M8 PRINCIPLES & PRACTICES OF MANAGEMENT

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UNIT 1: INTRODUCTION TO MANAGEMENT CONCEPT OF MANAGEMENT SIGNIFICANCE OF MANAGEMENT NATURE OF MANAGEMENT MANAGEMENT AS A SCIENCE AND AN ART 14 PRINCIPLES OF MANAGEMENT FUNCTIONS OF MANAGEMENT MANAGEMENT CONTRIBUTIONS BY MANAGEMENT THINKERS SOCIAL RESPONSIBILITIES OF MANAGEMENT MANAGEMENT ETHICS UNIT 2: PLANNING AND DECISION MAKING PLANNING FUNCTION NATURE OF PLANNING IMPORTANCE OF PLANNING PLANNING PROCESS PRINCIPLES OF PLANNING LIMITATIONS OF PLANNING DECISION MAKING TYPES OF DECISIONS DECISION MAKING PROCESS INDIVIDUAL AND GROUP DECISION MAKING MANAGEMENT BY OBJECTIVES (MBO) CHARACTERISTICS OF MBO LIMITATIONS OF MBO NEGOTIATION UNIT 3: ORGANIZING ORGANIZING FUNCTION ORGANIZING PROCESS DEPARTMENTALIZATION SPAN OF MANAGEMENT DELEGATION OF AUTHORITY PROCESS OF DELEGATION OF AUTHORITY ADVANTAGES / IMPORTANCE OF DELEGATION OF AUTHORITY PRINCIPLES OF EFFECTIVE DELEGATION OF AUTHORITY CENTRALIZATION AND DECENTRALIZATION UNIT 4: DIRECTION AND CONTROLLING DIRECTING FUNCTION IMPORTANCE OF DIRECTION PRINCIPLES OF DIRECTING MOTIVATION IMPORTANCE OF MOTIVATION THEORIES OF MOTIVATION LEADERSHIP IMPORTANCE OF LEADERSHIP CONTROLLING FUNCTION CHARACTERISTICS OF CONTROL PROCESS OF CONTROLLING CO-ORDINATION SIGNIFICANCE OF CO-ORDINATION PRINCIPLES OF COORDINATION COORDINATION IS THE ESSENCE OF MANAGEMENT UNIT 5: HUMAN RESOURCE MANAGEMENT CONCEPT OF HUMAN RESOURCE MANAGEMENT SCOPE OF HUMAN RESOURCE MANAGEMENT STRATEGIC HUMAN RESOURCE MANAGEMENT STAFFING FUNCTION NATURE OF STAFFING STAFFING PROCESS PERSONNEL MANAGEMENT NATURE OF PERSONNEL MANAGEMENT FUNCTIONS OF PERSONNEL MANAGEMENT EMPLOYEE RELATIONS 73 73 74 74 76 76 76 82 83

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UNIT 1: INTRODUCTION TO MANAGEMENT

CONCEPT OF MANAGEMENT

Management in all business and organizational activities is the act of getting people together to accomplish desired goals and objectives using available resources efficiently and effectively. Management comprises planning, organizing, staffing, leading or directing, and controlling an organization (a group of one or more people or entities) or effort for the purpose of accomplishing a goal. Resourcing encompasses the deployment and manipulation of human resources, financial resources, technological resources, and natural resources. Because organizations can be viewed as systems, management can also be defined as human action, including design, to facilitate the production of useful outcomes from a system. This view opens the opportunity to 'manage' oneself, a prerequisite to attempting to manage others. Imagine an army with no general, a team with no coach, or a nation with no government. How could the army beat the enemy? How could the team win games? How could the nation avoid complete anarchy? They couldnt. And an organization cant succeed without a manager. Managers make sure that an organization stays, well organized. Organizing and directing the work of others is the work of the manager. People need organization and direction if they are to work effectively, and managers provide that. Management is generally defined as the art and science of getting things done through others. This definition emphasizes that a manager plans and guides the work of other people. Some (cynical) individuals think that this means managers dont have any work to do themselves. As youll learn in this book (if you dont already know it), managers have an awful lot of work to do. Organizing and directing the work of others is known as administration. In a business it is called business administration. (In a hospital, it is called health-care administration. In a government agency, it is called public administration.) Thus, business administration means managing a business, and an MBAmaster of business administration degree prepares a person to manage a business. In an MBA program, which is a graduate school program, you learn about the structure, parts, and purpose of a business, and about the tools you need in order to manage the business. These tools include budgets and financial statements as well as methods of analyzing business decisions. Simply speaking, management is what managers do. However, this simple statement doesnt tell us much. We define management as the process of coordinating and integrating work activities so that they are completed efficiently and effectively with and through other people. The process represents the ongoing functions of primary activities engaged in by managers. These functions are typically labeled planning, organizing, leading, and controlling. Definition of Management Management is the process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aims. - Harold Koontz and Heinz Weihrich Management is defined as t he process of planning, organising, actuating and controlling an organisations operations in order to achieve coordination of the human and material resources essential in the effective and efficient attainment of objectives. -Robert L. Trewelly and M. Gene Newport Management is the process of working with and through others to effectively achieve organisational objectives by efficiently using limited resources in the changing environment. - Kreitner
SIGNIFICANCE OF MANAGEMENT

Management is a function, a discipline, a task to be done, and managers practice this discipline, carry out the functions and discharge these tasks - Peter F. Drucker Analysis of business failures made over many years shows that a high percentage of these failures was due to unqualified or inexperienced management. The Bank of America has said, in its publication "Small Business Reporter". "In the final analysis, more than 90% of business failures are due to managerial incompetence and inexperience." The significance of management is much more in case of developing countries. In recent years development specialists has shown in their research that availability of money or technology does not bring development. The limiting factor in almost every case has been the lack of quality on the part of managers. There are some people or groups who believe that there is no need of management. In fact, they feel that people would work together better and with more personal satisfaction if there were no managers. They refer 'team effort' as the ideal group operation. Perhaps they do not realise that whenever an individual plays a game, he has clear group goals as well as some personal goals also. In fact, every group effort designed to attain goals with minimum cost of time, money and materials , adopts some basic principles and techniques of management. Management is critical in the nation's economic and social development also. Efficient management helps a developing country to make better use of resources for the achievement of economic development.

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NATURE OF MANAGEMENT

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1. Universality: Management is an universal phenomenon in the sense that it is common and essential element in all enterprises. Managers perform more or less the same functions irrespective of their position or nature of the organization. The basic principles of management can be applied in all managerial situations regardless of the size, nature and location of the organization. Universality of managerial tasks and principles also implies that managerial skills are transferable and managers can be trained and developed. 2. Purposeful: Management is always aimed at achieving organizational goals and purposes. The success of management is measured by the extent to which the desired objectives are attained. In both economic and non-economic enterprises, the tasks of management are directed towards effectiveness (i.e., attainment of organizational goals) and efficiency (i.e., goal attainment with economy of resource use). 3. Social process: Management essentially involves managing people organized in work groups. It includes retaining, Developing and motivating people at work, as well as taking care of their satisfaction as social beings. All these interpersonal relations and interactions makes the management as a social process. 4. Coordinating force: Management coordinates the efforts of organization members through orderly arrangement of interrelated activities so as to avoid duplication and overlapping. Management reconciles the individual goals with the organizational goals and integrates human and physical resources. 5. Intangible: Management is intangible. It is an unseen force. Its presence can be felt everywhere by the results of its effort which comes in the form of orderliness, adequate work output, satisfactory working climate, employees satisfaction etc. 6. Continuous process: Management is a dynamic and an on-going process. The cycle of management continues to operate so long as there is organised action for the achievement of group goals. 7. Composite process: Functions of management cannot be undertaken sequentially, independent of each other. Management is a composite process made up of individual ingredients. All the functions are performed by involving several ingredients. Therefore, the whole process is integrative and performed in a network fashion. 8. Creative organ: Management creates energetic effect by producing results which are more than the sum of individual efforts of the group members. It provides sequence to operations, matches jobs to goals, connects work to physical and financial resources. It provides creative ideas, new imaginations and visions to group efforts. It is not a passive force adopting to external environment but a dynamic life giving element in every organization.
MANAGEMENT AS A SCIENCE AND AN ART

Management as an Art What is art? Art is the skillful and personal application of existing knowledge to achieve desired results. It can be acquired through study, observation and experience. Since art is concerned with personal application of knowledge some kind of ingenuity and creativity is required to practice the basic principles learnt. The basic features of an art are as follows: (i) Existence of theoretical knowledge: Art presupposes the existence of certain theoretical knowledge. Experts in their respective areas have derived certain basic principles which are applicable to a particular form of art. For example, literature on dancing, public speaking, acting or music is widely recognised. (ii) Personalised application: The use of this basic knowledge varies from individual to individual. Art, therefore, is a very personalised concept. For example, two dancers, two speakers, two actors, or two writers will always differ in demonstrating their art. (iii) Based on practice and creativity: All art is practical. Art involves the creative practice of existing theoretical knowledge. We know that all music is based on seven basic notes. However, what makes the composition of a musician unique or different is his use of these notes in a creative manner that is entirely his own interpretation. Management can be said to be an art since it satisfies the following criteria: (i) A successful manager practices the art of management in the day-to-day job of managing an enterprise based on study, observation and experience. There is a lot of literature available in various areas of management like marketing, finance and human resources which the manager has to specialise in. There is existence of theoretical knowledge. (ii) There are various theories of management, as propounded by many management thinkers, which prescribe certain universal principles. A manager applies these scientific methods and body of knowledge to a given situation, an issue or a problem, in his own unique manner. A good manager works through a combination of practice, creativity, imagination, initiative and innovation. A manager achieves perfection after long practice. Students of management also apply these principles differently depending on how creative they are. (iii) A manager applies this acquired knowledge in a personalised and skillful manner in the light of the realities of a given situation. He is involved in the activities of the organisation, studies critical situations and formulates his own theories for use in a given situation. This gives rise to different styles of management The best managers are committed and dedicated individuals; highly trained and educated, with personal qualities such as ambition, self- motivation, creativity and imagination, a desire for development of the self and the organisation they belong to. All management practices are based on the same set of principles; what distinguishes a successful manager from a less successful one is the ability to put these principles into practice.

M8-Principles & Practices of Management Management as a Science Science is a systematised body of knowledge that explains certain general truths or the operation of general laws. The basic features of science are as follows: (i) Systematised body of knowledge: Science is a systematic body of knowledge. Its principles are based on a cause and effect relationship. For example, the phenomenon of an apple falling from a tree towards the ground is explained by the law of gravity. (ii) Principles based on experimentation: Scientific principles are first developed through observation and then tested through repeated experimentation under controlled conditions. (iii) Universal validity: Scientific principles have universal validity and application. Based on the above features, we can say that management has some characteristics of science. (i) Management has a systematised body of knowledge. It has its a) Anthropology Anthropology is the study of societies, which helps us learn about human beings and their activities. Anthropologists work on cultures and environments, for instance, has helped managers to better understand differences in fundamental values, attitudes, and behavior between people in different countries and within different organisations. b) Economics Economics is concerned with the allocation and distribution of scarce resources. It provides us with an understanding of the changing economy as well as the role of competition and free markets in a global context. An understanding of free trade and protectionist policies is absolutely essential to any manager operating in the global marketplace, and these topics are addressed by economists. c) Philosophy Philosophy courses inquire into the nature of things, particularly values and ethics. Ethics are standards that govern human conduct. These ethics have shaped todays organisations by providing a basis for legitimate authority, linking rewards to performance, and justifying the existence of business and the corporate form. d) Political Science Political science is the study of the behavior of individuals and groups within a political environment. Management is affected by a nations form of government by whether it allows its citizens to hold property, by its citizens ability to engage in and enforce contracts, and by the appeal mechanisms available to redress grievances. A nations stand on property, contracts, and justice, in turn, shapes the type, form, and policies of its organisations. e) Psychology Psychology is the science that seeks to measure, explain, and sometimes change the behaviour of humans and other animals. Todays managers confront both a diverse customer base and a diverse set of employees. Psychologists efforts to understand gender and cultural diversity provide managers with a better perception of the needs of their changing customer and employee populations. Psychology courses are also relevant to managers in terms of gaining a better understanding of motivation, leadership, trust, employee selection, performance appraisals, and training techniques. f) Sociology Sociology is the study of people in relation to their fellow human beings. What are some of the sociological issues that have relevance to managers? Here are a few. How are societal changes such as globalisation, increasing cultural diversity, changing gender roles, and varying forms of family life affecting organisational practices? What are the implications of schooling practices and education trends on future employees skills and abilities? Answers to questions such as these have a major effect on how managers operate their businesses. Management has its own theory and principles that have developed over a period of time, but it also draws on other disciplines such as Economics, Sociology, Psychology and Mathematics. Like all other organised activity, management has its own vocabulary of terms and concepts. For example, all of us discuss sports like cricket and soccer using a common vocabulary. The players also use these terms to communicate with each other. Similarly managers need to communicate with one another with the help of a common vocabulary for a better understanding of their work situation. (ii) The principles of management have evolved over a period of time based on repeated experimentation and observation in different types of organisations. However, since management deals with human beings and human behaviour, the outcomes of these experiments are not capable of being accurately predicted or replicated. Therefore, management can be called an inexact science. Despite these limitations, management scholars have been able to identify general principles of management. For example, scientific management principles by F.W. Taylor and Functional Management principles by Henri Fayol. (iii) Since the principles of management are not as exact as the principles of science, their application and use is not universal. They have to be modified according to a given situation. However, they provide managers with certain standardised techniques that can be used in different situations. These principles are also used for training and development of managers. You must have understood from the foregoing discussion that management has features of both art and science. The practice of management is an art. However, managers can work better if their practice is based on the principles of management. These principles constitute the science of management. Management as an art and a science are therefore not mutually exclusive, but complement each other.

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14 PRINCIPLES OF MANAGEMENT

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Management Principles developed by Henri Fayol: 1. Division of work: Work should be divided among individuals and groups to ensure that effort and attention are focused on special portions of the task. Fayol presented work specialization as the best way to use the human resources of the organization. 2. Authority: The concepts of Authority and responsibility are closely related. Authority was defined by Fayol as the right to give orders and the power to exact obedience. Responsibility involves being accountable, and is therefore naturally associated with authority. Whoever assumes authority also assumes responsibility. 3. Discipline: A successful organization requires the common effort of workers. Penalties should be applied judiciously to encourage this common effort. 4. Unity of command: Workers should receive orders from only one manager. 5. Unity of direction: The entire organization should be moving towards a common objective in a common direction. 6. Subordination of individual interests to the general interests: The interests of one person should not take priority over the interests of the organization as a whole. 7. Remuneration: Many variables, such as cost of living, supply of qualified personnel, general business conditions, and success of the business, should be considered in determining a workers rate of pay. 8. Centralization: Fayol defined centralization as lowering the importance of the subordinate role. Decentralization is increasing the importance. The degree to which centralization or decentralization should be adopted depends on the specific organization in which the manager is working. 9. Scalar chain: Managers in hierarchies are part of a chain like authority scale. Each manager, from the first line supervisor to the president, possess certain amounts of authority. The President possesses the most authority; the first line supervisor the least. Lower level managers should always keep upper level managers informed of their work activities. The existence of a scalar chain and adherence to it are necessary if the organization is to be successful. 10. Order: For the sake of efficiency and coordination, all materials and people related to a specific kind of work should be treated as equally as possible. 11. Equity: All employees should be treated as equally as possible. 12. Stability of tenure of personnel: Retaining productive employees should always be a high priority of management. Recruitment and Selection Costs, as well as increased product-reject rates are usually associated with hiring new workers. 13. Initiative: Management should take steps to encourage worker initiative, which is defined as new or additional work activity undertaken through self direction. 14. Espirit de corps: Management should encourage harmony and general good feelings among employees.
FUNCTIONS OF MANAGEMENT

Planning is the ongoing process of developing the business' mission and objectives and determining how they will be accomplished. Planning includes both the broadest view of the organization, e.g., its mission, and the narrowest, e.g., a tactic for accomplishing a specific goal. Organizing is establishing the internal organizational structure of the organization. The focus is on division, coordination, and control of tasks and the flow of information within the organization. It is in this function that managers distribute authority to job holders. Staffing is filling and keeping filled with qualified people all positions in the business. Recruiting, hiring, training, evaluating and compensating are the specific activities included in the function. In the family business, staffing includes all paid and unpaid positions held by family members including the owner/operators. Directing is influencing people's behavior through motivation, communication, group dynamics, leadership and discipline. The purpose of directing is to channel the behavior of all personnel to accomplish the organization's mission and objectives while simultaneously helping them accomplish their own career objectives. Controlling is a four-step process of establishing performance standards based on the firm's objectives, measuring and reporting actual performance, comparing the two, and taking corrective or preventive action as necessary.
MANAGEMENT CONTRIBUTIONS BY MANAGEMENT THINKERS

Part 1: Machiavelli, Fayol and Taylor The 20th century was remarkable for the rise of the professional manager often basing his or her approach to management on a particular theory or favoured guru. MBA students all over the world have investigated these theories and written countless assignments discussing their value. As we progress through the 21st century, are these theories still relevant or have they had their day? This article is the first in a three-part series that looks at ten influential theorists and the influence they still have. The series does not attempt to create a top ten or rank contributions in any way (they are presented in chronological order), but aims to provide food for thought and debate. Part 1 looks at Machiavelli, Fayol and Taylor three famous theorists who have all passed into management mythology, but whose views are sometimes misunderstood.

M8-Principles & Practices of Management Niccolo Machiavelli, 14691527 Machiavelli lived in Florence, where he worked for the Florentine state as a secretary, then a diplomat. His best known work, The Prince, is based on his observation of Cesare Borgia a cunning, cruel and self-seeking man. Machiavelli did not regard Cesare Borgia as an ideal person, but thought that, under him, the Florentines could unite Italy and this was his long-term goal. In fact, Machiavellis tactic did not work, as the Medici (the ruling family of Florence) took exception to what he said, and Cesare Borgia himself also found the work insulting. Machiavelli was essentially a republican, preferring a state controlled by citizens (in his day, citizens made up only a small part of the population). However, the adjective Machiavellian has become synonymous with corrupt, devious government and with the ethos that the end justifies the means. Machiavellis Prince uses devious, immoral political behaviour to achieve his ends. Therefore a prince, so long as he keeps his subjects united and loyal, ought not to mind the reproach of cruelty Upon this a question arises: whether it is better to be loved than feared or feared than loved? It may be answered that one should wish to be both, but, because it is difficult to unite them in one person, it is much safer to be feared than loved. [I]t is necessary for a prince wishing to hold his own to know how to do wrong, and to make use of it or not according to necessity. Today, Machiavellian behaviour is denounced as self-seeking and immoral, and the end justifying the means ethos is considered morally wrong. However, the fact is that people do behave like this, and a lot of successful managers employ these methods some more consciously than others. Take Harold Geneen (1910 to 1997), CEO of ITT (International Telephone and Telegraph) from 1959 to 1977. He had an autocratic management style, was a relentless workaholic with no interest in personal life (and expected the same from his employees), and subjected his executives to harsh and bullying behaviours such as humiliation and cross-examination. Yet he was highly successful and created a huge conglomerate; he masterminded 250 acquisitions at ITT, some hostile. He was obsessed with profits and took ITTs profits from US$29 million to US$550 million. Some of his sayings resonate closely with Machiavellis description of how a leader should behave to achieve his ends. The soul of a business is a curious alchemy of needs, desires, greed and gratifications mixed with selflessness, sacrifices and personal contributions far beyond material rewards. You read a book from beginning to end. You run a business the opposite way. You start with the end, and then you do everything you must to reach it. The best way to inspire people to superior performance is to convince them by everything you do and by your everyday attitude that you are wholeheartedly supporting them. Geneen took the Prince analogy even further by embroiling ITT in political scandals such as subsidising the 1972 Republican convention in San Diego and the companys influence in elections in Chile, during which ITT was accused of funding CIA subversion. There were also allegations of tax evasion. It appears that the reality of many organisations is that management is a political activity, and most managers have to use situations to advance their own or their functions interests. Most are uncomfortable about admitting this and would prefer to think of themselves as ethical. Chris Argyris picked up on this dilemma when he described the espoused theory and the theory-in-use. The former is what managers say they believe, but the latter is what actually guides their behaviour. As we headed towards the 21st century, the rewards of Machiavellian behaviour could be seen in the research carried out by Fred Luthans. He found that successful managers (those who get promoted) spend a lot of time engaged in the political act of networking using their contacts and influences. By contrast, effective managers (those who are perceived as being good at their jobs) spend relatively little time networking. Instead, they put their efforts into communicating and people managing. Sadly, for the ethicists among us, effective managers do not get rewarded by career advancement or at least not to the same extent as successful managers. And as we progress into the new century, a recent article in the Harvard Business Review points out that leadership is not a moral concept and that leaders are not necessarily good people; they are like everyone else, trustworthy and deceitful, cowardly and brave, greedy and generous. Henri Fayol, 18411925 Command and control Fayol is famous for the classical school of management, which emphasises command and control. A Frenchman, he wrote General and Industrial Management in 1916, but it was not translated into English until 1949. Fayol taught that the functions of management are five-fold: planning, organising, commanding, coordinating and controlling. He also defined 14 principles of management. 1. 2. 3. Division of work specialisation and repetition, leading to speed and accuracy. Authority and responsibility together, these require increasing judgement and morality at senior levels: Responsibility is feared as much as authority is sought for. Discipline obedience, application and respect.

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M8-Principles & Practices of Management Unity of command workers receiving orders from one superior only. Unity of direction one plan, one leader. Subordination of individual interests to the general good. Fair but not excessive remuneration, which rewards effort. Centralisation. The scalar chain a line or hierarchy of authority, although it was permitted to cut out the hierarchy to improve communication (juniors can interact with each other in the interests of efficiency). 10. Order: a place for everyone and everyone in their place. 11. Equity equal and fair treatment of employees. 12. Stability people need to stay in their jobs long enough to deliver, so should not be moved around too much. 13. Initiative allowing employees to think through a problem and implement a solution (which, Fayol believed, increases motivation). 14. Esprit de corps keeping the team together, using harmony as a basis of strength: Dividing enemy forces to weaken them is clever, but dividing ones own team is a grave sin against the business. Although command and control appears at odds with todays emphasis on employee participation, it is undoubtedly true that many organisations require a degree of hierarchy, and clear lines of command and accountability, in order to function effectively. Any organisation that has to respond quickly to a crisis the armed forces, for example, or the emergency services needs to know exactly who is in charge and who does what. Fayol has his supporters today among management theorists. Elliott Jaques, for example, points out that management hierarchies are still needed because managers are accountable, so must have authority too. In practice, hierarchy is not necessarily autocratic; it is important to work out the desirable layers of management, and the authority associated with each, so that employees know where they stand and can therefore fulfil their potential. Jaques believes that concepts such as de-layering, group objectives and empowerment can lead to confusion and problems due to an incomplete understanding of where accountability lies. 4. 5. 6. 7. 8. 9. F W Taylor, 18561915 Scientific management Sigmund Freud would have had a field day with Frederick Winslow Taylor. From an early age, he was obsessed with control, and with planning, scheduling and self-regimenting. Childhood games lost all spontaneity and fun as Fred insisted on precise rules and measurements. Today he might be dismissed as a crank, but at the time his principles of scientific management yielded results and hit a chord. In 1878, Taylor began working at the Midvale Steel Company, where he rose to be foreman and tested out his ideas, later published as The Principles of Scientific Management. Taylor believed that responsibility for the organisation of work belonged with the manager; workers merely implemented what they were told to do. He taught that the most efficient way of doing the job should be specified precisely, then followed. Workers should be carefully selected, trained and monitored via tools such as the time and motion study. Some of Taylors sayings make bleak reading today. You are not supposed to think. There are other people paid for thinking around here. In the past man has been first; in the future the system must be first. Taylors view of the separation of hand and brain, and belief that workers could be motivated by payment by results incentives alone, make us feel uncomfortable and, interestingly, were by no means universally popular in his own day. He was, for example, termed the enemy of the working man and was summoned in 1911 to defend his system of management before a committee of the US House of Representatives. However, before we adopt a condemnatory stance we should remember that Taylorism is still flourishing today. McDonalds employees are taught to follow tick lists that break down their activities into small component parts; production lines are closely controlled and monitored by computers; and call centre operatives follow scripts that have been written for them. Taylors ideas were developed by others. Frank and Lillian Gilbreth, for example, founded a highly successful business in the 1890s to 1910s based on time and motion studies, the elimination of waste and the reduction of time spent on work activities. However, their analysis of work at a micro level began to develop a movement away from an obsession with control and tasks towards an interest in, and understanding of, the importance of the individual. Lillian Gilbreth herself returned to university to study psychology in more detail, and wrote The Psychology of Management the first detailed application of psychological concepts to management. [T]he emphasis in successful management lies on the man, not on the work; that efficiency is best secured by placing the emphasis on the man, and modifying the equipment, materials and methods to make the most of the man. Taylor would not have approved of this focus on the individual later developed by Elton Mayo, whose wellknown Hawthorne experiments highlighted the importance of social interaction. Given Taylors obsession with control and selfdiscipline, it is unlikely that he would have even understood such theories.

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M8-Principles & Practices of Management Part 2: Weber, Follett and Maslow In Part 1 of this series, which appeared in the January 2005 issue of Training Journal, we looked at the influence of Machiavelli, Fayol and Taylor. Part 2 moves on chronologically to examine the work of three more theorists Weber, Follett (a female theorist whose views are not widely known, but who is highly favoured by some of todays influential gurus) and Maslow. Max Weber, 18641920 Bureaucratic organisation AGerman sociologist, Weber has been somewhat misunderstood. He is often portrayed as an advocate of bureaucracy, but he was in fact skeptical about its merits and saw clearly how the organisation could become an instrument of domination. He observed, however, that bureaucracy was the most frequently found type of rational legal authority (that is, authority based on a set of rules and procedures). He also saw that bureaucracy had replaced other forms of authority for example, charismatic (based on personal qualities) and traditional (based on respect for tradition and the past). Weber believed the bureaucratic form is a manifestation of the process of rationalisation of society. Unlike Fayol, he did not see bureaucracy as the best form of organisation; his main interest was in explaining how rulers legitimately exercised authority. Weber was concerned about the trend towards increasing bureaucratisation and rationalisation, which he likened to an iron cage that threatened the human spirit. Despite his concerns, Weber is inextricably linked with bureaucracy an organisational form that endures today and is likely to continue to do so. In its purest form (in practice not likely to be found), Weber characterised the bureaucratic organisation as giving the following features. Official functions bounded by rules. Specialisation a clear division of labour and an understanding of what is expected, with job holders having the necessary authority. A clearly defined hierarchy. Stable and comprehensive rules. Impersonality equality of treatment. Selection on the basis of qualification, not favouritism. Full-time paid officials. A career structure. Officials detached from ownership of organisation lessening the possibility of bribery or corruption. Systematic discipline and control of work. Bureaucracy clearly led to some benefits that Weber approved of. In particular these were a levelling of social classes (because technical competence was the main criterion for advancement), a greater degree of social equality, and plutocracy (because the many different offices required specialist qualifications). Mary Parker Follett, 18681933 A prophet before her time? Follett was an American political scientist and management thinker who experienced a late and somewhat unexpected career as a management guru. In the 1920s she was well known on both sides of Atlantic, but her star was later eclipsed by the more masculine approaches that seemed to be better attuned with the Second World War era. The principles of democracy and cooperation permeate all Folletts writings, be they about politics, business or education. (Indeed, she thought that democratic principles should be taught from an early age.) Follett theorised about community, experience and the group, and how these related to the individual and the organisation. A business, she reasoned, is a microcosm of human society. An organisation is one in which people at all levels should be motivated to work and participate. They should gather their own information, define their own roles and shape their own lives. Organisations are based fundamentally on cooperation and coordination; this is the single unifying principle holding them together. She advocated power with (a jointly developed power) rather than power over as the key to social progress and business success which did not suit the prevailing mood before, during and after the Second World War, but is much more in tune with recent management thinkers. Henry Mintzberg and Rosabeth Moss Kanter, for example, are fans of Folletts approach. The following quotations serve as examples of Folletts ethos of management and resonate with todays ideas about organizational citizenship and the importance of employee involvement. The ramifications of modern industry are too widespread, its organization too complex, its problems too intricate for industry to be managed by commands from the top alone. You must have an organisation which will permit interweaving all along the line [I]t is my plea above everything else that we learn how to cooperate

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M8-Principles & Practices of Management The leader knows that any lasting agreement among members of the group can come only by their sharing each others experience. The difference between competition and joint effort is the difference between a short and a long view. Folletts theoretical emphasis on integration, synthesis and unifying differences and her work on group processes, crowd psychology, neighbourhood and work, governance and the self in relation to the whole now appear way ahead of their time. We should remember, however, that in the 1920s before the spectre of war reared its head she was received with empathy and understanding. Her current resurrection is an indication of the relevance of such theories to many working environments today. Abraham Maslow, 19081970 Motivational theory Maslow is famous for encapsulating a theory of human needs which is fundamental to the understanding of motivation. His hierarchy of needs, derived from research into human behavior between 1939 and 1943, describes five sets of goals, each of which cannot be attended to until the previous goal has been satisfied. Physiological such as hunger, thirst, shelter and sleep. Safety security, stability and freedom from attack. Love and belonging friends, family, partners, identification. Esteem success, self-respect, mastery, achievement. Self-actualisation self-fulfilment, realisation of potential, creativity, the desire to become more and more what one is, to become everything that one is capable of becoming. The motivational theorists that followed Maslow built on his work and have produced well-known and much-quoted theories, two of which are briefly outlined below. 1. 2. 3. 4. 5. Herzbergs two-factor hygiene and motivation theory Frederick Herzberg overturns previously held received wisdom about pay being the ultimate employee motivator. He describes pay and other organisational factors such as working environment as hygiene factors they can cause dissatisfaction, but do not motivate. Intrinsic factors like achievement, recognition, advancement and job interest are the true motivators. Vrooms expectancy theory Victor Vroom states that individuals have different needs and will be motivated if they believe that there is a positive correlation between effort and performance; that favourable performance will result in a desirable reward; that the reward will satisfy an important need; and that the desire to satisfy the need is strong enough to make the effort worthwhile. Maslows hierarchy of needs is now so well known that it is hard to imagine managerial life without it. Maslow started a debate about motivation that will continue into the 21st century and probably beyond. As evidence increasingly mounts that highly motivated individuals perform better, every CEO and HR professional would like to be able to possess the magic key to motivating their workforce. Part 3: Drucker, Hofstede, Mintzberg and Senge This is the third and final part of a short series describing ten influential theorists and the influence they still have today. Part 1 looked at Machiavelli, Fayol and Taylor, while Part 2 examined Weber, Follett and Maslow. Part 3 offers four more recent (and still living) theorists whose views continue to have a major impact. Peter Drucker, b.1909 Management as a Discipline Peter Drucker is renowned as the creator of management as a discipline in its own right. He was born in 1909 in Vienna, and was educated both there and in England before emigrating to the USA in 1937. When he became Professor of Management at New York University in 1950, he was, in his own words, the first person anywhere in the world to have such a title and to teach such a subject. Druckers ground-breaking management book about General Motors, Concept of the Corporation, was published in 1946. In it, he asserted that management was not a rank or a title, but a responsibility and a practice a discipline that can be taught and must be studied, just like other disciplines. Drucker is a prolific writer who has coined new phrases and introduced new concepts that have become firmly established as facts of management life. His two famous books, The Practice of Management (1954) and Management Tasks, Responsibilities, Practices (1973), describe his philosophy and approach to management and are also textbooks that teach the reader how to manage. His five basic principles of management are: 1. setting objectives 2. organising 3. motivating and communicating 4. establishing measurements of performance, and 5. developing people.

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M8-Principles & Practices of Management Despite advancing years Drucker has continued to contribute fresh ideas, publishing Management Challenges for the 21st Century in 1999. He has the gurus knack of presenting concepts and ideas clearly and persuasively to his audience, and is eminently quotable. The best way to predict the future is to create it. A manager is responsible for the application and performance of knowledge. The most important contribution management needs to make in the 21 st century is to increase the productivity of knowledge work and the knowledge worker. Geert Hofstede, b.1928 Cultural differences Born in 1928, Geert Hofstede is renowned for his work on cross-cultural management based on a worldwide survey of IBM employees people who had much in common (such as educational attainment, nature of work and company) but who belonged to different nationalities. He derived four dimensions (later, he added a fifth) that distinguish cultures at a national level. 1. Power distance perceptions of the degree of inequality in society. Those with a large power distance put greater stress on hierarchies and often have extreme politics, while those with low power distance stress equal rights. 2. Collectivism versus individualism the former base their societies on social groups, while the latter stress the identity of the individual. 3. Masculinity versus femininity masculine societies are assertive and competitive, and feminine societies prefer cooperative relationships. 4. Uncertainty avoidance the avoidance of risks and the creation of rules (countries with low uncertainty avoidance are tolerant of ambiguity and are uncomfortable with regulations). 5. Long-term versus short-term orientation Anglo-Saxon Western countries are decidedly short-term in their focus, unlike China and Far Eastern countries. Hofstede observed that management is seen very differently in different countries. In the US, for example, the manager is a cultural hero, whereas in Germany, where technical qualifications are prized and held by many workers, the engineer is more likely to fulfil this role. The core of Japanese enterprise is the permanent worker group those who are tenured and aspire to life-long employment. Control is via the peer group rather than the professional manager. In France, a hierarchical, stratified society, where management cadres are responsible for running organisations, matrix management is frowned upon; the principle of unity of command dominates. Dutch management operates by consensus and open-ended exchanges of views. Dutch workers value being given freedom to adopt their own approach to the job, being consulted, being given training opportunities, contributing to the success of the organisation and helping others; this consensual employment relationship contrasts with the contractual relationship prevalent in the USA. The overseas Chinese, another cultural group studied by Hofstede, favour small, family owned businesses, with no separation between ownership and management; they are flexible and opportunistic, with few professional managers. Hofstedes observations about management will be relevant in the 21st century and beyond for as long as we have different cultures in the world. His observation that management cannot be isolated from other processes in society is a valuable one for managers educated on a diet of predominantly US thinkers. He finds it particularly amusing that US writers of management texts often misrepresent his research, stating that he surveyed IBM managers rather than employees thus unconsciously reinforcing their prejudice in favour of the managerial role. Henry Mintzberg, b.1939 The Reality of Management Henry Mintzbergs The Nature of Managerial Work was published in 1973 (based on his PhD research). It created waves by describing what managers actually do rather than the theory of what they do, what they say they do or what they should be doing. [T]here are really no tangible mileposts where he can stop and say, now my job is finished the manager is a person with a perpetual preoccupation. In practice, Mintzberg found that managers work occurs in very short episodes, is highly fragmented, frequently interrupted and brief in duration. Managers are not systematic, reflective planners, but prefer (and gravitate towards) activities that are current, specific, well-defined and non-routine. The complexity of organisations means that managers are driven to brevity, fragmentation and superficiality. [They] focus on that which is current and tangible in [their] work even though the complex problems facing many organisations call for reflection and a far-sighted perspective. The reality of managerial behaviour is untidy and not at all in line with the rational model. In practice, managers use a bounded rationality model of decision making.

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M8-Principles & Practices of Management Since 1973, Mintzberg, a professor at McGill University in Montreal, has continued to be iconoclastic and provocative, and has applied his attentions to a variety of subjects. In his own field, strategy, he has remained at the forefront of the debate. A champion of strategy as a creative and emergent process, he has consistently defended it against those who seek to reduce it to prescriptive analysis. His value to 21st-century managers lies in his constant questioning and challenging of received wisdom, and his emphasis on people and relationships within organisations. The MBA is really about business, which would be fine except that people leave these programs thinking theyve been trained to do management. I think every MBA should have a skull and crossbones stamped on their forehead and underneath should be written: Warning: not prepared to manage. And the issue is not just that they are not trained to manage, but that they are given a totally wrong impression of what managing is; namely decision making by analysis. The impression they get from what theyve studied is that people skills dont really matter. The global style is not global, it is American. The trouble is everywhere else people think that the universal way of managing is what happens in the United States. But each place has its own different style. Peter Senge, b.1947 The learning organization The youngest thinker in this article, Peter Senge was born in 1947. His 1990 book The Fifth Discipline popularised the concept of the learning organisation and brought it to the forefront of management thinking. Senge describes the learning organisation as a place where: people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning to see the whole together. In an environment of rapid change, Senge argues, only those organisations that have the flexibility and skills to adapt will survive and to outperform the competition, organisations must gain the commitment of all employees, no matter what their level, and nurture their capacity to learn. Being a true learning organisation requires a mind shift to enable the organisation not just to survive but to acquire the continuing capacity to create. Learning organisations must master five basic disciplines. 1. Systems thinking fundamental to the learning organization philosophy is the ability to see the whole, rather than focusing on the parts. 2. Personal mastery the proficiency to live in a continual learning mode, which brings selfconfidence to the individual, who is not afraid to admit ignorance and the need to grow. 3. Mental models deeplyingrained assumptions, generalisations or even pictures and images that influence how we understand the world and how we take action. 4. Building shared vision a genuine vision that encourages people to excel and learn because they want to. 5. Team learning because people need to be able to act together and learn from each other in order to achieve maximum creativity and innovation. Within the learning organisation, the leader is not so much a decision maker and motivator as a designer, steward and teacher. Senges learning organisation is hard to find in practice, and appears at odds with the need to deliver short-term profits to shareholders. However, the late 20th and early 21st centuries are fast-moving times, when knowledge and the ability to muster it to create and innovate are at a premium. If not yet a reality, the aspiration of the learning organisation has helped many individuals and organisations to focus on learning as a benefit, rather than a cost and it will be fascinating to see whether true learning organisations develop during our lifetimes.
SOCIAL RESPONSIBILITIES OF MANAGEMENT

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The term social responsibilities can be defined as the obligation of management towards the society and others concerned. Reason for Social Responsibilities: Business enterprises are creatures of society and should respond to the demands of society. If the management does not react to changes in social demands, the society will either force them to do so through laws or will not permit the enterprise to survive. Therefore the long term interests of business are best served when management assume social responsibilities. The image of business organization liked with the quality of its products and customer service and the extent to which it fulfills the expectations of owners, employees, consumers, government and the community at large. For long term success it matters a great deal if the firm has a favorable image in the public mind. Every business enterprise is a organ of society and its activities have impact on the social scene. Therefore, it is important for management to consider whether their policies and actions are likely to promote the public good, advances the basic values of society, and constitute to its stability, strength and harmony. Increasing concern for the social responsibility of management, it is now recognized that besides taking care of the financial interest of owners, managers of business firms must also take into account the interest of various other groups such

M8-Principles & Practices of Management as employees, consumers, the government and the community as a whole. These interested groups are directly or indirectly affected by the pursuit of business activities and they are the stake-holders of the business enterprise. Responsibility towards owners: The primary responsibilities of management is to assure a fair and reasonable rate of return on capital and fair return on investment can be determined on the basis of difference in the risks of business in different fields of activity. With the growth of business the shareholders can also expect appreciation in the value of their capital. Responsibility towards employees: Management responsibility towards employees relate to the fair wages and salaries, satisfactory work environment, labour management relations and employee welfare. Fair wages should be fixed in the light of labor productivity, the prevailing wage rates in the same or neighboring areas and relative importance of jobs. Managers salaries and allowances are expected to be linked with their responsibility, initiative and skill. But the spread between minimum wages and highest salaries should be reasonable. Employees are expected to build up and maintain harmonious relationships between superior and subordinates. Another aspect of responsibility towards employees is the provision of welfare amenities like safety and security of working conditions, medical facilities, housing, canteen, leave and retirement benefits. Responsibility towards consumers: In a competitive market, serving consumers is supposed to be a prime concern of management. But in reality perfect competition does not prevail in all product markets. In the event of shortage of supply there is no automatic correction. Besides consumers are often victims of unfair trade practices and unethical conduct of business. Consumer interests are thus protected to some extent with laws and pressure of organized consumer groups. Management should anticipate these developments, satisfy consumer needs and protect consumer interests. Goods must be of appropriate standard and quality and be available in adequate quantities at reasonable prices. Management should avoid resorting to hoarding or creating artificial scarcity as well as false and misleading advertisements. Responsibility towards the Governments: As a part of their social responsibility, management must conduct business affair in lawful manner, honestly pay all the taxes and dues, and should not corrupt public officials for selfish ends. Business activities must also confirm to the economic and social policies of the government. Responsibility towards the community and society: The socially responsible role of management in relation to the community are expected to be revealed by its policies with respect to the employment of handicapped persons, and weaker sections of the community, environmental protection, pollution control, setting up industries in backward areas, and providing relief to the victims of natural calamities etc.
MANAGEMENT ETHICS

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Morality as it pertains to the business management world is commonly known as management ethics. While each company has a different ethical standard, management ethics are largely the same in every industry. In many ways, this type of ethical understanding exists as an unwritten code, though literal ethical documents also exist. The main goal of management ethics is to treat all employees and customers justly and fairly. It is believed that by following a moral and ethical code, business will improve. When a management team adheres to management ethics, employees become motivated and a workplace environment becomes motivational. When applied to everyday business, acting ethically means adhering to law, competing with others in an honest manner, and performing daily tasks without any element of deceit. Many companies around the globe update written codes of conduct as a result of past corporate scandals. It is not uncommon for a company to update this document on a yearly basis. After a code of conduct document has been updated, each staff member must read and understand the document. Further, all employees must adhere to the updated codes of conduct, and those that do not follow these regulations are often dismissed. Although managers must follow the same codes of conduct as employees, these individuals have additional obligations. Almost every decision that is made on a daily basis involves an ethical decision. Managers must keep this in mind at all times. By setting a good ethical example for other employees, managers can easily encourage all employees to follow the same ethics. Some companies offer managers specialized management ethics courses that must be completed prior to job acceptance. Frequently, managers who switch companies are asked to follow a different code of conduct. This does not mean that all other management ethics should be forgotten, but it does mean that additional ethics should be learned. Ethics are not necessarily interchangeable from country to country. Sometimes, different cultures respect different ethical rules. Thus, any person who decides to move to another country may have to adapt to cultural, and workplace, ethical differences.

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UNIT 2: PLANNING AND DECISION MAKING

PLANNING FUNCTION

Planning is concerned with the future impact of today's decisions. It is the fundamental function of management from which the other four stem. The need for planning is often apparent after the fact. However, planning is easy to postpone in the short-run. Postponement of planning especially plagues labor oriented, hands on managers. The organizing, staffing, leading and controlling functions stem from the planning function. The manager is ready to organize and staff, only after goals and plans to reach the goals are in place. Likewise, the leading function, influencing the behavior of people in the organization, depends on the goals to be achieved. Finally, in the controlling function, the determination of whether or not goals are being accomplished and standards met is based on the planning function. The planning function provides the goals and standards that drive the controlling function. Planning is important at all levels of management. However, its characteristics vary by level of management. The characteristics of the world being simple, certain, structured and short-term often become rationalizations for top managers not to plan. Top managers acting as if they are lower level managers plagues. Planning Terminology The order from general to specific is: vision-mission-objectives-goals. In Management Excel practice established before the use of Higgins as the basic reference, we adopted the order: vision-mission-objectives-goals. The Higgins text switches the order of objectives and goals. In reading the Higgins text, simply substitute the term objective for goal and the term goal for objective. The key terms are defined as follows: Vision: Nonspecific directional and motivational guidance for the entire organization. Top managers normally provide a vision for the business. It is the most emotional of the four levels in the hierarchy of purposes. Mission: An organization's reason for being. It is concerned with scope of the business and what distinguishes this business from similar businesses. Mission reflects the culture and values of top management. Objectives: Objectives refine the mission and address key issues within the organization such as market standing, innovation, productivity, physical and financial resources, profitability, management and worker performance and efficiency. They are expected to be general, observable, challenging, and untimed. Goals: Goals are specific statements of anticipated results that further define the organization's objectives. They are expected to be SMART: Specific, Measurable, Attainable, Rewarding, and Timed. Development of tactics is a fifth level of planning. Tactics, the most specific and narrow plans, describe who, what, when, where and how activities will take place to accomplish a goal. Strategic Planning Strategic planning is one specific type of planning. Strategies are the outcome of strategic planning. An organization's strategies define the business the firm is in, the criteria for entering the business, and the basic actions the organization will follow in conducting its business. Strategies are major plans that commit large amounts of the organization's resources to proposed actions, designed to achieve its major objectives and goals. Strategic planning is the process by which the organization's strategies are determined. In the process, three basic questions are answered: 1. Where are we now? 2. Where do we want to be? 3. How do we get there? The "where are we now?" question is answered through the first three steps of the strategy formulation process: (1) perform internal and external environmental analyses, (2) review vision, mission and objectives, and (3) determine SWOT: Strengths, Weaknesses, Opportunities and Threats. SWOT analysis requires managers to be honest, self-disciplined and thorough. Going on to strategy choices without a comprehensive SWOT analysis is risky. Strengths and weaknesses come from the internal environment of the firm. Strengths can be exploited, built upon and made key to accomplishment of mission and objectives. Strengths reflect past accomplishments in production, financial, marketing and human resource management. Weaknesses are internal characteristics that have the potential to limit accomplishment of mission and objectives. Weaknesses may be so important that they need to be addressed before any further strategic planning steps are taken. Opportunities and threats are uncontrollable by management because they are external to the firm. Opportunities provide the firm the possibility of a major improvement. Threats may stand in the way of a firm reaching its mission and objectives.
NATURE OF PLANNING

The planning has the following inherent characteristics: 1. Planning is an intellectual process: - Planning as an intellectual process, the conscious determination of course of action. Thus, it is an intellectual stimulation. It possesses an element of day-dreaming. In the initial stage it may involve what might be called vision. It involves foreseeing future development, making forecasts or predictions and then taking decisions. Thus, it becomes an important mental exercise.

M8-Principles & Practices of Management 2. Planning contributes to the objective: - A plan starts with the setting of objectives and in order to realize it develops policies, procedures, and strategies, etc. Obviously, without setting the goals to be reached and lines of action to be followed, there is a continuous and never-ending activity of a manager to keep the enterprise going. 3. Planning is a selecting process: - Planning is a selective process. It involves the study and a careful analysis of various alternatives and then selecting the best one. It not only pertains to defining a problem which immediately confronts the manager, but often it mentally searches the possibilities for problems that might appear in the future. 4. Planning forms the premises for the decision of the future: - Plans become premises, for the decisions of the future. Detailed planning may include several plans, which are mutually exclusive. It provides series or sets of decision that can be made under various possible circumstances. Thus, planning aids in making specific decisions, since it includes all of the important alternatives, which 5. Planning pervades all managerial activities: - Planning is a pervasive activity convering the entire enterprise with all its segments and its every level of management. It is not the exclusive responsibility of top management but it extends to middle and lower management as well. It is a primary function of the management and its level and extent, etc. Will depend upon the level of management. 6. Planning is directed towards efficiency: - The main purpose of planning is to increase the efficiency of the enterprise. It is an attempt on the part of a manager to anticipate the future in order to achieve better performance. It has become an important function due to uncertain and ever changing environmental of business. 7. Planning is a continuous and flexible process: - Because of uncertainties of the future the planner must be ever alert and should form his plans in such a way as to adopt them to changing circumstances without inconvenience and undue costs.
IMPORTANCE OF PLANNING

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Accounting to Koontz, ODonnell and Weihrich, planning is an intellectually demanding process; it requires the conscious determination of courses of action and the basing of decisions on purpose, knowledge and considered estimates. Planning is one of the most important functions of management because of the following factors: 1. Makes the objectives clear and specific: planning clearly specifies the objectives and the policies or activities to be performed to achieve these objective in other words what is to be done and how it is to be done are clarified in planning. 2. Offsetting the uncertainty and change: planning is necessary to look ahead towards future and to take decisions regard facing the expected changes/requirement of the future. E.g. before coming of summer session producers started production for the products to be used in summer. 3. Plans facilitate decision-making: to achieve the objective predetermined under planning, business has to take various decisions by considering the available resources. If job may be completed by using various alternatives (e.g. manually or by machines) and the best alternative is decided by the management, which is more helpful in achieving the objective. 4. Provides basis of control: under controlling actual performance is compared with the planed performance (target/objective). So planning is the base of controlling process. 5. Leads to economy and efficiency: planning clarifies the work and its method of doing. Resultantly it reduces confusion and wastage of resources in the form of thinking at the time of doing. So efficiency of the worker will risen which will further result economy in production. 6. Facilitates integration: under planning proper directions as per plane are provided to the subordinates. Resultantly they all make effort towards the achievement of preplanned objective. Such co-ordination of sub-ordinates and their departments will certainly help the organisation in achieving its objective. 7. Encourages innovation and creativity: planning is the process of thinking in advance and so plans are made to achieve a target at future date by using latest methods and technology to perform the industrial/business activities and so plans lead to innovation. 8. Facilitates control: planning facilitates the managers in performing their function of control. Planning and control are inseparable in the sense that unplanned action cannot be controlled because control involves keeping activities on the predetermined course by rectifying deviations from plans. Planning facilitates control by furnishing standards of control. It lays down objectives and standards of performance, which are essential for the performance of control function. 9. Improves motivation: the effective planning system ensures participation of all managers, which improves their motivation. It improves the motivation of workers also because they know clearly what is expected of them. Moreover, planning also serves as a good training device for future managers. 10. Improves competitive strength: effective planning gives a competitive edge to the enterprise over other enterprises that do not have planning or have ineffective planning. This is because planning may involve expansion of capacity, changes in work methods, changes in quality, anticipation of tastes and fashion of people and technological changes, etc. 11. Encourages innovation and creativity: planning helps innovative and creative thinking among the managers because many new ideas come to the mind of a manager when he is planning. It creates a forward-looking attitude among the managers. 12. Achieves better coordination: planning secures unity of direction towards the organisational objectives. All the activities are directed towards the common goals. There is an integrated effort throughout the enterprise. It will also help in avoiding duplication of efforts. Thus, there will be better coordination in the organisation.

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PLANNING PROCESS

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As planning is one of great importance to an organization the entire process of planning should be carried out in a systematic manner. Planning is an intellectual process which an executive carries out before he does any job with the help of other people. It involves the following steps : 1. Determination of the objectives: The first step in planning is to identify certain objectives. The objectives set must clearly indicate what is to be achieved, where action should take place, who should perform it and when it is to be accomplished. The objectives should be established for the entire organisation and for each and every department. Planning has no utility if it is not related to certain objectives. 2. Collection and forecasting of Information: Sufficient information must be collected in order to make plans and sub plans. necessary information includes the critical assessment of current status of the organisation together with a forward look at the environment that is anticipated. The collection and forecasting of the information must be done in terms of external and internal environment. The considerations of the external environments must the competitions now and in the future. The assessment of internal environment may consist of the strong and weak point of the organisation. This is an important step of planning process. 3. Development of planning premises: The next step is the establishment of planning premises. Planning premises are the assumptions and predictions about the future. The assumptions are the basis of planning. Forecasting is important in premising. It helps in making realistic assumptions about sales, costs, prices, products etc in future. This requires a collection of data on present trends and future possibilities. 4. Discovering alternative courses of action: Usually, there are several alternatives for any plan. The manager should try to find out all the possible alternatives.At the time of developing alternatives he should screen out most viable alternatives. So he has to analyse in detail a limited number of alternatives. 5. Selection of best alternative: The various alternatives identified are evaluated and compared in terms of their expected costs and benefits. Many quantitative techniques are available to evaluate alternatives. after evaluating the various alternatives the best alternative should be selected for implementation. 6. Formulation of derivative plans: The next step is to develop detailed sub plans for its implementation. Derivative plans are required to support the overall plans. The derivative plans are developed in the frame work of overall plans.These are drawn up with respect to different areas of activity. 7. Communicating the plan: It is very important to get the co operation of the subordinates at every stage of its implementation. For this purpose the plans should be communicated and explained to them so that they can get the clear picture of what to be done. An organisation is not benefited from planning process until they are put into action. 8. Follow up measures: To ensure the plans are proceeding along the right lines, the actual performance is compared with the planned performance. In this way, any short coming can be noted and suitable remedial action can be taken.
PRINCIPLES OF PLANNING

Planning is a dynamic process, it is very essential for every organisation to achieve their ultimate goals, but, there are certain principles which are essential to be followed so as to formulate a sound plan. They are only guidelines in the formulation and implementation of plans. These principles are as follows: 1. Principle of Contribution: The purpose of planning is to ensure the effective and efficient achievement of corporate objectives, in-fact, the basic criteria for the formulation of plans are to achieve the ultimate Objectives of the company. The accomplishment of the objectives always depends on the soundness of plans and the adequate amount of contribution of company towards the same. 2. Principle of Sound and Consistent Premising: Premises are the assumptions regarding the environmental forces like economic and market conditions, social, political, legal and cultural aspects, competitors actions, etc. These are prevalent during the period of the implementation of plans. Hence, Plans are made on the basis of premises accordingly, and the future of the company depends on the soundness of plans they make so as to face the state of premises. 3. Principle of Limiting factors: The limiting factors are the lack of motivated employees, shortage of trained personnel, shortage of capital funds, government policy of price regulation, etc. The company requires to monitor all these factors and need to tackle the same in an efficient way so as to make a smooth way for the achievement of its ultimate objectives. 4. Principle of Commitment: A commitment is required to carry-on the business that is established. The planning shall has to be in such a way that the product diversification should encompass the particular period during which entire investment on that product is recovered. 5. Principle of Coordinated Planning: Long and short-range plans should be coordinated with one another to form an integrated plan, this is possible only when latter are derived from the former. Implementation of the long-range plan is regarded as contributing to the implementation of the short-range plan. functional plans of the company too should contribute to all others plans i.e. implementation of one plan should contribute to all the other plans, this is possible only when all plans are consistent with one another and are viewed as parts of an integrated corporate plan. 6. Principle of Timing: Number of major and minor plans of the organisation should be arranged in a systematic manner. The plans should be arranged in a time hierarchy, initiation and completion of those plans should be clearly determined.

M8-Principles & Practices of Management 7. Principle of Efficiency: Cost of planning constitute human, physical and financial resources for their formulation and implementation as well. Minimizing the cost and achieving the efficient utilization of resources shall has to be the aim of the plans. Cost of plan formulation and implementation, in any case, should not exceed the organisations output's monetary value. Employee satisfaction and development, and social standing of the organisation are supposed to be considered while calculating the cost and benefits of plan. 8. Principle of Flexibility: Plans are supposed to be flexible to favour the organisation to cope-up with the unexpected environments. It is always required to keep in mind that future will be different in actuality. Hence companies, therefore, require to prepare contingency plans which may be put into operation in response to the situations. 9. Principle of Navigational Change: Since the environment is always not the same as predicted, plans should be reviewed periodically. This may require changes in strategies, objectives, policies and programmes of the organisation. The management should take all the necessary steps while reviewing the plans so that they efficiently achieve the ultimate goals of the organisation. 10. Principle of Acceptance: Plans should be understood and accepted by the employees, since the successful implementation of plans requires the willingness and cooperative efforts from them. Communication also plays a crucial role in gaining the employee understanding and acceptance of the plans by removing their doubts and misunderstanding about the plans also their apprehensions and anxieties about consequences of plans for achievement of their personal goal
LIMITATIONS OF PLANNING

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Planning is an important function of management. However, the planning may fail if the following limitations. Lack of accuracy: planning relates to future and future is always uncertain and so prediction about future is so much difficult. Moreover planning are based on data/information relating to past and as such planning based on any wrong information may not be useful to the organisation. Costs: formulation of plans involves too much cost which are in the form of time spend, money spent etc. but some times there is little benefit from in plan and than it becomes a burden for the institution. If the plan is not useful than the amount or time spent on its formulation is a waste. Advance effect on decisions: some plans are rigid and a manager faces difficulty while making any changes where as there may be continuous change in environment where as the quick decision is required as per the changed environment. Delay in actions: planning requires some time for thinking, analyzing the situation and designing the final plan and so in case emergency decision is required it will take time and business will lose its opportunity. Moreover delay in decision will further delay the action. Psychological barrier: people in organisation have to work strictly according to plan where as they may be able to give better performance in a way decided by themselves. Secondly they do not think beside the plan and performs their activities like a machine without using their psychology. Limited flexibility: there may be some changes in planning only up to some extent because measure changes in plan will further attract the changes in supporting plans also and as such the whole system is disturbed moreover changes in plans time and again will prove a wastage of time and money spent on previous plan (pre-changed plan). Human elements: planning are the results of thinking of human being. Information on the basis of which plan is formulated may not be free form bias or there may be some other errors which will further Reebok (problem) the better plan. Limited practical value: planning is too much theoretical and have a less practical use planning is more suitable when environment is suitable but due to unsuitability of environment business has to take various quick steps/decision time and again and as such the importance of other resources which are used according to changing environment, is more than that of planning. Improper plan: planning/target set at the lower side than the capability of or resources and target on over side than the capacity of the resources both are termed as improper planning because lower target will be easily achieved and we will feel false sense of security. On the other hand over planned target beyond resources cannot be achieved even all effort both are the situation of improper plan. Planning is a time-consuming and costly process: this may delay action if certain cases. But it is also true that, if sufficient time is not given to the planning process, the plans so produced may prove to be unrealistic. Similarly, planning involves costs of gathering and analyzing information and evaluation of various alternatives. If the management is not willing to spend on planning, the result may not be good. Planning is a forward-looking process: the planner must possess the required initiative. He should be an active planner and should take adequate follow up measures to see that plans are understood and implemented properly. Resistance to change is another important factor, which puts limits on planning: It is commonly experienced phenomenon in many organisations. Sometimes, planners themselves do like change and on other occasion, they do not think it desirable to bring change, as it will create resistance on the part of the workers. This attitude makes the planning process ineffective.

M8-Principles & Practices of Management Internal inflexibility in the organisation may compel the planners to make rigid plans: this may deter the managers from taking initiative and doing innovative thinking. So, the planners must have sufficient discretion and flexibility in the enterprise. They should not always be required to follow the procedures rigidly. Psychological factors also limit the scope of planning: some people consider present as more important than future because present is less uncertain. Such persons are psychologically opposed to planning. But it should not be forgotten that dynamic managers always look ahead. Long-term well being of the enterprise cannot be achieved unless proper planning is done for future. The effectiveness of planning is sometimes limited: because of external factors, which are beyond the control of the planners. External stringencies are very difficult to predict. Sudden breakout of war, government controls, natural havocs and may other factors are beyond the control of management. They make the execution of plans very difficult.
DECISION MAKING

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Decision-making is a process of selection from a set of alternative courses of action, which is thought to fulfill the objectives of the decision problem more satisfactorily than others. It is a course of action, which is consciously chosen for achieving a desired result. A decision is a process that takes place prior to the actual performance of a course of action that has been chosen. In terms of managerial decision-making, it is an act of choice, wherein a manager selects a particular course of action from the available alternatives in a given situation. Managerial decision making process involves establishing of goals, defining tasks, searching for alternatives and developing plans in order to find the best answer fo the decision problem. The essential elements in a decision making process includes the following: 1. The decision maker, 2. The decision problem, 3. The environment in which the decision is to be made, 4. The objectives of the decision maker, 5. The alternative courses of action, 6. The outcomes expected from various alternatives, and 7. The final choice of the alternative. Characteristics of decision-making 1. It is a process of choosing a course of action from among the alternative courses of action. 2. It is a human process involving to a great extent the application of intellectual abilities. 3. It is the end process preceded by deliberation and reasoning. 4. It is always related to the environment. A manager may take one decision in a particular set of circumstances and another in a different set of circumstances. 5. It involves a time dimension and a time lag. 6. It always has a purpose. Keeping this in view, there may just be a decision not to decide. 7. It involves all actions like defining the problem and probing and analyzing the various alternatives, which take place before a final choice is made.
TYPES OF DECISIONS

There are two types of decisions depending upon the frequency at which decisions have to be made. They can be classified into programmed and non-programmed decisions. Programmed Decisions: A decision is said to be programmed when adequate information about the decision situation is available with the decision maker. In certain situations, due to the frequent occurrence of the situation, making a decision rule is easy. The presence of such decision rules guides the decision maker as to which is the most appropriate alternative that can be chosen under the prevailing conditions. This enables him in making programmed decisions. The same rule is used to make a decision whenever such a situation arises in the future. If the situation is the same, the rule applied has to be the same. Non-Programmed Decisions: A new problem or decision making situation which involves the development and evaluation of alternatives without the aid of a decision rule is generally called a non-programmed decision. Non-programmed decisions are characterized by a poorly defined structure and lack of goal clarity. They are made in the absence of reliable and well defined sources of information and lack an explicit procedure for decision making which, thus, is responsible for the poorly defined structure of non-programmed decisions.
DECISIONMAKING PROCESS

Quite literally, organizations operate by people making decisions. A manager plans, organizes, staffs, leads, and controls her team by executing decisions. The effectiveness and quality of those decisions determine how successful a manager will be. Managers are constantly called upon to make decisions in order to solve proble ms. Decision making and problem solving are ongoing processes of evaluating situations or problems, considering alternatives, making choices, and following them up with the necessary actions. Sometimes the decision -making process is extremely short, and mental reflection is essentially instantaneous. In other situations, the process can drag on for weeks or even months. The

M8-Principles & Practices of Management entire decision-making process is dependent upon the right information being available to the right people at the right times. The decision-making process involves the following steps: 1. Clearly define your objective: Every time that you have a decision to make, think about the objective or outcome that you want to achieve as a result of taking the decision. Once you have clarity on the objective or outcome it becomes much easier to complete the rest of the decision process. As the saying goes, start with the end in mind. 2. Collect the necessary information: There will be times when there is an abundance of information and times when it will be scarce. Each time that you are faced with a decision, think about the type of information that will help you take the decision. From this point, get clear on the essential information and go and find it. 3. Create options: With any decision, there will be a number of options available. Brainstorm these options without any form of evaluation initially. For example, imagine one of your objectives is to improve your decision making skills. In your initial brainstorm of options you might come up with things like reading a book, attending a teleclass, reading blogs on the internet, going to a workshop or training course. 4. Evaluate options and decide: Every option you generate will have benefits and drawbacks. Take time to evaluate each of your options and decide on balance what appears to be the best option in this instance. 5. Implement your decision: Implementation is when you move from analysis to action. When you get into action you start to get results, so make sure that you take action. 6. Monitor and adapt: The final step is to monitor the outcomes that you are getting compared to what you are expecting. Things might go as you expected and they may not but you can adapt and make changes if necessary. At the end of the day, there is no magic formula that it guarantees success in decision making. On the other hand, by adopting a systematic approach and acting you lay the foundations for more successful decision making.
INDIVIDUAL AND GROUP DECISION MAKING

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Decision making is a process of specifying the nature of a particular problem or opportunity and selecting between available alternatives to solve a problem or capture an opportunity. Decision making has two aspects; the act and the process. The act involves choosing between alternatives. The processes consists of formulating, identification of the problem or opportunity and acquiring relevant information and the solution being the desired course of action. Individual decision making can consist of (a) the rational/classical model, (b) the administrative or bounded rationality model and (3) the retrospective decision-making model. The rational or classical model is a seven step process, which begins with identifying problems and opportunities, depending on one's perception. The next step is developing objectives and criteria and assigning relative weightings. The third step is generating alternatives with the experience of past solutions and creative new solutions. The fourth step is to analyse alternatives with minimally acceptable results, feasibility and best results. The fifth step is to select an alternative from weightings giving to selection criteria, the seventh to implement a decision, locating sources and reasons for reasons, chronology and sequence of actions, required resources and delegation of tasks. The seventh step is to monitor and evaluate results. The bounded rationality model of Herbert Simon argues that decisions are not completely rational but rather that people usually settle for an acceptable rather than maximum option because the decisions they confront typically demands greater information processing than they have available. Decision-makers engage in heuristic rules that guide the search for alternatives into areas that have a high probability of success rather than analysing in detail. They also engage in satisficing, the tendency to accept the first alternative that meets minimum requirements rather than seeking for alternative that produces the best results. From the standpoint of bounded rationality firstly set the goal to pursued, establish what is an appropriate criterion level, employ heuristics to narrow the solution to a single primising alternative, if no feasible alternative is identified lower the aspiration level, evaluate the chosen alternative to determine its acceptability, if acceptable implement the decision. Following the implementation evaluate the ease with which the goal was attained and raise or lower the performance accordingly on future decisions. The retrospective decision making model, or implicit favourite, focuses on how decision makers attempt to rationalise their choices after they are made. It often highlights issues of perceptual distortion, highlighting the positive features of the implicit favourite over the alternative and alerts to the possibility of intuitive decision making, the primarily subconscious process of identifying a decision and selecting a preferred alternive. Decision types include programmed decisions, a standard response to a simple or routine problem or a non-programmed decision which is either poorly defined or novel. Lower-level managers spend much of their time with programmed decisions; high level managers with non-programmed decisions. A standard operating procedure assists in the establishment of programmed decisions. Decisions can also be put in a matrix of urgent and non-urgent. Gersham's law of planning states that there is a tendency of managers to deal with programmed and urgent decisions, leaving nonprogrammed/non-urgent decisions forgotten. Good decisions come from decision-maker characteristics (knowledge, ability and motivation), problem-characteristics (unfamiliarity, ambiguity, complexity and instability) and decision-environment characteristics (irreversibility, significance, accountability, time and monetary constraints). To make better decisions manages must analyse the situation, scan the environment, think through the process, be creative, know the right timing, increase their knowledge, and be flexible.

M8-Principles & Practices of Management Group-decision making incorporates social interaction which complicates the process and can slow down the decision making and can inhibit management's need to act quickly and decisively which is imperative in a high-technology and changing environment. However it does have advantages; in establishing objectives it is superiors as there is greater cumulative knowledge. In identifying alternatives a greater variety is brought to the table. In evaluating alternatives group judgment is superior to individual judgment, however groups are inferior in carrying out the analysis. In choosing alternatives, group involvement leads to greater acceptance. In implementing the choice, individual responsibility however is superior to group responsibility. Other problems include the tendency towards groupthink, where agreement becomes dominant truncating criticism, which often occurs in highly cohesive groups, insulated from the outside and dominated by a leader; they tend to make few, if any, contingency plans. Victims of groupthink tend to collectively rationalise and discount warning signs and other negative feedback. A means to overcome groupthink is to formally introducte or value a devil's advocate or involve outside experts, and at times break the group up into subgroups to discuss problems. Cross-functional teams working together in problem solving is an example of positive implementation of group decision making. Escalating commitment is the tendency to exhibit greater levels of commitment to a decision as time passes and investments are made in the decision, even after significant evidence emerges indicating that the original decision was incorrect. The Vietnam war is a particular example. Prospective rationality, the belief that future courses of action are rational and correct, ensures that the incorrect decision is maintained in the hope that 'prosperity is just around the corner'. To avoid escalating commitment, sunk costs must be recognised. An atmosphere has to be created where consistency does not dominate. Like with groupthink, an individual serving as devil's advocate should be appointed. To improve decision making, problem formulation can be improved by introducing structured debates on the subject. Multiple advocacy assigns several members to represent the opinions of various constituencies. A process of dialectical inquiry where a member(s) take the role of a questioning the underlying assumption can also assist. To improve the generation of problem solutions, brainstorming activities generate many creative solutions without evaluating their merit. A Nominal Group Technique (NGT) is a process of having group members record their solutions, summarise all proposed solutions, and independently rank them until a favoured solution emerges. In contrast to NGT, the Delphi technique never allows decision participants to meet face-to-face but rather identifies a problem and offers solutions via a questionnaire. Methods of Group Decision Making No two groups will ever function in the same way while involved in the process of decision making. Some are proactive groups while there are other groups, which need a driving force or a facilitator to facilitate the process. There are several methods of group decision-making. Here are some of the common methods employed in the process of decision-making: Authoritarian Style The authoritarian style is like a dictatorship, in which the decision ultimately rests in the hands of one person. This style of decision-making is applicable in the presence of a powerful person who dictates the entire process of decision-making and has the final authority on the outcome. This style, although in use at various places, tends to have more disadvantages than advantages because the people whose opinions are disregarded might have negative feelings about the entire process. A variation of this method is the minority control method wherein the group discusses the issues but the power of decisionmaking rests not in the hands of one but a small group of people within the group. Brainstorming This group decision-making method is best when the decision-making has to be started from scratch, which means creating the various options and then weighing them. This is an excellent method for group decisions, which is very popular owing to the complete creative freedom it offers to all the participants. There can be a facilitator to facilitate the entire discussion just to ensure that the people dont digress. The facilitator can merely help to start off the conversation, provide subtle hints and nudges when the participants get stuck and thus help to make effective and creative group decisions. The positive aspect of this method is that it values the opinion of every individual member and the final decision is reached by consensus. Voting Based Method This is a group decision-making process, which is convenient to use when the group has certain set of defined options before it and needs to pick out the optimum solution. A voting system allows every participant to cast his/her vote for the option that he/she thinks is the best. The option that gathers the maximum number of votes is selected. This method however does not value the individual opinion of each and every participant in the group. A variation of this method is the majority method wherein a majority of people within the group has the power to pass the final decision. Advantages of Group Decisions: Group decisions help to combine individual strengths of the group members and hence has a set of varied skill sets applied in the decision making process. Individual opinions can be biased or affected with pre-conceives notions are restricted perspectives, group decision help to get a broader perspective owing to differences of perception between individual in the group.

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M8-Principles & Practices of Management A group decision always means enhanced collective understanding of the course of action to be taken after the decision is taken. A group decision gains greater group commitment since everyone has his/her share in the decision making. Group decisions imbibe a strong sense of team spirit amongst the group members and helps the group to think together in terms of success as well as failure. Disadvantages of Group Decisions: One of the major disadvantages of group decision making is that it is more time consuming than the process of individual decision making. Group decisions take longer to be finalized since there are many opinions to be considered and valued. In case of authoritarian or minority group decision making, the people whose opinions are not considered tend to be left out from the decision making process and hence the team spirit ceases to grow. The responsibility and accountability of the decisions are not equally shared in some cases which leads to a split in the group and hence hamper the overall efficiency of the group. While involved in a group decision making process it is always better to study the advantages and disadvantages of group decisions and hence formulate a group-decision making process that suits your group and gives you the optimum results.
MANAGEMENT BY OBJECTIVES (MBO)

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Management by Objectives (MBO) is a process of defining objectives within an organization so that management and employees agree to the objectives and understand what they are in the organization. The term "management by objectives" was first popularized by Peter Drucker in his 1954 book 'The Practice of Management'. The essence of MBO is participative goal setting, choosing course of actions and decision making. An important part of the MBO is the measurement and the comparison of the employees actual performance with the standards set. Ideally, when employees themselves have been involved with the goal setting and choosing the course of action to be followed by them, they are more likely to fulfill their responsibilities. There are four important and essential steps or elements in the management by Objectives process as follows: Setting Objectives: Goal-setting or objective setting is a multistage process. It starts with the examining of the current stat3e of affaires, level of efficiency, threats, and opportunities. Then the key result areas are identified, such as product markets, improved services, lowered costs, work simplification, employee motivation, profitability innovation and social responsibility. The performance of these areas is critical for organization in the sense that failure in these areas may result in failure of the organization. And this is why they are known as key result areas. Peter says, objectives are important in every area where performance and results directly affect the survival and prosperity of business. Thereafter interacting or joint goal setting takes place. Subordinates are actively involved in formulating goals at every level in the organization such goals are finished with reference to the overall objectives of the organization. Care is taken to establish goals that are measurable and contribute to the element also. Such goals may be long rang, medium rang, or short range. Further, resources availability also becomes an important consideration in goal setting. There is always need to decide priorities among the different objectives keeping in view the environment within which business operates as well as possible further changes in it. Developing Action Plans: Set objectives must be translated into action plans. It requires assignment of specific responsibilities to different departments, division, and individuals. It also requires allocation of necessary resources needed to perform the assigned responsibilities. Time dimensions are also to be decided in order that targets are reached without any unwarranted delays. Periodic Review or Monitoring the Progress: After setting objectives and developing action plans, it is necessary to establish a proper monitoring system with a view to regularly keeping the activities. He progress is monitored without day path leading to the ultimate objective. It is ensured that the deviations found, if any, are thoroughly discussed and immediate corrective actions are taken to set them right on the course. Such a regular monitoring and periodic review not only provide feedback which is essential for completion of work in time. But also motivates the managers accountable for performance. Periodic review and monitoring are done at departmental level generally. Performance appraisal: This is the last phase of MBO program that evaluates performance annually. The annual review or appraisal is comprehensive and is done at the organization level. The actual annual results are evaluated against the set objectives. Such assessment is also used for determining targets for next year, for modification in standards (goals0 if needed, and for taking corrective actions in order to avoid deviations form predetermined objectives.

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CHARACTERISTICS OF MBO

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The basic principle behind Management by Objectives (MBO) is for employees to have a clear understanding of the roles and responsibilities expected of them. They can then understand how their activities relate to the achievement of the organization's goal. MBO also places importance on fulfilling the personal goals of each employee. Some of the important features and advantages of MBO are: 1. Motivation Involving employees in the whole process of goal setting and increasing employee empowerment. This increases employee job satisfaction and commitment. 2. Better communication and Coordination Frequent reviews and interactions between superiors and subordinates helps to maintain harmonious relationships within the organization and also to solve many problems. 3. Clarity of goals 4. Subordinates tend to have a higher commitment to objectives they set for themselves than those imposed on them by another person. 5. Managers can ensure that objectives of the subordinates are linked to the organization's objectives.
LIMITATIONS OF MBO

There are several limitations to the assumptive base underlying the impact of managing by objectives, including: 1. It over-emphasizes the setting of goals over the working of a plan as a driver of outcomes. 2. It underemphasizes the importance of the environment or context in which the goals are set. That context includes everything from the availability and quality of resources, to relative buy-in by leadership and stake-holders. As an example of the influence of management buy-in as a contextual influencer, in a 1991 comprehensive review of thirty years of research on the impact of Management by Objectives, Robert Rodgers and John Hunter concluded that companies whose CEOs demonstrated high commitment to MBO showed, on average, a 56% gain in productivity. Companies with CEOs who showed low commitment only saw a 6% gain in productivity. 3. Companies evaluated their employees by comparing them with the "ideal" employee. Trait appraisal only looks at what employees should be, not at what they should do. When this approach is not properly set, agreed and managed by organizations, self-centered employees might be prone to distort results, falsely representing achievement of targets that were set in a short-term, narrow fashion. In this case, managing by objectives would be counterproductive. The use of MBO must be carefully aligned with the culture of the organization. While MBO is not as fashionable as it was before the 'empowerment' fad, it still has its place in management today. The key difference is that rather than 'set' objectives from a cascade process, objectives are discussed and agreed upon. Employees are often involved in this process, which can be advantageous. A saying around MBO -- "What gets measured gets done", Why measure performance? Different purposes require different measures -- is perhaps the most famous aphorism of performance measurement; therefore, to avoid potential problems SMART and SMARTER objectives need to be agreed upon in the true sense rather than set.
NEGOTIATION

Negotiating is the process of communicating back and forth, for the purpose of reaching a joint agreement about differing needs or ideas. It is a collection of behaviors that involves communication, sales, marketing, psychology, sociology, assertiveness and conflict resolution. A negotiator may be a buyer or seller, a customer or supplier, a boss or employee, a business partner, a diplomat or a civil servant. On a more personal level negotiation takes place between spouses friends, parents or children. It is a process of interaction by which two or more parties who consider that they need to be jointly involved in an outcome, but who initially have different objectives, seek by the use of argument and persuasion to resolve their difference in order to achieve a mutually acceptable solution. Another important consideration is that negotiation implies acceptance by both parties that agreement between them is required before a decision can be implemented. The art of negotiation is based on attempting to reconcile what constitutes a good result for the other party. To achieve a situation where both sides win something for themselves, you need to be well prepared, alert and flexible. There are seven basic principles common to all forms of negotiation. There are minimum two parties involved in the negotiation process. There exists some common interest, either in the subject matter of the negotiation or in the negotiating context, that puts or keeps the parties in contact. Though the parties have the same degree of interest, they initially start with different opinions and objectives which hinders the outcome in general. In the beginning, parties consider that negotiation is a better way of trying to solve their differences. Each party is under an impression that there is a possibility of persuading the other party to modify their original position, as initially parties feel that they shall maintain their opening position and pursuade the other to change. During the process, the ideal outcome proves unattainable but parties retain their hope of an acceptable final agreement. Each party has some influence or power real or assumed over the others ability to act. The process of negotiation is that of interaction between people usually this is direct and verbal interchange.

M8-Principles & Practices of Management Negotiation is a skill that anyone can learn and practice. The necessary skills required for successful negotiations can be listed as: The ability to define a range of objectives, yet be flexible about some of them. The ability to explore the possibilities of a wide range of options. The ability to be well prepared. The ability to listen to and question other parties. The ability to set priorities. These are useful abilities, not only in negotiations but in daily life as well. It is useful to remember that the ability to influence and persuade is one of the most essential of all management skill and influence and persuasion are very much the stuff of effective negotiation. Types of negotiation Depending upon the situation and time, the way the negotiations are to be conducted differs. The skills of negotiations depends and differs widely from one situation to the other. Basically the types can be divided into three broad categories. 1. Day-to-day / Managerial Negotiations: Such types of negotiations are done within the organization and are related to the internal problems in the organization. It is in regards to the working relationship between the groups of employees. Usually, the manager needs to interact with the members at different levels in the organization structure. For conducting the day-to-day business, internally, the superior needs to allot job responsibilities, maintain a flow of information, direct the record keeping and many more activities for smooth functioning. All this requires entering into negotiations with the parties internal to the organization. 2. Commercial Negotiations: Such types of negotiations are conducted with external parties. The driving forces behind such negotiations are usually financial gains. They are based on a give-and-take relationship. Commercial negotiations successfully end up into contracts. It relates to foregoing of one resource to get the other. 3. Legal Negotiations: These negotiations are usually formal and legally binding. Disputes over precedents can become as significant as the main issue. They are also contractual in nature and relate to gaining legal ground. Process of negotiation Prior to the actual interaction that leads to an agreement between various parties, the preparation for a successful negotiation process is essential. The achievement of the target has to be systematic and strategic move. This asks for a detailed and minute analysis. A manager needs to be clear about his perspective. 1) Evaluate relative strengths Before embarking on negotiation there is a need to assess the partys relative strengths. This strength can be defined as the power to influence others so as to have an upper hand over the final outcome. Each side has certain bargaining power on the back of which the whole negotiating process can be carried. While weighing relative strengths, the judgment regarding four things is involved: The amount of authority that each party possesses to conduct negotiations and the ability of the parties to make decisions. The strength of each party to get sanctions or benefits that are unrelated to the matter under negotiation. The logic or equity in the arguments. The firm determination with which each party pursues its case. 2) Set the objectives While planning negotiations, an assessment of relative strength should be linked to the determination of objectives. Usually, the stronger ones position is, the higher the level of objective achievement is there. The passing of the agreement takes place depending upon three different possible settlement levels. The ideal or the best possible deal. The expected settlement level. The worst, though still just acceptable deal. As a negotiator, one needs to identify the top line objectives, the best achievable outcome and the outcome that can be acceptable at the lowest level. It is vital to consider the other partys viewpoint as well as ones own. One objective of negotiations is to help the other party feel satisfied with the outcome and not to be too aggressive in the process. 3) Keep an eye on the other side For conducting successful negotiation, an eye on the other partys plans, strengths and weaknesses helps in deciding a winning strategy. What are the objectives of the other party ? The facts and arguments they are likely to put forward and their overall winning strategy, all this knowledge is useful for preparing on the underlying and unstated issues. Besides, exchanging factual data before negotiations helps in overcoming delays or confusions. Checking of the issue, detailed facts and arguments, exchanging details are all preparatory assessments.

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M8-Principles & Practices of Management 4) Decision regarding the style and the scene This is planning of more actual negotiation. The negotiations can be conducted in number of different styles. They can be discursive or brisk, formal or informal, assertive or persuasive. Depending upon the role and responsibility of the individual the expression of these styles differ. Besides, whom to involve in the discussion process and whom not to involve, is a crucial task. Minutest details like the location of the negotiation site, the seating arrangements, refreshments to be provided, documentation aspects all need special attention. Negotiations are surely affected by the style, pace and composition of the negotiating teams but equally important are the seating plans, breaks and conducting of the session itself. It is also useful to keep some record of the outcome of negotiations to ensure a common understanding. 5) Setting of the Agenda It is important to chalk out a plan of action in advance to avoid misunderstandings and common errors. If a clear cut guideline regarding what is to be done is provided, a lot of time and effort can be saved. The agenda may be formal or informal. If the subject, scope and purpose are fixed in advance, confusion can be avoided. It is useful to remember that the progress of negotiation is influenced significantly by the first speaker. One way of securing a strong opening position is to volunteer a brief rehearsal of the background before full negotiations begin. 6) Pleading your case To win the maximum favor in negotiation, tactics have to be used to strengthen ones position during the bargaining process. Prior to introducing a new issue, its acceptability by the opposite parties need to be rated. Compromise and concession are the essential aspects of negotiation. Equally necessary is the attachment of conditions to the concessions. The use of emotion in negotiating should be avoided. At times during discussions, people start getting emotionally attached. It is professionally dangerous to rise to the bait of personal attack. There are occasions, when a controlled display of emotion may be beneficial. For this, the two conditions are, that the emotion must be sincere and its use should be a conscious decision, not an instant reaction. It is advantageous for a good negotiator to be a good listner. The most common fault occurs in saying too much and listening too little. To keep the heaviness out, use of humor reduces the tension. Use of humor also avoids a confrontational mode. Experienced negotiators usually do not commit themselves to definite statements until they are confident that this will not prejudice their position. The art of reading between the lines help in avoiding perceptional errors. 7) Timing and Adjournments The maximum time for which an individual can maintain continuous attention and involvement, is somewhere around two hours. Henceforth, while planning negotiations, thought needs to be given to the time-scale. The longest period for effective continuous negotiation is about two hours. For this the time allotted for presentation can be 15 to 20 minutes and ideal time for individual contribution at the beginning of the discussion is two to three minutes. Breaks and adjournments are helpful revival from monotonus discussions. They provide time to consider progress or new proposals within the team and avoid rash decisions. It also helps in bringing an end to unconstructive and personalized arguments. Besides, during the adjournment sessions the parties can have an opportunity for informal and casual talks. 8) Arriving at an agreement The closer the negotiation comes to end, the more sensitively the discussion needs to be handled. While weighing the benefits of the agreement, besides immediate returns the quality of longterm relationships also should be the crux. The final offer and agreement needs to be timed to coincide with the discussion which is positively constructive. Before finalizing, it is advisable to check that all the aspects in the deal have been taken care of, particularly dates for implementation, completion time and definition and meaning of each term. Ensure that both parties fully understand what has been agreed and get the confirmation in writing. Those issues that still remain unsolved can be carried forward for future negotiations. 9) Effective Implementation Arriving at an agreement is not an end in itself. The purpose with which negotiations are carried is to reach an outcome or action. An agreement is not successful until it has been effectively implemented. Adequate information and explanation should be supplied to those who are affected or apply the agreement. 10) Handling Breakdown It is not necessary that negotiations always prove successful. At times an agreement may not be achieved and this requires other arrangements. A contingency plan should be kept ready in case of failure of the negotiations. The major options for handling breakdowns are either to go ahead on your own and take a decision that is best or seek third party intervention.

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UNIT 3: ORGANIZING
ORGANIZING FUNCTION

Organizing is the function of management which follows planning. It is a function in which the synchronization and combination of human, physical and financial resources takes place. All the three resources are important to get results. Therefore, organizational function helps in achievement of results which in fact is important for the functioning of a concern. According to Chester Barnard, Organizing is a function by which the concern is able to define the role positions, the jobs related and the co- ordination between authority and responsibility. Hence, a manager always has to organize in order to get results.
ORGANIZING PROCESS

A manager performs organizing function with the help of following steps:1. Identification of activities - All the activities which have to be performed in a concern have to be identified first. For example, preparation of accounts, making sales, record keeping, quality control, inventory control, etc. All these activities have to be grouped and classified into units. 2. Departmentally organizing the activities - In this step, the manager tries to combine and group similar and related activities into units or departments. This organization of dividing the whole concern into independent units and departments is called departmentation. 3. Classifying the authority - Once the departments are made, the manager likes to classify the powers and its extent to the managers. This activity of giving a rank in order to the managerial positions is called hierarchy. The top management is into formulation of policies, the middle level management into departmental supervision and lower level management into supervision of foremen. The clarification of authority helps in bringing efficiency in the running of a concern. This helps in achieving efficiency in the running of a concern. This helps in avoiding wastage of time, money, effort, in avoidance of duplication or overlapping of efforts and this helps in bringing smoothness in a concerns working. 4. Co-ordination between authority and responsibility - Relationships are established among various groups to enable smooth interaction toward the achievement of the organizational goal. Each individual is made aware of his authority and he/she knows whom they have to take orders from and to whom they are accountable and to whom they have to report. A clear organizational structure is drawn and all the employees are made aware of it.
DEPARTMENTALIZATION

Departmentalization is the process done for efficient functioning of an organization. The process of departmentalization includes forming departments or grouping activities of an organization into number of separate units. Its major benefits include specialization, administrative control, and fixation of responsibility, freedom or autonomy, development of managers. There are various benefits of departmentalization they are: 1. Specialization: It leads to specialization of work as various activities are grouped according to their specified field. Each and every manager specialize the work for which they are assigned from time to time. 2. Administrative control: It helps in the effective control as the standards of performance of every department are streamlined in accordance with the goals and objectives set by their respective managers. 3. Fixation of responsibility: Division of work leads to manageable fixation of responsibility of the managers. It becomes very easy to fix the responsibilities and its accountability to various employees accordingly. 4. Freedom or autonomy: The departments created under this process are semi-autonomous and have sufficient authority to run the respective department. It also increases the efficiency of the departments. 5. Development of managers: It enables the managers to develop their managerial skills by giving them the chance to take decisions and initiatives on their own. It also motivates the executives to develop their skills for the higher positions in the organization. Types of Departmentalization Functional departmentalization - Grouping activities by functions performed. Activities can be grouped according to function (work being done) to pursue economies of scale by placing employees with shared skills and knowledge into departments for example human resources, IT, accounting, manufacturing, logistics, and engineering. Functional departmentalization can be used in all types of organizations. Product departmentalization - Grouping activities by product line. Tasks can also be grouped according to a specific product or service, thus placing all activities related to the product or the service under one manager. Each major product area in the corporation is under the authority of a senior manager who is specialist in, and is responsible for, everything related to the product line. LA Gear is an example of company that uses product departmentalization. Its structure is based on its varied product lines which include womens footwear, childrens footwear and mens footwear. Customer departmentalization - Grouping activities on the basis of common customers or types of customers. Jobs may be grouped according to the type of customer served by the organization. The assumption is that customers in each department have a common set of problems and needs that can best be met by specialists. The sales activities in an office supply firm can be broken down into three departments that serve retail, wholesale and government accounts. Geographic departmentalization - Grouping activities on the basis of territory. If an organization's customers are geographically dispersed, it can group jobs based on geography. For example, the organization structure of Coca-Cola has reflected the companys operation in two broad geographic areas the North American sector and the international sector, which includes the Pacific Rim, the European Community, Northeast Europe, Africa and Latin America groups.

M8-Principles & Practices of Management Process departmentalization - Grouping activities on the basis of product or service or customer flow. Because each process requires different skills, process departmentalization allows homogenous activities to be categorized. For example, the applicants might need to go through several departments namely validation, licensing and treasury, before receiving the drivers license. Owing to the complexity of tasks and the competitive environment in which organisations operate, they often use a combination of the above-mentioned methods in departmentalization.
SPAN OF MANAGEMENT

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Also known as span of control, is a very important concept of organizing function of management. It refers to the number of subordinates that can be handled effectively by a superior in an organization. It signifies how the relations are planned between superior and subordinates in an organization. Span of management is generally categorized under two heads- Narrow span and Wide span. Narrow Span of management means a single manager or supervisor oversees few subordinates. This gives rise to a tall organizational structure. While, a wide span of management means a single manager or supervisor oversees a large number of subordinates. This gives rise to a flat organizational structure.There is an inverse relation between the span of management and the number of hierarchical levels in an organization, i.e., narrow the span of management , greater the number of levels in an organization. Narrow span of management is more costly compared to wide span of management as there are larger number of superiors/ managers and thus there is greater communication issues too between various management levels. The less geographically scattered the subordinates are, the better it is to have a wide span of management as it would be feasible for managers to be in touch with the subordinates and to explain them how to efficiently perform the tasks. In case of narrow span of management, there are comparatively more growth opportunities for a subordinate as the number of levels is more. The more efficient and organized the managers are in performing their tasks, the better it is to have wide span of management for such organization. The less capable, motivated and confident the employees are, the better it is to have a narrow span of management so that the managers can spend time with them and supervise them well. The more standardized is the nature of tasks ,i.e., if same task can be performed using same inputs, the better it is to have a wide span of management as more number of subordinates can be supervised by a single superior. There is more flexibility, quick decision making, effective communication between top level and low level management,and improved customer interaction in case of wide span of management. Technological advancement such as mobile phones, mails, etc. makes it feasible for superiors to widen their span of management as there is more effective communication. An optimal/ideal span of control according to the modern authors is fifteen to twenty subordinates per manager, while according to the traditional authors the ideal number is six subordinates per manager. But actually, an ideal span of control depends upon the nature of an organization, skills and capabilities of manager, the employees skills and abilities, the nature of job, the degree of interaction required between superior and subordinates. Factors determining the span of management: Capacity of manager: Each manager has different capacity and ability in terms of decision making, leadership, communication, judgment, guidance and control etc. mangers having more abilities in respect to these factors may have more number of subordinates. Capacity of subordinates: capacity of subordinates also affects the span of a manager. Efficient and trained subordinates may work without much help of their manager. They may just need broad guidelines and they will perform accordingly. They would require lesser time from their superior due to which manager can have large number of subordinates under him. Nature of work: If subordinates are performing similar and repetitive routine work they can do their work without having much time of the manager. Frequent changes in work would require more detailed instructions from manager whenever there is change in work. Type of technology used also affects the span of control. Degree of Decentralization: degree of centralization or decentralization affects the span by affecting the involvement in decision making process. If manager clearly delegates his authority and defines it fully this would require less time to devote to manage his subordinates as subordinates will take most of the actions by their own. Hence manager can have wider span. Degree of Planning: If the planning is effectively done particularly if standing plans procedures rules methods are clear then subordinates can make their decisions on their own. If they have to make their own plans they would require more guidelines by superiors and manager can handle narrow span in the case of improper planning. Communication System: If communication system is modern i.e. tools like electronic devices will save time of face to face interaction, which require more time, span of manager can be increased Level of Management: level of management also affects the span. Higher the level of management lesser the number of subordinates as higher level management does not have much time to supervise. They spend their most of time in planning and other functions. Lower level managers can have wider span than the higher level managers. Physical location: If all the persons to be supervised are located at same place within the direct supervision of manager, he can supervise more number of people. If subordinates are at different locations then manager can supervise less number of spans.

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DELEGATION OF AUTHORITY

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Delegation of authority is one vital organizational process. It is inevitable along with the expansion and growth of a business enterprise. Delegation means assigning of certain responsibilities along with the necessary authority by a superior to his subordinate managers. Delegation does not mean surrender of authority by the higher level manager. It only means transfer of certain responsibilities to subordinates and giving them the necessary authority, which is necessary to discharge the responsibility properly. Delegation is quite common in all aspects of life including business. Even in the college, the principal delegates some of his authority to the vice-principal. In delegation, an attempt is being made to have meaningful participation and cooperation from the subordinates for achieving certain well-defined results. Due to delegation, the routine responsibilities of the superior are reduced. As a result, he concentrates on more urgent and important matters. Secondly, due to delegation, subordinate becomes responsible for certain functions transferred to him. Delegation is a tool, which a superior manager uses for sharing his work with the subordinates and thereby raising his efficiency. Delegation is not a process of abdication. The person who delegates does not divorce himself from the responsibility and authority with which he is entrusted. He remains accountable for the overall performance and also for the performance of his subordinates. Delegation is needed when the volume of work to be done is in excess of an individual's physical and mental capacity. Delegation involves the following three basic elements: 1. Assignment of duties to subordinates, 2. Granting of authority to enable the subordinates to perform the duties assigned, and 3. Creation of obligation on the part of subordinate to perform duties in an orderly manner Responsibility is the obligation or expectation to perform and carry out duties and achieve goals related to a position. Authority is the right inherent in a managerial position to tell people what to do and to expect them to do it, right to make decisions and carry out actions to achieve organizational goals. While part of a managers work may be delegated, the manager remains accountable for results. a. Accountability is the requirement of being able to answer for significant deviations from duties or expected results. b. The fact that managers remain accountable for delegated work may cause them to resist delegation. Delegation is assignment of part of managers work to others along with responsibility and authority. Definition of Delegation of authority According to F.C. Moore, "Delegation means assigning work to the others and giving them authority to do so." According to O. S. Miner, "Delegation takes place when one person gives another the right to perform work on his behalf and in his name and the second person accepts a corresponding duty or obligation to do that is required of him." According to Louis Allen, "Delegation is the dynamics of management, it is the process a manager follows in dividing the work assigned to him so that he performs that part which only he, because of his unique organizational placement, can perform effectively, and so that he can get others to help him with what remains." Objectives of Delegation of Authority To reduce the excessive burden on the superiors i.e., executives and managers functioning at different levels. To provide opportunities of growth and self development to junior executives. To create a team of experienced and matured managers for the Organisation. It acts as a technique of management and human resource development. To improve individual as well as overall efficiency of the Organisation.
PROCESS OF DELEGATION OF AUTHORITY

(A) Assignment of duties to subordinates Before delegating, the delegator has to decide precisely the duties which are to be delegated to the subordinate or a group of subordinates. The authority is delegated accordingly and the subordinate is told what is expected from him. The usual practice is to list the functions to be performed by the subordinate. If necessary, targets to be achieved by the subordinate are also spelt out. Subordinates may be assigned tasks either in terms of activities or results. The manager (delegator) must communicate clearly his expectations. Competent and responsible employees may be given general guidelines about what needs to be accomplished. Their less competent and responsible counter-parts need more specific guidelines. In brief, in the first stage of delegation process, duties are assigned to the subordinate. (B) Transfer of authority to perform the duty In the second stage of delegation process, the authority is granted by the delegator to his subordinate (delegate). Authority must be delegated strictly to perform the assigned duty. The performance of duties suffers serious setback when required authority is not delegated along with the duty. In brief, the transfer of authority should be adequate considering the duties assigned to the subordinate. (C) Acceptance of the assignment In this third stage of delegation process, the subordinate/delegate has to accept or reject the task assigned to him in the first stage along with the authority given in the second stage. If the delegates refuse, the delegator has to make fresh plan of delegation or may consider some other subordinate who is capable and is willing to accept the assignment. On the other hand,

M8-Principles & Practices of Management the process of delegation will move to the fourth and the last stage, if the first delegates accept the assignment of work accompanying the authority. (D) Creation of Obligation / Accountability / Responsibility The fourth stage in the, delegation of authority is the creation of obligation on the part of the subordinate to perform duties assigned to him in a satisfactory manner by using the authority given. When subordinate accepts a task and the authority is given, an obligation is created. He has to perform the assigned task by using the authority granted to him. A subordinate is also responsible/accountable for completing the assigned work. He is held answerable to a superior for the satisfactory performance of that work assigned. The delegator has to help his subordinate as and when necessary as he is responsible to his superior/organisation.
ADVANTAGES / IMPORTANCE OF DELEGATION OF AUTHORITY

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1. Relieves manager for more challenging jobs: Delegation makes it possible for the managers to distribute their workload to others. Thus, managers are relieved of routine work and they can concentrate on higher functions of management like planning, organising, controlling, etc. 2. Leads to motivation of subordinates: Subordinates are encouraged to give their best at work when they have authority with responsibility. They take more initiative and interest in the work and are also careful and cautious in their work. Delegation leads to motivation of employees and manpower development. 3. Facilitates efficiency and quick actions: Delegation saves time enabling tile subordinates to deal with the problems promptly. They can take the decisions quickly within their authority. It is not necessary to go to the superiors for routine matters. This raises the overall efficiency in an Organisation and offers better results in terms of production, turnover and profit. 4. Improves employee morale: Delegation raises the morale of subordinates as they are given duties and supporting authority. They feel that they are responsible employees. The attitude and outlook of subordinates towards work assigned becomes more constructive. 5. Develops team spirit: Due to delegation, effective communication develops between the superiors and subordinates. The subordinates are answerable to superiors and the superiors are responsible for the performance of subordinates. This brings better relations and team spirit among the superiors and subordinates 6. Maintains cordial relationships: The superiors trust subordinates and give them necessary authority. The subordinates accept their accountability and this develops cordial superior-subordinate relationships. 7. Facilitates management development: Delegation acts as a training ground for management development. It gives opportunity to subordinates to learn, to grow and to develop new qualities and skills. It builds up a reservoir of executives, which can be used as and when required. Delegation creates managers and not mere messengers. The advantages of delegation will not be available easily and automatically. They will be available only when the process of delegation moves smoothly. Problems may develop, if the delegation is not introduced with proper planning and in proper spirit. For example, the authority given to subordinate is inadequate or the subordinate is not competent to discharge the responsibilities assigned or the superior fails to monitor the whole process of delegation effectively. In all such cases, the delegation will be ineffective and the expected advantages will not be available to the Organisation and also to concerned parties.
PRINCIPLES OF EFFECTIVE DELEGATION OF AUTHORITY

1. Knowledge of Objectives: Before delegating authority, the subordinates should be made to understand their duties and responsibilities. In addition, knowledge of objectives and policies of the enterprise should be provided to them. This will enable them to discharge their roles purposefully in the process of delegation. 2. Parity of Authority and Responsibility: This principle of delegation suggests that when authority is delegated, it should be commensurate with the responsibility of the subordinate. In fact, the authority and responsibility should be made clear to the subordinate so that he will know what he is expected to do within the powers assigned to them. There should be proper balance/parity or co-existence between the authority and responsibility. A subordinate will not function efficiently, if authority given to him is inadequate. On the other hand, if the excess authority is given, he may misuse the same. For avoiding this, the subordinates who are assigned duties should be given necessary/ adequate authority enables them to carry out their duties. 3. Unity of Command: This principle of delegation suggests that everyone should have only one boss. A subordinate should get orders and instructions from one superior and should be made accountable to one superior only. This means 'no subordinate should be held accountable to more than one superior'. When a subordinate is asked to report to more than one boss, it leads to confusion and conflict. Unity of command also removes overlapping and duplication of work. In the absence of unity of command, there will be confusion and difficulty in fixing accountability. 4. The Scalar Principle: The scalar principle of delegation maintains that there should be clear and direct lines of authority in the Organisation, running from the top to the bottom. The subordinate should know who delegates authority to him and to whom he should contact for matters beyond his authority. They (subordinates) should also know what is expected from them. This principle justifies establishment of the hierarchical structure within the Organisation. 5. Clarity of Delegation: The principle of clarity of delegation suggests that while delegating authority to subordinates, they should be made to understand the limits of authority so that they know the area of their operation and the extent of freedom of action available to them. Such clarity guides subordinates while performing their jobs.

M8-Principles & Practices of Management 6. Absoluteness of Responsibility: This principle of delegation suggests that it is only the authority which is delegated and not the responsibility. The responsibility is absolute and remains with the superior. He cannot run away from the same even after delegation. Even when the manager delegates authority to his subordinate, he remains fully accountable to his superiors because responsibility cannot be divided between a superior and his subordinate. No superior can delegate responsibilities for the acts of his subordinates. He is responsible for the acts and omissions of his subordinates. 7. Use of Exception Principle: This principle of delegation indicates that when authority is delegated, it is expected that the subordinate will exercise his own judgment and take decisions within the purview of his authority. He is to be given adequate freedom to operate within his authority even at the cost of mistakes. He should refer the problems to the top level management only when he is unable to take decisions. Unnecessary interference in the work of delegates should be avoided. This normal rule can be given up under exceptional circumstances. Here, the superior can interfere in the work of his subordinate and even withdraw the delegated duties and authority. The superior takes this decision under exceptional circumstances. 8. Completeness of Delegation: This principle of delegation suggests that there should be completeness in the process of delegation. The process of delegation should be taken to its logical end. Otherwise, there will be confusion of authority and accountability. 9. Effective Communication Support System: This principle suggests that there should be continuous flow of information between the superior and the subordinates with a view to furnishing relevant information to subordinate for decisionmaking. This helps him to take proper decisions and also to interpret properly the authority delegated to him. Delegation system may not work smoothly in the absence of effective communication between the superior and subordinates. 10. Reward for Effective Delegation: This principle suggests that effective delegation and successful assumption of authority should be rewarded. This will facilitate fuller delegation and effective assumption of authority within the Organisation. Reward for effective delegation will provide favorable environmental climate for its fair introduction.
CENTRALIZATION AND DECENTRALIZATION

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The general pattern of authority throughout an organization determines the extent to which that organization is centralized or decentralized. A centralized organization systematically works to concentrate authority at the upper levels. In a decentralized organization, management consciously attempts to spread authority to the lower organization levels. A variety of factors can influence the extent to which a firm is centralized or decentralized. The following is a list of possible determinants: The external environment in which the firm operates. The more complex and unpredictable this environment, the more likely it is that top management will let low-level managers make important decisions. After all, low-level managers are closer to the problems because they are more likely to have direct contact with customers and workers. Therefore, they are in a better position to determine problems and concerns. The nature of the decision itself. The riskier or the more important the decision, the greater the tendency to centralize decision making. The abilities of low-level managers. If these managers do not have strong decision-making skills, top managers will be reluctant to decentralize. Strong low-level decision-making skills encourage decentralization. The organization's tradition of management. An organization that has traditionally practiced centralization or decentralization is likely to maintain that posture in the future.

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UNIT 4: DIRECTION AND CONTROLLING

DIRECTING FUNCTION

Directing is said to be a process in which the managers instruct, guide and oversee the performance of the workers to achieve predetermined goals. Directing is said to be the heart of management process. Planning, organizing, staffing have got no importance if direction function does not take place. Directing initiates action and it is from here actual work starts. Direction is said to be consisting of human factors. In simple words, it can be described as providing guidance to workers is doing work. In field of management, direction is said to be all those activities which are designed to encourage the subordinates to work effectively and efficiently. According to Human, Directing consists of process or technique by which instruction can be issued and operations can be carried out as originally planned Therefore, Directing is the function of guiding, inspiring, overseeing and instructing people towards accomplishment of organizational goals. Direction has got following characteristics: Pervasive Function - Directing is required at all levels of organization. Every manager provides guidance and inspiration to his subordinates. Continuous Activity - Direction is a continuous activity as it continuous throughout the life of organization. Human Factor - Directing function is related to subordinates and therefore it is related to human factor. Since human factor is complex and behaviour is unpredictable, direction function becomes important. Creative Activity - Direction function helps in converting plans into performance. Without this function, people become inactive and physical resources are meaningless. Executive Function - Direction function is carried out by all managers and executives at all levels throughout the working of an enterprise, a subordinate receives instructions from his superior only. Delegate Function - Direction is supposed to be a function dealing with human beings. Human behaviour is unpredictable by nature and conditioning the peoples behaviour towards the goals of the enterprise is what the executive does in this function. Therefore, it is termed as having delicacy in it to tackle human behaviour.
IMPORTANCE OF DIRECTION

In this context, the importance of direction function in the organisation can be presented as follows 1. Direction initiates actions. Organisation is the sum-total of human and non-human resources. These resources should be handled in a certain way to get the desired results. Through direction, management conveys and motivates individuals in the organisation to function in the desired way to get organisational objectives. Without direction, other managerial activities like planning, organising and staffing become ineffective. 2. Direction integrates employees efforts. For achieving organisational objectives, individuals need not only to be efficient, but effective also. Their actions are interrelated in such a way that each individual's efforts need to be integrated so that organisation achieves its objectives in the most efficient manner and this is possible through direction only. 3. Direction attempts to get maximum out of individuals. Every individual in the organisation has some potentiality and capability which, in the absence of proper motivation, leadership, communication-all element of direction-may not be utilised fully. Direction provides the way to utilize these capabilities and also it helps in increasing these capabilities. 4. Direction facilitates changes in the organisation. Organisation exists in the society and any change in the society changes organisational process to keep organisation ready to face environmental changes. Moreover, there are changes in organisation structure and in individuals. To incorporate and implement these changes, management should motivate individuals affected by these changes, which is an essential part of direction. 5. Direction provides stability and balance in the organisation. Effective leadership, communication and motivation, provide stability in the organisation and maintain balances in the different part of the organisation. Thus, organisation exists for a long period and its parts work in a harmonious way.
PRINCIPLES OF DIRECTING

Harmony of objectives: Effective directing depends on the extent to which individual objectives in cooperative activity are harmonized with group objectives. Unity of command: The more completely an individual has a reporting relationship to a single superior, the less the problem of conflict in instructions and the greater the feeling of personal responsibility for results. Direct supervision: Effective direction requires that management supplement objective methods of supervision with direct personal contact. Supervisory techniques: Since people, tasks, and organizational environment vary, techniques of supervision will be most effective if appropriately varied.

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MOTIVATION

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Motivation is the driving force by which we achieve our goals. Motivation is said to be intrinsic or extrinsic. The term is generally used for humans but it can also be used to describe the causes for animal behavior as well. This article refers to human motivation. According to various theories, motivation may be rooted in a basic need to minimize physical pain and maximize pleasure, or it may include specific needs such as eating and resting, or a desired object, goal, state of being, ideal, or it may be attributed to less-apparent reasons such as altruism, selfishness, morality, or avoiding mortality. Conceptually, motivation should not be confused with either volition or optimism. Motivation is related to, but distinct from, emotion. Defining Motivation Motivation is to inspire people to work, individually or in groups in the ways such as to produce best results. It is the will to act. It is the willingness to exert high levels of effort towards organizational goals, conditioned by the efforts and ability to satisfy some individual need. Motivation is getting somebody to do something because they want to do it. It was once assumed that motivation had to be injected from outside, but it is now understood that everyone is motivated by several differing forces. Motivation is a general term applied to the entire class of drives, desires, needs, wishes and similar forces. To say that managers motivate their subordinates is to say that they do those things which they hope will satisfy these drives and desires and induce the subordinates to act in a desired manner. To motivate others is the most important of management tasks. It comprises the abilities to communicate, to set an example, to challenge, to encourage, to obtain feedback, to involve, to delegate, to develop and train, to inform, to brief and to provide a just reward. Types of motivation (1) Achievement Motivation: It is the drive to pursue and attain goals. An individual with achievement motivation wishes to achieve objectives and advance up on the ladder of success. Here, accomplishment is important for its own shake and not for the rewards that accompany it. It is similar to Kaizen approach of Japanese Management. (2) Affiliation Motivation: It is a drive to relate to people on a social basis. Persons with affiliation motivation perform work better when they are complimented for their favorable attitudes and co-operation. (3) Competence Motivation: It is the drive to be good at something, allowing the individual to perform high quality work. Competence motivated people seek job mastery, take pride in developing and using their problem-solving skills and strive to be creative when confronted with obstacles. They learn from their experience. (4) Power Motivation: It is the drive to influence people and change situations. Power motivated people wish to create an impact on their organization and are willing to take risks to do so. (5) Attitude Motivation: Attitude motivation is how people think and feel. It is their self confidence, their belief in themselves, their attitude to life. It is how they feel about the future and how they react to the past. (6) Incentive Motivation: It is where a person or a team reaps a reward from an activity. It is You do this and you get that, attitude. It is the types of awards and prizes that drive people to work a little harder. (7) Fear Motivation: Fear motivation coercions a person to act against will. It is instantaneous and gets the job done quickly. It is helpful in the short run.
IMPORTANCE OF MOTIVATION

Motivation is a very important for an organization because of the following benefits it provides:1. Puts human resources into action Every concern requires physical, financial and human resources to accomplish the goals. It is through motivation that the human resources can be utilized by making full use of it. This can be done by building willingness in employees to work. This will help the enterprise in securing best possible utilization of resources. 2. Improves level of efficiency of employees The level of a subordinate or a employee does not only depend upon his qualifications and abilities. For getting best of his work performance, the gap between ability and willingness has to be filled which helps in improving the level of performance of subordinates. This will result intoa. Increase in productivity, b. Reducing cost of operations, and c. Improving overall efficiency. 3. Leads to achievement of organizational goals The goals of an enterprise can be achieved only when the following factors take place :a. There is best possible utilization of resources, b. There is a co-operative work environment, c. The employees are goal-directed and they act in a purposive manner, d. Goals can be achieved if co-ordination and co-operation takes place simultaneously which can be effectively done through motivation.

M8-Principles & Practices of Management 4. Builds friendly relationship Motivation is an important factor which brings employees satisfaction. This can be done by keeping into mind and framing an incentive plan for the benefit of the employees. This could initiate the following things: a. Monetary and non-monetary incentives, b. Promotion opportunities for employees, c. Disincentives for inefficient employees. In order to build a cordial, friendly atmosphere in a concern, the above steps should be taken by a manager. This would help in: a. Effective co-operation which brings stability, b. Industrial dispute and unrest in employees will reduce, c. The employees will be adaptable to the changes and there will be no resistance to the change, d. This will help in providing a smooth and sound concern in which individual interests will coincide with the organizational interests, e. This will result in profit maximization through increased productivity. 5. Leads to stability of work force Stability of workforce is very important from the point of view of reputation and goodwill of a concern. The employees can remain loyal to the enterprise only when they have a feeling of participation in the management. The skills and efficiency of employees will always be of advantage to employees as well as employees. This will lead to a good public image in the market which will attract competent and qualified people into a concern. As it is said, Old is gold which suffices with the role of motivation here, the older the people, more the experience and their adjustment into a concern which can be of benefit to the enterprise. From the above discussion, we can say that motivation is an internal feeling which can be understood only by manager since he is in close contact with the employees. Needs, wants and desires are inter-related and they are the driving force to act. These needs can be understood by the manager and he can frame motivation plans accordingly. We can say that motivation therefore is a continuous process since motivation process is based on needs which are unlimited. The process has to be continued throughout. We can summarize by saying that motivation is important both to an individual and a business. Motivation is important to an individual as: 1. Motivation will help him achieve his personal goals. 2. If an individual is motivated, he will have job satisfaction. 3. Motivation will help in self-development of individual. 4. An individual would always gain by working with a dynamic team. Similarly, motivation is important to a business as: 1. The more motivated the employees are, the more empowered the team is. 2. The more is the team work and individual employee contribution, more profitable and successful is the business. 3. During period of amendments, there will be more adaptability and creativity. 4. Motivation will lead to an optimistic and challenging attitude at work place.
THEORIES OF MOTIVATION

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1) Contribution of Robert Owen: Though Owen is considered to be paternalistic in his view, his contribution is of a considerable significance in the theories of Motivation. During the early years of the nineteenth century, Owens textile mill at New Lanark in Scotland was the scene of some novel ways of treating people. His view was that people were similar to machines. A machine that is looked after properly, cared for and maintained well, performs efficiently, reliably and lastingly, similarly people are likely to be more efficient if they are taken care of. Robert Owen practiced what he preached and introduced such things as employee housing and company shop. His ideas on this and other matters were considered to be too revolutionary for that time. 2) Jeremy Benthams The Carrot and the Stick Approach: Possibly the essence of the traditional view of people at work can be best appreciated by a brief look at the work of this English philosopher, whose ideas were also developed in the early years of the Industrial Revolution, around 1800. Benthams view was that all people are self-interested and are motivated by the desire to avoid pain and find pleasure. Any worker will work only if the reward is big enough, or the punishment sufficiently unpleasant. This view - the carrot and stick approach - was built into the philosophies of the age and is still to be found, especially in the older, more traditional sectors of industry. The various leading theories of motivation and motivators seldom make reference to the carrot and the stick. This metaphor relates, of course, to the use of rewards and penalties in order to induce desired behavior. It comes from the old story that to make a donkey move, one must put a carrot in front of him or dab him with a stick from behind. Despite all the

M8-Principles & Practices of Management research on the theories of motivation, reward and punishment are still considered strong motivators. For centuries, however, they were too often thought of as the only forces that could motivate people. At the same time, in all theories of motivation, the inducements of some kind of carrot are recognized. Often this is money in the form of pay or bonuses. Even though money is not the only motivating force, it has been and will continue to be an important one. The trouble with the money carrot approach is that too often everyone gets a carrot, regardless of performance through such practices as salary increase and promotion by seniority, automatic merit increases, and executive bonuses not based on individual manager performance. It is as simple as this : If a person put a donkey in a pen full of carrots and then stood outside with a carrot, would the donkey be encouraged to come out of the pen ? The stick, in the form of fearfear of loss of job, loss of income, reduction of bonus, demotion, or some other penalty has been and continues to be a strong motivator. Yet it is admittedly not the best kind. It often gives rise to defensive or retaliatory behavior, such as union organization, poor-quality work, executive indifference, failure of a manager to take any risks in decision making or even dishonesty. But fear of penalty cannot be overlooked. Whether managers are first-level supervisors or chief executives, the power of their position to give or with hold rewards or impose penalties of various kinds gives them an ability to control, to a very great extent, the economic and social well-being of their subordinates. 3) Abraham Maslows Need Hierarchy Theory: One of the most widely mentioned theories of motivation is the hierarchy of needs theory put forth by psychologist Abraham Maslow. Maslow saw human needs in the form of a hierarchy, ascending from the lowest to the highest, and he concluded that when one set of needs is satisfied, this kind of need ceases to be a motivator. As per his theory this needs are: (i) Physiological needs: These are important needs for sustaining the human life. Food, water, warmth, shelter, sleep, medicine and education are the basic physiological needs which fall in the primary list of need satisfaction. Maslow was of an opinion that until these needs were satisfied to a degree to maintain life, no other motivating factors can work. (ii) Security or Safety needs: These are the needs to be free of physical danger and of the fear of losing a job, property, food or shelter. It also includes protection against any emotional harm. (iii) Social needs: Since people are social beings, they need to belong and be accepted by others. People try to satisfy their need for affection, acceptance and friendship. (iv) Esteem needs: According to Maslow, once people begin to satisfy their need to belong, they tend to want to be held in esteem both by themselves and by others. This kind of need produces such satisfaction as power, prestige status and self-confidence. It includes both internal esteem factors like selfrespect, autonomy and achievements and external esteem factors such as states, recognition and attention. (v) Need for self-actualization: Maslow regards this as the highest need in his hierarchy. It is the drive to become what one is capable of becoming, it includes growth, achieving ones potential and self-fulfillment. It is to maximize ones potential and to accomplish something. As each of these needs are substantially satisfied, the next need becomes dominant. From the standpoint of motivation, the theory would say that although no need is ever fully gratified, a substantially satisfied need no longer motivates. So if you want to motivate someone, you need to understand what level of the hierarchy that person is on and focus on satisfying those needs or needs above that level. Maslows need theory has received wide recognition, particularly among practicing managers. This can be attributed to the theorys intuitive logic and ease of understanding. However, research does not validate these theory. Maslow provided no empirical evidence and other several studies that sought to validate the theory found no support for it. 4) Theory X and Theory Y of Douglas McGregor: McGregor, in his book The Human side of Enterprise states that people inside the organization can be managed in two ways. The first is basically negative, which falls under the category X and the other is basically positive, which falls under the category Y. After viewing the way in which the manager dealt with employees, McGregor concluded that a managers view of the nature of human beings is based on a certain grouping of assumptions and that he or she tends to mold his or her behavior towards subordinates according to these assumptions. Under the assumptions of theory X: Employees inherently do not like work and whenever possible, will attempt to avoid it. Because employees dislike work, they have to be forced, coerced or threatened with punishment to achieve goals. Employees avoid responsibilities and do not work fill formal directions are issued. Most workers place a greater importance on security over all other factors and display little ambition.

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M8-Principles & Practices of Management In contrast under the assumptions of theory Y: Physical and mental effort at work is as natural as rest or play. People do exercise self-control and self-direction and if they are committed to those goals. Average human beings are willing to take responsibility and exercise imagination, ingenuity and creativity in solving the problems of the organization. That the way the things are organized, the average human beings brainpower is only partly used. On analysis of the assumptions it can be detected that theory X assumes that lower-order needs dominate individuals and theory Y assumes that higher-order needs dominate individuals. An organization that is run on Theory X lines tends to be authoritarian in nature, the word authoritarian suggests such ideas as the power to enforce obedience and the right to command. In contrast Theory Y organizations can be described as participative, where the aims of the organization and of the individuals in it are integrated; individuals can achieve their own goals best by directing their efforts towards the success of the organization. However, this theory has been criticized widely for generalization of work and human behavior. 5) Contribution of Rensis Likert: Likert developed a refined classification, breaking down organizations into four management systems. 1st System Primitive authoritarian 2nd System Benevolent authoritarian 3rd System Consultative 4th System Participative As per the opinion of Likert, the 4th system is the best, not only for profit organizations, but also for non-profit firms. 6) Frederick Herzbergs motivation-hygiene theory: Frederick has tried to modify Maslows need Hierarchy theory. His theory is also known as two-factor theory or Hygiene theory. He stated that there are certain satisfiers and dissatisfiers for employees at work. In- trinsic factors are related to job satisfaction, while extrinsic factors are associated with dissatisfaction. He devised his theory on the question : What do people want from their jobs ? He asked people to describe in detail, such situations when they felt exceptionally good or exceptionally bad. From the responses that he received, he concluded that opposite of satisfaction is not dissatisfaction. Removing dissatisfying characteristics from a job does not necessarily make the job satisfying. He states that presence of certain factors in the organization is natural and the presence of the same does not lead to motivation. However, their nonpresence leads to demotivation. In similar manner there are certain factors, the absence of which causes no dissatisfaction, but their presence has motivational impact. Examples of Hygiene factors are : Security, status, relationship with subordinates, personal life, salary, work conditions, relationship with supervisor and company policy and administration. Examples of Motivational factors are : Growth prospectus job advancement, responsibility, challenges, recognition and achievements. 7) Contributions of Elton Mayo: The work of Elton Mayo is famously known as Hawthorne Experiments. He conducted behavioral experiments at the Hawthorne Works of the American Western Electric Company in Chicago. He made some illumination experiments, introduced breaks in between the work performance and also introduced refreshments during the pauses. On the basis of this he drew the conclusions that motivation was a very complex subject. It was not only about pay, work condition and morale but also included psychological and social factors. Although this research has been criticized from many angles, the central conclusions drawn were: People are motivated by more than pay and conditions. The need for recognition and a sense of belonging are very important. Attitudes towards work are strongly influenced by the group. 8) Vrooms Valence x Expectancy theory: The most widely accepted explanations of motivation has been propounded by Victor Vroom. His theory is commonly known as expectancy theory. The theory argues that the strength of a tendency to act in a specific way depends on the strength of an expectation that the act will be followed by a given outcome and on the attractiveness of that outcome to the individual to make this simple, expectancy theory says that an employee can be motivated to perform better when their is a belief that the better performance will lead to good performance appraisal and that this shall result into realization of personal goal in form of some reward. Therefore an employee is: Motivation = Valence x Expectancy.

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M8-Principles & Practices of Management The theory focuses on three things : Efforts and performance relationship Performance and reward relationship Rewards and personal goal relationship 9) The Porter and Lawler Model: Lyman W. Porter and Edward E. Lawler developed a more complete version of motivation depending upon expectancy theory. Actual performance in a job is primarily determined by the effort spent. But it is also affected by the persons ability to do the job and also by individuals perception of what the required task is. So performance is the responsible factor that leads to intrinsic as well as extrinsic rewards. These rewards, along with the equity of individual leads to satisfaction. Hence, satisfaction of the individual depends upon the fairness of the reward. 10) Clayton Alderfers ERG Theory: Alderfer has tried to rebuild the hierarchy of needs of Maslow into another model named ERG i.e. Existence Relatedness Growth. According to him there are 3 groups of core needs as mentioned above. The existence group is concerned mainly with providing basic material existence. The second group is the individuals need to maintain interpersonal relationship with other members in the group. The final group is the intrinsic desire to grow and develop personally. The major conclusions of this theory are : 1. In an individual, more than one need may be operative at the same time. 2. If a higher need goes unsatisfied than the desire to satisfy a lower need intensifies. 3. It also contains the frustration-regression dimension.
LEADERSHIP

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Leadership has been described as the process of social influence in which one person can enlist the aid and support of others in the accomplishment of a common task. Definitions more inclusive of followers have also emerged. Alan Keith of Genentech states that, "Leadership is ultimately about creating a way for people to contribute to making something extraordinary happen." According to Ken "SKC" Ogbonnia, "effective leadership is the ability to successfully integrate and maximize available resources within the internal and external environment for the attainment of organizational or societal goals." Different Types of Leadership 1. Autocratic Leadership Autocratic leadership is an extreme form of transactional leadership, where a leader exerts high levels of power over his or her employees or team members. People within the team are given few opportunities for making suggestions, even if these would be in the team's or organizations interest. Most people tend to resent being treated like this. Because of this, autocratic leadership usually leads to high levels of absenteeism and staff turnover. Also, the team's output does not benefit from the creativity and experience of all team members, so many of the benefits of teamwork are lost. For some routine and unskilled jobs, however, this style can remain effective where the advantages of control outweigh the disadvantages. 2. Bureaucratic Leadership Bureaucratic leaders work by the book, ensuring that their staff follow procedures exactly. This is a very appropriate style for work involving serious safety risks (such as working with machinery, with toxic substances or at heights) or where large sums of money are involved (such as cash-handling). In other situations, the inflexibility and high levels of control exerted can demoralize staff, and can diminish the organizations ability to react to changing external circumstances. 3. Charismatic Leadership A charismatic leadership style can appear similar to a transformational leadership style, in that the leader injects huge doses of enthusiasm into his or her team, and is very energetic in driving others forward. However, a charismatic leader can tend to believe more in him or herself than in their team. This can create a risk that a project, or even an entire organization, might collapse if the leader were to leave: In the eyes of their followers, success is tied up with the presence of the charismatic leader. As such, charismatic leadership carries great responsibility, and needs long-term commitment from the leader.

M8-Principles & Practices of Management 4. Democratic Leadership or Participative Leadership Although a democratic leader will make the final decision, he or she invites other members of the team to contribute to the decision-making process. This not only increases job satisfaction by involving employees or team members in whats going on, but it also helps to develop peoples skills. Employees and team members feel in control of their own destiny, and so are motivated to work hard by more than just a financial reward. As participation takes time, this style can lead to things happening more slowly than an autocratic approach, but often the end result is better. It can be most suitable where team working is essential, and quality is more important than speed to market or productivity. 5. Laissez-Faire Leadership This French phrase means leave it be and is used to describe a leader who leaves his or her colleagues to get on with their work. It can be effective if the leader monitors what is being achieved and communicates this back to his or her team regularly. Most often, laissez-faire leadership works for teams in which the individuals are very experienced and skilled self-starters. Unfortunately, it can also refer to situations where managers are not exerting sufficient control. 6. People-Oriented Leadership or Relations-Oriented Leadership This style of leadership is the opposite of task-oriented leadership: the leader is totally focused on organizing, supporting and developing the people in the leaders team. A participative style, it tends to lead to good teamwork and creative collaboration. However, taken to extremes, it can lead to failure to achieve the team's goals. In practice, most leaders use both task-oriented and people-oriented styles of leadership. 7. Servant Leadership This term, coined by Robert Greenleaf in the 1970s, describes a leader who is often not formally recognized as such. When someone, at any level within an organization, leads simply by virtue of meeting the needs of his or her team, he or she is described as a servant leader. In many ways, servant leadership is a form of democratic leadership, as the whole team tends to be involved in decision-making. Supporters of the servant leadership model suggest it is an important way ahead in a world where values are increasingly important, in which servant leaders achieve power on the basis of their values and ideals. Others believe that in competitive leadership situations, people practicing servant leadership will often find themselves left behind by leaders using other leadership styles. 8. Task-Oriented Leadership A highly task-oriented leader focuses only on getting the job done, and can be quite autocratic. He or she will actively define the work and the roles required, put structures in place, plan, organize and monitor. However, as taskoriented leaders spare little thought for the well-being of their teams, this approach can suffer many of the flaws of autocratic leadership, with difficulties in motivating and retaining staff. Task-oriented leaders can benefit from an understanding of the Blake-Mouton Managerial Grid, which can help them identify specific areas for development that will help them involve people more. 9. Transactional Leadership This style of leadership starts with the premise that team members agree to obey their leader totally when they take a job on: the transaction is (usually) that the organization pays the team members, in return for their effort and compliance. As such, the leader has the right to punish team members if their work doesnt meet the pre-determined standard. Team members can do little to improve their job satisfaction under transactional leadership. The leader could give team members some control of their income/reward by using incentives that encourage even higher standards or greater productivity. Alternatively a transactional leader could practice management by exception, whereby, rather than rewarding better work, he or she would take corrective action if the required standards were not met. Transactional leadership is really just a way of managing rather a true leadership style, as the focus is on short-term tasks. It has serious limitations for knowledge-based or creative work, but remains a common style in many organizations. 10. Transformational Leadership A person with this leadership style is a true leader who inspires his or her team with a shared vision of the future. Transformational leaders are highly visible, and spend a lot of time communicating. They dont necessarily lead from the front, as they tend to delegate responsibility amongst their teams. While their enthusiasm is often infectious, they can need to be supported by detail people. In many organizations, both transactional and transformational leadership are needed. The transactional leaders (or managers) ensure that routine work is done reliably, while the transformational leaders look after initiatives that add value. The transformational leadership style is the dominant leadership style taught in the "How to Lead: Discover the Leader Within You" leadership program, although we do recommend that other styles are brought as the situation demands.

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IMPORTANCE OF LEADERSHIP

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Leadership is an important function of management which helps to maximize efficiency and to achieve organizational goals. The following points justify the importance of leadership in a concern. 1. Initiates action- Leader is a person who starts the work by communicating the policies and plans to the subordinates from where the work actually starts. 2. Motivation- A leader proves to be playing an incentive role in the concerns working. He motivates the employees with economic and non-economic rewards and thereby gets the work from the subordinates. 3. Providing guidance- A leader has to not only supervise but also play a guiding role for the subordinates. Guidance here means instructing the subordinates the way they have to perform their work effectively and efficiently. 4. Creating confidence- Confidence is an important factor which can be achieved through expressing the work efforts to the subordinates, explaining them clearly their role and giving them guidelines to achieve the goals effectively. It is also important to hear the employees with regards to their complaints and problems. 5. Building morale- Morale denotes willing co-operation of the employees towards their work and getting them into confidence and winning their trust. A leader can be a morale booster by achieving full co-operation so that they perform with best of their abilities as they work to achieve goals. 6. Builds work environment- Management is getting things done from people. An efficient work environment helps in sound and stable growth. Therefore, human relations should be kept into mind by a leader. He should have personal contacts with employees and should listen to their problems and solve them. He should treat employees on humanitarian terms. 7. Co-ordination- Co-ordination can be achieved through reconciling personal interests with organizational goals. This synchronization can be achieved through proper and effective co-ordination which should be primary motive of a leader.
CONTROLLING FUNCTION

Managerial planning results in the framing of objectives and laying down of targets. To achieve the objectives, a proper organisational structure is designed; people are assigned the various tasks; and are directed to perform their respective jobs. The actual performance is then assessed from time to time to ensure that what is achieved is in conformity with the plans and targets. This exactly is the controlling function. Thus, controlling as a function of management refers to the evaluation of actual performance of work against planned or standard performance and taking the corrective action, if necessary. According to Henri Fayol, Control consists in verifying whether everything occurs in conformity with the plan adopted, the instructions issued and principles established. According to Brech, Control is checking current performance against predetermined standards contained in the plans, with a view to ensure adequate progress and satisfactory performance, and also recording the experience gained from the working of these plans as guide to possible future needs. Planning and controlling are closely related and depend upon each other. Controlling depends upon planning because planning provides the targets or standards against which actual performance can be compared. Controlling, on the other hand, appraises planning. It brings out the shortcomings of planning and helps to improve upon the plans. For example, in a factory, 10 workers are required to cut steel sheets into small round pieces. The work plan prescribes that each worker should cut 40 pieces in a day (240 pieces per week). After a week, the manager finds that, out of 10 workers, 6 were able to cut only 200 pieces each and 4 could cut only 180 pieces each. In order to find out the causes of this deviation he evaluates the physical facilities provided to workers in the work place. On being satisfied with these conditions, the manager concludes that the target of 240 pieces per week is too high for workers to achieve. Therefore, it should be revised from 240 to 200 pieces per week. Thus, the manager revises the plan because the control exercise indicated that standard he had fixed was unreasonably high and beyond the reach of the workers. It may be noted that in order to exercise effective control, managers should not only have the standards but also see that information on the gaps between actual and standard performance is made available and action taken to rectify the deviations, if any. This is essential because, without such information, managers will not be able to measure the deviations and, without corrective action, the entire control process would be a meaningless exercise. You should also make a note that controlling does not simply involve checking the quantity of work done but also includes checking the quality of performance, the time taken and the cost incurred. In the above example, suppose each worker could cut 240 pieces per week but most of the pieces were not of the specified size or there was an excessive wastage of steel sheets. This would result in unnecessary loss to the organisation. Hence, the managers have to take steps so that the quality of work is improved and the wastage is reduced. Thus, controlling involves (i) knowing the nature, quantum and time frame of the work; (ii) comparing the performance with the plan; (iii) analysing deviation, if any; (iv) taking corrective steps; and (v) suggesting revision of plans, if necessary.

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CHARACTERISTICS OF CONTROL

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The following are the basic characteristics of control. 1. Planning is the basis of control: Control is said to be checking performance as per what has been planned. So planning precedes controlling and sets the standards and targets of performance. 2. Control is a continuous process: It is an ongoing and dynamic function of management. It involves a continuous review of performance and is not a one-time exercise. The period of control normally depends upon the nature of work, the amount of work and the policies of management. 3. Control is all pervasive: Control is exercised at all levels of management, and is done in every functional area and at each unit or department. Thus, control is all pervasive. 4. Action is the essence of control: Control is an action-oriented process. The very purpose of control is defeated if corrective action is not taken for improvement of performance or the revision of plans. 5. Control is forward looking: Control is futuristic in nature. It measures current performance and provides guidelines for the corrective action. This ensures future performance as per plans. Thus, it is forward looking.
PROCESS OF CONTROLLING

Controlling as a management function involves following steps: 1. Establishment of standards- Standards are the plans or the targets which have to be achieved in the course of business function. They can also be called as the criterions for judging the performance. Standards generally are classified into twoa. Measurable or tangible - Those standards which can be measured and expressed are called as measurable standards. They can be in form of cost, output, expenditure, time, profit, etc. b. Non-measurable or intangible- There are standards which cannot be measured monetarily. For example- performance of a manager, deviation of workers, their attitudes towards a concern. These are called as intangible standards. Controlling becomes easy through establishment of these standards because controlling is exercised on the basis of these standards. 2. Measurement of performance- The second major step in controlling is to measure the performance. Finding out deviations becomes easy through measuring the actual performance. Performance levels are sometimes easy to measure and sometimes difficult. Measurement of tangible standards is easy as it can be expressed in units, cost, money terms, etc. Quantitative measurement becomes difficult when performance of manager has to be measured. Performance of a manager cannot be measured in quantities. It can be measured only bya. Attitude of the workers, b. Their morale to work, c. The development in the attitudes regarding the physical environment, and d. Their communication with the superiors. It is also sometimes done through various reports like weekly, monthly, quarterly, yearly reports. 3. Comparison of actual and standard performance- Comparison of actual performance with the planned targets is very important. Deviation can be defined as the gap between actual performance and the planned targets. The manager has to find out two things here- extent of deviation and cause of deviation. Extent of deviation means that the manager has to find out whether the deviation is positive or negative or whether the actual performance is in conformity with the planned performance. The managers have to exercise control by exception. He has to find out those deviations which are critical and important for business. Minor deviations have to be ignored. Major deviations like replacement of machinery, appointment of workers, quality of raw material, rate of profits, etc. should be looked upon consciously. Therefore it is said, If a manager controls everything, he ends up controlling nothing. For example, if stationery charges increase by a minor 5 to 10%, it can be called as a minor deviation. On the other hand, if monthly production decreases continuously, it is called as major deviation. Once the deviation is identified, a manager has to think about various cause which has led to deviation. The causes can bea. Erroneous planning, b. Co-ordination loosens, c. Implementation of plans is defective, and d. Supervision and communication is ineffective, etc. 4. Taking remedial actions- Once the causes and extent of deviations are known, the manager has to detect those errors and take remedial measures for it. There are two alternatives herea. Taking corrective measures for deviations which have occurred; and b. After taking the corrective measures, if the actual performance is not in conformity with plans, the manager can revise the targets. It is here the controlling process comes to an end. Follow up is an important step because it is only through taking corrective measures, a manager can exercise controlling.

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CO-ORDINATION

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Co-ordination is the unification, integration, synchronization of the efforts of group members so as to provide unity of action in the pursuit of common goals. It is a hidden force which binds all the other functions of management. According to Mooney and Reelay, Co-ordination is orderly arrangement of group efforts to provide unity of action in the pursuit of common goals. According to Charles Worth, Co-ordination is the integration of several parts into an orderly hole to achieve the purpose of understanding. In every organisation, different types of work are performed by various groups and no single group can be expected to achieve the goals of the organisation as a whole. Hence, it becomes essential that the activities of different work groups and departments should be harmonised. This function of management is known as co-ordination. It ensures unity of action among individuals, work groups and departments, and brings harmony in carrying out the different activities and functions so as to achieve the organisational goals efficiently. In other words, coordination is the orderly arrangement of individual and group efforts to provide unity of action in the pursuit of a common goal. In an organisation, for example, the purchase department buys raw materials for production, the production department produces the goods, and the marketing department to procures orders and sells the products. All these departments must function in an integrated manner so that the organisational goal is duly achieved. Thus, coordination involves synchronisation of different activities and efforts of the various units of an organisation so that the planned objectives may be achieved with minimum conflict. According to Brech, Coordination is balancing and keeping together the team by ensuring suitable allocation of tasks to the various members and seeing that the tasks are performed with the harmony among the members themselves.
SIGNIFICANCE OF CO-ORDINATION

The significance of co-ordination as a function of management mainly arises from the fact that work performed by different groups, units or departments form integral part of the total work for which an organisation is established. Without harmonised effort or unity of action, achievement of goals in some departments may run counter to that of the other departments, or the timing of achievements may not fit in properly. This has to be avoided and the managers have to prevent overlapping and conflict so as to achieve unity of action. With increasing size and scale of operations, the significance of co-ordination becomes more important. This is because of the following reasons (a) When there is growth in size and the volume of work, there will be more people and work groups. So there is greater possibility of people working at cross purposes as the unit and sub-unit goals may be considered more important by them than the organisational goals. Not only that, the large size may also lead problems of supervision and communication. Hence coordinating the activities in a large concern becomes a major task for the managers. (b) Large organisations generally tend to have activities located at different places, which may not permit frequent and close interaction among people. Hence, the need for coordination becomes greater and it becomes a major responsibility for the managers. (c) Growth in size of an organisation is often combined with diversification of business activities. This may be due to new unrelated products being added to the existing products. As a result, there may be more division and sub-division of activities. At the same time, there is an increase in the number of managerial levels and vertical division of responsibilities. All these make coordination more difficult as well as important. In view of the importance of coordination in an organisation, it is sometimes called the essence of management. It is a function of managers in all departments and branches of an organisation, and applies at all levels of management. It ultimately helps in reconciliation of goals, total accomplishment of business objectives, maintenance of harmonious relationship between different groups and ensuring economy and efficiency in the organisation.
PRINCIPLES OF COORDINATION

Following are the principles of coordination: Early introduction: Coordination must be visualized right from the early stages of planning and policymaking. At the time of preparation of the plan, mutual cooperation, consultation, give and take become the necessity. In case the plan is prepared without coordination then it becomes difficult to supply the required materials or results in the misallocation of the duties. Continuity: According to this principle, coordination should be followed in the organisation on continuous basis and it should be taken as a regular activity. Managers should treat coordination as the never ending exercise. Direct Contact: According to the principle of direct contact, coordination can only be established through the direct contact of the parties whose activities are to be coordinated. As through direct contact the parties can discuss the methods, plans, actions, activities and work for the achievement of overall organisational goals. Mutual relation: This principle states that every employee should understand the problems faced by the other employees and try to solve them. For the purpose of coordination, there should be perfect adjustment and sense of fellow feeling among the employees.

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COORDINATION IS THE ESSENCE OF MANAGEMENT

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According to modern approach, coordination is not only a function of management but it is also an essence of the management process. Coordination is required in each and every activity and in each and every function of the management. Coordination is maintained in all the activities of the department, so that enterprise can be run efficiently and effectively. The concept of essence is related to the intrinsic nature of the object. Every function of management must in itself be coordinated. So it becomes the central task of the manager to reconcile the differences in approach, timing, effort, or interest and to harmonize cooperative and individual goals. The reasons for treating coordination as the essence of management is as follow: Coordination and Planning: Planning cannot prove effective if the sub plans of the organisation does not match with the overall or main plan. Coordination reconciles the policies and programmes of the various departments with the policies and programmes of the organisation, so that overall objectives can be achieved. Proper coordination as well is required when plans of the organisation are prepared with the participation of all the people who are involved in it. Further, coordination can be achieved through planning by integrating the plans of different departments. Coordination and Organising: Organisation would be poor if there is lack of harmony in vertical and horizontal authority relationships. Coordination helps in simplifying the organisational structure as well as reduces the conflicts. Coordination is required at the time of division of work i.e. delegating authority and creating responsibility. So for successfully performing the function of organising, there is great need of coordination. Coordination and Staffing: Staffing must be consistent with the needs and the resources of the enterprise. Every manager requires coordination for performing the function of recruitment, selection, training, development, performance appraisal, transfers, demotion, promotion etc. Placing the right person at the right place and at the right time requires coordination. So coordination is required for effectively performing the function of management. Coordination and Direction: Direction cannot be proved effective if the orders and instructions given to the employees are not consistent with the requirements of the circumstances. Coordination promotes effective communication, leadership, supervision, and motivation. Similarly effective communication, leadership, motivation, and supervision enhance coordination in the enterprise. Coordination and Controlling: Controlling creates harmony between planning and the performance. For the measurement of actual performance, comparing it with the standards and taking the corrective action requires coordination of the different activities and the units in the organisation. So coordination is required for the performance of the controlling function efficiently. The above discussion makes it clear that coordination is the essence of management.

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UNIT5: HUMAN RESOURCES MANAGEMENT

CONCEPT OF HUMAN RESOURCE MANAGEMENT

Human Resource Management (HRM) is the function within an organization that focuses on recruitment of, management of, and providing direction for the people who work in the organization. Human Resource Management can also be performed by line managers. Human Resource Management is the organizational function that deals with issues related to people such as compensation, hiring, performance management, organization development, safety, wellness, benefits, employee motivation, communication, administration, and training. Human Resource Management is also a strategic and comprehensive approach to managing people and the workplace culture and environment. Effective HRM enables employees to contribute effectively and productively to the overall company direction and the accomplishment of the organization's goals and objectives. Human Resource Management is moving away from traditional personnel, administration, and transactional roles, which are increasingly outsourced. HRM is now expected to add value to the strategic utilization of employees and that employee programs impact the business in measurable ways. The new role of HRM involves strategic direction and HRM metrics and measurements to demonstrate value.
SCOPE OF HUMAN RESOURCE MANAGEMENT

Human resources are undoubtedly the key resources in an organization, the easiest and the most difficult to manage! The objectives of the HRM span right from the manpower needs assessment to management and retention of the same. To this effect Human resource management is responsible for effective designing and implementation of various policies, procedures and programs. It is all about developing and managing knowledge, skills, creativity, aptitude and talent and using them optimally. Human Resource Management is not just limited to manage and optimally exploit human intellect. It also focuses on managing physical and emotional capital of employees. Considering the intricacies involved, the scope of HRM is widening with every passing day. It covers but is not limited to HR planning, hiring (recruitment and selection), training and development, payroll management, rewards and recognitions, Industrial relations, grievance handling, legal procedures etc. In other words, we can say that its about developing and managing harmonious relationships at workplace and striking a balance between organizational goals and individual goals. The scope of HRM is extensive and far-reaching. Therefore, it is very difficult to define it concisely. However, we may classify the same under following heads: HRM in Personnel Management: This is typically direct manpower management that involves manpower planning, hiring (recruitment and selection), training and development, induction and orientation, transfer, promotion, compensation, layoff and retrenchment, employee productivity. The overall objective here is to ascertain individual growth, development and effectiveness which indirectly contribute to organizational development. It also includes performance appraisal, developing new skills, disbursement of wages, incentives, allowances, traveling policies and procedures and other related courses of actions. HRM in Employee Welfare: This particular aspect of HRM deals with working conditions and amenities at workplace. This includes a wide array of responsibilities and services such as safety services, health services, welfare funds, social security and medical services. It also covers appointment of safety officers, making the environment worth working, eliminating workplace hazards, support by top management, job safety, safeguarding machinery, cleanliness, proper ventilation and lighting, sanitation, medical care, sickness benefits, employment injury benefits, personal injury benefits, maternity benefits, unemployment benefits and family benefits. It also relates to supervision, employee counseling, establishing harmonious relationships with employees, education and training. Employee welfare is about determining employees real needs and fulfilling them with active participation of both management and employees. In addition to this, it also takes care of canteen facilities, crches, rest and lunch rooms, housing, transport, medical assistance, education, health and safety, recreation facilities, etc. HRM in Industrial Relations: Since it is a highly sensitive area, it needs careful interactions with labor or employee unions, addressing their grievances and settling the disputes effectively in order to maintain peace and harmony in the organization. It is the art and science of understanding the employment (union-management) relations, joint consultation, disciplinary procedures, solving problems with mutual efforts, understanding human behavior and maintaining work relations, collective bargaining and settlement of disputes. The main aim is to safeguarding the interest of employees by securing the highest level of understanding to the extent that does not leave a negative impact on organization. It is about establishing, growing and promoting industrial democracy to safeguard the interests of both employees and management.
STRATEGIC HUMAN RESOURCE MANAGEMENT

In todays intensely competitive and global marketplace, maintaining a competitive advantage is crucial. Competitive advantage lies not just in differentiating a product or service but in also being able to tap the companys special skills or core competencies and rapidly respond to customers needs and competitors moves. In other words competitive advantage lies in

M8-Principles & Practices of Management managements ability to consolidate corporate-wide technologies and production skills into competencies that empower individual businesses to adapt quickly to changing opportunities. Today there is greater recognition that distinctive competencies are obtained through highly developed employee skills, distinctive organizational cultures, management processes and systems. This is in contrast to the traditional emphasis on transferable resources such as equipment. Increasingly it is being recognized that competitive advantage can be obtained with a high quality workforce that enables organizations to compete on the basis of market responsiveness, product and service quality, differentiated products and technological innovation. Strategic human resource management has been defined as the linking of human resources with strategic goals and objectives in order to improve business performance and develop organizational culture that foster innovation and flexibility. Strategic HR means accepting the HR function as a strategic partner in the formulation of the companys strategies as well as in the implementation of those strategies through HR activities such as recruiting, selecting, training and rewarding personnel. Human Resource Management also plays a role in identifying and analyzing external opportunities and threats that may be crucial to the companys success. Similarly HR management is in a unique position to supply competitive intelligence that may be useful in the strategic planning process. HR also participates in the strategy formulation process by supplying information regarding the companys internal strengths and weaknesses. The strengths and weaknesses of a companys human resources can have a determining effect on the viability of the firms strategic options. The primary focus of a strategic human resource manager is to translate business strategies into HR priorities. In any business setting, whether at the corporate, functional, business unit or product line level a strategy exists either explicitly (in the formal process or document) or implicitly (through a shared agenda on priorities). As strategic partners, HR professionals identify the HR practices that make the strategy happen.
STAFFING FUNCTION

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The managerial function of staffing involves manning the organization structure through proper and effective selection, appraisal and development of the personnels to fill the roles assigned to the employers/workforce. According to Theo Haimann, Staffing pertains to recruitment, selection, development and compensation of subordinates.
NATURE OF STAFFING

1. Staffing is an important managerial function- Staffing function is the most important mangerial act along with planning, organizing, directing and controlling. The operations of these four functions depend upon the manpower which is available through staffing function. 2. Staffing is a pervasive activity- As staffing function is carried out by all mangers and in all types of concerns where business activities are carried out. 3. Staffing is a continuous activity- This is because staffing function continues throughout the life of an organization due to the transfers and promotions that take place. 4. The basis of staffing function is efficient management of personnels- Human resources can be efficiently managed by a system or proper procedure, that is, recruitment, selection, placement, training and development, providing remuneration, etc. 5. Staffing helps in placing right men at the right job. It can be done effectively through proper recruitment procedures and then finally selecting the most suitable candidate as per the job requirements. 6. Staffing is performed by all managers depending upon the nature of business, size of the company, qualifications and skills of managers,etc. In small companies, the top management generally performs this function.In medium and small scale enterprise, it is performed especially by the personnel department of that concern.
STAFFING PROCESS

Manpower requirements- The very first step in staffing is to plan the manpower inventory required by a concern in order to match them with the job requirements and demands. Therefore, it involves forecasting and determining the future manpower needs of the concern. 1. Recruitment- Once the requirements are notified, the concern invites and solicits applications according to the invitations made to the desirable candidates. 2. Selection- This is the screening step of staffing in which the solicited applications are screened out and suitable candidates are appointed as per the requirements. 3. Orientation and Placement- Once screening takes place, the appointed candidates are made familiar to the work units and work environment through the orientation programmes. placement takes place by putting right man on the right job. 4. Training and Development- Training is a part of incentives given to the workers in order to develop and grow them within the concern. Training is generally given according to the nature of activities and scope of expansion in it. Along with it, the workers are developed by providing them extra benefits of indepth knowledge of their functional areas. Development also includes giving them key and important jobsas a test or examination in order to analyse their performances.

M8-Principles & Practices of Management 5. Remuneration- It is a kind of compensation provided monetarily to the employees for their work performances. This is given according to the nature of job- skilled or unskilled, physical or mental, etc. Remuneration forms an important monetary incentive for the employees. 6. Performance Evaluation- In order to keep a track or record of the behaviour, attitudes as well as opinions of the workers towards their jobs. For this regular assessment is done to evaluate and supervise different work units in a concern. It is basically concerning to know the development cycle and growth patterns of the employeesin a concern. 7. Promotion and transfer- Promotion is said to be a non- monetary incentive in which the worker is shifted from a higher job demanding bigger responsibilities as well as shifting the workers and transferring them to different work units and branches of the same organization.
PERSONNEL MANAGEMENT

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Personnel management can be defined as obtaining, using and maintaining a satisfied workforce. It is a significant part of management concerned with employees at work and with their relationship within the organization. According to Flippo, Personnel management is the planning, organizing, compensation, integration and maintainance of people for the purpose of contributing to organizational, individual and societal goals. According to Brech, Personnel Management is that part which is primarily concerned with human resource of organization.
NATURE OF PERSONNEL MANAGEMENT

1. Personnel management includes the function of employment, development and compensation- These functions are performed primarily by the personnel management in consultation with other departments. 2. Personnel management is an extension to general management. It is concerned with promoting and stimulating competent work force to make their fullest contribution to the concern. 3. Personnel management exist to advice and assist the line managers in personnel matters. Therefore, personnel department is a staff department of an organization. 4. Personnel management lays emphasize on action rather than making lengthy schedules, plans, work methods. The problems and grievances of people at work can be solved more effectively through rationale personnel policies. 5. It is based on human orientation. It tries to help the workers to develop their potential fully to the concern. 6. It also motivates the employees through its effective incentive plans so that the employees provide fullest co-operation. 7. Personnel management deals with human resources of a concern. In context to human resources, it manages both individual as well as blue- collar workers.
FUNCTIONS OF PERSONNEL MANAGEMENT

Following are the four functions of Personnel Management: 1. Manpower Planning: Manpower Planning which is also called as Human Resource Planning consists of putting right number of people, right kind of people at the right place, right time, doing the right things for which they are suited for the achievement of goals of the organization. Human Resource Planning has got an important place in the arena of industrialization. Human Resource Planning has to be a systems approach and is carried out in a set procedure. The procedure is as follows: Steps in Manpower Planning 1. Analysing the current manpower inventory- Before a manager makes forecast of future manpower, the current manpower status has to be analysed. For this the following things have to be noted Type of organization Number of departments Number and quantity of such departments Employees in these work units Once these factors are registered by a manager, he goes for the future forecasting. 2. Making future manpower forecasts- Once the factors affecting the future manpower forecasts are known, planning can be done for the future manpower requirements in several work units. The Manpower forecasting techniques commonly employed by the organizations are as follows: a. Expert Forecasts: This includes informal decisions, formal expert surveys and Delphi technique. b. Trend Analysis: Manpower needs can be projected through extrapolation (projecting past trends), indexation (using base year as basis), and statistical analysis (central tendency measure). c. Work Load Analysis: It is dependent upon the nature of work load in a department, in a branch or in a division. d. Work Force Analysis: Whenever production and time period has to be analysed, due allowances have to be made for getting net manpower requirements. e. Other methods: Several Mathematical models, with the aid of computers are used to forecast manpower needs, like budget and planning analysis, regression, new venture analysis. 3. Developing employment programmes- Once the current inventory is compared with future forecasts, the employment programmes can be framed and developed accordingly, which will include recruitment, selection procedures and placement plans.

M8-Principles & Practices of Management 4. Design training programmes- These will be based upon extent of diversification, expansion plans, development programmes,etc. Training programmes depend upon the extent of improvement in technology and advancement to take place. It is also done to improve upon the skills, capabilities, knowledge of the workers. 2. Recruitment: Recruitment is of 2 types Internal Recruitment - is a recruitment which takes place within the concern or organization. Internal sources of recruitment are readily available to an organization. Internal sources are primarily three - Transfers, promotions and Reemployment of ex-employees. Re-employment of ex-employees is one of the internal sources of recruitment in which employees can be invited and appointed to fill vacancies in the concern. There are situations when ex-employees provide unsolicited applications also. Internal recruitment may lead to increase in employees productivity as their motivation level increases. It also saves time, money and efforts. But a drawback of internal recruitment is that it refrains the organization from new blood. Also, not all the manpower requirements can be met through internal recruitment. Hiring from outside has to be done. Internal sources are primarily 3 a. Transfers b. Promotions (through Internal Job Postings) and c. Re-employment of ex-employees - Re-employment of ex-employees is one of the internal sources of recruitment in which employees can be invited and appointed to fill vacancies in the concern. There are situations when exemployees provide unsolicited applications also. External Recruitment - External sources of recruitment have to be solicited from outside the organization. External sources are external to a concern. But it involves lot of time and money. The external sources of recruitment include - Employment at factory gate, advertisements, employment exchanges, employment agencies, educational institutes, labour contractors, recommendations etc. a. Employment at Factory Level - This a source of external recruitment in which the applications for vacancies are presented on bulletin boards outside the Factory or at the Gate. This kind of recruitment is applicable generally where factory workers are to be appointed. There are people who keep on soliciting jobs from one place to another. These applicants are called as unsolicited applicants. These types of workers apply on their own for their job. For this kind of recruitment workers have a tendency to shift from one factory to another and therefore they are called as badli workers. b. Advertisement - It is an external source which has got an important place in recruitment procedure. The biggest advantage of advertisement is that it covers a wide area of market and scattered applicants can get information from advertisements. Medium used is Newspapers and Television. c. Employment Exchanges - There are certain Employment exchanges which are run by government. Most of the government undertakings and concerns employ people through such exchanges. Now-a-days recruitment in government agencies has become compulsory through employment exchange. d. Employment Agencies - There are certain professional organizations which look towards recruitment and employment of people, i.e. these private agencies run by private individuals supply required manpower to needy concerns. e. Educational Institutions - There are certain professional Institutions which serves as an external source for recruiting fresh graduates from these institutes. This kind of recruitment done through such educational institutions, is called as Campus Recruitment. They have special recruitment cells which helps in providing jobs to fresh candidates. f. Recommendations - There are certain people who have experience in a particular area. They enjoy goodwill and a stand in the company. There are certain vacancies which are filled by recommendations of such people. The biggest drawback of this source is that the company has to rely totally on such people which can later on prove to be inefficient. g. Labour Contractors - These are the specialist people who supply manpower to the Factory or Manufacturing plants. Through these contractors, workers are appointed on contract basis, i.e. for a particular time period. Under conditions when these contractors leave the organization, such people who are appointed have to also leave the concern. 3. Selection: Employee Selection is the process of putting right men on right job. It is a procedure of matching organizational requirements with the skills and qualifications of people. Effective selection can be done only when there is effective matching. By selecting best candidate for the required job, the organization will get quality performance of employees. Moreover, organization will face less of absenteeism and employee turnover problems. By selecting right candidate for the required job, organization will also save time and money. Proper screening of candidates takes place during selection procedure. All the potential candidates who apply for the given job are tested. But selection must be differentiated from recruitment, though these are two phases of employment process. Recruitment is considered to be a positive process as it motivates more of candidates to apply for the job. It creates a pool of applicants. It is just sourcing of data. While selection is a negative process as the inappropriate candidates are rejected here. Recruitment precedes selection in staffing process. Selection involves choosing the best candidate with best abilities, skills and knowledge for the required job. The Employee selection Process takes place in following order1. Preliminary Interviews- It is used to eliminate those candidates who do not meet the minimum eligiblity criteria laid down by the organization. The skills, academic and family background, competencies and interests of the candidate are

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M8-Principles & Practices of Management examined during preliminary interview. Preliminary interviews are less formalized and planned than the final interviews. The candidates are given a brief up about the company and the job profile; and it is also examined how much the candidate knows about the company. Preliminary interviews are also called screening interviews. 2. Application blanks- The candidates who clear the preliminary interview are required to fill application blank. It contains data record of the candidates such as details about age, qualifications, reason for leaving previous job, experience, etc. 3. Written Tests- Various written tests conducted during selection procedure are aptitude test, intelligence test, reasoning test, personality test, etc. These tests are used to objectively assess the potential candidate. They should not be biased. 4. Employment Interviews- It is a one to one interaction between the interviewer and the potential candidate. It is used to find whether the candidate is best suited for the required job or not. But such interviews consume time and money both. Moreover the competencies of the candidate cannot be judged. Such interviews may be biased at times. Such interviews should be conducted properly. No distractions should be there in room. There should be an honest communication between candidate and interviewer. 5. Medical examination- Medical tests are conducted to ensure physical fitness of the potential employee. It will decrease chances of employee absenteeism. 6. Appointment Letter- A reference check is made about the candidate selected and then finally he is appointed by giving a formal appointment letter. 4. Training and Development: Training of employees takes place after orientation takes place. Training is the process of enhancing the skills, capabilities and knowledge of employees for doing a particular job. Training process moulds the thinking of employees and leads to quality performance of employees. It is continuous and never ending in nature. Importance of Training Training is crucial for organizational development and success. It is fruitful to both employers and employees of an organization. An employee will become more efficient and productive if he is trained well. Training is given on four basic grounds: 1. New candidates who join an organization are given training. This training familiarize them with the organizational mission, vision, rules and regulations and the working conditions. 2. The existing employees are trained to refresh and enhance their knowledge. 3. If any updations and amendments take place in technology, training is given to cope up with those changes. For instance, purchasing a new equipment, changes in technique of production, computer implantment. The employees are trained about use of new equipments and work methods. 4. When promotion and career growth becomes important. Training is given so that employees are prepared to share the responsibilities of the higher level job. The benefits of training can be summed up as: 1. Improves morale of employees- Training helps the employee to get job security and job satisfaction. The more satisfied the employee is and the greater is his morale, the more he will contribute to organizational success and the lesser will be employee absenteeism and turnover. 2. Less supervision- A well trained employee will be well acquainted with the job and will need less of supervision. Thus, there will be less wastage of time and efforts. 3. Fewer accidents- Errors are likely to occur if the employees lack knowledge and skills required for doing a particular job. The more trained an employee is, the less are the chances of committing accidents in job and the more proficient the employee becomes. 4. Chances of promotion- Employees acquire skills and efficiency during training. They become more eligible for promotion. They become an asset for the organization. 5. Increased productivity- Training improves efficiency and productivity of employees. Well trained employees show both quantity and quality performance. There is less wastage of time, money and resources if employees are properly trained. Ways/Methods of Training Training is generally imparted in two ways: On the job training- On the job training methods are those which are given to the employees within the everyday working of a concern. It is a simple and cost-effective training method. The inproficient as well as semi- proficient employees can be well trained by using such training method. The employees are trained in actual working scenario. The motto of such training is learning by doing. Instances of such on-job training methods are job-rotation, coaching, temporary promotions, etc. Off the job training- Off the job training methods are those in which training is provided away from the actual working condition. It is generally used in case of new employees. Instances of off the job training methods are workshops, seminars, conferences, etc. Such method is costly and is effective if and only if large number of employees have to be trained within a short time period. Off the job training is also called as vestibule training,i.e., the employees are trained in a separate area( may be a hall, entrance, reception area,etc. known as a vestibule) where the actual working conditions are duplicated.

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EMPLOYEE RELATIONS

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Maintaining healthy employee relations in an organization is a pre-requisite for organizational success. Strong employee relations are required for high productivity and human satisfaction. Employee relations generally deal with avoiding and resolving issues concerning individuals which might arise out of or influence the work scenario. Strong employee relation depends upon healthy and safe work environment, cent percent involvement and commitment of all employees, incentives for employee motivation, and effective communication system in the organization. Healthy employee relations lead to more efficient, motivated and productive employees which further lead to increase in sales level. Good employee relation signifies that employees should feel positive about their identity, their job as well as about being a part of such a great organization. Despite the importance of strong and healthy employee relations, there are circumstances in the life of every organization when employee and management relations are hampered. Instances of such circumstances are as follows1. When the employees do not behave as per accepted norms of behaviour, it is known as employee indiscipline. Absenteeism, change in employees behaviour, slow performance and grievances are all forms of employee indiscipline. Thus, when the employees fail to meet management expectations in terms of standard performance and behaviour, it is referred to as indiscipline. In such cases, it must be ensured by the management that steps should be taken so that employees behaviour is in conformity with the managerial expectations. 2. Similarly, the employees also expect from the management to provide them a safe working environment, fair treatment, proper incentives, participation in decisions, and needs satisfaction. The failure on part of management to meet these expectations is termed as employee grievance. 3. When the employees fail to meet their own expectations whether in terms of personal goals, career goals, performance, self-respect, etc it is referred to as employee stress. Excessive workload, insufficient workload, peer pressure, excessive/unreasonable use of authority by the management, lack of promotional opportunities, nature of job, etc all again lead to employee stress. All the above mentioned organizational factors influencing employees relation must be carefully tackled. An optimistic approach to strengthen disciplinary culture rooted on shared norms of employees should be adopted. An effective grievance redressal system should be there. Stress management strategies should be followed in the organization. Improving Employee Relations Employee relations must be strengthened in an organization. To do so, following points must be taken care of:i. Employee has expectation of fair and just treatment by the management. Thus, management must treat all employees as individuals and must treat them in a fair manner. Employee favoritism should be avoided. ii. Do not make the employees job monotonous. Keep it interesting. Make it more challenging. This can be done by assigning employees greater responsibilities or indulging them in training programmes. iii. Maintain a continuous interaction with the employees. Keep them updated about companys policies, procedures and decisions. Keep the employees well-informed. Informed employees will make sound decisions and will remain motivated and productive. Also, they will feel as a member of organizational family in this manner. iv. Employees must be rewarded and appreciated for a well-done job or for achieving/over-meeting their targets. This will boost them and they will work together as a team. v. Encourage employee feedback. This feedback will make the employers aware of the concerns of employees, and their views about you as an employer. vi. Give the employees competitive salary. They should be fairly paid for their talents, skills and competencies. vii. Be friendly but not over-friendly with the employees. Build a good rapport with the employee. The employee should feel comfortable with the manager/supervisor rather than feeling scared.