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PRINCIPLES OF MANAGEMENT
UNIT I
MEANING OF MANAGEMENT
Management is a process of planning, decision making, organizing, leading, motivation
and controlling the human resources, financial, physical, and information resources of an
organization to reach its goals efficiently and effectively.
DEFINITION OF MANAGEMENT
The best definition of management was created by the
American Management Association. “It is the act of getting things done through others and
having them do it willingly”.
Objectives of Management:
The primary objective of management is to run the enterprise smoothly. The profit
earning objective of a business is also to be kept in mind while undertaking various functions.
1. Proper Utilization of Resources:
2. Improving Performance:
3. Mobilizing Best Talent:
4. Planning for Future:
Scope or Branches of Management:
Management is an all pervasive function since it is required in all types of organized
endeavour. Thus, its scope is very large.
The following activities are covered under the scope of management:
(i) Planning,
(ii) Organization
(iii) Staffing.
(iv) Directing,
(v) Coordinating, and
(vi) Controlling.
The operational aspects of business management, called the branches of management, are
as follows:
1. Production Management
2. Marketing Management
3. Financial Management.
4. Personnel Management and
5. Office Management.
SKILLS OF MANAGER
The following are 6 essential skills that managers need to have in order to manage
employees effectively and efficiently to get the best from them.
1. Good communication
2. Good Organisation
3. Team Building
4. Leadership
5. Ability to Deal with Changes Effectively
6. Domain Knowledge
LEVELS OF MANAGEMENT
The three levels of management is to provide a separation between the managerial
positions of the organization. There are three levels of management found within an
organization, where managers at these levels have different roles to perform for the organization
to have a smooth performance, and the levels are:
FUNCTIONAL AREAS OF MANAGEMENT
Evolution of Management thought
According to Fayol's theory, management must plan and schedule every part of
industrial processes. 2. Organizing. Henri Fayol argued that in addition to planning a
manufacturing process, management must also make certain all of the necessary resources (raw
materials, personnel, etc.)
The fourteen principles of management created by Henri Fayol are explained below.
1. Division of Work-
Henri believed that segregating work in the workforce amongst the worker will enhance
the quality of the product. Similarly, he also concluded that the division of work improves the
productivity, efficiency, accuracy and speed of the workers. This principle is appropriate for both
the managerial as well as a technical work level.
2. Authority and Responsibility-
These are the two key aspects of management. Authority facilitates the management to
work efficiently, and responsibility makes them responsible for the work done under their
guidance or leadership.
3. Discipline-
Without discipline, nothing can be accomplished. It is the core value for any project or
any management. Good performance and sensible interrelation make the management job easy
and comprehensive. Employees good behaviour also helps them smoothly build and progress in
their professional careers.
4. Unity of Command-
This means an employee should have only one boss and follow his command. If an
employee has to follow more than one boss, there begins a conflict of interest and can create
confusion.
5. Unity of Direction-
Whoever is engaged in the same activity should have a unified goal. This means all the
person working in a company should have one goal and motive which will make the work easier
and achieve the set goal easily.
6. Subordination of Individual Interest-
This indicates a company should work unitedly towards the interest of a company rather
than personal interest. Be subordinate to the purposes of an organization. This refers to the whole
chain of command in a company.
7. Remuneration-
This plays an important role in motivating the workers of a company. Remuneration can
be monetary or non-monetary. However, it should be according to an individual’s efforts they
have made.
8. Centralization-
In any company, the management or any authority responsible for the decision-making
process should be neutral. However, this depends on the size of an organization. Henri Fayol
stressed on the point that there should be a balance between the hierarchy and division of power.
9. Scalar Chain-
Fayol on this principle highlights that the hierarchy steps should be from the top to the
lowest. This is necessary so that every employee knows their immediate senior also they should
be able to contact any, if needed.
10. Order-
A company should maintain a well-defined work order to have a favourable work culture.
The positive atmosphere in the workplace will boost more positive productivity.
11. Equity-
All employees should be treated equally and respectfully. It’s the responsibility of a
manager that no employees face discrimination.
12. Stability-
An employee delivers the best if they feel secure in their job. It is the duty of the
management to offer job security to their employees.
13. Initiative-
The management should support and encourage the employees to take initiatives in an
organization. It will help them to increase their interest and make then worth.
14. Esprit de Corps-
It is the responsibility of the management to motivate their employees and be supportive
of each other regularly. Developing trust and mutual understanding will lead to a positive
outcome and work environment.
This 14 principles of management are used to manage an organization and are beneficial
for prediction, planning, decision-making, organization and process management, control and
coordination.
Unit 2
Planning
Definition:
Planning is the fundamental management function, which involves deciding beforehand,
what is to be done, when is it to be done, how it is to be done and who is going to do it. It is
an intellectual process which lays down an organisation’s objectives and develops various
courses of action, by which the organisation can achieve those objectives. It chalks out exactly,
how to attain a specific goal.
Planning is nothing but thinking before the action takes place. It helps us to take
a peep into the future and decide in advance the way to deal with the situations, which we are
going to encounter in future.
Characteristics of Planning
It helps managers to improve future performance, by establishing objectives and selecting a
course of action, for the benefit of the organisation.
It minimises risk and uncertainty, by looking ahead into the future.
It facilitates the coordination of activities. Thus, reduces overlapping among activities
and eliminates unproductive work.
It states in advance, what should be done in future, so it provides direction for action.
It uncovers and identifies future opportunities and threats.
It sets out standards for controlling. It compares actual performance with the standard
performance and efforts are made to correct the same.
Steps involved in Planning
Nature of Planning
The nature of planning can be understood by examining its four major aspects. They are;
1. It is a contribution to objectives,
2. It is primacy among the manager’s tasks.
3. It is pervasiveness, and
4. The efficiency of resulting plans.
Nature of Organizational Goals
Several benefits can be achieved by using goals, such as:
Improvement of performance.
Increment in expectations.
Facilitation of the controlling function to assess and correct the progress.
Motivation is increase by achieving the goals.
TYPES OF PLANS
Operational Planning
“Operational plans are about how things need to happen,” This type of planning typically
describes the day-to-day running of the company. Operational plans are often described as single
use plans or ongoing plans. Single use plans are created for events and activities with a single
occurrence (such as a single marketing campaign).
Strategic Planning
“Strategic plans are all about why things need to happen,” Story said. “It’s big picture,
long-term thinking. It starts at the highest level with defining a mission and casting a vision.”
Strategic planning includes a high-level overview of the entire business. It’s the
foundational basis of the organization and will dictate long-term decisions.
Tactical Planning
“Tactical plans are about what is going to happen,” Story said. “Basically at the tactical
level, there are many focused, specific, and short-term plans, where the actual work is being
done, that support the high-level strategic plans.”
Tactical planning supports strategic planning. It includes tactics that the organization
plans to use to achieve what’s outlined in the strategic plan.
Contingency Planning
Contingency plans are made when something unexpected happens or when something
needs to be changed. Business experts sometimes refer to these plans as a special type of
planning. Contingency planning can be helpful in circumstances that call for a change.
DECISION MAKING
Decision-making is an integral part of modern management. Essentially, Rational or
sound decision making is taken as primary function of management. Decisions play important
roles as they determine both organizational and managerial activities.
DEFINITION
A decision can be defined as a course of action purposely chosen from a set of
alternatives to achieve organizational or managerial objectives or goals. Decision making process
is continuous and indispensable component of managing any organization or business activities.
Steps of Decision Making Process
Following are the important steps of the decision making process. Each step may be
supported by different tools and techniques.
Step 1: Identification of the purpose of the decision
In this step, the problem is thoroughly analysed. There are a couple of questions one should
ask when it comes to identifying the purpose of the decision.
What exactly is the problem?
Why the problem should be solved?
Who are the affected parties of the problem?
Does the problem have a deadline or a specific time-line?
Step 2: Information gathering
A problem of an organization will have many stakeholders. In addition, there can be
dozens of factors involved and affected by the problem.
In the process of solving the problem, you will have to gather as much as information
related to the factors and stakeholders involved in the problem. For the process of information
gathering, tools such as 'Check Sheets' can be effectively used.
Step 3: Principles for judging the alternatives
In this step, the baseline criteria for judging the alternatives should be set up. When it
comes to defining the criteria, organizational goals as well as the corporate culture should be
taken into consideration.
As an example, profit is one of the main concerns in every decision making process.
Companies usually do not make decisions that reduce profits, unless it is an exceptional case.
Likewise, baseline principles should be identified related to the problem in hand.
Step 4: Brainstorm and analyse the different choices
For this step, brainstorming to list down all the ideas is the best option. Before the idea
generation step, it is vital to understand the causes of the problem and prioritization of causes.
For this, you can make use of Cause-and-Effect diagrams and Pareto Chart tool. Cause-
and-Effect diagram helps you to identify all possible causes of the problem and Pareto chart
helps you to prioritize and identify the causes with highest effect.
Then, you can move on generating all possible solutions (alternatives) for the problem in hand.
Step 5: Evaluation of alternatives
Use your judgement principles and decision-making criteria to evaluate each alternative.
In this step, experience and effectiveness of the judgement principles come into play. You need
to compare each alternative for their positives and negatives.
Step 6: Select the best alternative
Once you go through from Step 1 to Step 5, this step is easy. In addition, the selection of
the best alternative is an informed decision since you have already followed a methodology to
derive and select the best alternative.
Step 7: Execute the decision
Convert your decision into a plan or a sequence of activities. Execute your plan by
yourself or with the help of subordinates.
Step 8: Evaluate the results
Evaluate the outcome of your decision. See whether there is anything you should learn
and then correct in future decision making. This is one of the best practices that will improve
your decision-making skills.
Conclusion
When it comes to making decisions, one should always weigh the positive and negative
business consequences and should favour the positive outcomes.
This avoids the possible losses to the organization and keeps the company running with a
sustained growth. Sometimes, avoiding decision making seems easier; especially, when you get
into a lot of confrontation after making the tough decision.
UNIT 3
ORGANIZATION
Meaning of Organizing:
Organization refers to a collection of people, who are involved in pursuing defined
objectives. It can be understood as a social system which comprises all formal human
relationships. The organization encompasses division of work among employees and alignment
of tasks towards the ultimate goal of the company.
Definition
Organizing is a “process of defining the essential relationships among people, tasks and
activities in such a way that all the organization’s resources are integrated and coordinated to
accomplish its objectives efficiently and effectively”. — Pearce and Robinson
Process of Organization
Step 1: Determination and classification of firm’s activities.
Step 2: Grouping of the activities into workable departments.
Step 3: Assignment of authority and responsibility on the departmental executives for
undertaking the delegated tasks.
Step 4: Developing relationship amidst superior and subordinate, within the unit or
department.
Step 5: Framing policies for proper coordination between the superior and subordnate and
creating specific lines of supervision.
Types of Organization Structure
1. Formal Organization Structure: The organization structure of jobs and positions, with
specified activities and relationships, is known as formal organization structure. It is created by
management, to attain the objectives of the company.
Line Organization: Line organization is the oldest and simplest pattern of orgnization,
wherein the supervisor has outright supervision over the subordinate. The flow of authority
is from the top level executive to the person at the lowest level of the organization’s echelon.
Functional Organization: As the name suggests, functional organization structure is one in
which the thorough task of managing and directicting the employees, is grouped as per the
functions or type of work involved.
Line and Staff Organization: This type of organization structure is an improvement over
the traditional line organization. In line and staff organization primary and supportive
activities are related to the line of supervision by appointing supervisor and specialist, who
are linked to line authority.
Project Management Organization: Project Organization is not an independent
organization, like the organization structure discussed above. Instead it is a set up within an
organization, so as to accomplish a project or firm’s objectives. It is led by project manager,
who is responsible for project objectives.
Matrix Organization: Matrix organization is the emerging structure of the organization,
which is a combination of functional organization and project organization. In such an
organization, the functional departments such as production, accounting, marketing, human
resource, etc. constitute a vertical chain of command, while project division constitute
horizontal line of authority.
Informal Organization Structure: The relationship between the employees, that relies
on personal attitudes, prejudices and interests rather than procedures. It is system of personal and
social connection, whose creation is not needed by formal organization.
The organization structure is a basic idea, which depends on the activity authority relationship in
the company. It is designed in such a way to realize business objectives.
Types of Organizational Structures
1.Functional
The functional structure is based on an organization being divided up into smaller groups
with specific tasks or roles. For example, a company could have a group working in information
technology, another in marketing and another in finance.
Each department has a manager or director who answers to an executive a level up in the
hierarchy who may oversee multiple departments. One such example is a director of marketing
who supervises the marketing department and answers to a vice president who is in charge of the
marketing, finance and IT divisions.
2.Divisional
Larger companies that operate across several horizontal objectives sometimes use a
divisional organizational structure.This structure allows for much more autonomy among groups
within the organization. One example of this is a company like General Electric. GE has many
different divisions including aviation, transportation, currents, digital and renewable energy,
among others.
Under this structure, each division essentially operates as its own company, controlling
its own resources and how much money it spends on certain projects or aspects of the division.
3.Matrix
A hybrid organizational structure, the matrix structure is a blend of the functional
organizational structure and the projectized organizational structure.
In the matrix structure, employees may report to two or more bosses depending on the
situation or project. For example, under normal functional circumstances, an engineer at a large
engineering firm could work for one boss, but a new project may arise where that engineer’s
expertise is needed.
The matrix structure is challenging because it can be tough reporting to multiple bosses and
knowing what to communicate to them. That’s why it’s very important for the employees to
know their roles, responsibilities and work priorities.
SPAN OF CONTROL
Span of control also called Span of Management, is the term used in business
management, particularly human resource management. Span of control refers to the number of
subordinates a supervisor has. Simply a manager or a supervisor or a superior who has a group of
subordinates, who can directly report him or her is called a Span of Management.
Definition: A span of control is a concept that describes the number of people that are
managed by someone. It is a chain of command notion where the number of subordinates is
properly identified to understand a manager’s reach.
DELEGATION
Delegation is the assignment of any authority to another person (normally from a
manager to a subordinate) to carry out specific activities. It is one of the core concepts
of management leadership. However, the person who delegated the work remains accountable
for the outcome of the delegated work. Delegation empowers a subordinate to make decisions,
i.e. it is a shifting of decision-making authority from one organizational level to a lower one.
Delegation and Decentralization
Centralization and Decentralization
The important and key decisions are taken by the top management and the other levels
are into implementations as per the directions of top level. ...
Centralization is said to be a process where the concentration of decision making is in a
few hands. All the important decision and actions at the lower level, all subjects and actions at
the lower level are subject to the approval of top management. According to Allen,
“Centralization” is the systematic and consistent reservation of authority at central points in the
organization.
Decentralization is a systematic delegation of authority at all levels of management and
in all of the organization. In a decentralization concern, authority in retained by the top
management for taking major decisions and framing policies concerning the whole concern. Rest
of the authority may be delegated to the middle level and lower level of management.
STAFFING
Staffing is the process of hiring eligible candidates in the organization or company
for specific positions. In management, the meaning of staffing is an operation of recruiting the
employees by evaluating their skills, knowledge and then offering them specific job roles
accordingly.
In a new enterprise, the staffing function follows the planning and organising function. In
the case of running an enterprise, staffing is a continuous process. So, the manager should
perform this function at all times. The staffing function includes recruitment, selection, training,
development, transfer, promotion and compensation of personnel.
DEFINITION
1.According to Koontz and O’Donnell, “The managerial function of staffing involves managing
the organisation structure through proper and effective selection, appraisal and development of
personnel to fill the roles designed into the structure.”
2.S. Benjamin has defined staffing as – “The process involved in identifying, assessing, placing,
evaluating and directing individuals at work.”
Staffing includes:
1. Identifying the requirement of workforce and its planning.
2. Recruitment and selection of appropriate personnel for new jobs or for positions which may
arise as a result of existing employees leaving the organisation.
3. Planning adequate training for development and growth of workforce.
4. Deciding on compensation, promotion and performance appraisals for the workforce.
Staffing is basically sustainable addition of human resource in an organisation. That means it
encompasses all the processes involved in building and retaining the workforce of the
organization.
Here’s what goes on behind the Staffing scenes –
Human Resource Planning – Determine your organisation’s workforce requirement. Plan the
number of employees you require and the qualities you expect in them.
Recruitment– Search and obtain prospects for the vacancies. Create conditions and stimulate
job seekers to maximize the number of applications for the vacancy.
Selection – Among the pool of applicants, shortlist the right candidates who display the expected
qualifications and skills.
Induction and Orientation – Introduce your new employee to the organisation and align
him/her to the job responsibilities and work culture.
Training and development – Train your employees as per the technical knowledge required in
their jobs. Also, focus on their holistic development.
Performance Appraisal – Regularly review your employee’s job performance and overall
contribution to the organisation.
Employment decision – Take decisions regarding their promotions and career planning.
What is Recruitment?
Recruitment is part of the staffing process.
What you essentially do in recruitment is to search and obtain prospective candidates
for the job. Furthermore, the best candidate is chosen through the selection process which is a
part of staffing.
During the recruitment process, the organisation needs to stimulate job hunters and get as many
applications as possible from them.
To stimulate the job hunters, the recruiter must amplify the visibility of job vacancy. This is done
through promoting the vacancy and the organisation on job portals, social media, newspapers,
direct calls and texts, etc.
It is through the recruitment process that people (in general) come to know that your organisation
has vacancies. Now it’s upon them to send across applications for the same.
Recruitment entails hiring from within or outside the organisation. The process is known by the
terms internal and external recruitment respectively.
The recruitment process ends once you receive applications from job seekers.
Difference between Staffing and Recruitment
STAFFING RECRUITMENT
Anelaborate process to acquire, employ,
develop, compensate, and retain employees
Finding prospective candidates for vacancy and then
inducing them to apply for the same
One of the functions of management Part of the staffing process
Series of steps involved Single-step and thus has limited scope in comparison
A long-term and continuous process of your
organisation
A short-term process where you have to find and
encourage people to apply for your job vacancies
Flows through recruitment, selection, training
and development and ultimately promotion and
compensation
Happens only in the initial stages – starts with
searching for suitable candidates and ends with
receiving applications.
Sources of Recruitment
SELECTION
Selection is the process of picking or choosing the right candidate, who is most
suitable for a vacant job position in an organization. ... Selection is a process of identifying and
hiring the applicants for filling the vacancies in an organization.
The selection process can be defined as the process of selection and shortlisting of
the right candidates with the necessary qualifications and skill set to fill the vacancies in an
organisation. The selection process varies from industry to industry, company to company and
even amongst departments of the same company.
Definition of Selection
1.According to Harold Koontz, “Selection is the process of choosing from the candidates, from
within the organization or from outside, the most suitable person for the current position or for
the future positions.”
2.Dale Yoder said, “Selection is the process by which candidates for employment are divided
into classes those who will be offered employment and those who will not.”
3.David and Robbins said, “Selection process is a managerial decision-making process as to
predict which job applicants will be successful if hired.”
Process of selection
The selection process is comprised of several steps:
1. Preliminary Interview
2. Receiving Applications
3. Screening of Applications
4. Employment Tests
5. Interview
6. Reference Checking
7. Medical Examination
8. Final Selection
TRAINING
Training is teaching, or developing in oneself or others, any skills and knowledge or
fitness that relate to specific useful competencies. Training has specific goals of improving one's
capability, capacity, productivity and performance.
Definition of Training:
Dale S. Beach defines training as ‘the organized procedure by which people learn
knowledge and/or skill for a definite purpose’.
Training refers to the teaching and learning activities carried on for the primary purpose
of helping members of an organization acquire and apply the knowledge, skills, abilities, and
attitudes needed by a particular job and organization.
Types of Training:
Various types of training can be given to the employees such as induction training,
refresher training, on the job training, vestibule training, and training for promotions.
Some of the commonly used training programs are listed below:
1. Induction training:
Also known as orientation training given for the new recruits in order to make them
familiarize with the internal environment of an organization. It helps the employees to
understand the procedures, code of conduct, policies existing in that organization.
2. Job instruction training:
This training provides an overview about the job and experienced trainers demonstrates
the entire job. Addition training is offered to employees after evaluating their performance if
necessary.
3. Vestibule training:
It is the training on actual work to be done by an employee but conducted away from the
work place.
4. Refresher training:
This type of training is offered in order to incorporate the latest development in a
particular field. This training is imparted to upgrade the skills of employees. This training can
also be used for promoting an employee.
5. Apprenticeship training:
Apprentice is a worker who spends a prescribed period of time under a supervisor.
UNIT 4
DIRECTING
Directing refers to a process or technique of instructing, guiding, inspiring, counselling,
overseeing and leading people towards the accomplishment of organizational goals. It is a
continuous managerial process that goes on throughout the life of the organization.
Directing means giving instructions, guiding, counselling, motivating and leading the staff in an
organisation in doing work to achieve Organisational goals. Directing is a key managerial
function to be performed by the manager along with planning, organising, staffing and
controlling. Directing is a continuous process initiated at top level and flows to the bottom
through organisational hierarchy.
Direction has following elements:
• Supervision
• Motivation
• Leadership
• Communication
(i) Supervision- implies overseeing the work of subordinates by their superiors. It is the
act of watching & directing work & workers.
(ii) Motivation- means inspiring, stimulating or encouraging the sub-ordinates with zeal
to work. Positive, negative, monetary, non-monetary incentives may be used for this
purpose.
(iii) Leadership- may be defined as a process by which manager guides and influences
the work of subordinates in desired direction.
(iv) Communications- is the process of passing information, experience, opinion etc
from one person to another. It is a bridge of understanding.
Principles of Directing
Directing is a complex function as it deals with people whose behaviour is
unpredictable. Effective direction is an art which a manager can learn and perfect through
practice. However, managers can follow the following principles while directing their
subordinates.
1. Harmony of objectives. Individuals join the organization to satisfy their physiological and
psychological needs. They are expected to work for the achievement of organizational
objectives. They will perform their tasks better if they feel that it will satisfy their personal goals.
Therefore, mar agreement should reconcile the personal goals of employees with the
organizational goals.
2. Maximum individual contribution. Organizational objectives are achieved at the optimum
level when every individual in the organization makes maximum contribution towards them.
Managers should, therefore, try to elicit maximum possible contribution from each subordinate.
3. Unity of command. A subordinate should get orders and instruction from one superior only.
If he is made accountable to two bosses simultaneously, there will be confusion, conflict,
disorder and indiscipline in the organization. Therefore, every subordinate should be asked to
report to only one manager.
4. Appropriate techniques. The manager should use correct direction techniques to ensure
efficiently of direction. The technique used should be suitable to the superior, the subordinates
and the situation.
5. Direct supervision. Direction becomes more effective when there is a direct personal contact
between the superior and his subordinates. Such contact improves the morale and commitment of
the employees. Therefore, whenever possible direct supervision should be used.
6. Managerial communication. A good system of communication between the superior and his
subordinates helps to improve mutual understanding. Upwards communication helps a manager
to understand the subordinates to express their feeling.
Motivational Concepts
Concept of Motivation:-
Technically, the term motivation can be traced to Latin word Movere, which means 'to
move'. In order to understand the concept of motivation, we have to examine three terms:
motive, motivating and motivation and their relationship.
Motive:-
Based on the Latin word Movere, motive (need) has been defined as follows: according
to Bernard Berelson and Garry A. Steiner, " A motive is an inner state that energizes, activates,
or moves (hence motivation), and that directs behavior towards goals."
Motive has also been defined by Fillmore H. Sanford and Larence S. Wrights man as, "A motive
is restlessness, a lack, a yen, a force. Once in the grip of a motive an organism does something to
reduce restlessness, to remedy the lack, to alleviate the yen, to mitigate the force."
Motivating:-
Motivating is a term which implies that one person (in the organizational context, a
manager) includes another, (say, employee) to engage in action (work behaviour) by ensuring
that a channel to satisfy the motive becomes available and accessible to the individual. In
addition to channelizing the strong motives in a direction that is satisfying to both organization
and employees, the manager can also activate the latent motives in individuals and harness them
in a manager that would be funtional for the organization.
Motivation:-
While motive is energizer of action, motivating is the channelization and activation of
motives, motivation is the work behavior itself. Motivation is something that moves a person to
action, and continues him in the course of action already initiated."
According to McFarland, "Motivation refers to the way in which urges, drives, desires,
aspirations, striving, or needs direct, control, or explains the behavior of human beings."
Motivational Theories
Need Hierarchy Theory
Abraham Maslow's hierarchy of human needs theory is the one of the most widely
discussed theories of motivation.
The theory can be summarized as follows:
• Human beings have wants and desires which influence their behaviour: Only unsatisfied needs
influence behavior, satisfied needs do not.
• Since needs are many, they are arranged in order of importance, from the basic to the complex.
• The person advances to the next level of needs only after the lower level need is at least
minimally satisfied.
• The further the progress up the hierarchy, the more individuality, humanness and psychological
health a person will show.
The needs, listed from basic (lowest, earliest) to most complex (highest, latest) are as follows:
• Physiological
• Safety
• belongingness
• Esteem
• Self actualization
Herzberg's two-factor theory
Fredrick Herzberg's two-factor theory, aka intrinsic/extrinsic motivation, concludes that
certain factors in the workplace result in job satisfaction, but if absent, lead to dissatisfaction.
He distinguished between:
• Motivators; (e.g. challenging work, recognition, responsibility) which give positive
satisfaction, and
• Hygiene factors; (e.g. status, job security, salary and fringe benefits) that do not motivate if
present, but, if absent, result in demotivation.
The theory is sometimes called the "Motivator-Hygiene Theory."
Alderfer's ERG theory
Clayton Alderfer, expanding on Maslow's hierarchy of needs, created the ERG
theory (existence, relatedness and growth). Physiological and safety, the lower order needs, are
placed in the existence category, while love and self esteem needs are placed in the relatedness
category. The growth category contains our self-actualization and self-esteem needs.
Self-determination theory
Self-determinaation theory, developed by Edward Deci and Rihcard Ryan, focuses on the
importance of intrinsic motivation in driving human behavior. Like Maslow's hierarchial theory
and others that built on it, SDT posits a natural tendency toward growth and development.
Unlike these other theories, however, SDT does not include any sort of "autopilot" for
achievement, but instead requires active encouragement from the environment.
Leadership: a Definition
According to the idea of transformational leadership , an effective leader is a person who
does the following:
1. Creates an inspiring vision of the future.
2. Motivates and inspires people to engage with that vision.
3. Manages delivery of the vision.
4. Coaches and builds a team, so that it is more effective at achieving the vision.
Leadership is the art of motivating a group of people to act toward achieving a common
goal. In a business setting, this can mean directing workers and colleagues with a strategy to
meet the company's needs.
A good leadership
“A great leader posses a clear vision, is courageous, has integrity, honesty, humility and
clear focus. ... Great leaders help people reach their goals, are not afraid to hire people that
might be better than them and take pride in the accomplishments of those they help along the
way.”
Leadership styles
Leadership styles are classifications of how a person behaves while leading a group.
Lewyn's leadership styles are authoritarian (autocratic), participative (democratic), and
delegative (laissez-faire).
The first major study of leadership styles was performed in 1939 by Kurt Lewin
who led a group of researchers to identify different styles of leadership (Lewin, Lippit,
White, 1939). This early study has remained quite influential as it established the three
major leadership styles: (U.S. Army, 1973):
o authoritarian or autocratic - the leader tells his or her employees what to do
and how to do it, without getting their advice
o participative or democratic - the leader includes one or more employees in the
decision making process, but the leader normally maintains the final decision
making authority
o delegative or laissez-fair (free-rein) - the leader allows the employees to make
the decisions, however, the leader is still responsible for the decisions that are
made.
o Although good leaders use all three styles, with one of them normally dominant,
bad leaders tend to stick with one style, normally autocratic.
Communication
Meaning and Definition
Communication is simply the act of transferring information from one place, person or
group to another. Every communication involves (at least) one sender, a message and a recipient.
These include our emotions, the cultural situation, the medium used to communicate, and even
our location.
Communication is the act of one or more persons conveying information to someone else.
The content of the communication can be facts, ideas, concepts, opinions, attitudes and
emotions. Communication is very important because it's the only way we can effectively work
together on anything.
Definitions: 1. Keith Davis: Communication is a process of passing information and
understanding from one person to another.
William Newman and Charles Summer: Communication is an exchange of ideas,
facts, opinions or emotions of two or more persons.
Importance of Communication
1. The Basis of Co-ordination
The manager explains to the employees the organizational goals, modes of their
achievement and also the interpersonal relationships amongst them. This provides coordination
between various employees and also departments. Thus, communications act as a basis for
coordination in the organization.
2. Fluent Working
A manager coordinates the human and physical elements of an organization to run it
smoothly and efficiently. This coordination is not possible without proper communication.
3. The Basis of Decision Making
Proper communication provides information to the manager that is useful for decision
making. No decisions could be taken in the absence of information. Thus, communication is the
basis for taking the right decisions.
4. Increases Managerial Efficiency
The manager conveys the targets and issues instructions and allocates jobs to
the subordinates. All of these aspects involve communication. Thus, communication is essential for
the quick and effective performance of the managers and the entire organization.
5. Increases Cooperation and Organizational Peace
The two-way communication process promotes co-operation and mutual understanding
amongst the workers and also between them and the management. This leads to less friction and
thus leads to industrial peace in the factory and efficient operations.
6. Boosts Morale of the Employees
Good communication helps the workers to adjust to the physical and social aspect of work.
It also improves good human relations in the industry. An efficient system of communication
enables the management to motivate, influence and satisfy the subordinates which in turn boosts
their morale and keeps them motivated.
Types of Communication
1. Formal Communication
Formal communications are the one which flows through the official channels designed in
the organizational chart. It may take place between a superior and a subordinate, a subordinate and a
superior or among the same cadre employees or managers. These communications can be oral or in
writing and are generally recorded and filed in the office.
Formal communication may be further classified as Vertical communication and Horizontal
communication.
Vertical Communication
Vertical Communications as the name suggests flows vertically upwards or downwards
through formal channels. Upward communication refers to the flow of communication from a
subordinate to a superior whereas downward communication flows from a superior to a subordinate.
Application for grant of leave, submission of a progress report, request for loans etc. are
some of the examples of upward communication. Sending notice to employees to attend a meeting,
delegating work to the subordinates, informing them about the company policies, etc. are some
examples of downward communication.
Horizontal Communication
Horizontal or lateral communication takes place between one division and another. For
example, a production manager may contact the finance manager to discuss the delivery of raw
material or its purchase.
Types of communication networks in formal communication:
Single chain: In this type of network communications flows from every superior to his
subordinate through a single chain.
Wheel: In this network, all subordinates under one superior communicate through him only.
They are not allowed to talk among themselves.
Circular: In this type of network, the communication moves in a circle. Each person is able
to communicate with his adjoining two persons only.
Free flow: In this network, each person can communicate with any other person freely.
There is no restriction.
Inverted V: In this type of network, a subordinate is allowed to communicate with his
immediate superior as well as his superior’s superior also. However, in the latter case, only
ordained communication takes place.
2. Informal Communication
Any communication that takes place without following the formal channels of
communication is said to be informal communication. The Informal communication is often
referred to as the ‘grapevine’ as it spreads throughout the organization and in all directions without
any regard to the levels of authority.
The informal communication spreads rapidly, often gets distorted and it is very difficult to
detect the source of such communication. It also leads to rumors which are not true. People’s
behavior is often affected by the rumors and informal discussions which sometimes may hamper the
work environment.
However, sometimes these channels may be helpful as they carry information rapidly and,
therefore, may be useful to the manager at times. Informal channels are also used by the managers
to transmit information in order to know the reactions of his/her subordinates.
Types of Grapevine network:
Single strand: In this network, each person communicates with the other in a sequence.
Gossip network: In this type of network, each person communicates with all other persons
on a non-selective basis.
Probability network: In this network, the individual communicates randomly with other
individuals.
Cluster Network: In this network, the individual communicates with only those people
whom he trusts. Out of these four types of networks, the Cluster network is the most popular
in organizations.
Barriers to Communication
The communication barriers may prevent communication or carry incorrect meaning due to
which misunderstandings may be created. Therefore, it is essential for a manager to identify such
barriers and take appropriate measures to overcome them. The barriers to communication in
organizations can be broadly grouped as follows:
1. Semantic Barriers
These are concerned with the problems and obstructions in the process of encoding and
decoding of a message into words or impressions. Normally, such barriers result due to use of
wrong words, faulty translations, different interpretations, etc.
For example, a manager has to communicate with workers who have no knowledge of the
English language and on the other side, he is not well conversant with the Hindi language. Here,
language is a barrier to communication as the manager may not be able to communicate properly
with the workers.
2. Psychological Barriers
Emotional or psychological factors also act as barriers to communication. The state of mind
of both sender and receiver of communication reflects in effective communication. A worried
person cannot communicate properly and an angry recipient cannot understand the message
properly.
Thus, at the time of communication, both the sender and the receiver need to be
psychologically sound. Also, they should trust each other. If they do not believe each other, they
cannot understand each other’s message in its original sense.
3. Organizational Barriers
The factors related to organizational structure, rules and regulations authority relationships,
etc. may sometimes act as barriers to effective communication. In an organization with a highly
centralized pattern, people may not be encouraged to have free communication. Also, rigid rules and
regulations and cumbersome procedures may also become a hurdle to communication.
4. Personal Barriers
The personal factors of both sender and receiver may act as a barrier to effective
communication. If a superior thinks that a particular communication may adversely affect his
authority, he may suppress such communication.
Communication Process
Communications is a continuous process which mainly involves three elements viz. sender,
message, and receiver. The elements involved in the communication process are explained below in
detail:
1. Sender
The sender or the communicator generates the message and conveys it to the receiver. He is
the source and the one who starts the communication
2. Message
It is the idea, information, view, fact, feeling, etc. that is generated by the sender and is then
intended to be communicated further.
3. Encoding
The message generated by the sender is encoded symbolically such as in the form of words,
pictures, gestures, etc. before it is being conveyed.
4. Media
It is the manner in which the encoded message is transmitted. The message may be
transmitted orally or in writing. The medium of communication includes telephone, internet, post,
fax, e-mail, etc. The choice of medium is decided by the sender.
5. Decoding
It is the process of converting the symbols encoded by the sender. After decoding the
message is received by the receiver.
6. Receiver
He is the person who is last in the chain and for whom the message was sent by the sender.
Once the receiver receives the message and understands it in proper perspective and acts according
to the message, only then the purpose of communication is successful.
7. Feedback
Once the receiver confirms to the sender that he has received the message and understood it,
the process of communication is complete.
8. Noise
It refers to any obstruction that is caused by the sender, message or receiver during
the process of communication. For example, bad telephone connection, faulty encoding, faulty
decoding, inattentive receiver, poor understanding of message due to prejudice or inappropriate
gestures, etc.
UNIT 5
CONTROLLING
Controlling can be defined as that function of management which helps to seek planned
results from the subordinates, managers and at all levels of an organization.
The controlling function helps in measuring the progress towards the organizational goals &
brings any deviations, & indicates corrective action.
Meaning and Definition
Definition:
George R. Terry:
“Controlling is determining what is being accomplished that is evaluating the
performance and, if necessary, applying corrected measures so that the performance takes place
according to plans.”
Robert N. Anthony:
“Management Control is the process by which managers assure that resources are
obtained and used effectively and efficiently in the accomplishment of an organization’s
objectives.”
Importance of controls
The control function helps management in various ways. It guides the ‘management in
achieving pre-determined goals. The efficiency of various functions is also ensured by the
control process.
1. Basis for Future Action:
2. Facilitates Decision-making:
3. Facilitates Decentralization:
4. Facilitates Co-ordination:
5. Helps in Improving Efficiency:
6. Psychological Pressure:
Control Process
1. Setting performance standards: Managers must translate plans into performance
standards. These performance standards can be in the form of goals, such as revenue from
sales over a period of time. The standards should be attainable, measurable, and clear.
2. Measuring actual performance: If performance is not measured, it cannot be ascertained
whether standards have been met.
3. Comparing actual performance with standards or goals: Accept or reject the product
or outcome.
4. Analyzing deviations: Managers must determine why standards were not met. This step
also involves determining whether more control is necessary or if the standard should be
changed.
5. Taking corrective action: After the reasons for deviations have been determined,
managers can then develop solutions for issues with meeting the standards and make
changes to processes or behaviors.
Non-Budgetary Control Techniques
There are, of course, many traditional control devices not connected with budgets,
although some may be related to, and used with, budgetary controls. Among the most important
of these are statistical data, special reports and analysis, analysis of break- even points, the
operational audit, and the personal observation.
1 Statistical data:
Statistical analyses of innumerable aspects of a business operation and the clear
presentation of statistical data, whether of a historical or forecast nature are, of course, important
to control.
2 Break- even point analysis:
An interesting control device is the break even chart. This chart depicts the
relationship of sales and expenses in such a way as to show at what volume revenues exactly
cover expenses.
3 Operational audit:
Another effective tool of managerial control is the internal audit or, as it is now
coming to be called, the operational audit. Operational auditing, in its broadest sense, is the
regular and independent appraisal, by a staff of internal auditors, of the accounting, financial, and
other operations of a business.
4 Personal observation:
In any preoccupation with the devices of managerial control, one should never
overlook the importance of control through personal observation.
Types of Budgetary Controlling Techniques
Budgetary control is a system for monitoring an organization’s process in monetary
terms. Types of budgetary controlling techniques are;
1. Financial Budgets.
2. Operating Budget.
3. Non-Monetary Budgets.
Financial Budgets
Such budgets detail where the organization expects to get its cash for the coming period
and how it plans to spend it. Usual sources of cash include sales revenue, the sales of assets, the
issuance of stock, and loans.
On the other hand, the common uses of cash are to purchase new assets, pay expenses,
repay debts, or pay dividends to shareholders.
Financial budgets may be of the following types:
1. Cash budget
This is simply a forecast of cash receipts and disbursements against which actual cash
“experience” is measured
It provides an important control in an enterprise since it breaks down incoming and
outgoing cash into monthly, weekly, or even daily periods so that the organization can make sure
it can meet its current obligations.
The cash budget also shows the availability of excess cash, thereby making it possible to
plan for profit-making investment of surpluses.
2. Capital expenditure budget
This type of financial budget concentrates on major assets such as a new plant, land or
machinery. Organizations often acquire such assets by borrowing significant amounts through,
say, long-term bonds or securities.All organizations, large or small, business or non-business,
pay close attention to such a budget because of the large investment usually associated with
capital expenditure.
3. The balance sheet budget
It forecasts what the organization’s balance sheet will look like if all other budgets are
met. Hence it serves the purpose of overall control to ensure that other budgets mesh properly
and yield results that are in the best interests of the organization.
Operating Budgets
This type of budget is an expression of the organization’s planned operations for a
particular period. They are usually of the following types:
1. The sales or revenue budget
It focuses on the income the organization expects to receive from normal operations. It is
important since it helps the manager understand what the future financial position of the
organization will be.
2. The expense budget
It outlines the anticipated expenses of the organization in a specified period. It also points
out upcoming expenses so that the manager can better prepare for them.
3. The project budget
It focuses on anticipated differences between sales or revenues and expenses i.e. profit. If
the anticipated profit figure is too small, steps may be needed to increase the sales budget or cut
the expense budget.
Non-monetary budgets
Budgets of this type are expressed in non-financial sales or revenues and expenses, i.e.
profit. If the anticipated profit figure is too small steps may be needed to increase the sales
budget or cut the expense budget.
Fixed and variable budgets
Regardless of their purpose, most budgets must account for the three following kinds of
costs:
1. Fixed costs
They are the expenses that the organization incurs whether it is in operation or not. Salaries of
managers may be an example of such a cost.
2. Variable costs
Such costs vary according to the scope of operations.The best example may be the raw materials
used in production. If $5 worth of material is used per unit. 10 units would cost $50, 20 units
would cost $100 and so on.
3. Semi-variable costs
They also vary, but in a less direct fashion. Costs for advertising, repairs, and
maintenance, etc. may fall under this category.All these categories of cost must be accurately
accounted for in developing a budget. Fixed costs are usually the easiest to deal with. Variable
costs can also be forecast, although with less precision from projected operations.
Semi-variable costs are the most difficult to predict because they are likely to vary, but
not in direct relation to operations. For these costs, the manager must often rely on experience
and judgment.
Essential Requirements of a Good Control System
1. Focus on Objectives
The control system should always focus on objectives. It should aim to achieve the
objectives of the organisation.
2. Suitability
The control system should be suitable to the needs of the organisation.
3. Promptness
The control system should be prompt. That is, it should find out the deviations quickly.
This will help the management to correct the deviations quickly.
4. Flexibility
The control system should be flexible. It should change according to the changes in plans,
situations, environments, etc. A rigid control system will always fail. Hence flexibility is
necessary for a control system.
5. Forward Looking
The control system should be forward-looking. It should forecast the future deviations.
That is, it should find out the deviations before it happens. It should also take steps to prevent
these future deviations.
6. Economical
The control system should be economical. This means the cost of the control system
should not be more than its benefits.
7. Simplicity
The control system should not be complicated. It should be easy to understand and simple
to use. Those who are going to use the control system should understand it clearly and
completely.
8. Motivating
The control system should be motivating. That is, it should give more importance to
preventing the mistakes and less importance to punishing the employees. So, it should
encourage, not discourage the employees.
9. Suggestive
The control system should be suggestive and it should give complete answers for the following
questions :-
1. What is the Problem?
2. Where is the Problem?
3. How to solve the Problem?
10. Proper Standards
The control system should have proper standards. The standards should be very clear.
They should be definite, verifiable, specific and measurable. They should not be too high or too
low.
Relationship between planning and controlling
Planning and controlling are two separate fuctions of management, yet they are closely
related. The scope of activities if both are overlapping to each other. Without the basis of
planning, controlling activities becomes baseless and without controlling, planning becomes a
meaningless exercise. In absense of controlling, no purpose can be served by. Therefore,
planning and controlling reinforce each other. According to Billy Goetz, " Relationship between
the two can be summarized in the following points
1. Planning preceeds controlling and controlling succeeds planning.
2. Planning and controlling are inseperable functions of management.
3. Activities are put on rails by planning and they are kept at right place through controlling.
4. The process of planning and controlling works on Systems Approach which is as follows:
Planning → Results → Corrective Action
5. Planning and controlling are integral parts of an organization as both are important for
smooth running of an enterprise.
6. Planning and controlling reinforce each other. Each drives the other function of
management.
In the present dynamic environment which affects the organization, the strong relationship
between the two is very critical and important. In the present day environment, it is quite likely
that planning fails due to some unforeseen events. There controlling comes to the rescue. Once
controlling is done effectively, it give us stimulus to make better plans. Therfore, planning and
controlling are inseperate functions of a business enterprise.
Need for Coordination in Management
Co-ordination is an abstract of management. The purpose of coordination is to
synchronize the functions of various sections for achieving organizational goals with minimum
effort. It is an orderly management of group effort to provide unity of action in the pursuit of
common purpose.
In this context, Ordway Tead says
“co-ordination is the effort to assume a smooth inter-play of the functions and forces of
all the different component parts of an organization to the end that its purpose will be realized
with a minimum of friction and a maximum of collaboration effectiveness”.
The need for co-ordination arises due to the following
1. In every organization, the nature of work is such that it requires to be divided into
homogeneous and specialized sub-tasks and then without Integration and co-ordination the
output of the organization will be nil.
2. Co-ordination applies to group effort rather than to individual effort. It gives importance to
unity of effort and united action. The outcome of coordinated group efforts will be much better
than the sum results of various individuals.
3. Coordination motivates the employees to consider their work from the point of view of
business and so the employees will willingly contribute towards the success of the concern.
Therefore, coordination is heartbeat of organization which brings integration of efforts and
action among employees in the organization.
3. Coordination ensures commitment on the part of divisions, groups, individuals toward
organizational goals.
4. Coordination ensures efficiency and economy in the organization, enterprise to ensure smooth
working. It also helps in saving of time by bringing efficiency and economy to the enterprise.
5. There may arise certain circumstances that may demand sacrifice of objective of one
department in the welfare of the enterprise as a whole. In such situation, the need for co-
ordination arises.
6. Coordination is directed towards channelizing the efforts, skills, energies of work groups
along organizationally established lines. If the co-ordination is absent, group members may be
pulled in different directions and work at cross purposes.