Management

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MANAGEMENT

• Dr. ANANDA KUMAR
• Professor,
• Department of Management Studies,
• Christ College of Engg. Tech.
• Puducherry, India.
• Mobile [phone]
• E-mail searchanandu_at_gmail.com

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MANAGEMENT

• Management is the process of designing and
  maintaining of an environment in which
  individuals working together in groups
  efficiently accomplish selected aims.
• Koontz Weihrich
• Management is the art of knowing what do you
  want to do and then seeing that it is done in the
  best and cheapest way.
• - F. W. Taylor

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MANAGEMENT

• Management is the coordination of all resources
  through the process of planning, organizing,
  directing and controlling in order to attain
  stated goals.
• - Henry L. Sisk

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MANAGERIAL SKILLS

• 1. Technical Skill
• 2. Human Skill
• 3. Conceptual Skill

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• Technical Skill
• It refers to the ability to the tools, equipment,
  procedures and techniques.
• Effective supervision and coordinating of the
  work of the subordinates. Therefore depends on
  the technical possessed by the lower level market.

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• Human Skill
• Human skill refers to the ability of the
  manager to work effectively as a group member and
  to build cooperative effort in the team he leads.
• Human skills are concerned with understanding
  of people.
• Managers skill in working with others is
  natural and conditions.

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• Conceptual Skills
• This skill also called design and problem.
  Solving skill involves the ability.
• To see the organisation and the various
  components of it as a whole.
• To understand how its various parts and functions
  mesh together.
• A higher degree of conceptual skill helps in
  analyzing the environment and in identifying the
  opportunities.

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MANAGEMENT LEVELS
Top Level Management Middle Level Management
Lower Level Management
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• Top Level Management
• The main functions of top management are
• To formulate goals and policies of the company.
• To formulate budgets.
• To appoint top executives.
• To provide overall direction and leadership of
  the company.
• To decide the distribution of profits etc.

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• Middle Level Management
• The important functions of middle level
  management.
• To monitor and control the operating performance.
• To train, motivate and develop supervisory level.
• To co-ordinate among themselves so as to
  integrate the various activities of a department.

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• Lower Level or Supervisory Management
• The main functions of lower level management
• To train and develop the efficiency of the
  workers.
• To assign jobs to workers
• To give orders and instructions.
• To maintain discipline and good human relations
  among workers.
• To report feedback information about workers.

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FUNCTIONS OF MANAGEMENT

• 1. Planning
• 2. Organising
• 3. Staffing
• 4. Directing
• 5. Controlling

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• 1. Planning
• Planning is simple looking ahead. It is
  preparing for the future. Effective planning
  leads to efficient management. Effective planning
  provides answers to questions like what to do?
  When to do? How to do? Who is to do?

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• Organising
• Organizing establishes harmonious relationship
  among all the workers of an organization by
  providing them with suitable authority and
  responsibility.
• According to Louis A. Allen Organisation
  involves identification and grouping the
  activities to be performed and dividing them
  among the individuals and creating authority and
  responsibility relationships among them for the
  accomplishment of organizational objectives.

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3. Staffing

• Staffing process involves selecting candidates
  for positions, fixing salary, training and
  developing them for effective organizational
  functions. The manager performs the duties of
  job analysis, job description etc. which come
  under the staffing function.

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4. Directing

• One plans are made and the organisation is
  created next step is to achievement of objectives
  of the organisation.
• Directing is involves activities like guiding,
  supervising and motivating the subordinates in
  their jobs. Motivation, leadership and
  communication are three important sub function of
  directing. Motivation helps to increase the
  performance of the workers. Communication
  provides with proper information to improve the
  effective management. Leadership the process by
  which a manager guide and influences the work of
  his subordinates.

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5. Controlling

• Controlling as a function of management deals
  with checking and verifying the activities
  against the predetermined standards. The process
  of ensuring that actual activities conform to
  planned activities. Controlling process involves
  the following steps.
•   1. Establishing standards
• 2. Measuring current performance.
• 3. Comparing this performance to the
  established
• standards.
• 4. Taking corrective actions of deviation are
• detected.

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IMPORTANCE OF MANAGEMENT

• 1. Attainment of group goals
• 2. Effective functioning of business
• 3. Resource development
• 4. Management control the organisation
• 5. Integrates individual efforts
• 6. Motivation
• 7. Communication
• 8. Coordination
• 9. Decision-making
• 10. Leadership quality

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DIFFERENCE BETWEEN ADMINSTRATION MANAGEMENT
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Points of Distinction Administration Management
1. Nature It is a determinative thinking function. It is an executive or doing function.
2. Scope It is concerned with the determination of major objectives and policies. It is concerned with the implementation of policies.
3. Level It is mainly a top-level function It is a largely a middle and lower-level function.
4. Influence Administrative decisions are influenced mainly by public opinion and other outside forces. Managerial decisions are influenced mainly by objectives and policies of the organisation.
5. Direction of human efforts It is not directly concerned with direction of human efforts. It is actively concerned with direction of human efforts in the execution of plans.
6. Main functions Planning and control are the main functions involved in it. Directing and organizing are the main functions involved in it.
7. Skills required Conceptual and human skills. Technical and human skills.
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NATURE CHARACTERISTICS OF MANAGEMENT

• 1. Management is Universal
• 2. Management is Purposeful
• 3. Management is an Integrative Force
• Management is a Social Process
• Management is Multidisciplinary
• Management is a Continuous Process
• Management is Intangible
• Management is an Art as well as a Science

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MANAGEMENT AS A SCIENCE OR AN ART?
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What is Science?

• The science portion of management is apparent
  in the body of management knowledge, its
  fundamental principles and what experience and
  experimentation have shown.
• In some management subjects, we can build
  models and use mathematics to prove our study
  toward the scientific end of the spectrum.
• Management as a discipline fulfills the science
  criterion. The application of these principles
  helps any practicing manager to achieve the
  desired goals.

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What is Science?

• Science classified into two types. They are
  exact science and inexact science. Exact science
  where the results are accurate. In the case of
  management it is an inexact science.

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What is Science?

• Management is inexact science because
• Every organizations human resources are
  different attitude, aspirations and perceptions.
  So standard results may not be obtained.
• Readymade and standard solutions cannot be
  obtained
• Management is complex and unpredictable.
• Every organisation decisions are influenced by
  the environment. The environment is so complexes
  and unexpected changes.

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What is an art?

• Art means application of skill in finding a
  desired result. Art is the way of doing things
  skillfully. Management is an art because of the
  following facts.
• Management process involves the use of
  practical knowledge and personal skill.
• Management is creative.
• Application of practical knowledge and certain
  skills helps to achieve concrete results.

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Management is both science and an art

• Management is a science because it contains
  general principles. It is also an art because it
  requires certain personal skills to achieve
  desired results.

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HENRY FAYOLS CONTRIBUTION (1841 1925)

• Fayol was a contemporary of Taylor.
• He started his career as a junior engineer in a
  coal mining company in France in 1860 and became
  its general manager in 1880.
• We published his famous book Administration
  Industrielle et Generale in 1916 which was
  published in English in 1949 under the title
  General and Industrial Management.
• This book is now considered to be one of the
  best classics in management.

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Principles of Management

• 1. Division of Work
• Authority Responsibility
• Discipline
• 4. Unity of Command
• 5. Unity of Direction
• Subordination of Individual interest to General
  interest
• Remuneration of personnel
• 8. Centralization

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• 9. Scalar Chain
• Order
• Equity
• Stability of Staff
• Initiative
• Esprit-de-corps

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Case Study

• ABI Ltd., is a medium sized company Mr. Pramod
  has been working in the company for over 12 years
  as a secretary. He has got an excellent track
  record and recently he has been raised to the
  position of Administrative Manager. As a result
  of this change, the output of his work in the
  office dropped considerably and morale become
  low. There was alarming increased in Staff
  turnovers.

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• To study the situation, the managing director
  engaged a consultant. His report while praising
  the aspects of office administration pointing out
  his incapabilities especially in dealing with
  people. Surprisingly, Mr. Pramod enjoyed much
  popularity of the senior executives of the
  company. He won their appreciation for his
  valuable service as a manager. They were much
  worried over the incapabilities of Mr. Pramod in
  dealing with people. They were helpless.

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• Questions
• What is the real possible cause of this problem?
• What can be done to rectify the situation
  considering Mr. Pramods value to the company?

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ROLE OF A MANAGER

• 1. Director
• Motivation
• Human being
• Guide
• Friend
• Planner
• Supervisor
• Reporter

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TASKS / RESPONSIBILITIES OF A PROFESSIONAL MANAGER

• 1. Planning of work
• 2. Proper and Effective Communication
• 3. Co-ordination of Efforts
• 4. Getting co-operation of employees
• 5. Encourages a team spirit
• 6. Better utilization of Resources
• 7. Selecting the Procedure
• 8. Maintaining good human relations
• 9. Solve the problem
• 10. Arranging training and development facilities

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QUALITIES OF MANAGER

• Physical
• Mental
• Moral
• General Education
• Special knowledge
• Experience

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SYSTEM APPROACH TO MANAGEMENT

• Introduction Like a human organism an
  organisation is a system. In an organisation
  also people, tasks and the management are
  interdependent.

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• System concepts
• System theory was first applied in the fields of
  science and engineering.
• A system is essentially a set or assemblage of
  things interconnected or independent, so as to
  form a complex unity.
• Just as a doctor effective manager should
  collect information about all parts of the
  organisation in order to diagnosis a problem and
  take necessary corrective action.

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• Some key concepts
• Subsystem While an organisation as a
  whole is a system, the various components or
  parts within it are called the subsystem. Thus a
  department is a subsystem of the organisation.
• Closed system A system that does not
  interact with its environment. A closed system
  has fixed boundaries, its operation is relatively
  independent of the environment outside the
  system.
• Open system A system that interacts
  with its environment. Thus an open system is one
  which constantly comes into contact with the
  environment.
• Synergy Synergy means that
  departments that interact cooperatively are more
  productive than they would be if they operated in
  isolation.

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Open system model of an Organisation
External Environment

Information
OUTPUTS Goods Services
INPUTS Human Machines Money Technology
Transformation
Feedback
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SOCIAL RESPONSIBILITIES OF A BUSINESS

• 1. Responsibility towards shareholder/owners
• 2. Responsibility towards Employees
• 3. Responsibility to customers
• 4. Responsibility towards Government
• 5. Responsibility towards community

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• 1. Responsibility towards shareholder/owners
• a fair return on investment
• safety of investment
• steady appreciation of investment
• regular, accurate and full information about
  the working and progress of the company.

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• 2. Responsibility towards Employees
• Fair wages and salaries
• Good and safe working conditions
• Adequate service benefits such as housing,
  medical facilities insurance cover, retirement
  benefits
• Recognition of workers rights to form trade
  unions, to collective bargaining and strike
• Opportunities for education, training and
  promotion.
• Workers participation in decision-making.

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• 3. Responsibility to customers
• Regular supply of quality goods at right time
  and place
• Change reasonable prices
• Supply goods that meet the needs of different
  classes and taste with different purchasing
  power.
• Prompt, adequate and continuous service
• Prompt, redressal of customers grievances
• True and fair information through
  advertisements
• Avoid unfair and unethical practices like
  adulteration, hoarding and black marketing.

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• 4. Responsibility towards Government
• To abide by the laws of the land
• To pay taxes honestly and in time
• To avoid corrupting public servants
• To encourage fair trade practices
• To avoid monopoly and concentration of economic
  power

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• 5. Responsibility towards community
• To make the best possible or efficient use of
  the societys resources
• To provide maximum possible employment
  opportunities
• To keep the environment healthy and free from
  all types pollution
• To refrain from indulging in anti-social and
  unethical practice
• To improve public health, education and
  cultural life of the community.

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PLANNING

• Planning is the most basic of all management
  functions.
• Lots of planning activities are done by the
  management people at all levels.
• Planning is the process of selecting objectives
  and determining the course of action required to
  achieve these objectives.
• Planning bridges the gap from where we are and
  where we want to go.

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Definition

• According to Koontz and ODonnell, Planning is
  deciding in advance what to do, how to do it,
  when to do it, and who is to do it. It is the
  selection among alternatives of future course of
  action for the enterprise as a whole and each
  department within it. Plans involve selecting
  enterprise objectives and determining ways of
  achieving them.

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Definition

• In the words of Mary Cushing Niles, Planning is
  the conscious of selecting and developing the
  best course of action to accomplish an objective.
  It is the basis from which future management
  action spring.

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STEPS IN PLANNING PROCESS
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Identification of opportunities
Establishment of objectives
Developing Planning Premises
Identification of Alternatives

• STEPS IN PLANNING PROCESS

Evaluation of Alternatives
Selecting an Alternatives
Formulating Derivative Plans
Establishing Sequence of Activities
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1. Identification of Opportunities

• Identification of awareness of the opportunity is
  the starting point of planning. First of all, we
  should identify the possible future opportunities
  and analyze them clearly and completely. From
  that, we should know
• Where we stand,
• What is our strength and weakness,
• What problem we wish to solve and why, and
• What we expect to gain.

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2. Establishment of Objectives

• The next step in planning is to establish
  objectives for the entire organization and then
  for each subordinate units. Objectives specify
  and indicate the results expected.
• What is to be done?
• Where is the primary emphasis to be placed?
• What is to be accomplished by the various types
  of plans?

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3. Developing planning premises

• Planning premises are the assumptions that should
  be made about the various elements of the
  environment. It provides the basic framework in
  which plans operate. These premises may be
  internal or external.
• Internal premises include organizational,
  policies, resources of various types, sales
  forecasts and the ability of the organisation to
  withstand the environmental pressure. External
  premises include the total factors in task
  environment like political, social,
  technological, competitors, plans and actions,
  and government policies etc.

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4. Identification of Alternatives

• A particular objective can be achieved through a
  number of ways. The entire alternative cannot be
  analysed. Some alternative can be rejected at
  its preliminary stage itself by considering
  preliminary criteria such as minimum investment
  required, matching with the present business,
  market conditions government control, skilled
  workers, technique available etc.
• Only the alternatives which meet the preliminary
  criteria may be chosen for further detailed
  analysis.

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5. Evaluation of Alternatives

• The alternatives considered for the analysis
  according to preliminary criteria may be taken
  for further evaluation. Each alternative course
  of action is evaluated on the basis of
  profitability, capital investment, risk involved,
  gestation period etc. It presents a problem
  because each of these alternatives may have
  certain advantages and disadvantages. For
  instance, an alternative may appear to be must
  profitable. But, it requires a large cash outlet
  with slow payback another may be less profitable
  but involves less risk factors.

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6. Selecting Alternatives

• After the evaluation of various alternatives, the
  most appropriate course of action is selected.
  If more than one alternative is suitable, then
  any are alternative may be chosen for execution.
  When the situation changes and the selected plan
  do not provide to be the best, the other
  alternative may be tried.

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7. Formulation of derivative plans

• The derivative plans are formulated on the basis
  of the major plans. There are several minor
  plans required to support and execute the major
  plans. These plans are known as derivative
  plans. The various derivative plans are planning
  for buying equipment, buying raw materials,
  recruiting and training personal, developing new
  product etc.

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8. Establishing sequence of activities

• After formulating basic and derivative plans, the
  sequence of activities is determined so that
  plans are put into action while formulating
  derivative plans, a built in mechanism should be
  created for periodic review and updating of
  various plans whenever necessary. The starting
  and finishing times are fixed for each piece of
  work so as to indicate when and within what time
  that work is to be commenced and completed.

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PURPOSE or OBJECTIVES OF PLANNING

1. Primary of Planning
2. To achieve objectives
3. To cope with uncertainty and change
4. To Facilitate control
5. To help in coordination
6. To increase organizational effectiveness
7. To guide decision making

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PRINCIPLES OF PLANNING

1. Principle of the Contribution to objectives
2. Principle of the Primacy of planning
3. Principle of the Pervasiveness of Planning
4. Principle of the Flexibility of Planning
5. Principle of Periodicity
6. Principle of Planning Premises
7. Principle of Efficiency of Operations

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ADVANTAGES OF PLANNING

1. Helps in achieving objectives
2. Better utilization of resources
3. Economy in operation
4. Reduces uncertainty and risk
5. Improves competitive strength
6. Effective Control
7. Coordination
8. Encourages Motivation

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LIMITATIONS OF PLANNING

1. Lack of accurate information
2. Time and Cost
3. Inflexibility
4. Delay during emergency period
5. False sense of security

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NATURE / CHARACTERISTICS OF A SOUND PLAN

1. Primary
2. Continuity
3. Flexibility
4. Unity
5. Precision
6. Pervasiveness

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RANGE OF PLANNING

• It involves deciding a future course of action,
  plans always have some time frame-the period in
  future that a plan covers.
• Based on the length of time involved, plans are
  usually classified as strategic range and
  operational plans or short range plans

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• LONG RANGE PLANNING / STRATEGIC PLANNING /
  CORPORATE PLANNING
• Strategies are the large scale action plans for
  interacting with environment in order to achieve
  long term goals.
• Strategic plans focus on the board future of
  the organisation and incorporate both external
  environment demands and internal resources into
  the actions managers need to take to achieve the
  long term goals of the organization.
• Typically, strategic plans cover the major
  aspects of the organization, including its
  products, services, finances, technology and
  human resources.

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• SHORT RANGE PLANNING / OPERATIONAL PLANNING
• Operational plans translate tactical plans into
  specific goals and actions for small units of the
  organization and focus on the near term,
  typically 12 months or less.
• Strategic planning provides guidance and
  boundaries for operational planning.
• For example, if the strategic plan is to face
  competition with new and innovative products,
  major tasks to achieve this goal would be
  clarified by operational planning.

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OBJECTIVES

• Objectives are the aims, purposes or goals that
  an organization wants to achieve over varying
  periods of time.
• Objectives simply let people know what they are
  trying to do, or what is expected of them at the
  close of the evaluation period.

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SETTING OBJECTIVES

• Objective features in all branches of
  management.
• For setting the initial objectives, all
  organizations have a formal, explicitly
  recognized, legally specified organization.
• In general, the overall objective of the
  organization is set by the top management.

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Conti.

• However, in some organizations, the objectives
  are set by the vote of the shareholders in
  others, by a vote of the members, by a small
  number of trustees or by a few individuals who
  will win and run the organization.
• In large organizations, objectives are set by
  the board of directors, governing board,
  executive committee.

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MANAGING BY OBJECTIVES (MBO)

• MBO is a process whereby the superior and the
  subordinate managers of an enterprise jointly
  identify its common goals define each
  individuals major areas of responsibility in
  terms of results expected of him, and use these
  measures as guides for operating the unit and
  assessing the contribution of each of its
  members.
• - George Odiorne

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Conti.

• MBO is a process whereby superiors and
  subordinates sit together to identify the common
  objectives and set the results which are to be
  achieved by the subordinates.

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THE PROCESS OF MBO

• 1. Setting Preliminary objectives
• 2. Fixing Key result areas
• 3. Setting subordinates objectives
• 4. Recycling objectives
• 5. Matching resources with objectives
• 6. Periodic performance reviews
• 7. Appraisal

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BENEFITS OF MBO

• 1. Improvement of managing
• 2. Clarification of organization
• 3. Personnel satisfaction
• 4. Team work
• 5. Development of Effective Control
• 6. Fast Decision making

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WEAKNESS OF MBO

• Failure to teach the philosophy of MBO
• Failure to give guidelines to goals setters
• Difficulty of setting goals
• Emphasis on short-term goals
• Danger of Inflexibility
• Time consuming
• Increased paper work

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REASONS WHY MBO FAIL

• Lack of top management involvement and support.
• Lack of understanding of the philosophy behind
  MBO.
• Difficultly insetting realistic and meaningful
  objectives.
• Increased time pressure.
• Lack of relevant skills.
• Lack of individual motivation.
• Poor integration with other systems

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POLICIES

• A policy is a broad statement formulated to
  provide guidance in decision making.
• A policy is the statement or general
  understanding which provides guidance in decision
  making to members of an organisation in respect
  to any course of action. - L.M. Prasad
• Policies are general statements of
  understandings which guide or channel thinking in
  decision making or subordinates. - Weihrich and
  Koontz

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NEED or IMPORTANCE or PURPOSE OF POLICY

• To operationalise objectives
• To save time and effort
• To facilitate delegation of authority
• To speedup decision making
• To control administration

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FORMULATION OF A POLICY

• Identification of area
• Objectives
• Analysis of Environment
• Corporate Analysis
• Collection of Information
• Analysing the information
• 7. Identification of Alternatives
• Appraisal of Policies
• Selection of a Policy
• Approval of policy
• Communicating the policy

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TYPES OF POLICIES

• 1. Formulated Policies
• 2. Appealed Policy
• 3. Imposed Policy

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STRATEGIES

• Strategy is the determination of basis
  long-term objectives and the adoption of the
  course of action and allocation of resources to
  achieve these goals. - Alfred D. Chandler
• A strategy may also be defined as a special type
  of plan prepared for meeting the challenge posted
  by the activities of competitors and other
  environmental forces.
• Strategy is a course of action through which an
  organisation relates itself with environment so
  as to achieve its objectives.

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PROCEDURES

• Policies are subdivided and stated in terms of
  procedures.
• For example A companys policy may be to sell
  the obsolete products at a discount. The
  procedure may explain how to decide which product
  is obsolete and what percentage of discount is to
  be offered.
• Procedures for placing orders for material and
  equipment, for sanctioning different types of
  employees leave, for handling grievances at the
  shop floor level, etc., suggest how each of these
  has to be handled.

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PROGRAMMES

• A programme is a broad term which includes goals,
  policies, procedures, rules and steps to be taken
  in putting a plan into action.
• Terry and Frankin define programme as a
  comprehensive plan that includes future use of
  different resources in an integrated pattern and
  establishes a sequence of required and time
  schedules for each in order to achieve stated
  objectives.

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FORECASTING

• In all organizations, managers plan their future
  course of action based on some predictions of the
  future. Forecasting provides them the knowledge
  of the future trends.
• Forecasting is the process of estimating the
  future, based on the analysis of their past and
  present behaviour. Its aim is to provide
  information for planning and decision making.

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BUDGETS

• Budgets are used to quantify and allocate
  resource to specific activities. In most
  organizations, budgets are proposed and annually.
  
• A variety of resources can be quantified in
  budgets, but money is most commonly used. There
  are several types of budgets. For example, a
  capital expenditure budget specifies the amount
  of money to be spent on specific items that have
  long term use and require significant amounts of
  money to acquire. These items might include such
  things as equipment, land or buildings.

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DECISION-MAKING

• Decision-making is defined as the process of
  choosing a course of action from among
  alternatives to achieve a desired goal.
• It is one of the functions of management and also
  a core process of planning. The management
  executive takes a number of decisions every day.
  
• There are number of alternatives available to the
  management. The best one is selected out of the
  available alternatives.

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Definition

• Knootz and Weihrich, Decision making is defined
  as the selection of a course of action from among
  alternatives.
• Georage R. Terry, Decision making is the
  selection based on some criteria from two or more
  possible alternatives.

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DECISION MAKING PROCESS / PHASES OF DECISION
MAKING
Identification of Problem
Diagnosis and analysis the problem
Search for Alternatives
Evaluation of Alternatives
Selecting an Alternatives
Implementation and follow-up
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ORGANISING

• Organising is the process of identifying and
  grouping of activities required to attain the
  objectives, delegating authority, creating
  responsibility and establishing relationships for
  the people to work effectively.

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Definition

• According to Haimann, Organising is the
  process of defining and grouping the activities
  of the enterprise and establishing the authority
  relationships among them.
• Koontz and ODonnel define organizing as the
  grouping of activities necessary to attain
  objectives, the assignment of each grouping to a
  manager with authority necessary to supervise it,
  and the provision for co-ordination horizontally
  and vertically in the enterprise structure.

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NATURE OF ORGANIZATION

1. Common Objectives
2. Specialization or Division of Labour
3. Authority of Structure
4. Group of Persons
5. Co-ordination
6. Communication
7. Environment
8. Rule and Regulations

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SPAN OF CONTROL or SPAN OF MANAGEMENT

• Span of management means the number of people
  managed effectively by a single superior in an
  organization.
• The term Span of management is also known as
  Span of supervision, Span of authority and
  Span of responsibility.
• If the number of members is too large, it will
  be very difficult to manage the persons and
  perform the work effectively.

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Definition

• According to L. Urwick, the ideal number of
  subordinates is four in case of higher level
  management and eight to twelve in case of bottom
  level management.

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DETERMINATION OF SPAN OF MANAGEMENT

1. Direct single relationship
2. Direct group relationships
3. Cross relationship

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• 1. Direct single relationship It is
  one in which a supervisor has direct relationship
  with his subordinates individually. If X
  supervises Y and Z who are subordinates, there
  are two direct single relationships.
• 
  Supervisor
• Subordinates

X
Z
Y
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• Direct group relationships In direct
  group relationship, a supervisor has direct
  relationship with his subordinates jointly.
• Supervisor
• Consultation Consultation
• Subordinates

X
Y
Z
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• Cross relationship In cross
  relationship, a subordinate has relationship with
  another subordinate mutually.
• 
  Supervisor
• Relationship
• Subordinates

X
Y
Z
98
FORMAL ORGANISATION

• A formal organisation typically consists of a
  classical hierarchical structure in which
  positions, responsibility, authority,
  accountability and the line of command are
  clearly defined and established.
• Each and every person is assigned the duties and
  given the required amount of authority and
  responsibility to carryout the job.
• The inter relationship of staff members can be
  shown in the organisation chart and manuals

99
Advantages of Formal Organisation

• Since the definite boundary of each worker is
  clearly defined, the conflict among the workers
  is automatically reduced.
• Overlapping of responsibility is easily
  avoided.
• More stable organization can be ensured. It
  makes the organization less dependent on one man.
• A sense of security arises from classification
  of the task.
• It motivates the employees.

100
INFORMAL ORANISATION

• Informal organisation is an organisation which
  establishes the relationship on the basis of
  members interaction, communication, personal
  likings and disliking, and social contacts within
  as well as outside the organisation.
• It arises naturally on the basis of friendship or
  some common interest which may or may not be
  related with work.

101
Advantages of informal organisation

• Since informal organisation gives satisfaction
  to the workers, it motivates workers and also
  maintains the stability of the work.
• It fills up the gaps and deficiency of the
  formal organisation.
• It fills up the gaps among the abilities of the
  managers.
• The presence of informal organisation
  encourages the executives to plan the work
  correctly and act accordingly.

102
DIFFERENCE BETWEEN FORMAL AND INFORMAL
ORGANISATION
Point of view Formal Organisation Informal Organisation
Origin It is created deliberately and consciously by the frames of the organisation. It is created spontaneously and naturally.
Purpose It is created for achieving legitimate objectives of the organisation. It is created by the members of the organisation for social and psychological satisfaction.
Nature Planned and official Unplanned and unofficial.
Size It may quite large. It may be small in size.
Nature of groups It may be stable and continue for a very long. It is quite unstable in nature.
103
Point of view Formal Organisation Informal Organisation
Number of groups More Less
Structure Definite structure, mechanical and rational Structure less, impersonal and emotional.
Authority Authority flows from top to bottom It may flow upward to downwards from or horizontally.
Communication Communication normally flows through the prescribed chain of command. Communications pass through the informal channels which do not have one single form.
104
ORGANISATIONAL CHARTS

• Organisational charts are prepared for the
  purpose of describing the organisational
  structure clearly.
• An organisation chart is a graphical portrayal of
  the various positions in the enterprise and the
  formal relationships among them.
• It shows the organisational relationships and
  activities within an organisation.

105
KINDS OF ORGANISATION CHARTS

• 1. Vertical Chart
• 2. Horizontal Chart or Left to Right Chart
• 3. Circular Chart or Concentric Chart

106

• 1. Vertical Chart

Chairmen
Managing Director
Marketing Manager
Production Manager
Personnel Manager
Supervisor for Operation B
Supervisor for Operation A
Supervisor for Operation C
Workman III
Workman II
Workman I
107

• 2. Horizontal chart or Left to right chart

Managing Director
Salesman I
Branch Manager I
President
Salesman II
Branch Manager II
Managing Director
Managing Director
Managing Director
Salesman III
Branch Manager III
108

• Circular Chart or Concentric Chart
• Supervisor III
• Supervisor II
• Supervisor I

Production Marketing Manager
Manager Personnel Finance Manager
Manager
Chairman
109
STEPS IN ORGANISING PROCESS

• 1. Determination of Activities
• 2. Grouping of Activities
• 3. Assignment of Duties
• 4. Delegation of Authority
• 5. Establishment of Structural Relationship
• 6. Co-ordination of Activities

110
DEPARTMENTATION / FUNCTIONAL DEPARTMENTATION

• Departmentation means the process of grouping of
  similar activities of the business into
  department, division or other homogeneous units.
  It is used for the purpose of facilitating smooth
  administration at all levels.
• Departmentation involves grouping of people or
  activities with similar characteristics into a
  single department or unit.

111
DEPARTMENTATION BY DIFFERENT STRATEGIES

• 1. Departmentation by Numbers
• 2. Departmentation by Time
• 3. Departmentation by Enterprise Function
• 4. Departmentation by Territory or Geography
• 5. Departmentation by Customers
• 6. Departmentation by Process or Equipment

112

• Departmentation by Numbers
• In this case, departments are created on the
  basis of number of persons forming the
  department. Similar types of activities are
  performed by small groups.
• In such case, the each group is controlled by a
  supervisor or an executive.
• For example, in the army soldiers are grouped
  into squads on the basis of the number prescribed
  for each unit.

113

• Departmentation by Time
• Under this base, the business activities are
  grouped together on the basis of the time of
  performance.
• For example, a manufacturing unit working in
  three shifts of eight hours each per day may
  group the activities shift wise and thus having
  separate department for each shift.
• The basic idea is to get the advantages of people
  specialized to work in a particular shift.

114

• Departmentation by Enterprise Function

President
Vice-president
MD
Finance Dept
Personnel Dept
Production Dept
Marketing Dept
Production Planning
Financial Planning
Market Research
Recruitment Selection
Production Engineering
Budgets
Market Planning
Training
Purchasing
General Accounting
Sales Administration
Tooling
Labour
Advertising
Cost Accounting
Repairs
115

• 4. Departmentation by Territory or Geography

President
Managing Director
Northern Region
Central Region
Western Region
Southern Region
Eastern Region
116

• Departmentation by Customers

Branch Manager
Manager Housing Loans
Manager Business Loans
Manager Cooperative Loan
Manager Personal Loans
Manager Agricultural Loans
117
6. Departmentation by Process or Equipment
President
General Director
Ginning
Weaving
Spinning
Packing Sale
Dying Printing
118

• 7. Departmentation by Product or Service

General Manager
Automobile
Heavy Engg Division
Finance
Sales
Finance
Sales
Personnel
Production
Personnel
Production
Power Products Division
Earth Moving Equipment Division
Finance
Sales
Finance
Sales
Personnel
Production
Personnel
Production
119
 AUTHORITY

• According to Hendry Fayol, Authority is the
  right to give orders and the power to exact
  obedience.
• Koontz and ODonnell have defined authority as,
  Authority is the power to command other to act
  or not to act in a manner deemed by the possessor
  of the authority to further enterprise or
  departmental purposes.

120
LINE AUTHORITY or LINE ORGANISATION

• Line authority exists between superior and his
  subordinate.
• Line authority is the direct authority which a
  superior exercises over a number of subordinates
  to carry out orders and instructions.
• In organisation process, authority is delegated
  to the individuals to perform the activities.

121

Manager
Superintendent 1
Superintendent 2
Foreman 1
Foreman 1
Foreman 2
Foreman 2
W
W
W
W
W
W
W
W
W
W
W
W
122
STAFF AUTHORITY

• Staff authority is exercised by a man over line
  personnel.
• The relationship between a staff manager and the
  line manager with whom he works depends in part
  on the staff duties.
• In a management, staff refers to those elements
  of the organisation which help the line to work
  most effectively in accomplishing the primary
  objectives of the enterprise, the nature of the
  staff relationship is advisory.

123

• The function of staff is to investigate research
  and give advice to line managers.
• Staff personnels having specialized knowledge
  and skills reduce the burden of line personnels.

124
DECENTRALISATION OF AUTHORITY

• Centralization and decentralization refer to the
  location of decision-making authority in an
  organisation.
• Centralisation means that the authority for
  most decisions is concentrated at the top of the
  managerial hierarchy whereas decentralisation
  requires such authority to be dispersed by
  extension and delegation through all levels of
  management.

125

• Louis A.Allen has defined both the terms as,
  Centralisation is the systematic and consistent
  reservation of authority at central points within
  an organisation. Decentralisation applies to the
  systematic delegation of authority in an
  organisation-wide context.

126
MAKING DECENTRALISATION EFFECTIVE

• 1. Centralized Top Policy
• 2. Appreciation of Concept of Decentralization
• 3. Development of managers
• 4. Competition among units
• 5. Open Communication
• 6. Effective Co-operation

127
DELEGATION OF AUTHORITY

• Delegation of authority is a process which
  enables a person to assign works to others and
  delegate them with adequate authority to do it.
• Delegation consists of granting authority or the
  right to decision-making in certain defined areas
  and charging the subordinate with responsibility
  for carrying through an assigned task

128
COMPARISON BETWEEN DELEGATION AND DECENTRALISATION

Sl. No Delegation Decentralization
1. It is the process of devolution of authority. It is the end result achieved by the delegation.
2. It implies the relationship between a superior and a subordinate. It implies the relationship between top management and various departments and sections.
3. The delegation control rests entirely with the superior. Here, the top management exercises only control and delegates the authority for control to the departmental heads.
4. It is must for management. It is optional
5. It is a technique of management to get things done. It is both technique and philosophy of management.
6. It can take place without decentralization. There cannot be decentralization without delegation.
129
STRATEGY AND ORGANIZATION DESIGN

• A well-developed design enhances the
  accomplishment of strategic objectives, and these
  strategic objectives should have carefully
  selected to ensure successful organizational
  performance.
• Organization design is overall plans for
  organizing the work, goals, relationships, and
  decisions of an organization in such a way that
  people can perform to the best of their abilities.

130
DESIGN ORGANIZATIONS TO MATCH THEIR ENVIRONMENTS

• Some of the pioneering work on the relationship
  between organization design and environment was
  done by Tom Burns and G.M. Stalker. They found
  that successful organizations were designed
  differently in different environments. They
  distinguished between two types of organization
  designs a mechanistic design and an organic
  design.

131

• Mechanistic Designs A mechanistic
  design follows Webers bureaucratic model very
  closely in that it is characterized by
  specialized activities, specific rules and
  procedures, an emphasis on formal communicational
  and a well-defined chain of command.
• Because mechanistic designs tend to be
  inflexible and resistant to change, this type of
  design is more successful in a stable
  environment.

132

• Organic Designs In an organic design,
  task activities are loosely defined, there are
  very few rules and procedures, and great emphasis
  falls on self-control, participative problem
  solving, and horizontal communication.
• Organic designs are more successful in dynamic,
  rapidly changing environments that require
  adaptability to change.

133
STAFFING

• Staffing is defined as filling and keeping
  filled, positions in the organization structure.
• It includes identifying work force requirements,
  inventorying the people available and recruiting,
  selecting, placing promoting, appraising and
  training developing both candidates and current
  jobholders to accomplish their tasks effectively
  and efficiently.

134
ROLE OF STAFFING

• Massive increase in the number of employees.
• Technological innovations that require more
  skilled and experienced staff.
• Changing employee roles and values.
• Increasing the percentage of woman employees.
• Effective utilization of skills and potential
  of the work force.
• Provision of job satisfaction to employees.

135
JOB ANALYSIS

• It is an attempt to match the jobs and
  job-holders.
• Job analysis is a detailed study of a job to
  identify the skills, experience and aptitude
  required for the job.

136

JOB ANALYSIS
Job Specification
Job Description
Personal Characteristics Age, Sex,
Education. Physical Characteristics Length,
Weight, Vision. Mental Characteristics General
intelligence, Memory, Judgment. Social
Psychological Characteristics Emotional
Stability, Initiative, Creativity.
Job Title A Title of the Job Job Activities
Tasks performed, materials used. Working
Conditions Light, Heat, Noise. Social
Environment Size of work group members etc.
137

• Job Description Job description is a
  written statement showing job title, tasks duties
  and responsibilities involved in a job.
• Job Specification Job specification
  also known as man or employee specification is a
  statement of minimum acceptable qualities
  required in a job incurrent for the effective
  performance of the job.

138
JOB DESIGN

• The job design is usually broad enough to
  accommodate peoples needs and desires. It may
  be especially appropriate to design jobs for
  exceptional persons in order to utilize their
  potential.
• People spend a great deal of time on the job
  and it is therefore important to design jobs so
  that individuals feel good about their work.

139

• Two important goals of job design are
• To meet the organisational requirement such as
  higher productivity, operational, efficiency,
  quality of product/service etc.
• To satisfy the needs of the individual employees
  like interests, challenge, achievement etc.

140
TECHNIQUES FOR DESIGNING JOBS

• The following factors are the designing of jobs.
• 1. Job Enlargement
• 2. Job Rotation
• 3. Job Enrichment

141
Job Enlargement

• Job Enlargement is several short tasks which are
  given to one worker. Thus the scope of the job
  is increased because there are many tasks of be
  performed by the same worker.
• Job enlargement does not increase the depth of a
  job. Enlarged jobs require longer training
  period because there are more tasks to be
  learned. If workers are more satisfied with
  jobs, job enlargement should be successful.

142
Job Rotation

• Job rotation refers in the movement of an
  employee from the job to another.
• An employee who works on a routine job is
  affected from boredom and monotony.
• Job rotation improves employees skills. Thus
  the role of job rotation is motivating people is
  limited.

143
Job Enrichment

• Job enrichment is based on herzbergs two-factor
  theory of motivation. It is based on the
  assumption that in order to motivate workers.
  The job itself must provide opportunities for
  achievement, recognition and responsibility.
• The job enrichment approach to boring jobs is to
  give the individual employee more autonomy in the
  job. Employee receives a greater sense of
  accomplishment as well as more authority and
  responsibility.

144
RECRUITMENT

• Recruitment is defined as a process to discover
  the sources of manpower to meet the requirements
  of the staffing schedule and to employ effective
  measures for attracting that manpower in adequate
  members to facilitate effective selection of an
  efficient work force.
• B.Flippo defined recruitment as The process of
  search for prospective employees and stimulating
  them to apply for jobs in the organization.

145
SOURCES OF RECRUITMENT

SOURCES OF RECRUITMENT
INTERNAL SOURCE
EXTERNAL SOURCE
146

• Internal Sources
• Present permanent employees
• Present temporary/Casual employees
• Retired employees

147

• External Sources
• Advertisements
• Employment exchanges
• Campus Recruitment
• Recruitment at the factory gates or gate hiring
• Jobbers / Contractors / Personnel consultants
• Recommendations of existing employees

148
SELECTION

• Selection is the process that enables the
  enterprise to pick up the candidates with the
  required qualifications, training and skill for
  the job after careful screening and rejecting the
  undesirables at each successive step.
• The selection procedure is the system of
  functions and devices adopted in a given company
  to ascertain whether the candidates
  specifications are matched with the job
  specifications and requirements.

149
STEPS OF SELECTION PROCESS

Screening of Applications
Selection Tests
Preliminary Interview
Medical Examinations
Final Interview
Approval
Placement
150
PERFORMANCE APPRAISAL

• Appraising the performance of individuals,
  groups and organization is a common practice of
  all societies.
• Thus teachers evaluate the performance of
  students, bankers evaluate the performance of
  creditors, parents evaluate the behaviour of
  their children and all of us consciously or
  unconsciously evaluate our own actions from time
  to time.

151

• Meaning
• Performance appraisal evaluate not only the
  performance of worker but also his potential for
  development.
• Performance appraisal is a continuous process
• Appraisals are arranged periodically according
  to a definite plan.
• The performance appraisal is the process of
  determining and communicating to an employee how
  well he is performing the job.
• Performance appraisal is the employees job
  relevant strength and weaknesses.

152
PROMOTION

• Promotion means shifting of personnel to a higher
  position carrying increased wages and
  responsibilities. It is a movement from lower to
  higher rank involving higher salary,
  responsibility and increase in status.

153
TRAINING AND DEVELOPMENT

• Training plays a very important role in human
  resource development. Training involves the
  department of skills that are usually necessary
  to perform a specific job.
• According to Edwin B.Flippo Training is the act
  of increasing the knowledge and skills of an
  employee for doing a particular job.

154

• Development means all round improvement in the
  job performance, personality growth in
  proficiency, advancement and progress in all
  other personality traits that make an employee a
  better man and a better citizen.

155
NEED FOR TRAINING

• Every organization should provide training to all
  employees irrespective of their qualification,
  skill, suitability of the job etc.
• 1. Training is necessary to prepare existing
  employees for higher level jobs.
• 2. Training is necessary when a person is
  shifted from one job to another.
• 3. Training is necessary to make employee mobile
  and versatile.
• 4. Training provides a sense of security and self
  confidence to employees.

156
Cont

• 5. Training is needed to bridge the gap between
  what the employee has and what the job demands.
• 6. Training develops new skill to the employees.
• 7. There are three other factors which could
  necessitate training

157
TRAINING METHODS

Training Methods
On-the Job Training Methods
Off-the Job Training Methods

• Job Rotation
• Apprenticeship Coaching
• Committee Assignments
• Experience
• Temporary Promotions

1. Lecture
2. Conference Seminars
3. Role Playing
4. Case Studies
5. Programmed Instructions
6. Business Game
7. In basket method
8. Sensitivity Training

158
ORGANISATIONAL CHANGE

• The term change refers to an alteration in a
  system whether physical biological or social.
  Thus organisational change is the alteration of
  work environment in organization.
• 1. Organisational change is a continuous change.
• 2. Any changes may affect part of organization
  positively or negatively.
• 3. When change occurs in any part of the
  organization, it disturbs the old equilibrium
  necessitating the development new equilibrium.

159
FACTORS INFLUENCING ORGANISATIONAL CHANGE

Organisational Change
External Factors
Internal Factors

• Technologies
• Social
• Political

1. Change in Managerial Personnel
2. Deficiency in Existing organisation

160
ORGANISATION DEVELOPMENT

• Organisation development is a systematic and
  continuous process of learning and growth. It
  improves the managerial effectiveness. It is
  basically long range programme.
• Organisational development is attempting to
  change the behavioural attitudes and performance
  of the total organisation.
• Organisation development is an education strategy
  which focuses on the whole culture of the
  organisation in order to bring about planned
  change.

161
DIRECTING

• Directing may be defined as the process of
  instructing, guiding and inspiring human factors
  in the organisation to achieve organisation
  objectives.
• It is not only issuing orders and instruction by
  a superior to his subordinates but also including
  the process of guiding and inspiring them to work
  effectively.

162
Cont..

• Directing includes the following elements
• 1. Leadership
• 2. Motivation
• 3. Communication

163
LEADERSHIP

• Leadership is the process of influencing the
  behaviour of other towards the accomplishment of
  goals in a given situation.
• Koontz and ODonnel have defined, Leadership is
  the art of process of influencing people so that
  they will strive willingly towards the
  achievement of group goals.

164
IMPORTANCE OF LEADERSHIP

1. Motivating employees
2. Leader develops team work