Notes for IDM 11

7/23/2019 Notes for IDM 11

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Notes for IDM 11

Business Enterprise

- Business Enterprise is a work organization especially created to produce goods and services

for the community

o Produces goods for the market and consumers

o Yield profits for owners or dividends for shareholders

o Generates services for employees in terms of jobs careers income perks and welfare

- !n enterprise also produces by-products

o "evenue for the state payable in the form of various ta#es

o $ervices for the community such as employment promotion housing medical care

o Power for the bosses which they may use to ac%uire personal status as well as for

influencing public policies

- Every enterprise has four key features &''($)

o 'harter* ! statement of aims and objectives the purpose for which the enterprise has been created+ ,his may be stated in the form of (emorandum of !ssociation or

!rticles of !ssociation

o 'ulture* (ay be influenced by the personal philosophy and values of promoters

social environment e#pressed through methods and procedures of work and conveyed

through business policy and communication system

o ecision (aking and .mplementation (achinery* ,o translate policies into actions

o (echanism of $ocialization of /ew (embers* $tructured into recruitment selection

and training programmes which gives the new comers the re%uired behaviour pattern

- $elf-interest brings people together to join an enterprise+ ,he enterprise provides a framework

for control and coordination of diverse skills necessary for achievement of the common goal

- Profits and 'orporate 'itizenship

o Goal of an enterprise is to attain the optimum efficiency and effectiveness

o Profits are a function of efficiency of operations of an enterprise

o 0alid test to determine the organization health of an enterprise is the efficiency of its

operations rather than profitability

o 1olders of the power may not necessarily be the owners of an enterprise+ ,hey are

professional managers hired to do a job

o Profit can be used as a measure of success but it need not be the goal of an enterprise

certainly not for the professional manager

- 2orms of Business Enterprise

o Proprietary and Partnership firms

3nlimited liability is a great risk

2inancial institutions hesitate to entertain re%uest for assistance from such

firms

o 'ompanies

Private limited companies the total number of shareholders cannot be more

than 45 shares are not %uoted on stock e#change and li%uidity of shares is

restricted

Public limited companies offer their shares to larger public and the shares are

widely distributed among shareholders+ $hares can be %uoted on the stock

e#change and are li%uid assetso (ultinational 'orporations



1ave their head%uarters in one country but their operations in many countries

(odern (/'s have a geocentric orientation+ ,his means that the total

organization is viewed as an interdependent system operating in many

countries

!dvantages

•'an take advantage of business opportunities in different countries

• 'an raise money for its operations throughout the world

• !ble to establish their production facilities in countries where their

products can be produced most effectively and efficiently

• 'an recruit from a worldwide labour pool

'hallenges

• .ncreasing nationalism

• ,o maintain good relations with the host country

Entrepreneur

- !n entrepreneur is one who undertakes an economic venture owns organizes promotes andmanages it and assumes the risk of business

- (anagement refers to the e#ecutive action of planning organizing directing controlling and

supervising any business with responsibility for results

- (anagement is a means to accomplish an end6 the end is determined by entrepreneurship

- !ttributes of an Entrepreneur &7P8PE)

o 7pportunity 2inding

"esults in business are obtained by e#ploiting opportunities not by solving

problems

.t means that effectiveness rather than efficiency is essential for business

,he relevant %uestion is not how to do things right but how to find right

things to do and to concentrate resources and efforts on them

!n entrepreneur is in search of right things to do a manager is preoccupied

with how to do things right

o Problem 2inding

Problem finding is more important than problem solving and much more

comple#

Entrepreneurship calls for the ability to foresee and identify problems that

need to be solved before it is too late

1e must be able to read meaning into changes in methods of doing business

and into actions of customers and competitors which may not show up inwritten statements or reports

! manager is trained in problem solving and an entrepreneur is a problem

finder

o 8ill to (anage

,here is a 9way to manage: and a 9will to manage:

! person can be trained on the 9way to manage: but 9will to manage: is

something he must have

,he 9will to manage: is a crucial factor therefore in determining whether a

person can get effective results from others

! good performer or a high achiever may be a 9do-it-yourself: type but may

not be able to make other people e#cel at their jobso /eed for Power



Entrepreneurs are power seekers

,hey strive hard to reach positions where they can e#ercise authority over

increasingly large number of people

! person who makes millions continues to work even harder and to make

more money for what it can get for him

!n entrepreneur without need for power may set up an enterprise and evenmake money but will remain an mere trader

o 'apacity for Empathy

!bility to cope with the emotional reactions that inevitably occur when

people work together in an organization

.t is often said that trained managers are emotion blind and may not be able to

cope with human emotions in an organization

Entrepreneurs capacity to handle emotions get them loyal colleagues who

stand with them all the way through from the backyard days of starting to the

present day empire

- ,ypes of Entrepreneurs

o $mall $cale $ector

o $ons of .ndustrialists

o Professional (anagers

o Public $ector E#ecutives

$tructure of an Enterprise

- .nformal Groups

- (anagement

o $upervisors

o (iddle management

o ,op management- Board of irectors

- Employees



(anagement

- 8ithout some form of organization and order therein the group will not be able to achieve

anything it will be just a crowd with everyone pulling in different directions

- (anagement is what a manager does+ (anagement is getting things done through others

- (anagement is the process of designing and maintaining an environment in which

individuals working together in groups efficiently accomplish selected goals

- ecision making is the most critical attribute of being a manager+ (anager must also take

action

- (anagement ; !rt or $cience

o $ome people argue that management is an art as managers are born not made

o 1owever management has become a profession with following attributes

(anagement has a body of knowledge of its own ; theories concepts etc

and it is growing continuously .t has skills of the practice of profession that are codified communicable and

can be used for imparting training

7ffer career to its members ; paid jobs to practice the profession

Presence of professional organizations that regulate entry into the profession

o (anagement has become a professional discipline and a science

o Given the basic aptitude and opportunities all men and women can train themselves

as managers and engage in professional practice

- 2unctional !reas of (anagement

o Production 2inance (arketing Personnel Procurement Public "elations and

7perations "esearch

- (anagement Processes

o Processes refer to a set of activities se%uentially arranged and designed to produce a

specific output

o .ndividual tasks< functions within a process are important but none of them matter if

the process does not deliver the goods

o Every function must pass through various management processes+ !nd every process

applies to all functions

- (anagement ,echni%ues* ,echni%ues are essentially ways of doing things

o 0alue Engineering

! proven management techni%ue using a systematized approach to seek outthe best functional balance between the 'ost Performance and "eliability of

a product or a project

.t seeks to improve the management capability of people and to promote

progressive change by identifying and removing unnecessary costs

,he systematic approach of value engineering is =ob Plan+ ,he =ob Plan is the

road map6 for defining the re%uired task and determining the most

economical combination of functions to achieve the task

=ob Plan consists of five steps &.'=")

• .nformation Phase

• 'reative Phase

• =udgement Phase• evelopment Phase



• "ecommendation Phase

0alue Engineering is

• $ystem 7riented* formal job plan to identify and remove unnecessary

costs

• (ultidiscipline ,eam !pproach* terms of e#perienced designers and

consultants• >ife 'ycle 7riented* e#amines the total cost of owning and operating

a facility

• Proven (anagement ,echni%ue

• 2unction 7riented* related function re%uired to the value received

0alue Engineering is not

• esign "eview

• 'heapening Process

• "e%uirement one on !ll esigns

• ?uality 'ontrol

o Benchmarking

.t is a process of systematic and continuous approach to identify the

benchmark compare yourself to the benchmark and identify practices that

enable you to become the new 9Best-in-class:

.t should be seen as a means of enhancing competitive behaviour and of

searching for ways of doing business more effectively

Benchmarking helps drive rapid business improvement in three ways

• ?uantification of the gap between internal and e#ternal practices

creates the need for change

• 3nderstanding industry best practices identifies what is to be

changed

• E#amination of e#ternally benchmarked practices gives a picture of

what the future holds after change Preparing for Benchmarking* starts with self-study

• efine your objectives

• @now your processes

,ypes of Benchmarking

• $trategic

• Performance

• Process

8ho to Benchmark !gainstA

• .nternal

•

'ompetitors• 2unctional

• Generic

o Business Process "eengineering &BP")

"eorganizing the processes rather than functions and e#ploiting the potential

of information technology

"eengineering implies the fundamental rethinking and radical redesign of the

business process to achieve dramatic improvements in critical contemporary

measure to cost %uality service and speed

,he first principle is that reengineering begins with no assumptions+

"eengineering means starting over from the scratch

,he term radical design is getting to the root of the problem+ ,he second

principle is that reengineering is about business reinvention



,he term dramatic is not about making marginal improvements but about

achieving %uantum of leaps in performance+ ,he third principle of

reengineering is that dramatic improvement demands blowing up the old and

replacing it with something new

,he fourth and final principle of reengineering is that the shift to process

based thinking is need of the day+ "eengineering re%uires looking at the business as a whole and introduce change in a manner that triggers off

changes in the entire way of doing business in the desired direction and to the

desired level

Business Process

• ! process may be defined as transformation of inputs into outputs

• ,here are three types of business processes within an organization

o End to end business processes

,ake inputs from outside the boundaries of an

organization and produce goods and services for

delivery to the customers outside the boundaries of

the organization

o 2unnel business processes

(ove from broad long term inputs to defined

outputs

o 'omposite business processes

!ct as a holding category for business processes

which cannot be fitted into the other two until

rationalization can be made

• ,he business processes in a reengineering organization are few in

number ; perhaps only four to si# should be networked together+

7ther processes should be ordered hierarchically under business

processes

o Partnering Partnering assumes that the parties share sufficient common goals to warrant

a more collaborative relationship

,his means that both the contractors and the owners would want projects

completed safely and on time+ /either party wants rework and would prefer

to avoid costly litigation+ Each party would like to reduce costs while at the

same time improve %uality

'onditions for $uccess

• !cceptance by the partners that it is worth making the investment in

building a partnering arrangement

• Potential for improvement in the product or service that is subject of

partnering arrangement• ,o achieve full benefits of partnering it has to be a medium to long

term strategy

• >ong term commitment to strategic partnering arrangements by

senior management is an essential pre-re%uisite

• 7rganizations should have similar work culture compatibility and

be financially stable

• !rrangement should be based on e%uality rather than being a one

sided paternalistic relationship

• Partners should have an interest in each others profitability and seek

to take an e%ual share of risks

• 2ree and open e#change of information is an important characteristicof good partnering



• ,here should be annual review of performance

• "eal efficiency re%uires the whole team to work reliably and

efficiently



$cientific (anagement ,heory &2redrick ,aylor)

- ,aylor propounded that there was no inherent conflict between labour and employers

- >abour wanted more income employers wanted more profits and the consumer wanted a

better price+ !ll of them could be benefited only if the plant itself produced more

- ,herefore it was in the interest of everyone to produce more and thereby take more

- ,he real problem was in determining a fair days pay for a fair days work+ 2or this if a

%uantitative method could be evolved wherein a worker could know the basis of his wages

and in which his income moved up along with the increase in efforts put in the he would be

more rational and more production oriented

- .t is for employers to establish a scientific approach to management which he said was based

on five basic rules

o "eplacing thumb rule with organized knowledge

o 7btaining harmony in group action

o !chieving cooperation for all rather than individuals

o 8orking for ma#imum output rather than restricted output

o eveloping of workers ability to their fullest e#tent possible for their own and their

companys prosperity- ,aylor advised the employers to establish the following four management practices

o $cientific management of work

o 'lear procedures of work

o "ational wage structure

o "ight man for the right job

1uman "elations ,heory &Elton (ayo)

- ,he Generic Electric Plant was undergoing high labour turnover absenteeism and production

fall for no e#plicable reason

- ,he company felt this was due to fatigue as well as lack of proper lighting and other physicalamenities at the work place+ ,he needful was done

- ,he production went up but the problem was that while these conditions were not present in

the control group its production also went up

- .t was not of the fact of giving better conditions but the feeling that this action created

amongst the employees that did the trick

- >ater when the workers were asked to elect representatives that would sit with the

management to discuss working conditions the production soared up without any regard to

whether changes made or not

- !nother department of the same company never showed any improvement in production

irrespective of whatever management did

- Production fluctuated up and down for no particular reasons due to which management did

not feel in control of the situation- (ayo identified the role of informal groups in shop floor management+ 1e found that people

organize themselves into small groups on the basis of interests and someone emerged as

leader of the group

- (ayo said that a management should accept the role of informal groups and involve informal

groups leaders into management processes

- ,he formal management should be trained in human relations in order to achieve better

production

,heory C D Y &(cGregor)

- ,heory C was a label for the traditional management approach of pushing people and

e#tracting work out of them- ,heory C was based on the premise that



o People did not like to work basically

o $ome kind of authority threat of punishment needed to be held on their heads to

make sure that they worked

o People did not like to think for themselves+ ,herefore they should be told what to do

- ,heory Y was based on the following premises

o

People do not like or dislike work as such+ "ather they develop an attitude towardswork based on their e#perience in the past

o 8hile authoritarian methods can get work done in the short run it will not work in

the long run

o People select the goals for themselves if they see some kind of reward in it

o 7nce a person sets a goal for himself he will pursue it vigorously

o (ost people under right circumstances seek responsibility for self-fulfilment

- (ost powerful motivating force to an individual was the possibility of financial gains coupled

with the possibility of personal growth

(anagement $ystem ,heory &1enri 2ayol)

- 1e said all activities of an enterprise could be divided into groups &,'2$!()o ,echnical ; production

o 'ommercial ; buying selling and e#changing

o 2inancial ; creating resources and making optimal use of capital

o $ecurity ; protection of property persons and health

o !ccounting ; book keeping and statistics

o (anagerial ; planning organization coordination and control

- 2ayol pointed out that the first 4 activities are well known and they e#isted in businesses of

any kind and size+ ,herefore he devoted attention to the th activity i+e+ (anagerial

- Persons responsible for management must have re%uired managerial %ualities which are listed

as below &P((EE,)

o Physical i+e+ good health and vigour o (ental i+e+ ability to understand learn judge and predict

o (oral i+e+ energy willingness to accept responsibility initiative and loyalty

o Educational i+e+ e#pert knowledge of ones own field and ability to work with other

disciplines

o E#perience i+e+ performance in the past which a person is able to analyze cosdify and

use for work in future

o ,echnical i+e+ e#pertise in ones own profession

- 2ayols fourteen general principles of management

o ivision of work

o !uthority and responsibility

o isciplineo 3nity of command

o 3nity of direction

o $ubordination of self-interest to the corporate interest

o 1uman relations

o 'entralization

o 'hain of authority

o 7rderliness i+e+ place for everything and everything in place

o ?uality

o $tability of tenure i+e+ offering a career

o .nitiative

o ,eam spirit



(otivation ,heory &1erzberg)

- 1erzberg was concerned about the fall in production which varied from time to time for no

particular identifiable reason

- 1e had interviews with engineers and asked them recall specific incidents which made them

feel particularly good or bad about their jobs

- ,his led to identification of a series of factors in the work situation of individuals that

influenced their attitudes and performance and whose intensity and duration affected their

work behaviour

o 1ygiene 2actors

=ob job security work rules promotions incentives leaves employment

practices

o (otivating 2actors

!ttitudes feeling about job desire to e#cel care and concern about %uality

- Based on the study and classification of factors he concluded as below

o 1ygiene factors when inade%uate had negative effect on employees attitudes+

1owever when present they had no positive effect

o 1ygiene factors are something that have to be provided and without which no personworth his while will join the organization

o 1ygiene factors are necessary to create motivation but are powerless by themselves

o ,he lesson for management is that if you do not provide hygiene factors you risk not

having productivity and you do not e#pect motivated workforce

o .f you are looking for %uality desire to e#cel concern for economy care of the

materials and e%uipments then you need to create a motivating environment and this

is what 1erzberg called (anagement

o 1e said four things were important

,reating people as individuals not as foreman mechanic peon etc

Giving true respect to them as dignified human beings

.nvolving them in taking decisions that affect their careers and lives

Giving them a feeling through involvement and training that staying with the

company is contributing to their career development

/eeds 1ierarchy ,heory &(aslow)

- (aslows studies led him to conclude that man was never contended+ You can never really

buy content for people by giving them what they want

- /eeds were of three orders

o Physical needs i+e+ needs to satisfy hunger protection against nature and well being of

self and family

o $ocial "elationship needs i+e+ belonging to a group recognitions and promotions

o Power $ocial and $ocietal Esteem needs

- 7ne need replaces another and the process continues

- (oney is worth what it can buy and some people have all that is worth having+ ,herefore the

needs that motivate them to keep striving to work hard to e#pand must be of a different order

altogether

- ,odays motivators are likely to become tomorrows hygiene factors

(c@inseys F$ !pproach

- ,he basic premise of the model is that there are seven internal aspects of an organization that

need to be aligned if it is to be successful

- ,he F$ model can be used in a wide variety of situations where an alignment perspective isuseful such as to



o .mprove the performance of a company

o E#amine the likely effects of future changes within a company

o !lign departments and processes during a merger or ac%uisition

o etermine how best to implement a proposed strategy

- ,he (c@insey F$ model involves seven interdependent factors which are categorized as

either hard or soft elementso 1ard elements

$trategy

• ,he plan devised to maintain and build competitive advantage over

the competition

$tructure

• ,he way the organization is structured and who reports to whom

$ystems

• ,he daily activities and procedures that staff members engage in to

get the job done

o $oft elements

$hared 0alues

• 'ore values of the company that are evidenced in the corporate

culture and the general work ethic

$kills

• $kills and competencies of the employees working for the company

$tyle

• $tyle of leadership adopted

$taff

• Employees and their general capabilities

- 1ard elements are easier to define and management can directly influence them

- $oft elements are more difficult to describe and less tangible and more influenced by culture

- Placing $hared 0alues in the middle emphasizes that these values are central to thedevelopment of all other critical elements

- ,he original vision of the company was formed from the values of the creators+ !s the values

change so do all the other elements



Planning

- Plan

o Plan is a projected course of action

o Project plan will spell out the details in which the activities will be carried out

resources will be deployed and time frames when certain outputs should be e#pectedo Planning is the process of determining objectives setting time frames creating

options and choosing the most efficient one6 estimating types and %uantum of

re%uirement of resources and allocating them

o Planning always deals with future and it always precedes action

- Basic ,erms

o 7bjectives* Ends towards which an activity is aimed

o $trategy* 'ourse of action decided to achieve the goal

o Policy* $tatement which guides the actions and decisions of managers

o Procedure* (ethod of handling work in an enterprise

o "ule* >ike procedure e#cept that it has no chronology or se%uence

o Programme* 'omple# of objectives strategies procedures and rules

o Budget* $tatement of e#pected performance results in numerical terms

- >evels of Planning

o 'orporate Planning

Process of planning for the enterprise as a whole

o Project Planning

$eries of activities that may be undertaken to complete a project within the

time cost and %uality parameters

o $ite Planning

- ,ypes of Planningo $trategic Planning

>ong term planning process

o ,actical Planning

$hort term planning which offers a great scope of fle#ibility correction and

reallocation of resources

o "olling Planning

>ink between long term and short term planning

Plan for short time intervals that fit se%uentially in the long term plan

o 'ontingency Planning

Emergency or standby plans

"esorted to if the plan under implementation fails

- $teps in Planning &7P7'")

o $etting 7bjectives

7bjectives state the end results desired+ >esser the number better the focus

7bjectives are supported by sub-objectives+ 7rganization will have

objectives departments will have sub-objectives

7bjectives form a hierarchy from broad to specific+ Board of irectors may

set objectives in broad terms management will convert them to more specific

7bjectives form a network of desired results+ .f they are not inter-connected

or if they do not support one another managers may pursue paths that may

seem good for their own departments but may be detrimental to the companyas a whole



7bjectives should be %uantifiable and verifiable+ .nstead of saying 9to make

reasonable profits: be specific like 9to achieve HI p+a+ rate of return on

investment:

o Premising* (aking !ssumptions

,o establish circulate and obtain agreement to utilize critical planning

premises such as forecasts applicable basic policies and e#isting company plans

,hey are assumptions about the environment in which the plan is to be

carried out

,he more thoroughly individuals who are charged with planning understand

and agree to utilize consistent planning premises the more coordinated

enterprise planning will be

2orecasting is important to premising

.t would not be profitable or realistic to make assumptions about every detail

of the future environment and hence is limited to assumptions that are critical

or strategic to a plan

o 'reating 7ptions

,o search for and evaluate alternative courses of action

,he more common problem is not finding alternatives but reducing the

number of alternatives so that the most promising may be analyzed

o Evaluating !lternative 'ourses

,o evaluate the alternatives by weighing them in the light of premises and

goals

7ne course may appear to be the most profitable but it may re%uire a large

cash outlay and have a slow payback6 another may look less profitable but

may involve less risk6 still another may suit the companys long term

objectives

,here are so many alternative courses in most situations and so many

variables and limitations to be considered that evaluation can be e#ceedinglydifficult

o $electing a 'ourse

!n analysis and evaluation of the alternative courses will disclose that two or

more are advisable and the manager may decide to follow several courses

rather than the one best course

o 2ormulating erivative Plans

erivate plans are almost invariably re%uired to support the basic plan

o Estimating "esource "e%uirement

,o numberize them by converting plans into budgets

- (ost Essential Guiding Principles of Planning are listed below*o ,he Purpose and /ature of Planning

Principle of 'ontribution to 7bjectives

• ,he purpose of every plan and all supporting plans is to promote the

accomplishment of enterprise objectives

Principle of 7bjectives

• .f the objectives are to be meaningful to people they must be clear

attainable and verifiable

Principle of Primacy of Planning

• Planning logically precedes all other managerial functions

Principle of Efficiency of Plans



• ,he efficiency of a plan is measured by the amount it contributes to

purpose and objectives as offset by the costs re%uired to formulate

and operate it

o ,he $tructure of Plans

Principle of Planning Premises

•,he more thoroughly individuals who are charged with planningunderstand and agree to utilize consistent planning premises the

more coordinated enterprise planning will be

Principle of $trategy and Policy 2ramework

• ,he more strategies and policies are clearly understood and

implemented in practice the more consistent and effective will be the

framework of enterprise plans

o ,he Process of Planning

Principle of the 'ritical 2actor

• ,he more accurately individuals can recognize and solve for those

factors which are critical to the attainment of the desired goal the

more easily and accurately they can select the most favourablealternative

,he 'ommitment Principle

• >ong range planning is not really planning for decisions but rather

planning for the future impact of todays decisions

Principle of 2le#ibility

• Building fle#ibility into plans will lessen the danger of losses

incurred through une#pected events

Principle of /avigational 'hange

• "edraw plans periodically as necessary to maintain a course towards

a desired goal

•

3nless plans have fle#ibility built-in navigational change may bedifficult or costly



7rganizing

- 7rganizing Process

o 7rganizing process brings together the basic resources of an enterprise in an orderly

manner and arranges people and resources in an acceptable pattern so that they could

perform the re%uired activities efficiently and achieve the objectiveso 7rganizing process deals with creating a structure assigning duties of individuals and

groups setting up an hierarchy for smooth and efficient working and sorting out

issues of authority leadership and delegation

- 'reating a $tructure

o ,hree basic steps involved in creating a structure are*

8ork is distributed among departments

Persons are assigned to perform this divisional work

(ethods and procedures of handling work as well as role relationship are laid

down

o ,he structure or form of organization must remain fle#ible and should change as new

problems are encounteredo "ecently the matri# form of organization has emerged

o 2lat vs ,all $tructures

3nder flat organization structure

• ,here is e#tensive delegation or decentralization of authority

• By pushing down authority in the hierarchy span of control can be

widened

• .mproved vertical communication

• "apid decision making

• Better development of subordinates

• 'entralized financial control

- !ssigning uties

o 'omprises of following steps*

etermining the duties

Grouping duties

!ssigning authority

$pan of control

- epartmentalization

o By $imple /umbers

7n decline because of skill differentiation of workers

o By ,ime

Based on shifts

o By 2unctions

epartments according to nature of work in the organization such as finance

marketing production personnel

!dvantages

• Efficiency and Economy

• $implifies ,raining

• Permits 7ccupational $pecialization

• ,ighter 'ontrols Possible

•

"esponsibilities can be 2i#ed isadvantages



• >oyalty develops to function and not to company as whole

• Profitability becomes the concern of top management where all

functions merge

• .nter-departmental coordination is difficult

o By ,erritory

Jone wise or "egion wise !dvantage is that local action is taken on time and the span of control is

reduced

o By Products

Products of similar nature are grouped together and created as a department

,he Product (anager then looks after all aspects ; production marketing

finance personnel etc

,his method permits better planning better controls and profitability of the

product can be seen more clearly

.ts advantages are that the problems of coordination and integration are

detected early and dealt with promptly

!lso helps to keep problems of one product isolated from others

.ts drawbacks include the reduced opportunity to use professional e#pertise

for the other products of the organization

'ommunication among specialists since they are now in different units is

hampered

- 7rganization $tructure

- $pan of 'ontrol !uthority and elegation

o You can delegate only that much which you can manage and control

o !uthority and elegation are essentially the pattern of relationships

(anager ! delegates to B D '+ ,he resultant relationships that come into

e#istence are

• ! --------- B

• ! --------- '

• ! --------- B K ' &Group relationship)

• ' --------- B &'ross $ectional relationship)

• B --------- '

• B K ' ---- ! &'ollective relationship)

- ,ips on 1ow to o 7rganizing $uccessfully

o ont o it Yourself

o

'ommunicate 'onstantlyo Go from the People to the People

o 7rganizing lines on its 'ampaigns

o (anagers are also (anaged

o o things with the 8orkers and not merely for them

- (ost Essential Guiding Principles of 7rganizing are listed below*

o ,he Purpose of 7rganizing

Principle of 3nity of 7bjectives

• !n organization structure is effective if it enables individuals to

contribute to enterprise objectives

Principle of 7rganizational Efficiency



• !n organization is efficient if it is structured for accomplishment of

enterprise objectives

o ,he 'ause of 7rganizing

$pan-of-management principle

• .n each managerial position there is a limit to the number of persons

an individual can effectively manage but the e#act number willdepend on the impact of underlying variables

o ,he $tructure of 7rganization* !uthority

$calar Principle

• ,he clearer the line of authority from the ultimate management

position in an enterprise to every subordinate position the clearer

will be the responsibility for decision making and the more effective

will be organizational communication

Principle of elegation by "esults E#pected

• !uthority delegated to all individual managers should be ade%uate to

ensure their ability to accomplish results e#pected

Principle of !bsoluteness of "esponsibility• $uperiors cannot escape responsibility for the organization activities

of their subordinates

Principle of Parity of !uthority and "esponsibility

• ,he responsibility for actions cannot be greater than that implied by

the authority delegated

Principle of 3nity of 'ommand

• ,he more complete an individuals reporting relationships to a single

superior the smaller the problem of conflicting instructions

!uthority >evel Principle

• ecisions within the authority of individual managers should be

made by them and not be referred upward in the organizationstructure

o ,he $tructure of 7rganization* epartmentalized !ctivities

Principle of 2unctional efinition

• ,he more a department has a clear definition of the results e#pected

and activities to be undertaken the more ade%uately the responsible

individual can contribute towards accomplishing enterprise

objectives

o ,he Process of 7rganizing

Principle of Balance

• !pplication of principles must be balanced to ensure the overall

effectiveness of the structure in meeting enterprise objectives• .nefficiencies of broad span of management must be balanced against

the inefficiencies of long lines of communication and so on

Principle of 2le#ibility

• (ore that provisions are made for building fle#ibility into an

organization structure the more ade%uately an organization structure

can fulfil its purpose

• Enterprise that develops infle#ibilities whether they are resistant to

change too complicated procedures or too firm departmental lines is

risking the inability to meet the challenges of economic technical

biological political and social changes

Principle of >eadership 2acilitation

• .t is important for an organization structure to do its part in creating a

situation in which a manager can most effectively lead





$taffing

- $taffing is a function of filling the organization with right type of people in the right number

at the right time

- $ub-2unctions of $taffing

o (anpower Planning

.t would avoid shortages and at the same time avoid surplus people

2orecasting is the first step in manpower planning

(anpower planning has to be related to some period in the future

.t can be made as reliable as possible by following systematic procedures

such as studying the past data trying to assess the future trend in the related

fields etc

o "ecruitment

,his helps in identifying sources for the re%uired manpower

,hrough recruitment organization attracts potential people and induces them

to apply for the positions

$ources of recruitment could be internal or e#ternal

o $election

,his comprises

• 'omparing the %ualifications and e#perience of the prospective

candidates with job re%uirement

• Eliminating those whose %ualifications and e#perience does not

match the re%uirement

• $electing those who satisfy the needs

$election procedure is assisted by =ob !nalysis and =ob $pecifications

o Placement

etermination of the precise job to which a selected candidate is assigned or

assigning an appropriate job to the selected candidate

! person who is not properly placed will be frustrated person and also

hamper the work of others in the organization

Placement and ,raining are complementary

o ,raining

! person may not fit in place unless some training is given to him

>earning on-the-job on their own is a slow process and candidates may learn

wrong practices

,raining is work oriented and is aimed at imparting specific skills for doing a

particular job

,ypes of ,raining

• .nduction training

• =ob training

• "efresher training

- (ost Essential Guiding Principles of $taffing are listed below*

o ,he Purpose of $taffing

Principle of the 7bjective of $taffing

• ,he objective of staffing is to ensure that organization roles are filled

by %ualified personnel who are able and willing to occupy them

Principle of $taffing

• 'learer the definition of organizational roles and their human

re%uirements and better the techni%ues of appraisal and training the

higher the managerial %uality



• "ests on an important body of knowledge concerning management

practices

o ,he Process of $taffing

Principle of =ob efinition

• (ore precisely the results e#pected of managers are identified the

more the dimensions of their positions can be defined Principle of (anagerial !ppraisal

• (ore clearly verifiable objectives and re%uired managerial activities

are identified the more precise can be the appraisal of managers

against these criteria

Principle of 7pen 'ompetition

• !lthough social pressures strongly favour promotion from within the

firm these forces should be resisted whenever better candidates can

be brought in from outside

Principle of (anagement ,raining and evelopment

• (ore the management training and development are integrated with

the management process and objectives the more effective thedevelopment programs and activities will be

Principle of ,raining 7bjectives

• (ore precisely the training objectives are stated the more likely are

chances of achieving them

• Brings into focus the contribution that training makes to the purpose

of the enterprise and development of individuals

Principle of 'ontinuing evelopment

• .n a fast changing and competitive environment managers cannot

stop learning+ .nstead they have to update their managerial

knowledge continuously and improve their skills to achieve

enterprise results



(onitoring and 'ontrolling

- 'ontrol is the measurement and correction of the performance of activities of subordinates to

make sure that all levels of objectives and plans devised to attain them are being

accomplished

- 'ontrol Process

o Establishing $tandards

$tandards are yardsticks or measures of e#pected performance

$tandards may be set up as signals for critical activities as all the activities

cannot be monitored

,hey are best e#pressed in %uantifiable terms i+e+ turnover e#penditure etc

however some standards may not be %uantifiable accurately e+g+ morale

loyalty etc

o (easuring !ctual Performance against the $tandards

,his should be done on a forward looking basis so that deviations may be

detected in advance of their actual occurrence and avoided by appropriate

actions .n less technical kinds of work not only are standards difficult to develop but

appraisal is also difficult

o ,aking 'orrective !ctions

Process in not complete until deviations from standards are corrected

eviations may also be positive as the result of superior performance or

inade%uate standards

(anagers may correct deviations by redrawing plans modifying goals

reassigning duties etc

- ,ypes of 'ontrols

o Production and 7perations 'ontrolo .nventory 'ontrol

o ?uality 'ontrol

o 2inancial 'ontrol

- 'omple#ity of 'ontrol

o ,he feedback provided by the system discloses the errors and results in a corrective

action

o ,here is an erroneous belief that control is a feedback system because the corrective

action is applied on receipt of the feedback

o .n fact it is this kind of feedback based control system that results in project overruns

- 2eed 2orward 'ontrol

o .t is now possible to obtain real time data on many operations when they are taking

place+ .n such a situation the 2eedback >oop for management control may e#ist

o ,he real time information for feedback loop system works efficiently for simple

operations like airlines payroll etc+ 1owever in project management where inputs

come from a large number of diverse sources this system has not been found to work

efficiently always

o $ay in construction projects one could devise a system of control that will tell

project managers well in advance that problems will occur if they do not take some

actions at such and such times

o ,he forecasting system can be applied successfully in matters of manpower materials

and casho Basic re%uirements of a 2eed 2orward 'ontrol $ystem are mentioned below



eveloping a model of planning and control system

.dentify the most important input variables

(odel should be kept dynamic

.nput data on important variables should be reliable

0ariations between the actual input data and planned input data must be

regularly assessed !ction should be taken to solve problems that occur

- Budget as a 'ontrol ,echni%ue

o 2ormulation of plans for a given future period in financial non-financial terms

o 2ive basic types of budget are

"evenue and E#pense

,ime $pace and (aterials

'apital 7utlay

'ash

Balance $heet

o Jero-Base Budget Enterprise plan is divided into packages comprising goals activities and

needed resources

,hen the cost of each package is calculated from ground up i+e+ afresh

,his avoids the tendency to look at the changes from previous budget

Each package is costed and reviewed in terms of benefits to the organization

then ranked accordingly to the importance of benefits and finally selected

against cost benefit criteria

,his techni%ue is more relevant to support functions of the organization and

not its core function+ .n a project construction is a core function

- (ost Essential Guiding Principles of 'ontrolling are listed below*

o ,he Purpose and /ature of 'ontrol

Principle of the Purpose of 'ontrol

• ,he task of control is to ensure that plans succeed by detecting

deviations from plans and furnishing a basis for taking action to

correct actual undesired deviations

Principle of 2uture-irected 'ontrols

• Because of the time lags in the total system of control the more a

control system is based on feed forward rather than simple feedback

of information the more managers have the opportunity to perceive

undesirable deviations from plans before they occur and to take

action in time to prevent them

Principle of 'ontrol "esponsibility

• ,he principal responsibility for the e#ercise of control rests in the

manager charged with the performance of particular plans involved

Principle of Efficiency of 'ontrol

• 'ontrol techni%ues and approaches are efficient if they detect and

illuminate the nature and causes of deviations from plans with a

minimum of costs

Principle of Preventive 'ontrol

• ,he higher the %uality of managers in a managerial system the lesser

will be the need for direct controls

o ,he $tructure of 'ontrol

Principle of "eflection of Plans



• ,he more the plans are clear complete and integrated and the more

that controls are designed to reflect such plans the more effectively

controls will serve the need of managers

Principle of 7rganizational $uitability

• ,he more the organizational structure is clear complete and

integrated and the more that controls are designed to reflect the placein organization structure where responsibility for action lies the more

the controls will facilitate corrections of deviations from plans

Principle of .ndividuality of 'ontrols

• ,he more that control techni%ues and information are understandable

to individual managers the more they will actually be used and the

more they will result in effective control

o ,he Process of 'ontrol

Principle of $tandards

• Effective control re%uires objective accurate and suitable standards

• ,here should be a simple specific and verifiable way to measure

whether a planning programme is being accomplished• Good standards of performance are more likely to be accepted by

subordinates as fair and reasonable

Principle of 'ritical-Point 'ontrol

• Effective control re%uires special attention to those factors critical to

evaluating performance against plans

• 'ritical-Point 'ontrol is to do with recognizing the points to be

watched

,he E#ception Principle

• ,he more that managers concentrate control efforts on significant

e#ceptions the more efficient will be the result of their control

•E#ception principle is to do with watching the size of deviations

Principle of 2le#ibility of 'ontrols

• .f controls are to remain effective despite failure or unforeseen

changes of plans fle#ibility is re%uired in their design

Principle of !ction

• 'ontrol is justified only if deviations from plans are corrected

through appropriate planning organizing staffing and leading

• 'ontrol is wasteful use of managerial and staff time unless it is

followed by action

Documents

Notes for IDM 11