UNIT – I INTRODUCTION TO MANAGEMENT

CONCEPT OF MANAGEMENT

Management is what managers do. It refers to the people at top level in the organization.
It is often viewed as maneuvering, i.e. doing something cleverly to change a situation and make
things happen the way you want them to. It has drawn the concepts and principles from a number
of disciplines such as economics, sociology, psychology, anthropology, and statistics and so on.
There are a variety of views about the term management. Traditionally, the term "management"
refers to the activities (and often the group of people) involved in the four general functions
(planning, organizing, leading, controlling).
Another common view is that "management" is getting things done through others. To
most employees, the term "management" probably means the group of people (executives and
other managers) who are primarily responsible for making decisions in the organization. In non-
profit organizations, the term management might refer to all or any of the activities of the board,
executive director and/or program directors.
In general, management is a set of activities directed at the efficient and effective
utilization of resources in the pursuit of one or more goals. Different scholars from different
disciplines have expressed their views on management. For example, economists have treated
management as a factor of production; sociologists have treated it as a class or group of persons;
practitioners have treated it as a process comprising different activities.

Definition:
1. According to Harold Koontz, “Management is an art of getting things done through
and with the people in formally organized groups. It is an art of creating an environment
in which people can perform and individuals and can co-operate towards attainment of
group goals”.
2. According to F.W. Taylor, “Management is an art of knowing what to do, when to do and
see that it is done in the best and cheapest way”.
3. According to Henry Fayol, “To manage is to forecast and to plan, to organize to
command, to coordinate and to control”.
Therefore, a good management includes both being effective and efficient. Being efficient
means doing the task correctly atleast possible cost with minimum wastage of resources.
Management is a process involving planning, organizing, staffing, directing and controlling
human efforts to achieve stated objectives in an organization.

IMPORTANCE OF MANAGEMENT

Management has been important to the daily lives of people and to the organizations. The
importance of management may be traced in the following contexts:
1. Achievement of group goals: A human group consists of several persons, each
specializing in doing a part of the total task. Each person may be working efficiently, but
the group as a whole cannot realize it objectives unless there is mutual cooperation
and coordination among them. Management creates team work and coordination in the
group.
2. Optimum utilization of resources: Managers forecast the need for materials, machinery,
money and manpower. They ensure that the organization has adequate resources and at
the same time does not have idle resources.
 3. Minimization of Cost: In the modern era of cut-throat competition no business can
succeed until it is able to supply the required goods and services at the lowest possible
cost per unit. Management directs the day-to-day operations in such a way that all
wastages are avoided.
4. Survival and Growth: An enterprise has to adapt itself to the changing demands of the
market and society. It takes steps in advance to meet the challenges of changing
environment. Managers enable the enterprise to minimize the risks and maximize the
benefits of opportunities.
5. Generation of Employment: By setting up and expanding business enterprises, managers
create jobs for the people. Managers also create such an environment that people working
in enterprise can get job satisfaction and happiness.
6. Continuity in the organization: Continuity is very important in the organization. It is
only management that keeps the organization continuing. Where there are no proper
guidelines for decision making continuity cannot be guaranteed.
7. Development of the Nation: Efficient management is equally important at National
level. The development of a country largely depends on the quality of the
management of its resources. By producing wealth, management increases the
national income and living standards of people.

NATURE OF MANAGEMENT

The study and application of management techniques in managing the affairs of the
organization have changed its nature over a period of time. The following points will describe the
nature of management:
1. Management is a Social process: Management is done by people, through people
and for people. Social process refers to a series of activities that are performed in the
society. These activities are carried out by administrators, politicians, economists,
doctors, lawyers, parents, etc.
2. Management is goal oriented: Management involves achieving certain goals; it has no
justification to exist without goals. The basic goal of management is to ensure efficiency
and economy in utilization of human, physical and financial resources.
3. Management is Universal: Management is an essential element of every organized
activity irrespective of the size or type of activity. All types of organizations require
management. Managers at all levels perform the same basic functions.
4. Management is a continuous process: Management is dynamic and an on-going
process. The cycle of management continuous to operate so long as there is organized
action for the achievement of group goals.
5. Management is a Group Activity: Management is very much less concerned with
individual’s efforts. It is more concerned with groups. It involves the use of group effort to
achieve predetermined goal of management of ABC & Co. is good refers to a group of
persons managing the enterprise.
6. Relative, Not Absolute Principles: Management principles are relative, not absolute,
and they should be applied according to the need of the organization. A particular
management principle has different strengths in different conditions. Therefore, principles
should be applied according to the prevailing conditions.
7. Management is Multidisciplinary: Management has been developed as a separate
discipline, but it draws knowledge and concepts from various disciplines like psychology,
sociology, economics, statistics, operations research, etc. Management integrates the idea
and concepts taken from these disciplines and presents newer concepts which can be
put into practice for managing the organizations.
8. Management is Intangible: Management is an unseen or invisible force. It cannot be
 seen but its presence can be felt everywhere in the form of results. However, the managers
who perform the function are tangible or visible.
9. Management is a Profession: A Profession refers to a vocation or a branch of
advanced learning such as engineering or medicine. Management helps to carry out every
profession in a scientific manner.
10. Management is an Art as well as Science: An art is characterized by practical
knowledge, personal creativity and skill. A science is a systematized body of knowledge
of facts. It involves basic principles, which are capable of universal application.

FUNCTIONS OF MANAGEMENT

Management is a process of the quality of both physical as well as human resources to

seek objectives. The elements or activities which are performed in this process are known as
functions of management. Various authors have classified these functions differently:
Writers Management Functions
Henry Fayol Planning, Organizing, Commanding, Coordinating, Controlling

Luther POSDCORD- Planning, Organising, Staffing, Directing

Gullick Coordinating, Reporting, Directing
Koontz
Planning, Organising, Staffing, Leading, Controlling

Thus, the functions of management may be classified in to five categories: Planning,

Organizing, Staffing, Directing (leadership, motivation, communication, coordination)and
Controlling.
PLANNING
The first function of the manager is planning. It is also the foremost and the essential
function. Planning defines the goals and objectives to be reached in the plan period. It also
consists of policies, procedures, methods, budgets, strategy and programmes that are needed to
achieve the goals set. Decision-making is the most important and integral part of planning.
Planning is the most basic and pervasive process involved in managing. It means deciding
in advance what actions to take and when and how to take them. Planning is needed, firstly for
committing and allocating the organization’s limited resources towards achieving its objectives
in the best possible manner and, secondly for anticipating the future opportunities and problems.
Planning is putting down in black and white the actions which a manager intends to take.
Each manager is involved in planning though the scope and character may vary with the level of
the manager. Planning involves determination of objectives; forecasting; formulation of policies
and programmes; and preparation of schedules.

The steps generally involved in planning are as follows:

1. Establishing Verifiable Goals or Set of goals to be achieved
2. Establishing Planning Premises
3. Deciding the planning Period
4. Finding Alternative Course of Action
5. Evaluating and selecting a Course of Action
6. Developing Derivative plans
7. Measuring and Controlling the progress

ORGANIZING
Organizing is to give a proper shape to the structure that should execute the plan
smoothly to achieve its success. It is the function of putting together different parts forming an
enterprise and makes it an organic whole to enable it to carry out defined operations. Various
activities to fulfill the goals have to be grouped and these are to be assigned to people in-
groups or departments. The authority, responsibility, accountability needed at each level to
execute the plan is to be defined and delegated.
Organizing simply can be defined as a process that results in organizational structure
through departmentalization, linking departments together, defining authority and responsibility
and prescribing authority relationship sub activities. The organizing function deals with all those
activities that result in the formal assignment of tasks and authority and a coordination of effort.
The supervisor staffs the work unit, trains employees, secures resources, and empowers the
work group into a productive team.

The process of organizing consists of the following steps:

a. Determining and defining the activities required for the achievement of planned goals;
b. Grouping the activities into proper and convenient units;
c. Assigning the duties and activities to specific positions and people d. Delegating
authority to those positions and people;
e. Defining and fixing responsibility for performance; and
f. Establishing horizontal and vertical authority-responsibility relationship throughout the
organization.
STAFFING
It is the function of manning the organization structure and keeping it manned.
Staffing has assumed greater importance in the recent years due to advancement of technology,
increase in size of business, complexity of human behavior etc. The main purpose of
staffing is to put right man on right job i.e. square pegs in square holes and round pegs in round
holes.
The staffing function involves identifying/selecting the right person for executing
each task planned. By carrying the functions of organizing and staffing the "plan" is transformed
from a document level to the operational stage. Having found the right candidate, it is
equally important that you are able to retain him. Among other things, motivation and
leadership provided by the top management of organization also plays an important role.
The staffing function includes all the jobs connected with:
Ø Manpower Planning;
Ø Recruitment; Selection & placement;
Ø Training & development;
Ø Remuneration, Performance Appraisal;
Ø Promotions & Transfer.

DIRECTING
It is that part of managerial function which actuates the organizational methods to
work efficiently for achievement of organizational purposes. It is considered life- spark of the
enterprise which sets it in motion the action of people because planning, organizing and staffing
are the mere preparations for doing the work. Direction is that inert-personnel aspect of
management which deals directly with influencing, guiding, supervising, motivating sub-
ordinate for the achievement of organizational goals.
The function of directing embraces the following activities:
a. Issuing orders and instructions.
b. Supervising (overseeing) people at work.
c. Motivation, i.e. creating the willingness to work for certain objectives.
d. Communication, i.e. establishing understanding with employees regarding plans and their
implementation, and
e. Leadership or influencing the behavior of employees. Direction has following elements:
1. Supervision: implies overseeing the work of subordinates by their superiors. It is the act
of watching & directing work & workers.
2. Motivation: means inspiring, stimulating or encouraging the sub-ordinates with zeal to
work. Positive, negative, monetary, non-monetary incentives may be used for this
purpose.
3. Leadership: may be defined as a process by which manager guides and
influences the work of subordinates in desired direction.
4. Communications: is the process of passing information, experience, opinion etc
from one person to another. It is a bridge of understanding.

CONTROLLING
Control is the tool for course regulation as the organization marches ahead and
correcting it when it diverts off-course. The results of the activity must confirm to the laid down
standards and all variations should be analyzed and root cause identified. Controlling includes
ongoing collection of feedback, and monitoring and adjustment of systems, processes and
structures accordingly. Examples include use of financial controls, policies and procedures,
performance management processes, measures to avoid risks etc.
 Planning and controlling go hand in hand. There can be no control without a plan and
plans cannot be successfully implemented in the absence of controls. Controls provide a
means of checking the progress of the plans and correcting any deviations that may occur along
the way. It implies measurement of accomplishment against the standards and correction of
deviation if any to ensure achievement of organizational goals.
The purpose of controlling is to ensure that everything occurs in conformities with the
standards. Controlling is the measurement & correction of performance activities of subordinates
in order to make sure that the enterprise objectives and plans desired to obtain them as being
accomplished.
The process of controlling involves the following steps:
a. establishing standards for measuring work performance;
b. measurement of actual performance and comparing it with the standards;
c. finding variances between the two and see the reasons ; and
d. taking corrective action for rectifying deviations so as to ensure attainment of
objectives

EVALUATION OF MANAGEMENT THOUGHT

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From the start of the 19 century until the 20 century, managers and scholars have
formed a theoretical framework to explain what they believe to be good practices of
management. Their efforts led to different classes of perspectives on management and each
perspective is based on different assumptions towards the objectives of the organization and
human behavior.

The schools of management thoughtsare classified as follows:

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1. Classical Perspective: This perspective existed in the 19 century and early 20 century.
It focuses on the rational and scientific approaches to the study of management and on
finding ways to mould an organization to become more efficient.Classical management
theory can be divided into three perspectives distinguished by the issues and problems that
they address.
· Scientificmanagement emerged primarily among American scholars and managers and
focused on issues involved in the management of work and workers. The theory of
scientific management developed by F.W.Taylor and others accepted the empirical
methods for arriving at conclusions.
· Administrativetheory (also called Functional approach) evolved from a concern by
both European and American academicians and managers with the nature and
management of the total organization. Issues and problems that they sought to address
focused on the technical efficiency of the organization. Other thinkers like Henry
Fayol following the functional approach emphasized on the importance of
managerial functions and principles for universal application.
· Bureaucracy theory was developed by the German sociologist, Max Weber, which
portrays the structure and design of organization characterized by a hierarchy of
authority, formalized rules and regulations that serve to guide the coordinated
functioning of an organization.

2. Neo-Classical or Human Relations Perspective: The neo-classical writers tried to

remove the deficiencies of the classical school and suggested improvements for good human
relations in the organization. Human relation is frequently used as a general term to describe
the ways in which managers interact with their employees. When ‘employee management’
stimulates more and better work, the organization has effective human relations, when morale
and efficiency deteriorate, its human relations are said to be ineffective.
The human relations movement/approach arose from early attempts to systematically
 discover the social and psychological factors that would create effective human relations.
Their propositions are based on 'human relations studies' and motivational theories such
as Hawthorne Experiments, Maslow’s need hierarchy theory, etc.

3. Quantitative Management or Behavioral Sciences Perspective:The behavioral school

emerged partly because the classical approach did not achieve sufficient production,
efficiency and workplace harmony. People did not always follow predicted or expected
patterns of behavior. Thus there was increased interest in helping managers deal more
effectively with the people side of their organizations.
Several theorists tried to strengthen neoclassical management theory with the
insights of sociology and psychology. The behavioral science perspective believes that it is
difficult to understand the sociology of a group separate from the psychology of the
individuals comprising it and the anthropology of the culture within which it exists.

4. Contemporary or Modern Perspective: The modem management thinkers define

organization as a system and also consider the impact of environment on the effectiveness of
the organization. The organization is viewed as adaptive systems which must in order to
survive adjust to environmental changes. As a result, two approaches have gained prominence
after 1960s, which are: Systems approach and Contingency approach.

SCIENTIFIC MANAGEMENT

The classical scientific branch arose because of the need to increase productivity and
efficiency. The emphasis was on trying to find the best way to get the most work done by
examining how the work process was actually accomplished and by scrutinizing the skills of the
workforce.
The concept of scientific management was introduced by Frederick Winslow Taylor in
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USA in the beginning of 20 century (1856-1915).Since Taylor has put the emphasis on
solving managerial problems in a scientific way, often, he is called as Father of Scientific
Management and his contributions as the principles of scientific management. He also developed
a theory of organizations, which has been largely accepted by subsequent Management
Philosophers.

Definition:
“Scientific management is concerned with knowing exactly what you want to do and
then see in that they do it in the best and cheapest way.”
Taylor was concerned with the problems of increasing labour productivity without putting
under strain or workers. Scientific management implies the application of scientific methods of
study and analysis to the problems of management. On the basis of experiments, he published
many papers and books and all his contributions were compiled in his book “Scientific
Management”.

His contributions are divided into two parts:

v Principles of scientific management.
v Elements and tools of scientific management.

Principles of Scientific Management:

Taylor has given certain basic principles of scientific management.
1) Replacing rule of thumb with science: It requires scientific study and analysis of
each element of a job in order to replace the old rule of thumb approach development of a
science for each element of a man’s job requires that decisions should be made on the
basis of facts rather than opinions and beliefs.
2) Harmony in group action: Taylor has pointed out that attempts should be made to obtain
 harmony in group action rather than discord. Group harmony suggests that there
should be mutual give and take situation and proper understanding so that group as a
whole contributes to the maximum.
3) Co-operation: Scientific management involves achieving cooperation rather than chaotic
individualism. It is based on mutual confidence, co-operation and goodwill. Co-operation
between management and workers can be developed through mutual understanding and a
change in thinking.
4) Maximum output: Scientific management involves continuous increase in
production and productivity instead of restricted production either by management or by
worker. This can be possible when efficiency and output are maximized. Maximum
output and optimum utilization of resources brings profits.
5) Development of workers: All workers should be developed to the fullest extent possible
for their own and for the company’s highest prosperity. Training should be provided to
the workers to keep them fully fit according to the requirement of new methods of
working which may be different from non-scientific methods.

Elements and Tools of Scientific Management:

1. Separation of planning & doing: Taylor emphasized the separation of planning
aspect from actual doing of the work. In other words planning should be left to the
supervisor and the worker should concentrate only on operational work.
2. Functional foremanship: Taylor introduced the concept of functional foremanship
based on specialization of functions. In this system, eight persons are involved to
direct the activities of workers. Out of these four persons are concerned with planning
viz., route clerk, instruction card clerk, time and cost clerk and disciplinarian. The
remaining four persons are concerned with doing aspect of the job, viz., speed boss,
inspector, gang boss and maintenance foreman.

3. Standardization:It is a process of fixing well thought out and tested standards of

norms with a view to minimize efficiency of work.It should be maintained in respect of
instruments and tools, period of work, amount of work, working conditions, cost of
production, etc.
4. Selection and Training: Taylor has suggested that workers should be selected on
scientific basis taking into account their education, work experience, aptitude,
physical strength, etc. A worker should be given work for which he is physically and
technically most suitable. Apart from selection, proper training should be provided to
workers to make them more effective and efficient.
5. Financial Incentives: Financial incentives can motivate workers to put in their maximum
efforts. If provisions exist to earn higher wages by putting in extra effort, workers will be
motivated to earn more. According to this scheme, a worker who completes the normal
work gets wages at higher rate per piece and one who does not complete gets at lower
rate.
6. Economy:While applying scientific management, not only scientific and technical
aspects should be considered but adequate consideration should be given to economy and
profit. The economy and profit can be achieved by making the resources more productive
as well as by eliminating the wastages.
7. Mental Revolution: scientific management depends on the mutual co-operation between
management and workers. For this co-operation, there should be mental change in both
parties from conflict to co-operation.
CRITICISM:
Scientific management ignored human side of organization. Taylor and his disciples
were called "Efficiency Experts" because they concentrated attention on improving
efficiency of workers and machines. Scientific management is therefore restricted in scope as a
theory of Industrial Engineering or Industrial Management, rather than a general theory of
management.
Although it is accepted that the scientific management enables the management to put
resources to its best possible use and manner, yet it has not been spared of severe criticism.
Employer’s Viewpoint:
1. More Expensive: Scientific management is a costly system and a huge investment is
required in establishment of planning dept., standardization, work study, training of
workers. It may be beyond reach of small firms.
2. Time Consuming: Scientific management requires mental revision and complete
reorganizing of organization. A lot of time is required for work, study standardization
& specialization.

Workers Viewpoint:
1. Unemployment: Workers feel that management reduces employment opportunities
through replacement of men by machines and by increasing human productivity
fewer workers are needed to do work leading to chucking out from their jobs.
2. Exploitation: Workers feel they are exploited as they are not given due share in
increasing profits which is due to their increased productivity. Wages do not rise in
proportion as rise in production. Wage payment creates uncertainty & insecurity.
3. Monotony: Due to excessive specialization the workers are not able to take initiative on
their own. Their status is reduced to being mere cogs in wheel. Jobs become dull.
Workers lose interest in jobs and derive little pleasure from work.
4. Weakening of Trade Union: Everything is fixed & predetermined by management.
So it leaves no room for trade unions to bargain as everything is standardized,
standard output, standard working conditions, standard time etc.
5. Over speeding: The scientific management lays standard output, time so they have to
rush up and finish the work in time. The workers speed up to that standard output, so
scientific management drives the workers to rush towards output and finish work in
standard time.

ADMINISTRATIVE/MODERN OPERATIONALMANAGEMENT

Administrative theory focuses on the total organization and attempts to develop principles
that will direct managers to more efficient activities. Administrative theorists looked at
productivity improvements from the "top down", as distinguished from the Scientific
Approach of Taylor, who reorganized from "bottom up". Administrative theorists developed
general guidelines of how to formalize organizational structures and relationships.
Henri Fayol(1841-1925) was a French mining engineer who spent many of his later years
as an executive for a French coal and iron combine. In 1916, as director of the company,
Fayol penned the book General and Industrial Management. In this book, Fayol classified the
study of management into several functional areas which are still commonly used in executive
training and corporate development programs. The functional areas identified by Fayol are
planning, organizing, commanding, coordinating, and controlling. His contributions are divided
in the following categories:
According to Fayol the following are the list of qualities required in a manager:
v Physical – includes Health, Vigor and address.
v Mental – includes ability to understand and learn, judgment, and capability.
 v Moral – includes energy, firmness, initiative, loyalty, etc.
v Educational – includes qualifications.
v Technical - peculiar to the function being performed.
v Experience – knowledge in related field.
Organizational Activities:
He emphasized the role of administrative management and concluded that all
activities that occur in business organizations could be divided into six main groups.
1. Technical - related to production or manufacturing.
2. Commercial – includes buying, selling and exchange.
3. Financial – includes search for capital and its optimum use.
4. Security – related to protection of property and person.
5. Accounting – includes record keeping, costing and statistics.
6. Managerial – includes planning, organizing, commanding, coordinating and
controlling).
He concluded that the six groups of activities are interdependent and that it is the role of
management to ensure all six activities work smoothly to achieve the goals of an
enterprise.

General 14 Principles of Management:

Henry Fayol has given 14 general principles of management:
1. Division of work: It is helpful to take the advantage of specialization. Here, the work is
divided among the members of the group based on the employee’s skills and
talents.
2. Authority and Responsibility: Fayol finds authority as a continuation of official and
personal factors. Official authority is derived from the manager’s position and
personal authority is derived from personal qualities such as intelligence, experience,
moral worth, past services, etc., Responsibility arises out of assignment of activity.
3. Discipline: All the personal serving in an organization should be disciplined.
Discipline is obedience, application, behavior and outward mark of respect shown by
employees.
4. Unity of Command: Unity of command means that a person should get orders from
only one superior. Fayol has considered unity of command as an important aspect in
managing an organization.
5. Unity of Direction: According to this principle, each group of activities with the
same objective must have one head and one plan. Unity of direction provides better
coordination among various activities to be undertaken by an organization.
6. Subordination of individual interest to general interest: Individual interest must be
subordinate to general interest when there is conflict between the two. However
factors like ambition, laziness, weakness, etc., tend to reduce the importance of
general interest. Therefore, superiors should set an example in fairness and goodness.
7. Remuneration to Personnel: Remuneration to employees should be fair and provide
maximum possible satisfaction to employees and employers.
8. Centralization of Authority: Authority is to be centralized when decision making
powers are retained at top level. The degree of centralization or decentralization is
determined by the needs of the company.
9. Scalar Chain: There should be a scalar chain of authority and of communication
ranging from the highest to the lowest. It suggests that each communication going up or
coming down must flow through each position in the line of authority. It can be short-
circuited only in special circumstances.Scalar chain can be presented as follows:
10. Order: This is a principle relating to the arrangement of things and people. In social
order, there should be the right man in the right place.
11. Equity: Equity is the combination of justice and kindness. Equity in treatment and
 behavior is liked by everyone and it brings loyalty in the organization.
12. Stability of tenure: No employee should be removed or transferred within short time.
There should be reasonable security of jobs. Stability of tenure is essential to get an
employee accustomed to new work and succeeding in doing it well.
13. Initiative: Within the limits of authority and discipline, managers should encourage
their employees for taking initiative. Initiative is concerned with thinking out and
execution of a plan. Initiative increases zeal and energy on the part of human beings.
14. Esprit de corps: It is the principle of ‘union is strength’ and extension of unity of
command for establishing team work. The manager should encourage esprit de corps
among his employees.

Until today, his principles remain important as they continue to have a significant impact
on current managerial thinking. Fayol's main contribution was the idea that management was not
a talent related to genetic hereditary, but a skill that could be taught. He created a system of ideas
that could be applied to many areas of management and laid down basic rules for managing large
organizations.

BASIC CONCEPTS OF ORGANISATION

The term 'organization' connotes different meanings to different people. Many writers
have attempted to state the nature, characteristics and principles of organization in their own may.
The word 'organization' is also used widely to connote a group of people and the structure of
relationships.The term ‘organization’ is used in many ways. It means different things different
people. Currently the following uses of the term are popular
Ø A group of people united by a common purpose.
Ø An entity, an ongoing, business unit engaged in utilizing resources to create a
result.
Ø A structure of relationships between various positions in an enterprise.
Ø A process by which employees, facilities and tasks are related, to each other, with a
view to achieve specific goals.

Definition:
According to Koontz and O'Donnel"It is grouping of activities necessary to attain
enterprise objectives and the assignment of each grouping to a manager with authority
necessary to supervise it".

Steps in Organizing:
Organizing involves the following interrelated steps:
1. Determination of Objectives: Organization is always related to certain objectives.
Therefore, it is essential for the management to identify the objectives before starting any
activity. It will help the management in the choice of men and materials with the help of
which it can achieve its objectives.
2. Identification and Grouping of Activities: If the members of the group are to pool
their efforts effectively, there must be proper division of the major activities. Each job
should be properly classified and grouped. This will enable the people to know what is
expected of them as members of the group.
3. Assignment of Duties: After classifying and grouping the activities, each individual
should be given a specific job to do according to his ability and made responsible for that.
He should also be given the adequate authority to do the job, assigned to him.
4. Developing Authority,Responsibility and Relationships: Since so many individuals
work in the same organization, it is the responsibility of management to lay down
structure of relationships in the organization. This will help in the smooth working of the
 enterprise by facilitating delegation of responsibility and authority.

PRINCIPLES OF ORGANISATION

Effective and efficient working of any organization depends on how the managerial
function of organization is being performed. The function of organization can be carried
effectively with the help of under mentioned principles:
1. Division of work: While structuring organization, division of work, at the very
outset, should be considered as the basis of efficiency. It is an established fact that group
of individuals can secure better results by having division of work. This is also called the
principle of specialization.
2. Attention to objectives: An organization is a mechanism to accomplish certain goals or
objectives. The objectives of an organization play an important role in determining the
type of structure which should be developed.
3. Span of Management: Span of management also refers to span of control signifying the
number of subordinates reporting directly to any executive. It is an established fact that
larger the number of subordinates reporting directly to the executive, the more difficult it
tends to be for him to supervise and coordinate them effectively.
4. Unity of Command: Organization structure should also be designed in such a way
that there exists unity of command in the sense that a single leader is the ultimate source
of authority.
5. Flexibility: While designing the organization it should be kept in mind that organizational
structure should not be regarded as static. Every organization is a living entity in a
living environment which is fast changing.
6. Proper balance: It is important to keep various segment or departments of an organization
in balance. The problem of balance basically arises when an activity or a department is
further divided and subdivided into smaller segments
7. Efficiency: The organization should be able to attain the predetermined objectives at the
minimum cost. From the point of view of an individual, a good organization should
provide the maximum work satisfaction.
8. Decentralization: This principle is of great significance to big organizations.
Decentralization implies selective dispersal of authority to help departments and units to
run effectively and efficiently without frequent interruptions from the top of the
enterprise.
9. Scalar principle: Scalar chain refers to the vertical placement of superiors starting
from the chief executive at the top through the middle level to the supervisory level at the
bottom. Proper scalar chain or line of command is prerequisite for effective
organization.
10. Continuity: The form of organization structure should be such which is able to serve the
enterprise to attain its objectives for a long period of time.
11. Coordination: The principal of coordination underlines that there should be proper
liaison and cooperation between different departments and units of work. Unity of efforts
for the accomplishment of desired objectives is the main aim of organization.
12. Authority and Responsibility: Authority should commensurate with responsibility.
While assigning the responsibility, authority should also be assigned. If authority is not
granted, the subordinates cannot discharge their responsibility properly.

TYPES OF ORGANISATION STRUCTURES

An organization structure shows the authority and responsibility relationships

between the various positions in the organization by showing who reports to whom. It is a set of
planned relationships between groups of related functions and between physical factors and
personnel required for the achievement of organizational goals.
Organization involves establishing an appropriate structure for the goal seeking activities.
The structure of an organization is generally shown on an organization chart or a job- task
pyramid. For instance, if an undertaking is in production line, the, dominant element in its
organization chart, would be manufacturing and assembling. A good organization structure
should not be static but dynamic. It should be subject to change from time to time in the light of
the changes in the business environment. While designing the organization structure, due
attention should be given to the principles of sound organization.

There are two types of structural variables, namely;

a) Basic structure involves such central issues as how the work of the organization will be
divided and assigned among positions, groups, departments, divisions, etc. and how
the coordination necessary to achieve organizational objectives will be brought about.
b) Operating mechanism includes such factors as information system, control
procedures, rules and regulations, system of reward and punishment, etc.
 In order to organize the efforts of individuals, any of the following types of organization
structures may be set up:
1. Line organization
2. Line and staff organization
3. Functional organization
4. Matrix organization
5. Committee organization
6. Inverted Pyramid structure
7. Virtual organization
8. Team structure
9. Boundary less organization
10. Lean and Flat organization

LINE ORGANIZATION

It is also known as scalar or military or vertical organization and perhaps is the oldest
form. In this form of organization managers have direct responsibility for the results; line
organization can be designed in two ways:
a) Pure Line Organization: Under this form, similar activities are performed at a particular
level. Each group of activities is self – contained unit and is able to perform the assigned
activities without the assistance of others.

Production Manager

Foreman-A Foreman-B Foreman-C Worker

Worker Worker

b) Departmental Line Organization: Under this form, entire activities are divided into
different departments on the basis of similarity of activities. The basic objective of this
form is to have uniform control, authority and responsibility.

Production Manager

Foreman-A Foreman- F
(Body Moulding) (Seating)
B (o
F
Worker Worker Worker

Suitability:
This type of organisational structure is suitable to small scale organizations where the
number of subordinates is quite small.
Advantages:
1. Simplicity: Line organization is very simple to establish and can be easily understand
by the employees.
2. Discipline: Since each position is subject to control by its immediate superior position,
often the maintenance of discipline is easy unity of command and unity of direction foster
discipline among the people in the organization.
3. Co-ordination: The hierarchy in management helps in achieving effective coordination.
4. Effective communication: There will be a direct link between superior and his subordinate;
both can communicate properly among him or herself.
5. Economical: Line organization is easy to operate and it is less expensive.
6. Unity of command: In this every person is under the command of one boss only.
7. Prompt decision: Only one person is in charge of one division or department. This
enables manager to take quick decisions.
8. Over all development of the managers: The departmental head has to look after all the
activities of his department; therefore, it encourages the development of all round
managers at the higher level of authority.

Disadvantages:
1. Ability of Manager: The success of the enterprise depends upon the caliber and
ability of few departmental heads, loss of one or two capable men may put the
organization in difficulties.
2. Personnel limitations: In this type of organization an individual executive is suppose to
discharge different types of duties. He cannot do justice to all different activities because
he cannot be specialized in all the trades.
3. Overload of work: Departmental heads are overloaded with various routine jobs
hence they cannot spare time for managerial functions like planning, budgeting, etc.
4. Dictatorial way: In line organization, too much authorities centre on line executive.
Hence it encourages dictatorial way of working.
5. Duplication of work: Conflicting policies of different departments result in
duplication of work.
6. Unsuitable for large concerns: It is limited to small concerns.
7. Scope of favourism: As the departmental heads has the supreme authority, there is
chance of favourism.

LINE AND STAFF ORGANIZATION

It refers to a pattern in which staff specialists advise line managers to perform their duties.
When the work of an executive increases its performance requires the services of specialists
which he himself cannot provide because of his limited capabilities on these matters. Such advice
is provided to line managers by staffs personal who are generally specialists in their fields. The
staff people have the right to recommend, but have no authorit y to enforce their preference on
other departments.

Features:
1) This origin structure clearly distinguishes between two aspects of administration viz.,
planning and execution.
2) Staff officers provide advice only to the line officers; they do not have any power of
command over them.
3) The staff supplements the line members.
Suitability:
It can be followed in large organizations where specialization of activities is required,
because it offers ample opportunities for specialization.

Advantages:
1. Planned specialization: The line and staff structure is based upon the principle of
specialization. The line managers are responsible for operations contributing directly to the
achievement of organizational objectives where as staff people are there to provide expert
advice on the matters of their concerns.
2. Quality decisions: Decisions come after careful consideration and thought each expert
gives his advice in the area of his specialization which is reflected in the decisions.
3. Prospect for personal growth: Prospect for efficient personal to grow in the
organization not only that, it also offers opportunity for concentrating in a particular
area, thereby increasing personal efficiency
4. Less wastage: There will be less wastage of material.
5. Training ground for personnel: It provides training ground to the personnel in two
ways. First, since everybody is expected to concentrate on one field, one’s training
needs can easily be identified. Second, the staff with expert knowledge provides
opportunities to line managers for adopting rational multidimensional approach towards a
problem.

Disadvantages:
1. Chances of Mis-interpretation: Although the expert advice is available, yet it reaches
the workers through line supervisors. The line officers may fail to understand the meaning
of advice and there is always a risk of misunderstanding and misinterpretation.
2. Chances of friction: There are bound to be occasions when the line and staff may
differ in opinion may resent in conflict of interests and prevents harmonious relations
between the two.
3. Ineffective Staff in the absence of authority: The staff has no authority to execute
their own advice. Their advice is not a binding on the line officers. Therefore the advice
given by specialist may be ignored by line heads.
 4. Expensive: The overhead cost of the product increases because of high salaried
specialized staff.
5. Loss of initiative by line executives: If they start depending too much on staff may
lose their initiative drive and ingenuity.

FUNCTIONAL ORGANIZATION

It is the most widely used organization structure in the medium and large scale
organizations having limited number of products. This structure emerges from the idea that the
organization must perform certain functions in order to carry on its operations.
Functional structure is created by grouping the activities on the basis of functions required
for the achievement of organizational objectives. For this purpose, all the functions required are
classified into basic, secondary and supporting functions according to their nature &
importance.

Features:
1) The whole activities of an organization are divided into various functions.
2) Each functional area is put under the charge of one executive.
3) For any decision, one has to consult the functional specialist.

Suitability:
Functional organisational structure is suitable for large scale organizations.

General Manager

Marketing F P Production
Manager i e Manager
n r
a s
n o
c n
e n
M e
a l
n M
a a
g n
e a
r g
e
r

Bran Offi Factory Manager

ch ce
Mana Man
ger ager
 Line of authority
Functional authority

Advantages:
1. Separation of work: In functional organization, work has been separated from routine
work. The specialist has been given the authority and responsibility for supervision and
administration pertaining to their field of specialization unnecessary over loading of
responsibilities is thus avoided.
2. Specialization: Specialization and skilled supervisory attention is given to workers the
result is increase in rate of production and improved quality of work.
3. Ease in selection and training: Functional organization is based upon expert knowledge.
The availability of guidance through experts makes it possible to train the workers
properly in comparatively short span of time.

4. Reduction in prime cost: Since for every operation expert guidance is there, wastage of
material is reduced and thus helps to reduce prime cost.
5. Scope of growth and development of business: This type of organization presents
ample scope for the growth and development of business.

Disadvantages:
1. Indiscipline: Since the workers receive instructions from number of specialist it leads
to confusion to which they should follow. Therefore, it is difficult to maintain
discipline
2. Shifting of responsibility: It is difficult for the top management to locate
responsibility for the unsatisfactory work everybody tries to shift responsibility on others
for the faults and failure.
3. Kills the initiative of workers: As the specialized guidance is available to the workers the
workers will not be using their talents and skills therefore their initiative cannot be
utilized.
4. Overlapping of authority: The sphere of authority tends to overlap and gives rise to
friction between the persons of equal rank.
5. Lack of co-ordination between functions: except the function in which he is
specialized he is absolutely indifferent to other functions. Therefore, there is a lack of
coordination of function and efforts.

MATRIX ORGANISATION

It is also called project organization. It is a combination of all relationships in the

organization, vertical, horizontal and diagonal. It is a mostly used in complex projects. The main
objective of Matrix organization is to secure a higher degree of co-ordination than what is
possible from the conventional, organizational structures such as line and staff.
In matrix organization structure, a project manager is appointed to co-ordinate the
activities of the project. Under this system a subordinate will get instructions from two or
more bosses, Viz., administrative head and his project manager.

General Manager

Production Personnel Finance Marketing

Project A
W W W
W
Manager

Project B W W W
W
Manager

Project C
W W W
W
Manager
Suitability:
It can be applicable where there is a pressure for dual focus, pressure for high
information processing, and pressure for shred resources.
Ex: Aerospace, chemicals, Banking, Brokerage, Advertising etc.

Advantages:
1. It offers operational freedom & flexibility
2. It focuses on end results.
3. It maintenance professional Identity.
4. It holds an employee responsible for management of resources.

Disadvantages:
1. It calls for greater degree of coordination,
2. It violates unity of command.
3. Difficult to define authority & responsibility.
4. Employee may be de motivated.

COMMITTEE ORGANISATION

A committee does not represent a separate type of organization like line and staff, or
functional. It is rather a device which is used as supplementary to or in addition to any of the
above types of organizations. A committee may be defined as a group of people performing
some aspects of Managerial functions. Thus, a committee is a body of persons appointed or
elected for the Consideration of specific matters brought before it.

Suitability:
It is suitable for educational organizations and universities.
Merits:
1. Pooling up of opinions.
2. It facilitates coordination.
3. It enhances communication.
4. It gives better motivation.
Demerits:
1. It is highly expensive.
2. It makes compromised decisions.
3. Lack of secrecy.
4. Domination by few members.
VIRTUAL ORGANIZATION

The concept of virtual organisation or corporation along with virtual team and office has
entered management field very recently. The meaning of virtual is having the efficacy without
the material part; unreal but capable of being considered as real for the purpose. It works in a
network of external alliances, using the Internet. This means while the core of the organization
can be small but still the company can operate globally is a market leader in its niche.
Employees in a virtual organization will become emasculate and ineffective in the
absence of information and knowledge. Therefore, virtual organizations use a seamless web of
electronic communication media. The main components of this web are as follows:
1. Technology: The traditional ways of working has been transformed through new
technology.
2. E-mail integration: The whole organization can take advantage of SMS products
such as ‘Express Way’ by integrating SMS into the existing e-mail infrastructure.
3. Office systems integration: SMS technology can greatly enhance the existing or new
office systems. For example, phone messages can be sent via SMS rather than returning it
in a message book.
4. Voice Mail Alert: Addition of SMS technology to the existing voice mail system
builds an effective method of receiving voice mail alerts.
5. Mobile Data: This enables a laptop to retrieve information anywhere through the
mobile phone network. In the past corporate information has been inaccessible from many
places where it is needed. One can keep connected to his/her virtual organization
from anywhere by linking laptop to mobile phone.

Advantages:
1. Saves time and travel expenses.
2. Provides excess to outside experts, without down time and travel or logging expenses.
3. Ability to organize in teams even if members are not in reasonable proximity to each
other.
4. Firms can expand their potential labour markets. They can hire and retain the best
people irrespective of their physical locations.
 5. Employees can accommodate both personal and professional lives.
6. Employees can be assigned to multiple concurrent teams.
7. Dynamic team membership allows people to move from one project to another.
8. Team communication and work reports are available on-line to facilitate swift
responses to the demands of a global market.

Disadvantages:
1. Lack of physical interactions.
2. Lack of synergies arising from face-to-face interaction.
3. Non-availability of verbal and non-verbal cues such as voice, eye movement, facial
expression and body language which make communication more effective.

BOUNDARY LESS ORGANIZATION

It may be defined as an organisation structure that can avoid all the barriers (vertical,
horizontal, external, geographic) much more permeable than they are now. Boundary less
organisation allows free flow of ides/information / resources throughout the organisation and into
others. The boundaries are:
1. Vertical: Boundaries between layers within an organization.
2. Horizontal: Boundaries which exist b/w organizational departments.
3. External: Barriers between the organization and the outside world. (Customers,
suppliers other govt. committees).
4. Geographic: Barriers among organization units located in different countries.
A boundary less organisation is the opposite of a bureaucracy with numerous barriers and
division. In contrast, the organisation without boundaries offers interaction and networking
among professionals inside and outside the organisation. It is characterized by teamwork and
communication.
The purpose of this initiative was to remove barriers between the various departments as
well as between domestic and international operations. To reward people for adopting the
“integration model”, bonuses were awarded to those who not only generated new ideas but also
shared them with others.

Advantages:
1. It allows free flow of ideas of information or resources throughout the organisation
and others.
2. Boundary less organization is able to achieve greater integration and coordination.
3. They are able to adapt to environmental changes.
4. It is highly flexible and responsive.
5. It reduces ineffectiveness.
6. Creativity, quality, timeliness.
7. Increase in speed and flexibility.

Disadvantages:
1. Lack of flexibility to changing mission needs/rapidly changing world.
2. Slow/poor in responding customer requirement.
3. Failure to get things to done.
4. Customer/vendor has a hard time dealing with the organization.
TEAM STRUCTURE

One of the newest organizational structures developed in the 20th century is team. In
small businesses, the team structure can define the entire organization. Teams can be both
horizontal and vertical. While an organization is constituted as a set of people who synergies
individual competencies to achieve newer dimensions, the quality of organizational structure
revolves around the competencies of teams in totality.
For example, every one of the Whole Foods Market stores, the largest natural-foods grocer in the
US developing a focused strategy, is an autonomous profit centre composed of an average of 10
self-managed teams, while team leaders in each store and each region are also a team. Larger
bureaucratic organizations can benefit from the flexibility of teams as well.

Suitable:
Xerox, Motorola, and DaimlerChrysler are all among the companies that actively use
teams to perform tasks.

Advantages:
1. Team-based organizations filter decision making down to all levels of management.
2. Team-based organizations require that all employees participate in the decision-
making process.
3. Employees feel they are part of the total organization, rather than members of an
individual department.
4. Team-based organizations run more efficiently and effectively, giving them a
competitive edge in today's global market.

Disadvantages:
1. Recognition for individual achievement within a hierarchical organization is a
motivator and a factor in determining compensation.
2. Team-based organizations value team performance over individual performance.
3. Lack of focus on the individual in team-based organizations.
4. Motivating individuals in a team-based organization can be more challenging.
5. Team-based organizations are decentralized rather than hierarchical.

INVERTED PYRAMID STRUCTURE

This is an alternative to traditional chain of command. This is a structure which is narrow
at the top and wide at the base. It includes few levels of management i.e. sales people and sales
support staff sit at the top as they are key decision makers for all issues related to sales and
dealings with customers. Since they are in tough with customers, they are given all the freedom
to follow their own judgment at all levels.
Suitable:
This organisation structure is suitable for sales associates, journalism, etc.

Advantages:
1. In this structure the customers are given the first preference.
2. It becomes simple to know their preferences and plan the strategies of the
organisation accordingly.
3. Front line employees are given more responsibility and authority in the organisation
than the top management because they are closest to the customers.
4. Decentralization of authority and responsibility place a very important role in prompt and
timely decisions.
5. The inverted pyramid structure motivates the employees as they are placed in a better
position than the top management.

Disadvantages:
1. This structure may be dangerous because the role of top management is shifted to
supporting one from that of commanding one which ultimately leads to the direction
less-organisation.
2. In this structure there is absence of clear authority and responsibility levels as a result of
which people become confused and business veers out of control.
3. Frontline supervisor cannot make strategies regarding organisations even though they
have proper understanding of the customers because they are not equipped to do so.

FLAT AND LEAN ORGANISATION

Flat Organizations are those, which have few or even one level of management. For
example, a service organization with equal partners and 30 employees. Flat organizations are
known by their wider span of management of control. Each manager controls more number of
employees at a given point of time.

Managing Director

Sales Manager Pers Finance Manager

Production Manager onn
el
Man
ager
Tall/Lean organizations may have many levels of management. It focuses on vertical
communication through the levels of grades. It involves narrow span of management. Generally
the greater the height of organizational chart, the smaller is the span of control, vice versa.
Managing Director

General Manager

Sales Manager Pers Finance Manager

Production Manager onn
el
Man
ager

Advantages:
1. It is simple to understand.
2. Easy supervision & control.
3. Quick decisions are possible.
4. It sets clearly the direct lines of authority and responsibility of a line manager.

Disadvantages:
1. Lack of specialization
2. Low – Morale
3. Autocratic approach
4. Overburden to manager

IMPORTANT QUESTIONS
1. Explain the nature and functions of management?
2. Explain how scientific management paved way for changes in the traditional mindset.
3. “Management is regarded as an art by some, science by others”. In the light of this
statement, Explain the exact nature of management
4. What is the contribution of Henry Fayol to management thought? Explain 14
principles of management thought.
5. Write short notes on:
a. Maslow theory of Hierarchy of Human Needs
b. Frederick Herzberg two factor theory of motivation. c. Theory X and Theory Y
(Douglas Mc. Gregor)
d. Mayo’s Hawthorne Experiments
6. What are the challenges you have to face as a manger? Discuss.
7. State the history of evolution of management thought with emphasis on modern
management techniques.
8. Explain the meaning of organization and state its principles.
9. Write brief notes and merits and demerits of the following. a. Line & staff organization
b. Line organization
c. Functional organization
10. What are the different organizational structure designs in modern trends?
THEORIES OF MOTIVATION

The word ‘motivation’ has been derived from the latin word ‘motive’ which
means any idea, need or emotion that prompts a man into action. Human motives are
internalised goals within individuals. Motivation may be defined as those forces that cause
people to behave in certain ways. Motivation encompasses all those pressures and
influences that trigger, channel, and sustain human behaviour. Most successful managers
have learned to understand the concept of human motivation and are able to use that
understanding to achieve higher standards of subordinate work performance.
Motivation is the process of channelling a person's inner drives so that he wants to
accomplish the goals of the organization. It seeks to know the incentives for work and tries
to find out the ways and means whereby their realization can be helped and
encouraged. Managers, by definition, are required to work with and through people, so
they must gain at least some understanding of the forces that will motivate the people they
are to manage.

Definition:
1. Koontz and O'Donnell, "Motivation is a general term applying to the entire class
of
drives, needs, wishes and similar forces".

2. Lewis Allen, "Motivation is the work a manager performs to inspire, encourage

and impel people to take required action".

Theories of Motivation:
Many methods of employee motivation have been developed. There are
many
approaches to classify the theories of motivation. Two primary approaches to motivation
are content and process.
1. The content approach emphasizes what motivates employees, focuses on the
assumption that individuals are motivated by the desire to fulfill inner needs.
Content theories focus on the needs that motivate people.
2. The process approach emphasizes how and why people choose certain behaviors
in order to meet their personal goals. Process theories focus on external influences
or behaviors that people choose to meet their needs.

MAYO’S HAWTHORNE EXPERIMENTS

The human relations approach was born out of a reaction to classical approach.
For the first time an intensive and systematic analysis of human factor in organisations was
made in the form of Hawthorne experiments.
To investigate the relationship between productivity and physical working
conditions, a team of four members George Elton mayo, White head, Roethlisberger
and William Dickson was introduced by the company in Hawthorne plant. These
experiments are often referred to as the Hawthorne experiments or Hawthorne studies as
they took place at the Western Electric Company in Chicago.
They conducted various researches in four phases:
1. Experiments to determine the effects of changes in illuminations on
productivity.
Illumination experiments (1924-27).
2. Experiments to determine the effects of changes in hours and other
 working conditions on productivity. (Relay assembly test room experiments 1927-
28).
3. Mass interviewing programme (1928-1930).
4. Determination and analysis of social organization at work (Bank wiring
observation room experiments 1931-32).

Experiment Results:
After analyzing the results from the Hawthorne experiments Mayo concluded
that
workers were motivated by more than self-interest and the following had an impact too:
1. Psychological Contract:There is an unwritten understanding between the
worker and employer regarding what is expected from them; Mayo called this the
psychological contract.
2. Interest in Workers:A worker’s motivation can be increased by showing an
interest in them. Mayo classified studying the workers (through the experiments) as
showing an interest in the workers.
3. Work is a Group Activity:Work is a group activity, team work can increase
a worker’s motivation as it allows people to form strong working relationships and
increases trust between the workers. Work groups are created formally by the
employer but also occur informally.
4. Social Aspect of Work:Workers are motivated by the social aspect of work,
as demonstrated by the female workers socializing during and outside work and the
subsequent increase in motivation.
5. Recognize Workers:Workers are motivated by recognition, security and a sense
of belonging.
6. Communication:The communication between workers and management
influences workers’ morale and productivity. Workers are motivated through a
good working relationship with management.

Conclusion:
The traditional view of how to motivate employees is that you offer monetary
rewards
(pay increases, bonuses, etc.,) for work completion. However the Hawthorne
experiments may suggest that motivation is more complicated than that. Advocates of the
"Hawthorne Effect" will state that the Hawthorne experiment results show that
motivation can be improved through improving working relationships and social
interaction.

MASLOW’S THEORY OF HUMAN NEEDS

Abraham H. Maslow, a famous social scientist or psychologist, has given a

framework that helps to explain the strength of certain needs. He identifies five levels
of needs, which are best seen as a hierarchy with the most basic need emerging first
and the most sophisticated need last. People move up the hierarchy one level at a
time. Gratified needs lose their strength and the next level of needs is activated. As
basic or lower-level needs are satisfied, higher-level needs become operative. A satisfied
need is not a motivator. The most powerful employee need is the one that has not been
satisfied.
The hierarchy of needs is identified as follows:

1. Physiological needs: The Physiological needs are at the top of hierarchy

because they tend to have the highest strength until they are reasonably satisfied.
It includes the

need for food, sleep, shelter, etc. these are the basic needs and if these are
not satisfied, one does not think of needs at higher level.
2. Safety or Security Needs: Once physiological needs are satisfied to a
reasonable level, the next level in the hierarchy is safety. Safety means being free
of physical danger or self-preservation. It covers protection, job security, safety of
property, food or shelter, etc.
3. Affiliation or Acceptance or Social needs: After the first two needs are
satisfied, social needs become important in the need hierarchy. Man wants to live in
the society as a member of society. He wants to love and be loved by others. It
includes desire to seek or show affection and recognition, need for companionship,
identification with a group, etc.
4. Esteem needs: These needs are concerned with self respect, self confidence, a
feeling of personal worth, feeling of being unique and recognition. Satisfaction of
these needs produces feelings of self confidence, prestige, power and control.
5. Self actualization needs: These needs indicate the strong desire to
achieve something, particularly in view of potential one has. This includes
competence which implies control over environmental factors both physical and
social and achievement.

Conclusion:
Maslow suggest that the various levels are interdependent and overlapping,
each
higher level need emerging before the lower level need has been completely satisfied.

DOUGLAS Mc GREGOR’S THEORY X AND THEORY Y

McGregor's work was based on Maslow's hierarchy of needs. He grouped

Maslow's hierarchy into "lower order" (Theory X) needs and "higher order" (Theory Y)
needs. McGregor, in 1960 in his book “The Human side of Enterprise” states that people
inside the organization can be managed in two ways. The first is basically negative,
which falls under the category X and the other is basically positive, which falls under the
category Y.
After viewing the way in which the manager dealt with employees, McGregor
concluded that a manager’s view of the nature of human beings is based on a certain
grouping of assumptions and that he or she tends to mold his or her behavior towards
subordinates according to these assumptions.
Douglas McGregor has classified the basic assumption regarding human nature
into
twoparts and has designated them as 'theory X’ and 'theory Y' as discussed below:

Theory - X: This is the traditional theory of human behaviour, which makes the
following assumptions about human nature:
1. Management is responsible for organizing the elements of productive
enterprises - money, material, equipment, and people - in the interest of economic
ends.
2. With reference to people it is a process of directing their efforts, motivating
them, controlling their actions, modifying their behaviour in order to be in
conformity with the needs of the organization.
3. Without this active intervention by management, people would be passive –
even resistant to organizational needs. Hence they must be persuaded, rewarded,
punished and properly directed.
4. The average human being has an inherent dislike of work and will avoid it if he can.
5. He lacks ambition, dislikes responsibility and prefers to be led.
6. He is inherently self-centred, indifferent to organizational needs.
7. He is by nature resistant to change.
8. He is gullible, not very bright.

Theory - Y: The assumption of theory Y, according to McGregor are as follows:

1. Work is as natural as play or rest, provided the conditions are favourable; the
average human being does not inherently dislike work.
2. External control and the thrust of punishment are not the only means for
bringing about efforts towards organizational objectives. Man can exercise self-
control and self-direction in the service of objectives to which he is committed.
3. Commitment to objectives is a result of the rewards associated with
their achievement. People select goals for themselves if they see the possibilities of
some kind of reward that may be material or even psychological.
4. The average human being, under proper conditions does not shirk responsibility,
but learn not only to accept responsibility but also to seek it.
5. He has capacity to exercise a relatively high degree of imagination, ingenuity
and creativity in the solution of organizational problems in widely, not
narrowly distributed in the population.
6. Under conditions of modern industrial life the intellectual potentialities of people
are only partially utilized. As a matter of fact, men, have unlimited potential.

Comparison of Theory X and Theory Y:

Theory - X Theory - Y
Theory X assumes human beings Theory Y assumes that
inherentlydislike work and are distasteful work is as
towards work. naturalas play or rest.
Theory X emphasizes that people do not Theory Y assumes just the
haveambitions and they shrink reverse.
responsibility. Given proper conditions,
people haveambitions and
 Theory X assumes that people in general According to Theory Y the
havelittle capacity for creativity. creativity
iswidely distributed in the
According to Theory X, people lack self- While in Theory Y people
population.
motivation and require be externally are self-
controllingand closely supervising in order directedand creative and
to get maximumoutput. prefer Self- control.

Theory X emphasize upon centralization Theory Y emphasizes

ofauthority in decision-making process. decentralization
and greater
participation in
HERZBERG’S TWO FACTOR THEORY OF MOTIVATION

Frederick Hertzberg conducted a structured interview programme to analyze the

experience and feelings of 200 engineers and accountants in nine different companies in
Pittsburg area, U.S.A. During the structured interview, they were asked to describe a few
previous job experiences in which they felt ‘exceptionally good’ or exceptionally bad
about their jobs.
In his analysis, he found that there are some job conditions which operate primarily
to dissatisfy employees when the conditions are absent, however their presence does
not motivate them. It is referred as Hygiene or Maintenance Factors.Another set of job
conditions operates primarily to build strong motivation and high job satisfaction, but
their absence rarely proves strongly dissatisfying. It is referred as motivational factors.
1. Hygiene Factors: According to Hertzberg, there are 10 maintenance
factors.These maintenance factors are necessary to maintain at a reasonable level
of satisfaction in

employees. Any increase beyond this level will not produce any satisfaction to the
employees. However, any cut below this level will dissatisfy them.Dissatisfaction
occurs when the following hygiene factors, extrinsic or job context, maintenance
factors are not present on the job and include:
1. company policy and administration,
2. technical supervision,
3. salary,
4. job security,
5. personal life,
6. status,
7. working conditions,
8. interpersonal relationship with superiors,
9. interpersonal relationship with peers and
10. interpersonal relationship with subordinates

2. Motivational Factors: These factors are capable of having a positive effect on

job satisfaction often resulting in an increase in ones total output. Most of the
factors are related with job contents. An increase in these factors will satisfy the
employees. However, any decrease in these factors will not affect their level of
satisfaction.Satisfaction comes from motivators that are intrinsic or job content,
such as:
1. achievement,
2. recognition,
3. advancement;
4. work itself,
 5. possibility of growth and
6. responsibility

What is Leadership

Leadership is a process by which an executive can direct, guide and influence the behavior
and work of others towards accomplishment of specific goals in a given situation.
Leadership is the ability of a manager to induce the subordinates to work with confidence
and zeal.

Leadership is the potential to influence behaviour of others. It is also defined as the

capacity to influence a group towards the realization of a goal. Leaders are required to
develop future visions, and to motivate the organizational members to want to achieve the
visions.

According to Keith Davis, “Leadership is the ability to persuade others to seek defined
objectives enthusiastically. It is the human factor which binds a group together and
motivates it towards goals.”

Characteristics of Leadership

1. It is a inter-personal process in which a manager is into influencing and guiding

workers towards attainment of goals.

2. It denotes a few qualities to be present in a person which includes intelligence,

maturity and personality.

3. It is a group process. It involves two or more people interacting with each other.

4. A leader is involved in shaping and moulding the behaviour of the group towards
accomplishment of organizational goals.

5. Leadership is situation bound. There is no best style of leadership. It all depends

upon tackling with the situations.

Importance of Leadership
Leadership is an important function of management which helps to maximize efficiency
and to achieve organizational goals. The following points justify the importance of
leadership in a concern.

1. Initiates action- Leader is a person who starts the work by communicating the
policies and plans to the subordinates from where the work actually starts.

2. Motivation- A leader proves to be playing an incentive role in the concern’s

working. He motivates the employees with economic and non-economic rewards and
thereby gets the work from the subordinates.

3. Providing guidance- A leader has to not only supervise but also play a guiding role
for the subordinates. Guidance here means instructing the subordinates the way they have
to perform their work effectively and efficiently.
4. Creating confidence- Confidence is an important factor which can be achieved
through expressing the work efforts to the subordinates, explaining them clearly their role
and giving them guidelines to achieve the goals effectively. It is also important to hear the
employees with regards to their complaints and problems.

5. Building morale- Morale denotes willing co-operation of the employees towards

their work and getting them into confidence and winning their trust. A leader can be a
morale booster by achieving full co-operation so that they perform with best of their
abilities as they work to achieve goals.

6. Builds work environment- Management is getting things done from people. An

efficient work environment helps in sound and stable growth. Therefore, human relations
should be kept into mind by a leader. He should have personal contacts with employees and
should listen to their problems and solve them. He should treat employees on humanitarian
terms.

7. Co-ordination- Co-ordination can be achieved through reconciling personal

interests with organizational goals. This synchronization can be achieved through proper
and effective co-ordination which should be primary motive of a leader.

Qualities of a Leader
A leader has got multidimensional traits in him which makes him appealing and effective in
behavior. The following are the requisites to be present in a good leader:

1. Physical appearance- A leader must have a pleasing appearance. Physique and

health are very important for a good leader.

2. Vision and foresight- A leader cannot maintain influence unless he exhibits that he
is forward looking. He has to visualize situations and thereby has to frame logical
programmes.

3. Intelligence- A leader should be intelligent enough to examine problems and

difficult situations. He should be analytical who weighs pros and cons and then summarizes
the situation. Therefore, a positive bent of mind and mature outlook is very important.

4. Communicative skills- A leader must be able to communicate the policies and

procedures clearly, precisely and effectively. This can be helpful in persuasion and
stimulation.

5. Objective- A leader has to be having a fair outlook which is free from bias and
which does not reflects his willingness towards a particular individual. He should develop
his own opinion and should base his judgement on facts and logic.

6. Knowledge of work- A leader should be very precisely knowing the nature of work
of his subordinates because it is then he can win the trust and confidence of his
subordinates.

7. Sense of responsibility- Responsibility and accountability towards an individual’s

work is very important to bring a sense of influence. A leader must have a sense of
responsibility towards organizational goals because only then he can get maximum of
capabilities exploited in a real sense. For this, he has to motivate himself and arouse and
urge to give best of his abilities. Only then he can motivate the subordinates to the best.
8. Self-confidence and will-power- Confidence in himself is important to earn the
confidence of the subordinates. He should be trustworthy and should handle the situations
with full will power. (You can read more about Self-Confidence at : Self Confidence - Tips
to be Confident and Eliminate Your Apprehensions).

9. Humanist-This trait to be present in a leader is essential because he deals with

human beings and is in personal contact with them. He has to handle the personal problems
of his subordinates with great care and attention. Therefore, treating the human beings on
humanitarian grounds is essential for building a congenial environment.

10. Empathy- It is an old adage “Stepping into the shoes of others”. This is very
important because fair judgement and objectivity comes only then. A leader should
understand the problems and complaints of employees and should also have a complete
view of the needs and aspirations of the employees. This helps in improving human
relations and personal contacts with the employees.

From the above qualities present in a leader, one can understand the scope of leadership and
it’s importance for scope of business. A leader cannot have all traits at one time. But a few
of them helps in achieving effective results.

Leader versus Manager

“Leadership and managership are two synonymous terms” is an incorrect statement.
Leadership doesn’t require any managerial position to act as a leader. On the other hand, a
manager can be a true manager only if he has got the traits of leader in him. By virtue of his
position, manager has to provide leadership to his group. A manager has to perform all five
functions to achieve goals, i.e., Planning, Organizing, Staffing, Directing, and Controlling.
Leadership is a part of these functions. Leadership as a general term is not related to
managership. A person can be a leader by virtue of qualities in him. For example: leader of
a club, class, welfare association, social organization, etc. Therefore, it is true to say that,
“All managers are leaders, but all leaders are not managers.”

A leader is one who influences the behavior and work of others in group efforts towards
achievement of specified goals in a given situation. On the other hand, manager can be a
true manager only if he has got traits of leader in him. Manager at all levels are expected to
be the leaders of work groups so that subordinates willingly carry instructions and accept
their guidance. A person can be a leader by virtue of all qualities in him.

Leaders and Managers can be compared on the following basis:

Basis Manager Leader

A person becomes a manager by A person becomes a leader on

Origin
virtue of his position. basis of his personal qualities.

Manager has got formal rights in an Rights are not available to a

Formal Rights
organization because of his status. leader.
 The group of employees whom
The subordinates are thefollowers of
Followers the leaders leads are his
managers.
followers.

Leader influences people to

A manager performs all five
Functions work willingly for group
functions of management.
objectives.

A leader is required to create

A manager is very essential to a cordial relation between person
Necessity
concern. working in and for
organization.

Leadership is
Stability It is more stable.
temporary.

Mutual All managers are All leaders are not

Relationship leaders. managers.

Manager is accountable for self and Leaders have no well

Accountabilit
subordinates behaviour and defined
y
performance. accountability.

A manager’s concern is A leader’s concern is group goals

Concern
organizational goals. and member’s satisfaction.

People follow manager by virtue of People follow them on voluntary

Followers
job description. basis.

A manager can continue in office till

A leader can maintain his position
Role he performs his duties satisfactorily
only through day to day wishes of
continuation in congruence with organizational
followers.
goals.

A leader has command over

Manager has command over
different sanctions and related
Sanctions allocation and distribution of
task records. These sanctions are
sanctions.
essentially of informal nature.

ll leaders do not possess same attitude or same perspective. As discussed earlier, few
leaders adopt the carrot approach and a few adopt the stick approach. Thus, all of the
leaders do not get the things done in the same manner. Their style varies. The leadership
style varies with the kind of people the leader interacts and deals with. A perfect/standard
leadership style is one which assists a leader in getting the best out of the people who
follow him.

Some of the important leadership styles are as follows:

Autocratic leadership style: In this style of leadership, a leader has

complete command and hold over their employees/team. The team cannot put forward
their views even if they are best for the team’s or organizational interests. They cannot
criticize or question the leader’s way of getting things done. The leader himself gets
the things done. The advantage of this style is that it leads to speedy decision-making
and greater productivity under leader’s supervision. Drawbacks of this leadership style
are that it leads to greater employee absenteeism and turnover. This leadership style
works only when the leader is the best in performing or when the job is monotonous,
unskilled and routine in nature or where the project is short-term and risky.

The Laissez Faire Leadership Style: Here, the leader totally trusts
their employees/team to perform the job themselves. He just concentrates on the
intellectual/rational aspect of his work and does not focus on the management aspect of
his work. The team/employees are welcomed to share their views and provide
suggestions which are best for organizational interests. This leadership style works
only when the employees are skilled, loyal, experienced and intellectual.
Democrative/Participative leadership style: The leaders invite and
encourage the team members to play an important role in decision-making process,
though the ultimate decision-making power rests with the leader. The leader guides the
employees on what to perform and how to perform, while the employees communicate
to the leader their experience and the suggestions if any. The advantages of this
leadership style are that it leads to satisfied, motivated and more skilled employees. It
leads to an optimistic work environment and also encourages creativity. This leadership
style has the only drawback that it is time-consuming.
Bureaucratic leadership: Here the leaders strictly adhere to the
organizational rules and policies. Also, they make sure that the employees/team also
strictly follows the rules and procedures. Promotions take place on the basis of
employees’ ability to adhere to organizational rules. This leadership style gradually
develops over time. This leadership style is more suitable when safe work conditions
and quality are required. But this leadership style discourages creativity and does not
make employees self-contented.
Transformational Leadership Theory
Creating high-performance workforce has become increasingly important and to do so
business leaders must be able to inspire organizational members to go beyond their task
requirements. As a result, new concepts of leadership have emerged - transformational
leadership being one of them.

Transformational leadership may be found at all levels of the organization: teams,

departments, divisions, and organization as a whole. Such leaders are visionary, inspiring,
daring, risk-takers, and thoughtful thinkers. They have a charismatic appeal. But charisma
alone is insufficient for changing the way an organization operates. For bringing major
changes, transformational leaders must exhibit the following four factors:Figure 1: Model
of Transformational Leadership

Inspirational Motivation: The foundation of transformational leadership is the

promotion of consistent vision, mission, and a set of values to the members. Their
vision is so compelling that they know what they want from every interaction.
Transformational leaders guide followers by providing them with a sense of meaning
and challenge. They work enthusiastically and optimistically to foster the spirit of
teamwork and commitment.

Intellectual Stimulation: Such leaders encourage their followers to be innovative and

creative. They encourage new ideas from their followers and never criticize them
publicly for the mistakes committed by them. The leaders focus on the “what” in
problems and do not focus on the blaming part of it. They have no hesitation in
discarding an old practice set by them if it is found ineffective.

Idealized Influence: They believe in the philosophy that a leader can influence followers
only when he practices what he preaches. The leaders act as role models that followers
seek to emulate. Such leaders always win the trust and respect of their followers through
their action. They typically place their followers needs over their own, sacrifice their
personal gains for them, ad demonstrate high standards of ethical conduct. The use of
power by such leaders is aimed at influencing them to strive for the common goals of the
organization.

Individualized Consideration: Leaders act as mentors to their followers and reward

them for creativity and innovation. The followers are treated differently according to their
talents and knowledge. They are empowered to make decisions and are always provided
with the needed support to implement their decisions.

The common examples of transformational leaders are Mahatma Gandhi and Obama.

Transactional Leadership Theory

The transactional style of leadership was first described by Max Weber in 1947 and then by
Bernard Bass in 1981. This style is most often used by the managers. It focuses on the basic
management process of controlling, organizing, and short-term planning. The famous
examples of leaders who have used transactional technique include McCarthy and de
Gaulle.

Transactional leadership involves motivating and directing followers primarily

through appealing to their own self-interest. The power of transactional leaders comes
from their formal authority and responsibility in the organization. The main goal of the
follower is to obey the instructions of the leader. The style can also be mentioned as a
‘telling style’.

The leader believes in motivating through a system of rewards and punishment. If a

subordinate does what is desired, a reward will follow, and if he does not go as per the
wishes of the leader, a punishment will follow. Here, the exchange between leader and
follower takes place to achieve routine performance goals.

These exchanges involve four dimensions:

Contingent Rewards: Transactional leaders link the goal to rewards, clarify

expectations, provide necessary resources, set mutually agreed upon goals, and
provide various kinds of rewards for successful performance. They set SMART
(specific, measurable, attainable, realistic, and timely) goals for their subordinates.

Active Management by Exception: Transactional leaders actively monitor the

work of their subordinates, watch for deviations from rules and standards and
taking corrective action to prevent mistakes.

Passive Management by Exception: Transactional leaders intervene only when

standards are not met or when the performance is not as per the expectations. They
may even use punishment as a response to unacceptable performance.

Laissez-faire: The leader provides an environment where the subordinates get

many opportunities to make decisions. The leader himself abdicates responsibilities
and avoids making decisions and therefore the group often lacks direction.

Assumptions of Transactional Theory

· Employees are motivated by reward and punishment.

· The subordinates have to obey the orders of the superior.

· The subordinates are not self-motivated. They have to be closely monitored and
controlled to get the work done from them.

Implications of Transactional Theory

The transactional leaders overemphasize detailed and short-term goals, and standard rules
and procedures. They do not make an effort to enhance followers’ creativity and generation
of new ideas. This kind of a leadership style may work well where the organizational
problems are simple and clearly defined. Such leaders tend to not reward or ignore ideas
that do not fit with existing plans and goals.

The transactional leaders are found to be quite effective in guiding efficiency decisions
which are aimed at cutting costs and improving productivity. The transactional leaders tend
 to be highly directive and action oriented and their relationship with the followers tends to
be transitory and not based on emotional bonds.

The theory assumes that subordinates can be motivated by simple rewards. The only
‘transaction’ between the leader and the followers is the money which the followers receive
for their compliance and effort.

Difference between Transactional and Transformational Leaders

Transactional Transformational
leadership Leadership

Leadership is Responsive Leadership is proactive

Works within the organizational culture Work to change the organizational culture by
implementing new ideas

Transactional leaders make Employees achieve Transformational leaders motivate and empower
organizational objectives through rewards and employees to achieve company’s objectives by
punishment appealing to higher ideals and moral values

Motivates followers by appealing to their ownMotivates followers by encouraging them to transcend

self-interest their own interests for those of the group or unit

UNIT – III
OPERATIONS MANAGEMENT

PLANT LAYOUT
Plant layout deals with the arrangement of work areas and equipment. It is related
to allocation of adequate spaces at the appropriate places for work equipment, working
men, materials, other supporting activities and also customers. The basic theme behind the
arrangement of work area is to produce the product economically, to provide the service
effectively and to provide a safe and good physical environment for the users that is, the
workers and / or the consumers.

Definition:
According to Moore, “Plant layout is a plan of an optimum arrangement of
facilities
including personnel, operating equipment, storage space, material handling equipment and
all other supporting services along with the design of best structure to contain all
these facilities”.

OBJECTIVES OF PLANT LAYOUT

 The primary goal of the plant layout is to maximise the profit by arrangement of
all the plant facilities to the best advantage of total manufacturing of the product. The
objectives of plant layout are:
1. Streamline the flow of materials through the plant.
2. Facilitate the manufacturing process.
3. Maintain high turnover of in-process inventory.
4. Minimize materials handling and cost.
5. Effective utilization of men, equipment and space.
6. Provide for employee convenience, safety and comfort.
7. Minimize investment in equipment.
8. Minimize overall production time.
9. Facilitate the organizational structure.

PRINCIPLES OF PLANT LAYOUT

1. Principle of integration: A good layout is one that integrates men, materials,
machinesand supporting services and others in order to get the optimum utilization
of resources and maximum effectiveness.
2. Principle of minimum distance: This principle is concerned with the
minimum travel (or movement) of man and materials. The facilities should be
arranged such that, the total distance travelled by the men and materials should be
minimum and as far as possible straight line movement should be preferred.
3. Principle of cubic space utilization: The good layout is one that utilize
both horizontal and vertical space. It is not only enough if only the floor space is
utilized optimally but the third dimension, i.e., the height is also to be utilized
effectively.
4. Principle of flow: A good layout is one that makes the materials to move in
forward direction towards the completion stage, i.e., there should not be any
backtracking.
5. Principle of maximum flexibility: The good layout is one that can be altered
without much cost and time, i.e., future requirements should be taken into account
while designing the present layout.
6. Principle of safety, security and satisfaction: A good layout is one that gives
due consideration to workers safety and satisfaction and safeguards the plant and
machinery against fire, theft, etc.
7. Principle of minimum handling: A good layout is one that reduces the
material handling to the minimum.

TYPES OF PLANT LAYOUT

The Plant Layouts can be classified into the following five categories:
1. Process layout
2. Product layout
3. Fixed position layout
4. Combination layout
5. Hybrid layout

1. PRODUCT LAYOUT OR LINE LAYOUT

This type of layout is developed for product-focused systems. In this type
of
layout only one product, or one type of product, is produced in a given area. In case of
product being assembled, this type of layout is popularly known as an assembly line
 layout. The equipment here is laid out accordance to the sequence in which it is used
for making the product. Product layout is usually suitable for assembling operations, for
example in the automobile industry.
Product layout can be applicable where:
Ø the machines can be continuously handled for longer periods.
Ø time and motion study can be conducted.
Ø the products so manufactured do not require higher degree of inspection.

Advantages:
1. Removal of obstacles in production: Product layout ensures unrestricted
and
continuous production thereby minimising bottlenecks in the process of
production, this is because work stoppages are minimum under this method.
2. Economies in material handling: Under this method there are direct channels for
the flow of materials requiring lesser time which considerably eliminate back-
tracking of materials. On account of this, cost of material handling is considerably
reduced. This is greatly helpful in achieving desired quality of the end product.
3. Lesser manufacturing time: Under this method (as already pointed), backward
and forward handling of materials is not involved; it leads to considerable saving in
manufacturing time.
4. Lesser work in progress: On account of continuous uninterrupted mass
production, there is lesser accumulation of work in progress or semi-finished goods.
5. Proper use of floor space: This method facilitates proper and optimum use
of available floor space. This is due to non- accumulation of work in progress and
overstocking of raw materials.
6. Economy in inspection: Inspection can be easily and conveniently undertaken
under this method and any defect in production operations can be easily
located in production operations. The need for inspection under this method is
much less and can be confined at some crucial points only.
7. Lesser manufacturing cost: On account of lesser material handling, inspection
costs and fullest utilization of available space, production costs are considerably
reduced under this method.
8. Lesser labour costs: Due to specialization and simplification of operations and use
of automatic simple machines, employment of unskilled and semi-skilled workers
can carry on the work. The workers are required to carry routine tasks under this
method. This leads to lesser labour costs.
9. Introduction of effective production control: Effective production control
on account of simple operation of this method can be employed successfully.
Production control refers to the adoption of measures to achieve production
planning.

Dis-Advantages:
1. Lesser flexibility: As work is carried in sequence and process arranged in a line, it
is
very difficult to make adjustments in production of operations. Sometimes,
certain changes under this method become very costly and impractical.
2. Large investment: Under this method, machines are not arranged in accordance
with functions as such similar type of machines and equipment is fixed at various
 lines of production. This leads to unavoidable machinery duplication resulting in
idle capacity and large capital investment on the part of the entrepreneur.
3. Higher overhead charges: Higher capital investment leads to higher
overheads
(fixed overheads) under this method. This leads to excessive financial burden.
4. Interruption due to breakdown: If one machine in the sequence stops on account
of breakdown, other machines cannot operate and work will be stopped. The
work stoppage may also take place on account of irregular supply of material, poor
production scheduling and employee absenteeism etc.
5. Difficulties in expanding production: Production cannot be expanded
beyond certain limits under this method.
6. Lack of specialization in supervision: Supervision of different production jobs
becomes difficult under this method as there is absence of specialized supervision
as the work is carried on in one line having different processes and not on the basis
of different departments for different specialized jobs.
7. Under-utilization of machines: As has already been pointed out, separate set of
one type of machines is fixed at different lines of production. Usually, these
machines are not properly and fully utilized and there remains idle capacity in the
form of under- utilized equipment.

2. PROCESS LAYOUT OR FUNCTION LAYOUT:

Process layout is recommended for batch production. All machines
performing
similar type ofoperations are grouped at one location in the process layout e.g., all
lathes, milling machines, etc.are grouped in the shop will be clustered in like groups.
Thus, in process layout the arrangement of facilities are grouped together according to
their functions. The flow paths of material through the facilities from one functional
area to another vary from product to product. A typical process layout is shown below.

Process layout can be preferred when:

· more varieties of products are manufactured in fewer quantities
· close quality inspection is required
· it is difficult to carry out time and motion study
· it is necessary to use the same machine for more than one product

Advantages:
1. Maximum utilisation of machines: This method ensures fuller and
effective
utilisation of machines and consequently investment in equipment and
machines becomes economical.
2. Greater flexibility: Changes in the sequence of machines and operations can be
 made without much difficulty. This is because the machines are arranged in
different departments in accordance with the nature of functions performed by
them.
3. Scope for expansion: Production can be increased by installing additional
machines without much difficulty.
4. Specialisation: As has already been pointed out that under this method,
specialised machines are used for performing different production operations. This
leads to specialisation.
5. Effective utilisation of workers: Specialised workers are appointed to carry
different type of work in different departments. This leads to effective and efficient
use of their talent and capabilities.
6. More effective supervision: As the machines are arranged on the basis of
functions, performed by them, the specialised and effective supervision is ensured
by the specialised knowledge of supervisors. Each supervisor can perform his task
of supervision effectively as he has to supervise limited number machines
operating in his department.
7. Lesser work stoppages: Unlike the product method, if a machine fails, it does
not lead to complete work stoppage and production schedules are not seriously
affected. Due to breakdown in one machine, the work can be easily transferred to
the other machines.
Disadvantages:
1. Coverage of more floor area: Under this method, more floor space is needed for the
same quantum of work as compared to product layout.
2. Higher cost of material handling: Material moves from one department to another
under this method, leading to the higher cost of material handling. The mechanical
devices of material handling cannot be conveniently employed under this method on
account of functional division of work.
3. Higher labour costs: As there is functional division of work, specialised workers are to
be appointed in different departments for carrying specialised operations. The
appointment of skilled worker leads to higher labour costs.
4. Longer production time: Production takes longer time for completion under this
method and this leads to higher inventories of work-in-progress.
5. Difficulties in production, planning and control: Due to large variety of products
and increased size of the plant, there are practical difficulties in bringing about proper
coordination among various areas (departments) and processes of production. The process
of production, planning and control becomes more complex and costly.
6. Increased inspection costs: Under this type of layout more supervisors are needed and
work is to be checked after every operation which makes the process of supervision
costlier.

3. FIXED POSITION LAYOUT

This is also called the project type of layout. In this type of layout, the material, or
major components remain in a fixed location and tools, machinery, men and other materials
are brought to this location. This type of layout is suitable when one or a few pieces of
identical heavy products are to be manufactured and when the assembly consists of large
number of heavy parts, the cost of transportation of these parts is very high.
For example, building ships, manufacture of aircrafts, heavy pressure vessels and
automobile industries, etc,.

Advantages:
1. Economies in transformation: As the work is carried at one place and material is not
taken from one place to another, this leads to savings in transformation costs.
2. Different jobs with same layout: Different projects can be undertaken with the help of
same layout.
3. Production in accordance with specifications: The jobs can be performed in accordance
with the specifications given by the customers.
4. Scope for flexibility: It provides maximum flexibility for various changes in
production processes and designs of the products.
Disadvantages:
1. Immobility of material: As material is fixed at one place, this leads to certain
difficulties in arranging specialised workers, machines and equipment for the job.
2. Large investment: This method is time consuming and costlier as compared to first
two methods.
 3. Unsuitable for small products: This method is not suitable for producing and assembling
small products in large quantities. In actual practice, it has been observed that a judicious
combination of three types’ viz., product, process and stationary material layout is
undertaken by different organisations.

4. COMBINATION LAYOUT:
A combination of process and product layouts combines the advantages of both
types of layouts. A combination layout is possible where an item is being made in
different types and sizes. Here machinery is arranged in a process layout but the process
grouping is then arranged in a sequence to manufacture various types and sizes of products. It
is to be noted that the sequence of operations remains same with the variety of products and
sizes. The below figure shows a combination type of layout:

5. HYBRID OR CELLULAR LAYOUT:

It is also called Multi-Objective Layout. A grouping of equipment for performing
a sequence of operations on family of similar components or products has become all the
important. Group technology (GT) is the analysis and comparisons of items to group them
into families with similar characteristics. GT can be used to develop a hybrid between
pure process layout and pure flow line (product) layout. This technique is very useful for
companies that produce variety of parts in small batches to enable them to take advantage
and economics of flow line layout.
The application of group technology involves two basic steps; first step is to
determinecomponent families or groups. The second step in applying group technology is to
arrange the plants equipment used to process a particular family of components. This
represents small plants within the plants.
Advantages:
1. The group technology reduces production planning time for jobs.
2. It reduces the set-up time.
3. It can increase component standardization and rationalization.
4. Effective machine operation and productivity.
5. It can decrease the Paper work and overall production time.
6. Work-in-progress and work movement.
7. It can reduce the Overall cost.
Disadvantages:
1. This type of layout may not be feasible for all situations.
2. If the product mix is completely dissimilar, then we may not have meaningful cell
formation.