Industerial Relations.rtf

8/11/2019 Industerial Relations.rtf

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A. ANANDA KUMAR / INDUSTRIAL MANAGEMENT / UNIT-1

INDUSTRIAL MANAGEMENT

UNIT 1

INTRODUCTION

Management is as an art and science of getting work done through people. It is the

process of giving directing and controlling the various activities of the people to achieve the

objectives of an organization.

DEFINITION

Management is the process of designing and maintaining of an environment in which

individuals working together in groups efficiently accomplish selected aims.

- Koontz & Weihrich

Management is the art of knowing what do you want to do and then seeing that it is done

in the best and cheapest way.

- F. W. Taylor

Management is the coordination of all resources through the process of planning,

organizing, directing and controlling in order to attain stated goals.

- Henry L. Sisk

MANAGERIAL SKILLS

or analysis, skills re!uired of any manager are classified under three different heads

technical, human and conceptual skill.

1. Technical Skill:

It refers to the ability to the tools, e!uipment, procedures and techni!ues.

"ffective supervision and coordinating of the work of the subordinates. #herefore

depends on the technical possessed by the lower level market.

2. Huan Skill:

$uman skill refers to the ability of the manager to work effectively as a group

member and to build cooperative effort in the team he leads.

$uman skills are concerned with understanding of %people&.

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Manager&s skill in working with others is natural and conditions.

3. C!nce"#ual Skill$:

#his skill also called design and problem. 'olving skill involves the ability.

#o see the organisation and the various components of it as a whole.

#o understand how its various parts and functions mesh together.

#o foresee how changes in any one of these may affect all the others.

( higher degree of conceptual skill helps in analyzing the environment and in

identifying the opportunities.

MANAGEMENT LE%ELS

#he three levels of management that are commonly found in any organisation are top,

middle and lower management.

#op level

Management

Middle level Management

)ower level Management

T!" Le&el Mana'een#:

#he main functions of top management are

1. #o formulate goals and policies of the company.2. #o formulate budgets.

3. #o appoint top e*ecutives.

4. #o provide overall direction and leadership of the company.

5. #o decide the distribution of profits etc.

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Mi((le Le&el Mana'een#:

#he important functions of middle level management.

1. #o monitor and control the operating performance.2. #o train, motivate and develop supervisory level.

3. #o co+ordinate among themselves so as to integrate the various activities

of a department.

L!)e* Le&el !* Su"e*&i$!*+ Mana'een#:

#he main functions of lower level management

1. #o train and develop the efficiency of the workers.

2. #o assign jobs to workers

3. #o give orders and instructions.

4. #o maintain discipline and good human relations among workers.

5. #o report feedback information about workers.

FUNCTIONS OF MANAGEMENT

1. Planning:

lanning is simple is looking ahead. It is preparing for the future. "ffective

planning leads to efficient management. "ffective planning provides answers to !uestions like -

what to do /hen to do $ow to do /ho is to do

#he planning process involves the following activities.

(i) 0etermination of the goal of the organization.

(ii) ormulating policies, rules, procedures etc. for the organization.

(iii) orecasting the future based on past and present activities.

2. Organising:

1rganizing establishes harmonious relationship among all the workers of an

organization by providing them with suitable authority and responsibility.

(ccording to )ouis (. (llen 1rganisation involves identification and grouping the

activities to be performed and dividing them among the individuals and creating authority and

responsibility relationships among them for the accomplishment of organizational objectives.

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1rganisation process involves the following activities2

(i) Identification and analysis of activities re!uired. or the attainmentorganizational objectives.

(ii) (ssignment of duties to the individuals concerned.

(iii) ollow+up the activities.

3. Staffing:

'taffing process involves selecting candidates for positions, fi*ing salary, training

and developing them for effective organizational functions. #he manager performs the duties of

job analysis, job description etc. which come under the staffing function.

4. Directing:

1ne plans are made and the organisation is created ne*t step is to achievement of

objectives of the organisation.

0irecting is involves activities like guiding, supervising and motivating the

subordinates in their jobs. Motivation, leadership and communication are three important sub

function of directing. Motivation helps to increase the performance of the workers.

3ommunication provides with proper information to improve the effective management.

)eadership the process by which a manager guide and influences the work of his subordinates.

5. ontrolling:

3ontrolling as a function of management deals with checking and verifying the

activities against the predetermined standards. #he process of ensuring that actual activities

conform to planned activities. 3ontrolling process involves the following steps.

(i) "stablishing standards

(ii) Measuring current performance.

(iii) 3omparing this performance to the established standards.

(iv) #aking corrective actions of deviation are detected.

HENR, FA,OL-S CONTRIUTION / 011 3 14256

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ayol was a contemporary of #aylor. $e started his career as a junior engineer in a coal

mining company in rance in 4567 and became its general manager in 4557. /e published his

famous book (dministration Industrielle et 8enerale in 4946 which was published in "nglish in

49:9 under the title %8eneral and Industrial Management&. #his book is now considered to beone of the best classics in management.

$e concerned with the fourteen principles of management. #hey are

7*inci"le$ !8 Mana'een#:

!. Di"ision of Work: /ork should be divided in proper way with reference to the

available time. In general worker on the same job and the managers on the same duty ac!uire

ability sureness and accuracy which increase theory output.

#. $%thority & es'onsi(ility: (uthority means power given to a person to get work

from his subordinates. ;esponsibility means kind and amount of work e*pected of from a man

by his superior. 1ne of the essential elements of a good management delegation of authority to

the lower levels of management and fi*ing responsibility on town.

). Disci'line: 0iscipline is very essential for the smooth running of organisation. #o

ayol, discipline will result from good leadership at all levels of the organisation, fair agreements

and judiciously enforced penalties for infractions.

*. +nity of o,,an: (n employee must receive orders and instructions from one

supervisor only. Multiple commands will cause conflicts and confusions. ( sound management

should avoid dual commands.

. +nity of Direction:


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3. entralization: #he 1rganisation is centralized when the power is concentrated

with one person. If the power is fully distributes to the subordinates of the organisation is fully

decentralized. or effective management of people decentralization is necessary.

0ecentralization helps to take a !uick decision on all important problems. 4. Scalar hain: 'calar chain principle states that instructions and orders should be

sent from the top management to the lower management.

!5. Orer: #wo types of order 4= Materials order >= 'ocial order. In any

organisation materials and for men are correct places provided. 'o that materials can be easily

taken out and men easily located and also save time.

Material Order: A place for everything and everything in its place.

Social Order: A place for everyone and everyone in place.

!!. 67%ity: "!uity refers to the treatment of employees e!ually. "!ual treatment of

the employees helps to achieve organizational goals.

!#. Sta(ility of Staff: ( high employee turnover rate is not good for the efficient

functioning of any organisation.

!). 0nitiati"e: It is concerned with thinking and e*ecution of a plan. /hen

employees come forward with new ideas, they must be encouraged by the superiors. It will

create the morale of the employees.

!*. 6s'rit-e-cor's: #his means union is strength. In organisation employees

should be harmony and unity. It improves employee moral.

SCIENTIFIC MANAGEMENT

./. #aylor was born in 45?6. $e started his career as an apprentice in hiladephia in

45@?. In 45@5, #aylor joined Midvale 'teel 3ompany in


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A. ANANDA KUMAR / INDUSTRIAL MANAGEMENT / UNIT-1the first person to find the concept of 'cientific Management and develop it so, he is called as the

father of 'cientific Management.

(ccording to ./. #aylor, 'cientific Management consists of a certain philosophy of

scientific selection and training of right workers for the right job, providing ade!uate working

conditions, providing a system of monetary incentives to efficient workers and assumption of

responsibilities by managers and supervisors. #he workers are selected scientifically and

training is provided to both new and e*isting workers. #he workers are selected scientifically

and training is provided to both new and e*isting workers. #he workers are placed according to

their !ualifications and e*perience. #he effective doing of any work depends upon physical

working conditions, lighting, ventilation, rest rooms, rest periods, drinking water, canteen,

recreation, sanitation and the like are some of the physical working conditions. #he system of

monetary incentives should motivate the workers to work well. Managers and supervisors

should accept responsibility for planning, scheduling, guiding and controlling. It means that

planning and e*ecution are different functions.

7*inci"le$ !8 Scien#i8ic Mana'een#

./. #aylor has given the principles of 'cientific Management. #hey are briefly

e*plained below2

1. Science n!# *ule !8 #hu9: It means the replacement of old method of doing

work scientifically. #he nature of work performed by each worker should be clearly determined.

It includes the allotment of fair work to each worker, standardization in work, adoption of

differential piece rate of payment system and the like.

2. Ha*!n+ in '*!u" ac#i!n: ./. #aylor has emphasized peace and friendship in

group action. In other words, dissatisfaction of any worker is to be avoided in the group action.

#he dissatisfaction is eliminated through scientific selection, training and strategic placing of

workers.. C!3!"e*a#i!n: #here should be a co+operation between management and workers

and vice versa. /orkers should help the management to get larger profits, better !uality products

and lower cost of production. Management should give fair wages to workers, recognize the

performance of work and acknowledge the indispensability of workers in raising productivity.

#hen, better co+operation will be achieved. (ccording to #aylor, substitution of war for peace,

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A. ANANDA KUMAR / INDUSTRIAL MANAGEMENT / UNIT-1hearty and brotherly cooperation for discontentment and strife, replacement of suspicious

watchfulness with mutual confidence of becoming friends instead of enemies result in co+

operation.

. Ma;iu Ou#"u#: Ma*imum output is achieved through division of work andassumption of responsibility by the management and workers jointly. Ma*imum output results in

the increasing profit to the management and wages and bonus to the workers. Management

should provide standard materials, tools and working conditions to perform the work

economically and efficiently.

5. I"*!&een# !8 )!*ke*$:


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A. ANANDA KUMAR / INDUSTRIAL MANAGEMENT / UNIT-1(ccording to #aylor, Methods of 'tudy, Motion 'tudy, #ime 'tudy and atigue 'tudy are parts

of /ork 'tudy.

4. Ra#e $e##in': ./. #aylor emphasized upon fair wages to workers, and had

recommended differential piece rate age system. #he reason is that differential piece rate wage

system may act as an incentive to lazy and less efficient workers.

1?. S#an(a*(i$a#i!n: 'tandardisation is made in respect of tools and instruments,

working hours, volume of work, working conditions or atmosphere, cost of production etc.

#hese are fi*ed on the basis of job analysis.

11. Scien#i8ic $elec#i!n an( #*ainin': #he workers should be selected

scientifically. De*t, the appointment should be given to each worker according to the nature of

the job re!uirement and his !ualifications. (de!uate training should be given to new as well as

e*isting workers in order to update their knowledge. ( job is assigned to a worker to suit his

capacity best.

12. Financial incen#i&e$: inancial incentives can motivate the workers to show

their efficiency. rovisions should be made in such a way that increase in efficiency should go

with increase in wage structure. (s per the differential piece rate wage system, the efficient

workers get higher wages and vice versa. #he differential piece rate wage system was charted

out by ./. #aylor.

1. Men#al *e&!lu#i!n: Mental revolution refers to change in thinking both on the

part of the management and workers. If not, all the measures suggested in 'cientific

Management 'ystem would be useless. #he success of implementation of 'cientific

Management depends on the mental revolution of Management and workers. (ccording to

#aylor, #he success of scientific management rests primarily on a fundamental change in the

attitude of management and workers both as to their duty to co+operate in producing the largest

possible surplus and to the necessity for substituting e*act scientific knowledge for opinions or

the old rule of thumb of individual knowledge.

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1. Ec!n!+: #he techni!ues of cost estimates and control should be considered

in order to obtain economy. #he available resources are used to the fullest possible ma*imum

e*tent to eliminate wastage. Ma*imum profit is earned through this process. Earious ways are

given in 'cientific Management to get economy in production and for ma*imizing profits.

IM7ORTANCE OF MANAGEMENT

Management is must for every organisation. Management can plan the activities to attain

the objectives.

!. $ttain,ent of gro%' goals: #he achievement of objectives of business depends

upon various factors. #he management theory gives direction of achievement of goals.

#. 6ffecti"e f%nctioning of (%siness: (bility, understanding, communication,

motivation, coordination and supervision are some of the factors responsible for the effective

functioning of business. Management is vital tool to help for effective functioning of business.

). eso%rce e"elo',ent: #he resources of any enterprise may be identified and

developed by the management. 8enerally the term resources are men, money, material and

machines. *. 8anage,ent control the organisation: #he management controls the activities

of an enterprise. 3ontrol process is used to eliminate the unnecessary activities.

. 0ntegrates ini"i%al efforts: Management takes necessary steps to integrate

various efforts to attain the objectives of an organisation.

/. 8oti"ation: Motivation is vital tool to achieve organisation goal. roperly

motivate the workers increasing the speed of performance of a work. Motivation is in the form

of monetary or non+monetary incentive.

2. o,,%nication: 3ommunication is important role for effective management.

"ffective communication leads to efficient management.

3. oorination: (ll the activities of enterprises are department+wise. Management

coordinates the activities of different departments to attain the objectives of the organisation.

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4. Decision-,aking: #here are a number of decisions taken by the management

every day. #he management gives guides the managers to take correct decisions.

!5. Leaershi' 7%ality: )eadership !uality is developed in the persons who are

working in the top level management.

T,7ES OF MANAGEMENT

1. De&el!"en# Mana'een#: It includes research into materials, machines,

processes, etc.

2. Di$#*i9u#i!n Mana'een#: It includes marketing, merchandising

advertising, sales, etc.

. Financial Mana'een#: It includes economic forecasting, costing, accounting,

budgetary control, insurance and actuarial work, etc.

. Main#enance Mana'een#: It includes upkeep of buildings, e!uipment, estate

work, etc.

5. 7u*cha$e Mana'een#: It includes tendering, buying, contract work, store

keeping, store and stock control.

=. 7*!(uc#i!n Mana'een#: In includes work analysis, planning, scheduling,

routing, !uality control and work study.

>. T*an$"!*# Mana'een#: In includes transportation by rail, road, air and water,

packing, warehousing, etc.

. 7e*$!nnel Mana'een#: It includes employee selection, placement, training,

transfer, promotion, discharge, industrial relations, safety, health and welfare services, etc.

4. O88ice Mana'een#: It includes planning and control of offices, keeping

records, etc.

7LANNING

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lanning is the most basic of all management functions. #here is no choice between

planning and no planning. #he choice is only with regard to the method and techni!ues used to

plan. Most of us are planning many things in our day+to+day lives. re!uently, we plan to do

official work, improve our careers, plan our investment, built own houses, do business and so on.1rganizations are no e*ception and lots of planning activities are done by the management

people at all levels. lanning is the process of selecting objectives and determining the course of

action re!uired to achieve these objectives. )ot of information has to be gathered and processed

before planning is formulated.

lanning bridges the gap from where we are and where we want to go. It makes the

things possible to occur which would not otherwise happen. )et us look at what the following

observations suggest about planning.

lanning is outlining a future course of action in order to achieve on objective.

lanning is looking ahead.

lanning is getting ready to do something tomorrow.

lan is a trap laid down to capture the future.

STE7S IN 7LANNING 7ROCESS

lanning is a processF therefore, it contains number of steps within it. It is not necessary

that a particular planning process or steps are valid for all organizations and for all types of

plans. ( planning process is suitable for large scale organization which may not be suitable for

small organizations. 'ince, various factor that go into planning process may differ from plan to

plan or from organization to organization. #he planning process or steps given here is mostly

applicable for major programmes. Cut with minor modifications, the process is applicable for all

types of plans.

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#he general planning steps is given below

4

Identification of opportunities

"stablishment of objectives

0eveloping planning premises

Identification of alternatives

"valuation of alternatives

ormulating derivative plans

'electing an alternative

"stablishing se!uence of activities


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1. I(en#i8ica#i!n !8 !""!*#uni#ie$: Identification of awareness of the opportunity is the

starting point of planning. irst of all, we should identify the possible future opportunities and

analyze them clearly and completely. rom that, we should know2

/here we stand,

/hat is our strength and weakness,

/hat problem we wish to solve and why, and

/hat we e*pect to gain.

1nce, the opportunities are perceived from availability, the other steps of planning are

undertaken.

2. E$#a9li$hen# !8 !9@ec#i&e$ !* '!al$: #he ne*t step in planning is to establish

objectives for the entire organization and then for each subordinate units. 1bjectives specify and

indicate the results e*pected.

/hat is to be done

/here is the primary emphasis to be placed

/hat is to be accomplished by the various types of plans

1rganisational objectives should be specified in all key result areas. Gey result areas are

those which are important for organization in achieving its objective. #he key result areas may

be profitability, sales, research and development, manufacturing and so on.

. De&el!"in' "lannin' "*ei$e$: lanning premises are the assumptions that

should be made about the various elements of the environment. It provides the basic framework

in which plans operate. #hese premises may be internal or e*ternal.

Internal premises include organizational, policies, resources of various types, sales

forecasts and the ability of the organisation to withstand the environmental pressure. "*ternal

premises include the total factors in task environment like political, social, technological,

competitors, plans and actions, and government policies etc.

#he plans are formulated on the basis of both internal and e*ternal premises. #he nature

of planning premises differs at different levels of planning. (t the top level, it is mostly

e*ternally focused where as the bottom level is internally focused.

. I(en#i8ica#i!n !8 al#e*na#i&e$: #he ne*t step in planning is to search for and

designs the alternative courses of action. Cased on organizational objectives and planning

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A. ANANDA KUMAR / INDUSTRIAL MANAGEMENT / UNIT-1the survival and growth of business organization. It is necessary to plan due to the following

reasons.

1. 7*ia*+ !8 7lannin': lanning is a primary function of an organization which

proceeds all other functions. (ll other functions such as organizing, staffing, directing andcontrolling are performed to achieve the objectives already set by the planning process.

2. T! achie&e !9@ec#i&e$: lanning is directed towards the attainment of

organization objectives. /hile planning, we should be clear about few !uestions.

/hy am I making this plan

/hat am I trying to accomplish

/hat resources do I need to e*ecute the plan

If we prepare answers for the above !uestions, it provides lot of clarity to the objectives.lanning serves as a bridge between present and future.

. T! c!"e )i#h unce*#ain#+ an( chan'e: #here is a continuous change in the

environment. ( good organisation has to work in accelerating change. #his change is reflected

in both tangible and intangible forms. #angible changes are in the form of changes in

technology, market forces, government regulations etc. Intangible changes are in the form of

changes in attitudes, values, cultures etc. lanning enables the identification of future problems

and meeting such contingencies. lanning helps to minimize risk while taking advantages of

opportunities.

. T! 8acili#a#e c!n#*!l: 3ontrol involves the measurement of accomplishment of

events against plans and correction of deviations to assure the achievement of objectives as set

by plans. lanning provides the standards with which actual performance can be measured and

corrective actions taken wherever necessary. /ithout planning, we do not know what to control.

5. T! hel" in c!!*(ina#i!n: (ll the managerial functions lead to coordination in the

organization. Cut real coordination begins with the planning stage. 'ince, all the departments

work in accordance with the overall plan, the harmony and coordination is achieved.

3oordination is the essence of management and planning is the base for it.

=. T! inc*ea$e !*'ania#i!nal e88ec#i&ene$$: #he term effectives mean that the

organization is able to achieve its objectives within the given resources. ( better planning

ensures organizational effectiveness in many ways. In better planning, all the resources are put

in a way that ensures their ma*imum efficiency and contribution to organizational objectives.

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A. ANANDA KUMAR / INDUSTRIAL MANAGEMENT / UNIT-1lanning states the objectives of the organization in the conte*t of given resources. #herefore,

each resources of the organization has a specific use at a particular time. #hus, planning ensures

that resources are put in action in a way in which these have been specified.

>. T! 'ui(e (eci$i!n akin': lanning provides a basis for future orienteddecisions. /ithout planning, business decisions may become random. lanning creates better

relation among various decisions. It serves as a framework for making rational decision.

AD%ANTAGES OF 7LANNING

#he following are the advantages of planning2

1. Hel"$ in achie&in' !9@ec#i&e$: lanning concentrates attention on setting goals

or objectives of an organization. It gives effective direction to the control of employees of the

organization towards achieving organizational goals.

2. e##e* u#ilia#i!n !8 *e$!u*ce$: lanning gives clear cut direction on what to

produce and how to produce. #herefore, there is a possibility of utilizing the resources

effectively.

. Ec!n!+ in !"e*a#i!n: Cetter utilization of resources leads to economy in

operation.

. Re(uce$ unce*#ain#+ an( *i$k:


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. Enc!u*a'e$ M!#i&a#i!n: ( well+prepared plan encourages the employee&s moral

and confidence of the managers and gives them a sense of effective participation.

LIMITATIONS OF 7LANNING

Inspite of various advantages of planning, it suffers from the following limitations2

1. Lack !8 accu*a#e in8!*a#i!n: lanning is done for future. #he accuracy and

reliability of forecasts is doubtful if the forecasting period increases, because future is !uite

uncertain. lanning cannot insure against future perfectly.

2. Tie an( C!$#: lanning is a time consuming process. #he various steps in

planning may consume a lot of time because there is no limit of precision in planning tools.

'ince, the planning is proceeded with many course of action such as collection of

necessary information, careful analysis and interpretation etc., it is a costly affair.

. In8le;i9ili#+: lanning may result in integral rigidity in managerial work. 'uch

rigidity leads to delay in work performance. Many times, changes are not accepted even though

they are unavoidable.

. Dela+ (u*in' ee*'enc+ "e*i!(: 0uring emergencies, immediate and on the

spot actions are necessary which are not possible under planning. 'o, planning leads to delay in

action.

5. Fal$e $en$e !8 $ecu*i#+: #he management people may think that once the plansare formulated, action will automatically be efficient forever. It makes the management having a

false sense of security unless the plans are reviewed and revised periodically.

ORGANISINGORGANISING

1rganising is the process of identifying and grouping of activities re!uired to attain the

objectives, delegating authority, creating responsibility and establishing relationships for the

people to work effectively. (s a process, organisation refers to the process of determining,

arranging, grouping and assigning the activities to be performed for the attainment of objectives.

#hus, the organisation is a mechanism or structure which helps the activities to be performed

effectively. #he organisation is established for the purpose of achieving the business objectives.

(n organisation structure should be designed to clarify who is to do what task and who is

responsible for what results. #he organisation structure is designed both from mechanistic and

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A. ANANDA KUMAR / INDUSTRIAL MANAGEMENT / UNIT-1humanistic point of view. It is not only a mechanical structure of duties, activities and

relationships, but also web of human interactions within social group with attitudes and

aspirations.

De8ini#i!n:

(ccording toHaimann, 1rganising is the process of defining and grouping the activities

of the enterprise and establishing the authority relationships among them.

Koontz and ODonneldefine organizing as the grouping of activities necessary to attain

objectives, the assignment of each grouping to a manager with authority necessary to supervise

it, and the provision for co+ordination horizontally and vertically in the enterprise structure.

(ccording to Terry, 1rganising is the establishment of effective behavioural

relationships among

NATURE OF ORGANIATION

#he main characteristics of an organization are as follows2

1. C!!n O9@ec#i&e$: "very organization e*ists to achieve some common objectives.

(ll efforts of the organisation are directed towards this goal.

2. S"ecialia#i!n !* Di&i$i!n !8 La9!u*: #he total work of an organization is divided

into functions and sub+functions to get the benefits of specialization.. Au#h!*i#+ !8 $#*uc#u*e: #here is an arrangement of positions into a graded series.

#he authority and responsibility of each position is defined in the structure. #he chain of

superior and subordinate relationships is known as chain of command.

. G*!u" !8 "e*$!n$: (n organization is basically a group of persons. #herefore,

activity groupings and authority provisions must take into account the limitations and customs of

people. eople constitute the dynamic human element of an organization.

5. C!3!*(ina#i!n: #here is a mechanism for coordinating different activities and parts

of an organizations so that it functions as an integrated whole.

=. C!unica#i!n: "very organization has its own channels of communication.

#hese channels are necessary for mutual understanding and cooperation among members of an

organization.

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A. ANANDA KUMAR / INDUSTRIAL MANAGEMENT / UNIT-1as well as outside the organisation. It arises naturally on the basis of friendship or some common

interest which may or may not be related with work. or e*ample, the typists working in

different departments may form informal group due to similarity of work. 3ommon language,

common hobby, common habits may also lead to informal organisation.#he informal organisation relationship e*ists under the formal organisation also. #he

informal organisation gives a greater job satisfaction to the individuals and result in ma*imum

production.

$"antages of infor,al organisation

'ince informal organisation gives satisfaction to the workers, it motivates workers and

also maintains the stability of the work.

It fills up the gaps and deficiency of the formal organisation.

It fills up the gaps among the abilities of the managers.

#he presence of informal organisation encourages the e*ecutives to plan the work

correctly and act accordingly.

It is one of the useful channel of communication.

Disa"antages of infor,al organisation

Informal organisation may function in ways that are counter productive. #hey may stand

in the way of organisation achieving the objectives.

It indirectly reduces the effort of management to promote greater productivity.

It spreads rumor among the workers regarding the functioning of the organistion

unnecessarily.

ORGANISATIONAL CHARTS

1rganisational charts are prepared for the purpose of describing the organisational

structure clearly. (n organisation chart is a graphical portrayal of the various positions in the

enterprise and the formal relationships among them. It shows the organisational relationships

and activities within an organisation.

eorge !. Terry defines" #An organisation chart is a diagrammatical form $hich sho$s

the important aspects of an organisation incl%ding the ma&or f%nctions and their respective

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A. ANANDA KUMAR / INDUSTRIAL MANAGEMENT / UNIT-1relationships" the channels of s%pervision and the relative a%thority of each employee $ho is

incharge of each respective f%nction'.

H. Catty has defined, (n organisation chart is diagrammatic representation of the

framework or structure of an organisation.

KINDS OF ORGANISATION CHARTS

#here are several kinds of organisation charts. 'ome of them are described below21. %e*#ical Cha*#

3

3hairmen

Managing 0irector

ersonnel

Manager

Marketing

Manager

roduction

Manager

'upervisor for

operation (

/orkman I

'upervisor for

operation 3

'upervisor for

operation C

/orkman III/orkman II


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It shows the organisation structure in the form of a pyramid, the lines of communication

flow from top level to the bottom in vertical lines. #his vertical chart is in the form of a graph.

In this chart, the highest position is placed at the top after that the ne*t highest is shown in the

table. It is also known as Top(Do$n chart.

1 H!*i!n#al cha*# !* Le8# #! *i'h# cha*#

#he chart in which the line of command is flowing horizontally instead of vertical is

known as horizontal chart. #here is no much difference between vertical and horizontal chart.

In this chart, highest position is shown at the e*treme left and the lowest position at the e*treme

right.

2 Ci*cula* cha*# !* c!ncen#*ic cha*#

4

residentManaging0irector

Managing0irector

Managing

0irector

Managing0irector

CranchManager I

CranchManager II

Cranch

ManagerIII

'alesman I

'alesman III

'alesman II


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'upervisor III

'upervisor II

'upervisor I eo

In this chart, the position of the top e*ecutive is shown in the centre of the chart. #he

subordinates of these top e*ecutives are shown in all directions outward from the centre. 'uch a

chart is a better representation of the personnel relationships as it eliminates the status

implications.

STAFFING

'taffing is defined as filling and keeping filled, positions in the organization structure. It

includes identifying work force re!uirements, inventorying the people available and recruiting,

selecting, placing promoting, appraising and training developing both candidates and current

jobholders to accomplish their tasks effectively and efficiently. 'taffing is the part of the

management process which is concerned with the procurement, utilization, maintenance and

development of a large satisfied work force in the organization.

Na#u*e !8 S#a88in'

1 S#a88in' i$ an i"!*#an# ana'e*ial 8unc#i!n3'taffing function is the most important

mangerial act along with planning, organizing, directing and controlling. #he operations

5

roduction Marketing

Manager manager

ersonnel inance

Manager manager

chairman


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of these four functions depend upon the manpower which is available through staffing

function.

2 S#a88in' i$ a "e*&a$i&e ac#i&i#+3(s staffing function is carried out by all mangers and in

all types of concerns where business activities are carried out.

1 S#a88in' i$ a c!n#inu!u$ ac#i&i#+3#his is because staffing function continues throughout

the life of an organization due to the transfers and promotions that take place.

2 The 9a$i$ !8 $#a88in' 8unc#i!n i$ e88icien# ana'een# !8 "e*$!nnel$3 $uman

resources can be efficiently managed by a system or proper procedure, that is,

recruitment, selection, placement, training and development, providing remuneration, etc.

3 S#a88in' hel"$ in "lacin' *i'h# en a# #he *i'h# @!9.It can be done effectively through

proper recruitment procedures and then finally selecting the most suitable candidate as

per the job re!uirements.

4 S#a88in' i$ "e*8!*e( 9+ all ana'e*$depending upon the nature of business, size of

the company, !ualifications and skills of managers,etc. In small companies, the top

management generally performs this function. In medium and small scale enterprise, it is

performed especially by the personnel department of that concern.

S#a88in' 7*!ce$$ 3 S#e"$ in&!l&e( in S#a88in'

1 Man"!)e* *eui*een#$3#he very first step in staffing is to plan the manpower

inventory re!uired by a concern in order to match them with the job re!uirements and

demands. #herefore, it involves forecasting and determining the future manpower needs

of the concern.

2 Rec*ui#en#3 1nce the re!uirements are notified, the concern invites and solicits

applications according to the invitations made to the desirable candidates.

3 Selec#i!n3#his is the screening step of staffing in which the solicited applications are

screened out and suitable candidates are appointed as per the re!uirements.

1 O*ien#a#i!n an( 7laceen#31nce screening takes place, the appointed candidates are

made familiar to the work units and work environment through the orientation

programmes. placement takes place by putting right man on the right job.

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2 T*ainin' an( De&el!"en#3#raining is a part of incentives given to the workers in

order to develop and grow them within the concern. #raining is generally given according

to the nature of activities and scope of e*pansion in it. (long with it, the workers are

developed by providing them e*tra benefits of indepth knowledge of their functionalareas. 0evelopment also includes giving them key and important jobsas a test or

e*amination in order to analyse their performances.

3 Reune*a#i!n3It is a kind of compensation provided monetarily to the employees for

their work performances. #his is given according to the nature of job+ skilled or

unskilled, physical or mental, etc. ;emuneration forms an important monetary incentive

for the employees.

4 7e*8!*ance E&alua#i!n3In order to keep a track or record of the behaviour, attitudes as

well as opinions of the workers towards their jobs. or this regular assessment is done to

evaluate and supervise different work units in a concern. It is basically concerning to

know the development cycle and growth patterns of the employees in a concern.

5 7*!!#i!n an( #*an$8e*3romotion is said to be a non+ monetary incentive in which the

worker is shifted from a higher job demanding bigger responsibilities as well as shifting

the workers and transferring them to different work units and branches of the same

organization.

CONTROLLING

3ontrolling consists of verifying whether everything occurs in confirmities with the plans

adopted, instructions issued and principles established. 3ontrolling ensures that there is effective

and efficient utilization of organizational resources so as to achieve the planned goals.

3ontrolling measures the deviation of actual performance from the standard performance,

discovers the causes of such deviations and helps in taking corrective actions

(ccording to Crech, 3ontrolling is a systematic e*ercise which is called as a process of

checking actual performance against the standards or plans with a view to ensure ade!uate

progress and also recording such e*perience as is gained as a contribution to possible future

needs.

7


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(ccording to 0onnell, Hust as a navigator continually takes reading to ensure whether he

is relative to a planned action, so should a business manager continually take reading to assure

himself that his enterprise is on right course.

3ontrolling has got two basic purposes1 It facilitates co+ordination

2 It helps in planning

Fea#u*e$ !8 C!n#*!llin' Func#i!n

ollowing are the characteristics of controlling function of management+

1 C!n#*!llin' i$ an en( 8unc#i!n3( function which comes once the performances are

made in confirmities with plans.

2 C!n#*!llin' i$ a "e*&a$i&e 8unc#i!n3which means it is performed by managers at all

levels and in all type of concerns.

3 C!n#*!llin' i$ 8!*)a*( l!!kin'3because effective control is not possible without past

being controlled. 3ontrolling always look to future so that follow+up can be made

whenever re!uired.

4 C!n#*!llin' i$ a (+naic "*!ce$$3since controlling re!uires taking reviewal methods,

changes have to be made wherever possible.

5 C!n#*!llin' i$ *ela#e( )i#h "lannin'3 lanning and 3ontrolling are two inseperable

functions of management. /ithout planning, controlling is a meaningless e*ercise and

without controlling, planning is useless. )lanning pres%pposes controlling and

controlling s%cceeds planning.

7*!ce$$ !8 C!n#*!llin'

3ontrolling as a management function involves following steps2

1 E$#a9li$hen# !8 $#an(a*($3'tandards are the plans or the targets which have to be

achieved in the course of business function. #hey can also be called as the criterions for

judging the performance. 'tandards generally are classified into two+

a. Measurable or tangible + #hose standards which can be measured and e*pressed

are called as measurable standards. #hey can be in form of cost, output,

e*penditure, time, profit, etc.

8


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b. Don+measurable or intangible+ #here are standards which cannot be measured

monetarily. or e*ample+ performance of a manager, deviation of workers, their

attitudes towards a concern. #hese are called as intangible standards.

3ontrolling becomes easy through establishment of these standards because controllingis e*ercised on the basis of these standards.

1 Mea$u*een# !8 "e*8!*ance3#he second major step in controlling is to measure the

performance. inding out deviations becomes easy through measuring the actual

performance. erformance levels are sometimes easy to measure and sometimes difficult.

Measurement of tangible standards is easy as it can be e*pressed in units, cost, money

terms, etc. uantitative measurement becomes difficult when performance of manager

has to be measured. erformance of a manager cannot be measured in !uantities. It can

be measured only by+

a. (ttitude of the workers,

b. #heir morale to work,

c. #he development in the attitudes regarding the physical environment, and

d. #heir communication with the superiors.

It is also sometimes done through various reports like weekly, monthly, !uarterly, yearly

reports.

2 C!"a*i$!n !8 ac#ual an( $#an(a*( "e*8!*ance33omparison of actual performancewith the planned targets is very important. 0eviation can be defined as the gap between

actual performance and the planned targets. #he manager has to find out two things here+

e*tent of deviation and cause of deviation. "*tent of deviation means that the manager

has to find out whether the deviation is positive or negative or whether the actual

performance is in conformity with the planned performance. #he managers have to

e*ercise control by e*ception. $e has to find out those deviations which are critical and

important for business. Minor deviations have to be ignored. Major deviations like

replacement of machinery, appointment of workers, !uality of raw material, rate of

profits, etc. should be looked upon consciously. #herefore it is said, If a manager

controls everything, he ends up controlling nothing. or e*ample, if stationery charges

increase by a minor ? to 47J, it can be called as a minor deviation. 1n the other hand, if

monthly production decreases continuously, it is called as major deviation.

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1nce the deviation is identified, a manager has to think about various cause which has led

to deviation. #he causes can be+

a. "rroneous planning,

b. 3o+ordination loosens,c. Implementation of plans is defective, and

d. 'upervision and communication is ineffective, etc.

3 Takin' *ee(ial ac#i!n$31nce the causes and e*tent of deviations are known, the

manager has to detect those errors and take remedial measures for it. #here are two

alternatives here+

a. #aking corrective measures for deviations which have occurredF and

b. (fter taking the corrective measures, if the actual performance is not in

conformity with plans, the manager can revise the targets. It is here the controlling

process comes to an end. ollow up is an important step because it is only through

taking corrective measures, a manager can e*ercise controlling.

T,7ES OF O


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In this type, the single ownership where an individual e*ercises and enjoys these rights in

his own interest. It does well for those enterprises which re!uire little capital and lend

themselves readily to control by one person.

A(&an#a'e$ !8 a $!le "*!"*ie#!*$hi"

1 'implest and least e*pensive form of business to establish and to dissolve.

2 #he owner is making all the decisions and controlling the whole operations.

3 (ll profit flows directly to the owner.

4 It is subject to fewer regulations.

5 It has ta* advantage2 any income is declared as the owner&s personal income ta* return,

therefore there are no corporate income ta*es.

Di$a(&an#a'e$ !8 a $!le "*!"*ie#!*$hi"

1 #he owner is responsible for all the obligations of the business.

2 It is difficult to raise capital2 it can only use the owner&s personal saving and consumer

loans.

7ARTNERSHI7

( single owner becomes inade!uate as the size of the business enterprise grows. $e may

not be in a position to do away with all the duties and responsibilities of the grown business. (t

this stage, the individual owner may wish to associate with him more persons who have either

capital to invest, or possess special skill and knowledge to make the e*isting business still more

profitable. 'uch a combination of individual traders is called artnership.

artnership may be defined as the relation between persons who have agreed to share the

profits of a business carried on by all or any of them acting for all. Individuals with common

purposes join as partners and they put together their property ability, skill, knowledge, etc., for

the purpose of making profits

A(&an#a'e$ !8 a "a*#ne*$hi"

1 It is relatively easy to form but considerable amount of time should be invested in

developing the partnership agreement.

1


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2 It is easier to raise capital compared to a sole proprietorship as there are more than one

investor.

3 (ny income is declared as the partners& personal income ta* returns, therefore there are

no corporate income ta*es.

4 "mployees may be motivated and attracted to the business by the inventive to become a

partner

Di$a(&an#a'e$ !8 a "a*#ne*$hi"

1 artners are jointly responsible for all the obligations of the business.

2 artners must make decision together therefore disputes or conflicts may occur. It may

eventually lead to dissolving the partnership.

COR7ORATION

It is a form of private ownership which contains features of large partnership as well as

some features of the corporation. ( corporationis a limited liability entity doing business owned

by multiple shareholders and is overseen by a board of directors elected by the shareholders. It is

distinct from its owners and can borrow money, enter into contracts, pay ta*es and be sued. #he

shareholders gain from the profit through dividend or appreciation of the stocks but are not

responsible for the company&s debts.

A(&an#a'e$ !8 a c!*"!*a#i!n

1 It can raise additional funds through the sale of stock.

2 'hareholders can easily transfer the ownership by selling their stock.

3 Individual owner& liability is limited to the value of stock they are holding in the

corporation.

Di$a(&an#a'e$ !8 a c!*"!*a#i!n

1 It is restricted by more regulations, more closely monitored by governmental agenciesand are more costly to incorporate than other forms of the organizations.

2 rofit of the business is ta*ed by the corporate ta* rate. 0ividends paid to shareholders

are not deductible from corporate income, so this part of income is ta*ed twice as the

2


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shareholders must declare dividends as their personal income and pay personal income

ta*es too.

7ULIC LIMITED COM7AN,

( public enterprise is one that is A4= 1wned by the state, A>= Managed by the state or AB=

1wned and managed by the state.

ublic enterprises are controlled and operated by the 8overnment either solely or in

association with private enterprises. It is controlled and operated by the 8overnment to produce

and supply goods and services re!uired by the society. )imited companies which can sell share

on the stock e*change are ublic )imited companies. #hese companies usually write )3 after

their names.

A(&an#a'e$

#here is lii#e( lia9ili#+ for the shareholders.

#he business has $e"a*a#e le'al en#i#+. #here is continuity even if any of the

shareholders die.

#hese businesses can *ai$e la*'e ca"i#al sum as there is no limit to the number of

shareholders.

#he shares of the business are 8*eel+ #*an$8e*a9le providing more li!uidity to its

shareholders .

Di$a(&an#a'e$

#here are lot of le'al 8!*ali#ie$re!uired for forming a public limited company. It is

costly and time consuming.

In order to protect the interest of the ordinary investor there are $#*ic# c!n#*!l$ an(

*e'ula#i!n$to comply. #hese companies have to publish their accounts.

#he original owners may l!$e c!n#*!l.

ublic )imited companies are huge in size and may face ana'een# "*!9le$such as

slow decision making and industrial relations problems.

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7RI%ATE LIMITED COM7ANIES

#hese are closely held businesses usually by family, friends and relatives.

rivate companies may issue stock and have shareholders. $owever, their shares do not trade on

public e*changes and are not issued through an initial public offering.

'hareholders may not be able to sell their shares without the agreement of the other shareholders.

A(&an#a'e$

Lii#e( Lia9ili#+:It means that if the company e*perience financial distress because of

normal business activity, the personal assets of shareholders will not be at risk of being

seized by creditors.

C!n#inui#+ !8 e;i$#ence: business not affected by the status of the owner.

Minimum number of shareholders need to start the business are only>.

More capital can be raised as the ma*imum number of shareholders allowed is ?7.

Sc!"e !8 e;"an$i!nis higher because easy to raise capital from financial institutions and

the advantage of limited liability.

Di$a(&an#a'e$

8rowth may be limited because a;iu $ha*eh!l(e*$allowed are only ?7.

#he shares in a private limited company cann!# 9e $!l( !* #*an$8e**e(to anyone else

without the agreement of other shareholders.

4

Documents

Industerial Relations.rtf