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Management Thought
What is Management?
The concept of management has acquired special significance in the present competitive
and complex business world. Efficient and purposeful management is absolutely essential
for the survival of a business unit. Management concept is comprehensive and covers all
aspects of business. In simple words, management means utilizing available resources in
the best possible manner and also for achieving well defined objectives. It is a distinct
and dynamic process involving use of different resources for achieving well defined
objectives. The resources are: men, money, materials, machines, methods and markets.
These are the six basic inputs in management process (six M's of management) and the
output is in the form of achievement of objectives. It is the end result of inputs and is
available through efficient management process.
The term 'management' is used extensively in business. It is the core or life giving
element in business. We expect that a business unit should be managed efficiently. This is
precisely what is done in management. Management is essential for the conduct of
business activity in an orderly manner. It is a vital function concerned with all aspects of
working of an enterprise.
Definitions of Management
1. According to George R. Terry, "Management is a distinct process consisting of
planning, organizing, actuating and controlling, performed to determine and
accomplish stated objectives by the use of human beings and other resources".
2. According to Henry Fayol, "To manage is to forecast and to plan, to organize, to
command, to coordinate and to control".
3. According to Peter Drucker, "Management is a multi-purpose organ that manages
business and manages managers and manages workers and work".
4. According to Harold Koontz, "Management is the art of getting things done
through and with people in formally organized groups”.
5. According to Mary Parker Fallett, "Management is the art of getting things done
through people".
Characteristics of Management
1. Management is a managerial process: Management is a process and not merely
a body of individuals. Those who perform this process are called managers. The
managers exercise leadership by assuming authority and direct others to act
within the organization. Management process involves planning, organizing,
directing and unifying human efforts for the accomplishment of given tasks.
2. Management is a social process- Management takes place through people. The
importance of human factor in management cannot be ignored. A manager's job is
to get the things done with the support and cooperation of subordinates. It is this
human element which gives management its special character.
3. Management is action-based: Management is always for achieving certain
objectives in terms of sales, profit, etc. It is a result-oriented concept and not
merely an abstract philosophy. It gives importance to concrete performance
through suitable actions. It is an action based activity.
4. Management involves achieving results through the efforts of others:
Management is the art of getting the things done through others. Managers are
expected to guide and motivate subordinates and get the expected performance
from them. Management acts as an activating factor.
5. Management is a group activity: Management is not an isolated individual
activity but it is a collective activity or an activity of a group. It aims at using
group efforts for achieving objectives. Managers manage the groups and
coordinate the activities of groups functioning in an organization.
6. Management is intangible: Management is not directly visible but its presence is
noticed in the form of concrete results. Management is intangible. It is like
invisible spirit, which guides and motivates people working in a business unit.
Management is like government, which functions but is not visible in physical
form.
7. Management is aided, not replaced by computers: The computer is an
extremely powerful tool of management. It helps a manager to widen his vision.
The computer supplies ocean of information for important decision-making. The
computer has unbelievable data processing and feedback facilities. This has
enabled the manager to conduct quick analysis towards making correct decisions.
A computer supports manager in his managerial work. However, it cannot replace
managers in business. They were required in the past, at present and also in
future. Their existence is absolutely essential in the management process.
8. Management is all pervasive: Management is comprehensive and covers all
departments, activities and employees. Managers operate at different levels but
their functions are identical. This indicates that management is a universal and all
pervasive process.
9. Management is an art, science as well as a profession: Management is an art
because certain skills, essential for good management, are unique to individuals.
Management is a science because it has an organized body of knowledge.
Management is also a profession because it is based on advanced and cultivated
knowledge.
10. Management aims at coordination of activities: Coordination is the essence of
management. It gives one clear direction to the whole organization and brings
unity and harmony in the whole business unit. For such coordination, effective
communication at all levels is essential.
11. Management is innovative: Management techniques are dynamic and
innovative. They need to be adjusted as per the requirements of the situations.
Another manager need not repeat the decisions of one manager. Similarly, a
manager has to change his decisions under different situations.
12. Management has different operational levels: Every Organization needs
managers for managing business activities. The manager's job is basically the
same at all levels. The managers at the higher levels have more important duties
while managers at the lower levels have to perform routine functions i.e. duties.
13. Management is different from ownership: Management is concerned with the
management of business activities. Managers are not the owners but they manage
the business on behalf of the owners. Separation of ownership and management is
a special feature of modem business organization.
14. Management has vast scope: The scope of management is quite comprehensive.
It covers all aspects of business. The principles of management guide managers
while managing various business activities.
15. Management is dynamic: Business is influenced by changes in economic, social,
political technological and human resource. Management adjusts itself to the
changing atmosphere making suitable forecasts and changes in the policies.
Hence, management is treated as a dynamic activity.
16. Management aims at achieving predetermined objectives: Management is a
meaningful activity. All organizations are essentially groups of individuals
formed for achieving common objectives. An Organization exists for the
attainment of specific objectives.
Need of Management
1. Direction, coordination and control of group efforts: In business, many
persons work together. They need proper direction and guidance for raising their
efficiency. In the absence of guidance, people will work as per their desire and
the, orderly working of enterprise will not be possible. Management is needed for
planning business activities, for guiding employees in the right direction and
finally for coordinating their efforts for achieving best/most favorable results.
2. Orderly achievement of business objectives: Efficient management is needed in
order to achieve the objectives of business activity in an orderly and quick
manner.
3. Performance of basic managerial functions: Planning, Organizing, Co-
ordinating and Controlling are the basic functions of management. Management is
needed as these functions are performed through the management process.
4. Effective communication at all levels: Management is needed for effective
communication within and outside the Organization.
5. Motivation of employees: Management is needed for motivating employees and
also for coordinating their efforts so as to achieve business objectives quickly.
6. Success and stability of business enterprise: Efficient management is needed
for success, stability and prosperity of a business enterprise.
Modem business is highly competitive and needs efficient and capable management for
survival and growth. Management is needed as it occupies a unique position in the
smooth functioning of a business unit. This suggests the need of efficient management of
business enterprises. Profitable/successful business may not he possible without efficient
management. In this sense, "No management, no business" is true. Survival of a business
unit in the present competitive world is possible only through
efficient and competent management.
The term management is explained in different ways. For example, it is said that
management is what management does. Here, management is explained with reference to
its basic functions which include planning, organizing, coordinating and controlling.
Similarly, management is described as a process which involves various elements.
Management process is a continuous one and is run by the managers functioning at
different levels. Management is now recognized as a distinct process in which managers
plan, organize, lead, motivate and control human efforts in order to achieve well defined
goals. In fact, process means a series of activities/operations undertaken/conducted for
achieving a specific objective. Process is a systematic way of doing things. For example,
in a factory there is a production process. Similarly, in the management process,
resources and human efforts are used in an orderly manner for achieving specific
objectives. The management process suggests functions to be performed by the
managers.
Functions of Management
a. Planning
b. Organizing
c. Directing and
d. Controlling.
We may add some more elements in the management process. Such elements are:-
i. Motivating
ii. Co-coordinating
iii. Staffing and
iv. Communicating.
The elements in the management process are actually the basic functions of management
these functions constitute the management process in practice. Management process is in
fact, management in practice. This process suggests what a manager is supposed to, do or
the basic functions that he has to perform while managing the job assigned to him.
Luther Gullic gave a new formula to suggest the elements of Management Process i.e.
basic functions of management. According to him, management process may be indicated
by the word "PODSCORB”. Here, ‘P' states for 'planning'. "O" for 'organizing', "D" for
'directing', "S" for 'Staffing', "CO" for 'Coordinating, "R" for 'Reporting' and "B" for
'Budgeting'. Gullic coined the word "PODSCORB" to suggest seven functions of
management.
The following figures show the management process and the elements involved:
Importance of Management
1. Optimum utilization of resources: Management facilitates optimum utilization
of available human and physical resources, which leads to progress and prosperity
of a business enterprise. Even wastages of all types are eliminated or minimized.
2. Competitive strength: Management develops competitive strength in an
enterprise. This enables an enterprise to develop and expand its assets and profits.
3. Cordial industrial relation: Management develops cordial industrial relations,
ensures better life and welfare to employees and raises their morale through
suitable incentives.
4. Motivation of employees: It motivates employees to take more interest and
initiatives in the work assigned and contribute for raising productivity and
profitability of the enterprise.
5. Introduction of new techniques: Management facilitates the introduction of new
machines and new methods in the conduct of business activities. It also brings
useful technological developments and innovations in the management of
business activities.
6. Effective management: Society gets the benefits of efficient management in
terms of industrial development, justice to different social groups, consumer
satisfaction and welfare and proper discharge of social responsibilities.
7. Expansion of business: Expansion, growth and diversification of a business unit
are possible through efficient management.
8. Brings stability and prosperity: Efficient management brings success, stability
and prosperity to a business enterprise through cooperation among employees.
9. Develops team spirit: Management develops team spirit and raises overall
efficiency of a business enterprise.
10. Ensures effective use of managers: Management ensures effective use of
managers so that the benefits of their experience, skills and maturity are available
to the enterprise.
11. Ensures smooth functioning: Management ensures smooth, orderly and
continues functioning of an enterprise over a long period. It also raises the
efficiency, productivity and profitability of an enterprise.
12. Reduces turnover and absenteeism: Efficient management reduces labor
turnover and absenteeism and ensures continuity in the business activities and
operations.
13. Creates sound organization: A dynamic and progressive management
guarantees development of sound Organization, which can face any situation -
favorable or unfavorable with ease and confidence.
The importance of management is not fully realized in many developing countries. The
economic progress of western countries is not merely due to abundant material resources
but because they are efficiently managed and utilized. In other countries, resources are
not utilized fully and properly due to lack of managerial skills. This suggests that
management is a key factor in the working of business enterprises. There is no substitute
to efficient management. An inefficiently managed business enterprise has no place in the
present complex and competitive business world groups.
In the next couple of decades, management theory and practice is bound to change in
order to meet the complex and ever changing environmental variables. The phenomenal
growth in multinational and transnational operations, fast changing technology,
increasing complexity of decision making, dynamic social and economic environment,
globalization of business and elastic project organizations and task groups will
significantly influence the future managerial world and managerial tasks. There are
successful business and management leaders publishing their memories and offering their
experience to the world. There is great increase in the number of business schools.
Management education is bank ably providing expertise to nonage the business and this
trend is likely to continue. Career paths are likely to be based on expertise alone.
Managers will be under pressure to develop this expertise and apply it in an ever-
widening range of situations rather than their ability to survive the bureaucratic jungle.
They will have to combine their personal, professional and operational qualities and
capacities to the satisfaction of employers and the society. The future must be considered
as an opportunity and not a problem.
Some forces/factors that are likely to have an impact upon management in future are as
mentioned below:-
The recorded use of organized management dates back to 5000 B.C. when the
agricultural revolution had taken place. These agricultural civilizations existed in India,
China and Egypt According to Peter Drucker these irrigation civilizations "were not only
one of the great ages of technology, but it represented also mankind’s most productive
age of social and political innovation". As the villages grew and civilizations evolved, the
managers too grew and evolved. They became the priests, the kings, the ministers holding
power and wealth in the society. Written documents found in the Sumerian civilization
which flourished some 5000 years ago, contains evidence of management control
practices.
As early as 4000 B.C., the Egyptians were aware of the importance of planning,
organizing and controlling. The huge pyramids of Egypt stand a mute testimony to the
managerial and organizational abilities of the ancient Egyptian civilization. One pyramid
required 1,00,000 men working for 20 years, covering 13 acres, using 2.3 million blocks,
each weighing an average of 2.5 tons. To produce such a monument required proper
planning, work allocation, organizing, directing, controlling and decision making.
In the Grecian civilization we find the origin of the Scientific Method in the famous
Socratic discourses. The Romans who built a vast empire extending from Britain in the
west to Syria in the east ruled it for many years only because of their superior and
advanced managerial abilities.
In ancient India Kautilya wrote his Arthashastra in about 321 B.C. the major theme of
which was political, social and economic management of the State. The study of
administration of the cities of Mohenjodaro and Harappa of the ancient Aryans in 2000
B. C., Buddha's order and the Sangha in 530 B. C., provide evidence about the use of the
principles of management.
During the 13th and 14th centuries AD the large trading houses of Italy needed a means
of keeping records of their business transactions. To satisfy their needs Luca Pacioli
published a treatise in 1494 describing the Double Entry System of Book-keeping for the
first time.
This evolution of management thought can be studied in the following flum broad stages:
It is rather difficult to state the exact period of each stage in the evolution of management
thought. Experts, in general, agree with the following period for each thought/school.
a. Classical School/thought: 1900 to 1930.
b. Neo-classical School/thought: 1930 to 1960.
c. Modern School/thought: 1960 onwards.
F.W. Taylor is one of the founders (the other two are Max Weber and Henry Fayol) of
classical thought/classical theory of management. He suggested scientific approach to
management also called scientific management theory. F. W. Taylor (1856-1915) is
rightly treated as the father of scientific management. He suggested the principles of
scientific management. His concept of scientific management developed into a movement
and dominated the industrial management for several decades after him. His concepts and
principles were refined and popularized by several of his followers, notable among them
being Henry Gantt, The Gilberths and Emerson.
1. The development of 'One best way" of doing a job. This suggests the task of
finding out the best method for achieving the objectives of a given job. The
standards are decided scientifically for Jobs and incentive wages were paid for all
production above this standard. Here, job analysis and standardization of tools,
equipment, machinery, etc. are required.
2. Scientific selection of workers and their development through proper training.
3. Scientific approach by management. The management has to develop a true
science in all fields of work activity through scientific investigation and
experiments.
4. Close co-operation of managers and workers (labor management relations) for
better results and understandings.
5. Elimination of conflict between methods and men. The workers are likely to resist
to new methods. This can be avoided by providing them an opportunity to earn
more wages.
Features of Scientific Management
1. Scientific task setting: F. W. Taylor suggested the introduction of standard task
which every worker is expected to complete within one day (working hours) the
task is to be calculated through careful scientific investigation. For this, work
study (i.e. method study and work measurement study) is essential. Taylor
suggested time study, motion study, fatigue study and rate-setting for the
introduction of scientific task. Time study is the art of observing and recording the
time required to do each detailed element in an industrial operation. Motion study
refers to the study and analysis of the movements of an operator while performing
a job so that attempts can be made to remove useless/unwanted movements from
the process. Both the studies together help in determining the best method of
performing a job and the standard time allowed for it. This replaces the old rule-
of-thumb knowledge of the workers. The workload, the best method of
performing the same and the time within which it must be performed are
suggested in this feature of scientific management by Taylor.
2. Planning the task: For performing the task by every worker, Taylor suggested
the need of planning the production activity accurately. This idea of planning is
Taylor's gift to the science of management. Planning of task gives answers to the
following questions. What has to be done, how it is to be done, where the work
shall be done and when the work shall be done.
3. Scientific selection and training of workers: Taylor suggested the need of
scientific selection of workers for the plant/production activities. The procedure
of selection must be systematic so as to select the best and the most suitable
persons for different types of jobs. Correct placement of workers is equally
important He also suggested the need of training of workers so as to raise their
ability or efficiency. Training is to be integrated with the promotion policy. He
also suggested differential piece wage plan for compensation payment to workers.
He also suggested the importance of cordial relations between management and
workers.
4. Standardization: Taylor suggested the importance of standardization of tools and
equipment, materials, conditions of work and speed of machines. This brings co-
ordination in different activities and all workers will be able to perform the task
assigned easily. The workers will have satisfactory working conditions for work
due to such standardization.
5. Specialization: Taylor suggested specialization in the administrative and
organizational setup of the plant He suggested functional foremanship. Taylor
recommended eight functional foremen for different activities and functions. The
foremen suggested by him are like route clerk, instruction card clerk, speed boss
etc. Such specialization is useful for raising efficiency of the whole organization.
6. Mental revolution: The techniques suggested by F. W. Taylor in his scientific
management are different as compared to traditional techniques and methods.
Naturally, these techniques can be used only when workers supervisors and
managers accept them in theory and also in practice For this, Mental revolution on
their part is essential The success of scientific management rests basically on the
attitude of management and workers. They must give up their old ideas and
methods and must accept new scientific methods. For this, mental revolution on
the part of both is essential. Cooperation from workers and management for the
introduction of scientific management depends on this mental revolution.
The positive view of scientific management was described by Taylor as "Science, not
rule of thumb; Harmony, not discord; Co-operation, not individualism; maximum output
in place of restricted output. The development of each man to his greatest efficiency and
prosperity".
F.W. Taylor a rightly treated as father of scientific management. In fact, through his
concept of scientific management, Taylor actually developed a new science of
management which is applicable not only to management of industrial units but also to
the management of all other business units. He suggested certain techniques which can be
applied purposefully to all aspects of management of business activities. This is treated as
Taylor’s unique contribution to management thought.
Scientific management has wider economic and social significance. It has succeeded in
revolutionalising the very concept of management by offering a novel approach to the
managers in managing men, materials and methods. In spite of several benefits, Taylor's
scientific management concept has widely been criticized by employers, workers, trade
unions and also by theorists. They oppose Taylor's scientific management on different
grounds. The points of criticism we as explained below:
Henry Fayol (1841-1925) is rightly treated as the father of modern theory of general and
industrial management. The credit of suggesting the basic principles of management in an
orderly manner goes to Henry Fayol. After obtaining an engineering degree, Henry
Fayol, joined as chief executive in a coal mining company. He developed his
management principles and general management theory and published them in the form
of a book (in French) "General and Industrial Administration" in 1916. It was translated
into English in 1930. In due course of time, Henry Fayol came to be recognized as the
founder of modern management theory. His analysis of management process acts as the
foundation of the whole management theory and the present super-structure of
management has been built on it.
Henry Fayol suggested important qualities of managers and stressed the need for raising
such qualities. He developed fourteen principles of management out of his practical
experience. These principles are universal in character and are applicable to all types of
organizations. Each principle suggested by him has specific meaning and significance.
According to him, managers in all organizations need to follow these
principles/guidelines while managing the affairs of their business units. The management
principles suggested by him in 1916 are universally accepted by modern authorities on
management and are treated as valid even to this day. This is because these principles are
practical in nature and also result-oriented. In fact, these principles are the outcome of his
long experience as a practicing manager. These basic principals are useful for effective
management of business activities. They are related to the basic components of
management process such as planning, organizing, staffing, leading, coordinating and
controlling. He incorporated these principles in the management theory suggested by
him. The principles of management suggested by him are useful not only in
business/industrial enterprises but also in other organizations such as colleges, hospitals,
charitable institutions and government departments. Due to his contribution to
management theory and principles, Henry Fayol is rightly treated as the Father of Modern
Management Thought. Fayol is the first management thinker who provided the
conceptual framework of the functions of management in his book “General and
Industrial Management. The functions of management according to Fayol are,
1. Planning
2. Organizing
3. Staffing
4. Commanding
5. Coordinating
6. Controlling
The fourteen principles of management suggested by him are related these basic
functions of management process and are universally accepted. Fayol has given adequate
details of every principle suggested by him. He also made them easily acceptable by
others. According to Henry Fayol, managers should be flexible in the application of these
principles.
The fourteen principles of management suggested by him are related these basic
functions of management process and are universally accepted. Fayol has given adequate
details of every principle suggested by him. He also made them easily acceptable by
others. According to Henry Fayol, managers should be flexible in the application of these
principles.
Fayol divided general and industrial management into following six groups:-
1. Division of work,
2. Authority and responsibility,
3. Discipline,
4. Unity of command,
5. Unity of direction,
6. Subordination of personal interest to organizational interests,
7. Remuneration,
8. Centralization,
9. Scalar chain,
10. Order,
11. Equity,
12. Stability of tenure,
13. Span of co-operation and
14. Initiative
Henry Fayol’s contribution to management theory is certainly remarkable. He gave
overall concepts of general management and suggested the basic functions of
management. He recommended the selection and training of workers and managers. He
also advocated the use of organization charts. He suggested certain qualities of manager’s
winch include physical, mental, moral, educational technical and experience. Fayol’s
theory of management was the first complete theory of management as we understand
today. It incorporated proven principles, elements, procedures and techniques based on
his practical experience.
Mayo discussed the factors that cause a change in human behavior. He concluded that the
cause of increase in the productivity of the workers is not a single factor like rest pauses
or changing working hours but a combination these and several other factors such as less
restrictive supervision, giving autonomy to workers, allowing the formation of small
cohesive groups of workers and so on. Today, as a result of the efforts of Mayo and his
associates, the managers in different organizations recognize that workers' performance is
related to psychological, sociological and physical factors. Thus, Hawthorne Study was
an important landmark to study the behavior of worker and his relationship to the job, his
fellow workers and the organization. It proved that informal work groups and the
opportunity to be heard and participate in decision-making have an important impact on
the productivity of the workers.
Mayo is one leading management thinker and also a leading advocate of neo-classical
theory. The concept of participative management style was suggested in the neo-classical
theory. The human relations approach suggested by Mayo has special importance in the
present period. He rightly suggested the importance of democratic leadership and
participative management style for running business activities efficiently. The role of
people (workers) is clearly suggested by Mayo. He rightly suggested that management is
not a mechanical process but a study of people involved in the production activities.
Management will get positive response from its employees when their actions, sentiments
and expectations are given due attention.
Mayo is best known for his work on the project commonly referred to as the Hawthorne
Studies. They were conducted in the Hawthorne plant of Western Electric Company in
the USA between 1927 and 1932. It is said that Mayo applied psychological approach to
management for the first time. He used clinical and diagnostic methods. Mayo has drawn
various conclusions from these studies. The Hawthorne Studies have had a shattering
impact on management thinking. Mayo is regarded as revolutionary thinker because of
his contribution to the management thought in the recent period. The credit of
humanization of management with a view to achieve common interest of management
and workers goes to Elton Mayo.
Hawthorne Studies are primarily responsible for consideration of non financial incentives
in improving productivity. Mayo pointed out that the organization is a social system and
informal organization is a reality. The knowledge of human nature can solve many
problems of management. He emphasized that successful human relations approach can
easily create harmony in an organization, higher employee satisfaction and great
operational efficiency. Central to this approach was an increased understanding of the
individual worker with emphasis on motivation, needs, interpersonal relationships and
group dynamics Mayo believed that a factory is not only a workplace but also a social
environment in which the employees interact with each other. This gave rise to the
concept of the 'social man' whose interaction with others would determine the quality and
quantity of the work produced.
The features of human relations school (noted above) are important as they were
introduced in the management theory for the first time. At present, these features are well
recognized but were unique when suggested by 1930.
The human relations movement is based on the experiments conducted in the Hawthorne
Plant in Cicero (USA). The major conclusion (of Hawthorne Experiments) was that the
workers respond to their work situation as a whole and their attitudes and social relations
constitute an important part of the total situation. In addition, the attitudes of workers and
their relations with each other and with the management would play a role in forming
their attitudes towards the total work situation. Elton Mayo conducted a series of
pioneering studies at the Hawthorne plant they proved to be of much use in associating
employees with the management for achieving organizational objectives.
Both the approaches (of Taylor and Mayo) are supplementary in the present management
thought. At present, stress is on scientific management principles as well as on human
approach to management. Efforts are being made to create favorable organization climate
for achieving organizational goals. Taylor's approach is comparatively old and was
popular in the early decades of 19th century the human relations approach (suggested by
Elton Mayo) is comparatively new and got popularity by 1930s.
From 1960s onwards, the management theorists and practitioners are referring
management concepts in systems phraseology. A system means to bring together or to
combine. When viewed from the systems angle, the organization is seen as operating in
an open system constantly interacting with its environment. It receives external inputs in
a continuous manner and transforms them into outputs. Suitable adjustments and
rectifications are also made as per the feedback available. An organization which is not
adaptive and responsive to its environment will not survive or grow. An organization will
have individuals, groups, formal structures, goals and resources. A manager has to see
that all these parts work in co-ordination in order to achieve organizational goals.
Absence of co-ordination will hamper the performance of the organization. The systems
approach suggests that the total performance of the organization will be effective only
when the different systems/units/activities are coordinated and integrated in an efficient
manner. For example, efficient manufacturing division needs the support of efficient
marketing division for achieving organizational objectives. If not, the total performance
of the organization will be jeopardized. The managers, as decision-making entities, have
to regulate the sub-systems of the Organization. They should not work in isolation but
operate in co-ordination with others.
This will avoid shortfalls in different components and bring success to the organization.
The emphasis of systems approach is on interrelatedness of the parts of an organization.
The introduction of integrated approach is treated as major contribution of systems
theory.
The systems approach developed only after 1950 and is the recent contribution to
management thought. It stresses the interrelatedness and interdependence of all activities
within an organization. The systems theory considers organization as an open, adaptive
system which has to adjust changes in its environment. It defines organization as a
structured process in which individuals interact for attaining objectives.
The systems approach rightly points out the role of 'synergy' in management. Each
subsystem derives strength by its association and interaction with other sub-systems. As a
result, the overall outcome is more than the sum total of individual contributions. The
other contribution of systems theory is its treatment of organization as an open system.
The Organization exhibits a 'holistic' character.
A common deficiency of the classical, behavioral and quantitative schools is that they
have stress one aspect of the organization at the cost of others. The classical approach
emphasizes on 'task' while behavioral approach emphasizes on 'people’. The stress of
quantitative approach is on 'mathematical decision-making’. However, it is difficult to
understand precisely which aspect is most useful and appropriate in a given practical
situation. This brings the need to develop me broad conceptual framework that can help a
manager diagnose a problem and decide which tool or tools will best do the job. The
systems approach as well as contingency approach provides one integrated approach to
management problems. The contingency/situational approach is the second approach (the
first being the systems approach) which attempts to integrate the various schools of
management thought in an orderly manner. The contingency management approach is
similar to known leadership theory called situational leadership theory. The contingency
approach is applicable to leadership as well as to business management. This situational
management approach is relatively a new approach to management and is an extension of
systems approach. The basic theme of contingency approach is that organizations have to
deal with different situations in different ways. There is no single best way of managing
applicable to all situations. In order to be effective, the internal functioning of the
organization must be consistent with the needs and demands of the external environment.
In other words internal organization should have the capacity to face any type of external
situation with confidence.
As per the contingency approach, the task of managers is to try to identify which
technique or method will be most suitable for achieving the management objectives under
the available situation. Managers have to develop a sort of situational sensitivity and
practical selectivity in order to deal with their managerial problems as they develop from
time to time.
The contingency approach is the outcome of the research studies conducted by Tom
Burns and G. W. Stalker, James Thompson and others.
Contingency theories do not give special importance to any specific theory. It suggests
that there is no one best way to management. In the Contingency approach, what is best
for a particular business unit or organization or under the available situation is given
special attention. Each situation (before the management) is different and calls for a
Contingency / situational approach. A manager has to study the complexity under each
situation. He has to adjust his policies/decisions as per his awareness. He has to decide
what is best under the available total situation and act accordingly. He (manager) has to
identify the technique which will be most effective for achieving organization objectives
under particular situation/ circumstances and act accordingly. This is the practical aspect
of contingency approach. What constitutes best/effective management varies with the
organizations internal and external environment and the make-up of the organizational
sub-systems. The best management pattern depends on a number of interrelated internal
and external variable factors around the specific organization/business unit.
The contingency approach falls somewhere in between the classical theory and systems
theory. It provides a synthesis that brings together the best of aft segments of what
Koontz has termed "management theory jungle". Contingency approach is practical
progressive and action oriented. It considers each organization as unique and gives
special attention to situation around it. Finally, it integrates theory with practice in a
systems framework. The other theories (classical or systems) are not rejected in the,
contingency approach. However, they are viewed as incomplete, vague and unsuitable to
all organizations and situations.
Question Bank
Planning is the primary function of management and occupies the first position in the
management process. It is the starting point of the whole management process as other
management functions are related to planning function. Planning, in simple words, means
to decide the objectives clearly and to prepare a plan. Thereafter to take suitable steps for
the execution of the plan. Planning function is performed by managers at all levels. It is
deciding the objective to be achieved and taking suitable follow-up steps for achieving
the same.
Planning bridges the gap from where we are to where we want to go. In the absence of
planning, events are left to chance. A plan is to-day's projection for tomorrow's activity.
2. Definitions of Planning
3. Need of Planning
The need of planning is universally accepted in the business as well as in other aspects of
life. The following points justify the need of business planning/planning in business:
5. Advantages of Planning
1. Facilitates quick achievement of objectives: Planning facilitates quick
achievement of business objectives. In the planning process, the objectives to be
achieved are clearly decided / finalized and plans are prepared and executed for
achieving such well defined objectives. Planning ensures achievement of
objectives in an orderly and quick manner.
2. Brings unity of purpose and direction: Planning brings unity of purpose and
direction before the entire organization as it is for achieving certain well defined
goals. Planning diverts all resources in one direction for achieving well defined
objectives.
3. Ensures full utilization of resources: Planning ensures effective/maximum
utilization of available human and material resources. It eliminates wastages of all
kinds (of material resources and human efforts) and this ensures fuller utilization
of available resources.
4. Avoids inconsistency in efforts: Planning avoids inconsistency in efforts and
also avoids possible frictions and duplications. It ensures economy in business
operations.
5. Raises competitive capacity/strength: Planning raises competitive potentialities
of a business unit. It enables a business unit to stand with confidence in a
competitive market. It keeps ready solutions for possible problems and enables a
business unit to function with confidence.
6. Promotes managerial efficiency: Planning promotes managerial efficiency. It
covers all managerial functions and helps management to execute future
programmes in a systematic manner. It makes managerial direction and control
effective.
7. Avoids hasty decisions and actions: Due to planning, hasty decisions and
haphazard actions by managers are avoided. It also encourages systematic
thinking by the managers. Planning facilitates effective delegation of authority,
removes communication gaps and thereby raises overall efficiency. It even
encourages innovative thinking among managers.
8. Ensures effective control on the Organization: Planning ensures effective
control on the whole organization. It fixes targets in clear terms and draws plans
and programmes for achieving them. This facilitates effective control on the
functioning of the business unit.
9. Acts as an insurance against future uncertainties: Planning acts as an
insurance against future uncertainties. It takes care of all business uncertainties. In
fact, in planning, future problems and situations are studied in advance and
alternative solutions are kept ready. This enables management to face any type of
critical situation with ease and confidence.
10. Facilitates other managerial functions: Planning facilitates other managerial
functions. It is the basic managerial function and other managerial functions such
as organizing, etc. move as per the plans prepared. It acts as a motivating force
behind other managerial functions.
11. Improves motivation: Planning facilitates participation of managers and workers
in the normal functioning of an enterprise. It develops team spirit and raises
morale and motivation of employees. Workers know what is expected from them.
This ensures high degree of efficiency from them. Planning also provides training
to managers. It serves as a tool for manpower development in an Organization.
12.
1. Planning ensures survival, stability and progress of a business unit.
2. Ensures uniform decision-making.
3. Acts as a key to solve problems and challenges faced by a business unit.
4. Sets performance standards for functional departments.
5. Planning enables a business unit to adjust itself with ever changing
business environment.
6. Limitations of Planning
1. Time-consuming and costly: It is argued that planning is a lengthy process as it
involves collection of data, forecast, research and analysis. Similarly, planning is
essentially the job of highly paid experts. As a result, planning is a time-
consuming and costly activity. Only large firms can undertake planning due to
heavy cost and lengthy procedure involved in it.
2. Ineffective due to environmental changes: Business environment changes
frequently and plans are required to be adjusted as per the changes in the situation
through suitable modifications. However, such revision/modification creates a
number of problems. Such adjustments in the operational plan are always costly,
time-consuming.
3. Dangers of unreliable data: Planning needs accurate data from internal and
external sources. The quality of planning depends on such accurate feedback. If
the information supplied by various departments is unreliable, the planning
process will be adversely affected. Planning based on incomplete information
may prove to be even dangerous. In brief, plans based on unreliable data are not
useful /effective. Securing reliable information is always difficult and this brings
deficiencies in the entire planning process.
4. Encroachment on individual freedom and initiative: Planning is a centralized
process. At the lower levels, plans are to be executed as per the directives issued.
This affects individual freedom and initiative at the lower levels. Employees at
the lower levels act as instruments for the execution of plan prepared by the top
level managers. People are asked to become cogs in the machine with little scope
for initiative or independent thinking.
5. Delays actions: Planning is a lengthy process. As a result, the actions to be taken
for execution are delayed. Planning is not useful when quick decisions and actions
are required.
6. Unsuitable to small firms: Small firms prefer to function without long term
comprehensive planning as they find planning rather costly and time-consuming.
They prefer to face the situations as they come. Similarly, quick decisions and
prompt actions are necessary in the case of certain business activities. Here, long
term planning is not suitable.
7. Limited practical value: It is argued that planning is too theoretical and has
limited practical utility. Planning takes long time for preparation and the situation
changes when such plans are ready for execution. Planning for example, is not
suitable in the case of speculative business. It is also not useful for taking quick
benefits of business opportunities. In brief, planning has limited practical value.
8. No guarantee of expected results: Planning is for achieving certain well defined
objectives. However, there is no guarantee that the objectives will be achieved
within the specific time limit by using planning as a tool. Actual performance may
not be as per the expectation due to various reasons. Thus planning has an
element of uncertainty. Planning leads to probable results and not the expected
results. It gives benefits but may not be exactly as per the expectation. Thus, there
is no guarantee that planning will give 100 per cent positive/expected results.
9. Generates frustration: At the lower levels, plans are imposed on the employees.
No consideration is given to their difficulties, views and opinions. The targets
may be too ambitious and the employees may not be able to achieve them in spite
of best efforts. This leads to frustration among employees at lower levels.
10. Involves huge paper work: Planning involves huge paper work in the
preparation of master plan and departmental plans.
11. Danger of overdoing: Sometimes, planners overload the work. Elaborate reports
are prepared without practical utility.
The advantages of planning are more important/significant while its limitations are few
and also not of serious nature. Moreover, these limitations can be minimized. The
practical utility of planning is universally accepted. It is not fair to give up the concept of
planning due to certain limitations. The better alternative is to make it more effective,
purposeful and result oriented.
7. Steps in Planning Process
Planning is a lengthy process which moves gradually and step by step approach is usually
adopted. These steps are like stations in the journey of planning process. Usual steps in
the planning process are as briefly explained below:
1. Classifying the problems: The planning process starts with clear understanding
and classifying business problems faced by a business unit. Identification of
problems or opportunities by managers justifies the need for action. It is like the
diagnosis of the health problem of a patient by his doctor. Planners have to
understand the problems of the Organization first and, then, prepare a plan to deal
with the problems in the light of the prevailing business environment.
2. Determining the objectives: In this second stage in the planning process, the
planners decide the overall objectives to be achieved. Planning is always for
achieving certain well defined objectives and naturally objectives must be spelt
out precisely. Objectives act as pillars of the entire planning process. Business
objectives may be decided in terms of profit, sales, production or market
reputation. Objectives may be defined in quantitative or qualitative terms.
3. Collecting complete information and data: The planners have to collect
information relating to problems facing the business unit. Such information is
necessary and useful for analyzing the problems in depth and also for accuracy in
planning. Information can be collected from internal and external sources.
Reliable, updated and adequate data make planning process result-oriented.
4. Analyzing and classifying the information: At this stage, the information
collected is analyzed and interpreted systematically for drawing specific
conclusions. This facilitates purposeful use of information, while preparing
alternative plans. Irrelevant information can be discarded through such analysis.
5. Establishing planning premises: Planning premises are various assumptions and
predictions about the future business situation. Such premises act as background
for planning activities. The planning premises are expected to supply relevant
facts, information and data on the basis of which forecasts are prepared and future
trends are indicated. Planning premises reduce uncertainties in the planning
process. Planning premises are three in number viz., (a) Controllable premises, (b)
Semi-controllable premises, and (c) Uncontrollable premises.
6. Determining alternative plans: Here, the planners prepare and keep ready
alternative plans suitable for use under different situations. The best among the
available alternative plans is used for actual execution. The preparation of
alternative plans is essential as one plan is normally not adequate under all types
of situations. It is a type of stand-by arrangement useful for meeting any
emergency situation.
7. Selecting operating plan and preparing derivative plans: After study of the
business environment and the alternative plans available, the planners select the
best plan for actual execution. This decision is a delicate one and must be made
with proper care. After the selection of operating plan, the planners have to
prepare derivative plans. Such plans are related to different departments/activities
and constitute sub-sections of the operating plan. The division of overall plan into
derivative plans is necessary for effective execution.
8. Arranging timing and sequence of operations: Timing involves fixation of
starting and finishing time for each job or piece of work. Sequence of operations
ensures proper flow of work. This step in planning process is important as it
brings coordination in the activities of different departments. The timings and
sequence of operations must be communicated to concerned departments,
managers and staff for implementation of the plan.
9. Securing participation of employees: Planning needs willing participation of all
employees and departments. For this, information regarding the operative plan
should be given to employees well in advance. Here, the internal communication
system should be used extensively. For such participation, employees should be
associated with the planning process.
10. Follow-up of the proposed plan: The purpose of follow-up is to make periodical
review of the execution process. It is useful for understanding actual progress and
deficiencies in the process of execution of the plan. This also facilitates adoption
of suitable remedial measures as and when required.
The concept of MBO is closely connected with the concept of planning. The process of
planning implies the existence of objectives and is used as a tool/technique for achieving
the objectives. Modern managements are rightly described as 'Management by
Objectives' (MBO). This MBO concept was popularized by Peter Drucker. It suggests
that objectives should not be imposed on subordinates but should be decided collectively
by a concerned with the management. This gives popular support to them and the
achievement of such objectives becomes easy and quick.
MBO is an approach (to planning) that helps to overcome these barriers. MBO involves
the establishment of goals by managers and their subordinates acting together, specifying
responsibilities and assigning authority for achieving the goals and finally constant
monitoring of performance. The genesis of MBO is attributed to Peter Drucker who has
explained it in his book 'The Practice of Management'.
1. Goal setting: The first phase in the MBO process is to define the organizational
objectives. These are determined by the top management and usually in
consultation with other managers. Once these goals are established, they should
be made known to all the members. In setting objectives, it is necessary to
identify "Key-Result Areas' (KRA).
2. Manager-Subordinate involvement: After the organizational goals are defined,
the subordinates work with the managers to determine their individual goals. In
this way, everyone gets involved in the goal setting.
3. Matching goals and resources: Management must ensure that the subordinates
are provided with necessary tools and materials to achieve these goals. Allocation
of resources should also be done in consultation with the subordinates.
4. Implementation of plan: After objectives are established and resources are
allocated, the subordinates can implement the plan. If any guidance or
clarification is required, they can contact their superiors.
5. Review and appraisal of performance: This step involves periodic review of
progress between manager and the subordinates. Such reviews would determine if
the progress is satisfactory or the subordinate is facing some problems.
Performance appraisal at these reviews should be conducted, based on fair and
measurable standards.
1. Support from all: In order that MBO succeeds, it should get support and co-
operation from the management. MBO must be tailored to the executive's style of
managing. No MBO programme can succeed unless it is fully accepted by the
managers. The subordinates should also clearly understand that MBO is the policy
of the Organization and they have to offer cooperation to make it successful. It
should be a programme of all and not a programme imposed on them.
2. Acceptance of MBO programme by managers: In order to make MBO
programme successful, it is fundamentally important that the managers
themselves must mentally accept it as a good or promising programme. Such
acceptances will bring about deep involvement of managers. If manages are
forced to accept NIBO programme, their involvement will remain superfluous at
every stage. The employees will be at the receiving-end. They would mostly
accept the lines of action initiated by the managers.
3. Training of managers: Before the introduction of MBO programme, the
managers should be given adequate training in MBO philosophy. They must be in
a position to integrate the technique with the basic philosophy of the company. It
is but important to arrange practice sessions where performance objectives are
evaluated and deviations are checked. The managers and subordinates are taught
to set realistic goals, because they are going to be held responsible for the results.
4. Organizational commitment: MBO should not be used as a decorative piece. It
should be based on active support, involvement and commitment of managers.
MBO presents a challenging task to managers. They must shift their capabilities
from planning for work to planning for accomplishment of specific goals. Koontz
rightly observes, "An effective programme of managing by objective must be
woven into an entire pattern and style of managing. It cannot work as a separate
technique standing alone."
5. Allocation of adequate time and resources: A well-conceived MBO programme
requires three to five years of operation before it provides fruitful results.
Managers and subordinates should be so oriented that they do not look forward to
MBO for instant solutions. Proper time and resources should be allocated and
persons are properly trained in the philosophy of MBO.
6. Provision of uninterrupted information feedback: Superiors and subordinates
should have regular information available to them as to how well subordinate's
goal performance is progressing. Over and above, regular performance appraisal
sessions, counseling and encouragement to subordinates should be given.
Superiors who compliment and encourage subordinates with pay rise and
promotions provide enough motivation for peak performance.
Means and ends are linked together through decision-making. To decide means to come
to some definite conclusion for follow-up action. Decision is a choice from among a set
of alternatives. The word 'decision' is derived from the Latin words de ciso which means
'a cutting away or a cutting off or in a practical sense' to come to a conclusion. Decisions
are made to achieve goals through suitable follow-up actions. Decision-making is a
process by which a decision (course of action) is taken. Decision-making lies embedded
in the process of management.
1. Decision making implies choice: Decision making is choosing from among two
or more alternative courses of action. Thus, it is the process of selection of one
solution out of many available. For any business problem, alternative solutions
are available. Managers have to consider these alternatives and select the best one
for actual execution. Here, planners/ decision-makers have to consider the
business environment available and select the promising alternative plan to deal
with the business problem effectively. It is rightly said that "Decision-making is
fundamentally choosing between the alternatives". In decision-making, various
alternatives are to be considered critically and the best one is to be selected. Here,
the available business environment also needs careful consideration. The
alternative selected may be correct or may not be correct. This will be decided in
the future, as per the results available from the decision already taken. In short,
decision-making is fundamentally a process of choosing between the alternatives
(two or more) available. Moreover, in the decision-making process, information is
collected; alternative solutions are decided and considered critically in order to
find out the best solution among the available. Every problem can be solved by
different methods. These are the alternatives and a decision-maker has to select
one alternative which he considers as most appropriate. This clearly suggests that
decision-making is basically/fundamentally choosing between the alternatives.
The alternatives may be two or more. Out of such alternatives, the most suitable is
to be selected for actual use. The manager needs capacity to select the best
alternative. The benefits of correct decision-making will be available only when
the best alternative is selected for actual use.
2. Continuous activity/process: Decision-making is a continuous and dynamic
process. It pervades all organizational activity. Managers have to take decisions
on various policy and administrative matters. It is a never ending activity in
business management.
3. Mental/intellectual activity: Decision-making is a mental as well as intellectual
activity/process and requires knowledge, skills, experience and maturity on the
part of decision-maker. It is essentially a human activity.
4. Based on reliable information/feedback: Good decisions are always based on
reliable information. The quality of decision-making at all levels of the
Organization can be improved with the support of an effective and efficient
management information system (MIS).
5. Goal oriented process: Decision-making aims at providing a solution to a given
problem/ difficulty before a business enterprise. It is a goal-oriented process and
provides solutions to problems faced by a business unit.
6. Means and not the end: Decision-making is a means for solving a problem or for
achieving a target/objective and not the end in itself.
7. Relates to specific problem: Decision-making is not identical with problem
solving but it has its roots in a problem itself.
8. Time-consuming activity: Decision-making is a time-consuming activity as
various aspects need careful consideration before taking final decision. For
decision makers, various steps are required to be completed. This makes decision-
making a time consuming activity.
9. Needs effective communication: Decision-taken needs to be communicated to
all concerned parties for suitable follow-up actions. Decisions taken will remain
on paper if they are not communicated to concerned persons. Following actions
will not be possible in the absence of effective communication.
10. Pervasive process: Decision-making process is all pervasive. This means
managers working at all levels have to take decisions on matters within their
jurisdiction.
11. Responsible job: Decision-making is a responsible job as wrong decisions prove
to be too costly to the Organization. Decision-makers should be matured,
experienced, knowledgeable and rational in their approach. Decision-making need
not be treated as routing and casual activity. It is a delicate and responsible job.
The figure given below suggests the steps in the decision-making process:-
1. Identifying the Problem: Identification of the real problem before a business
enterprise is the first step in the process of decision-making. It is rightly said that
a problem well-defined is a problem half-solved. Information relevant to the
problem should be gathered so that critical analysis of the problem is possible.
This is how the problem can be diagnosed. Clear distinction should be made
between the problem and the symptoms which may cloud the real issue. In brief,
the manager should search the 'critical factor' at work. It is the point at which the
choice applies. Similarly, while diagnosing the real problem the manager should
consider causes and find out whether they are controllable or uncontrollable.
2. Analyzing the Problem: After defining the problem, the next step in the
decision-making process is to analyze the problem in depth. This is necessary to
classify the problem in order to know who must take the decision and who must
be informed about the decision taken. Here, the following four factors should be
kept in mind:
1. Futurity of the decision,
2. The scope of its impact,
3. Number of qualitative considerations involved, and
4. Uniqueness of the decision.
3. Collecting Relevant Data: After defining the problem and analyzing its nature,
the next step is to obtain the relevant information/ data about it. There is
information flood in the business world due to new developments in the field of
information technology. All available information should be utilized fully for
analysis of the problem. This brings clarity to all aspects of the problem.
4. Developing Alternative Solutions: After the problem has been defined,
diagnosed on the basis of relevant information, the manager has to determine
available alternative courses of action that could be used to solve the problem at
hand. Only realistic alternatives should be considered. It is equally important to
take into account time and cost constraints and psychological barriers that will
restrict that number of alternatives. If necessary, group participation techniques
may be used while developing alternative solutions as depending on one solution
is undesirable.
5. Selecting the Best Solution: After preparing alternative solutions, the next step in
the decision-making process is to select an alternative that seems to be most
rational for solving the problem. The alternative thus selected must be
communicated to those who are likely to be affected by it. Acceptance of the
decision by group members is always desirable and useful for its effective
implementation.
6. Converting Decision into Action: After the selection of the best decision, the
next step is to convert the selected decision into an effective action. Without such
action, the decision will remain merely a declaration of good intentions. Here, the
manager has to convert 'his decision into 'their decision' through his leadership.
For this, the subordinates should be taken in confidence and they should be
convinced about the correctness of the decision. Thereafter, the manager has to
take follow-up steps for the execution of decision taken.
7. Ensuring Feedback: Feedback is the last step in the decision-making process.
Here, the manager has to make built-in arrangements to ensure feedback for
continuously testing actual developments against the expectations. It is like
checking the effectiveness of follow-up measures. Feedback is possible in the
form of organized information, reports and personal observations. Feed back is
necessary to decide whether the decision already taken should be continued or be
modified in the light of changed conditions.
Every step in the decision-making process is important and needs proper consideration by
managers. This facilitates accurate decision-making. Even quantitative techniques such as
CPM, PERT/OR, linear programming, etc. are useful for accurate decision-making.
Decision-making is important as it facilitates entire management process. Management
activities are just not possible without decision-making as it is an integral aspect of
management process itself. However, the quality of decision-making should be always
superior as faulty/irrational decisions are always dangerous.
Various advantages of decision-making (already explained) are easily 'available when the
entire decision-making process is followed properly. Decisions are frequently needed in
the management process. However, such decisions should be appropriate, timely and
rational. Faulty and hasty decisions are wrong and even dangerous. This clearly suggests
that various advantages of decision-making are available only when scientific decisions
are taken by following the procedure of decision-making in an appropriate manner.
Rational decisions are the best decisions under the available circumstances. All decisions
should be rational as such decisions facilitate expansion of business and give more profit,
goodwill and prosperity to a business unit. Rationality and decision-making are closely
related concepts. Rationality principle is applicable to all types of decisions. All decisions
(business, economic, social etc.) should be fair and rational. They should serve as
examples over a long period. For such decisions, rational/scientific/balanced approach is
essential while making decisions. In the absence of such approach, decisions are likely to
be faulty and dangerous to the Organization and also to all concerned parties.
Rationality in decision-making is possible through human brain which has the ability to
learn, think, analyze and relate complex facts and variables while arriving at a decision.
A manager has to introduce rationality in his decision-making by using his skills,
experience, knowledge and mental abilities.
On some occasions, such rational and right decisions are not taken due to variety of
possible reasons. It is also possible that the decision taken may be rational when taken but
is treated as wrong/irrational/faulty because' the results available from the decision taken
are not as expected/positive/encouraging. Rational decisions may not be possible when
the approach of the decision-maker is casual and superficial. He may not be alert, careful
and cautious while taking the decisions or he might not have followed the decision-
making process in a scientific manner. In brief, all business decisions should be rational
as far as possible as such rational decisions offer many benefits/advantages. However,
rational decisions may not be taken on certain occasions. According to Herbert A. Simon,
human beings are not always rational in the decisional process.
The points noted above suggest why it is not possible to take rational and right decisions
on all occasions.
Responsibility
Responsibility indicates the duty assigned to a position. The person holding the position
has to perform the duty assigned. It is his responsibility. The term responsibility is often
referred to as an obligation to perform a particular task assigned to a subordinate. In an
organization, responsibility is the duty as per the guidelines issued.
Definitions of Responsibility
Characteristics of Responsibility
Authority
A manager will not be able to function efficiently without proper authority. Authority is
the genesis of organizational framework. It is an essential accompaniment of the job of
management. Without authority, a manager ceases to be a manager, because he cannot
get his policies carried out through others. Authority is one of the founding stones of
formal and informal organizations. An Organization cannot survive without authority. It
indicates the right and power of making decisions, giving orders and instructions to
subordinates. Authority is delegated from above but must be accepted from below i.e. by
the subordinates. In other words, authority flows downwards.
Definitions of Authority
According to Henri Fayol, "Authority is the right to give orders and the power to exact
obedience."
According to Mooney and Reily, "Authority is the principle at the root of Organization
and so important that it is impossible to conceive of an Organization at all unless some
person or persons are in a position to require action of others."
Accountability
Definition of Accountability
When authority is delegated to a subordinate, the person is accountable to the superior for
performance in relation to assigned duties. If the subordinate does a poor job, the superior
cannot evade the responsibility by stating that poor performance is the fault of the
subordinate. A superior is normally responsible for all actions of groups under his
supervision even if there are several layers down in the hierarchy. Simply stated,
accountability means that the subordinate should explain the factors responsible for non-
performance or lack of performance.
Delegation of authority is one vital organizational process. It is inevitable along with the
expansion and growth of a business enterprise. Delegation means assigning of certain
responsibilities along with the necessary authority by a superior to his subordinate
managers. Delegation does not mean surrender of authority by the higher level manager.
It only means transfer of certain responsibilities to subordinates and giving them the
necessary authority, which is necessary to discharge the responsibility properly.
Delegation is quite common in all aspects of life including business. Even in the college,
the principal delegates some of his authority to the vice-principal.
Delegation is not a process of abdication. The person who delegates does not divorce
himself from the responsibility and authority with which he is entrusted. He remains
accountable for the overall performance and also for the performance of his subordinates.
Delegation is needed when the volume of work to be done is in excess of an individual's
physical and mental capacity.
i. According to F.C. Moore, "Delegation means assigning work to the others and
giving them authority to do so."
ii. According to O. S. Miner, "Delegation takes place when one person gives
another the right to perform work on his behalf and in his name and the second
person accepts a corresponding duty or obligation to do that is required of him."
iii. According to Louis Allen, "Delegation is the dynamics of management, it is the
process a manager follows in dividing the work assigned to him so that he
performs that part which only he, because of his unique organizational placement,
can perform effectively, and so that he can get others to help him with what
remains."
1. To reduce the excessive burden on the superiors i.e., executives and managers
functioning at different levels.
2. To provide opportunities of growth and self development to junior executives.
3. To create a team of experienced and matured managers for the Organization. It
acts as a technique of management and human resource development.
4. To improve individual as well as overall efficiency of the Organization.
Process of Delegation of Authority ↓
Delegation process involves four distinct stages. The process of delegation moves
through these stages. The following figure shows the stages in the process of delegation
of authority.
Before delegating, the delegator has to decide precisely the duties which are to be
delegated to the subordinate or a group of subordinates. The authority is delegated
accordingly and the subordinate is told what is expected from him. The usual practice is
to list the functions to be performed by the subordinate. If necessary, targets to be
achieved by the subordinate are also spelt out. Subordinates may be assigned tasks either
in terms of activities or results. The manager (delegator) must communicate clearly his
expectations. Competent and responsible employees may be given general guidelines
about what needs to be accomplished. Their less competent and responsible counter-parts
need more specific guidelines. In brief, in the first stage of delegation process, duties are
assigned to the subordinate.
In the second stage of delegation process, the authority is granted by the delegator to his
subordinate (delegate). Authority must be delegated strictly to perform the assigned duty.
The performance of duties suffers serious setback when required authority is not
delegated along with the duty. In brief, the transfer of authority should be adequate
considering the duties assigned to the subordinate.
In this third stage of delegation process, the subordinate/delegate has to accept or reject
the task assigned to him in the first stage along with the authority given in the second
stage. If the delegates refuse, the delegator has to make fresh plan of delegation or may
consider some other subordinate who is capable and is willing to accept the assignment.
On the other hand, the process of delegation will move to the fourth and the last stage, if
the first delegates accept the assignment of work accompanying the authority.
The fourth stage in the, delegation of authority is the creation of obligation on the part of
the subordinate to perform duties assigned to him in a satisfactory manner by using the
authority given. When subordinate accepts a task and the authority is given, an
obligation is created. He has to perform the assigned task by using the authority granted
to him. A subordinate is also responsible/accountable for completing the assigned work.
He is held answerable to a superior for the satisfactory performance of that work
assigned. The delegator has to help his subordinate as and when necessary as he is
responsible to his superior/organization.
1. Relieves manager for more challenging jobs: Delegation makes it possible for the
managers to distribute their workload to others. Thus, managers are relieved of
routine work and they can concentrate on higher functions of management like
planning, organizing, controlling, etc.
2. Leads to motivation of subordinates: Subordinates are encouraged to give their
best at work when they have authority with responsibility. They take more
initiative and interest in the work and are also careful and cautious in their work.
Delegation leads to motivation of employees and manpower development.
3. Facilitates efficiency and quick actions: Delegation saves time enabling tile
subordinates to deal with the problems promptly. They can take the decisions
quickly within their authority. It is not necessary to go to the superiors for routine
matters. This raises the overall efficiency in an Organization and offers better
results in terms of production, turnover and profit.
4. Improves employee morale: Delegation raises the morale of subordinates as they
are given duties and supporting authority. They feel that they are responsible
employees. The attitude and outlook of subordinates towards work assigned
becomes more constructive.
5. Develops team spirit: Due to delegation, effective communication develops
between the superiors and subordinates. The subordinates are answerable to
superiors and the superiors are responsible for the performance of subordinates.
This brings better relations and team spirit among the superiors and subordinates
6. Maintains cordial relationships: The superiors trust subordinates and give them
necessary authority. The subordinates accept their accountability and this
develops cordial superior-subordinate relationships.
7. Facilitates management development: Delegation acts as a training ground for
management development. It gives opportunity to subordinates to learn, to grow
and to develop new qualities and skills. It builds up a reservoir of executives,
which can be used as and when required. Delegation creates managers and not
mere messengers.
The advantages of delegation will not be available easily and automatically. They will be
available only when the process of delegation moves smoothly. Problems may develop, if
the delegation is not introduced with proper planning and in proper spirit. For example,
the authority given to subordinate is inadequate or the subordinate is not competent to
discharge the responsibilities assigned or the superior fails to monitor the whole process
of delegation effectively. In all such cases, the delegation will be ineffective and the
expected advantages will not be available to the Organization and also to concerned
parties.
1. Too much dependence on the manager for decisions: Some subordinates avoid
responsibility even when the superior/manager is prepared to delegate authority.
They want the manager to tackle problems and take decisions. A subordinate who
is not confident about his performance/ability will certainly try to shirk
responsibility even though his superior is prepared to delegate functions and
authority.
2. Fear of criticism: Subordinates express unwillingness to accept delegated
authority because of the fear of criticism in the case of mistakes. They fear that
they may be criticized by others if they commit mistakes. Such subordinates have
the following feeling in their mind, "Why should I stick my neck out for my boss?"
3. Lack of information: A subordinate may hesitate to accept a new assignment,
when he knows that necessary information to perform the job is not likely to be
made available to him. He is reluctant to accept delegated functions and authority
as he feels that he will not be able to perform well due to inadequate information
available.
4. Absence of positive incentives: Positive incentives like recognition of work and
rewards go a long way in building up the morale of subordinates. In the absence
of such incentives in the form of recognition, appreciation or monetary benefit, a
subordinate may not be prepared to accept delegation of authority.
5. Absence of self-confidence: A subordinate may lack self-confidence about his
ability to take quick and correct decisions. He may not like to accept new
challenging functions as he lacks self-confidence. Thus, lack of self-confidence
on the part of subordinates is one obstacle which comes in the way of delegation
of authority.
6. Difficulty in decision-making: A subordinate may not have the skill and the
expertise to take quick and correct decisions. He prefers to go to his superior
(boss) and ask for his guidance or opinion. Such psychology acts as a cause for
non-acceptance of delegation. A subordinate avoids delegation due to such mental
tension or inferiority complex.
7. Poor superior-subordinate relations: Absence of cordial relations in between
the superior and the subordinates hampers the process of delegation of authority.
The attitude of the superior towards subordinate may not be friendly but hostile.
There may be undue interference in the work assigned to the subordinate. Even
the good work of subordinate may not be appreciated by the superior. Such
situation creates unfavorable attitude of subordinate towards delegation. He
avoids delegation as and when offered.
8. Undue interference by superior: A superior should not interfere in the duties
delegated to the subordinate. He may offer guidance as and when asked for. Some
superiors interfere in the work of his subordinate and try to control him often and
again. In the absence of legitimate freedom, the subordinate becomes uneasy and
prefers to remain away from the process of delegation.
9. Fear of being exposed: Some subordinates may have inferiority complex. They
feel that they have limited capacity to accept the challenges which are bound to
come out to delegation. They feel that their inability to deal with new problems
will be exposed due to delegation. This fear acts as an obstacle to delegation.
In simple words, organizing means arranging the ways and means for the execution of
business plan. It is the creation of administrative set-up for the execution of the plan. It
suggests the framework within which the management functions. The term organization
suggests a functional group working together for achieving common purposes/objectives.
Organization provides mechanism for integrated and co-operative action by two or more
persons with a view to implementing any plan. Organization facilitates efficient
administration, direction and control. It avoids wastage of raw materials and human
efforts. Every management has to establish its own organization structure for efficient
conduct of business activities
There are different structures which can be given to an organization. They include line,
functional and so on. An organization deals with a number of elements which defines the
relationships between the members of a group. It is concerned with the channels of
communication and lines of authority. It also defines the degree of authority and
responsibility of each person in the organization. In short, organization clarifies
relationships and provides a framework within which all managerial actions take place.
2. Definitions of Organization
3. Importance of Organization
4. Organization As A Structure
The term organization can be studied as a structure and also as a process. In a static
sense, organization is a structure. A group of people functions within this structure and
try to accomplish certain objectives. Organization is a structure for the conduct of
business activities efficiently. In the words of Kast and Rosenzweig, "structure is the
established pattern of relationships among the component parts of the organization" . In this sense,
Organization structure refers to the network of relationships among individuals and
positions in an Organization.
5. Organization Structure Suggests Its Framework
Just as human beings have skeletons that define their parameters likewise organizations
have structures that define their parameters. While preparing an architectural plan, an
architect considers different factors such as space, cost, time, special features and
resources. In the same way, a manager is expected to take into account factors such as
channels of communication, before designing Organization structure.
There are some principles which are common to all organizations that are established in a
classical form i.e. the form where there is hierarchy of authority and responsibility and it
flows downwards. The principles of Organization offer guidance for the creation of a
sound, efficient and effective Organization structure. In other words, these principles are
the sound criteria for efficient organizing. They ensure smooth and orderly working of a
business enterprise.
Principles of organizing are not given in a serial order by any authority on management.
Management thinkers (Henry Fayol, F. W. Taylor, U. L Urwick and others) have laid
down certain statements regarding organizing function of management. Such statements
are treated as principles of organization. Well accepted principles of organization
/organizing are as explained below.
1. Unity of Objectives: Objectives of the enterprise influence the Organization
structure and hence the objectives of the enterprise should first be decided clearly
and firmly. In addition, there should be unity among the objectives decided. This
gives clear direction to the whole Organization and it will be geared for the
achievement of such objectives. The Organization acts as a tool for achieving the
objectives. The objectives may be divided into departmental objectives and
organizational objectives. There should be unity of objectives as such unity gives
one clear direction to the whole Organization. In addition, objectives should be
made clear to all concerned persons so as to enable them to do their best to
achieve the objectives.
2. Division of Work and Specialization: Division of work leads to specialization. Every
department of an Organization should be given specialized functions. This will
raise the overall efficiency and quality of work of an Organization. At the same
time, specialization and departmentation should not have any adverse effect on
the total integrated system. Coordination must be established among the
departments and activities. Specialization is necessary for raising the efficiency of
the whole Organization structure. The functions given to each department should
be preferably only of one category. Employees should be assigned duties to
different departments as per their qualifications, qualities and so on.
3. Delegation of Authority: There should be proper delegation of authored in every
Organization, particularly in large organizations. The basic idea behind delegation
is to see that decision-making power is placed at a proper place. Delegation
should go to the lower levels of management. Every one should be given authority
which is adequate to accomplish the task assigned to him. Delegation is useful for
getting the things done through others. A successful manager normally does not
perform the jobs by himself. He delegates the authority and responsibility to his
subordinates. He also motivates his subordinates and see that they take initiative,
work efficiently and contribute for achieving organizational objectives.
4. Coordination: Organization involves division of work and departmentation. This
naturally suggests the need of proper coordination among the departments and
efforts of people working in an Organization. Due to coordination one clear-cut
direction is given to people/ departments and efforts will not be wasted or
misdirected. Coordination also brings integration in the basic functions of
management. The principle of coordination is important as it facilitates
achievement of overall objectives of a business Organization. It also brings unity
of action in the Organization. Coordination will not be available automatically.
For this, working relationships need to be established within the Organization.
5. Unity of Command: Unity of command principle suggests that each subordinate
should have only one superior whose command he has to obey. Dual
subordination is undesirable as it leads to confusion, disorder, uneasiness and
indiscipline. An employee should not have more than one boss to whom he has to
report and also function as per his orders and instructions. Reporting to more than
one boss leads to confusion.
6. Flexibility: According to the principle of flexibility, the Organization structure
should be flexible and not rigid. Such structure is adaptable to changing situations
and permits expansion or replacement without any serious dislocation and
disruption. There should be an in-built arrangement to facilitate growth and
expansion of an enterprise.
7. Simplicity: The Organization structure should be simple for clear understanding
of employees. The structure should be easy to manage. Internal communication
will be easy due to simplicity of Organization. The Organization structure should
be simple as far as possible. The levels of management should also be limited.
8. Span of Control: The span of control, as far as possible, should be small and fair.
This means a manager should not be asked to keep supervision on large number
of subordinates. The span of control should be narrow and manageable. It should
be properly balanced.
9. Scalar Principle (Chain of Command): The principle of chain of command
suggests that the line of authority from the chief executive to the first line of
superior should be clearly defined. The line of authority should be properly
defined so as to avoid any confusion as regards the line of authority. This
principle suggests that as far as possible, the chain of authority should be short
and should not be broken.
10. Exception Principle: The executives at the higher level are busy in important
matters and have limited time for the study of routine administrative matters. It is
not desirable to take routine matters to the top level managers frequently. Very
crucial and exceptionally complex problems should be referred to the top
executives and routine matters should be dealt with by the junior executives at the
lower levels. Moreover, time of top executives is saved. They can use their time
for dealing with more important and complex problems.
11. Authority and Responsibility: Authority acts as a powerful tool by which a
manager can achieve a desired objective. Authority of every manager should be
clearly defined. Moreover, it should be adequate to discharge the responsibilities
assigned. The superior should be held responsible for the acts of his subordinates.
He cannot run away from the responsibility simply by delegating authority to his
subordinates. In fact, the responsibility of the superior for the acts of his
subordinates is absolute.
12. Efficiency: The Organization structure should enable the enterprise to function
efficiently. This will enable the enterprise to accomplish its objectives quickly and
also at the lowest cost. For this, the structure introduced should be suitable to the
nature, size, activities etc. of the Organization. A suitable Organization structure
ensures full and purposeful utilization of available human and material resources
and ensures efficiency.
13. Proper Balance: Proper balance is necessary in different aspects of the
Organization. This means there should be reasonable balance in the size and
functions of departments, centralization and decentralization of the Organization,
span of control, chain of command and finally in between human and material
resources. This principle of balance suggests that the top management should see
that the vertical and horizontal dimensions of the Organization are fairly balanced.
14. Separation of line and staff functions: Line functions should be separated from
the staff functions even when they are supplementary in character. Line functions
are directly connected with operations while staff functions are auxiliary to the
line functions. These functions should be coordinated when necessary but
normally they should be kept separate.
Organization structure is defined as "The logical arrangement of task and the network of
relationships and roles among the various positions established to carry out the activities
necessary to achieve the predetermined objectives of business". Internal Organization
structure constitutes the arteries and veins through which the blood of work flows in the
body of Organization.
Internal Organization structures can be broadly classified into the following types/forms:
Line Organization (also called Military/Scalar Organization) is the oldest and the
simplest form of internal Organization structure. It was first developed by the Roman
army and later adopted by armies all over the world. Factory owners also used line
Organization structure in its purest form in the nineteenth century in England.
In the line Organization, the line of authority moves directly from the top level to the
lowest level in a step-by-step manner. It is straight and vertical. The top-level
management takes all major decisions and issues directions for actual execution. The
general manager, for example, issues order to various departmental managers. Thereafter,
the departmental manager issues instructions to works manager. The works manager will
issue instructions to foreman. In this manner, the orders and instructions will be issued to
the workers working at the lowest level. Thus authority moves downward and also step-
by-step. The responsibility, on the other hand, moves in the upward direction.
1. Heavy burden on line executives: The line executives are given too many duties
and responsibilities. Even the quality of the decisions of executives may suffer
due to heavy burden of duties and responsibilities.
2. Non-availability of services of experts: There is absence of skilled experts in
line organization. Expert assistance is not available promptly when needed by line
executives.
3. Favoritism: There is wide scope for favoritism and nepotism in the line
organization. Leadership of departmental executive is autocratic due to heavy
concentration of powers. He may favor some employees at the cost of others.
4. Too much dependence on limited executives: In the line organization, all
powers are concentrated in the hands of a few executives. Naturally, the success
and stability of the entire organization depends on their personal skill, initiative
and interest. Special difficulties arise when one executive is to be
transferred/replaced/promoted.
5. Rigidity: There is rigidity in the working of line organization.
6. Delays in communication, limited freedom to employees and unsuitability to
modern large business units are some more demerits of line Organization.
In the functional Organization structure, there will be separation of planning of work and
execution of the plan prepared. The basis of division is the function and naturally the
Organization structure created will be called "Functional Organization".
1. Time and Cost Clerk: He is concerned with preparing standard time for the
completion of certain piece of work and compiling the cost of that work.
2. Instruction Card Clerk: He lays down the exact method of doing the work. He
specifies the tools to be used for conducting the production and also gives other
instructions on the instruction cards prepared by him.
3. Route Clerk: The route clerk lays down the exact route through which each and
every piece of work should move through various stages till completion. He
decides the production schedule and the sequence of steps by which the
production process is to move.
4. Shop Disciplinarian: He is concerned with the discipline, insubordination,
violation of rules of discipline and absenteeism. All cases relating to these matters
will be managed by the shop disciplinarian.
1. Gang Boss: He assembles and sets up various machines; and tools for a particular
piece of work. He is in-charge of assembling line of production.
2. Speed Boss: He is concerned with the speeding of machines used for production.
He keeps proper speed of the machines and see that workers complete the
production work as per the schedule time.
3. Repair Boss: The repair boss looks after the proper maintenance of machines,
tools and equipments required during the production process.
4. Inspector: The inspector controls quality of the products by keeping adequate
check/control when the production work is in progress.
In the line and staff Organization, line executives and staff (specialists) are combined
together. The line executives are 'doers' whereas staff refers to experts and act as
'thinkers'. The following chart shows line and staff Organization structure:
The line executives are concerned with the execution of plans and Policies. They do their
best to achieve the organizational objectives. The staff concentrates their attention on
research and planning activities. They are experts and conduct advisory functions.
Staff specialists are regarded as 'thinkers" while execution function is given to line
executives who are "doers". The staff is supportive to line. The staff specialists offer
guidance and cooperation to line executives for achieving organizational objectives. This
reduces the burden of functions on the line executives and raises overall efficiency of the
Organization. For avoiding the conflicts between line and staff, there should be clear
demarcation between the line and staff functions. This avoids overlapping of functions
and possible conflicts. In short, the line and staff functions are different but are
supportive and can give positive results if adjusted properly i.e. by avoiding the conflicts.
They suggest/recommend but have no power to command the line executive. However,
their advice is normally accepted because of their status in the Organization.
According to Louis Allen, "Line refers to those positions and elements of the
Organization, which have the responsibility and authority and are accountable for
accomplishment of primary objectives. Staff elements are those which have responsibility
and authority for providing advice and service to the line in attainment of objectives".
1. Less burden on executives: Line executives get the assistance of staff specialists.
This reduces the burden of tine executives. This raises overall efficiency and
facilitates the growth and expansion of an enterprise.
2. Services of experts available: The benefits of services of experts are provided to
line managers. Highly qualified experts are appointed and they offer guidance to
line executives.
3. Sound decision-making: Line and staff Organization facilitates sound
management decisions because of the services of experts and specialists. The
decisions are also taken in a democratic method i.e. in consultation with the
experts.
4. Limited tension on line managers: The pressure of work of line bosses is
brought down as they are concerned only with production management.
5. Benefits of specialization: There is division of work and specialization in this
Organization. Naturally, the benefits of division of work and specialization are
easily available.
6. Training opportunities to employees: Better opportunities of advancement are
provided to workers. The scope for learning and training for promotions are
available.
One serious problem in the line and staff Organization is the possible conflict between
the line executives and staff specialists.
Line executives have complaints against staff officers and staff officers have complaints
against line executives.
1. Resistance to new plans and ideas: According to staff managers, the line
managers usually oppose/resist new plans/ideas. They treat this as interference in
their routine work. A staff manager is a professional critic. He suggests
modifications, which are useful, but the suggestions are opposed as unnecessary
interference. This leads to conflicts.
2. Inadequate support from line executives: Staff managers argue that line
Managers do not take benefit of their services. Their services are used only as a
measure of last resort.
3. Inadequate scope for the use of authority: Staff managers argue that line
managers do not give importance to suggestions given by them. This reduces the
scope of activities of staff managers. Moreover, the suggestions of staff managers
are not binding on line executives and this affects their importance and
contribution.
4. Lack of support from top management: Staff managers also feel that they do
not get full support from the top management. The top management is more
concerned with regular production. As a result, it gives better treatment to line
bosses.
5. Limited cooperation from line executives: Staff managers argue that line
executives adopts negative approach towards them even when both are working in
the same Organization with identical objectives. Line executives do not take the
advice/suggestions of staff managers in the right spirit. They reject suggestions on
the ground that they are not practicable even without giving fair trail. This
indicates limited co-operation from line executives.
6. Supply of inadequate information: Staff managers argue that line executives do
not approach them well in advance with all necessary details of the problems
faced by them. They do not supply relevant information but want the solution
quickly. If solution is suggested within the time limit, it is again rejected on the
ground that it is not workable. This leads to dissatisfaction and conflicts.
7. Absence of authority: Staff managers feel frustrated as they offer suggestions for
solving the problem through hard work and also by using their skills and
experience. However, they do not have commanding authority to execute their
suggestions.
Organization structure of a company can be shown in a chart. Such chart indicates how
different departments are interlinked on the basis of authority and responsibility. It is a
simple diagrammatic method of describing an Organization structure. It indicates how the
departments are linked together on the basis of authority and responsibility. Such
Organization chart provides information of the Organization structure at a glance.
Organization chart is like a blue print of a building. It indicates the number and types of
departments, superior-subordinate relationship, chain of command and communication.
According to George Terry, Organization chart is "a diagrammatical form which shows
important aspects of an Organization, including the major functions and their respective
relationships, the channels of supervision and the relative authority of each employee
who is in-charge of each respective function".
The definition noted above indicates the following features of Organization charts:
1. Organization chart is a diagrammatical presentation.
2. It represents the formal Organization structure.
3. It shows the lines of authority in the Organization.
4. It indicates the channel of communication.
5. It indicates who supervises whom and how various units are inter-related.
1. Brings clarity to the Organization: The very process of preparing a chart makes
the executive think more clearly about the Organization relationships.
2. Provides dear picture of the Organization: Once the charts are prepared, they
provide lot of information about the Organization, both to the members of the
Organization as well as to the outsiders. This information relates to number and
types of departments, superior subordinate relationships, chain of command and
communication and job titles of each employee.
3. Facilitates training of employees: Organization charts are useful in familiarizing
and training new employees.
4. Ensures organizational changes: Organization charts provide a starting point for
planning organizational changes after having discovered the weaknesses of the
existing structure.
5. Provides quick understanding: A chart serves as a better method of visualizing
an Organization than a lengthy written description of it.
1. Details are not provided: The Organization chart does not provide all the details
of Organization structure created. For example, the chart will show the line of
authority but not the extent of authority.
2. Informal relationship is not shown: The chart fails to give details of informal
relationship available in a firm. In fact, human relationships cannot be shown on a
chart.
3. Updated position is not available: The chart shows the position of Organization
structure when it was formed. It gives a static picture of the Organization.
Changes made thereafter may not be available in such charts.
4. Fosters buck-passing: The charts tend to foster 'buck-passing' and emphasize
only formal channels of communication.
5. Lacks flexibility: Organization chart lacks an element of flexibility. Such chart
also brings an element of rigidity in the working of an Organization.
6. Creates rank consciousness: An Organization chart leads to rank consciousness
among the staff. It destroys team spirit and collective approach on the part of the
staff.
10.5 Types of Organization Chart
1. Vertical chart: One of the most popular methods is the vertical chart in which the
highest job is shown at the top with other jobs shown in a descending order,
connected by lines to show the authority and the line of communication.
2. Horizontal chart: This chart shows the Organization structure in the form of a
pyramid.
3. Circular chart: The top management is shown at the centre of the circle and
other management levels are shown in concentric circles.
4. Departmental chart: This chart is devoted exclusively to particular department
and gives details of relationships, authority, responsibility, etc. within the
department.
In decentralization, systematic efforts are being made to delegate to the lowest levels all
authority except that which can only be exercised at the central points. Decentralization is
delegation not from one individual to another but delegation to all units in an
Organization. A company is said to be highly decentralized, when the delegation is
company-wide in all functions and divisions of the company and also for a wide range of
authorities and responsibilities.
Definitions of Decentralization
According to Henry Fayol, "Everything that goes to increase the importance of the
subordinate’s role is decentralization; everything that goes to reduce it is centralization."
This definition makes it clear that even in decentralization; delegation to the lowest levels
is not complete as the basic functions in the management process are centralized.
Limitations of Decentralization
Leading is one important function of management only next to planning and organizing.
It is the liveliest element in the management process. It initiates actions to translate the
decisions into concrete actions. Managers have to lead their subordinates through guiding
and motivating. Leading involves directing, influencing and motivating employees to
perform essential tasks.
Every manager has to act as a leader in his area of operation. This means he has to guide,
instruct, lead and motivate his subordinates so as to use their skills, efficiency, capacity
etc. for the benefit of his Organization. He has to influence the behavior of his
subordinates and get the work done through their collective efforts. Leadership qualities
are required in order to conduct various managerial functions effectively. Each and every
group of people engaged in a particular activity needs a leader in order to guide, co-
ordinate and control their efforts. In this sense, leadership is required for the conduct of
economic, social, political or cultural activities. A college principal, secretary of a co-
operative society or of a sports club or cultural association acts as leaders in their
respective fields. George Washington, Abraham Lincoln, Winston Churchill, Dr.
Babasaheb Ambedkar, Mahatma Gandhi, Nelson Mandella, John F. Kennedy are
world known political leaders while Henry Ford, J. R. D. Tata and S. L. Kirloskar are
known leaders in the business world. Here, we are concerned only with the managerial
leadership. Managerial leadership is that part of a manager's activities by which he
influences the behavior of his subordinates towards a desired objectives or results.
Leadership is follower ship. A good leader leads but does not push. Effective leadership
can guide a group towards certain ideals without exerting much force. Managers who
possess the quality of guiding and directing the subordinates under inspired impulses can
be called business leaders. Leadership is concerned with getting results through people
and implies the Organization of staff into productive teams, groups and departments.
Leadership entrails the creation of human structures, their motivation and direction; the
resolution of conflicts at the workplace, creating vision for the entire business and
providing resources in support of this.
Manager can perform various managerial functions more effectively by providing proper
leadership to his subordinates. This makes leadership an inevitable aspect of management
process itself. Leadership is essential for the success and stability of a business enterprise.
Managers possessing leadership qualities are called business leaders.
2. Definitions of Leadership.
3. Characteristics of Leadership.
A leader needs sound health and physical capacity to perform his functions or duties
assigned in an efficient manner. In addition to physical qualities, an ideal leader needs
certain qualities of head and heart. The main qualities include Personal Traits and
Managerial Traits which are shown in the following chart:
5. Styles of Leadership.
There are different styles of leadership. This classification is based on the methods used
by the leaders.
Edwin Flippo has defined leadership style as "a pattern of behavior designed to
integrate organizational and personal interest in pursuit of some objectives."
Basically, the styles of leadership can be divided into two broad groups. These are: (a)
Task-oriented styles, and (b) People-oriented styles.
a. In the task oriented styles of leadership, more importance is given to getting the
work done by subordinates. Task-oriented leaders are interested in the completion
of work and do not give importance/attention to subordinates or their desires,
interests and so on. Dictatorial leader and autocratic leader are the examples of
this category.
b. People-oriented style of leadership is basically democratic. Here, the leader gives
importance to the interests, thoughts, problems, etc. of subordinates. He tries to
achieve objectives with their support and co-operation. Participative or
democratic leader comes under this category.
6. Theories of Leadership.
The traits approach theory was one of the first attempts to explain the leadership based on
personal traits. Traits are inborn or acquired personal qualities of an individual. They
include physical qualities and the qualities of head and heart.
Traits theory refers to certain traits/characteristics which separate leaders from non-
leaders. Such traits enable some to rise above their followers.
The basic traits useful for leadership include height, energy, looks, knowledge and
intelligence, imagination, self-confidence, integrity, fluency of speech, mental balance,
enthusiasm, courage, sociability, and friendliness and so on.
According to the traits theory, an individual possessing such traits is usually able to
influence others and gets the status of a leader. This suggests that a leader is quite
different from an average person in regard to personal qualities such as intelligence,
perseverance and overall personality including physical features.
The traits theory suggests that leaders are above the followers in regard to personal traits.
A fair combination of such traits makes them influential and impressive as compared to
others.
Traits theory indirectly supports the view that leaders are born and not made. Researchers
have suggested different traits of leaders. Such traits are similar to physical,
psychological, mental, intellectual and other qualities which are normally treated as
essential in the case of an ideal leader. It may be noted that some traits are innate while
some others can be acquired through special efforts.
The behavioral approach theory is an extension of the traits theory and is superior in
certain respects. The traits theory failed to explain what caused effective leadership. The
behavioral approach is based on the study of behavior of a leader.
Leadership grows/develops not by traits but by the acts or experience of a person. The
behavioral theory is based on the assumption that leaders are not born but they develop
gradually by experience and maturity. The attention is given to what leaders do (i.e., their
behavior) rather than to what they are. A leader learns new traits through his experience
(behavior or acts). The focus point, here, is on what the leader does while leading.
This behavioral theory suggests that a leader do not behave in the same manner under all
situations. Similarly, his actions are not identical under all situations which he faces. He
adjusts his behavior as per the need of the situation. There is an element of flexibility in
his approach and behavior. He studies the situation and adjusts his leadership style
accordingly. He adopts different leadership styles to meet the need of different situations.
The behavioral approach theory is practical in nature. It gives more attention to acts and
behavior of a person and not to the personal traits. Leadership develops by experience
and not by inborn traits. A leader has to acquire certain qualities by experience only.
Like the traits theory, the behavioral approach oversimplifies the complexities of the
leadership process. However, the behavioral approach is responsible for the development
of a classification of leadership styles which has provided managers suitable
opportunities to secure greater insight into their own behavior.
Contingency approach concludes that there is no "one best style" of leadership under all
conditions. Efficient leadership style varies with situations and an efficient leader is one
who studies the prevailing situation and finds out the leadership style which would be
most suitable for the given situation. This is natural as a simple cookbook approach for
selecting the best leadership style does not exist. A good leader has to study the situation
and adjust his leadership style accordingly. Here, the focus is on the situation and not on
the personal qualities and behavior of a leader.
The situational theory suggests that a manager's leadership style should vary with the
situation. This leadership model is simple and appealing. However, it ignores several
other critical elements that determine leadership style and it does not have a wide
accepted research base. In spite of the limitations, this leadership model achieved
considerable popularity and also awakened many managers to the idea of contingency
approaches to leadership style.
1. The situational leadership theory is a practical one and is based on real facts of
life. The best leadership style is situational.
2. The situational theory has universal acceptance.
3. It focuses attention not on the personality of the leader, but on the personality of
the Organization as a whole.
4. The situational leadership theory is flexible and adaptable. It can operate in any
style (autocratic, democratic, etc.) as per the need of the situation.
Every business unit needs human resource (manpower) for the conduct of different
business activities. In fact, no organization can exist or operate efficiently without the
support of human resource. Such human resource includes top level managers,
executives, supervisors and other subordinate / lower level staff / employees. A business
organization has to estimate its future manpower needs and adjust its manpower planning
and development programmes accordingly. This is called 'staffing' function of
management. Human resource management is also described as personnel management
or manpower management.
Various areas such as recruitment and selection, wage payment and industrial relations
are covered under human resource management.
Human resource is certainly important even in this age of extensive use of computer
technology. This is because machine cannot be used as a substitute for human brain
which has capacity to think, assess and react. It is correct to say that man is a power
rather than man has a power. Progressive / professional managements invest huge funds
on training and development of human resource and this suggests the importance of
human resource and its contribution in industrial and economic development.
Professionally managed companies in India such as Larsen and Toubro Ltd, TELCO,
Reliance, etc., give special importance and good attention to HRD.
The functions of HRM are directly or indirectly related to the human resource available
in the organization. HR manager has to perform the basic functions of management in the
area of HRM. These managerial functions include planning, organizing, directing and
controlling the manpower of his department. The operative functions of the HRM include
procurement of manpower, development of manpower, and payment compensation to
manpower and so on. In short, HRM involves the following functions and these functions
are to be performed by the HRM department of the Organization:
These HRM functions need to be performed regularly for the benefit of employees and
also for continuity in the production activities of the Organization.
W.R. Spriegel has divided the functions of personnel management / HRM department
into the following six broad categories :-
a. Employment
b. Promotion, Transfer and Termination.
c. Training.
d. Wages and other incentives.
e. Service activities (welfare activities).
f. Collective bargaining and workers' participation.
As per Indian Institute of Personnel Management (IIMP now called NIPM), the
Personnel / HRM functions are classified as noted below:-
According to Edwin Flippo, "Job analysis is the process of studying and collecting
information relating to the operations and responsibility of a specific job."
1. Facilitates proper publicity of jobs: Exact details of the job and the
qualifications, qualities, etc., required can be notified in the advertisement
because of job analysis. Scrutiny of applications and selection of suitable
candidates is made manageable, easy and quick.
2. Facilitates appropriate selection of psychological tests: Psychological tests can
be adjusted exactly as per the need of the job due to the availability of details
from job analysis.
3. Facilitates purposeful interviews: Interviewers should be given the details of job
analysis before interviewing the candidates. This makes the interviews relevant as
the candidates are judged accurately in the light of details of job analysis.
4. Facilitates appropriate medical examination: Even the medical examination is
adjusted as per the information available from job analysis.
5. Facilitates scientific selection and placement of candidates: Job analysis makes
the selection work accurate. The tragedy of misfit is avoided. In addition, proper
placement (as per qualifications and qualities) of employees is possible due to job
analysis.
6. Facilitates scientific promotions and transfers: Promotions and transfers
become easy, quick and accurate on the basis of data of job analysis.
7. Facilitates impartial performance appraisal: A company can make scientific
and impartial performance appraisal of its employees with the help of job analysis
data.
8. Useful for providing training: Job analysis suggests the qualities necessary for
performing specific job. This information can be used in a purposeful manner
while framing training programmes for jobs.
9. Useful for fixing wage structure: Job analysis indicates relative worth of each
job within the Organization. This information is useful for fixing wage rates for
different categories of workers.
10. Facilitates redesigning of jobs: Job analysis gives the details of different jobs
and facilitates redesigning of jobs so as to improve operational performance or to
enrich job content and employee improvement.
Meaning of Recruitment ↓
Recruitment means to estimate the available vacancies and to make suitable arrangements
for their selection and appointment. In the recruitment process, the available vacancies
are given wide publicity and suitable candidates are encouraged to submit applications so
as to have a pool of eligible candidates for scientific selection.
Recruitment is a positive function in which publicity is given to the jobs available in the
organization and interested candidates (qualified job applicants) are encouraged to submit
applications for the purpose of selection.
Definition of Recruitment ↓
The need for recruitment may be due to the following reasons / situations:-
Meaning of Selection ↓
Selection is next to recruitment. It is the process of choosing the most suitable candidates
(Properly qualified and competent) out of many interested candidates. It is a process of
selecting the best and rejecting the rest. In this selection process, interested applicants are
differentiated in order to identify those with a greater likelihood of success in a job. Such
candidates are selected and appointed.
In recruitment prospective employees are encouraged to apply for the jobs and in the
selection; the most suitable candidates are selected out of the pool of applicants. The
purpose of both is to have the most suitable and most capable candidates for the
Organization out of a pool of available and interested candidates. The recruitment process
widens the scope for selection and provides wide choice for the selection of best
candidates out of many interested. Recruitment and selection need lengthy and scientific
procedure particularly in the case of managerial posts. Such lengthy procedure must be
followed for scientific selection of employees.
Sources of recruitment are the outlets through which suitable candidates are available.
The Following chart shows the sources of recruitment at supervisory and managerial
levels.
Steps In The Scientific Selection Process ↓
In the selection procedure, out of the available / interested candidates, the best one is
selected through written test, psychological tests, personal interview and medical
examination. Such lengthy procedure is followed in order to select the most suitable
candidate. Selection process is a screening process. It is a type of hurdle race to the
candidates. Final selection is possible only when the candidate completes this hurdle race
successfully. Lengthy selection procedure is needed for scientific selection of candidates.
1. Job Analysis: job analysis prepares proper background for recruitment and
selection. It gives details of a job to be performed and the human qualities and
qualifications required for performing that job efficiently. Scientific selection is
possible only when it is made in the light of the details available from job
analysis. Job means an activity performed in one or the other department of a
business unit. A job includes various positions. Clear and detailed understanding
of the job is called job analysis or job study.
2. Advertisement: This medium is widely used for recruitment of all categories of
personnel. Though quite costly, it provides a wide choice as it attracts large
number of candidates from all over the country. The qualities and qualifications
expected from the candidates are usually mentioned in the advertisement.
3. Collection of Applications Blanks: In this step, applications with necessary
details are collected from interested candidates. Some companies give
advertisement in the press and ask interested candidates to submit applications on
a prescribed form.
4. Scrutiny of Applications Received: After the last date fixed for the receipt of
applications, officer from the personnel department starts the scrutiny of
applications received. Incomplete applications are normally rejected. Applicants,
who do not possess required qualifications, experience, etc., are also rejected.
Along with this, the certificates, testimonials and references are checked.
5. Written Tests: After the scrutiny of applications, a final list of candidates for
written tests is prepared. The purpose of such tests is to judge the knowledge of
the candidate and also to find out his :-
a. Intelligence,
b. Aptitude,
c. Capacity,
d. Interests and
e. Suitability for a specific job.
Trade test is particularly necessary in the case of technical jobs such as junior
engineer, computer engineer and research assistant and so on. At present, such
test is given in the case of all types of jobs. For example, written tests are used by
Banks and public sector organizations for selection purpose.
Each test needs to be given separately and each test is useful for judging specific
quality of a candidate to be selected for the executive post.
These references help to cross check the information provided by the candidate.
10. Medical Examination: The purpose of medical examination is to judge the
general health and physical fitness of the candidate. Candidates who are not
physically fit for the specific job are rejected even when they show good
performance in the tests and personal interview. Medical test is taken in the case
of all candidates before appointment. In case of certain jobs, the test is of a
general nature. However, medical examination has special importance in armed
forces.
11. Final Selection for Appointment: The selection procedure comes to an end
when the final appointment letter is sent to the candidate with a request to join the
organization on a particular date. This means the 'job is offered to the selected
candidate' and he is asked to join the organization within a specific time limit.
For scientific selection of candidates (particularly for higher level / executive level posts)
different types of tests are given to candidates as per the requirements of the post for
which selection is required to be made. Such tests include written test, trade test and
psychological tests. The basic purpose is to judge the knowledge, skills, intelligence,
aptitude, etc., of the candidate before his selection. It is also possible to reject the
candidates who show poor performance in such tests. The possible performance of the
candidate in the future can be judged with the help of such tests. Such tests need to be
conducted in a systematic manner and not as a mere formality. The assistance of experts
should be taken while conducting such tests. In addition, the results of such tests should
be used while taking final decision regarding selection of the candidate. Such tests are
particularly useful for the selection of supervisory staff in an Organization.
Interviewing is the most 'popular element in the selection procedure'. It plays a crucial
role in the selection procedure. For majority of executive posts, it is supplemented by
written and other tests. Personal interview offers many benefits to the company and also
to the candidates.
Training is necessary due to technological changes rapidly taking place in the industrial
field. It is also essential along with the introduction of new techniques, new methods and
so on. It is necessary for developing overall personality of employees and also for
developing positive attitude towards fellow employees, job and Organization where he is
working.
Types of Training ↓
1. Induction training,
2. Job training,
3. Training for promotion,
4. Refresher training,
5. Training for managerial development, etc.
Training for promotion is given after the promotion but before joining the post at the
higher level. The purpose is to enable an employee to adjust with the work assignment at
the higher level. The purpose of refresher training is to update the professional skills,
information and experience of persons occupying important executive positions. Training
for managerial development is given to managers so as to raise their efficiency and
thereby to enable them to accept higher positions. A company has to make provision for
providing all types of training.
Objectives of Training ↓
Importance of Training ↓
1. Training raises the efficiency and productivity of managers. It also improves the
performance of workers due to their motivation.
2. Training improves the quality of production. It also reduces the volume of spoiled
work and wastages of all kinds. This reduces cost of production and improves
quality.
3. It reduces accidents as trained employees work systematically and avoid mistakes
in the work assigned.
4. Training reduces expenditure on supervision as trained employees take interest in
the work and need limited supervision and control.
5. Training brings stability to labor force by reducing turnover of managerial
personnel.
6. Training raises the morale of employees.
7. Training creates skilled and efficient manpower which is an asset of an industrial
unit.
8. Training moulds attitudes of employees and develops cordial industrial relations.
9. Training reduces absenteeism as trained managers find their job interesting and
prefer to remain present on all working days.
10. Training facilitates the introduction of new management techniques and also new
production techniques including automation and computer technology.
11. Training creates a pool of trained and capable personnel from which replacements
can be drawn to fill up the loss of key personnel due to retirement, etc.
12. Training provides proper guidance and instructions to newly appointed executives
and assists them to adjust properly with the job and the organization.
In addition to training for operative staff, an organization has to take steps for training
managers. Such training programmes are called 'managerial development / executive
development programmes. Managerial talent is the most important asset that a company
can possess. Management development ensures that as and when the demand for
managers arises, suitably qualified persons are ready to fill the vacancies.
Managerial development consists of all means by which executives learn to improve their
performance. It is designed to improve the effectiveness of mangers in their present jobs
and to prepare them for higher jobs in future. Managerial development aims at helping
the mangers to realize their full potential.
Management development is a way to improving the culture of the Organization so that it
could be geared to excellence. "People move organizations not machines."
1. Shortage of trained managers: Talented and matured managers are not easily
available. It is not possible to appoint managers from outside for the key
managerial posts. The better alternative is to select talented persons as trainee
managers and develop their qualities through special training and wider
exposures. In this way, the organization can create its own team of talented
managers to lead the whole Organization.
2. Complexity of management jobs: The jobs of managers are now complicated
and more challenging. They need varied skills for dealing with the complex
organizational problems. For this, talented persons should be selected and proper
training should be given to them.
3. Technological and social changes: Rapid technological and social changes are
taking place in the business world. In India, such developments are fast taking
place along with the liberalization and globalization of business. Managers should
be given proper training and exposure in computer applications and information
technology.
4. Management obsolescence: Executive obsolescence occurs due to mental
deterioration and aging process. This can be corrected by offering self-
development opportunities to managers. In fact, self-development must continue
throughout the career of an executive.
5. Complexity of business management: Business management is becoming very
complicated due to government legislations, market competition, social pressures
and consciousness among consumers. Well-trained and matured managers are
therefore required. Such managers are not available easily. The best way is to
train existing managers through management development programmes.
For management development, several methods / techniques are used. These methods can
be divided into two broad categories, namely,
i. Internal or On the job methods, and
ii. External or Off the job methods.
1. Universities and Colleges: The universities and colleges, now, provide facilities
of management education. Here, education is given through lectures, discussions,
home assignments, tests and examinations. In India, Mumbai University (MU)
has its Jamnalal Bajaj Institute of Management Studies (JBIMS) for various
management development courses. Colleges affiliated to the Universities also
conduct DBM, MBA and other management development programmes for the
executives from business sector. Candidates working at managerial levels in
companies are normally selected for such training programmes.
2. Management Institutions: Along with the universities and colleges, there are
management training institutions such as NITIE, Bombay Management
Association, and Productivity Councils and so on. These institutes run special
training courses for graduates interested in management education and also
orientation programmes for existing managers from public and private sector
enterprises. Companies can depute their managers for short orientation courses
and update the knowledge and information of their managers in specific areas.
Even seminars, workshops and conferences are arranged for the training of
managers by various associations such as chambers of commerce and export
promotion councils.
3. Role-playing: Role-playing has been defined as "A method of human interaction,
which involves realistic behavior in the imaginary situations." It is particularly
useful for learning human relations and leadership training. Its objective is to raise
the ability of trainee manager while dealing with others. In the role playing, a
conflict situation is artificially created and two or more trainees are assigned
different roles to play. For example, a male employee may assume the role of a
female supervisor and the female supervisor may assume the role of a male
employee. Then, both may be given a typical work situation and asked to respond
as they expect others to do. Such role playing results in better understanding
among individuals. It helps to promote interpersonal relations and attitude change.
4. Case Study: Case study method was first developed by Christopher Langdell at
Harvard Law School. A case is a written account giving certain details of the
situation is relation to a specific matter. Such case study may be related to any
aspect of management such as production, marketing, personnel, finance and so
on. The case presented is always incomplete. This means the solution to the
problem is not provided. The participants are supposed to identify the best
available solution.
A small group of managers are asked to study the case in the fight of theoretical
study already completed and is followed by open discussion in the presence of
capable instructor, who can guide intelligent discussion and analysis. There is
nothing like one correct answer to the case study.
Case study method has certain advantages like, (a) in-depth thinking about the
matter by managers, (b) more perception in situation and greater respect for the
opinions of others.
5. Conferences and Seminars: Deputing officers for conferences and seminars is a
method available for management development. Various matters are discussed
systematically in such conferences and seminars. This provides new information
and knowledge to the managers. The participants in such conferences and
seminars are limited. As a result, more persons get an opportunity to participate in
such conferences for self-development. Conferences may be directed or guided or
may be for consultation and finally for problem solving.
6. Simulation: Here, an executive or trainee is given practical training by creating
situation / environment, which closely represents the real life situation at the work
place. For example, activities of an organization may be simulated and the trainee
may be asked to make a decision in support of those activities. The results of
those decisions are reported back to the trainee with an explanation. The report
illustrates what would have happened if that decision was taken. The trainee
teams from this feedback and improves his subsequent simulation.
7. Management / Business Games: A variety of computer and non-computer
management / business games have been devised for training of managers. This
training method is used in management development. It is a type of classroom
method of training. The game is designed to represent real life situation.
Employees for managerial positions are put in an exercise of actual decision-
making. A problem is provided to them along with all the necessary information
and constraints. The employee is asked to make a decision. The quality of this
decision is judged by how well the applicant has processed the information
provided to him. The processing of information is supposed to be guided by
knowledge of the goals and policies of the organization. Even if mistake is made
in the game, the trainee can learn a lot out of his mistake. This avoids possible
mistakes while taking decisions for his company. This method develops capacity
to take rational decisions by managers.
8. TV and Video Instructions: TV and Video instructions are used for training and
management development programmes. At present, programmes on management
problems are arranged on TV network regularly. Videotapes are also available on
management training. Books and periodicals are published regularly on
management. Audio-visual aids (film strips, Video, tape recorders, TV, overhead
projectors, etc.) are now used for training of managers.
Motivation is next to directing / leading. Managers can motivate their subordinates while
guiding them. Motivating means encouraging people to take more initiative and interest
in the work assigned. It is an art of getting things done willingly from others.
Motivation avoids clashes and non-cooperation and brings harmony, unity and co-
operative outlook among employees. Managers have to work as motivators of their
subordinates. For this, effective communication, proper appreciation of work done and
positive encouragement are necessary and useful. Motivation is inspiring and
encouraging people to work more and contribute for achieving the objectives of the
company. The creation of the desire and willingness to perform the job efficiently is
known as motivation.
In motivation, efforts should be made to satisfy the different needs of employees so that
they will be satisfied, happy and away from tensions. This creates favorable environment
because of which employees take more interest and initiative in the work and perform
their jobs efficiently. Motivation is a technique of creating attraction for the job. It is
encouraging employees for better performance in order to achieve the goals of an
Organization. The process of motivation is a continuous one (circular one) and is
beneficial to both - employer and employees. It is a key to improve work performance of
employees.
The term 'motive' is derived from the Latin word 'emovere' which means to move or to
activate. Motivation is the act of making someone to act in the desired manner through
positive encouragement. It is through motivation that employees can be induced to work
more, to earn more and to give better results to the Organization.
Definition of Motivation
Features of Motivation
Importance of Motivation
Motivation occupies an important place and position in the whole management process.
This technique can be used fruitfully for encouraging workers to make positive
contribution for achieving organizational objectives. Motivation is necessary as human
nature needs some sort of inducement, encouragement or incentive in order to get better
performance. Motivation of employee’s offers may benefits to the Organization and also
to the employees. This suggests the importance of motivating employees. Motivation acts
as a technique for improving the performance of employees working at different levels.
Motivation of employees is one function which every manager has to perform along with
other managerial functions. A manager has to function as a friend and motivator of his
subordinates. Motivation is useful in all aspects of life and even our family life. The same
is the case with business. This dearly suggests that motivation is extremely important. It
is an integral part of management process itself.
Advantages of Motivation
Monetary incentives are offered in terms of money. Such incentives provide more cash or
purchasing power to employees. Monetary incentives are extremely attractive to
employees (particularly those working at lower levels) as they get the benefit quickly and
in concrete terms. At the higher levels of management, non-monetary incentives are more
important than monetary incentives. Workers prefer monetary incentives as compared to
non-monetary incentives. Managements also offer liberal monetary incentives to all
categories of workers.
1. Job security and job enrichment: Job security is useful for the motivation of
employees. Such security keeps the employee away from the tension of becoming
unemployed. Job enrichment provides an opportunity for greater recognition and
advancement. Job enrichment refers to redesign of jobs.
2. Fair treatment to employees: Employer should give attention to the needs,
difficulties and grievances of employees. Small work groups and effective
communication are useful for solving the problems of workers. Employees must
be given decent treatment. They will be co-operative only when they are treated
with sympathy and love, affection and dignity. Employees should also be given
help in personal matters.
3. Recognition of good work: Recognition of good work at an appropriate time
gives encouragement to employees to show better performance in future. As an
appreciation of good work, prizes, rewards, promotions, etc. should be given.
4. Encouragement to self-development and career development: Employees
should be given varied training facilities. Training facilitates self-development
and also provides opportunities for career development. Every employee has a
desire to grow, develop and rise higher. This desire should be exploited fully for
motivating employees. For this, training as well as management development
programmes should be introduced.
5. Delegation of authority: Due to delegation of authority, a subordinate employee
feels that superior has faith in him and also in his ability to use authority in a
proper manner. Employees get mental satisfaction when authority is given to
them. They take interest and initiative in the work and try to prove that they are
competent to work at the higher levels. Thus, delegation of authority becomes a
motivating factor.
6. Congenial working conditions: It is a non financial incentive for motivation.
Employees should be given various facilities and conveniences at the work place.
The work environment should be pleasant and safe. This creates desire to work
efficiently.
7. Helpful attitude of management: The helpful attitude of management towards
its employees creates a sense of affinity for the Organization. Fair treatment to
workers creates better understanding among workers. Cordial industrial relations
also motivate employees. Thus, enlightened and pro-employee attitude of
management acts as a motivating factor.
8. Fair opportunity of promotion: Fair opportunity of promotion to all eligible
workers is one more method useful for motivating employees. They take interest
in the work as they feet that they will be rewarded in the form of promotions.
Training facility should be provided to employees in order to make them eligible
for promotion.
9. Labour participation in management: Labour participation in management is
useful for the motivation of employees. Workers get higher status and better
scope for expressing their views through such participation. Even the formation of
quality circles or joint management councils is useful for motivating employees.
10. Designation and status: When an employee is provided with a better designation,
it adds to his status. Employees are proud to reveal their attractive and high-
sounding designations.
Theories of Motivation
The most famous of all human relations movement and research were Hawthorne
Experiments. So named because they were carried on in Hawthorne plant of western
Electric Company of Chicago in USA.
Dr. Elton Mayo led a team from Harward University which cooperated with western
electric co. in the period 1927-1936 to carry out Hawthorne Experiments. They identified
following details.
It was in 1943 a Psychologist Mr. Abraham Harold Maslow suggested his Theory of
Human Motivation. His theory is one popular and extensively cited theory of
motivation. Maslow's theory is based on the Hierarchy of Human Needs. According to
Maslow, human behavior is related to his needs. It is adjusted as per the nature of needs
to be satisfied. In hierarchy of needs theory, Maslow identified five types / sets of human
need arranged in a hierarchy of their importance and priority. He concluded that when
one set of needs is satisfied, it ceases to be a motivating factor. Thereafter, the next set of
needs in the hierarchy order takes its place. These needs in hierarchy can be compared to
a pyramid. At the lowest level, there will be first set of needs which can be described as
basic needs and are universal in character. This will be followed by other sets of needs.
1. Man is a wanting being, i.e. his wants are growing continuously even when some
wants are satisfied. Human needs are of varied and diversified nature. They can
be arranged in a hierarchy of importance progressing from a lower to a higher
order of needs.
2. Needs have a definite hierarchy of importance. As soon as needs on a lower level
are fulfilled, those on the next level will emerge and demand satisfaction. This
suggests that bread (food) is essential and is a primary need of every individual.
According to Maslow, "Man lives by bread alone when there is no bread."
However, he feels the other needs when his physiological needs are fulfilled. In
brief, bread is important but man does not live by bread alone. There are other
needs (security / safety, social, esteem and self actualization which influence
behavior of people (employees) to work. This is the basic feature of Maslow's
need hierarchy. Attention to all human needs is essential for motivation of
employees. Attention to the provision of bread alone is not adequate for
motivating employees. Bread can act as motivating factor when there is no bread
but when it is available, its use as motivator comes to an end. Here, other
motivators (e.g. security of job, social status, etc.) will have to be introduced for
motivating employees. Attention to other needs such as security needs, social
needs, esteem needs and self actualization needs is equally important and essential
for the motivation of different categories of employees. Maslow, in his theory, has
referred to different needs and suggested that attention needs to be given to all
such needs as attention to physiological needs alone is not adequate for
motivating employees. According to Maslow, "Man does not live by bread
alone". This conclusion of Maslow is a practical reality and needs to be given
adequate attention while motivating employees.
3. A satisfied need does not act as a motivator.
4. As one need is satisfied, another replaces it.
1. Physiological Needs: Physiological needs are the basic needs for sustaining
human life. These needs include food, shelter, clothing, rest, air, water, sleep and
sexual satisfaction. These basic human needs (also called biological needs) lie at
the lowest level in the hierarchy of needs as they have priority over all other
needs. These needs cannot be postponed for long. Unless and until these basic
physiological needs are satisfied to the required extent, other needs do not
motivate an employee. A hungry person, for example, is just not in a position to
think of anything else except his hunger or food. According to Maslow, 'man lives
by bread alone,' when there is no bread. The management attempts to meet such
physiological needs through fair wages.
2. Security / Safety Needs: These are the needs connected with the psychological
fear of loss of job, property, natural calamities or hazards, etc. An employee
wants protection from such types of fear. He prefers adequate safety or security in
this regard i.e. protection from physical danger, security of job, pension for old
age, insurance cover for life, etc. The safety needs come after meeting the
physiological needs. Such physiological needs lose their motivational potential
when they are satisfied. As a result, safety needs replace them. They begin to
manifest themselves and dominate human behavior. Safety needs act as
motivational forces only if they are unsatisfied.
3. Social Needs: An employee is a human being is rightly treated as a social animal.
He desires to stay in group. He feels that he should belong to one or the other
group and the member of the group should accept him with love and affection.
Every person desires to be affiliated to such groups. This is treated as basic social
need of an individual. He also feels that he should be loved by the other members.
He needs friends and interaction with his friends and superiors of the group such
as fellow employees or superiors. Social needs occupy third position in the
hierarchy of needs.
4. Esteem Needs: This category of needs include the need to be respected by others,
need to be appreciated by others, need to have power and finally prestigious
position. Once the previous needs are satisfied, a person feels to be held in esteem
both by him and also by others. Thus, esteem needs are two fold in nature. Self
esteem needs include those for self confidence, self-respect, competence, etc. The
second groups of esteem needs are those related to one's status, reputation,
recognition and appreciation by others. This is a type of personal ego which needs
to be satisfied. The Organization can satisfy this need (ego) by giving recognition
to the good work of employees. Esteem needs do not assume the motivational
properties unless the previous needs are satisfied.
5. Self-actualization Needs: This is the highest among the needs in the hierarchy of
needs advocated by Maslow. Self actualization is the desire to become what one is
capable of becoming. It is a 'growth' need. A worker must work efficiently if he is
to be ultimately happy. Here, a person feels that he should accomplish something
in his fife. He wants to utilize his potentials to the maximum extent and desires to
become what one is capable of becoming. A person desires to have challenges and
achieves something special in his life or in the area of his specialization. Though
every one is capable of self-actualization, many do not reach this stage. This need
is fully satisfied rarely.
Maslow's theory of motivation (Hierarchy of Needs Theory) is very popular all over the
world and provides guidelines to managers / managements for motivating employees.
However, Maslow's theory has many limitations.
1. Maslow's theory is over simplified and is based on human needs only. There is
lack of direct cause and effect relationship between need and behavior.
2. The theory has to refer to other motivating factors like expectations, experience
and perception.
3. Needs of all employees are not uniform. Many are satisfied only with
physiological needs and security of employment.
4. The pattern of hierarchy of needs as suggested by Maslow may not be applicable
uniformly to all categories of employees.
5. Maslow's assumption of 'need hierarchy' does not hold good in the present age as
each person has plenty of needs to be satisfied, which may not necessarily follow
Maslow's need hierarchy.
6. Maslow's theory is widely accepted but there is little empirical evidence to
support it. It is largely tentative and untested. Maslow's writings are more
philosophical than scientific.
Although Maslow's Hierarchy of Needs Theory has been criticized on above grounds,
still it holds many advantages or merits. It helps the managers to understand the behavior
of their employees. It also helps the managers to provide the right financial and non-
financial motivation to their employees. This overall helps to increase the efficiency,
productivity and profitability of the organization.
Frederick Herzberg's theory of motivation is also called 'Two Factor Theory', 'Dual
Factor Theory' and 'Hygiene / Maintenance Theory of Motivation'. This theory is based
on the information collected by him and his associates (in the USA in 1959) by
interviewing two hundred engineers and accountants. The information collected relates to
the attitude of people towards work. This attitude towards work depends on two sets of
factors namely hygiene or maintenance factors and the motivating factors.
Motivating Factors act as forces of job satisfaction. They create positive and a longer
lasting effect on employee’s performance and are related to work itself. Adequate
provisions of such factors called are 'Satisfiers'. They make people happy with their jobs
because they serve man's basic needs for psychological growth. In addition, they also
motivate employees in their work. Such factors are five and are called motivators by
Herzberg. The motivating factors are:
1. Achievement,
2. Recognition for Accomplishment,
3. Increased Responsibility,
4. Opportunity for Growth and Development, and
5. Creative and Challenging Work.
Motivating factors motivate subordinates to take more interest in the work. They raise
efficiency and productivity of employees. According to Frederick Herzberg, motivating
factors are essential in order to provide job satisfaction and in order to maintain a high
level of job performance. Employees will not have job satisfaction if the motivating
factors are not provided in sufficient quality by the employer.
According to Frederick Herzberg, these two sets of factors are quite independent of each
other. It may be noted that hygiene factors, when satisfied, tend to eliminate
dissatisfaction but do not motivate an individual employee for better performance. The
motivating factors will permit an individual to grow and develop in a natural way. In
brief, hygiene factors affect an individual's willingness to work while motivating factors
affect his ability and efficiency to work. This theory can be compared to Maslow's theory
of human needs as both the theories refer to needs and their role in motivation. In
addition, the assumptions in both the theories are identical.
Frederick Herzberg's theory has many limitations. They are related to research
methodology used, empirical validity and assumptions in the theory. His theory is
criticized on many grounds. Many have found the theory to be an oversimplification.
Despite such criticism, Herzberg's two factor theory has made a significant contribution
towards improving manager's basic understanding of human behavior. His theory is
simple to grasp, based on some empirical data and guides managers to improve employee
motivation. Herzberg provided stimulus to other researchers to develop alternative
theories of motivation.
The eminent psychologist Douglas McGregor has given his theory of motivation called
Theory X and Theory Y. He first presented his theory in a classic article titled 'The
Human Side of Enterprise'. He treated traditional approach to management as 'Theory
X' and the professional approach to management as 'Theory Y'. His theory refers to two
sets of employees based on the perception of human nature. Here, theory X and theory Y
are two sets of assumptions about the nature of employees. His theory is based on human
behavior.
2. Theory X.
1. The average human being is inherently lazy by nature and desires to work as little
as possible. He dislikes the work and will like to avoid it, if he can.
2. He avoids accepting responsibility and prefers to be led or directed by some other.
3. He is self-centered and indifferent to organizational needs.
4. He has little ambition, dislikes responsibility, prefers to be led but wants security.
5. He is not very intelligent and lacks creativity in solving organizational problems.
6. He by nature resists changing of any type.
In the case of such employees, self-motivation is just not possible. They will work only
when there is constant supervision on them. A manager has to persuade, punish or reward
such workers in order to achieve organizational goals.
3. Theory Y.
Such types of people (employees) are self-motivated and McGregor recommends that
they be motivated by encouraging participation so as to get team work. Theory Y
assumes that people are not by nature, lazy and unreliable. They can be self-directed and
creative at work, if properly motivated. It is for the management to unleash this potential
in individuals (employees). Theory Y emphasizes creating opportunities, removing
obstacles, providing guidance and encouraging growth. By using these tools, the
management can integrate individual goals of employees with those of the Organization.
Some people have an intense desire to achieve while others are not so keen about
achievement. David C. McClelland had studied this phenomenon for over twenty years
at Harvard University and proposed his Achievement Motivation Theory (Also called
Manifest Need Theory). According to him, there are certain needs that are learned and
socially acquired as the individual interacts with the environment. McClelland classified
such needs into three broad categories. These are (a) Need for power, (b) Need for
affiliation, and (c) Need for achievement.
This need is indicated by a person's desire to control and influence the behavior of others.
A person with desire for power likes to compete with others when the situation is
favorable for such domination. Such persons prefer jobs that provide them an opportunity
to acquire leadership with power. There are two aspects of power accordingly to
McClelland. These are: positive and negative. Positive use of a power is necessary when
a manager desires to achieve results through the efforts of others. The negative use of
power is possible when a person uses power for personal aggrandizement. Such use of
power may prove to be harmful to the Organization.
Here, the person has a need/desire for affection and wants to establish friendly
relationships. A person with high need for affiliation seeks to establish and maintain
friendships and dose emotional relationships with others. He wants to be liked by others
and develops a sense of belonging by joining informal groups in the Organization. Such
persons (managers) prefer tasks that require frequent interaction with subordinates/co-
workers.
Here, the person desires to succeed in competitive situations. He desires to prove his
superiority over others. Such person sets reasonably difficult but potentially achievable
goals for himself. He accepts moderate degree of risk. He is more concerned with
personal achievement than with the rewards of success. Moreover, he feels that he can
achieve the goal with his efforts and abilities. He also desires to have concrete feedback
(social or attitudinal) on his performance. Such person has high level of energy and
capacity to work hard. He naturally prefers jobs which tax his abilities and skills fully.
This again is for achieving the objectives set. According to McClelland, the need for
achievement is the most important need which can be used effectively for the economic
progress of a nation.
McClelland's theory is important as he argues that the achievement motive can be taught.
It can be achieved by learning. A manager can raise achievement need level of his
subordinates by creating a healthy work atmosphere, provision of reasonable freedom to
subordinates, provision of more responsibilities and by making tasks more interesting and
challenging. Even reward and appreciation of high performance of subordinates is useful
for raising their achievement need level. This is how motivation of employees is possible
by developing the desire for higher achievement in their mind. Such achievement
motivation is necessary and useful for the success of an enterprise.
McClelland's theory of motivation is quite extensive. He developed achievement motive
for motivation. His assertion that achievement motive can be developed among the
employees is important. This is possible through well-conceived and deliberate learning
process. This he (McClelland) proved in an experiment carried out in a large U.S.
Corporation.
Every manufacturing organization is concerned with the quality of its product. While it is
important that quantity requirements be satisfied and production schedules met, it is
equally important that the finished product meet established specifications. Because,
customer's satisfaction is derived from quality products and services. Stiff competition at
national and international level and consumer's awareness require production of quality
goods and services for survival and growth of the company. Quality and productivity are
more likely to bring prosperity into the country and improve quality of work life.
However, the management looks to achieve customer satisfaction by running its business
at the desired economic level. Both these can be attained by properly integrating quality
development, quality maintenance and quality improvement of die product. The
integration of these three aspects of a product can be achieved through a sound quality
control system.
2. The Meaning of Quality
Quality is a relative term and it is generally used with reference to die end use of the
product. For example, a gear used in sugarcane juice extracting machine may not possess
good surface finish, tolerance and accuracy as compared with the gear used in the head
stock of a lathe, still it may be considered of good quality if it works satisfactorily in die
juice extracting machine. The quality is thus defined as die fitness for use/purpose at die
most economical level.
The quality depends on die perception of a person in a given situation. The situation can
be user-oriented, cost-oriented or supplier-oriented. Since, die item is manufactured for
me use of die customer, die requirements of die customer dictates die quality of die
product. Quality is to be planned, achieved, controlled and improved continuously.
1. Fitness for purpose: The component is said to possess good quality, if it works
well in the equipment for which it is meant. Quality is tiius defined as fitness for
purpose.
2. Conformance to requirements: Quality is die ability of the material/component
to perform satisfactorily in an application for which it is intended by die user.
Quality of a product, thus, means conformance to requirements. Customer needs
have to be assessed and translated into specifications depending upon die
characteristics required for specific application. Just as every human has his own
characteristics every application has its own characteristics.
3. Grade: Quality is a distinguishing feature or grade of the product in appearance,
performance, life, reliability, taste, odor, maintainability etc. This is generally
called as quality characteristics.
4. Degree of preference: Quality is the degree to which a specified product is
preferred over competing products of equivalent grade, based on comparative test
by customers, normally called as customer's preference.
5. Degree of excellence: Quality is a measure of degree of general excellence of the
product.
6. Measure of fulfillment of promises: The quality of a product is a measure of
fulfillment of the promises made to the customers.
1. Suitability: For specific application.
2. Reliability: It should give efficient and consistent performance.
3. Durability: It should have desired life.
4. Safety: Safe and foolproof workability.
5. Affordability: It should be economical.
6. Maintainability: It should be easy to maintain.
7. Aesthetic look: It should look attractive.
8. Satisfaction to customers: It should satisfy the customers' requirements.
9. Economical: It should have reasonable price.
10. Versatility: It should serve number of purposes.
A product can be said to possess good quality if all the above requirements are
properly balanced while designing and manufacturing it.
3. Quality Control
Control can be defined as "a process by means of which we observe the actual
performance and compare it with some standard".
If there is a deviation between the observed performance and the standard performance
then it is necessary to take corrective action.
1. Quality control is the process through which we measure the actual quality
performance, compare it with the standards and take corrective action if there is a
deviation.
2. It is a systematic control of various factors that affect the quality of the product. It
depends on: Material, Tools, Machines, type of labour, working conditions,
measuring instruments, etc.
3. Quality control can be defined as the entire collection of activities which ensures
that the operation will produce the optimum quality products at minimum cost.
4. It can also be defined as the tools, devices or skills through which quality
activities are carried out.
5. It is the name of the department which devotes itself full time to quality functions.
6. The procedure for meeting the quality goals is termed as quality control.
7. It is a system, plan or method of approach to the solution of quality problems.
8. As per A.Y. Feigorbaum
Total Quality control is "An effective system for integrating the quality
development, quality maintenance and quality improvement efforts of the various
groups in an organization, so as to enable production and services at the most
economical levels which allow full customer satisfaction."
Quality control is one aspect of production planning and control. It is basically concerned
with the quality production through regular inspection technique. Quality is a
combination of characteristics pertaining to the manufacture of the product and control is
the correction in the quality of the product, when the deviations in the product are more
than expected. A good quality item is one which conforms to some standard
specifications. These specifications are determined by the expectations of consumers and
also by the availability and costs of processes and materials.
To most people, quality is variable. It is subjectively judged because it deals with the
relative goodness of a product. When a buyer boasts that his house or car is the best, it
implies high quality. Quality is thus subjective and vaguely measurable.
All manufacturing processes face a basic difficulty. It is physically impossible to make all
items or units exactly alike. There is always variability in the product. With precision
manufacturing, the variability may be difficult to see but nevertheless it is there. When
variability becomes obvious it results in scraps, re-work and losses, thus adding to the
costs.
The benefits of quality control to consumes are: Availability of standard quality and
reliable goods, proper reward for the price paid, safety to life and health, better standard
of living and protection against substitution or adulteration and quick shopping of goods.
Consumers always purchase standard quality goods even by paying a little higher price as
they get full satisfaction over a long period from quality goods. Consumers, particularly
educated consumers, support quality products as they know the benefits available from
such standard quality products. This suggests the importance of quality control from the
point of view of consumers.
The importance of quality control is, now, accepted even at the global level. Consumers
now insist for superior quality goods. Expenditure on quality control is an investment for
more sale and satisfaction to consumers. Quality control is a must for export promotion.
Companies can capture foreign markets only by manufacturing superior quality goods at
reasonable cost of production. Japan is a leading world exporter. This is mainly due to
superior quality of goods manufactured in Japan. Governments in many countries support
quality control measures. They provide all possible help for maintaining superior quality
of goods. Restrictions are also imposed on the manufacturing of cheap goods. Even
associations of manufacturers and traders support quality control measures. This suggests
the importance of quality control in business.
In addition, the following advantages of quality control also suggest its importance:
8. Cost of Quality
The costs of carrying out company quality program are known as "Cost of Quality". It
includes:-
1. Market research cost of discovering quality needs of customer.
2. Product research and development cost of creating a product concept, which will
meet quality needs.
3. The design cost of transmitting product concept into information which represents
planning for manufacturer.
4. Cost of inspection and test.
5. Cost of defect prevention.
6. Cost of quality assurance.
7. Cost of scrap and quality failure.
8. The quality cost can be defined in four categories :-
a. Cost of prevention.
b. Cost of appraisal.
c. Cost of internal failures.
d. Cost of external failures.
i. Cost of Quality planning: It includes the cost associated with creating a overall
quality plan, the cost of market research and product development, inspection
plan, reliability plan etc.
ii. Cost of Documenting: It includes cost of preparation of manuals and procedures
to communicate these costs.
iii. Process control cost: Used with quality plans procedure to achieve fitness for
use.
iv. Cost of training: Cost associated in preparing any programs for attaining,
improving, maintaining quality programs.
v. Cost associated with preventing recurring defects: Engineering, technical,
supervisory, cost of preventing recurring defects.
vi. Cost of investigation, analysis of correction of causes of defects by quality central
department.
vii. Cost of investigation, analysis of correction of causes of defects by engineering
control department.
viii. Cost of consciousness programs.
Costs associated with measuring, evaluating or auditing the products, component and
purchase materials to assure conformance with quality standard and performance
requirement are called as "Cost of appraisal".
In other words, the cost of evaluating, quality and of identifying and segregating non-
conforming part and assemblies.
This consist costs of :-
The costs associated with defective products, components, materials that fail to meet
quality requirements and results in manufacturing losses are called as "Cost of internal
failures".
Costs associated with scrap i.e. Cost of material, labor. Cost of rework, repair i.e. Cost of
making defective parts and assembly rules.
Cost of re-inspection and re-test after defective parts are repaired. Costs associated with
material review activity.
Cost of processes yield lower that might be attainable by improved controls. Trouble
shooting.
Total quality management is a comprehensive concept and not related only to the quality
of goods and services. It suggests that high quality standards (e.g., ISO 9000) should be
maintained in other aspects of management such as production cost, marketing, sales
promotion, etc. For such quality/efficiency in all aspects of business management,
consciousness/awareness needs to be developed at all levels and among employees
working in all departments of the enterprise. Employees must be motivated for
maintaining high quality standards. In addition, their cooperation/involvement is
necessary for maintaining efficiency in all aspects of business management. In brief,
quality management is not the responsibility of management alone.
Participation/involvement of both parties (management and employees) is essential for
achievement of quality and other benefits.
The concept of TQM is closely related to the concept of quality circles which is very
popular and also successful in Japan. Quality circles are work groups that meet frequently
to study the ways and means to improve quality, reduce cost, eliminate wastages and
solve other production problems. Here, employees are associated with quality, cost,
efficiency, productivity, consumer service and satisfaction. This creates background for
the concept of TQM.
TQM aims at improving the total performance at the work place. It covers all functions,
activities and people who are responsible for competitiveness of an Organization. The
employees are expected to participate not only in maintaining quality but also in
improving their total performance so that the wastages will be avoided, production cost
will go down and the enterprise can earn more profit.
1. Stress on quality management: In TQM, collective efforts are being made for
improving quality of goods and services so as to give more satisfaction to
consumers. Quality improvement is also useful for facing market competition and
for creating market reputation. In brief, TQM involves steps for improving quality
and productivity. There is total commitment to quality on the part of entire
Organization. TQM covers all functions, activities and people who are
instrumental for raising the competitiveness.
2. Continuous process: TQM is a continuous process/activity as there is ample
scope for using new methods and techniques for improvement in the quality
standards and performance. "Steal ideas constantly and shamelessly" is the rule in
TQM. Implementation of innovative ideas or taking benefit of new opportunities
is an integral aspect of TQM. In fact, TQM is a never ending quest for achieving
new levels of performance.
3. Stress on quality assurance system: The aim of TQM is to give maximum
satisfaction to consumers by providing goods which are best in quality (zero
defects). The present ISO9000 series is a set of well recognized standards for
quality assurance system. The Japanese have been using quality assurance
concepts and principles as a part of their TQM implementation programme even
when specific name or number was not used. Thus, quality assurance system is an
integral part of TQM.
4. Linkage of quality and productivity: The TQM technique is useful for
improving quality as well as productivity. In a TQM programme, the focus is on
quality improvement. However, such programme also raises productivity. The
methods used in TQM programmes. E.g. stress on quality improvement, zero
defects production, making all employees responsible for quality maintenance and
improvement) are likely to bring quality improvement as well as yield
improvement. Similarly, the TQM programme creates a feeling of participation
among the employees. There is also positive improvement in the morale of
employees.
5. TQM is a gradual process: Introduction of TQM is a gradual process. It is self
improvement and group improvement programme through team building for
raising quality and productivity. TQM is about the gradual change of people's
behavior towards the tasks they perform and their attitude towards other people. A
mental revolution among the employees is required for the execution of TQM.
However, such change in the mental make-up of managers and employees
requires long period. This suggests that TQM is a gradual process. There are, in
fact, four broad phases in the introduction of TQM.
These are:
a. Awareness Phase,
b. Planning Phase,
c. Implementation Phase, and
d. Institutional Phase.
6. Focus on customers: Customers are the source of all the revenue that flows
through the corporation. Their satisfaction keeps the money flowing especially in
an open market where competitors are wooing them too. The focus of TQM is on
customer satisfaction on quality, cost and delivery through improved
organizational quality of processes. According to British Quality Association
(BQA), TQM is a corporate business management philosophy which recognized
that customers' needs and business goals are inseparable.
7. Employee involvement: Employees involvement is the most important
recognized feature of TQM. In fact, quality's a team work of all employees. Their
participation and co-operation are required to be taken at all levels. TQM is
possible only through participative management. Under TQM, employees will be
motivated to participate actively in the process of quality improvement through
incentives and recognition of contribution for achieving quality standards.
8. Formation of quality improvement teams: A cornerstone of TQM is the team
building that leads to commitment to improvement. Such teams include quality
steering teams, corrective actions teams and so on. Such teams motivate
employees and facilitate quality improvement.
9. Management's involvement: TQM is a systems approach in managing business
and improving overall performance. It needs total commitment from the top
management to provide viable leadership to the whole approach. Top level
management has to take number of initiatives in order to start the process of
TQM. In fact, TQM cannot have a good take off without total commitment of
CEO and other senior executives.
Dewar, President of the International Association of QCs, defines QCs as "a way of
capturing the creative and innovative power that lies within the work force".
The Quality Circle concept has three major attributes; these are:
Objectives which contribute to the improvement and development of the enterprise and
indirectly the interest of the employees are:
1. To improve the quality and productivity and thus contribute to the improvements
and development of the enterprise.
2. To reduce the cost of products or services by waste reduction, safety, effective
utilization of resources, avoiding unnecessary errors and defects.
3. To identify and solve work related problems that interferes with production.
4. To tap the creative intelligence of the persons working in the organization and to
make full use of its human resources.
5. To permit employees to develop and use greater amount of knowledge and skill
and motivate them to apply to a wide range of challenging tasks.
6. To improve communication within the organization.
7. To increase employees' loyalty and commitment to the organization and its goals.
8. To respect humanity and build a happy bright work place environment which is
meaningful to work in.
9. To enrich human capability, confidence, moral, attitude and relationship.
10. To satisfy the human needs of recognition, achievement and self-development.
The organization can accomplish one or more of the following advantages by establishing
quality circles:
Importance of Planning
The need and importance of planning is depicted in the following image.
1. Increases efficiency
Planning makes optimum utilization of all available resources. It helps to reduce wastage
of important resources and avoids their duplication. It aims to give highest returns at the
lowest possible cost. Planning thus increases the overall efficiency.
There are many risks involved in any modern business. Planning helps to forecast these
business-related risks. It also helps to take the necessary precautions to avoid these risks.
Thus, planning reduces business risks.
Often, the plans of all departments of an organization are well coordinated with each
other. Similarly, the short-term, medium-term and long-term plans of an organization are
also coordinated with each other. Such proper coordination is possible only because of
efficient planning.
4. Aids in organizing
Organizing means to bring together all available resources, i.e. 6Ms. Organizing cannot
be done without planning. This is because planning tells us how much resources are
required, when it is required, so on. This means that planning aids in organizing.
Direction means to give proper information, accurate instructions and right guidance to
the subordinates. Direction cannot be done without planning. This is because planning
tells us what to do, how to do it and when to do it. Therefore, planning helps to give right
direction.
Every organization has certain goals or objectives or targets. It keeps working hard to
fulfill these objectives. Planning helps an organization to achieve these objectives but
with some ease and promptness. Planning also helps an organization to avoid doing some
random (done by chance) activities.
A good plan provides various financial and non-financial incentives to both managers and
employees. These incentives motivate them to work hard and achieve the objectives of
the organization. Thus, planning through various incentives helps to motivate the
personnel of an organization.
Planning encourages managers to express and/or use their creativity and innovation. This
brings satisfaction to the managers and success to the organization.
A manager makes many different plans. Then manager selects or chooses the best of all
available plans. Doing a selection or choosing something means to take a decision. So,
decision making is facilitated by planning.