BB 0031 Management Development

BLOCK INTRODUCTION
Efficient management of human resources and physical resources is very important for the accomplishment of objectives of any organisation. Todays managers are required to use professional skills for greater effectiveness. These skills can be acquired by studying the management science and practising the principles of management. This book is an attempt to provide an effective aid to the development of an undertaking of the basic concepts that relate to the practice of management in all kinds of organised endeavour. This book contains nine units. The first two units discuss the nature and the history of management thought. The last seven units deal with the functions of management viz., Planning, Decision-making, Organising, Staffing, Selection, Direction, Co-ordination and Control.
Brig. (Dr.) R. S. Grewal VSM (Retd.) Pro Vice Chancellor Sikkim Manipal University of Health, Medical & Technological Sciences Advisory Board 1. Dr. Janardan Jha 2. Dr. N. Chandrasekar 3. Prof. S. R. Bhillar 4. Prof. B. S. Sharma 5. Sri Pramod Khera 6. Major Sushil Goel 7. H. N. Udupa, Associate Professor Content Preparation Team Content Writing/Compilation Mr. Umesh Maiya Assistant Professor Sikkim Manipal University Manipal Content and Language Editing Dr. Janardan Jha Senior Vice President Manipal Universal Learning Pvt. Ltd. Manipal 576 104 Mr. H. Nagaraja Udupa Co-ordinator Sikkim Manipal University Manipal Edition: June 2003 Reprinted for Spring 2008 This book is a distance education module comprising of written and collated learning material for our students. All rights reserved. No part of this work may be reproduced in any form by any means without permission in writing from Sikkim Manipal University of Health, Medical and Technological Sciences, Gangtok, Sikkim. Printed and Published on behalf of Sikkim Manipal University of Health, Medical and Technological Sciences, Gangtok, Sikkim by Mr. Rajkumar Mascreen, GM, Manipal Universal Learning Pvt. Ltd., Manipal 576 104. Printed at Manipal Press Limited, Manipal.
BB 0031 Management Development

Contents
Unit 1 Management Unit 2 Evolution of Management Unit 3 Planning Unit 4 Decision Making Unit 5 Organising Unit 6 Staffing Unit 7 Selection Unit 8 Direction and Co-ordination Unit 9 118 110 100 73 64 48 17 1
Controlling
BKID B0184 13 Nov. 2007
th
136
Management
Unit 1
Unit 1
Structure 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 1.10 Introduction Meaning Definitions of Management Features of Management Levels of Management Management as a Profession Management as Science Management as an Art Managerial roles Exercise
Management
1.1 Introduction
A Business is comprised of 7 elements popularly known as 7 Ms. They are Men, Materials, Money, Machines, Methods, Market and Management. Among these elements Management is the most important because all other elements are determined and controlled by it.
1.2 Meaning
Management is the activity for getting things done by others. For this it is necessary to guide, direct, co-ordinate and to control human efforts towards the fulfillment of certain common goals. Management represents that skill which directs, regulates and integrates human efforts in the discharge of all operations required for an enterprise. Management is like a pipeline, the inputs are fed at one end and they are processed through management functions like planning, organising, directing, controlling and ultimately we get the end result or output in
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the form of goods and services, profit, productivity; satisfaction etc. This can be seen in the following chart:
Planning Organising
Management Men Input Materials Money Machines Methods Market
Profits Goods &
Management
Services Productivity
Output
Directing Co-ordinating
Controlling
Satisfaction
1.3 Definitions of Management

1) F. W. Taylor Management is an art of knowing exactly what you want men to do and than seeing that it is done in the best and cheapest way. Managers according to Taylor should secure the maximum from men; materials, machines and money. He stressed on knowing the job and doing it in the best way. He has not given much importance to men because of which he was criticised by many. 2) Henry Fayol To manage is to forecast and to plan, to organise, to command, to co-ordination and to control. This definition has mentioned the functions of management for achieving desired results. According to Fayol, Management is the process of planning, organising , commanding, co-ordinating and controlling. 3) Ralph C. Davis Management is the function of executive leadership. 4) Donald J. Clough Management is the art and science of decision making and leadership. Both these definitions speaks on managers responsibility of taking decisions and directing the activity of others.
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5) Lawrence W. Apley Management is the development of people and not direction of things. This definition says that people give their best when they are developed rather than when they are ordered to do this or that. The above definitions may reflect different approaches but do not run counter to each other. No single definition can give the exact and complete meaning of management. Management today is facing many challenges and its job has become more complex due to pressures from internal as well as external environment. The demands of the employees, share holders, customers and the Government put pressures on management. In such a situation
management becomes a function of four Ps. They are Productivity, People, Profit and Public Responsibility.
1.4 Features of Management

The analysis of the above definitions brings out the following features of management. 1) Management is a Process: It is the process of planning, organising, directing, co-ordinating and controlling. These functions should be performed continuously and simultaneously. The manager acts by assuming authority, expecting responsibility, delegating authority and establishing accountability for actions of individuals within the organisation. He brings together men, materials, machines and money and makes the best use of these resources for the benefit of the entire organisation. 2) It is a Social Process: Managers job is to get things done by others. People cannot be ignored in an organisation because they have been described as the means to achieve the ends of the organisation. Thus management is a social process.
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3) Management involves Team Efforts: Management utilises team efforts to achieve the goals of the organisation. The manager alone cannot fulfill the objectives of the organisation. He needs the help of his employees. 4) It aims at Achieving Pre-determined Objectives: All organisations are groups of individuals formed for achieving common objectives. Once the organisation comes into existence it is for the realisation of some definite objectives which may be expressed or implied. The objectives are determined by administration. 5) It is a Distinct Activity: A good manager does not believe in doing work for himself but in getting things done by others. Thus management is a distinct type of work. 6) Management Management is a Multi-disciplinary upon many Subject: The discipline of
depends
other
subjects
like
Sociology,
Psychology, Economics, Mathematics, Statistics etc. 7) Co-ordination is the essence of Management: Co-ordination is an important function of management. A successful manager has to coordinate individual and departmental activities in such a way so as to achieve common objectives. 8) Management is a system of authority: Management is a rule making and rule enforcing body. As superior subordinate relationship is existing in an enterprise management becomes a system of authority. 9) Management is required at all levels: The manager is to perform the same functions at all levels of the organisation. Whether it is top level, middle level or lower level the functions performed are the same. In all the situations getting things done by other calls for decision making. Of course managers at the top level make more important decisions than the managers at other levels.
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10) Management is essentially a human activity: An individual makes use of the technique developed by Management to achieve certain objectives such as best use of time, energy, money and other resources but ultimately the analysis of the situation is to be done by the manager. 11) Management is a Profession: Management is backed by a systematic body of knowledge. A number of principles have been developed which needs proper training and education. Thus management to some extent is being developed as a profession. 12) Management is an art as well as Science: Management is an art because desired results can be secured by the application of skills. Management is also a science because it has a body of organised knowledge relating to planning, organising, directing, and controlling. With the help of this management can take sure decisions and avoid chance decisions.
1.5 Levels of Management

In any company of any size it is humanly impossible for one individual to do justice to the multifarious activities and complex demand of both management and the people in and outside the business. Therefore authority has to be delegated and responsibility diversified as management believes in getting work done by others. This builds up the superior subordinate relationship and the managerial hierarchy. Knootz O Donell have classified management into two level i.e. (1) Top level (2) Supervisory level. Some have divided management into 5 levels namely (1) Top level (2) Upper middle level (3) Middle level
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(4) Lower level and (5) Operating level or frontline. However generally speaking management has 3 levels i.e. (1) Top Level: Which determines the objectives and policies. (2) Middle Level: Concerned with implementation of the policies. (3) Lower Level: Actively assisting in the achievement of the goal. The number of levels of management is not rigid. It can be increased but not to an unlimited extent because creation of each level complicates the problem of co-ordination, communication, control and adds to the cost of management. However the span of control should not be widened to restrict the number of managerial levels. The following diagram shows various levels of management.
Board of Director
Managing Director
General Manager
Manager (Personnel Dept.)
Manager (Production Dept.)
Manager (Marketing Dept.)
Assistant Manager
Assistant Manager
Assistant Manager
Heads of various Section Supervisors
Superintendent of Production Foremen
Branch Manager
Sales Officers
Workers
Workers
Workers
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Top Level Management

It is the head of the organisation. It consist of Board of Directors, Chief executives, Managing Directors and the General Managers. They are the ultimate source of authority. They set the goals, establish the policies, see that the policies are put into effect and analyse the results. It performs all the management functions but spend more time on planning and organising than other two levels. The policies and objectives of the company are framed and setup by the board of directors. But the directors are not the people who will implement their own policies. Therefore this task is entrusted to the managing director or general manager who is the chief executive. The chief executive issues necessary orders and instructions to the subordinate and from time to time he will see that the directors policies are properly implemented so as to achieve companys objectives. He is directly accountable to the Board of directors. He has to answer them about the results of the company and present proper books of accounts when needed. Thus he is the liaison officer between the director and the rest of the company. Functions: Main functions of top level Management are: 1) Determine Objectives: They decide both the general objectives and specific objectives of the company. 2) Frame the Policies: They have to develop the policies and plans to carry out the objectives. They have to achieve the objectives also. 3) Setting up Organisational Structure: They also determine the structure of the organisation for the execution of plans. 4) Assemble the Resources: They bring together men, materials, machines and money. 5) Control the Operation: Control are administered by top level management in the form of budgets, statistical quality control and accounting devices.
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Middle Level Management: This level is concerned with the task of implementing the policies and plans prepared by the top level management. They act with and under top management for achievement of objectives. It includes heads of various departments and other executive officers attached to different departments. They take instructions from Top Management and direct and guide the supervisors under their charge. They receive pressures from three sides i.e. from top management in the form of orders, from below who press for correct decision and from his colleagues in other departments which are interrelated to some extent. They are concerned with the results of their department for performing their task. They should have human relation skill. Functions: Mary C. Niles in her book Middle Level Management, has laid down the following functions. 1) To run the details of the organisation leaving the top executives as free as possible. 2) To Co-operate in building a smoothly functioning organisation. 3) To understand the interdependence of departments. 4) To achieve the Co-ordination between different parts of organisation to build up a continued and efficient staff. 5) To develop leaders for the future. 6) To build team spirit where all are working to provide a product or service wanted by the society. Lower Level Management: They are a link between the management and workers. They implement the policies of top management communicated to them by middle level management. Their main work is to get the actual work done. They deal with people of the company and internal working arrangement. They provide a final and finishing touch to the policies and plans of the top management. They are more concerned with direction and control functions of management. So they should possess more of technical skill than other levels.
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Functions: 1) 2) 3) 4) 5) 6) 7) 8) 9) 10) 11) To issue orders and instructions to the workers and supervise and control. To plan the activities of the section. To arrange for the necessary equipments, materials, tools etc. To provide on-the-job training. To look after the proper maintenance of tools and machinery. To solve the problem of workers. To communicate the problem of workers. To maintain discipline and right approach for work. To act as liaison officer between management and workers. To build team spirit. To maintain good human relation.
The following diagram shows the functions to be performed and skills needed by different levels of management.
Top Level Controlling Technical Skills Page No. 9 Planning Directing
Middle Level
Lower Level
Top Level Human Relations Skills Conceptual Skills
Middle Level
Lower Level
Conclusion:
Organising
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Managers of all levels perform the same management functions i.e. planning, organising, directing and controlling. But the difference lies in the emphasis. Top management spents more time in planning and organising, the middle management and the lower management in directing and controlling the workers.
1.6 Management as a Profession

It is very difficult to answer the question Is Management a Profession ? because there is no universally accepted definition of the term profession and the roles of the managers are extremely diverse. A profession is much more than a career which denotes merely the way of making a livelihood. It is also different from trade which represents a mercantile employment for profit. It is also distinct from occupation which is merely engaging ones time. The term profession is an activity which involves earning of a distinct intellectual quality. It can be defined as an occupation for which specialised skills and training are required and the use of these skills is not meant for self satisfaction, but are used for the larger interest of the society and the success of these skills is measured not in terms of money alone. Andrews has laid down five criteria for judging whether a field of activity is a profession. They are: 1) Knowledge: Existence of an organised and systematic knowledge. 2) Competent Application: Skilled and judicious utilisation of knowledge which are acquired by training and experience. 3) Social Responsibility: Primarily motivated by the desire to serve others and the community rather than monetary reward. 4) Self Control: Existence of an association with professionalization as its goal which formulates ethical codes for guidance of conduct. 5) Community Section: A condition of high community respect based upon societys recognition of the first four criteria.
Whether Management satisfies these tests

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1) Knowledge: Management no doubt do have rapid expanding body of knowledge underlying the management field. Starting from Henry Fayols General and Industrial Management, many management books and journals have been brought to light. 2) Competent Application: Management Curriculum in universities and management development programmes in commerce and industry have gained popularity, many institutes of management have come into being in India and elsewhere which offer courses for specialisation in various fields of management. Several management consultancy service firms have also come into existence which offer advice to business concerns on management problems. 3) Social Responsibility: Modern managers recognise their social responsibilities. We see such statements by business leaders in newspapers almost everyday. 4) Self Control: There is no universally accepted standards for evaluating managerial teams. There is no central agency to establish and enforce a code of conduct for the business managers. Therefore management does not fulfill the self-control criteria of a profession. 5) Community Sanction: Managerial personnel enjoy high status in the society. There is a direct relationship between the position of an individual in the organisational structure and his status in the society. Thus community approves management as a profession. Thus we can conclude management to be a profession as it satisfies most of the standards. But in the true sense of professionalisation, management is still far from complete as it does not have a code of conduct which puts self control on the managers. This is considerably narrowed which clearly indicates that management is moving towards professionalisation. This can be substantiated with the help of the following points: i) Substantial body of accumulated knowledge: Gradually management has developed a specialized body of theory and philosophy which is fast
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growing and it has become the best passport to enter the world of employment. ii) Compulsory Acquisition of Management Knowledge: It is becoming very essential to acquire management knowledge if one has to become a successful manager because of the advanced technology and complexities of business. iii) Management Tools: Continuous research has helped in the development of management tools whose application is becoming a must for the success or growth of an enterprise. These branches of management Profession have enhanced the practical utility of management. iv) A Distinct discipline: Today management has become a distinct discipline. Schools & institutes are offering masters degree in management, conducting seminars, symposiums, specialized courses, training programmes etc. in various areas of management. This is making management more specialized. v) Use of specialized experts & professionals: The place of Sons of father are being replaced by highly qualified, trained & experienced persons to manage the business. vi) Change in Outlook and Code of Conduct: Today the concept of seller beware has taken the place of Buyer Beware. Pressure of consumerism, trade unionism, public opinion & legislation are inducing the management to evolve a code of conduct. There are several codes of conduct for different types of managers by their respective organisation in different parts of the world. Eg: Code of conduct of British Institute of Management vii) Honesty & personal integrity: These two are fundamental for gaining universal acceptance for the practice of profession. Gentlemanly behaviour in terms of respecting the views of others & other profession is of core importance in management because of the fact that a large no. of specialists from different profession are employed in the business today.
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viii) Management Associations: Today many Management Associations are coming up which play an important role in spreading the new techniques of management in different areas. ix) Need for managerial democracy: One fundamental problem of the modern age is to replace managerial aristocracy by managerial democracy. It is the professional features of management which alone are to be taught & learned as a discipline that make possible the attainment of management democracy in modern business. x) Problem of managing men: Understanding of human nature, recognition of individual differences in men, a corrective approach towards the short coming in men & an appreciation of their real needs & problems as workers and human being are essential pre-requisites in establishing the leader, follower relationship. Only professional management can cope with this aspects of personal management. Two Factors have contributed to the above move towards professionalisation of management in India. They are i) The growth of private sector has been faster than that of the business families controlling the three fourth of the private sector. ii) The growth of the public sector has given an honourable place to the professional managers in the industrial enterprises run by the Government.
1.7 Management as Science

Science is a systematically organised body of knowledge based on proper findings and exact principles capable of verification. It contains some general truths explaining past events or phenomenon. Any subject which is scientifically developed and consist of universally accepted principles is science. In order to be recognised as a science a subject should have the following characteristics: 1) It should have a systematised body of knowledge including concepts, principles and theories. 2) It should have a method of scientific inquiry.
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3) It should establish cause and effect relationship. 4) Its principles should be verifiable. 5) It should have universal application. 6) It should ensure predictable results.
Whether Management Satisfies these Features

1) Systematised Body of Knowledge: Management has a systematized body of knowledge pertaining to its field. Its principles have been evolved on the basis of observation not necessarily through the use of scientific methods. 2) Scientific Enquiry: The researchers in management use scientific techniques to collect and analyse data about human behaviour. 3) Cause and effect relationship: Several principles have been developed which also establishes cause and effect relationships. 4) Verifiability of the Principles: The principles of management have also been verified by many researchers. 5) Universal Application: More or less these principles have universal application in different types of organisations. 6) Predictable results: Management theories and principles may not produce the exact results as in case of pure science. It shows different results in different situation because it deals with the people and their behaviour which cannot be accurately predicted. Moreover it is not possible to conduct experiments in a controlled environment as in case of other pure sciences. This puts the limitation on Management as a science. Conclusion: Management satisfies almost all the features of a science except ensuring predictable results. Therefore management cannot be considered as an exact or pure science. It is an Inexact Science or Soft Science. It is classified as one of the social sciences.
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1.8 Management as an Art

Management is also an art. Art is bringing about desired results through the application of skills. Every manager has to apply certain knowledge and skills while dealing with people and resources to achieve desired results. In fact management is one of the most creative art. As an art, management calls for enormous ability, intuition and judgement for a manager for functioning. From the above discussions we can say that management is both a science and an art. So the manager should possess not only the specialised knowledge of management but also the skill to put his knowledge into practice.
1.9 Managerial roles

A manager is concerned with planning, organising, directing and controlling functions of the organisation. But actually every manager takes on a much wider range of roles to move the organisation towards its stated objectives. In a broad sense, a role consists of the behaviour patterns expected of an individual with in an organisation. Henry Mintzburg made an extensive survey and found out that all the managers play a series of interpersonal, informational and decision making roles. They are: A) Interpersonal Roles: These roles help managers to keep their organisation running smoothly. 1) Figurehead: In this role, every manager has to perform same duties such as greeting the dignatories, taking the visitors to lunch, attending subordinates wedding etc. Managers are symbols and personify the organisation and its members. 2) Leader: As a leader, every manager must motivate and encourage his employees. 3) Liaison: Like politicians, managers must learn to work with everyone inside and outside the organisation who help in the achievement of organisational goals.
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B) Informational roles: Managers need information to make intelligent decisions. So receiving and communicating information are the most important aspects of a managers job. 1) Dissiminator: In the role of a dissiminator, the manager passes some of his information directly to his subordinates. 2) Monitor: Managers are constantly looking for useful information both within and outside the organisation. They may question and collect the information from subordinates. 3) Spokes person: In this role manager informs various groups and individuals outside the firm. C) Decisional Roles 1) Entrepreneur: In this role, the manager constantly looks out for new ideas and seeks to improve his unit. 2) Disturbance handler: In this role manager must seek solutions to unanticipated problems like strikes, financial difficulties etc. 3) Resource allocator: Here manager has to decide who will get what resources (men, machines, money, etc.). He has to decide to undertake the tasks in the order of priority. 4) Negotiator: Managers make negotiations both within and outside the organisation.
1.10 Exercise
1. Define Management. What are its features ? 2. Explain the different levels of Management. 3. Is Management a profession ? 4. Explain the Managerial roles.
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Evolution of Management
Unit 2
Unit 2
Structure 2.1 Introduction
2.2 Evolution of Management

2.2.1 2.2.2 2.2.3 2.2.4 2.2.5 2.2.6 2.2.7 2.2.8 2.2.9 Management in Antiquity Pre-Scientific Management Scientific Management Functional Management Human Relations School of Management Behavioural School of Management Quantitative approach to Management Systems approach to Management Contingency approach to Management
2.2.10 Management thought today 2.3 Exercise
2.1 Introduction
The existence of Management can be seen with dawn of civilization. It took its birth when man started living in groups, but it took the form of leadership, co-ordinating the efforts of the members of the family. Evidence of the use of the well recognised principles of Management was found in the organisation of public life in ancient Greece, the Organisation of Roman Catholic Church and Military Organisation. However theory of Management could not be developed due to the following reasons: 1) Indifferent approach of sociologist, economist, political thinkers towards commerce, trade and industry. 2) Treatment of Management as an art and not a Science. 3) Concept that managers are born and not made.
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With
the
growth
of
socio-economic,
political
and
scientific
institution,
Management started developing. This shows that Management was evolutionary.
2.2 Evolution of Management

The evolution of Management can be divided into different stages: Management in Antiquity. Pre-Scientific Management Scientific Management Functional Management Human Relations approach to Management. Behavioural science approach to Management. Quantitative approach to Management. Systems approach to Management. Contingency approach to Management. Management in Antiquity: Management which first began in the family
2.2.1
organisation expanded to the tribe and finally to the political units as found in Babylonian Civilization. The concept of managerial responsibility was clearly evidence in the code of Hamurabi. The Egyptians skill in planning and organising the construction of public edifices can be seen in their buildings and pyramids. The Chinese philosophers were the first to recognise the need for systematic selection of employees. Kautilyas Arthasastra speaks on duties of king and his ministers and Management of trade and commerce. But however, Management was strictly on a trial and error basis with little or no theory and visually no exchange of ideas and practices. Principles were not united in the stream of Management thought. 2.2.2 Pre-Scientific Management: Following closely the vast physical changes in the world economy, changes in the concepts and conduct of Management took
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place. Certain pioneers challenged the traditional character of Management by introducing new idea and approach. Some of the contributors are a) Prof. Charles Babbage (1729 1871): He was a mathematics professor at Cambridge University. He visited many factories in England and France and found that factories were fully run by traditional methods. Manufacturers were wholly unscientific and made little use of science or mathematics. They relied on opinion and guess work instead of investigation and accurate knowledge. Contributions: He advocated the use of science and mathematics in factory operations. He invented calculating machine called the differential engine. He published a book in 1832 entitled On the economy of machinery and manufacturers. In his book he emphasises on the following points: 1) Use of accurate data obtained by rigid investigation. 2) Desirability of finding out the number of times each operation is repeated each hour. 3) Dividing of work into mental and physical task. 4) Determining the precise cost of performing every process. 5) Paying of bonus to the workers in proportion to efficiency. b) Robert Owen: He started a factory for the manufacture of textile machinery and in 1800 he become the managing director. He carried out experiments in the group of textile mills he managed during the period. He is well-known as the promoter of co-operative and trade union movement in England. He was the first industrialist who was interested in his workers welfare on the job. Throughout his life he worked for building up a spirit of co-operation between the workers and Management. He is also called as the father of Personal Management. Contribution: He firmly believed that the workers performance was influenced by the total environment of working conditions and just treatment. Therefore he emphasizes the practice of:
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i) Shorter working hours ii) Housing facilities iii) Training of worker and hygiene iv) Education to their children. He took active part in its introduction at the British factory in 1819. He preached personal Management as an essential part of every managers job. c) James Watt Jr. and Mathew Robinson: They were the sons of the inventor of steam engine. They became the owners of an engineering factory where they used their principles. Contributions: They emphasized on i) Market research and forecasting. ii) Planned machine layout to facilitate better flow of work. iii) Production Planning. iv) Standardisation of components and parts. v) Accurate Statistical Records. vi) Maintenance of advance control techniques. vii) Provision of welfare with sickness and old age benefit scheme administered by an elected committee of employees. viii) Scheme for developing executives. 2.2.3 Scientific Management: Introduction of mass production, large scale
industry and use of expensive machinery resulted in difficulties of maintaining the harmonious relationship between the employer and the employees. This projected the importance of utilizing adequate methods and principles of solving problems of Management. Traditional methods were challenged. The post Management experience was scientifically systematized. Among the individuals who made their contributions on a large scale F. W. Taylor was the foremost. F. W. Taylor: (1856 1915) Fedrick Winslow Taylor well known as the father of scientific management made a greater impact on the development of management. He started his career as an apprentice mechanist in cramp
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shipyard in 1871. He joined Midwale Steel Company in 1874 as machine shop worker. After 2 years he was promoted as the gang boss and after 3 years as the chief engineer. Then he joined Bethleham Steel Company. He obtained his graduation in physics and mathematics and masters degree in Engineering. While working in Midwale Steel Company he found out many shortcoming for which he finds solution in his theory: 1) Wastage of Human and other resources. 2) No concept of systematic and efficient workmanship. 3) Traditional and customary ways of doing things even in organised settings. 4) Much reliance on Trial and error methods. 5) No concept of worker management responsibilities. 6) No incentives were used to improve workers efficiency. To remove these short commings Taylor proceeded to conduct certain experiments based on which he gives his scientific Management theory. He was keen on determining one best way of doing things. He emphasized on systematic analysis and measurement, validation of higher efficiency, higher productivity, standardisation, simplification and improvements of the methods and tools. Principles of Scientific Management: Taylors principles can be summarised in the following words Science, not rule of the thumb. Harmony, not discords. Co-operation, not individualism Maximum output instead of restricted output. Development of each man to his greatest efficiency and prosperity. Taylor agreed that the success of these principles requires complete mental revolution on the part of Management and workers. Instead of quarrelling over
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distribution of surplus they must try to increase productivity. The principles of scientific Management can be put as follows: 1) Separation of Planning and doing: In the Pre-Taylor period a worker would decide how he had to do the work and what machines and equipment would be required to perform the work. But Taylor seperated the two functions of planning and doing and emphasized that planning should be entrusted to specialists. The planning department will plan the days work. When a labourer comes to factory he gets clear instructions about what exactly he has to do. Therefore he can concentrate on the actual performance of work and thereby increase the productivity. 2) Functional Foremanship: Taylor introduced the system of functional foremanship where every worker receives order from eight foremen. Among these eight foremen, four are in the planning department and four are in the working department. The foremen found in the planning section are i) Route Clerk: He determines the path of movement for materials in various process of manufacture. ii) Instruction Card Clerk: He gives instructions to the workers. He prepares instruction cards to inform workers regarding special tools to be used, speed and feed of machines etc. iii) Time and Cost Clerk: He collects and supplies all the required information for recording the time taken for doing the work and thus the work of calculating standard time and cost. iv) Disciplinarian: He frames the rules and regulations to be followed by the workers. The four members found in the workshop are: i) Gang boss: He does all the necessary preliminary preparation of the work. He gives demonstration on the method of doing the work. ii) Speed boss: He sees that the workers are using proper tools and speed as instructed.
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iii) Repair boss: He looks after the maintenance of tools, equipments and machines. If necessary he gets the repair work done well in advance. iv) Inspector: He inspects and reports to the higher authorities on the performance of the workers and the quality of product. 3) Job Analysis: Job analysis is concerned with determining a method of work which takes least time, least cost and least movements. It is the process of determining standard task for every worker through careful investigation. Management will have to conduct time study, motion study and fatigue study to decide about the best method of doing the job. i) Time Study: It involves finding out the standard time for performing operations. ii) Motion Study: It refers to the study of the movement of the workers while performing the job. This helps in eliminating all unnecessary movement and finding the best way of doing the job. iii) Fatigue Study: It is the study about the tiredness of workers which decreases their efficiency. It helps in finding out at what intervals rest have to be provided so that the efficiency of the employees can be increased. 4) Standardisation of Tools and Equipments: Taylor emphasized on use of standardised machines, standard raw-materials, good working conditions and standard methods for handling machines and materials. It helps in maintaining quality and uniformity. 5) Mental Revolution: Taylor emphasizes on harmony and co-operation rather than individualism and conflict. There should be intimate and friendly relation between Management and workers. This is possible only by bylateral mental revolution. A complete mental revolution on the part of the employers as to their duties towards their fellow workers, towards their workman and their
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problems. Without this mental revolution scientific Management does not exist. 6) Financial Incentives: Taylor used financial motivators to make people work in the organisation. He devised an incentive payment system called Differential Piece-Rate System under which workers wage was calculated based on his performance and on the position he occupied. The rate should be fixed on accurate knowledge and not on estimates. 7) Scientific Selection and Training of Employees: He emphasized on increased productivity which needs right man in the right job. Therefore workers must be selected on scientific basis. Qualification, experience, aptitude, physical strength etc. must be considered while selecting the workers. After the selection they must be trained properly to take up the allotted task. This helps the worker to take up the responsibility for which he is best suited. 8) Economy: Taylor emphasized on profit and economy along with scientific methods and approaches. Necessary measures must be taken to reduce the wastages. Therefore, Taylor suggested an efficient system of cost accounting to estimate and control costs on various items of expenses connected with manufacturing operations. 9) Mechanism of Management: Taylor gave the mechanism of Management by listing some of the mechanisms: 1) Time Study 2) Functional Foremanship 3) Standardisation of tools and implements 4) Desirability of the planning group 5) Instruction cards for the workmen 6) Differential piece rate 7) Routing system 8) Modern cost system etc.
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Taylor tried to point out the following three points in his shop management. They are a) The objective of good cost. Management was to pay high wages and have low unit production cost. b) To achieve this objective Management had to apply scientific methods of research and experiments to its overall problem in order to formulate principles and standard process which would allow for control of the manufacturing operations. c) An Environment of close and friendly co-operation should be cultivated between Management and workers.
Criticisms Though scientific Management was considered unique and gained popularity, it was not free from limitations. 1) Use of the Word Scientific: People objected the use of word Scientific before Management. Mr. Brech remarks, In an era that has not seen only the best of science, it was perhaps an unfortunate choice. 2) Concentration only on production: The principles of scientific Management were confined to production management which is not the whole and soul of any organisation. There are other equally important areas such as financial management, sales management which are entirely ignored by him. 3) Impersonal and Utilitarian: Taylor was criticised to be excessively utilitarian and impersonal as he gave very little attention towards human element in production. 4) Employing first class men: Taylor emphasized a higher productivity and high production by employing specialists and first class men that made people to criticise taylor as expecting each worker to be a superman which is not possible.
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5) No direct relationship between wages and increase in productivity: There were complaints from the labourers that their wages were not increased in direct proportion to productivity increases which resulted from improved methods and procedures. 6) Industrial Autocracy: Taylors scientific Management led the organisation towards industrial autocracy as all planning was done by management and employees were merely asked to follow their instruction. Therefore trade unions discarded scientific Management and regarded them as the means to exploit labourers. 7) Difficult to Practice: It was also argued that work analysis, time, motion and fatigue studies, standardisation of pay-rates etc. cannot be scientifically measured. Controls pertaining to materials, machines and processes may be understandable in theory but in practice it is difficult to execute them. 8) No One best way: Taylor emphasises on finding out one best way of doing the activity. But in reality it cannot be done because individual skills and capacities influence the decision of the best method. What may be the best method for an individual or a factory need not be the best method for another individual or factory. 9) Concept of functional foremanship: Taylor advocated the concept of functional foremanship to bring about specialization in the organisation. But this is not feasible in practice as it violates the principle of unity of command and increases the problem of confusion, conflict and co-ordination. Henry Lawrence Gantt: He was a mechanical engineer who worked with Taylor at the Midwale steel company. Later he went on his own as a consulting industrial manager. Gantt began to reconsider Taylors Differential piece rate system which had too little motivational impact on workers. It was an incentive plan where by the
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worker was paid on the basis of his daily output. So Gantt developed his Task and Bonus System. According to this system the workers were divided into three class i) Normal Worker: Who performs the days work in the given time. He would get 50% bonus in addition to daily wages. ii) Inefficient Worker: Who is not able to complete the given task in the given time. He gets only wages. iii) Efficient Workers: Who completes the task in lesser time. He would get extra bonus in addition to his daily wages and 50% bonus. If a worker gets any bonus the supervisor who controls him also gets bonus. His attention was to motivate the supervisors to train their workers for higher performance. He has appealed for maintaining good relationship between the employer and the employees. One notable feature of Gantt is that he has distinguished men and machines. Gantt chart is today regarded as a potential tool for production control in the hands of the manager. Gantt is more credited in Management as he paid necessary attention to the human element in productivity. 2.2.4 Administrative Management, Process Management or Functional Management Administrative management is an important phase in the evolution or development of management thought. Henry Fayol is regarded as the Father of Administrative Management or the Father of Principles of Management. Henry Fayol was born in 1841 at Constantinople in France. He graduated as a mining engineer in 1860. In the same year, he joined a French coal mining company as an engineer. After a couple of years, he was promoted as the manager of the collieries and continued as such for 22 years. In 1888, when the company was almost bankrupt due to heavy losses, he was appointed as its managing director. He served as a managing director for 30 years and retired in
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1918 after expanding the company into a large coal-steel combine with a strong financial position and a record of profits and dividends over a long period. After retiring from his executive position in 1918, he devoted himself to popularising his theory of management. According to Fayol, all the activities of industrial undertakings could be divided into six groups, viz., a) Technical activities (i.e., those connected with production or manufacture). b) Commercial activities (i.e., those relating to buying, selling and exchange). c) Financial activities (i.e., those concerned with securing of capital and its use). d) Security activities (i.e., those connected with protection of property and persons). e) Accounting activities (i.e., those connected with stocktaking, preparation of financial statements like profit and loss account and balance sheet, cost accounting, statistics, etc.). f) Administrative or managerial activities (i.e., those connected with planning, organising, commanding, co-ordinating and controlling). He believed that for the successful running of any industrial or business undertaking, all these functions or activities must be performed. If any one function or activity was neglected, the enterprise would fail. As the first five function and activities were already well known, Fayol devoted his attention to managerial functions or activities. He was the first man to spell out the managerial functions or activities. He sub-divided the managerial functions or activities into five groups. They are: a) Forecasting and Planning: This activity means foreseeing or examining the future and preparing the plan of action (i.e., determining the result envisaged, the line of action to be followed, the stages to be gone through and the methods to be used) accordingly.
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b) Organising: This function means securing the various factors of production, such as materials, men, machines, etc. c) Commanding: This activity means putting the factors of production into operation. d) Co-ordinating: This function means unifying or binding together the activities of different groups of personnel. e) Controlling: This activity means ensuring that everything occurs in conformity with the plan adopted, instructions issued and principle established. While devoting his attention to the various managerial functions or activities, Fayol formulated 14 principles of management. He firmly belived in the universality of his management principles. In other words, he firmly believed that his principles of management apply not only to industrial or business enterprises but also to political, religious, philanthropic and other undertakings. The 14 management principles laid down by Fayol as general guides to the management process and management practice are: 1. Division of Labour: This is the principle of specialisation. It is necessary for promoting efficiency in the utilisation of labour. It is necessary not only in shop labour (i.e., production or technical work) but also in other types of work, such as managerial. 2. Authority and Responsibility: This principle implies that authority and responsibility should be related to each other. Responsibility without authority is meaningless. When the work is divided and different individuals are made responsible for different jobs, they must also be provided with the necessary powers to do those jobs. The extent of authority to be given to the personnel should correspond to the amount of responsibility.
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3. Discipline: This is the respect for agreements which are directed at achieving obedience, application, energy and outward marks of respect. It requires good superiors at all levels, clear and fair agreements and judicious application of penalties. 4. Unity of Command: This principle means that an employee should receive orders from one superior only. 5. Unity of Direction: This principle implies that each group of activities having the common objective must have one head and one plan. 6. Subordination of Individual Interest to Group Interest: This principle emphasises the necessity for protecting group or common interest as against individual interest. This will facilitate unity and avoid clashes among different workers. 7. Remuneration of Personnel: This principle means that the method of employee remuneration should be just and fair and should afford the maximum satisfaction to both employees and employer. 8. Centralisation: This principle implies that the degree of concentration of authority should vary according to the needs of the individual situation. 9. Scalar Chain: This is the line of authority or chain of superiors running from the highest rank to the lowest rank. The line of authority should be followed ordinarily or normally. However, when the strict following of the line of authority becomes detrimental, the chain can be short-circuited. 10. Order: This is the principle of organisation in the arrangement of things and persons. According to this principle, there must be a place for everything (and everyone), must be in its (and his) place. 11. Equity: This principle implies that the managers of an undertaking should enlist the loyalty and devotion from the employees by showing kindliness and justice in dealing with them (i.e., subordinates).
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12. Stability of Tenure of Personnel: This principle implies that every employee must be assured of security of service. When an employee is assured of security of service, he will take keen interest in giving the best performance. So, unnecessary labour turnover (i.e., termination of labourers) should be avoided. 13. Initiative: This principle implies that the mangers of an undertaking should permit their subordinates to take some initiative in thinking out and executing plans. This will give them (i.e., the subordinates) much satisfaction. 14. Espirit de corps: This principle means union is strength. So, there must be team-work and proper communication among the members of the team. Again, Fayol spelt out the qualities of successful managers. He held that managerial ability can be acquired in schools and colleges and later in the workshop in the same way as the technical ability. The qualities of a successful manager emphasised by Fayol are the following: a) Physical (i.e., health, vigour, etc.). b) Mental (i.e., ability to understand and learn, judgement, mental vigour and adaptability). c) Moral (i.e., energy, firmness, willingness to accept responsibility with initiative, loyalty, tact and dignity). d) General education (i.e., general acquaintance with matters not belonging exclusively to the function performed). e) Special knowledge (i.e., knowledge peculiar to the function). f) Experience (i.e., knowledge arising from the work proper).
Contributions of Administrative Management: Fayols administrative management received widespread acceptance from writers on management and managers of business undertakings. For instance, administrative management was accepted by two executives of the General Motors of the U.S.A., viz., James D. Mooney and Allan C. Railey. Administrative
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management was also recognised by writers on management like Harold Koontz and Cyril ODonnel. Administrative management has made some significant contributions to the development of management thought. The important contributions of
administrative management are: a) Administrative management has provided theoretical basis to the practice of management. That is, it points out that it is possible to learn and impart education and training in the art and science of management. b) It is easy for a manager to understand and practise management through administrative management. Under this approach (i.e., administrative management), when confronted with a problem, a manager has only to diagnose whether the problem concerns planning, organising, directing, coordination or controlling aspect of management function. Once this is done he can confidently proceed to solve the problem by using his knowledge and practical skill. c) Administrative management has pointed out that management is universal irrespective of the types of organisation. So, the functions of management are common and the principles of management are of universal application. d) Administrative management integrates the knowledge of various disciplines for better management. e) Administrative management provides flexibility in the sense that, under this approach, there is room for innovation research and development. f) Administrative management is an aid to professionalisation of management.
Criticisms of Administrative Management: It is true that administrative management has made certain contributions to the development of management thought. But it is not free from limitations or criticisms. The main criticisms against administrative management are:
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a) The principles of management proposed by administrative management are just based on observation (i.e., a few case studies), and are not tested empirically (i.e., not based on research). b) The so called universal principles of management proposed by administrative management do not always stand the test of empirical scrutiny. c) Organisations function under dynamic (i.e., changing) conditions. As such, profounding of universal principles of management may not always be a fruitful exercise. d) Administrative management suffers from excessive categorisation and impersonality. e) Some of the principles profounded by administrative management, say, the principle of unity of comand and the principle of specialisation or division of labour cannot be followed simultaneously. f) The principles of specialisatiion, chain of command, unity of direction and span of control profounded by the administrative management result in the formation of mechanistic organisation structures which are insensitive to employees social and psychological needs. g) The principles of management profounded by administrative management are based on the assumptions that organisations are closed systems. But this is not true. Organisations are open systems. So, the rigid structures which the principles (profounded by administrative management) tend to create do not work well under unstable conditions. 2.2.5 Human Relations School of Management Taylor was successful in harnessing the economic needs of the workers by devising wage incentive scheme but he failed to realise that workers had certain Psychological needs also. Many authorities like Elton Mayo and others conducted some experiments in the field of industrial psychology. As a result a
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trend began which can be phrased as Being nice to people or The human relations movement. Human relations put all stress on interpersonal relations and the informal groups. Its starting point was in individual psychology rather than in the analysis of worker and the work. This school has done an unique job in recognising the importance of human element in all organisations. It freed Management from domination of wrong ideas, but it did not succeed in substituting new concepts. Elton Mayo: He is generally recognised as the father of Human Relations School. He along with his associates conducted a series of study at western electrics Hawthorne plant. His experiments are popularly known as Hawthorne Experiments. The conclusions arrived at from these experiments were i) The amount of work to be done by an individual is not determined by his physical capacity but by the social norms. ii) Non-economic rewards and reactions play a significant role in influencing the behaviour of the workers. iii) Generally workers do not act or react as individuals but as members of the group. iv) Informal leaders play an important part in setting and enforcing the group norms. He proved that increase in productivity is not caused by any single factor like changing rest pauses or working hours but a combination of these and several other factors such as less restrictive methods of supervision, giving autonomy to workers, allowing the formation of small cohesive groups of workers, creating conditions which encourage and support the growth of these groups and the Co-operation between workers and Management. As a result it has been recognised that workers performance is related to physiological, sociological and psychological factors.
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Thus human relations school discarded the engineering approach to the problem of work and productivity and proved that informal work groups and the opportunity to be heard and participate in decision making have an important impact on the productivity of the workers. Many Parker Follet: Her Management views were a bi-product of her psychological and Sociological background. She tried to interpret classical management principles in terms of human factors. She attempted to solve the most basic problem of any organisation i.e. the problem of motivation. Therefore she tried to establish a Management philosophy based on the ground that any productive society must be founded upon the recognition of motivating desires of the individual and the group. The next basic problem identified by Follet was the problem of Co-ordinating the group efforts to achieve the pre-determined objectives. She was of the opinion that authority as an act of subordination was offensive to mans emotions and therefore could not serve as a good foundation for co-operative organisation. She laid down following principles to achieve effective co-ordination: 1) Co-ordination in the early stages of planning and policy making. 2) Co-ordination by direct contact of responsible persons. 3) Co-ordination as being reciprocal relating to all factors in the situation. 4) Co-ordination as a continuing process. Being a management philosopher, she maintained that for a particular situation, leadership will go to the man having vast knowledge and who can understand the situation and organise the essential elements for effective results. She coined the new principle The group concept and said that it would become the basis for the future industrial system. Conclusion: Both the human relation theorists discarded mechanistic approach which neglected human psychology and welfare. They emphasized that higher
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productivity can be better achieved when workers are treated as human beings. Thus human element and its relationships in the organisation is essential for the success of the organisation. 2.2.6 Behavioural School of Management Human relations school of management had a bad name by the middle of 1940s because Hawthrone experiments created a misunderstanding of what constitutes good human relations. Due to this and increasing knowledge about how the individual acts and reacts in the business environment, human relations movements gave the way to behavioral science approach to management. Abraham Mallows Need Hierarchy Theory: He was a famous social scientist and a psychologists. According to him man is a wanting animal. He has variety of needs from most basic necessities to the highest needs of self actualisation. If the basic needs are satisfied he seeks to satisfy his next higher level needs. The unsatisfied needs influence the human behavior. Manager must identify the unsatisfied needs of peoples and must try to satisfy them. According to Maslow people are motivated to meet the needs which can be arranged in an order from the lowest to the highest. Maslows hierarchy of needs can be shown as below:
(5) (4) (3) (2) (1)
1) Physiological needs such as food, clothing shelter etc. 2) Safety needs such as economic security, jobs security, provision for old age etc.
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3) Social needs such as love & affection, companionship, belongingness, acceptance etc. 4) Esteem needs such as self respect, status, prestige, recognition, reputation, achievement etc. 5) Self-actualisation needs such as self fulfillment, new responsibility, advancement, participation in Management, realisation of mans full potential. 1) Physiological Needs: For a man whose basic physiological needs are not satisfied, other higher needs of love, status & self fulfillment generally become less significant. Physiological needs are satisfied through monitary benefits. 2) Safety Needs: After satisfying physiological needs man tries to satisfy his safety needs. At this stage they act as prime motivators. 3) Social Needs: Man is a social animal. He needs to be loved & accepted by others. When physiological and safety needs are fairly satisfied social needs become powerful motivators. 4) Esteem needs or Status Needs: The desire for status & prestige is an important aspect of the need for esteem. It is concerned with awareness of self importance & recognition from others. Satisfaction of self esteem needs result in feelings of self-confidence, prestige & being worthy in the organisation. Unsatisfied esteem needs may result in feelings of inferiority weaknesses & helplessness. 5) Self-actualisation Needs: The highest level need according to maslow is the self actualisation needs. When all other needs are adequately satisfied employees will be motivated by the self-actualisation needs. Man Tries to realise his own potential abilities & leads to maximise his potential. Self-actualisation need is a growth need. It includes getting higher responsibility. This need can be satisfied by providing challenging job, promotion to managerial positions, delegation of authority etc.
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Maslows need hierarchy Theory has practical use to the managers while dealing with the subordinates Management must note that the satisfied need ceases to be the motivator of human behavior. Man will think of second need only when the first need is satisfied. The needs at a given level need not be fully satisfied before proceeding to the next higher need. The fact is that most people are partially satisfied & partially unsatisfied. Criticisms: The following criticisms are put forward against Maslows Theory: 1) It is based on assumptions: The hierarchy of needs suggested by Maslow is based on assumptions. It cannot be generalised. Different people have different order of needs. For eg.: For a politician self actualisation need may become a prime motivating factor before lower level needs are satisfied some people do not care for job security but for social needs. 2) It is non-testable: It is very difficult to interpret its concepts because human need are interdependent & overlapping. 3) It does not differentiate individuals: Needs may differ between the individuals in the same position for eg.: Esteem need may be a dominant motive for an individual but for another individual in the same position social need may be a strong motive. Inspite of the above limitations, Maslows need hierarchy theory is still a relevant theory for understanding the behaviour of subordinates. It provides a common sense approach to the managers. Herzbergs Two Factor Theory: This theory was prepared by Fedrick Herzberg after conducting a number of interviews with two hundred engineers and accountants of different companys in Pittsburgh in U.S.A. He asked about their experiences and feelings. Study revealed that employees felt good about their jobs when there was job enrichment, recognition of achievement, challenging work, opportunity for personal growth and advancement. These
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factors motivate the employees for higher performance. Therefore these are called motivators or satisfiers. It was found that bad feelings about the job were due to company policies working conditions, inter-personal relations, salary, status, job-security and quality of supervision. The presence of these factors in a work situation at a satisfactory level does not motivate employees but prevents job-dissatisfaction. These contribute for maintaining reasonable level of satisfaction in employees. Therefore these factor are called hygiene factors or dis-satisfiers or maintenance factors. The absence of hygiene factors in a work situation may cause dis-satisfaction among the employees about their jobs. He concluded that job satisfaction and dis-satisfaction comes from two factors i.e. motivational factors what he called as a satisfiers and hygiene factors what he called as dis-satisfiers. Therefore this theory was called as two factor theory. The following table explains Herzbergs Motivation and hygiene factors: Hygiene Factors Company policy and administration, quality of supervision, relationship with supervisors, salary, work condition, personal life, relations with subordinates, job security, status. Motivation Factors Achievement, recognition for good work, added responsibilities, opportunity for advancement, opportunity for personal growth, challenging work.
It is desirable to have motivational factor in the organisation to satisfy the employees for higher performance. But motivating factors may not satisfy the employees unless maintenance or hygiene factors are present in the work place at a reasonable and satisfactory level. He concluded that the key to motivation lies in designing challenging and rewarding jobs and providing opportunity for achievement and recognition. Thus Management should attempt to make jobs more satisfying.
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Theory X and Theory Y: This theory was developed by Prof. Mc Gregor. He developed these theories based on the assumptions made by the managers about human behaviour and human nature in the organisation. He identified two different sets of assumption that managers have about their subordinates. The first set of assumption is contained in theory X and the second set of assumption is contained in theory Y. Theory X: This is the traditional theory on Human behaviour. In this theory he has made the following assumptions about human behaviour: i) All though job is a necessity, people have an inherent dislike to work. They try to avoid it whenever possible. ii) Most people are lazy and unambiguous. They avoid responsibility and prefer to be directed by others. iii) Man by nature resist changes. iv) People are self centered and indifferent to organisational goals. v) People lack creativity. vi) People are not very bright. vii) Since people do not like work they must be motivated by force, money or praise. Theory X suggests that a manager must force employees and must threaten with punishment or must pay high salary and benefits as motivational techniques to direct the employees for higher performance. Thus theory X is negative, traditional and uses autocratic style of leadership. Theory Y: It is based on positive assumptions about human nature. The important assumptions are i) The average human being does not dislike work. People get a great deal of satisfaction from work in a good working environment. ii) Man has desire to achieve. iii) People work hard towards objectives to which they are committed.
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iv) Man does not inherently resist organisational changes. v) People take additional responsibilities and apply imagination and creativity to organisational problems. vi) External control and the threat of punishment are not the only means of directing the efforts of people to accomplish the task. vii) It is the responsibility of the Management to provide opportunity to the people, recognise and develop their abilities. Management must create opportunities, remove obstacles, encourage growth and provide guidance to the employees. Theory Y is positive, participatory and democratic. It is a new approach to management which emphasizes on co-operation between management and workers. It helps the organisation to reduce conflicts and misunderstandings. It emphasizes management by objectives, supportive management,
decentralization and job enrichment as motivation techniques. It can be used in an organisation where self motivated, self controlled, matured and responsible people work. In the present industrial environment theory Y is more appropriate than theory X. Theory Z: This theory emphasizes that employees are motivated to achieve organisational goals under two conditions. Each individual must know clearly the organisational goals and their efforts must be directed to achieve these goals. Each individual should be confident that realisation of organisational goals also satisfy his needs heavily. His needs are not threatened and frustrated by the members of the organisation. Four postulates are to be considered by the management in order to maintain and motivate the employees. i) Permanent Bondage of Worker with the Organisation: There should be permanent bond between organisation and workers. For this purpose measures like life time employment to the people, highly conducive work
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environment, challenging job, workers participation in Management etc. must be taken up by the Management. ii) Participative decision making: Management must encourage workers participation in decision making process. iii) Co-ordination and Co-operation: Management has to secure
co-ordination among the members of the organisation. It enables to achieve employee commitment to work and promotes a feeling of unity in the organisation. iv) Informal Organisational Structure: Theory Z suggested an informal organisation without a definite structure, chart and divisions. Individuals must work together by sharing of information, resources and plans without formal reporting relationships. Comparison between Human Relations Approach and Behavioural Sciences Approach
Human Relations Approach 1. Human relations approach laid emphasis on the individual, his needs and behaviouf. 2. If focussed on inter-personal relationships. 3. It was based on the Hawthorne Experiments and so it scope is limited. 4. It laid emphasis on motivation, job satisfaction and morale. Behavioural Science Approach 1. Behavioural science approach stressed upon groups and group behaviour. 2. It focussed on group relationships. 3. It refined the Human Relations approach and has a wide scope It is a much more systematic study of human behaviour in organisations. 4. The behaviourists studied group dynamics, informal organisation and motivation.
2.2.7 Quantitative Approach to Management: This approach is also called Mathematical, Operations Research or Management Science approach. The basic feature of the quantitative management thought is the use of mixed teams of scientists from several
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disciplines. This school uses scientific tools for providing a quantitative base for managerial decisions. The techniques commonly used for managerial decisionmaking include Linear Programming, Critical Path Metho (CPM), Programme Evaluation Review Technique (PERT), Games Theory, Queuing Theory and Break-Even Analysis. The quantitative approach uses mathematical formulae for finding solutions to the problems that were previously unsolved. The abiding belief of the quantitative approach is that if management is a logical process, it may be expressed in terms of mathematical symbols and relationships. The basic approach is the construction of a quantitative model because it is through this device that the problem is expressed in its basic relationships and in terms of selected objectives. The construction of the model expresses the effectiveness of the system under study as a function of a set of variables at least one of which is subject on control. The general form of operations research model is E = f(x1, y1), where E represents the effectiveness of the system (profit, cost and the like), x1 the variables of the system which are subjected to control and y1 those which are not subject to control. Comparison between Scientific Management and Quantitative Approach
Scientific Management Approach 1. It advocates use of scientific methods in managing. 2. It focussed on improving efficiency of workers and machines by finding one best way of doing things. 3. The main techniques of scientific management are time and motion studies. 4. It lays stress on experiment and research for improving efficiency. 5. The conceptual base of scientific management was provided by F. W. Taylor and his associates. Quantitative Approach 1. It advocates use of mathematical and statistical techniques for solving management problems. 2. It focussed on finding right answers to managerial problems. 3. The main technique of quantitative approach is operations research. 4. It lays stress on econometric models managerial decisions. developing for taking
5. Quantitative approach was popularised by W.C. Churchman and his associates. Page No. 43
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2.2.8
Systems Approach to Management:
In the 1960s, a new approach to management appeared which attempted to unify the earlier schools of thought. This approach is commonly referred to as Systems Approach. Basically, it took up where the functional process management school let off to try to unify management theory, A system view point may provide the impetus to unify management theory. By definition, it could treat the various approaches, such as the process, quantitative and behavioural ones, as sub-systems in an overall theory of management. Thus, the systems appraoch may succeed where the process approach has failed to lead management out of the theory jungle. The systems approach has taken up where the process approach has let off in attempting to unify management theory. Whereas the quantitative and behavioural approaches went off on opposite paths from the process appraoch, the systems approach has attempted to draw them back together to form an overall theory of management. Today, it is undoubtedly the most widely accepted theoretical base for modern management. The systems approach is based on the generalisation that an organisation is a system and its components are inter-related and inter-dependent. A system is composed of related and dependent elements which, when in interaction, form a unitary whole. It is simply assemblage or combination of things or parts, forming a complex whole. Its important feature is that it is composed of a hierarchy of sub-systems. The world as a whole can be considered to be a system in which various national economies are sub-systems. In turn, each national economy is composed of its various industries, each industry is composed of firms, and of course, a firm can be considered a system composed of sub-systems such as production, marketing, finance, accounting and so on. Thus, each system may comprise several sub-systems and, in turn, each sub-system may be further composed of sub-systems. The system may be closed or open.
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The systems approach considers organisation as system having the following characteristics: (i) It consists of several sub-systems which are interdependent and interrelated. (ii) A system has a boundary which separates it from other systems. (iii) An organisation is an open and dynamic system. It is sensitive to its environment such as government policies, competition in the market, change in tastes of people, etc. 2.2.9 Contingency Approach to Management:
A review of the earlier schools of management helps us to place the current approach to management in perspective. The performance results of the management process schools universalist assumptions were generally
disappointing. The behavioural approach to management was incomplete. Certain quantitative techniques worked in some situations and not in others. The quantitative people could not solve behavioural problems and behavioural people could not overcome operations problems adaptable to quantitative solutions. Many authors believe that a systems based theory could solve this dilemma. But this approach is also as yet incomplete. The latest approach to management which integrates the various approaches to management is known as contigency or situational approach. The contingency approach to management is based upon the major premise that there is no one best way to handle any of the management problems. The application of management principles and practices should be contingent upon theexisting circumstances. Functional, behavioural, quantitative and systems tools of management should be applied siutationally. There are three major parts of the overall conceptual framework for contingency management: (i) nenvironment; (ii) management concepts, principles and techniques; and (iii) contingent relationship between the first two.
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The contingency theory stresses that there is no one best style of leadership which will suit every situation. The effectiveness of a particular leadership style will vary from situation to situation. For instance, participative leadership may be more effective in an organisation employing professional personnel in a high technology operation in an atmosphere of non-materialistic orientation and free expression. On the other hand, authoritarian leadership would be more effective in an organisation which employs unskilled personnel on routine tasks in social values oriented towards materialism and obedience to authority. Evaluation of Contingency Approach: Contingency approach guides the managers to be adaptive to environment variables while choosing their styles and techniques. It discounts preconceived notions and liberates the managers from dogmas. The management principles and techniques should be tailored to meet the particular situation. Readymade solutions for all the situations are not available. Contingency approach tells the managers to be pragmatic and openminded. Contingency approach is an improvement over the systems approach. It not only examines the relationships between sub-systems of the organisation, but also the relationship between the organisation and its environment. Comparison of Systems Approach and Contingency Approach
Systems Approach 1. It lays emphasis on the interdependencies and interactions among systems and sub-systems. 2. It treats all organisations alike. Size of the organisation, and its socio-cultural setting are not considered. 3. It studies organisation at the philosophical level. 4. It does not comment on the validity of the classical principles of management. 5. It simply lays down that the organisation interacts with the environment. Contingency Approach 1. It identifies the nature of interdependencies and the impact of environment on organisational design and managerial style. 2. Each organisation is to be studies as a unique entity. 3. It follows an action-oriented approach and so is pragmatic. It is based on empirical studies. 4. It rejects the blind application of the classical principles of management. 5. The impact of environment on the organisation structure and managerial style is the major concern of contingency approach.
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2.2.10 Management Thought Today: Management thought today is the outcome of the contributions of a large number of management thinkers who have advocated different approaches to management. The various approaches to management have contributed to the development of modern management on scientific lines. Today, management is highly developed. Management thought today has universal application. Management has an important place not only in business undertakings but also in non-business undertakings. Further, today, management is highly professionalised. Again, in management thought today, there is greater emphasis on democratic management or participative management. Above all, management has become highly interdependent and inter-disciplinary today.
2.3 Exercise
1. Explain the F. W. Taylors Scientific Management. 2. Explain briefly the functional management. 3. Explain the Need Hierarchy Theory. 4. Explain the Herzbergs two factory theory.
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Planning
Unit 3
Unit 3
Structure 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 Introduction Definition and Nature of Planning Characteristic features of Planning Importance of Planning Types of Plans Steps in Planning Advantages of Planning Limitations of Planning Management By Objectives
Planning
3.10 Steps involved in M.B.O. 3.11 Advantages of M.B.O. 3.12 Forecasting 3.13 Importance of Forecasting in Planning 3.14 Techniques of Forecasting 3.15 Exercise
Learning Objectives
After studying this unit, you will be able to:
Explain the features of Planning. Explain the types of Plans. Explain the significance of M.B.O. Explain the importance of forecasting and techniques of forecasting.
3.1 Introduction
Planning is a primary function of management. It refers to the determination of a course of action to achieve a desired result. Planning concentrates in advance, what to do, how to do it, when to do it and who is to do it. Planning bridges the gap from where we are to where we want to go. Planning function of
Planning
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management precedes all other managerial functions. Without setting goals to be reached and line of actions to be followed, there is nothing to organise, to direct or to control. Planning actually is the foundation of management. The vital supporting column upon planning, organising, activating and controlling and all these combine together to make up the bridge of process of management. Planning governs the survival, progress and prosperity of any organisation in a competitive and everchanging environment. It is really a continuous process to keep the organisation as a going concern and other functions are also performed simultaneously.
3.2 Definition and Nature of Planning

Koontz and ODonnell defined planning as an intellectual process, the conscious determination of courses of action, the basing on decisions on purpose, acts and considered estimates. In the words of G. E. Milward, Management is the process and the agency through which the execution of policy is planned and supervised. On the basis of the above definitions, the nature of planning can be enumerated. 1) Planning is very closely associated with the goals or objectives of the organisation. The goals may be expressed or implied. However, well-defined goals lead to efficiency in planning. 2) Planning is mainly concerned with looking ahead of the future. Forecasting provides the necessary raw material for correct planning. 3) Planning involves in the selection of the best alternative. 4) Planning is required at all levels of management. However, its scope and importance increase at successively higher levels. 5) Planning is an inter-dependent process. It coordinates the activities of various departments, sections and sub-sections. 6) Planning is flexible as it is based on future conditions which too are dynamic. 7) Planning is a continuous and unending process. 8) Planning governs the survival, growth and prosperity of any organisation.
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3.3 Characteristic features of Planning

The following are the characteristics of planning: 1) Choosing is at the root of planning: The need for care and caution in making ones choice would arise only when there are several objects to choose from. If there is only one thing to take or do, there can be no question of a choice. In every sphere of business there are alternative courses of action for everything. Therefore, picking out the best from among a number of alternatives becomes important. Without planning, a business would be a rolling stone. It cannot have much chance of succeeding in any field. 2) Planning is a thinking process: Planning denotes logical thinking and decision-making. It involves decisions as to a) What is to be done? b) How it is to be done? c) When it is to be done? d) By whom it is to be done? Decisions in respect of these can be made only when the manager has the gift of foresight and vision, backed by knowledge of relevant facts as also of enough experience. 3) Planning is pervasive: An element of planning can be seen behind every human activity in any society or organisation. Planning function is involved in all forms of organisation irrespective of its objects. 4) Accomplishment of enterprise objectives: An organisation employs a number of persons and each of them has his own personality and attitude. As such, there are bound to be differences about the enterprise objectives and the ways to accomplish them. Planning focuses action on enterprise objectives. It points to action which might be costly or useless.
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5) Primary of Planning: Unless it is known in advance what work is to be done, and how and when it is to be done, there can be no preparation towards doing it. Problems regarding organisation staffing, direction and control can be sorted out only after objectives have been planned. 6) Planning is all-embracing: Planning can deliver the goods only when it is undertaken by all those whose job involves decision-making of one kind or another. In fact planning is the guide to decision-making. Thus whether it is the chief executive or a foreman on the shop floor, all managers have to do some amount of planning. 7) Planning is an integrated process: Planning involves selection of concrete objectives and formulation of sound policies, programmes and procedures and strategies for their accomplishment. For the accomplishment of an important task, all the present facts and the future possibilities have to be taken into account.
3.4 Importance of Planning

The importance of planning can be studied under the following: 1) Planning offsets future uncertainty and change: Future is uncertain and full of changes. Both these elements make planning a necessity. Planning brings a higher degree of certainty, rationality and order into the organisation. 2) Planning helps management by objectives: The first element of planning is setting the goals and objectives for the organisation as a whole and all its components. This gives a sense of direction to the working of the organisation and saves it from going astray or drifting about aimlessly. 3) Planning offers better co-ordination: Planning helps the management in the coordination process also. As Koontz and ODonnel say plans are selected courses along which the management desires to coordinate group actions.
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The well developed objectives, policies, programmes and procedures help in coordination. It avoids duplication of work and inter-department conflicts also. 4) Planning leads to Economy in operation: Planning is the only way to realise the business objectives at cheapest and the best. It paves the way for proper utilisation of company resources. 5) Planning helps control: Planning is always a pre-requisite for controlling. No control can be exercised without planning. Planning, is forward looking and control as backward looking. 6) Planning encourages innovations and creativity: Planning is basically the deciding function of management. It promotes innovative and creative thinking among the managers because many new ideas come to the mind of a manager when he is planning.
3.5 Types of Plans

Planning consists of several individual plans or component parts. From its objectives, an organisation develops standing plans and single-use plans. Standing plans lead to the development of policies, procedures and rules. Single use plans produce programmes, budgets, strategy etc. The relationship of standing plans and single use plans can be understood with the help of the following chart.
Types of plans Standing plans Objectives Policies Procedures Rules Methods Single use plans Programmes Budgets Projects Strategies
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A. Standing Plans: These are permanent plans. They are used repeatedly and include the following: 1) Objectives: Objectives provide the basic foundation upon which the structure of plans is built. To guide and unify the efforts of employees in a desired direction, the management must set its objectives. The objectives must be defined in clear terms. It is only clearly defined objectives that will enable a management to effectively plan policies, procedures, methods, strategies and so on. 2) Policies: General statements that guide decision-making are called policies. They define the boundaries within which decisions can be made by the subordinates. They direct decisions towards the
accomplishment of objectives. The basic purpose of policies is to secure a consistency of purpose and avoid decisions which are based on expediency. Policies may be either written statements or oral
understanding in general terms governing actions in repetitive situations. Policies help in the realisation of business objectives very much. 3) Procedures: Procedures indicate the specific manner in which a certain activity is to be performed. Where policies lay down the broad area of actions, the procedure determines the sequence of definite acts. 4) Methods: Method deal with the best way in which a particular task is to be performed. Thus a method is more detailed than a procedure. Whereas a procedure show a series of steps to be taken, a method is only concerned with a single operation. 5) Rules: Rules are specific statements of what may or may not be done. The only discretion left to the manager is whether or not to apply the rule. The development and communication of rules provide ways of informing the organisational members exactly what the boundaries of acceptable behaviour are. Thus a rule is different from a procedure.
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B. Single Use Plans: Single use plans are designed to accomplish specific objectives, usually within a relatively short period. Budgets, programmes, and projects are examples of such plans. The are as follows: 1) Budgets: A budget is a plan which covers the course for industrial activities for a future period to achieve the prescribed objectives and to provide the desired profits for operation. It may be stated in time,
materials, money or in any other unit. Money budgets are very common. Budgets serve two purposes, i.e., planning as well as control. 2) Programme: A programme is a sequence of activities designed to implement policies and accomplish objectives. They are developed under the umbrella of organisation goals. Programmes may be major or a minor one. Expansion programmes, training programmes, management
development programmes are some examples of major programmes. Replacement of a particular machine, training a few operators for a new machine are minor programmes. 3) Projects: A project may be called a specific programme. So it has some characteristics of programming and some characteristics of strategy. Construction of a new plant and marketing a new product are some examples of projects. 4) Strategy: A strategy is also a special kind of plan formulated basically to meet the challenge of special circumstances. They are actually counterplans. For example, strategy can be planned to face the excessive competition in marketing field choice of a strategy depends on a number of factors like available resources, urgency of achieving an objective, executives. external atmosphere, temperament of the concerned
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3.6 Steps in Planning

The following are important steps in the process of planning: 1) Determination of objectives: The first step in planning is to determine the enterprise objectives. These objectives set the pattern of the proposed course of action and shape the future policies. The objectives should be for the organisation as a whole and then it must be broken down into departmental, sectional and individual objectives. Objectives must be specific, clear and informative. 2) Establishment of Planning premises: The second step in planning is to establish planning premises. Premises are planning assumptions, the future setting in which planning takes place. Thus it is a forecast of those business conditions under which a plan is to operate. 3) Determination of Alternative courses: The third step in planning is to search for and examine alternative courses of action. There is hardly a plan for which a number of alternatives cannot be found out. In industries, there exist a number of alternative courses of action for achieving the desired objectives. All possible alternatives should be found out for their comparative and analytical evaluation. 4) Evaluation of alternatives and selection of a course of Action: The next step is the evaluation of alternative course of action and finding a suitable and best course of action. All the possible alternatives should be compared and evaluated in the light of premises and goals. 5) Preparation of Derivative plans: The next step in the planning process is to formulate the derivative plans in support of the basic plan. There are subplans or departmental plans. The basic plan prepared for the whole enterprise cannot be effectively operated in the absence of such sub-plans. So, within the framework of a primary or basic plan, derivated plans are
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devoted in each area of the business to integrate objectives with a network of policies, programmes, procedures, etc. 6) Timing and sequence of operation: Timing is an essential consideration in planning. After developing the plan, sub-plans, the starting and finishing period should be fixed for each plan. Scheduling is very useful not only in sales and production areas but in other functional areas also. 7) Securing participation of employees: The execution of a successful plan depends to a large extent upon the loyalty and sincerity of the subordinates. It can be secured only when their proper participation is secured. Plans must be communicated, explained and consulted with them thoroughly. Such participation improves the quality of planning and involvement of
subordinates in it. 8) Considering the strategy: Strategy has a significant contribution towards the execution of a plan. So consideration of different strategies becomes an integral part of the planning process. A multiple strategy should be planned and followed for the success of planning. 9) Providing follow-up to the proposed course of Action: Ultimately, a provision for follow-up measures should be made for the time when a plan is put into action. In the context of current problems and situations, necessary adjustment in plans becomes imperative. So necessary provision should be made for it beforehand
3.7 Advantages of Planning

Successful planning confers positive and all-round benefits to the organisation such as the following: 1) Economy of time and effort: As planned activities are subjected to a careful scrutiny, unnecessary activities are eliminated and only essential activities
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are undertaken to accomplish the specific work. Thus, overall time and effort for the planned activity is reduced to the minimum. 2) Maximum utilisation of Resources: As planning involves tacking stock of all available resources including human resources, it reveals hidden resources which might have hitherto remained unutilised. This makes maximum utilisation of resources possible. 3) Planning compels managers to visualise the complete picture about the future: This is valuable as it enables them to see important relationships to gain a fuller understanding of each activity and to appreciate the basis on which their managerial actions are planned. 4) Planning provides a basis for control: Planning involves not only determining objectives and fixing the time for starting and finishing each activity but also lays down sub-goals to be achieved at different points of time; during the entire plan period. This enables management to compare actual performance with what has been planned, thus providing a basis for control. 5) It sets enterprise goals in their proper perspective. 6) It gives meaning and content to the time-horizon in the enterprise life. It compels fore thought global in the wider socio-economic environment and internal within the enterprise management. 7) It provides the tempo and gives the direction to the management process.
3.8 Limitations of Planning

1) A plan is formulated on the basis of certain assumptions about future developments. Its usefulness, will largely depend on subsequent correctness of these assumptions. If the actual condition under which the plan has to be implemented are significantly different from those which had been assumed, much of the efforts which has gone into making the plan would be wasted.
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2) Critics of planning also argue that the resources spent on planning could better be spent in actually performing the physical work to be done and it is, therefore, a waste to spend them on planning. The answer to this is that expenditure of resources on many unplanned activities might well prove entirely unproductive and, to prevent this, planning is essential. 3) Managers have often complained that a clearly formulated plan forces them into a Straight Jacket and leaves no room for their initiative. Though there may be some element of truth in this view, it must be pointed out that no plans can be drawn in all their details and most of them generally do provide for some degree of flexibility, to facilitate necessary adjustments due to changes in conditions.
3.9 Management by Objectives

The techniques of M.B.O. was first used by Peter Drucker in 1954. Under this technique, the manager and subordinates together agree upon the targets, the type of activities, the time schedule for using as a criterion for evaluating the performance of subordinates. According to George Odiorne, M.B.O. is a process whereby the superior and the subordinates of an organisation jointly identify its common goals, define each individual major area of responsibility in terms of results expected of them and use these measures as guides for operating the unit and assessing the contribution of each of its members. The important areas where objectives are to be set according to Drucker are: 1) Market Standing 2) Innovation 3) Productivity 4) Physical and financial resources 5) Profitability 6) Managerial performance and development 7) Workers performance and 8) Attitude and public responsibility.
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3.10
Steps involved in M.B.O.
Joseph M. Putti in his book Management A Functional Approach enumerates the steps involved in M.B.O. as under: 1) The subordinate writes down his major areas of responsibility, discusses them with his superior and reaches an agreement. 2) The subordinate sets objectives in each one of the major areas of responsibility and reviews them with his superior. The superiors guidance is essential in sizing up these objectives. Once again an agreement is reached on the objectives. 3) The subordinate goes back and tries to put them into practice. 4) The subordinate reviews the progress towards these objectives with his superior on a quarterly basis. During these meetings, objectives and plans are revised and updated as required. 5) At the end of the given period, the subordinate submits in brief report of his accomplishments with comments on the variance between results actually achieved and the results expected. 6) The superior and subordinate discuss the self-appraisal of the subordinate. The reason for goals not being achieved are explored at this meeting. 7) As a final step, a new set of objectives is established for the following year along with recommendations for improvement, if any required.
3.11
Advantages of M.B.O.
1) It enables the individuals to know what is expected of them. 2) It helps in drafting plans and helps in achieving them. 3) It improves communication between the superior and subordinates. 4) It enables individuals to be aware of the goals of the organisation. 5) It makes the evaluation process more equitable by focussing on specific accomplishment.
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6) It enables subordinates to know how far they have progressed in achieving the goals of the organisation.
3.12
Forecasting
Forecasting is an important step in planning. It refers to that process of predicting, projecting and eliminating some specific future events and conditions (internal and external) in the organisation. It is a systematic appraisal of the future, viz., its behaviour, trends and likely changes so far as they are relevant to the functioning of the industries. Forecasting is an important tool of providing the intellectual basis and information inputs for undertaking the formulation of meaningful plans. Since the future by definition is uncertain, forecasting is unlikely to be accurate always. The future does not always behave as we would expect it to. It may be possible to improve the reliability of estimates and predictions by application of more scientific and sophisticated forecasting techniques but there is no reason for over optimism in this regard. Many events in the future may turn out to be significantly off the line of forecasts. Despite its limitations, forecasting cannot be dispensed with as a technique of generating information about future. That is why, most companies go for investing substantial money in forecasting. Planning is to be based on proper and reliable information on the past, present and likely future position of the organisation. Forecasting is intended to generate information on the future the conditions likely to prevail and their likely implications for the performance of the organisation. Intelligent, systematic and scientific forecasting is an attempt at understanding the state of uncertainty and complexity of some of the variables of the future. It may be noted that the forecasting does not render the future conditions less complex and uncertain. It only strengthens the sense of confidence and competence of managers, while making current decision on commitments of
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scarce resources and valuable efforts in the future. It enables managers to make informed judgements. The only alternative to forecasting is drifting into the unknown future with closed eyes, which is more hazardous.
3.13
Importance of Forecasting in Planning
One of the steps in planning in forecasting. It provides the intellectual basis and information inputs for understanding the formulation of meaningful plans. It also enables the manager to make planning premises, estimates and judgements on the implications of future events and behaviour of variables. Managers make planning premises on the basis of information they generate by forecasting. Thus, forecasting precedes the formulation of planning premises. In this sense formulation of planning premises may be regarded as one of the stages in planning. For an industrial enterprise there are several aspects of future which can be the subject matter of forecasting depending upon the size and nature of the enterprise. They relate to future conditions in economy, general price situation, growth of economy, changes in its structure, conditions in the industry in which the enterprise operates or wishes to operate, likely demand and competitive trends, availability of inputs, manpower, changes in technology, government policies etc. The time span of forecasting can range from a few months to a number of years depending upon the range and size of operation of the enterprise as also the nature of industry. Effective forecasting helps in reducing the influence of chance events and luck apart from enlarging the freedom of action for the enterprise make conscious choice as part of the planning process. However, it should be kept in mind that forecasting is not planning. The former is confined to the task of predicting the probable future conditions, while planning is concerned with designing the desired future conditions and making the need efforts to ensure that they will materialise.
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3.14 Techniques of Forecasting

A wide range of techniques have been developed for forecasting as explained below: 1) Time series analysis: Time series refers to numerical observations of a variable at successive intervals over a period of time. Time series of a variable for a fairly long period of time in the past can be used to project or to extrapolate its future behaviour on the assumption that history repeats itself. There are four components in a time series trend, seasonal, cyclical and erratic fluctuations. 2) Econometric techniques: These techniques are useful for determining and estimating the functional relationship of dependence and interdependence among two or more variables. Simple regression, multiple regression and simultaneous equations system are some of the econometric methods of forecasting. 3) Barometric techniques: The behaviour of certain economic or business variables can have an important effect on some other variables. There are three types of indicators; lead indicators; lag indicators and concurrent or coincident indicators. An overall index of behaviour of a set of indicators, known as diffusion index is prepared as the basis of forecasting the future in regard to the phenomenon under study. 4) Input-output techniques: There are important relationships among the various activities within a system whether it is as large as an economy or as small as an enterprise. One such relationship is called input-output relationship. Input-output tables can be prepared in a matrix form for various large or small activity systems and can be used for forecasting purposes. 5) Survey techniques: First hand data on the behaviour of certain desired variables can be obtained through selective surveys by means of questionnaires and interviews. The data so collected can be processed and
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analysed for purpose of testing some predetermined hypothesis and making predictions and future estimates of the bahaviour of the variables under study. Surveys are of two types: complete enumeration or central and sample survey.
3.15 Exercise
1. Explain the important features of Planning. 2. Write an analytical note on M.B.O. 3. What do you mean by Planning ? Explain its nature. 4. Explain the different techniques of forecasting.
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Decision Making
Unit 4
Unit 4
Structure 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 Introduction Definition Features of Decision Making Importance of Decision Making Types of Decisions Rationality in Decision Making Process of Decision Making Administrative Problems in Decision Making Exercise
Decision Making
4.1 Introduction
Decision Making involves choosing among alternatives. A managers ability is judged by the quality of decisions he makes. The manager has to decide which step will be most appropriate and profitable in a given situation.
4.2 Definition
According to Massie A decision is a course of action which is consciously chosen for achieving a desired result. According to Mary Niles Decision Making takes place in adopting the objectives and choosing the means and again when a change in the situation creates a necessity for adjustments.
4.3 Features of Decision Making

i) It implies a choice i.e. choosing among two or more alternative courses of action. ii) It is a continuous process.
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iii) It is human process as it involves mental work. iv) Decision Making is a end process preceeded by reasoning and deliberation. v) It may be negative and may just be a decision not to act. vi) There is the concept of commitment in every decision. The manager is committed to a decision not only from the time he takes it but also till he implements it successfully. vii) It is not identical with problem solving. viii) It relates the means to the end. ix) It depends upon the situation.
4.4 Importance of Decision Making

According to Melwin T. Copeland Administration is a decision making process and authority is responsibility for making decisions and for ascertaining that the taken decisions are carried out. In the business enterprise changes in condition occur, shifts in personnel take place, unforeseen contingencies arise, moreover, just to get wheels started and to keep them rotating decisions must be made. Decision Making is the nearest of planning. It is an important function of management. A management without decisions is like a man without a backbone. Every aspect of management function is determined by decisions only. The days of hit and miss methods of management are replaced by new and scientific technique. Therefore decision making is vital to all management activities. It helps to setup definite objectives, prepare plans of action, determine organisational structure, motivate personnel and introduce innovations.
4.5 Types of Decisions

i) Programmed and Non-Programmed Decision: Programmed decisions deal with routine or repetitive problems. Such problems being repetitive in nature needs a standard procedure for handling such problems by the
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managers at the appropriate level. The top executive need not waste his valuable time and energy in dealing with such problems. Eg.: If there is a habitual absenteeism in the company a set of rules and regulations will be there according to which the concerned officer can take action on such worker. Such problems need not be referred to the top executive. Non-Programmed decisions are caused by unexpected problems which cannot be solved so easily. Eg.: If a large number of workers remain absent without informing, it becomes a problem requiring non-programmed decision. Such problems should be referred to the top executives only who will have to study its causes and consequences and then take an appropriate decision. ii) Major and Minor Decisions: Decisions which have far reaching consequences and which involve huge expenditure are called major decisions Eg.: Purchase of costly plant and machinery. Major decisions will be taken by the top executive. Decisions which involve less expenditure are called minor decisions. They are taken by the officer in charge. Eg.: Purchase of ink and paper for office use. iii) Policy and Operating Decisions: Policy decisions are of great importance and affect the entire enterprise. They are taken by the top management. Eg.: Decision whether to give bonus or not. Operating decisions are taken to put the policy into action. It is taken by lower level management. Eg.: Calculating the bonus amount in respect of each worker is an operating decision. iv) Organisational and Personal Decisions: When the executive takes a decision in his official capacity it becomes organisational decision. Eg.: The sales mangers decision to visit distant branches. Decisions taken by the
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executive in his personal capacity are personal decisions (eg.) the decision of a manager to go on leave for one month. v) Long term, Departmental and Non-economic Decisions: In long term decisions, longer period is covered and risk is more. Such decisions are taken by top executives. Departmental decisions relates to a particular department and is made by the concerned head. Decisions relating to non-economic factors are non-economic decisions. Eg.: Decisions relating to moral behaviour of the workers. vi) Individual and Group Decisions: When a decision is taken by an individual in the organisation it is called as individual decision. Such decisions are taken in small organisations. When a decision is taken by a group of individuals it is groups decision. vii) Routine and Strategic Decisions: Routine decisions are made repetitively following certain established rules, procedures, policies etc. They do not require collection of new data and are always taken by manager at middle and lower level. Strategic Decisions or basic decisions are more important and are taken by top level management. They relate to policy maters. So it requires collection of information and analysis of alternatives Eg.: Sending samples of a product to the Government investigation centre is a routine decision. Cutting down the price of a product is a strategic decision.
4.6 Rationality in Decision Making

A manager can take a decision by intuition or rationally. If a decision is taken without considering carefully all the alternatives it is called decision by intuition. Decision by intuition are subjective.
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If a decision is taken after analysing and measuring the consequences of different alternatives it is called rational decision. This needs sufficient reasoning and logical thinking. It is a systematic way of decision making. In actual practice every individual takes decision both by intuition and by rationality. This was called as The principle of bounded rationality by Herbert Simon. He emphasized that a person makes decision not only on absolute logical analysis of facts but also by his intuition, value system and way of thinking which are subjective in nature. The subjectivity in decision making arises due to the following: i) The individual does not want to study and analyse the problem because of his perception. ii) The individual does not have full knowledge of the alternatives and their consequences. iii) The individual interprets the organisational goals in his own way. iv) The individual is lazy or careless in taking the decision. v) He may be indifferent towards the consequences of his decisions. The rationality of the individual is bounded by these limitations. The concept recognises that a man cannot be expected to have full knowledge and information and his capacity to perceive the information is not unlimited. Therefore the traditional concept of complete rational and economic man cannot work in practice. A man has only bounded rationality and this concept helps in understanding the actual behaviour of decision maker. A decision maker is bound to be effected by subjective factors even though he is otherwise rational.
4.7 Process of Decision Making

The decision making process involves the following steps: i) Diagnosing and defining the problem. ii) Analysing the problem and fact finding. iii) Developing alternatives.
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iv) Selecting the best alternative. v) Putting the decision into practice. vi) Follow up. i) Diagnosing and defining the problem: A problem well defined is half solved. Defining the problem is not an easy task. Much time is to be spent in pointing out the problem. But it is worth spending the time because many bad decisions are made due to wrong analysis of the problem. The manger has to identify the real problem because problems which appear to be seen in the organisation may not be true problems. ii) Analysing the problem and fact finding: After finding the problem the manager should analyse it. It involves classifying the problem and gathering information. Classifying is necessary in order to know who should take the decision and who should be consulted in taking it. Classification should be done on the basis of nature of the decision, impact of decisions on other functions, periodicity of decisions, limiting or strategic factor relevant to the decision. After classification information has to be collected which needs certain decision on the part of the manager. He must decide what type of information is to be needed, how it has to be collected, what time and money he needs to collect the information. It is necessary that the manager should know how to use it. It is a point to be noted that fact finding should be solution oriented. iii) Developing alternative: The purpose of finding alternatives is to make the best decision. After considering carefully the desirable courses of action he can select a best alternative. If this is not considered the manager cannot take good decisions because he is guided by his limited imagination and makes him skip of an important planning principle i.e. the principle of alternatives.
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Alternatives exists for every decision problem. Effective planning involves a search for alternatives. However the development of alternatives cannot provide a person with the imagination which he lacks. There is no guarantee that the best solution will be arrived at if alternatives are found out. iv) Selecting the best alternative: In order to make a final choice, measurement of the alternative in terms of its result is necessary. This can be done by the following methods: 1) Intuition: Choosing a solution that is good at that time. 2) By rational way: Choosing the alternative by measuring the consequences of various alternatives. Peter Drucker has given the following criteria for measuring the results of alternatives: 1) Risk: Risk is involved in all solutions. A manager has to measure the risk involved against expected gains. 2) Economy of effects: The decision to be chosen should ensure the maximum possible economy of efforts, money and time. 3) Situation or timing: The choice of the action depends upon the present situation. 4) Limitation of resources: In selecting alternatives primary importance should be given to the limiting factors. With the help of these elements a managers has to compare the various alternatives and select one which is the best in that situation. v) Putting the decision into action: A manager is not only concerned with the task of decision making but also with its implementation. He has to take steps to implement the decision. At this stage he may have to face resistance from the subordinates. This has to be over come by the manager. In order to make the sub-ordinates committed to the decisions, it is essential that they should be allowed to participate in the decision making process.
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vi) Follow up: If the desired results have to be achieved the manager has to check the results at every step after putting the decision into action. This is needed because 1) If the decision is good, one will come to know what to do when faced by the same situation. 2) If the decision is bad, one will know what not to do in the next time. 3) If the decision is bad and one follows up soon corrective action may be possible.
4.8 Administrative Problems in Decision Making

1) Correctness of Decision: To make correct decision, the manager should analyse the situation and he should have confidence in his ability in solving the problem. If the collected information is correct and if it is properly analysed, the decision made is bound to be correct. 2) Decision Environment: If the general environment in the company is satisfactory there will be mutual Co-operation and proper understanding which helps the manager to get timely information and take quick decision. 3) Timing of Decisions: Decisions without any purpose and timing are not at all business decisions. Further a decision has no meaning if it is not taken at the right time. 4) Effective Communication: Decisions taken must be communicated to those for whom they are meant and in the language known to them. Further the decision communicated must be clear, simple, logical and free from ambiguity. 5) Participation in Decision Making: The philosophy behind participation in decision making is that the manager should invite suggestions from the subordinates before taking a final decision to make them implementable easily.
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6) Implementation of Decision: When a decision is finalized the manager and his subordinates should carry it out with all energy and zeal. Even if the manager has consulted many of his subordinates and outside specialists he has to accept the responsibility for decisions taken. The decisions taken becomes meaningless if they are not implemented.
4.9 Exercise
1. Define Decision-making. Explain its features and importance. 2. Explain the different types of Decisions. 3. Explain the different steps involved in decision-making process.
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Organising
Unit 5
Unit 5
Structure 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 Introduction Definition Scope of Organisation Purpose of Organisation The Process of Organisation Principles of Organisation Ten Commandements of a Good Organisation Importance of Organisation Types of Organisation 5.9.1 5.9.2 5.9.3 5.9.4 Line Organisation Line and Staff Organisation Functional Organisation Committee Organisation
Organising
5.10 Exercise
Learning Objectives
Explain the process of Organisation. Explain the principles of Organisation. Explain the types of Organisation.
5.1 Introduction
The term Organisation is used in a dynamic as well as a static sense. In its dynamic sense, organisation refers to the function of management which is necessary for bringing people together so as to achieve the object of an undertaking. This may well be called the process of organising. In its static sense, Organisation refers to the structure of relationship among positions and
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jobs which is built up for the realisation of the common objectives of a firm. In this sense, organisation serves as a means to achieve the ends of the firm.
5.2 Definition
According to Oliver Sheldon (The Philosophy of Management), Organisation is the process of so combining the work which individuals or groups have to perform with the facilities necessary for its execution, that the duties so performed provide the best channels for the efficient, systematic, positive and coordinated application of the available effort. From the above definition, it is clear that organisation concerns itself with combining and coordinating individuals as well as group activities in an enterprise. Organisation integrates the various jobs of the enterprise into an effective operating system to provide for accomplishing the firms objective. A comprehensive definition of organisation is given by Louis A. Allen in his book, Management and Organisation. According to Allen, Organisation is the process of identifying and grouping the work to be performed, defining and delegating responsibility and authority and establishing relationships for the purpose of enabling people to work most effectively together in accomplishing objectives.
5.3 Scope of Organisation

Organising is the process of determining and establishing a structure or system of authority and activity relationships among the resources being used to meet the factorys objectives. The scope of organisation includes: 1) The human resources who utilise the physical resources of the company to achieve its objectives. 2) The respective positions they occupy and the functions they perform. 3) The range of authority and responsibility they individually exercise. 4) The framework of formal and informal relationships through which they deal and communicate with one another.
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5) The mechanisms through which they operate and coordinate their activities in the enterprise. It is upon the basis of persons, physical resources, positions, authority, contacts, operations, communications and co-ordination that work is carried on successfully.
5.4 Purpose of Organisation

Organisation serves two important purposes. Firstly, it serves as a plan of subfunctions. It defines the relationships between the sub-functions so as to coordinate the efforts of people in the accomplishment of the overall task effectively and efficiently. The objectives place more emphasis on the job content, definition, analysis and relationships of the organisation structure. Secondly, organisation serves as a pattern of ways in which a number of people relate themselves to each other in the planned systematic accomplishment of a complexity of tasks. This objective tends to emphasise on the personal relationships and human element to a greater extent. But the common purpose of establishing an organisation is to enable the human resources to work more effectively as a unit. In the words of Voivh and Wren (Principles of Management), To contribute his best, every employee needs to know what he is expected to do, who his superior is, and what his relationship is to other employees, and other parts of the organisation. A proper combination of resource inputs and a soundly conceived organisational structure are required to achieve increased productivity and synergy. A sound organisation tends to alleviate certain types of personnel problems such as (1) duplication of effort, (2) unbalanced workload, (3) defining training needs, (4) dormant programmes and (5) lack of coordination.
5.5 The Process of Organisation

Organisation is one of the important functions of management. To organise is to coordinate, harmonise or analyse in a logical order the various functions of a factory. This function includes making a rational division of work into groups of
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activities and tying together the positions which represent the group of activities so as to achieve a rational and orderly structure for accomplishing a task. The steps involved in the process of organisation are as follows: 1) Determination of objectives: The first step in organising is to decide the objectives as organisations are built around objectives. Here, the objective to be accomplished is to be clearly noted. It may be profit, sales or a certain volume of production. 2) Enumeration of activities: Here the total job will be divided into essential activities. Such activities are purchasing, finance, sales, accounting, personnel etc. The process of organising relates to all these activities. 3) Classification of activities: Here the activities are to be grouped according to their nature and common purpose. They are required to be adjusted to the resources available. For example, activities related to personnel department can be classified into a number of activities such as recruitment and selection, induction and training etc. 4) Fitting individuals into functions: Once the activities are enumerated and classified, the next step is to fix suitable and well-qualified persons to perform these activities. Each person in the group will be given a specific part of the job for operation and he will be held responsible for the same. 5) Assignment of a authority for action: Each member of the group will be given a specific responsibility in relation to authority assigned. In an organisational sense, authority is the right of one person to require another to perform certain duties. This authority may have one or more of the following aspects: i) It may be formal, i.e., conferred by law or delegated within the organisation. ii) It may be functional, because it is based on special knowledge or skill.
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iii) It may be personal, i.e. accorded because of seniority, popularity, or outstanding qualities of leadership. Responsibility in an organisational sense, is accountability for the performance of assigned duties. It is a moral attribute that is possessed by some to a greater extent than by others. The duties allotted to an individual are the activities he is required to perform because of the place he occupies in the organisation. These duties or activities are co-ordinated to accomplish the objectives of the enterprise.
5.6 Principles of Organisation

1) Principle of objective: According to this principle, all organisations and each part of an organisation should be the expression of a purpose, either explicit or implied. According to Alford and Beatty, each part and subdivision of the organisation should be the expression of a definite purpose in harmony with the objective of the undertaking. 2) Principle of authority and responsibility: According to this principle, responsibility for the execution of work must be accompanied by the authority to control and direct the means of doing the work. In the words of F. W. Taylor, formal authority and responsibility must be coterminous and co-equal. This principle is sometimes called the principle of correspondence. 3) Principle of ultimate authority of supervision: According to this principle, the responsibility of a higher authority for the acts of his subordinates is absolute. 4) Principle of scalar chain: According to this principle, a clear line of formal authority must run from the top to the bottom of an organisation for control. According to Mooney and Reiley, there must be a clear line of formal authority running from the top to the bottom of every organisation.
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5) Principle of span of control: According to this principle, the number of subordinates reporting to a superior should preferably be limited to six at the executive level. In the words of Graicunas, no superior can supervise directly the work of more than five or at the most six subordinates whose works interlock. 6) Principle of exception: According to this principle, managerial efficiency is greatly increased by concentrating attention upon those executive matters which are questions of policy or are variation from routine, plan or standard. 7) Principle of assignment of duties or specialisation of function: According to this principle, the work of every person in the organisation should be confined, as far as possible, to the performance of a single leading function. 8) Principle of definition: The duties, authority, responsibility and relations of everyone in the organisation structure should be clearly and completely spelt out in writing. 9) Principle of Homogeneity: According to this principle, an organisation, to be efficient and to operate without friction, should bring together only duties and activities which are similar or related to each other. 10) Principle of Organisation Effectiveness: According to this principle, the final test of a factory organisation is smooth and frictionless operation.
5.7 Ten Commandments of a Good Organisation

The Ten Commandments of a good organisation were formulated by M. C. Rorty, President of the American Management Association, in 1934. In 1941, AMA issued these Commandments in a commemorative form: a) Definitive and clear-cut responsibilities should be assigned to each executive, manager, supervisor and foreman. b) Responsibility should always be coupled with corresponding authority.
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c) No change should be made in the scope or responsibility of a position without a definite understanding to that effect on the part of all persons concerned. d) No executive or employee, occupying a single position in the organisation, should be subject to definite orders from more than one source. e) Orders should never be given to subordinates over the head of a responsible executive. Rather than do this, the officer in question should be supplanted. f) Criticisms of subordinates should be made privately. In no case should a subordinate be criticised in the presence of an executive or employee of equal or lower rank. g) No dispute or difference between the executives or employees as to authority or responsibility should be considered too trivial for prompt and careful adjudication. h) Promotions, wage changes, and disciplinary action should always be approved by the executive immediately superior to the one directly responsible. i) No executive or employee should be assistant to and, at the same time, a critic of the person he is assistant to. j) Any executive whose work is subject to regular inspection should be given the assistance and facilities necessary to enable him to maintain an independent check of the quality of his work.
5.8 Importance of Organisation

A well-conceived and developed organisation structure will immensely benefit the superiors and subordinates in a factory. A good organisation structure will not only enable the achievement of objectives more easily and quickly but also the
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physical operation of the organisation will be greatly enhanced. The importance of organisation is outlined under the following: 1) Organisation establishes responsibility and prevents buck-passing. 2) It provides for easier communication. 3) It eliminates jurisdictional disputes between individuals. 4) It helps in developing executive ability. 5) It aids in equitable distribution of work functions and/or personal supervision. 6) It aids in measuring a persons performance against his charges and responsibility. 7) It permits expansion and contraction without seriously disrupting the structure. 8) In times of change, it affords movement in the direction of the ideal organisation. 9) It prepares for clear cooperation and higher morale. 10) It points out dead-end jobs. 11) It delineates avenues of promotion. 12) It prevents duplication of work. 13) It makes growth possible with adequate control and without literally killing top executives through overwork. 14) It aids in wages and salary administration through forced job analysis and description.
5.9 Types of Organisation

A well-developed organisation structure consists of different levels of management, with well-defined duties and responsibilities. An organisation structure will provide the framework in which the management will function effectively. A good organisation structure helps in a satisfactory distribution of authority and responsibility among the members of an enterprise. The important
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types of organisations are: (1) Line organisation, (2) Line and staff organisation, (3) Functional organisation and (4) Committee organisation. 5.9.1 Line Organisation: The line organisation is the simplest and oldest form of organisation. This is also known as the military or hierarchical or scalar or traditional type. The organisation structure here is similar to that in an army organisation and hence the name military type. This type of organisation is based on the exact division of duties, full delegation of authority and discipline. The line is the backbone of this type of organisation, that is formed by a series of delegation from the top to the bottom of the organisation structure. This can be illustrated by Fig. 5.1.
Board of Directors Chief Executive Production Manager Foreman Workers Fig. 5.1: Chain of Command
From Fig. 5.1, it is clear that the board of directors delegates to the chief executive the responsibilities for managing the factory. The chief executive reserves overall responsibility and authority for managing the factory, but he delegates the day-to-day routine work to his subordinates who redelegate it to the successive lower levels. In the above figure, the chief executive has delegated his responsibility to the production manager, who in turn delegates certain work to the foreman. This lower management, i.e. foreman, then assigns the work to the workers. The line officers of a factory are those who are to accomplish the factorys primary objectives. Thus, in a factory, the line officers are usually the production
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manager, sales manager, financial manager, transport manager and so on. Fig. 5.2 is illustrative of this typical line organisation. From Fig. 5.2 it is clear that orders are passed down from the chief executive. On receiving the authority by the Sales Manager, Plant Manager and Financial Manager from the chief executive, these line officers in turn delegate authority to their respective supervisors. Thus, the Sales Manager may delegate certain selling authority to the Assistant Sales Manager, who in turn may delegate authority to sales supervisors. In this way, orders to sell eventually reach the salesman who will then undertake to push the sales.
Chief Executive
Sales Manager Assistant Sales Manager Sales Supervisors Salesmen
Production Manager Superintendent Foreman Workers Fig. 5.2: Typical Line Organisation
Financial Manager Treasurer Clerks
Requirement of Command. Henry Fayol, the French industrialist, laid down the requirements of command for the functioning of a line organisation as follows: 1) There must be a thorough knowledge of the working force. 2) Incompetence must be eliminated. 3) There must be sound knowledge of the agreements between the management and its employees. 4) Those in authority must set a good example to the work force. 5) The organisation must be periodically examined with the help of charts. Features of Line Organisation 1) Authority flows from the top to the bottom of the organisation structure step by step, as a result of the downward delegation of the authority.
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2) No subordinate will act without the authority delegated to him from his immediate superior. 3) Each subordinate is responsible to his immediate superior for the duties discharged by him. 4) Decisions are made at the top level management which are converted into orders and passed on to the lower level management by successive level of management. 5) A direct relationship between the superior and the subordinate is established under this type of organisation. While authority comes down from the superior, responsibility goes up from the subordinate. This means that as authority is exercised by the superior over his immediate subordinate, the latter is entirely responsible to his immediate superior for the performance of work entrusted to him by the former. The line type of organisation is successful in the following cases: 1) Small-scale industries with a relatively smaller number of subordinates. 2) Routine type of concerns where the same type of product is being produced without any complicated processes so that there could be rigid control exercised by the departmental bosses over their subordinates. 3) Continuous type of industries like soap and other industries. 4) Industries where automatic machinery is installed so that the supervisor of the departmental head need not exercise undue care and judgement but can manage with the usual instructions to his subordinates. Advantages: 1) Direct relationship: The existence of direct relationship of authority and responsibility makes every member of the organisation know his exact position, to whom he is responsible and who his immediate superior is. This renders the performance of work easy and smooth.
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2) Fixation of responsibility: The responsibility to discharge a certain duty is fixed to a certain subordinate, so that he might be held responsible for any deficiency in work. 3) Simplicity in operation: The fixation of authority and responsibility among the members of the organisation renders the operation of work simple and intelligible. 4) Sense of discipline: The direct relationship of authority and responsibility creates a sense of discipline in the organisation. Each subordinate is compelled to be faithful and loyal to his immediate superior. Discipline is thus the result of a single-man control over the subordinate which aids improvement in quality and quantity of production. It helps in maintaining a sense of purpose in every department of the organisation, besides rendering the working of the organisation very effective. 5) Definite lines of authority: The duties and responsibilities of each and every superior and subordinate is clearly laid down under this type of organisation. So the chances of confusion and misunderstanding and conflicts do not arise in this type of organisation. 6) Flexibility in action: The superior in each section has the authority to take effective steps to deal with particular situations in his section, as they crop up, without the need to consult any other executive in this respect. This freedom or flexibility in action would be helpful in dealing promptly with a situation of emergency. 7) Co-ordination of effort: There will be effective coordination in the entire organisation, because of the overall control exercised by the administrators in all the departments and because of the control over the activities of each department being exercised by the head of the department concerned. This in turn creates unification in the entire organisation and enables it to achieve its objectives.
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8) Direct Communication: The direct relationship between the superiors and subordinates at different levels results in direct communication which is essential for the quick performance of work. 9) Economical: As this type of organisation is simple in nature without involving any specialists, the cost of setting up this organisation is very little. Disadvantages: 1) Overburdens the head of department: As the plan of action and control of each department are the responsibility of the head of the department, it is possible that he may be overburdened with work. Most of his time and energy will be required for the supervision of the department, rendering him inefficient gradually. Besides, he will have little time and energy to devote to the improvement of the department. 2) Encourages autocracy: Excessive power and control of each department being vested in the departmental head may make him autocratic in decisionmaking without taking into account the views of his Assistants. This may lead to lack of co-operation from them which is essential for effective functioning of each department. 3) Lack of specialisation: Under this type of organisation, the departmental manager is expected to look after all the functions such as planning, decisionmaking, execution and control. The organisation thus suffers from lack of specialised skill of experts. A modern factory is so complex that it is extremely difficult for one person to carry out all the activities by himself. 4) Lack of scope for development of skill and efficiency of the subordinates: The dictatorial rule of the departmental heads may not permit the subordinates to express their opinions in respect of the methods of improvement in work and in turn will curb the development of their skill, intelligence and efficiency.
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5) Difficulty in securing capable executives: The retirement, resignation or death of capable executives may cripple the entire organisation as such men may not be available for the organisation even in the long run. 6) Difficulty to run large organisation: This type of organisation is not successful where there are complexities in the nature of manufacture and where the industrial unit is large. It may be difficult to obtain competent executives for the different departments of a large organisation, which may affect the quality of work. 7) Lack of co-operation and co-ordination among departmental heads: Under this type of organisation, each departmental head concentrates on his own departmental activity without bothering about the other departments. Lack of co-operation among departmental heads results in overall inefficiency in the factories. 5.9.2 Line and Staff Organisation: This type of organisation consists of the addition of staff specialists to the simple line organisation previously discussed. Harrington Emerson was the first man to introduce this type of organisation. The term staff in this type of organisation refers to helpers or specialists who enable the line officers to work most effectively. They are supporters who provide service and advice to the line officers. The individuals who constitute the staff in a factory are experts who have no line authority but whose function is largely advisory. Their authority arises from their superior knowledge of a particular function of the enterprise. Although they do not have the power to command the line officer, their advice is generally adhered to because of their status in the organisation. The line officers maintain discipline and stability and the staff officers provide expert information to the line officers. The duties of staff officers are as follows: a) Conduct research in the areas of technical, operating or managerial problems.
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b) Determination and recommendation of the various standards of performance. c) Keeping of records and statistics on the above activities as a measuring rod of performance. d) Advise and aid in carrying out plans and programmes. Line and staff control makes a clear distinction between doing and thinking, i.e. between getting work done in the line department and analysing, testing, researching, investigating and recording activities of the staff departments. It permits specialisation in the desired spheres of function but at the same time, maintains the integrity of the principle of undivided responsibility and authority throughout the line organisation. Types of staff officers: The staff officers comprise of four types. They are: (1) personal staff, (2) general staff, (3) specialised staff and (4) operating service staff. 1) Personal Staff: The personal staff exists primarily at the upper levels of an organisation. The personal staff provides a valuable service by handling much of the administrative work of his superior, by projecting his superiors ideas and wishes to others in the organisation. 2) General Staff: While the personal staff is intended to aid his superior in a personal way, the general staff is more concerned with preparing plans. In large factories, divisions and departments are often so extensive that it becomes difficult for the departmental heads to concentrate their attention and co-operation on achieving the total organisational goal. The general staff is a medium through which diversified work of large segments of the organisation is co-ordinated in the planning process. 3) Specialised Staff: The specialised staff serves in an advisory capacity for line activities based on its specialised knowledge. In helping planning function, the specialised staff may gather facts, study alternatives and develop plans and programmes for the line officers. In helping control
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function, they may advise on work standards, gather information on performance, and bring to the notice of the management the deviations between standards and actuals. 4) Operating Service Staff: Operating service staff and specialised staff have the common feature of serving the organisation as a whole. The operating service staff facilitates the operation of organisation by directly involving itself in it. Features of Line and Staff Organisation: 1) In this organisation, we come across two types of officers, viz. line officers and staff officers. Line officers have the authority to get the work executed whereas the staff officers are experts who can offer only advice to the line officers. 2) The authority of the staff stems from their specialisation in the particular branches of knowledge. 3) The staff tenders advice to the line who is expected to adopt it in their practical work, although the staff does not have the power to command the line. Fig. 5.3 illustrates the line and staff organisations. From Fig. 5.3, we can see that at the level of General Manager, two staff officers viz., Legal Adviser and Chief Accountant, offer advice to him. At the level of Production Manager, we have Production Engineer and Quality Control Inspector. At the level of foreman, the two Staff Officers are the supervisor and tool expert. The relation of each one of these staff officers is shown only at one level. However, advice from the Legal Adviser may be given not only to the General Manager, but also to any other line officer. Similarly, the Quality Control Inspector may advise not only the Production Manager but also the foreman. Similarly, the tool expert, whose primary responsibility is to advise the foreman, may also assist the worker. This indicates the cross-relationships existing in the
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line and staff organisation, which provide for more intimate contact between the two at all levels without breaking down lines of authority.
Board of Directors Legal Adviser Production Engineer Supervisors General Manager Production Manager Foreman Workers Fig. 5.3: Line and Staff Organisation Chief Accountant Quality Control Inspector Tool Expert
Advantages 1) It is based upon specialisation within the organisation. 2) It brings into the organisation expert knowledge which helps the line officers to solve many managerial problems and thus helps in maintaining overall efficiency and success of the entire organisation. 3) The division of duties into doing functions of the line and thinking functions of the staff helps in allowing the line to concentrate on its work and achieving proficiency in it with the aid of the staff, besides giving a good amount of flexibility to the organisation so that it can easily adjust itself to the changing circumstances through necessary changes effected in the staff. 4) It makes possible the principle of undivided responsibility and authority, and at the same time, permits staff specialisation. 5) It provides more opportunity for advancement of able workers, as a greater variety of responsible jobs are available. 6) The economy and efficiency resulting from the advice of the staff will more than be compensated by the costs involved in the appointment of the staff. Disadvantages 1) There will be a lot of confusion as to the functions and positions of the line officers and staff officers in this type of organisation. So this calls for a clear
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indication of the duties and responsibilities of the line and staff officers by charts and manuals. 2) Since the staff officers lack authority to execute the authority they may not have a sense of responsibility in tendering advice. 3) As the expert information and advice given by staff officers reach the workers through the line officers, there is the possibility of misunderstanding and misinterpretation of the advice by the subordinates. 4) Often conflicts between the line and staff may be created due to the inability to appreciate each others views. Conflicts may also be due to (a) the transfer of certain duties from the line executives to the staff resulting in illwill between the two, (b) resentment on the part of line officers because they have to take the advice of the staff which may appear to have an overriding authority over the former, (c) the staff may be given undue importance by the management, with the result that the line officers may feel that they are ignored, (d) the staff may be anxious to get their advice implemented without taking into the account practical difficulties involved, (e) line officers sometimes may resent the activities of staff officers, feeling that the prestige and influence of line officers suffer due to the presence of the staff officers. 5.9.3 Functional Organisation: This form of organisation was devised by F. W. Taylor in 1911 with a view to overcome the limitations of the line type, viz. getting sufficient number of trained and capable supervisors to direct production. Taylor proposed the concept of functional foremen for industrial units. According to Taylor, functional foremanship consists in so dividing the work of management that each man from the assistant superintendent up to the workers shall have as few functions as possible to perform. This system is based on the principle of specialisation, so that men with special abilities to take up specific functions, are employed. In consequence, the workmen at the lowest level will come into contact with the different specialists who are called functional foremen. In his
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writings, he states that a foreman must (a) be a good mechanist, (b) able to read drawings correctly, (c) plan the work of his department and see that it is properly prepared, (d) see to it that each man turns out work of proper quality, (f) see that the men work steadily and fast, (g) see that the work flows through the work centres in the proper sequence, (h) supervise time-keeping and rate-setting, and (i) maintain discipline and adjust wages. Taylor discovered that the typical foreman of his day was loaded with much clerical duty as well as operating responsibility. He found it necessary to remove the planning function from the shop (i.e. production department), where they were performed at a low efficiency which hampered production and put it into the hands of men who are specialised in such work. Thus, production could be speeded up and costs radically lowered. So Taylor proposed the employment of eight different functional foremen, four of whom would be located in the planning section and the other four in the workshop. Those in charge of the planning department are (1) Route clerk, (2) Instruction card clerk, (3) Time and cost clerk, (4) Shop disciplinarian. Those dealing with the shop are: (a) Gang boss, (b) Speed boss, (c) Repair boss and (d) Inspector. 1) Route Clerk: The route clerk is responsible for determining the exact route through which the production process should pass so that the finished product is ready for delivery to the customer on the scheduled date. 2) Instruction Card Clerk: The instruction card clerk is in charge of preparing instructions regarding each operation of the machine with reference to the special tools and fixtures to be used, and the proper speed to be employed in the operation of the different machines for a particular operation, the methods to be employed, the time to be taken, etc. 3) Time and Cost Clerk: The time and cost clerk is responsible for collecting information relating to the time taken and the amount of work done by each worker which is required for calculating the pay due to him.
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4) Shop Disciplinarian: The shop disciplinarian resembles the personnel manager in terms of responsibility and he is in charge of maintaining discipline and checking absenteeism on the part of the workers. 5) Gang Boss: The gang boss decides the setting up of tools and machines necessary for each operation and the instructions and training to be given to each worker. 6) Speed Boss: The speed boss is in charge of prescribing the proper speed for each machine and the tools to be used by the workers. 7) Repair Boss: The repair boss looks after the maintenance of machines, tools and equipment so that they are in perfect working condition. 8) Inspector: The inspector is in-charge of maintaining a proper check on the standards of the finished products, including its quality. The functional type of organisation is illustrated as in Fig. 5.4:
Board of Directors Chief Executive Production Manager Route Clerk Instruction Card Clerk Time and Cost Clerk Disciplinarian Workers Fig. 5.4: Functional Organisation Gang Boss Speed Boss Repair Inspector Boss
Advantages 1) Specialisation is encouraged. It ensures greater division of labour and enables the factory to take advantage of functional experts service. 2) Efficiency is increased. It makes for higher degree of efficiency as the workers get instructions from experts in their respective fields.
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3) Flexibility: It is a very flexible pattern of organisation. Any change in organisation can be made without disturbing the whole organisation. 4) Large-scale production: It facilitates mass production through specialisation and standardisation of operations. 5) Less burden to the executives: This aims at increased efficiency on the part of executives as they are required to perform a number of tasks which enables them to concentrate on them, unlike in the line organisation where each executive is a jack of all trades but a master of none. 6) Quality of the product is maintained: The quality of the product is maintained in this organisation, because the inspector undertakes to physically check and inspect the lot of goods manufactured. If there are any substandard products or defective units, they are rejected and only good quality products are passed for sale. Disadvantages 1) Conflict in authority: The authority relationship violates the principle of unity of command. It creates several bosses instead of one line boss. It creates confusion in the minds of workers as to whom they should obey and whom they should ignore. 2) Discipline is slackened: Due to decentralisation of control and division of loyalty of subordinates, the discipline of the enterprise becomes loose. 3) Lack of co-ordination: The use of several functional experts in an organisation creates the problem of co-ordination. 4) Lack of fixed responsibility: The inability to locate and fix responsibility may seriously affect the discipline and morale of the workers due to contradictory orders. 5) Conflict among the foremen: It also creates conflicts among the foremen of equal rank. Thus, conflicts mar their zeal and initiative. They will then work
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only as a machine in a routine manner. It harms the efficiency of subordinates also. 6) Impracticable and expensive: This pattern of organisation is quite impracticable and expensive also. So small organisation cannot follow it. 7) Not suitable to trading concerns: This type of organisation is suitable only for manufacturing concerns but not for trading concerns. 5.9.4 Committee Organisation: A committee is a form of organisation which supplements the line officers in pooling the ideas of several people on various problems involving different functions in order to frame better plans and policies for operation. The committee only serves in an advisory capacity to the line officers and the final decision to be taken rests with the line officers. A committee may be defined as a group of people who collectively makes decisions and presents its viewpoints and whose conduct is governed by a set of rules. The effectiveness of a committee can be increased by following certain principles. These principle are as follows: 1) Members of the committee should be selected from those persons possessing an open mind and are willing to consider dispassionately the issues. 2) Members of the committee should possess a wide range of knowledge concerning the operation of the business. 3) The number of members should be generally small. The effectiveness of a committee depends on the high degree of interaction among the members. 4) An agenda should be prepared and distributed to members well in advance for study prior to a meeting. 5) Committee meetings should follow the agenda and adhere to a time schedule.
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Functions of Committees 1) Interchange ideas. 2) Supply important information to the members or through them to the department. 3) Receive and act on reports from committee members or departments which have been asked for data or information. 4) Assemble facts from many sources and put them together into a combined plan. 5) Test the fitness of the results of operations, arrive at conclusions, and formulate reports or suggestions. 6) Make intelligent and expert studies of important factors, activities or problems. 7) Develop and recommend procedures of operation. 8) Co-ordinate or set up time relationships between the operations of different departments. 9) Correlate the activities of different departments. 10) Provide for co-operation between the different departments. 11) Formulate and set up standards of various kinds. Types of Committees 1) Executive Committee: This committee includes the sales manager, production manager, financial controller, chief engineer and general manager. The members of this committee represent the various functions of executive power. It becomes difficult for any one of the above mentioned functional executives to decide the difficult questions of policy. But when all these officials get together, their discussions become authoritative and the decisions taken by them will be sound. Some of the matters discussed may pertain to the general policy of operating the factory, size and type of articles to be manufactured, capital expenditure etc.
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2) Labour-Management Committee: The committee is formed with a view to provide better communication and good relations between employees and management. In its meetings matters such as working conditions, compensation and grievances are generally discussed. 3) Shop Conference Committee: This committee comprises of foremen in the production department, a representative from the planning and control departments and the works manager of the factory. This committee would discuss matters relating to production problems, and the findings of the committee takes the form of a progress report. This enables the works manager to know what should be done to speed up the work. 4) The Dissemination and Education Committee: This type of committee is helpful in getting information about the factorys problems, policies to the supervisors concerned. It also serves to familiarise new members with the factory procedures and give them an insight into the factory organisation and its objectives. Advantages of Committees 1) Integrated group knowledge and judgement: One of the uses of this form of organisation is the advantage of group dynamics and pooled knowledge and judgement over individual judgement. In a factory, there may arise problems requiring coordinated application of a number of areas of knowledge, such as engineering, manufacturing, sales etc. Pooled knowledge, experience and judgement comprising different viewpoints is an invaluable asset, particularly when complex problems are involved. 2) Representation of different interest groups: Committees are frequently used to give representation to important interest groups, such as labour unions, board of directors and shareholders. At the middle level and lower levels also, different interest groups can be represented on the committee, as for example, the general manager facing difficulty relating to some internal
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matters involving managers or specialists in different departments may form a committee not only to derive the benefit of group knowledge and judgement but also to give representation to all such interested groups. 3) Co-ordination of plans and policies: When any viewpoints are to be unified, and when the opinions of individuals differ, the committee form of organisation meets these requirements of bringing together all these viewpoints together. The efforts of all managers can be co-ordinated by constituting a committee of such managers. The common deliberations which take place in the meeting may be able to solve many of the intricate problems because of the co-ordination of the efforts of the concerned committee members. 4) Executive team work and personal interaction: Committee organisation results in a co-operative attitude and personal association in the development of team work. Instead of individual competition, the committee encourages group accomplishment. Formation of committees brings about interaction between all levels of management and thus secure conformity to the common goals through the sanction of the group. 5) Wider participation and motivation: A committee provides an opportunity for a wider participation of subordinates in the decision-making process. The mere participation of subordinates gives them a sense of belonging and a sense of satisfaction. Resistance to implement a programme is also eliminated by individual participation. Instead the subordinates feel more enthusiastic in executing it. 6) Improved Communication: Committees offer a very useful instrument for transmitting and acquiring information. Face to face oral communication is generally a more effective form of communication than written reports and memoranda. Members of the committee learn about mutual problems simultaneously. Opportunity is also provided for on-the-spot clarification of any doubts.
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7) Training ground for executive: Committees make a positive contribution to executive training and development. Subordinates get an opportunity to have an insight into the problems facing other executives and the organisation generally. Senior executives also get a chance to observe subordinates in action and teach them whenever necessary. Disadvantages 1) High Cost of Committees: Formation of committees is costly both in terms of money and time. The factory has to spend money for committee members whenever they have to attend a committee meeting. It also involves considerable amount of time to collect information and to prepare reports. Money costs of a committee are directly related to the time consumed in committee deliberations, and the costs involved in preparing reports and maintenance of committee members. 2) Delay in decision-making: The decisions to be taken by the committee always invariably involve too much time. Because, first of all, the committee itself is to be constituted. Secondly, prior notice of the committee meeting is to be issued. Thirdly, the deliberations and discussions of all the members have to be pooled together and a common consensus is to be arrived at. Thus, by the time the decision is taken, a favourable situation needing a decision might turn out to be adverse. 3) Compromise and indecision: Often conflicts among the committee members lead to a situation where compromise has to be reached instead of taking the best decision. In some cases where a compromise is not arrived at, it leads even to an indecision. 4) Minority Domination: Often a committee is dominated by a small group of influential members who make up the entire show in the committee. For example, one or two influential members of the committee such as a strong
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Organising
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chairman or a high-ranking line officer may dominate committee meetings and browbeat it into accepting a decision. 5) Divided responsibility: The committee organisation owes a joint
responsibility to the executive of the organisation. Under this type of organisation, a single individual cannot be held responsible for taking a wrong decision as he puts the blame on other committee members as well.
5.10
Exercise
1) Explain the process involved in an organisation. 2) State the ten commandments of good organisation as ennunciated by M. C. Rorty. 3) What do you understand by line organisation ? Explain the advantages and disadvantages of this form of organisation. 4) What do you understand by line and staff organisation ? Explain the advantages and disadvantages of this form of organisation.
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Staffing
Unit 6
Unit 6
Structure 6.1 6.2 6.3 6.4 6.5 6.6 6.7 6.8 6.9 Introduction Meaning and Definition Features of Staffing Importance of Staffing Staffing Process Manpower Planning Recruitment and Sources of Recruitment Merits and Demerits of Internal Source Advantages and Disadvantages of External Sources
Staffing
6.10 Exercise
6.1 Introduction
It is not the machines, money, materials, transport system and other physical resources that make the organisation to achieve its goals but it is the competency and efficiency of the people who handle resources contributes for the accomplishment of objectives of the enterprise. Therefore it is the responsibility of the management to secure and maintain competent and dedicated workforce including managers and operatives. This task has been referred to as staffing.
6.2 Meaning and Definition

Staffing refers to the managerial function of determining and improving the manpower requirements of an enterprise. It involves many sub-functions such as manpower planning, recruitment, performance appraisal, etc. Definition: 1) Knootz, ODonnell & Weihrich have defined staffing as filling positions in the organisation structure through identifying work force requirements,
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inventorying the people available, recruitment, selection, placement, promotion, appraisal, compensation and training of needed people. 2) Theo Haimann Concerned with the placement, growth and development of all those members of the organisation whose function is to get things done through the efforts of other individuals. 3) Curther Geelick Cyndall Urwick Staffing is the whole personnel function of bringing in and training the staff and maintaining of favourable conditions of work.
6.3 Features of Staffing

The analysis of the above definitions highlights the following features: 1) Deals with people: Staffing is a separate managerial function which deals with people in the organisation. 2) It has many sub-functions: Staffing involves determination of the manpower requirement, recruitment, selection, placement, training, development, transfer and appraisal of personnel to fill the organisational positions. 3) It aims at right man at right position: Staffing aims at selection of right person for right place at right time and retaining them in the organisation. 4) Pervasiveness of Staffing: Effective execution of staffing function is the responsibility of all managers in the organisation. Managers of the concerned departments are responsible for the selection and development of qualified people for their department and maintain them in their department. 5) It deals with future requirements: Staffing deals with current and future personnel requirements. Present positions must be filled keeping in mind the future requirements. Thus staffing deals with the future requirements also. 6) It is a continuous function: With the growth and expansion of business additional manpower is needed, vacancies arises out of retirement,
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promotion, resignation, etc. Thus staffing is an on-going process through-out the life of an organisation. 7) It is a process: It is a process having a logical sequence i.e. identifying the manpower requirements, recruitment, selection, induction, training
development and maintenance of personnel. 8) Personnel policies and programmes must be formulated as guides to perform the staffing function effectively.
6.4 Importance of Staffing

Andrew Carnegie, an industrialist once said, take away all our factories, our trade avenues of transportation and our money but leave us our organisation and in four years we will have re-established ourselves. This statement points out the importance of Men and the function of staffing in the enterprise. The function of planning, organising, direction and control become non-starters without managers and other members of the organisation. Thus staffing is a key managerial function giving life & meaning to other managerial function. The following points brings out the importance of staffing: 1) It determines the capacity of the organisation: The organisations strength and capacity is determined by its members abilities, skills and efforts to achieve the things. Thus an organisation which has selected right quality people will be in a better position to take full advantage of opportunities of growth and development. 2) Advancement of Technology: Many significant changes are taking place in technology. In order to make use of the latest technology, the appointment of right type of persons is necessary. The personnel can be fitted into new jobs properly only if the management performs its staffing function satisfactorily. 3) Long-range needs for manpower: In some industries labour turnover is very high. The management is required to determine the manpower
Staffing
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requirements well in advance. It has also to develop the existing personnel for future promotion. The role of staffing function has also increased because of shortage of really good managerial talent. 4) High Wage Bill: The outlay of big concerns on its personnel is quite high. To get better returns from such expenditures, it is essential that staffing function is to be performed in an efficient manner. 5) Recognition of Human Relations: The behaviour of individuals has become very complicated. Human aspect of organisation has become very important. By performing the staffing function, management can show the significance it attaches to the manpower working in the enterprise. 6) Efficient utilisation of all resources: Staffing function facilitates efficient allocation and utilisation of all physical, financial and other resources of the organisation. 7) Harmonious relationship: Organisation needs harmonious relationship between management and staff. Staffing provides ample scope for self development and job satisfaction to the employees. Thus it creates good relationship. 8) Basis for measurement: It is only through staffing function a system can be developed for measuring the value of human assets which is the basis for human resource accounting. 9) Facilitates changes: Every organisation has to go for changes. Staffing provides skilled and contented people so that organisation and the people in it can respond quickly and appropriately to the changes.
6.5 Staffing Process

Staffing is an on-going process. It tries to keep the organisation supplied with the right people in the right positions at the right time. Basic activities in the staffing process are shown in the following diagram:
Staffing
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Manpower Planning
Promotions, Transfers, Demotions and Separations
Recruitment
Performance Appraisal
Selection & Placement
Training & Development
6.6 Manpower Planning

Every management has to secure adequate supply of manpower and decide how effectively it can utilise it. For this, organisation has to decide in advance about the manpower requirements and how it can be hired and developed. It is the first step in the staffing process. It is concerned with forecasting of human resource needs of an organisation and designing appropriate course of action such as recruitment, selection, induction, training and development based on the needs. Edwin B. Criesler defined manpower planning as, It is a process by which a firm ensures that it has right number of people and the right kind of people at the right place and at the right time for things for which they are economically most usefull. It ensure that right number of people and right type of people are available in the organisation to accomplish the organisational goals.
6.7 Recruitment and Sources of Recruitment

Recruitment is the process of searching the candidates for employment and stimulating them to apply for jobs in the organisation. It is a positive process. It aims at attracting as many applicants as possible.
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Edwin B. Flippo defined recruitment as It is the process of searching for prospective employees and stimulating them to apply for jobs in the organisation. It envisages decisions on the choice or tapping the sources of labour supply.
Sources of Recruitment
Internal Source
External Source
Promotion Transfers Demotions
Direct Recruitment
Advertising
Educational Institutions
Recommendations
Labour Unions
Unsolicited applications
Employment Exchanges
Labour Contractors
Leasing
Internal Source: Internal sources refer to the employees already working in the organisation. There are three important internal sources. They are 1) Promotions: Filling higher jobs by promoting employees who are considered fit for such positions is the common practice. It has the advantage of stimulating and preparing the employees for possible promotions, increasing the morale of the employees and simplifying the selection and placement problems. 2) Transfer: Transfer involves shifting of an employee from one job to another. It does not involve any drastic change in the responsibilities and status of the employee. 3) Demotions: It is shifting the employee from higher positions to lower positions as a sort of penalty for his misdeeds.
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External Sources: 1) Direct Recruitment: It is also known as Recruitment at factory gate. In this method a notice will be put on the notice board of the enterprise specifying the details of the jobs available. It is generally followed for filling casual vacancies requiring unskilled workers. 2) Unsolicited applications: Many qualified persons apply for employment to reputed companies on their own initiative. Such applications are known as unsolicited applications. They serve as a good source of manpower. A proper record will be kept of such applications and the candidates will be called for interview whenever need arises. 3) Advertising: Advertising the job is the common feature of a large scale enterprise, particularly for higher post when there are a large number of vacancies. This informs the candidates spread over different parts of the country. Thus, this method increases the choice of the management. 4) Employment Exchange: Employment exchanges run by the Govt. and regarded as a good source of recruitment for unskilled, semi-skilled and skilled operative jobs. In some cases compulsory notification of vacancies to employment exchanges is required by law. They bring the job givers in contact with the job seekers. 5) Educational Institutions: Educational institutions including schools, colleges and universities are the major sources of recruitment. This source of recruitment is used to select entry level jobs especially engineers, scientists and other specialised jobs. Many organisations keep contact with the educational institutions and conduct campus interviews and select some students for final selection. 6) Labour Contractors: Labour Contractors continue to be a source of recruitment in some industries in India. Workers are recruited through labour contractors who are themselves employees of the organisation.
Staffing
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7) Recommendations: Applicants introduced by friends and relatives may prove to be a good source of recruitment. Indeed, many employees prefer to take such persons because something about their background is known. 8) Leasing: Leasing is a source of recruitment in public sector undertakings in India. It is used to fill managerial posts on deputation basis. 9) Labour Unions: In this method, recruitment is done through labour Unions. Job seekers will register their names with the labour unions. Employers call on unions to supply the names of persons to fill the vacancies.
6.8 Merits of Internal Source

1) Reliable Source: Organisation is very familiar with the capabilities and skills of employees and also their weaknesses. Only best talented people are promoted to the vacancies created in the organisation. Thus it is reliable source. 2) It motivates employees: Recruitment from within provides opportunities of promotion to the existing employees. It motivates the employees and raise the general level of morale of existing employees. 3) Simple and economical: Selection and placement of existing employees through promotion or transfer is simple and economical. 4) Promotes loyalty: It promotes loyalty among the existing employees. 5) It reduces labour turnover: It reduces labour turnover and ensures stability of employees. Demerits of Internal Source 1) Leads to Inbreeding: Internal recruitment leads to inbreeding and prevents the infusion of new blood into the organisation. Thus, it restricts the appointment of fresh talents from outside. 2) Leads to personal bias: Internal recruitment in the form of promotion is usually based on seniority. Seniors may not be the superiors. Suitable
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candidates may not be available internally or unsuitable employees may get promoted. Thus it leads to personal bias and prejudices at the time of selection of employees. 3) Leads to conflicts: It leads to conflicts and controversies among the existing employees who desire for promotion or transfer. It affects the industrial relations in the organisation. 4) Narrows down the area of selection: It narrows down the area of selection. Getting the qualified and suitable person is a chance but not choice.
6.9 Advantages and Disadvantages of External Sources

Advantages of External Sources: 1) Wide scope for selection: Organisation has wide scope for selection of suitable candidates from a large number of applicants received. 2) Open competition: Since there is open competition among the applicants, organisation can select talented and best candidates who possess required skills and talents for the post. 3) More useful for managerial positions: It is more useful to fill up managerial position which require technical and professional qualifications. Disadvantages of external sources: 1) Expensive and time consuming: The methods like advertisement and campus recruitment are quite expensive and time consuming. Only large organisations can employ external sources of recruitment. 2) Selection is very difficult: People in large number respond to the advertisement and sometimes even unqualified and unsuitable people also apply for the posts. Thus selection is very difficult and a long process. 3) Unsuitable persons may be selected: Organisations must have specialists with good knowledge of recruitment, interview and training to select right
Staffing
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candidate from a large number of applicants, otherwise unsuitable persons may be selected. 4) It may lead to friction and conflicts: Some existing employees who are experienced may desire for promotion but are denied promotion due to new recruitment. Thus, it may lead to friction and conflicts.
6.10 Exercise:
1. Define staffing and explain its features. 2. Explain the importance and process of staffing. 3. Explain the Recruitment and Sources of Recruitment.
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Selection
Unit 7
Unit 7
Structure 7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8 7.9 Introduction Steps in the Selection Process Placement and Orientation Training and Development Training Programmes Training Methods Management Development Programmes Performance Appraisal or Merit Rating Performance Appraisal Methods
Selection
7.10 Exercise
7.1 Introduction
The company identifies the source for prospective candidates and stimulates them to apply for jobs, under selection, the company chooses the employees among the applicants. The selection process involves the mutual decision making. The organisation decides whether or not to make a job offer and how attractive the job offer should be. The candidate decides whether or not to accept the job offer.
7.2 Steps in the Selection Process

In practice, the actual selection process will vary between organisations and between levels in the same organisation. The usual steps areas follows: 1. Completed Application Forms: Filling of the blank application forms by the candidates is the first step in the selection process. In this form the applicant gives personal data such as qualification, specialisation, experience etc. The application forms serve 3 purposes.
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a) It formally indicates that the applicant desires the position. b) It provides the interviewer with the basic information he needs, to conduct interview. c) It becomes a part of the organisations personnel data if the applicant is selected. 2. Initial Interview: Those who are selected on the basis of particulars furnished in the application are called for initial interview by the company. This is used to make a quick evaluation of the applicants suitability for the job. In effect, the initial interview determines for both the applicant and the company whether or not the selection process should proceed. 3. Employment Tests: For further assessment of a candidates nature and abilities, some tests are used in the selection process. Psychologist and other experts have developed some tests by which a candidates characteristics, his likes, dislikes, his intelligence, dexterity (special skills) his capacity to learn etc., can be estimated. Thus, there are aptitude tests, interest tests, intelligence tests, trade or profession tests, personality tests etc. 4. Background Investigation: If the candidate has been found satisfactory at the interview, and if his performance is good in employment test, the employer would like to get some important personal details about the candidate such as his personal character, past history, background of the family, verified by the people mentioned in the application. The employer may also contact his neighbours or contact the present and former employers of the candidate. 5. Physical or Medical Examination: Medical examination is another step in the selection procedure. The objectives of this examination are: a) To check the physical fitness of the applicant for the job applied for.
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b) To protect the company against the unwarranted claims for compensation under certain legislation such as Workmens Compensation Act. c) To prevent communicable diseases entering the business concern.
7.3 Placement and Orientation

The process of placing the right man on the right job is called placement. It is the determination of job to which a selected candidate is to be assigned and his assignment to that job. Placement is important part of staffing. An employee should be placed on a position where there is scope for full use of his skill and talent. At the time of placement of employees, attention is to be given for orientation and training to the employee in order to enable him to adjust himself to the work and make him feel at home with his colleagues. Usually, orientation is given in the form of Lecture, Picnic, Party and presentation of booklets, explaining the history, objectives, policies and programmes of the organisation.
7.4 Training and Development

Training is the act of increasing the knowledge and skill of an employee for doing the particular job. It is concerned with imparting specific skills for particular purposes. Development refers to programmes that attempt to improve technical, human relations and conceptual skills of an employee or manager.
7.5 Training Programmes

The need to train new employees or individuals who are being promoted is self evident. New jobs require training in new skills. Even experienced employees need systematic training. The training needs of such employees are not easy to determine. For this purpose performance appraisal, analysis of job requirements or survey of personnel to find out the problems they are facing and actions they
Selection
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require must be made. Once the training needs of employees have been identified appropriate training methods should be used.
7.6 Training Methods

There are different training methods that can be used to train new and old employees. One such method is on the job training. This includes: a) Job rotation in which the employee, over a period of time, works on a series of jobs thereby learning a variety of skills. b) Internship in which job training is combined with related class room instructions. c) Apprenticeship in which the employee is trained under the guidance of highly skilled co-worker. Another method is off the job training. This takes place outside the actual work place but attempts to stimulate actual working conditions. This type of training includes: a) Vestibule training: In which employees work on the actual equipment and in a realistic job setting but in a different room. b) Behaviourally experienced training: Some of the method used in experiential learning. For eg. Business games, case study, problem solving method are employed so that the trainee can learn the behaviour appropriate for the job. c) Classroom training: Finally off the job training may focus on the classroom training through discussion, lecture, films etc.
7.7 Management Development Programmes

Management development is designed to improve the overall effectiveness of managers in their present position to prepare them for greater responsibility in future.
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As in other training programmes, there are on the job and off the job management development programmes. There are 4 major on the job development method: a) Coaching: The training of a subordinate by his immediate superior. b) Job rotation involves shifting managers from position to position so that they may broaden up their experience. c) Training Positions: Trainees are given staff posts immediately under a manager, often with title assistance. Such assignments give trainees a chance to work with outstanding managers and learn from them. d) Plant work activities: These involve giving trainees important work assignments as a means of developing their experience and ability. Trainees may also be asked to hold a task force or participate in an important committee meeting. In this manner they gain insight into how organisations operate. Off the job development methods include classroom instructions and management development programmes sponsored by universities and other organisations like management and technical institutes.
7.8 Performance Appraisal or Merit Rating

Performance appraisal is one of the universal practices of management today. It refers to the formal procedures used to evaluate personality contributions and potentiality of employees. Appraisals can be made by superiors, subordinates or colleagues. They can also be made by a special committee consisting of two or three appraisers. There is also a self appraiser in which each employee evaluates his own performance. According to Edwin B. Flippo, Merit rating is a systematic, periodic and as far as humanly possible an impartial rating of an employees excellence in matters pertaining to his present job and to his potentialities for a better job.
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Purposes of appraisal: Performance appraisal serves the following purposes: 1. It can serve as a basis of promotion or job change. 2. By identifying the strengths and weaknesses of an employee it serves as a guide to formulating a suitable training and development programme. 3. It serves as a feed back to the employee on his own performance level so that he can improve his performance. 4. Performance appraisal provides a basis for payment of wages, bonus and incentive. Essentials of a good performance evaluation method: Following are the important features of a good appraisal system: 1. It must be simple. 2. It must be easily understandable. 3. It must have the support of the people who administer it. 4. It must be suitable to the organisation. 5. The system should be valid and reliable. 6. The system should have built in incentive i.e. reward should follow satisfactory performance. 7. The system should be periodically evaluated. Criteria of performance evaluation: There are a large number of criteria which may be used to measure performance of an employee. Depending on the means one or more of the following criteria may be used: 1. Quantity and quality of output. 2. Length of service. 3. Number of accidents. 4. Number of absents. 5. Cost per unit. 6. Degree of knowledge of work, corporate goals, policies etc.
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7.9 Performance appraisal methods

1. Ranking methods: The simple method of performance appraisal is to compare one man with all other men and placing in a simple rank order. 2. Rating Scale: As the very name implies this method provides some kind of scale for measuring absolute differences between individuals. For eg. 1 2 3 4 5
1 = Exceptionally good 2 = Above average 3 = Average 4 = Below average 5 = Poor 3. Check list method: Sometimes the methods used for performance evaluation is a list consisting of a number of statements about a worker and his behaviour. Examples of such statements is given below: a) Is the employee really interested in the job. b) Is his attendance satisfactory. c) Is his work satisfactory. d) Does he possess good working knowledge and so on. The rater then checks to indicate if the answer to a statement is positive or negative. 4. Forced Choice Description: Under this method, the rater might be asked to state which of the following statements is more descriptive of the employee in question. a) Gives good instruction to his subordinates. b) Can be depended upon to complete any job assignment. 5. Confidential Report: A confidential report about an employee by his immediate supervisor is also a method to evaluate the performance with a view to give promotion or transfer.
Selection
Unit 7
7.10 Exercise
1. Explain the steps involved in the selection process. 2. Briefly explain the performance appraisal. 3. Write short notes on: a) Training methods b) Management Development Programmes
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Direction and Co-ordination
Unit 8
Unit 8
Part A Direction Structure 8.1 8.2 8.3 8.4 8.5 8.6 Introduction Definition Characteristics of Direction Nature of Directing Importance of Directing Principles of Direction
Learning Objectives
Explain the characteristics and nature of Directing. Explain the principles of Direction. Distinguish between Co-ordination and Co-operation. List out the objectives of Co-ordination. Explain the types of Co-ordination. Explain the principles of Co-ordination.
8.1 Introduction
Direction is one of the functions of management. It is an important managerial function. It is a continuing function.
8.2 Definition
According to Koontz and ODonnel, directing is the interpersonal aspect of managing by which subordinates are led to understand and co-ordinate effectively and efficiently to the attainment of enterprise goals. It is instructing people as to what to do, how to do and telling them to do to the best of their
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ability. Direction is the managerial function of guiding, overseeing and leading people.
8.3 Characteristics of Direction

The characteristic features of direction are as follows: 1) Direction is an important managerial function. Through direction,
management initiates actions in the organisation. 2) Direction function is performed at every level of management. It is performed in the context of superior-subordinate relationship and every manager in the organisation performs his duties both as a superior and subordinate. 3) Direction is continuous process and it continues throughout the life-time of the organisation. A manager needs to give orders to his subordinates, motivate them, lead them and guide them on a continuous basis. 4) Direction initiates at the top level in the organisation and follows to bottom through the hierarchy. It emphasises that a subordinate is to be directed by his own superior only. 5) Direction has dual objectives. On the one hand, it aims at getting things done by subordinates and, on the other, to provide superiors opportunities for some more important work which their subordinates cannot do.
8.4 Nature of Directing

The nature of directing can be discussed under the following: 1) It is an important function of management: Directing is an important management function which provides a connecting link between planning, organising and staffing on one hand and controlling on the other. Directing is the process around which all performances revolve. 2) Continuous function: Directing is a continuous process. The manager never ceases to direct, guide, teach, coach and supervise his subordinates.
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3) Pervasive function: Directing is a managerial function performed by all managers at all levels of the organisation. The amount of time and effort an executive spends in directing however, will vary depending upon his level, the number of subordinates he has and the other duties he is expected to perform. 4) Essence of performance: Directing is the process around which all performances revolve. As Theo Haimann puts it, without the issuance of directives, without guiding and overseeing subordinates, nothing or at the best very little would be accomplished. 5) Relates to people: Directing basically aims at securing harmony in efforts of different people and achieving organisational goals. So directing has to do with people.
8.5 Importance of Directing

Direction is a key element in the management process. Once plans have been drawn up to achieve predetermined objectives, the organisation structure is designed and competent persons are appointed to responsible positions, the enterprise is ready to go into action. However, necessary activities will start only when a chief executive gives direction to all members of the management group. With effective direction, a chief executive hopes to secure. (a) A full understanding by each individual manager, of aims, objectives and plans of the organisation; both general and specific, long-range and immediate. (b) A full understanding of the organisation and its elements, that is, of who does what, and particularly of his own areas of authority and responsibility. (c) A full understanding of major problems faced by the enterprise and specially, what each manager can do to aid the solution of those problems. (d) A full understanding of policies, procedures and rules under which the organisation will operate, and the reasons thereof.
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(e) A full and up-to-date information on significant factors, that is, about business forecasts contemplated changes in facilities, policies, procedures, etc.
8.6 Principles of Direction

Direction is one of the most complex functions of management as it deals with people whose nature itself is quite complex and impracticable. Good and effective directions in the context of the people of diverse nature is really an art which can be learned and perfected by long-term experience. However managers follow some principles which can be divided into: (a) principles relating to the purpose of direction (b) principles relating to the direction process. 1) Principles relating to the purpose of Directing a) Principles of maximum individual contribution: Organisational objectives are achieved at a maximum level when every individual in the organisation contributes maximum towards this end. Management should adopt that direction technique which enables subordinates to contribute the maximum. b) Principle of Harmony of objectives: Individuals join the organisation to achieve certain objectives and wants such as physiological, psychological needs while working in the organisation. At the same time organisation has to integrate the corporate objective, i.e., maximisation of profit. Thus management has to integrate the corporate objectives or goals with that of the employees objectives by means of motivation and get maximum benefits to both. c) Principle of efficiency of direction: An effective direction tries to get work accomplished by subordinates without affecting the needs or interests of work force. Management should develop correct direction techniques, effective supervision, effective communication system and leadership qualities. Here human relations approach goes a long way in proper motivation of workers.
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2) Principles relating to Direction Process: Direction process is related to other factors which make a particular direction technique effective and efficient. From this point of view the following principles are enumerated. a) Principle of unity of Command: According to this principle, a person in the organisation should get orders from one superior only. No person can serve two masters. Dual command, that is, getting orders from more than one superior, creates conflict, confusion, disorder and instability in the organisation. b) Principle of appropriateness of Direction Techniques: There are three direction techniques authoritarian, consultative and free rein. Each technique has its own relative strength. Moreover each technique can be used in different cases depending upon the nature of superior and subordinates and situational variables. c) Principle of Managerial Communication: In an organisation success depends upon effective communication of ideals between superior and his subordinates. A superior through downward communication passes to his subordinates orders, ideas, about the work and through upward communication gets his feedback from subordinates. Hence there should be a two-way flow of communication and the channels of communication should be regular and timely. There should not be barriers or hindrances or gaps in communication. d) Principle of comprehension: Direction conveys to subordinates what, when, how and through whom to get the work done. Thus the superior should be able to comprehend the process of communication to the subordinates orally or in written form in the manner that may be understood by the subordinates. e) Principle of use of informal organisation: Though formal organisational structure is the usual way by which tasks are to be completed in an organisational set up, an efficient management team should explore the
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informal organisational channel through which communication passes more quickly and effectively to the subordinates. Management should try to understand, spot and make use of such informal organisation for making direction most effective. f) Principle of leadership: Leadership is the process of influencing individuals in an organisation for goal achievement. When subordinates function efficiently organisational goals are achieved. The subordinates are influenced through the exercise of authority and exercise of leadership. But leadership is more essential for establishing better and faster understanding between superiors and subordinates. Thus manager should possess leadership qualities. g) Principle of follow-through: Direction is a continuous management process. Here giving orders is not sufficient but management should find out how far the subordinates are able to execute the instructions with a time sense. Part B Co-ordination Structure 8.1 8.2 8.3 8.4 8.5 8.6 8.7 8.8 8.9 Introduction Definition of Co-ordination Nature of Co-ordination Co-ordination vs. Cooperation Objectives of Coordination Need and Significance of Coordination Co-ordination as the essence of management Types of Coordination Difficulties in Coordination
8.10 Techniques of Effective Co-ordination 8.11 Principles of Co-ordination 8.12 Exercise
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8.1 Introduction
The basic function of co-ordination in an enterprise is the same as that of an orchestra conductor who directs the activities of the orchestra party in such a manner that it produces harmony in music. Likewise the co-ordinator of an enterprise also directs the activities of the group in such a manner that it brings harmonious and unified actions to achieve common purpose. Like the orchestra conductor, a manager also performs the function of securing and maintaining unity of direction throughout the organisation. Co-ordination has been viewed by different management experts in different ways. Henri Fayol considers co-ordination as a function of a manager. Louis A. Allen also regards coordination as one of the separate managerial functions. James D. Mooney considers co-ordination as the first principle of organisation. Ralph C. Davis looks upon co-ordination primarily as a vital phase of controlling. George R. Terry and Theo Haimann consider co-ordination as a permeating function of management passing through the managerial functions of planning, organising, staffing, directing and controlling. Thus, terry and Theo Haimann are not in favour of regarding coordination as a separate function of management. According to them, coordination is a part of the managerial functions of planning, organising, directing and controlling. It transverses the entire process of managing. In short, it is the essence of management.
8.2 Definition of Co-ordination

Co-ordination is the orderly synchronisation of efforts of the subordinates to provide the proper amount, timing and quality of execution so that their united efforts lead to the stated objective. According to Terry, Co-ordination deals with the task of blending efforts in order to ensure successful attainment of an objective. It is accomplished by means of planning, organising, actuating and controlling. Thus, Terry considers coordination as a permeating function of management passing through the managerial functions of planning, organising, directing and control.
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In the words of Mooney and Railey, Co-ordination is the orderly arrangement of group efforts to provide unity of action in the pursuit of a common purpose. It is the effort to ensure a smooth interplay of the functions and forces of the different component parts of the organisation to the end that its purpose will be realised with a minimum of friction and a maximum of collaborative effectiveness. In other words, co-ordination means the orderly synchronisation of efforts of the people working in the organisation for the achievement of organisational objectives. Co-ordination is a continuous process for achieving unity of purpose in the organisation. It includes all such deliberate efforts on the part of management whereby efforts of various departments of the enterprise are so blended that they move harmoniously towards the accomplishment of organisational objectives.
8.3 Nature of Co-ordination

Co-ordination leads to blending the activities of different individuals and groups of individuals for the achievement of certain objectives. The features of coordination are as follows: (i) It is an essential managerial activity. It is needed at all levels of management. (ii) It involves an orderly arrangement of group efforts. (iii) It is a continuous process carried on by the managers. (iv) Its purpose is to secure unity of action towards common objectives.
8.4 Co-ordination vs. Co-operation

The terms co-ordination and co-operation cannot be used interchangeably because they have got different meanings. Co-ordination is an orderly arrangement of group efforts to provide unity of action in the pursuit of common objectives. It is a process of deliberately bringing together the efforts of various components of an enterprise in order to give them a unity of purpose. Cooperation denotes the collective efforts by the persons working in the enterprise voluntarily for accomplishing a particular purpose. It is the willingness of the
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individuals to help each other. Thus, it is obvious that the concept of coordination is broader in scope than that of co-operation. Co-ordination is something more than cooperation or voluntary efforts of individuals. It is a deliberate effort by the management. It is true that existence of co-operation among the members of the group facilitates co-ordination. But that does not mean that co-ordination originates automatically from the voluntary efforts of the group members. Co-ordination has to be achieved through the conscious and deliberate efforts of the managers. For instance, five persons engaged in pushing a car out of the mud have a strong desire to cooperate with another. But they may not be successful in their attempt unless one of them is able to co-ordinate the efforts of all of them. Similarly, harmony in music cannot be achieved by the orchestra party unless an orchestra conductor co-ordinates the activities of the group members. Thus, a manager plays an important role as a co-ordinator. Effective co-ordination cannot be achieved without the actual co-operation of the group members. Co-ordination without cooperation and co-operation without coordination are not very useful to the organisation. Co-operation without coordination has no fruit and co-ordination without co-operation has no root. Therefore, the manager should try to achieve both simultaneously. Distinction between Co-ordination and Co-operation Basis 1. Definition Co-ordination Co-ordination is a deliberate Effort by a manager. 2. Purpose It is an orderly arrangement of group efforts to provide unity of action in the pursuit of common objectives. Co-operation Co-operation is voluntary attitude of organisational members. It denotes collective efforts of the group contributed voluntary to accomplish a particular objective.
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3. Essential
It is essential where a group of people work together for a common purpose. It is achieved through both formal and informal relations. Co-ordination seeks wholehearted support of employees and departments.
It is voluntary in nature. It arises out of the desire of the people to work together. Co-operation arises out of informal relations. Co-operation without coordination is fruitless.
4. Relations 5. Result
8.5 Objectives of Co-ordination

The main purposes which are sought to be realised through co-ordination are as follows: (i) Reconciliation of Goals: This can be done by co-ordination only. The conflict of goals arises because everybody perceives the organisational goals differently and tries to achieve them in his own way. This may lead to confusion and chaos in the organisation. Therefore, coordination is necessary to bring unity of action in the organisation. (ii) Total Accomplishment: Through co-ordination it is possible to bring about total accomplishment which will be far in excess of the sum of the individual parts. It has been observed that the total accomplishment of ten employees of a department whose efforts are properly co-ordinated will be far greater than the mathematical sum of their individual accomplishment. This happens because through coordination, duplication of efforts are prevented and the time and energy thus saved are better utilised in more creative tasks. (iii) Economy and Efficiency: Through co-ordination, it is possible to bring about economy and efficiency in the organisation. Co-ordination will avoid duplication of efforts due to which there will be economy in labour, time and
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equipment. When the activities are properly integrated, there will be least delays which will bring efficiency in the business organisation. (iv) Good Personnel Relations: Co-ordination is achieved through systematic efforts. Good co-ordination gives job satisfaction to the employees which keeps their morale high. Moreover, there are good human relations because the authority-responsibility relationships are clear. The conflict between line and staff personnel can also be avoided through proper co-ordination of their efforts. (v) Retention of Managerial and other Personnel: It has been pointed out that sound co-ordination has a significant effect on the development and retention of good personnel in business. If the total organisation is so designed and patterned that each executive and employee derives job satisfaction, there will be a tendency on the part of the executives and employees to stay with the organisation. The absence of this will create suffocating conditions in which it would be difficult for any person to stay for long in the organisation.
8.6 Need and Significance of Co-ordination

When a number of people are working to carry out a task, co-ordination is the only method of synchronisation. It is an important method by which a manager can avoid potential sources of conflict between organisational members. Through co-ordination, duplication of work and work at cross-purposes can be eliminated. The efficiency of various departments will increase. This will lead to increased profitability of the organisation. Co-ordination is the essence of management. It is a creative force to harmonise the efforts of various individuals towards certain goals. It gives unity of direction to the group members. Without proper co-ordination, the organisational objectives cannot be achieved. The quality of co-ordination is the crucial factor in the survival of an organisation.
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The analogy of the conductor of symphony orchestra is appropriate to explain the significance of co-ordination. The conductor by his coordinating skills of vision, leadership and simultaneous attention to totality of the orchestra group and its individual instrument players, creates a living musical performance and not mere noise. In the same way, a manager creates results which are more than the sum total of the efforts of his subordinates. If a manager lacks coordinating skill, there will be wastage of efforts and the expected results will not be achieved. For instance, if a sales promotion campaign is launched without ensuring the goods on the retailers shelves, the customers will be disappointed and the prestige of the organisation will be lowered.
8.7 Co-ordination as the essence of Management

Co-ordination is the essence of managership. Our discussion in this chapter makes it abundantly clear that co-ordination is not something which can be ordered by a manager. Instead, it is something which the manager attempts to achieve while performing his functions of planning, organising, staffing, directing and controlling. Thus, every managerial function is an exercise in coordination. How co-ordination is achieved by performing the managerial functions is explained below. (i) Co-ordination through Planning: The planning stage is the ideal time to bring about coordination by properly integrating the various plans through mutual discussion, exchange of ideas, etc. For instance, if the Advertising Manager is to plan his advertising campaign, it would be helpful if he discusses the plan with the Production Manager, the Sales Manager, the Finance Manager, and so on. In this way, as he performs his managerial function of planning, he is attempting to achieve co-ordination by seeking co-operation of all the managers who are directly or indirectly concerned with it.
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(ii) Co-ordination through Organising: Mooney considers co-ordination as the very essence of organising. In fact, when a manager groups and assigns the various activities to subordinates, and when he creates departments, coordination is one thing which is uppermost in his mind. By placing related activities in the same administrative unit, co-ordination will be facilitated. Coordination is an essential part of organising. Unless the manager bears in mind how various groups are to function together, the organisation structure will not be a successful one. In order to obtain co-ordination while organising, the manager must look at it both vertically and horizontally. Poor co-ordination is caused quite often by a lack of understanding of who is to perform what or due to the fact that the manager did not clearly delegate authority and responsibility. This may lead to the duplication of efforts instead of their synchronisation. (iii) Co-ordination through staffing: The staffing function of management involves manpower planning, employment, training, wage determination, performance appraisal, etc. All these sub-functions are performed in such a manner that there are right persons on different jobs. This will help in achieving co-ordination in assigning tasks to various individuals. (iv) Co-ordination through Directing: When a manager directs, he is also performing the function of co-ordination. The very essence of giving orders, instructions, coaching and teaching subordinates means to coordinate their activities in such a manner that the overall enterprise objective will be achieved in the most efficient way. Thus, managers expertness in effectively directing his subordinates will bring about co-ordination. The manager should use free and open discussion and group decisionmaking techniques with subordinates in order to achieve the necessary coordination. It is vital that various subordinates have an opportunity for free and open discussion and for an interchange of ideas so that the details of a
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particular directive are properly understood. In short, as the manager performs his directing function, he will invariably coordinate. (v) Co-ordination through Controlling: While performing the function of controlling, the manager comes to know whether or not current activities are in keeping with the desired activities. Such frequent evaluation of operations helps to synchronise the efforts of the subordinates. If, while controlling the manager finds that the performance is not as planned or as directed, he should immediately take remedial action so that whatever deviations have occurred can be remedied. By doing this he brings about co-ordination. The very nature of the controlling function brings about co-ordination and leads the organisation to the desired goals. Good communication will be of immeasurable help in the co-ordination of various activities. There must be continuous and free flow of communication which will give the subordinates the necessary information needed for coordination. Personal contact is probably the most effective means of communication to achieve co-ordination. However, there are many other additional devices such as written communications, reports, procedures, bulletins and numerous modern mechanical devices which will ensure a speedy dissemination of the necessary information to the subordinates who must have this information to achieve proper coordination.
8.8 Types of Co-ordination

Co-ordination can be classified into two broad categories, one on the basis of its shape in the organisation and the other on the basis of its scope and coverage. On the former basis, it can be classified into vertical and horizontal co-ordination; and on the latter basis, into internal and external co-ordination. Each one of these has been discussed below: 1. Vertical and Horizontal Coordination: The term vertical co-ordination is used when co-ordination is to be achieved between various links or different
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levels of the organisation. Vertical co-ordination is needed to ensure that all the levels in the organisation act in harmony and in accordance with organisational policies and programmes. It is the function of the top executives to bring about this co-ordination. Vertical coordination is secured through delegation of authority and with the help of directing and controlling. There is no doubt that the delegated authority will carry great weight, but vertical coordination cannot be achieved by the mere weight of authority itself. This should rather come about as a by-product of the superiors efficient and expert performance of the managerial functions. The term horizontal co-ordination is used when co-ordination has to be achieved between department on the same level in the managerial hierarchy. Thus, when co-ordination is brought about between production department, sales department, sales department, personnel department etc., it is said to be horizontal coordination. Co-ordination between interdependent managers of different department is facilitated in a small enterprise due to proximity of working arrangements, close contacts, and short lines of communication. However, when a large company is involved, the problems become more complicated, and it is the fine art of the superior manager to achieve coordination in the horizontal sense. 2. Internal and External Co-ordination: Co-ordination may be internal and external to the organisation. Co-ordination is internal when it is achieved between different departments, sections and units of an enterprise. It is both vertical and horizontal. A business enterprise is a system in itself. It acts and reacts with the environment continuously. The various factors with whom it has interaction include Government, customers, suppliers and competitors. An enterprise has to keep proper co-ordination with these. Such type of coordination is known as external co-ordination and it is essential for the survival of the
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enterprise. External coordination also involves interaction with other business, economic and research institutions to have the benefits of latest information and technological advances.
8.9 Difficulties in Co-ordination

Henri Fayol stated that in a well-coordinated enterprise the following facts are to be observed: (1) Each department should work in harmony with the best. (2) Each department, division, and sub-division should be precisely informed as to the share they must take in the common task. (3) The working schedule of the various departments and sub-divisions should be constantly attuned to circumstances. In practice, these requirements are not always fulfilled. The lack of coordination is apparent because of the following difficulties: a) Lack of co-operation and understanding between and among individuals, groups and departments. b) Lack of good interpersonal relations. c) Failure in accomplishing objectives according to time and work schedule. d) Lack of direction and consequently aimless individuals efforts. e) Functioning of departments in the organisation as water-tight compartments. f) Lack of initiative and loyalty towards the organisation.
8.10 Techniques of Effective Co-ordination

The following steps should be taken for achieving effective co-ordination: (i) Clearly defined goals: The goals of the enterprise should be laid down clearly. Every individual in the enterprise should understand the overall objectives and the contribution by his job to these objectives. Unity of purpose is a must for achieving proper co-ordination.
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(ii) Clear lines of authority and responsibility: There is a line of authority in every enterprise which indicates as to who is accountable to whom. The line of authority and responsibility should be clearly defined to achieve coordination. Clear-cut authority relationships help in reducing conflicts among different positions (particularly line and staff) which is essential for sound coordination. (iii) Precise and comprehensive programmes and policies: Laying down well-defined programmes and policies is another measure for achieving effective co-ordination. This brings uniformity of action because everybody understands the programmes and policies in the same sense. (iv) Co-operation: Co-ordination must be accompanied by co-operation. The individuals in the organisation must be willing to help each other voluntarily. Co-operation can be brought about by keeping harmonious relations among the people in the organisation by encouraging informal contacts to supplement formal communication and using committees for exchange of ideas and views at the top level. (v) Effective Communication: Effective communication is the key to proper co-ordination. The channels of communication used in the enterprise should be reliable so that they are able to create proper understanding in the minds of the receivers. Personal contacts should be encouraged as it is the most effective means of communication for achieving coordination. (vi) Effective leadership and supervision: Management can achieve better co-ordination through effective leadership and supervision. Effective leadership ensures co-ordination both at the planning and the implementing stage. Effective supervision is necessary to guide the activities of individuals in the proper direction.
8.11 Principles of Co-ordination

Mary Parker Follett has laid down the following principles of coordination: (i) Principle of Direct Contact: The activities of different individuals can be co-ordinated effectively through direct personal contacts. This helps in
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exchanging the opinions and ideas in a better way and clarifying the misunderstanding more easily. (ii) Principle of Early Start: Co-ordination can be achieved easily during the early stages of planning and policy-making. It becomes difficult to secure coordination at the execution stage. (iii) Principle of Reciprocal Relationship: This principle states that all the factors in a situation like men, materials and environment are reciprocally related. For instance, when A works with B, each finds himself influenced by the other and both are influenced by the other persons and factors in the total situation. (iv) Principle of Continuity: Co-ordination should be a continuous process starting with planning and running through the other managerial processes. It is something which must go on all the time. It should be viewed as a never-ending process and every manager should strive for it constantly.
8.12 Exercise:
1. What is meant by Co-ordination ? Explain its importance in management. 2. Co-ordination is the essence of management. Explain the above statement and state the principles of effective coordination. 3. Co-ordination is the essence of management. Do you agree ? Give reasons. 4. Define co-ordination. What steps would you suggest for effective coordination in an organisation having field offices in six states of the country ? 5. Distinguish between Co-ordination and Co-operation. 6. Define Direction. Explain the characteristics and principles of Direction.
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Controlling
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Unit 9
Structure 9.1 9.2 9.3 9.4 9.5 9.6 9.7 Introduction Definitions of Control Necessity of Control Steps of Control Features of Control Characteristics of Good Control Procedure Exercise
Controlling
Learning Objectives
Explain the steps of Control. List out the features of Control. Explain the characteristics of Good Control Procedure.
9.1 Introduction
Control is one of the important functions of management. The managerial functions of control consists in a comparison of the actual performance with the planned performance with the object of discovering if all is proceeding according to plan and if not, why.
9.2 Definitions of Control

According to Koontz and ODonnell, control implies measurement of accomplishment against the standard and the correction of deviations to assure attainment of objectives according to plans. In the words of Henry Fayol, in an undertaking, control consists in verifying whether everything occurs in conformity with the plan adopted, the instructions issued and principles established. It has for object to point out weaknesses and
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errors in order to rectify them and prevent their recurrence. It operates on everything things, people, actions.
9.3 Necessity of Control

Control is an essential feature of all business activities. Effective control of men, materials, machines and money is essential for the proper running of any business. To measure performance, to adjust to the changing environment, the efforts of individuals and enterprises must be channelised in the desired directions. Control is necessary to ascertain the deviations and to guide the development of the factory towards the chosen goals.
9.4 Steps of Control

Each plan of control consists of five basic steps. They are: 1) Establishment of plan or standard: Control cannot exist unless there are some kinds of plan or standard. Plans and standards set the level for achievement and accomplishment. Plan or standard may be quantitative, qualitative or monetary. Examples of quantitative standards are units of finished products, units of man-hours, number of rejections. Examples of qualitative standards are skill, leadership, ability, discipline. Examples of monetary standards are costs, revenue and investments. 2) Keeping a record of actual performance: Accurate and authentic records of performance must be maintained in order to institute control procedures. 3) Appraisal and evaluation of actual or expected performance against set plans or standards: Evaluation involves two activities: (a) measurement of performance in concrete or numerical terms; (b) comparison with set plan or standard. Measurement or performance is the more difficult of these two. Qualitative standards like efficiency and morale are hard to measure. When actual performance meets planned performance, the manufacturing situation is said to be in control. When performance fails to meet the plan, the situation is considered out of control. Another aspect of evaluation is the prediction of possible failure.
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4) Finding out strategic control points: In the industrial production processes, it may not be feasible to measure and evaluate performance at every small step. Finding out strategic control points means finding out the exact places or spots where the performance should be evaluated in order to obtain the best results at the least cost. 5) Provision for taking corrective steps against deviation of performance from plan or standards: The first four steps are concerned with fact finding. They provide data, facts or statistics which point to the need for action and also indicate the directions in which corrective measures should be taken. Effective control cannot tolerate needless delays, excuses, endless compromises or excessive exceptions. Generally speaking, plans and standards of schedules and budgets should not be changed to meet failures in performance. Corrective action is of two kinds; (a) remedial and (b) preventive. Preventive measures are always preferable.
9.5 Features of Control

The following are the important features of control: 1) Control is not the beginning of the process of management but an end function. It is a follow-up of the other functions of management. It works on the basis of a plan and judges how the different factors men, materials, machinery and money are organised and co-ordinated for the best performance. 2) It is mainly forward looking. A manager cannot control the past. But he reviews the past events and applies the benefits of previous experience to make improvements in future. 3) Control is a dynamic process. As plans and objectives may change according to the needs of the situation, control must also adjust itself to them. The control system should be flexible.
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4) Like planning, control is a continuous activity. According to Koontz and ODonnell, just as a navigator continuously takes readings to ascertain where he is relative to a planned course, so should the business manager continually take reading to assure himself that his enterprise or department is on course. 5) Control is exercised at all levels of management though its nature and degree differ according to the level. While overall control and supervision are in the hands of the board of directors, the activity of the departments are controlled by departmental heads. 6) Control is identified with individuals. Control may be directly related to material, process or even finance, but ultimately there is some human being, whoever he may be, that is responsible for the defect in material shortcomings of the process or financial laps. 7) Control does not necessarily mean curtailment of the rights of the subordinates. It is not the same thing as interference as M.P. Follet had pointed out long ago.
9.6 Characteristics of Good Control Procedure

The following are the essential requisites of a good control procedure: 1) Simplicity: Control system should be as simple as possible. The fewer the forms or records, easier the system to operate. Simple systems are also easily understood by people. 2) Low cost: Control system should not be very expensive. 3) Adequate and timely information: Enough information should be gathered for making decisions. Economic balance should be maintained in the cost of information and its value. Information should be obtained at the appropriate time. 4) Flexibility.
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5) Permit management by exception: Those situations that require corrective action are brought to the immediate attention of the management or supervisory personnel. Ordinary situations may be handled by the person in charge. 6) Force planning and correction: A control system should be so designed as to force managers to look ahead. Good control plans should foster better planning for future operations. Corrective action by signalling failures should be brought to the notice of the next higher level of management. From the point of view of operations, control activities can be classified into several categories. The most important among them are: (1) control over policies, (2) control over procedures, (3) control over organisation, (4) control over personnel, (5) control over product, (6) control over product line, (7) control over production, (8) control over stock or inventory, (9) control over quality, (10) control over wages and salaries, (11) control over sales, (12) control over prices, (13) control over overall performance.
9.7 Exercise
1) Define control and explain the different steps of Control. 2) Explain the features of Control. 3) List out the characteristics of good control procedure.
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References: 1. Principles and Practice of Management 2. Principles of Business Management 3. Industrial Engineering and Management 4. Industrial Management 5. Principles of Management T. N. Chhabra Sherlekar and Sherlekar Khanna Thukaram B. S. Raman
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BB 0031 Management Development

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BLOCK INTRODUCTION

BB 0031 Management Development

Management Men Input Materials Money Machines Methods Market

Profits Goods &

1.3 Definitions of Management

1.4 Features of Management

1.5 Levels of Management

Manager (Personnel Dept.)

Manager (Production Dept.)

Manager (Marketing Dept.)

Heads of various Section Supervisors

Superintendent of Production Foremen

Top Level Management

Top Level Human Relations Skills Conceptual Skills

1.6 Management as a Profession

Whether Management satisfies these tests

1.7 Management as Science

Whether Management Satisfies these Features

1.8 Management as an Art

1.9 Managerial roles

2.2 Evolution of Management

2.2.10 Management thought today 2.3 Exercise

Management started developing. This shows that Management was evolutionary.

2.2 Evolution of Management

(5) (4) (3) (2) (1)

Systems Approach to Management:

3.2 Definition and Nature of Planning

3.3 Characteristic features of Planning

3.4 Importance of Planning

3.5 Types of Plans

3.6 Steps in Planning

3.7 Advantages of Planning

3.8 Limitations of Planning

3.9 Management by Objectives

Steps involved in M.B.O.

Importance of Forecasting in Planning

3.14 Techniques of Forecasting

4.3 Features of Decision Making

4.4 Importance of Decision Making

4.5 Types of Decisions

4.6 Rationality in Decision Making

4.7 Process of Decision Making

4.8 Administrative Problems in Decision Making

5.3 Scope of Organisation

5.4 Purpose of Organisation

5.5 The Process of Organisation

5.6 Principles of Organisation

5.7 Ten Commandments of a Good Organisation

5.8 Importance of Organisation

5.9 Types of Organisation

Sales Manager Assistant Sales Manager Sales Supervisors Salesmen

Financial Manager Treasurer Clerks

6.2 Meaning and Definition

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6.3 Features of Staffing

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6.4 Importance of Staffing

6.5 Staffing Process

Promotions, Transfers, Demotions and Separations

Selection & Placement

Training & Development

6.6 Manpower Planning

6.7 Recruitment and Sources of Recruitment

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