introduction of management theory and organisational behaviour

Management Theory & Organizational Behavior

INTRODUCTION TO MANAGEMENT

Management is universal in the modern industrial world and there is no substitute for good management.

It makes human efforts more productive and brings better technology, product, and services to our

society. It is a crucial economic resource and a life giving element in business. Without proper

management the resources of production cannot be converted into production. Management is a must to

accomplish desired goals through group action. It is essential to convert the disorganized resources of

Men, Material, Machines and Methods into a useful and effective enterprise. Thus management is a vital

function concerned with all aspects of the working of an organization.

Meaning:-

It is very difficult to give a precise meaning to the term management. The concept of management is as

old as the human race itself. Ever since people began forming groups to accomplish aims they could not

achieve as individuals, managing has been essential to ensure the co-ordination of the individual’s

efforts.

Management is the function of getting things done through people and directing the efforts of

individual towards a common objective.

Definition:-

Management is the art of getting things done through and with the people in formally organized groups. -Harlod Koontz In the words of Henry Fayol – “To manage is to forecast and to plan, to organize, to command, to co-

ordinate and to control”.

According to Lawrence A Appley – “Management is the development of people and not the direction of

things”.

According to F.W Taylor, management is the art of knowing what you want to do and then seeing that is

done in the best and cheapest way.

NATURE, SCOPE AND CHARACTERISTICS OF MANAGEMENT:

Management is Goal-Oriented: The success of any management activity is accessed by its achievement

of the predetermined goals or objective. Management is a purposeful activity. It is a tool which helps use

of human & physical resources to fulfill the pre-determined goals. For example, the goal of an enterprise

is maximum consumer satisfaction by producing quality goods and at reasonable prices. This can be

achieved by employing efficient persons and making better use of scarce resources.

QIS College of Engineering and Technology, Ongole Page 1

http://www.mbaknol.com/management-principles/henri-fayols-principles-of-management/


Management is goal-oriented. Management is goal oriented activity which means the

efforts and activities should be directed towards the attainment of pre-determined objectives.

These objectives are the ends towards which all the management activities are

systematicallydirected. Without knowing and directing our efforts towards these goals

there can’t be any management.

Management is social process:- management is a social process as it deals with people, it deals with how

to integrate the human effort in achieving targets efficiently through coordination and cooperation. Organizations

have to use the resources for the benefit of the society at large.

Management is a distinct and universal process. Management is a distinct process which

means it can be defined in terms of certain steps or stages. We can define the process of

management which consists of the functions of planning, organizing, staffing, directing and

controlling. The process of management involves decision-making and putting them into action.

These functions are performed by the managers at all levels of organization and in all types of

institutions. The management is universal process as its basic principles are universal in

character which means can be applied at any level any area and in any situation, can be

applied in different organizations and also in our day to day personal or professional life.

Management is a continuous process. The management is a continuous process as long as we

keep having targets to be achieved and an on-going process and a never-ending

process, because every activity is done to achieve a target once the target is achieved we define

new targets hence the process becomes cyclic in nature so becomes continuous.

Management is an integrative process . The management integrates the available resources

and directs them in to achievement of the desired outcome. The major objective is to achieve

these goals in most efficient and effective manner. Of all resources, the human resources are the

most precious and difficult to manage. And a good management is able to make synergies out of

human and non human resources by integrating their efforts in the most suitable manner.

Management is intangible. Management is intangible as it is not seen as a thing or a

material it is experiential in nature which means we can feel its presence in t he form of

results such as efficient organizational structures, better and informed decisions, increased

productivity, and heightened morale and motivation of employees. So management is

intangible and can be felt by employee satisfaction, wealth creation etc.



Management is contingent. Management is contingent as there is no best way of doing things

and each application or decision is based on the situation. A manager must take into account the

prevailing situation to solve a particular problem.

Management is multi-disciplinary. Management techniques, principles

and theories are drawn from other disciplines of knowledge like sociology, psychology,

engineering, anthropology, statistics etc. management depends upon wide knowledge and

practices derived from various disciplines. Management as a field of study has grown taking

the inputs of so many other disciplines.

Management is a dynamic function. Management is a dynamic function

of any organization as it keeps on changing to meet the requirements of the organization and at

the same time change the organization to the requirement of the business environment.

Management sometimes has to work to alter the business environment also. So we can say

that management is a dynamic function which makes it more capable to face the challenges

brought about by economic, social, political, technological or international factors.

Management is system of authority:- management is distribution and use of authority in designating

task allocating resources so as to achieve the targets, according to Drucker” management is a multipurpose

organ that manages a business, manages managers and manages workers and work” managers at higher level

have more authority than others.

Management is both a Science and an Art. Management has an organized body of knowledge

"which contains certain universal truths". So it is called a science. Management refers to a

distinct class of activities about which knowledge can be obtained and skill in its application

acquired. As an art, management implies to the ability and skill of a manager in applying these

principles of management and achieving the targets through a team of people and resources

available to them.

Management is all pervasive. Management function is all pervasive which means we can apply the

principles of management in all areas and levels of organization. Management is present in all the activities

and department of the organization, and on a broader sense we can say that no function can be done

without management.

Management is for economic resource management is a factor of production like the money,

material, machine, manpower etc, as the success and productivity of any organization depends

on the quality of management, this is the reason even when a smaller organization with lesser



other resources are performing better than bigger lot as the management is more efficient and

effective in the market place.

Management as a Science and as an Art and as both

Management as a Science

Science is a systematic body of knowledge pertaining to a specific field of study that contains general

facts which explains a phenomenon. It establishes cause and effect relationship between two or more

variables and underlines the principles governing their relationship. These principles are developed

through scientific method of observation and verification through testing.

Science is characterized by following main features:

1. Universally acceptance principles – Scientific principles represents basic truth about a particular

field of enquiry. These principles may be applied in all situations, at all time & at all places. E.g. – law

of gravitation which can be applied in all countries irrespective of the time. Management also contains

some fundamental principles which can be applied universally like the Principle of Unity of Command

i.e. one man, one boss. This principle is applicable to all type of organization – business or non business.

2. Experimentation & Observation – Scientific principles are derived through scientific investigation

& researching i.e. they are based on logic. E.g. the principle that earth goes round the sun has been

scientifically proved. Management principles are also based on scientific enquiry & observation and not

only on the opinion of Henry Fayol. They have been developed through experiments & practical

experiences of large no. of managers. E.g. it is observed that fair remuneration to personal helps in

creating a satisfied work force.

3. Cause & Effect Relationship – Principles of science lay down cause and effect relationship between

various variables. E.g. when metals are heated, they are expanded. The cause is heating & result is

expansion. The same is true for management; therefore it also establishes cause and effect relationship.

E.g. lack of parity (balance) between authority & responsibility will lead to ineffectiveness. If you know

the cause i.e. lack of balance, the effect can be ascertained easily i.e. in effectiveness. Similarly if

workers are given bonuses, fair wages they will work hard but when not treated in fair and just manner,

reduces productivity of organization.



4. Test of Validity & Predictability – Validity of scientific principles can be tested at any time or any

number of times i.e. they stand the test of time. Each time these tests will give same result. Moreover

future events can be predicted with reasonable accuracy by using scientific principles. E.g. H2 & O2

will always give H2O. Principles of management can also be tested for validity. E.g. principle of unity

of command can be tested by comparing two persons – one having single boss and one having 2 bosses.

The performance of 1st person will be better than 2nd. It cannot be denied that management has a

systematic body of knowledge but it is not as exact as that of other physical sciences like biology,

physics, and chemistry etc. The main reason for the inexactness of science of management is that it deals

with human beings and it is very difficult to predict their behavior accurately. Since it is a social process,

therefore it falls in the area of social sciences. It is a flexible science & that is why its theories and

principles may produce different results at different times and therefore it is a behavior science. Ernest

Dale has called it as a Soft Science.

Management as an Art

Art implies application of knowledge & skill to trying about desired results. An art may be defined as

personalized application of general theoretical principles for achieving best possible results. Art has the

following characters –

Practical Knowledge: Every art requires practical knowledge therefore learning of theory is not

sufficient. It is very important to know practical application of theoretical principles. E.g. to become a

good painter, the person may not only be knowing different colour and brushes but different designs,

dimensions, situations etc to use them appropriately. A manager can never be successful just by

obtaining degree or diploma in management; he must have also known how to apply various principles

in real situations by functioning in capacity of manager.

Personal Skill: Although theoretical base may be same for every artist, but each one has his own style

and approach towards his job. That is why the level of success and quality of performance differs from

one person to another. E.g. there are several qualified painters but M.F. Hussain is recognized for his

style. Similarly management as an art is also personalized. Every manager has his own way of managing

things based on his knowledge, experience and personality, that is why some managers are known as

good managers (like Aditya Birla, Rahul Bajaj) whereas others as bad.



Creativity: Every artist has an element of creativity in line. That is why he aims at producing something

that has never existed before which requires combination of intelligence & imagination. Management is

also creative in nature like any other art. It combines human and non-human resources in useful way so

as to achieve desired results. It tries to produce sweet music by combining chords in an efficient manner.

Perfection through practice: Practice makes a man perfect. Every artist becomes more and more

proficient through constant practice. Similarly managers learn through an art of trial and error initially

but application of management principles over the years makes them perfect in the job of managing.

Goal-Oriented: Every art is result oriented as it seeks to achieve concrete results. In the same manner,

management is also directed towards accomplishment of pre-determined goals. Managers use various

resources like men, money, material, machinery & methods to promote growth of an organization. Thus,

we can say that management is an art therefore it requires application of certain principles rather it is an

art of highest order because it deals with moulding the attitude and behavior of people at work towards

desired goals.

Management as both Science and Art

Management is both an art and a science. The above mentioned points clearly reveal that management

combines features of both science as well as art. It is considered as a science because it has an organized

body of knowledge which contains certain universal truth. It is called an art because managing requires

certain skills which are personal possessions of managers. Science provides the knowledge & art deals

with the application of knowledge and skills. A manager to be successful in his profession must acquire

the knowledge of science & the art of applying it. Therefore management is a judicious blend of science

as well as an art because it proves the principles and the way these principles are applied is a matter of

art. Science teaches to ’know’ and art teaches to ’do’. E.g. a person cannot become a good singer unless

he has knowledge about various ragas & he also applies his personal skill in the art of singing. Same

way it is not sufficient for manager to first know the principles but he must also apply them in solving

various managerial problems that is why, science and art are not mutually exclusive but they are

complementary to each other (like tea and biscuit, bread and butter etc.).The old saying that “Manager

are Born” has been rejected in favor of “Managers are Made”. It has been aptly remarked that

management is the oldest of art and youngest of science. To conclude, we can say that science is the root

and art is the fruit.



Various Concepts of Management: There are three basic concepts of Management

Management as a Discipline: Discipline refers to a field of study having well-defined concepts and

principles. When we refer to management as a discipline, we include in it the various relevant concepts

and principles, the knowledge of which aids in managing

Management as a Group of People: We refer to management as a group of people in which we include

all those personnel who perform managerial functions in organizations. We refer to two distinct classes

or groups of personnel in the organization. In the first category, we include all those persons who are

responsible for managerial functions and in the second category, we include non-managerial personnel.

Management as a process: In studying management discipline, we generally refer to management as a

process. A process can simply be defined s systematic method of handling activates. However, the

management process can be treated as a complex one which can be referred to as an identifiable flow of

information through interrelated stages of analysis directed towards the achievement of an objective or

set of objective. It is a concept of dynamic rather than static existence in which events and relationships

must be seen as dynamic, continuous, and flexible, and as such, must be considered as a whole. Thus,

management as a process includes various activities and sub activities.

Level of management: It refers to the categories or layers of managerial positions in an

organization. The level of management determines the amount of authority and status of the person

occupying the position at that level. These managerial positions divided into various categories

according to their amount and status, they are known as the level management.


Top Level Management(CEO,

GM, BOD, President, Vice-president)

Mddle Level Management(Departmental managers, seniour manager,

plant manager)

Lower/ Supervisory Leel Management(foremen, section head, officer

executive, engineer, supervisor.)


Managerial Hierarchy consists of:

Top-level management or senior level Management

Middle level Management.

Lower level Management such as supervisors or team leaders

Top-level management

Require an extensive knowledge of management roles and skills.

They have to be very aware of external factors such as markets.

Their decisions are generally of a long-term nature

Their decisions are made using analytic, directive, conceptual and/or behavioral/participative

processes

They are responsible for strategic decisions.

They have to chalk out the plan and see that plan may be effective in the future.

They are executive in nature.

These includes board of Directors, CEO’s they comprise small groups but are responsible for overall

management they formulate plans, decide objectives & communicate to middle level management.

Middle Level of Management

The branch managers and departmental managers constitute middle level. They are responsible to the

top management for the functioning of their department. They devote more time to organizational and

directional functions. In small organization, there is only one layer of middle level of management but in

big enterprises, there may be senior and junior middle level management. Their role can be emphasized

as –

They execute the plans of the organization in accordance with the policies and directives

of the top management.

They make plans for the sub-units of the organization.

They participate in employment & training of lower level management.

They interpret and explain policies from top level management to lower level.

They are responsible for coordinating the activities within the division or department.

It also sends important reports and other important data to top level management.

They evaluate performance of junior managers.



They are also responsible for inspiring lower level managers towards better performance.

Lower Level of Management

Lower level is also known as supervisory / operative level of management. It consists of supervisors,

foreman, section officers, superintendent etc. According to R.C. Davis, “Supervisory management refers

to those executives whose work has to be largely with personal oversight and direction of operative

employees”. In other words, they are concerned with direction and controlling function of management.

Their activities include –

Assigning of jobs and tasks to various workers.

They guide and instruct workers for day to day activities.

They are responsible for the quality as well as quantity of production.

They are also entrusted with the responsibility of maintaining good relation in the

organization.

They communicate workers problems, suggestions, and recommendatory appeals etc to

the higher level and higher level goals and objectives to the workers. They help to solve

the grievances of the workers.

They supervise & guide the sub-ordinates.

They are responsible for providing training to the workers.

They arrange necessary materials, machines, tools etc for getting the things done.

They prepare periodical reports about the performance of the workers.

They ensure discipline in the enterprise.

They motivate workers.

The main objectives of management:-

, "A managerial objective is the goal which prescribes definite scope and suggests the efforts of a

manager." - George R. Terry

In the words of Peter F. Drucker, "Objectives in the key areas are the 'instrument panel' necessary to

pilot the business enterprise. Without them the management flies by the 'seat of the pants' without

landmarks, without maps and without having flow route before."

To increasing organizational effectiveness.

To achieve optimum utilization of various resources.



To have co-ordination between various department in the organization.

To have co-ordination between various agencies, and company.

To control the material quality.

To reduces the execution time for various activities of the organization.

To control the quality of workmanship.

To manage and control economy execution.

Functions of Management or Management Functions: Management consists of the functions given

below. It is based on Henri Fayol's thinking on the functions of management.

Planning: generating plans of action for immediate, short term, medium term and long term periods.

Organizing: organizing the resources, particularly human resources, in the best possible manner.

Staffing: positioning right people right jobs at right time.

Directing (includes leading, motivating, communicating and coordinating): Communicate and

coordinate with people to lead and enthuse them to work effectively together to achieve the plans of the

organization.

Controlling (includes review and monitoring): evaluating the progress against the plans and making

corrections either in plans or in execution.

Each of these functions is explained in some detail below.

1. Planning:

Planning is decision making process.

It is making decisions on future course of actions.

Planning involves taking decisions on vision, mission, values, objectives, strategies and

policies of an organization.

Planning is done for immediate, short term, medium term and long term periods.

It is a guideline for execution/implementation.

It is a measure to check the effectiveness and efficiency of an organization.

2. Organizing:



Organizing involves determination and grouping of the activities.

Designing organization structures and departmentation based on this grouping.

Defining the roles and responsibilities of the departments and of the job positions within these

departments.

Defining relationships between departments and job positions.

Defining authorities for departments and job positions.

3. Staffing:

It includes manpower or human resource planning.

Staffing involves recruitment, selection, induction and positioning the people in the organization.

Decisions on remuneration packages are part of staffing.

Training, retraining, development, mentoring and counseling are important aspects of staffing.

It also includes performance appraisals and designing and administering the motivational

packages.

4. Directing

It is one of the most important functions of management to translate company's plans into

execution.

It includes providing leadership to people so that they work willingly and enthusiastically.

Directing people involves motivating them all the time to enthuse them to give their best.

Communicating companies plans throughout the organization is an important directing activity.

It also means coordinating various people and their activities.

Directing aims at achieving the best not just out of an individual but achieving the best through

the groups or teams of people through team building efforts.

5. Controlling

It includes verifying the actual execution against the plans to ensure that execution is being done

in accordance with the plans.

It measures actual performance against the plans.

It sets standards or norms of performance.



It measures the effective and efficiency of execution against these standards and the plans.

It periodically reviews, evaluates and monitors the performance.

If the gaps are found between execution levels and the plans, controlling function involves

suitable corrective actions to expedite the execution to match up with the plans or in certain

circumstances deciding to make modifications in the plans.

Management and administration

Management and administration are at times used interchangeably; however, they are two different

levels of the organization. The administration is the top level of the organization with the decisive

functions. They are responsible for determining the policies and objectives of the organization or the

firm. Management, on the other hand is the middle level executive function. They implement the

policies and objectives as decided by the administration.

The administration includes the people who are either owners or partners of the firm. They usually

contribute to the firm’s capital and earn profits or returns on their investment. The main administrative

function is handling the business aspects of the firm, such as finance. Other administrative functions

usually include planning, organizing, staffing, directing, controlling and budgeting. Administration must

integrate leadership and vision, to organize the people and resources, in order to achieve common goals

and objectives for the organization.

Management usually incorporates the employees of the firm who use their skills for the firm in return

for remuneration. Management is responsible for carrying out the strategies of the administration.

Motivation is the key factor of a management. Management must motivate and handle the employees. It

can be said that management is directly under the control of administration.

Further comparison between management and administration:

Management Administration

Definition Art of getting things done

through others by directing

their efforts towards

achievement of pre-determined

goals.

Formulation of broad

objectives, plans & policies.

Nature executing function, doing decision-making function,



function thinking function

Scope Decisions within the

framework set by the

administration.

Major decisions of an

enterprise as a whole.

Level of authority Middle level activity Top level activity

Status Group of managerial personnel

who use their specialized

knowledge to fulfill the

objectives of an enterprise.

Consists of owners who invest

capital in and receive profits

from an enterprise.

Usage Used in business enterprises. Popular with government,

military, educational, and

religious organizations.

Influence Decisions are influenced by the

values, opinions, beliefs and

decisions of the managers.

Influenced by public opinion,

government policies, customs

etc.

Main functions Motivating and controlling Planning and organizing

Abilities Handles the employees. Handles the business aspects

such as finance.

Discuss the Qualities of a Successful Manager

It is easy to find a bad manager, but much harder to find a successful one. So what makes a manager

successful? Here are my top ten qualities of a successful manager:

1. Demonstrates integrity - A manager should walk the talk. The old saying, "Lead by example" is the

first quality that makes a manager a stand out.

2. Deals honestly and diplomatically - A manager, who owns their mistakes, deals openly, and

honestly with others, earns the respect of those they are trying to lead.



3. Demonstrates flexibility - A manager who is responsive to the needs of the business and the needs of

employees, is able to keep his team on target and yet achieve the goals of the business.

4. Shows commitment and reliability - A manager who delivers their promises shows their team that

they are reliable and promotes trust.

5. Listens effectively - A manager who 'seeks first to understand, then to be understood' (Dr Steven

Covey) is a manager who will always have their finger on the pulse of the business.

6. A good negotiator - A manager who comes to the table prepared to give a little that the outcome is a

positive one for everyone, will not only earn the respect of his employees but be guaranteed of the

opportunity for further negotiations in the future.

7. A thorough planner - 'If you fail to plan, you plan to fail.' This saying is especially true for

managing. A manager is a coach to their team and the team are looking to them for the game plan.

8. Fair - A manager who doesn't take sides, show favoritism or victimize those they are supervising,

will earn their trust and in turn, will have more personal power to influence their team for good.

9. Knows how to have fun and has a good sense of humor - A manager who is able to promote a safe

and happy work environment where appropriate fun is embraced, will ensure the retention of staff.

10. Seeks to understand their workers - A manager who is able to accurately assess the skills, abilities

and personalities of their work team, will be able to develop individual managers to maximize their

effectiveness and help them reach their potential, whilst focusing their efforts on the goal.

The different roles that managers

To meet the many demands of performing their functions, managers assume multiple roles. A role is an

organized set of behaviors. Henry Mintzberg has identified ten roles common to the work of all

managers. The ten roles are divided into three groups: interpersonal, informational, and decisional.

The informational roles link all managerial work together.

The interpersonal roles ensure that information is provided.

The decisional roles make significant use of the information.

Responsibilities of a managerial position



1. Supervise and manage the overall performance of staff in his department.

2. Achieve business and organization goals, visions and objectives.

3. Analyzing, reporting, giving recommendations and developing strategies on how to improve

quality and quantity

4. Involved in employee selection, career development, succession planning and periodic training.

5. Working out compensations and rewards

6. Responsible for the growth and increase in the organizations' finances and earnings.

7. Identifying problems, creating choices and providing alternatives courses of actions.

Importance of Management

1. It helps in Achieving Group Goals - It arranges the factors of production, assembles

and organizes the resources, integrates the resources in effective manner to achieve goals.

It directs group efforts towards achievement of pre-determined goals. By defining

objective of organization clearly there would be no wastage of time, money and effort.

Management converts disorganized resources of men, machines, money etc. into useful

enterprise. These resources are coordinated, directed and controlled in such a manner that

enterprise work towards attainment of goals.

2. Optimum Utilization of Resources - Management utilizes all the physical & human

resources productively. This leads to efficacy in management. Management provides

maximum utilization of scarce resources by selecting its best possible alternate use in

industry from out of various uses. It makes use of experts, professional and these services

leads to use of their skills, knowledge, and proper utilization and avoids wastage. If

employees and machines are producing its maximum there is no under employment of

any resources.

3. Reduces Costs - It gets maximum results through minimum input by proper planning and by

using minimum input & getting maximum output. Management uses physical, human and

financial resources in such a manner which results in best combination. This helps in cost

reduction.

4. Establishes Sound Organization - No overlapping of efforts (smooth and coordinated

functions). To establish sound organizational structure is one of the objective of management



which is in tune with objective of organization and for fulfillment of this, it establishes effective

authority & responsibility relationship i.e. who is accountable to whom, who can give

instructions to whom, who are superiors & who are subordinates. Management fills up various

positions with right persons, having right skills, training and qualification. All jobs should be

cleared to everyone.

5. Establishes Equilibrium - It enables the organization to survive in changing environment. It

keeps in touch with the changing environment. With the change is external environment, the

initial co-ordination of organization must be changed. So it adapts organization to changing

demand of market / changing needs of societies. It is responsible for growth and survival of

organization.

6. Essentials for Prosperity of Society - Efficient management leads to better economical

production which helps in turn to increase the welfare of people. Good management makes a

difficult task easier by avoiding wastage of scarce resource. It improves standard of living. It

increases the profit which is beneficial to business and society will get maximum output at

minimum cost by creating employment opportunities which generate income in hands.

Organization comes with new products and researches beneficial for society.

Scientific Management

Fredrick Winslow Taylor ( March 20, 1856 – March 21, 1915) commonly known as ’Father of Scientific

Management’ started his career as an operator and rose to the position of chief engineer. He conducted

various experiments during this process which forms the basis of scientific management. It implies

application of scientific principles for studying & identifying management problems.According to Taylor,

“Scientific Management is an art of knowing exactly what you want your men to do and seeing that they

do it in the best and cheapest way”. In Taylors view, if a work is analysed scientifically it will be possible

to find one best way to do it.

Hence scientific management is a thoughtful, organized, dual approach towards the job of management

against hit or miss or Rule of Thumb.

According to Drucker, “The cost of scientific management is the organized study of work, the analysis

of work into simplest element & systematic management of worker’s performance of each element”.



Principles of Scientific Management

1. Development of Science for each part of men’s job (replacement of rule of thumb)

a. This principle suggests that work assigned to any employee should be observed, analyzed

with respect to each and every element and part and time involved in it.

b. This means replacement of odd rule of thumb by the use of method of enquiry, investigation,

data collection, analysis and framing of rules.

c. Under scientific management, decisions are made on the basis of facts and by the application

of scientific decisions.

2. Scientific Selection, Training & Development of Workers

a. There should be scientifically designed procedure for the selection of workers.

b. Physical, mental & other requirement should be specified for each and every job.

c. Workers should be selected & trained to make them fit for the job.

d. The management has to provide opportunities for development of workers having better

capabilities.

e. According to Taylor efforts should be made to develop each employee to his greatest level

and efficiency & prosperity.

3. Co-operation between Management & workers or Harmony not discord

a. Taylor believed in co-operation and not individualism.

b. It is only through co-operation that the goals of the enterprise can be achieved efficiently.

c. There should be no conflict between managers & workers.

d. Taylor believed that interest of employer & employees should be fully harmonized so as to

secure mutually understanding relations between them.

4. Division of Responsibility

a. This principle determines the concrete nature of roles to be played by different level of

managers & workers.

b. The management should assume the responsibility of planning the work whereas workers

should be concerned with execution of task.

c. Thus planning is to be separated from execution.

5. Mental Revolution

a. The workers and managers should have a complete change of outlook towards their mutual

relation and work effort.



b. It requires that management should create suitable working condition and solve all problems

scientifically.

c. Similarly workers should attend their jobs with utmost attention, devotion and carefulness.

They should not waste the resources of enterprise.

d. Handsome remuneration should be provided to workers to boost up their moral.

e. It will create a sense of belongingness among worker.

f. They will be disciplined, loyal and sincere in fulfilling the task assigned to them.

g. There will be more production and economical growth at a faster rate.

6. Maximum Prosperity for Employer & Employees

a. The aim of scientific management is to see maximum prosperity for employer and

employees.

b. It is important only when there is opportunity for each worker to attain his highest efficiency.

c. Maximum output & optimum utilization of resources will bring higher profits for the

employer & better wages for the workers.

d. There should be maximum output in place of restricted output.

e. Both managers & workers should be paid handsomely.

Techniques of Scientific Management

1. Time Study

a. It is a technique which enables the manager to ascertain standard time taken for performing a

specified job.

b. Every job or every part of it is studied in detail.

c. This technique is based on the study of an average worker having reasonable skill and ability.

d. Average worker is selected and assigned the job and then with the help of a stop watch, time

is ascertained for performing that particular job.

e. Taylor maintained that Fair day’s work should be determined through observations,

experiment and analysis by keeping in view an average worker.

Standard Time × Working Hours = Fair Day’s Work

2. Motion Study

a. In this study, movement of body and limbs required to perform a job are closely observed.

b. In other words, it refers to the study of movement of an operator on machine involved in a

particular task.



c. The purpose of motion study is to eliminate useless motions and determine the bet way of

doing the job.

d. By undertaking motion study an attempt is made to know whether some elements of a job can

be eliminated combined or their sequence can be changed to achieve necessary rhythm.

e. Motion study increases the efficiency and productivity of workers by cutting down all

wasteful motions.

3. Functional Foremanship

a. Taylor advocated functional foremanship for achieving ultimate specification.

b. This technique was developed to improve the quality of work as single supervisor may not be

an expert in all the aspects of the work.

c. Therefore workers are to be supervised by specialist foreman.

d. The scheme of functional foremanship is an extension of principle pf specialization at the

supervisory level.

e. Taylor advocated appointment of 8 foramen, 4 at the planning level & other 4 at

implementation level.

The names & function of these specialist foremen are: -

Instruction card clerk concerned with tagging down of instructions according to which

workers are required to perform their job

Time & cost clerk is concerned with setting a time table for doing a job & specifying the

material and labor cost involved in it.

Route clerk determines the route through which raw materials has to be passed.



Shop Disciplinarians are concerned with making rules and regulations to ensure discipline

in the organization.

Gang boss makes the arrangement of workers, machines, tools, workers etc.

Speed boss concerned with maintaining the speed and to remove delays in the production

process.

Repair boss concerned with maintenance of machine, tools and equipments.

Inspector is concerned with maintaining the quality of product.

4. Standardization

a. It implies the physical attitude of products should be such that it meets the requirements &

needs of customers.

b. Taylor advocated that tools & equipments as well as working conditions should be

standardized to achieve standard output from workers.

c. Standardization is a means of achieving economics of production.

d. It seems to ensure -

The line of product is restricted to predetermined type, form, design, size, weight, quality.

Etc

There is manufacture of identical parts and components.

Quality & standards have been maintained.

Standard of performance are established for workers at all levels.

5. Differential Piece Wage Plan

a. This tech of wage payment is based on efficiency of worker.

b. The efficient workers are paid more wages than inefficient one.

c. On the other hand, those workers who produce less than standard no. of pieces are paid wages

at lower rate than prevailing rate i.e. worker is penalized for his inefficiency.

d. This system is a source of incentive to workers who improving their efficiency in order to get

more wages.

e. It also encourages inefficient workers to improve their performance and achieve their

standards.

f. It leads to mass production which minimizes cost and maximizes profits.

6. Other Techniques

a. Various other techniques have been developed to create ordeal relationship between

management and workers and also to create better understanding on part of works.



b. Those includes use of instruction cards, strict rules & regulations, graphs, slides, charts etc,

so as to increase efficiency of workers.

Criticism of Scientific Management

Although it is accepted that the scientific management enables the management to put resources to its

best possible use and manner, yet it has not been spared of severe criticism.

Workers Viewpoint

Unemployment - Workers feel that management reduces employment opportunities from them through

replacement of men by machines and by increasing human productivity less workers are needed to do

work leading to chucking out from their jobs.

Exploitation - Workers feel they are exploited as they are not given due share in increasing profits

which is due to their increased productivity. Wages do not rise in proportion as rise in production. Wage

payment creates uncertainty & insecurity (beyond a standard output, there is no increase in wage rate).

Monotony - Due to excessive specialization the workers are not able to take initiative on their own.

Their status is reduced to being mere cogs in wheel. Jobs become dull. Workers loose interest in jobs

and derive little pleasure from work.

Weakening of Trade Union - To everything is fixed & predetermined by management. So it leaves no

room for trade unions to bargain as everything is standardized, standard output, standard working

conditions, standard time etc. This further weakens trade unions, creates a rift between efficient & in

efficient workers according to their wages.

Over speeding - the scientific management lays standard output, time so they have to rush up and finish

the work in time. These have adverse effect on health of workers. The workers speed up to that standard

output, so scientific management drives the workers to rush towards output and finish work in standard

time.

Employer’s Viewpoint



Expensive - Scientific management is a costly system and a huge investment is required in

establishment of planning dept., standardization, work study, training of workers. It may be beyond

reach of small firms. Heavy food investment leads to increase in overhead costs.

Time Consuming - Scientific management requires mental revision and complete reorganizing of

organization. A lot of time is required for work, study, standardization & specialization. During this

overhauling of organization, the work suffers.

Administrative Management - (Contribution of Henri Fayol)

Henri Fayol was real father of modern Management. Henri Fayol is the French industrialist in

1841-1925. He was a mining engineer in. Henri Fayol spent his entire working career in French

industry; French cool and iron combine of commentary fourchambault. Henri Fayol developed

a generaltheory of Business Administration.

Henri Fayol was concerned the principles of organization and the function of management. Fayol

laid the foundation of management as a separate body of knowledge. He always insisted that if scientific

forecasting and proper methods are used in management than company can get satisfactory results.

According to Fayol, management was not personal talent; it is a knowledge base skill.

Henri Fayol’s Administrative Management is based on six admin activities. They are-

Technical : Production and manufacture

Managerial : Planning, controlling, co-ordination

Commercial : Purchasing and selling

Financial : Use of capital

Accounting : Asset, Liabilities, cost, profits

Security : Protection of goods and Person

Fayol’s fourteen Principles of management

Fayol derived the following fourteen principles.-

1. Division of work: Division of work means specialization. Each job and work should be divided into

small task and should be assigned to specialist of it.



2. Authority and responsibility: Authority means right to give order and command while

responsibility means to accomplish objective.

3. Discipline: Discipline is required at every level in every organization. Fayol stated discipline in

terms of obedience, application, and respect to superiors.

4. Unity of command: A subordinate should receive order from only one boss.

5. Unity of direction: It means that all the works of an organization must work together to accomplish

a common objective in under one plan and head.

6. Subordination of individual interest to common interest: Worker follows the common interest of

organization rather than individual.

7. Remuneration: Remuneration should be fair and adequate. It includes both types of incentives

financial as well as non financial.

8. Centralization: There should be one central point in organization which exercises overall direction

and control of all the parts.

9. Scalar Chain: Scalar chain is the chain or line of command from superior to subordinates.

10. Order: Only proper order can give an efficient management.

11. Equity: Equity creates loyalty and devotion among the employees.

12. Stability of tenure personnel: Security of job for an employee in an organization is very important

and pre-requisite condition. Retaining productive employee should always a higher priority of

management.

13. Esprit de corps: Management should encourage harmony and proper understandings between

workers. Fayol said that in union there is strength. Whole organization should work as a team.

14. Initiative: Manager should be encouraged the employees Initiative for creative working.

Hawthorne Experiment:

In 1927, a group of researchers led by Elton Mayo and Fritz Roethlisberger of the Harvard Business

School were invited to join in the studies at the Hawthorne Works of Western Electric Company,

Chicago. The experiment lasted up to 1932. The Hawthorne Experiments brought out that the

productivity of the employees is not the function of only physical conditions of work and money wages



paid to them. Productivity of employees depends heavily upon the satisfaction of the employees in their

work situation. Mayo’s idea was that logical factors were far less important than emotional factors in

determining productivity efficiency. Furthermore, of all the human factors influencing employee

behaviour, the most powerful were those emanating from the worker’s participation in social groups.

Thus, Mayo concluded that work arrangements in addition to meeting the objective requirements of

production must at the same time satisfy the employee’s subjective requirement of social satisfaction at

his work place. The Hawthorne experiment consists of four parts. These parts are briefly described

below:-

1. Illumination Experiment.

2. Relay Assembly Test Room Experiment.

3. Interviewing Programme.

4. Bank Wiring Test Room Experiment.

1. Illumination Experiment:

This experiment was conducted to establish relationship between output and illumination. When the

intensity of light was increased, the output also increased. The output showed an upward trend even

when the illumination was gradually brought down to the normal level. Therefore, it was concluded that

there is no consistent relationship between output of workers and illumination in the factory. There must

be some other factor which affected productivity.

2. Relay Assembly Test Room Experiment:

This phase aimed at knowing not only the impact of illumination on production but also other factors

like length of the working day, rest hours, and other physical conditions. In this experiment, a small

homogeneous work-group of six girls was constituted. These girls were friendly to each other and were

asked to work in a very informal atmosphere under the supervision of a researcher. Productivity and

morale increased considerably during the period of the experiment. Productivity went on increasing and

stabilized at a high level even when all the improvements were taken away and the pre-test conditions

were reintroduced. The researchers concluded that socio-psychological factors such as feeling of being

important, recognition, attention, participation, cohesive work-group, and non-directive supervision held

the key for higher productivity.

3. Mass Interview Programme:

The objective of this programme was to make a systematic study of the employees’ attitudes which

would reveal the meaning which their “working situation” has for them. The researchers interviewed a

large number of workers with regard to their opinions on work, working conditions and supervision.



Initially, a direct approach was used whereby interviews asked questions considered important by

managers and researchers. The researchers observed that the replies of the workmen were guarded.

Therefore, this approach was replaced by an indirect technique, where the interviewer simply listened to

what the workmen had to say. The findings confirmed the importance of social factors at work in the

total work environment.

4. Bank Wiring Test Room Experiment:

This experiment was conducted by Roethlisberger and Dickson with a view to develop a new method of

observation and obtaining more exact information about social groups within a company and also

finding out the causes which restrict output. The experiment was conducted to study a group of workers

under conditions which were as close as possible to normal. This group comprised of 14 workers. After

the experiment, the production records of this group were compared with their earlier production

records. It was observed that the group evolved its own production norms for each individual worker,

which was made lower than those set by the management. Because of this, workers would produce only

that much, thereby defeating the incentive system. Those workers who tried to produce more than the

group norms were isolated, harassed or punished by the group. The findings of the study are:-

Each individual was restricting output.

The group had its own “unofficial” standards of performance.

Individual output remained fairly constant over a period of time.

Informal groups play an important role in the working of an organization.

Contributions of the Hawthorne Experiment:

Elton Mayo and his associates conducted their studies in the Hawthorne plant of the western electrical

company, U.S.A., between 1927 and 1930. According to them, behavioural science methods have many

areas of application in management. The important features of the Hawthorne Experiment are:-

1. A business organization is basically a social system. It is not just a techno-economic system.

2. The employer can be motivated by psychological and social wants because his behaviour is also

influenced by feelings, emotions and attitudes. Thus economic incentives are not the only method to

motivate people.

3. Management must learn to develop co-operative attitudes and not rely merely on command.



4. Participation becomes an important instrument in human relations movement. In order to achieve

participation, effective two-way communication network is essential.

5. Productivity is linked with employee satisfaction in any business organization. Therefore

management must take greater interest in employee satisfaction.

6. Group psychology plays an important role in any business organization. We must therefore rely

more on informal group effort.

7. The neo-classical theory emphasizes that man is a living machine and he is far more important than

the inanimate machine. Hence, the key to higher productivity lies in employee morale. High morale

results in higher output.

Maslow's Hierarchy of Needs:

Maslow's Hierarchy of Needs is a theory in psychology that Abraham Maslow proposed in

his 1943 paper A Theory of Human Motivation, which he subsequently extended. His theory contends

that as humans meet 'basic needs', they seek to satisfy successively 'higher needs' that occupy a

set hierarchy. Maslow studied exemplary people such as Albert Einstein, Jane Addams, Eleanor

Roosevelt, and Frederick Douglass rather than mentally ill orneurotic people, writing that "the study of

crippled, stunted, immature, and unhealthy specimens can yield only a cripple psychology and a cripple

philosophy."


http://psychology.wikia.com/wiki/Neurotic

http://psychology.wikia.com/wiki/Mentally_ill

http://psychology.wikia.com/wiki/Hierarchy

http://psychology.wikia.com/wiki/Human

http://psychology.wikia.com/wiki/1943

http://psychology.wikia.com/wiki/Abraham_Maslow

http://psychology.wikia.com/wiki/Psychology

http://static3.wikia.nocookie.net/__cb20061121181204/psychology/images/c/c3/Maslow's_hierarchy_of_needs.png


This diagram shows Maslow's hierarchy of needs, represented as a pyramid with the more primitive

needs at the bottom.

Maslow's hierarchy of needs is often depicted as a pyramid consisting of five levels: the four lower

levels are grouped together as deficiency needs associated with physiological needs, while the top level

is termed growth needs associated with psychological needs. While deficiency needs must be

met, growth needs are continually shaping behaviour. The basic concept is that the higher needs in this

hierarchy only come into focus once all the needs that are lower down in the pyramid are mainly or

entirely satisfied.

Physiological needs

Physiological needs are the physical requirements for human survival. If these requirements are not met,

the human body cannot function properly and will ultimately fail. Physiological needs are thought to be

the most important; they should be met first.

Air, water, and food are metabolic requirements for survival in all animals, including humans. Clothing

and shelter provide necessary protection from the elements. While maintaining an adequate birth rate

shapes the intensity of the human sexual instinct, sexual competition may also shape said instinct.

Safety needs

With their physical needs relatively satisfied, the individual's safety needs take precedence and dominate

behavior. In the absence of physical safety – due to war, natural disaster, family violence, childhood

abuse, etc. – people may (re-)experience post-traumatic stress disorder or trans generational trauma. In

the absence of economic safety – due to economic crisis and lack of work opportunities – these safety

needs manifest themselves in ways such as a preference for job security, grievance procedures for

protecting the individual from unilateral authority, savings accounts, insurance policies, reasonable

disability accommodations, etc. This level is more likely to be found in children because they generally

have a greater need to feel safe.

Safety and Security needs include:

Personal security Financial security Health and well-being Safety net against accidents/illness and their adverse impacts


http://en.wikipedia.org/wiki/Job_security

http://en.wikipedia.org/wiki/Transgenerational_trauma

http://en.wikipedia.org/wiki/Post-traumatic_stress_disorder

http://en.wikipedia.org/wiki/Childhood_abuse

http://en.wikipedia.org/wiki/Childhood_abuse

http://en.wikipedia.org/wiki/Family_violence

http://en.wikipedia.org/wiki/Sexual_competition

http://en.wikipedia.org/wiki/Weather

http://en.wikipedia.org/wiki/Metabolism

http://psychology.wikia.com/wiki/Needs


Love and belonging

After physiological and safety needs are fulfilled, the third level of human needs is interpersonal and

involves feelings of belongingness. This need is especially strong in childhood and can override the need

for safety as witnessed in children who cling to abusive parents. Deficiencies within this level of

Maslow's hierarchy – due to hospitalism, neglect, shunning, ostracism, etc. – can impact the individual's

ability to form and maintain emotionally significant relationships in general, such as:

Friendship Intimacy Family

According to Maslow, humans need to feel a sense of belonging and acceptance among their social

groups, regardless if these groups are large or small. For example, some large social groups may include

clubs, co-workers, religious groups, professional organizations, sports teams, and gangs. Some examples

of small social connections include family members, intimate partners, mentors, colleagues, and

confidants. Humans need to love and be loved – both sexually and non-sexually – by others. [2] Many

people become susceptible to loneliness, social anxiety, and clinical depression in the absence of this

love or belonging element. This need for belonging may overcome the physiological and security needs,

depending on the strength of the peer pressure.

Esteem

All humans have a need to feel respected; this includes the need to have self-esteem and self-respect.

Esteem presents the typical human desire to be accepted and valued by others. People often engage in a

profession or hobby to gain recognition. These activities give the person a sense of contribution or value.

Low self-esteem or an inferiority complex may result from imbalances during this level in the hierarchy.

People with low self-esteem often need respect from others; they may feel the need to seek fame or

glory. However, fame or glory will not help the person to build their self-esteem until they accept who

they are internally. Psychological imbalances such as depression can hinder the person from obtaining a

higher level of self-esteem or self-respect.

Self-actualization

"What a man can be, he must be." This quotation forms the basis of the perceived need for self-

actualization. This level of need refers to what a person's full potential is and the realization of that

potential. Maslow describes this level as the desire to accomplish everything that one can, to become the

most that one can be. Individuals may perceive or focus on this need very specifically. For example, one


http://en.wikipedia.org/wiki/Depression_(mood)

http://en.wikipedia.org/wiki/Inferiority_complex

http://en.wikipedia.org/wiki/Self-esteem

http://en.wikipedia.org/wiki/Clinical_depression

http://en.wikipedia.org/wiki/Social_anxiety

http://en.wikipedia.org/wiki/Maslow's_hierarchy_of_needs#cite_note-multiple-2

http://en.wikipedia.org/wiki/Ostracism

http://en.wikipedia.org/wiki/Shunning

http://en.wikipedia.org/wiki/Neglect

http://en.wikipedia.org/wiki/Hospitalism

http://en.wikipedia.org/wiki/Belongingness


individual may have the strong desire to become an ideal parent. In another, the desire may be expressed

athletically. For others, it may be expressed in paintings, pictures, or inventions. As previously

mentioned, Maslow believed that to understand this level of need, the person must not only achieve the

previous needs, but master them.

Herzberg's Two Factor Theory:

The two-factor theory (also known as Herzberg's motivation-hygiene theory and dual-factor

theory) states that there are certain factors in the workplace that cause job satisfaction, while a separate

set of factors cause dissatisfaction. It was developed by Frederick Herzberg, a psychologist, who

theorized that job satisfaction and job dissatisfaction act independently of each other.

Two-factor theory fundamentals: Attitudes and their connection with industrial mental health are related

to Maslow's theory of motivation. His findings have had a considerable theoretical, as well as a

practical, influence on attitudes toward administration. According to Herzberg, individuals are not

content with the satisfaction of lower-order needs at work, for example, those associated with minimum

salary levels or safe and pleasant working conditions. Rather, individuals look for the gratification of

higher-level psychological needs having to do with achievement, recognition, responsibility,

advancement, and the nature of the work itself. So far, this appears to parallel Maslow's theory of a need

hierarchy. However, Herzberg added a new dimension to this theory by proposing a two-factor model of

motivation, based on the notion that the presence of one set of job characteristics or incentives leads to

worker satisfaction at work, while another and separate set of job characteristics leads

to dissatisfaction at work. Thus, satisfaction and dissatisfaction are not on a continuum with one

increasing as the other diminishes, but are independent phenomena. This theory suggests that to improve

job attitudes and productivity, administrators must recognize and attend to both sets of characteristics

and not assume that an increase in satisfaction leads to decrease in unpleasurable dissatisfaction.

The two-factor, or motivation-hygiene theory, developed from data collected by Herzberg from

interviews with a large number of engineers and accountants in the Pittsburgh area. From analyzing

these interviews, he found that job characteristics related to what an individual does — that is, to the

nature of the work one performs — apparently have the capacity to gratify such needs as achievement,

competency, status, personal worth, and self-realization, thus making him happy and satisfied. However,

the absence of such gratifying job characteristics does not appear to lead to unhappiness and

dissatisfaction. Instead, dissatisfaction results from unfavorable assessments of such job-related factors


http://en.wikipedia.org/wiki/Maslow's_hierarchy_of_needs

http://en.wikipedia.org/wiki/Maslow's_hierarchy_of_needs

http://en.wikipedia.org/wiki/Abraham_Maslow

http://en.wikipedia.org/wiki/Psychologist

http://en.wikipedia.org/wiki/Frederick_Herzberg

http://en.wikipedia.org/wiki/Job_satisfaction

http://en.wiktionary.org/wiki/Workplace


as company policies, supervision, technical problems, salary, interpersonal relations on the job, and

working conditions.

Thus, if management wishes to increase satisfaction on the job, it should be concerned with the nature of

the work itself — the opportunities it presents for gaining status, assuming responsibility, and for

achieving self-realization. If, on the other hand, management wishes to reduce dissatisfaction, then it

must focus on the job environment — policies, procedures, supervision, and working conditions.[1] If

management is equally concerned with both, (as is usually the case), then managers must give attention

to both sets of job factors. The theory was based around interviews with 203

American accountants and engineers in Pittsburgh, chosen because of their professions' growing

importance in the business world. The subjects were asked to relate times when they felt exceptionally

good or bad about their present job or any previous job, and to provide reasons, and a description of the

sequence of events giving rise to that positive or negative feeling.

Here is the description of this interview analysis:

Briefly, we asked our respondents to describe periods in their lives when they were exceedingly happy

and unhappy with their jobs. Each respondent gave as many "sequences of events" as he could that met

certain criteria—including a marked change in feeling, a beginning and an end, and contained some

substantive description other than feelings and interpretations...

The proposed hypothesis appears verified. The factors on the right that led to satisfaction (achievement,

intrinsic interest in the work, responsibility, and advancement) are mostly unipolar; that is, they

contribute very little to job dissatisfaction. Conversely, the dis-satisfiers (company policy and

administrative practices, supervision, interpersonal relationships, working conditions, and salary)

contribute very little to job satisfaction.

Two-factor theory distinguishes between:

Motivators (e.g. challenging work, recognition, responsibility) that give positive satisfaction,

arising from intrinsic conditions of the job itself, such as recognition, achievement, or personal

growth, and

Hygiene factors (e.g. status, job security, salary, fringe benefits, work conditions) that do not give

positive satisfaction, though dissatisfaction results from their absence. These are extrinsic to the

work itself, and include aspects such as company policies, supervisory practices, or wages/salary.


http://en.wikipedia.org/wiki/Fringe_benefits

http://en.wikipedia.org/wiki/Salary

http://en.wikipedia.org/wiki/Job_security

http://en.wikipedia.org/wiki/Motivation

http://en.wikipedia.org/wiki/Pittsburgh

http://en.wikipedia.org/wiki/Engineer

http://en.wikipedia.org/wiki/Accountant

http://en.wikipedia.org/wiki/Two-factor_theory#cite_note-Herzberg1959-1


Essentially, hygiene factors are needed to ensure an employee is not dissatisfied. Motivation factors are

needed to motivate an employee to higher performance. Herzberg also further classified our actions and

how and why we do them, for example, if you perform a work related action because you have to then

that is classed as "movement", but if you perform a work related action because youwant to then that is

classed as "motivation".

SOCIAL RESPONSIBILITIES OF MANAGEMENT

Introduction:-

Social responsibility of the business is the main objective or principle of the business which help for

survival and long run of business in the market. The survival of business or smooth running of the

business is always supported by various factors such as Government, Consumer, Society, Share holders

etc. The main responsibility of the business is to satisfy all these factors. Unless these factors are

satisfied no business can survive for long time.

Definition: social responsibility [koontz]:-

“It is a serious consideration, by the corporate sector, of the impact of, its actions, on society.”

Social responsiveness: [koontz]:-


Social responsibility towards share holders

Social responsibility towards Consumers

Social responsibility towards ownersSocial responsibility towards

employees Business

Social responsibility towards government

Social responsibility towards society


“It is the ability of the company to relate its operations and policies to the social environment in ways

that are mutually beneficial, to the company and society as well.”

1. Responsibility towards the consumer:-

The primary responsibility of the business man is to satisfy the consumer by manufacturing

suitable and good quality of product at right price, Satisfying needs and wants of the customer by

giving after sakes service and satisfying them by providing various sales offers like discounts,

50% extra, Travel trip to foreign schemes etc.

1) Customer is a king and there is consumer sovereignty. This means that the corporate business

sector obliged to cater to the needs of the consumers. This is the primary obligation. This obligation

is to satisfy the needs of the consumers

2) Business has to ensure that the goods/services marketed must live up to the expected standards with

regard to quality, quantity, cost, durability etc.,

3) To maximize the consumer satisfactions with regard to quality aspect, the company must make its

association with quality association viz; ISI, Agmark etc. clear to audience.

4) Continues supply of spare parts and good after sales service facility are also important obligations

to be discharged.

2. Responsibility towards Society:-

It includes infrastructure development in the society, providing employment opportunity,

optimum utilization of local resources, providing quality products to the society, implementing

ethical aspects in business like pollution control, optimum utilization of resources and protecting

the society from pollution and adopting some villages nearby and developing them.

3. Responsibility towards the Government:-

Business responsibility towards the government means paying taxes to the government without

postponing or delay, implementation of government reservations in organization, paying salary

to employees according to the government norms, providing welfare facilities to the employees

like provident fund, Employee state insurance etc according to government rules, producing

quality products according to government standards (i.e. ISI) and finally developing the

infrastructure in that location. It also includes providing employment to the local people.

To follow fair trade policies and practices.



Business must be a good corporate citizen. It must be good and prompt at the payment of all

taxes to the government.

Business sector must comply with all legal frame work.

In all possible ways, corporate sector has to help the government and the society in general

Not to bribe Government officials.

4. Responsibility towards employees:-

It involves activities like giving preference to merit candidates, providing proper training to

employees, implementing suitable incentives and various welfare facilities like insurance,

provident fund, gratuity fund etc. It focuses on achieving employee satisfaction and employee

cooperation.

Owners and management should be kind, just and considerate towards employees.

Good human resource management is needed.

Motivation and morale are sought to be developed.

Sense of belongingness must be promoted.

The treatment should be such that employees are stable with a lot of loyalty and commitment.

5. Responsibility towards share holders:-

Responsibility of the business towards the share holders is to sell their shares to share holders.

Management has to run the organization and gain the profits. This profit should be distributed

among the share holders rationally. They had to satisfy the share holders by providing adequate

information about the company and also by running the organization effectively by gaining

profits and increase market value and share in the market.

Capital invested by the share holders is the hard earned money. It shall be utilized and

safeguarded best. This is how the share holders are to be safe guarded.

Ensuring a stable rate of dividend, though not a high rate, is a minimum obligation to be met.

From time to time, the share holders must be informed of authentic and reliable information about

the progress (or) otherwise of the organization.

Share holders also must never be misdirected and misled by the faulty accounting information.

There must be a great deal of transparency in what they are doing, what they did and what they

are going to do about.



There must be good corporate Governance. Etc.,

6. Responsibility towards Owner:-

Manager has to satisfy all the responsibilities given to him. He had to satisfy all the above said

factors and he had to satisfy him self by receiving equal profit for his efforts.

Towards Trade Unions:

Normally, company and Trade Union are considered natural enemies. This must be replaced.

Management must consider the trade unions as its friend but not a foe.

Company should always develop a positive attitude towards trade unions.

Good and cordial relations are sought to be promoted.

Collective bargaining and participative management concept must be given weightage and

implemented etc.

Thus, in all these possible ways, the business organizations will be discharging its obligations. Role of

the management is to appreciate the value of systems concept that there is a lot of interdependence

between companies on the one hand and the society on the other hand.

PLANNING

A basic management function involving formulation of one or more detailed plans to achieve optimum

balance of needs or demands with the available resources. The planning process (1) identifies the goals

or objectives to be achieved, (2) formulates strategies to achieve them, (3) arranges or creates the means

required, and (4) implements, directs, and monitors all steps in their proper sequence.

Meaning and Concept of Planning:

In simple words, planning is deciding in advance what is to be done, when where, how and by whom it

is to be done. Planning bridges the gap from where we are to where we want to go. It includes the

selection of objectives, policies, procedures and programmes from among alternatives. A plan is a



predetermined course of action to achieve a specified goal. It is an intellectual process characterized by

thinking before doing. It is an attempt on the part of manager to anticipate the future in order to achieve

better performance. Planning is the primary function of management.

Definition of Planning:

According to Koontz and O' Donnell, "Planning is an intellectual process, conscious determination of

course of action, the basing of decision on purpose, facts and considered estimates.

Nature / Characteristics of Planning:

1. Planning is an Intellectual Process: Planning is an intellectual process of thinking in advance.

It is a process of deciding the future on the series of events to follow. Planning is a process where

a number of steps are to be taken to decide the future course of action. Managers or executives

have to consider various courses of action, achieve the desired goals, go in details of the pros and

cons of every course of action and then finally decide what course of action may suit them best.

2. Planning Contributes to the Objectives: Planning contributes positively in attaining the

objectives of the business enterprise. Since plans are there from the very first stage of operation,

the management is able to handle every problem successfully. Plan try to set everything right. A

purposeful, sound and effective planning process knows how and when to tackle a problem. This

leads to success. Objectives thus are easily achieved.

3. Planning is a Primary Function of Management: Planning precedes other functions in the

management process. Certainly, setting of goals to be achieved and lines of action to be followed

precedes the organization, direction, supervision and control. No doubt, planning precedes other

functions of management. It is primary requisite before other managerial functions step in. But

all functions are inter-connected. It is mixed in all managerial functions but there too it gets

precedence. It thus gets primary everywhere.

4. A continuous Process: Planning is a continuous process and a never ending activity of a

manager in an enterprise based upon some assumptions which may or may not come true in the

future. Therefore, the manager has to go on modifying revising and adjusting plans in the light of

changing circumstances. According to George R. Terry, "Planning is a continuous process and

there is no end to it. It involves continuous collection, evaluation and selection of data, and



scientific investigation and analysis of the possible alternative courses of action and the selection

of the best alternative.

5. Planning Pervades Managerial Activities: From primary of planning follows pervasiveness of

planning. It is the function of every managerial personnel. The character, nature and scope of

planning may change fro personnel to personnel but the planning as an action remains intact.

According to Billy E. Goetz, "Plans cannot make an enterprise successful. Action is required, the

enterprise must operate managerial planning seeks to achieve a consistent, coordinated structure

of operations focused on desired trends. Without plans, action must become merely activity

producing nothing but chaos."

6. Role, Significance, Importance & Advantages of Planning: An organisation without planning

is like a sailboat minus its rudder. Without planning, organisation, are subject to the winds of

organizational change. Planning is one of the most important and crucial functions of

management. According to Koontz and O'Donnell, "Without planning business becomes random

in nature and decisions become meaningless and adhoc choices." According to Geroge R. Terry,

"Planning is the foundation of most successful actions of any enterprise." Planning becomes

necessary due to the following reasons:

7. Reduction of Uncertainty: Future is always full of uncertainties. A business organisation has to

function in these uncertainties. It can operate successfully if it is able to predict the uncertainties.

Some of the uncertainties can be predicted by undertaking systematic. Some of the uncertainties

can be predicted by undertaking systematic forecasting. Thus, planning helps in foreseeing

uncertainties which may be caused by changes in technology, fashion and taste of people,

government rules and regulations, etc.

8. Better Utilization of Resources: An important advantage of planning is that it makes effective

and proper utilization of enterprise resources. It identifies all such available resources and makes

optimum use of these resources.

9. Increases Organizational Effectiveness: Planning ensures organizational effectiveness.

Effectiveness ensures that the organisation is in a position to achieve its objective due to

increased efficiency of the organisation.

10. Reduces the Cost of Performance: Planning assists in reducing the cost of performance. It

includes the selection of only one course of action amongst the different courses of action that

would yield the best results at minimum cost. It removes hesitancy, avoids crises and chaos,

eliminates false steps and protects against improper deviations.



11. Concentration on Objectives: It is a basic characteristic of planning that it is related to the

organizational objectives. All the operations are planned to achieve the organizational objectives.

Planning facilitates the achievement of objectives by focusing attention on them. It requires the

clear definition of objectives so that most appropriate alternative courses of action are chosen.

12. Helps in Co-ordination: Good plans unify the interdepartmental activity and clearly lay down

the area of freedom in the development of various sub-plans. Various departments work in

accordance with the overall plans of the organisation. Thus, there is harmony in the organisation,

and duplication of efforts and conflict of jurisdiction are avoided.

13. Makes Control Effective: Planning and control are inseparable in the sense that unplanned

action cannot be controlled because control involves keeping activities on the predetermined

course by rectifying deviations from plans. Planning helps control by furnishing standards of

performance.

14. Encouragement to Innovation: Planning helps innovative and creative thinking among the

managers because many new ideas come to the mind of a manager when he is planning. It

creates a forward-looking attitude among the managers.

15. Increase in Competitive Strength: Effective planning gives a competitive edge to the enterprise

over other enterprises that do not have planning or have ineffective planning. This is because

planning may involve expansion of capacity, changes in work methods, changes in quality,

anticipation of tastes and fashions of people and technological changes etc.

16. Delegation is Facilitated: A good plan always facilitates delegation of authority in a better way

to subordinates.

Steps involved in Planning:

Planning is a process which embraces a number of steps to be taken. Planning is an intellectual exercise

and a conscious determination of courses of action. Therefore, it requires courses of action. The

planning process is valid for one organisation and for one plan, may not be valid for other organizations

or for all types of plans, because various factors that go into planning process may differ from

organisation to organisation or from plan to plan. For example, planning process for a large organisation

may not be the same for a small organisation. However, the major steps involved in the planning process

of a major organisation or enterprise are as follows:



1. Establishing objectives: The first and primary step in planning process is the establishment of

planning objectives or goals. Definite objectives, in fact, speak categorically about what is to be

done, where to place the initial emphasis and the things to be accomplished by the network of

policies, procedures, budgets and programmes, the lack of which would invariably result in

either faulty or ineffective planning. It needs mentioning in this connection that objectives must

be understandable and rational to make planning effective. Because the major objective, in all

enterprise, needs be translated into derivative objective, accomplishment of enterprise objective

needs a concrete endeavor of all the departments.

2. Establishment of Planning Premises: Planning premises are assumptions about the future

understanding of the expected situations. These are the conditions under which planning

activities are to be undertaken. These premises may be internal or external. Internal premises are

internal variables that affect the planning. These include organizational polices, various

resources and the ability of the organisation to withstand the environmental pressure. External

premises include all factors in task environment like political, social technological, competitors'

plans and actions, government policies, market conditions. Both internal factors should be

considered in formulating plans. At the top level mainly external premises are considered. As

one moves downward, internal premises gain importance.

3. Determining Alternative Courses: The next logical step in planning is to determine and

evaluate alternative courses of action. It may be mentioned that there can hardly be any occasion

when there are no alternatives. And it is most likely that alternatives properly assessed may

prove worthy and meaningful. As a matter of fact, it is imperative that alternative courses of

action must be developed before deciding upon the exact plan.

4. Evaluation of Alternatives: Having sought out the available alternatives along with their strong

and weak points, planners are required to evaluate the alternatives giving due weight-age to

various factors involved, for one alternative may appear to be most profitable involving heavy

cash outlay whereas the other less profitable but involve least risk. Likewise, another course of

action may be found contributing significantly to the company's long-range objectives although

immediate expectations are likely to go unfulfilled.

5. Evidently, evaluation of alternative is a must to arrive at a decision. Otherwise, it would be

difficult to choose the best course of action in the perspective of company needs and resources as

well as objectives laid down.



6. Selecting a Course of Action: The fifth step in planning is selecting a course of action from

among alternatives. In fact, it is the point of decision-making-deciding upon the plan to be

adopted for accomplishing the enterprise objectives.

7. Formulating Derivative Plans: To make any planning process complete the final step is to

formulate derivative plans to give effect to and support the basic plan. For example, if Indian

Airlines decide to run Jumbo Jets between Delhi an Patna, obliviously, a number of derivative

plans have to be framed to support the decision, e.g., a staffing plan, operating plans for fuelling,

maintenance, stores purchase, etc. In other words, plans do not accomplish themselves. They

require to be broken down into supporting plans. Each manager and department of the

organisation is to contribute to the accomplishment of the master plan on the basis of the

derivative plans.

8. Establishing Sequence of Activities: Timing an sequence of activities are determined after

formulating basic and derivative plans, so that plans may be put into action. Timing is an

essential consideration in planning. It gives practical shape and concrete form to the

programmes. The starting and finishing times are fixed for each piece of work, so as to indicate

when the within what time that work is to be commenced and completed. Bad timing of

programmes results in their failure. To maintain a symmetry of performance and a smooth flow

of work, the sequence of operation shaped be arranged carefully by giving priorities to some

work in preference to others. Under sequence it should be decided as to who will don what and at

what time.

9. Feedback or Follow-up Action: Formulating plans and chalking out of programmes are not

sufficient, unless follow-up action is provided to see that plans so prepared and programmes

chalked out are being carried out in accordance with the plan and to see whether these are not

kept in cold storage. It is also required to see whether the plan is working well in the present

situation. If conditions have changed, the plan current plan has become outdated or inoperative it

should be replaced by another plan. A regular follow-up is necessary and desirable from

effective implementation and accomplishment of tasks assigned.

10. The plan should be communicated to all persons concerned in the organisation. Its objectives and

course of action must be clearly defined leaving no ambiguity in the minds of those who are

responsible for its execution. Planning is effective only when the persons involved work in a

team spirit and all are committed to the objectives, policies, programmes, strategies envisaged in

the plan.



Management by Objectives (MBO)

Management by objectives (MBO), also known as management by results (MBR), is a process of

defining objectives within an organization so that management and employees agree to the objectives

and understand what they need to do in the organization in order to achieve them. The term

"management by objectives" was first popularized by Peter Drucker in his 1954 book The Practice of

Management.

The essence of MBO is participative goal setting, choosing course of actions and decision making. An

important part of the MBO is the measurement and the comparison of the employee’s actual

performance with the standards set. Ideally, when employees themselves have been involved with the

goal setting and choosing the course of action to be followed by them, they are more likely to fulfill their

responsibilities.

According to George S. Odiorne, the system of management by objectives can be described as a process

whereby the superior and subordinate jointly identify its common goals, define each individual's major

areas of responsibility in terms of the results expected of him, and use these measures as guides for

operating the unit and assessing the contribution of each of its members.

Definition of MBO:

According to John Humble, MBO is "a dynamic system which seeks to integrate the company's needs to

clarify and achieve its profits and growth goals with the manager's need to contribute and develop

himself. It is a demanding and rewarding style of managing a business."

Unique features and advantages of the MBO process:

Behind the principle of Management by Objectives (MBO) is for employees to have a clear

understanding of the roles and responsibilities expected of them. Then they can understand how their

activities relate to the achievement of the organization's goal. Also places importance on fulfilling the

personal goals of each employee.

Some of the important features and advantages of MBO are:



1. Motivation – Involving employees in the whole process of goal setting and increasing employee

empowerment. This increases employee job satisfaction and commitment.

2. Better communication and coordination – Frequent reviews and interactions between superiors

and subordinates helps to maintain harmonious relationships within the organization and also to

solve many problems.

3. Clarity of goals

4. Subordinates tend to have a higher commitment to objectives they set for themselves than those

imposed on them by another person.

5. Managers can ensure that objectives of the subordinates are linked to the organization's

objectives.

6. Everybody will be having a common goal for whole organization. That means, it is a directive

principle of management.

Features of Management by Objectives:-



1. Superior-subordinate participation: MBO requires the superior and the subordinate to

recognize that the development of objectives is a joint project/activity. They must be jointly

agree and write out their duties and areas of responsibility in their respective jobs.

2. Joint goal-setting: MBO emphasizes joint goal-setting that are tangible, verifiable and

measurable. The subordinate in consultation with his superior sets his own short-term goals.

However, it is examined both by the superior and the subordinate that goals are realistic and

attainable. In brief, the goals are to be decided jointly through the participation of all.

3. Joint decision on methodology: MBO focuses special attention on what must be accomplished

(goals) rather than how it is to be accomplished (methods). The superior and the subordinate

mutually devise methodology to be followed in the attainment of objectives. They also mutually

set standards and establish norms for evaluating performance.

4. Makes way to attain maximum result: MBO is a systematic and rational technique that allows

management to attain maximum results from available resources by focussing on attainable

goals. It permits lot of freedom to subordinate to make creative decisions on his own. This

motivates subordinates and ensures good performance from them.

5. Support from superior: When the subordinate makes efforts to achieve his goals, superior's

helping hand is always available. The superior acts as a coach and provides his valuable advice

and guidance to the subordinate. This is how MBO facilitates effective communication between

superior and subordinates for achieving the objectives/targets set.

Steps in Management By Objectives Planning:-

1. Goal setting: The first phase in the MBO process is to define the organizational objectives.

These are determined by the top management and usually in consultation with other managers.

Once these goals are established, they should be made known to all the members. In setting

objectives, it is necessary to identify "Key-Result Areas' (KRA).

2. Manager-Subordinate involvement: After the organizational goals are defined, the

subordinates work with the managers to determine their individual goals. In this way, everyone

gets involved in the goal setting.

3. Matching goals and resources: Management must ensure that the subordinates are provided

with necessary tools and materials to achieve these goals. Allocation of resources should also be

done in consultation with the subordinates.



4. Implementation of plan: After objectives are established and resources are allocated, the

subordinates can implement the plan. If any guidance or clarification is required, they can

contact their superiors.

5. Review and appraisal of performance: This step involves periodic review of progress between

manager and the subordinates. Such reviews would determine if the progress is satisfactory or

the subordinate is facing some problems. Performance appraisal at these reviews should be

conducted, based on fair and measurable standards.

Essential Conditions for Successful Execution of MBO:

1. Support from all: In order that MBO succeeds, it should get support and co-operation from the

management. MBO must be tailored to the executive's style of managing. No MBO programme

can succeed unless it is fully accepted by the managers. The subordinates should also clearly

understand that MBO is the policy of the Organisation and they have to offer cooperation to

make it successful. It should be a programme of all and not a programme imposed on them.

2. Acceptance of MBO programme by managers: In order to make MBO programme successful,

it is fundamentally important that the managers themselves must mentally accept it as a good or

promising programme. Such acceptances will bring about deep involvement of managers. If

manages are forced to accept NIBO programme, their involvement will remain superfluous at

every stage. The employees will be at the receiving-end. They would mostly accept the lines of

action initiated by the managers.

3. Training of managers: Before the introduction of MBO programme, the managers should be

given adequate training in MBO philosophy. They must be in a position to integrate the

technique with the basic philosophy of the company. It is but important to arrange practice

sessions where performance objectives are evaluated and deviations are checked. The managers

and subordinates are taught to set realistic goals, because they are going to be held responsible

for the results.

4. Organizational commitment: MBO should not be used as a decorative piece. It should be based

on active support, involvement and commitment of managers. MBO presents a challenging task

to managers. They must shift their capabilities from planning for work to planning for

accomplishment of specific goals. Koontz rightly observes, "An effective programme of



managing by objective must be woven into an entire pattern and style of managing. It cannot

work as a separate technique standing alone."

5. Allocation of adequate time and resources: A well-conceived MBO programme requires three

to five years of operation before it provides fruitful results. Managers and subordinates should be

so oriented that they do not look forward to MBO for instant solutions. Proper time and

resources should be allocated and persons are properly trained in the philosophy of MBO.

6. Provision of uninterrupted information feedback: Superiors and subordinates should have

regular information available to them as to how well subordinate's goal performance is

progressing. Over and above, regular performance appraisal sessions, counseling and

encouragement to subordinates should be given. Superiors who compliment and encourage

subordinates with pay rise and promotions provide enough motivation for peak performance.

Advantages:

1. Develops result-oriented philosophy: MBO is a result-oriented philosophy. It does not favor

management by crisis. Managers are expected to develop specific individual and group goals,

develop appropriate action plans, properly allocate resources and establish control standards. It

provides opportunities and motivation to staff to develop and make positive contribution in

achieving the goals of an Organisation.

2. Formulation of dearer goals: Goal-setting is typically an annual feature. MBO produces goals

that identify desired/expected results. Goals are made verifiable and measurable which

encourage high level of performance. They highlight problem areas and are limited in number.

The meeting is of minds between the superior and the subordinates. Participation encourages

commitment. This facilitates rapid progress of an Organisation. In brief, formulation of realistic

objectives is me benefit of M[BO.

3. Facilitates objective appraisal: NIBO provides a basis for evaluating a person's performance

since goals are jointly set by superior and subordinates. The individual is given adequate

freedom to appraise his own activities. Individuals are trained to exercise discipline and self

control. Management by self-control replaces management by domination in the MBO process.

Appraisal becomes more objective and impartial.



4. Raises employee morale: Participative decision-making and two-way communication

encourage the subordinate to communicate freely and honestly. Participation, clearer goals and

improved communication will go a long way in improving morale of employees.

5. Facilitates effective planning: MBO programmes sharpen the planning process in an

Organisation. It compels managers to think of planning by results. Developing action plans,

providing resources for goal attainment and discussing and removing obstacles demand careful

planning. In brief, MBO provides better management and better results.

6. Acts as motivational force: MBO gives an individual or group, opportunity to use imagination

and creativity to accomplish the mission. Managers devote time for planning results. Both

appraiser and appraise are committed to the same objective. Since MBO aims at providing clear

targets and their order of priority, employees are motivated.

7. Facilitates effective control: Continuous monitoring is an essential feature of MBO. This is

useful for achieving better results. Actual performance can be measured against the standards

laid down for measurement of performance and deviations are corrected in time. A clear set of

verifiable goals provides an outstanding guarantee for exercising better control.

8. Facilitates personal leadership: MBO helps individual manager to develop personal leadership

and skills useful for efficient management of activities of a business unit. Such a manager enjoys

better chances to climb promotional ladder than a non-MBO type.

Limitations:

1. Time-consuming: MBO is time-consuming process. Objectives, at all levels of the Organisation,

are set carefully after considering pros and cons which consumes lot of time. The superiors are

required to hold frequent meetings in order to acquaint subordinates with the new system. The

formal, periodic progress and final review sessions also consume time.

2. Reward-punishment approach: MBO is pressure-oriented programme. It is based on reward-

punishment psychology. It tries to indiscriminately force improvement on all employees. At

times, it may penalize the people whose performance remains below the goal. This puts mental

pressure on staff. Reward is provided only for superior performance.

3. Increases paper-work: MBO programmes introduce ocean of paper-work such as training

manuals, newsletters, instruction booklets, questionnaires, performance data and report into the

Organisation. Managers need information feedback, in order to know what is exactly going on in



the Organisation. The employees are expected to fill in a number of forms thus increasing paper-

work. In the words of Howell, "MBO effectiveness is inversely related to the number of MBO

forms.

4. Creates organizational problems: MBO is far from a panacea for all organizational problems.

Often MBO creates more problems than it can solve. An incident of tug-of-war is not

uncommon. The subordinates try to set the lowest possible targets and superior the highest.

When objectives cannot be restricted in number, it leads to obscure priorities and creates a sense

of fear among subordinates. Added to this, the programme is used as a 'whip' to control

employee performance.

5. Develops conflicting objectives: Sometimes, an individual's goal may come in conflict with

those of another e.g., marketing manager's goal for high sales turnover may find no support from

the production manager's goal for production with least cost. Under such circumstances,

individuals follow paths that are best in their own interest but which are detrimental to the

company.

6. Problem of co-ordination: Considerable difficulties may be encountered while coordinating

objectives of the Organisation with those of the individual and the department. Managers may

face problems of measuring objectives when the objectives are not clear and realistic.

7. Lacks durability: The first few go-around of MBO are motivating. Later it tends to become old

hat. The marginal benefits often decrease with each cycle. Moreover, the programme is

deceptively simple. New opportunities are lost because individuals adhere too rigidly to

established goals.

8. Problems related to goal-setting: MBO can function successfully provided measurable

objectives are jointly set and it is agreed upon by all. Problems arise when: (a) verifiable goals

are difficult to set (b) goals are inflexible and rigid (c) goals tend to take precedence over the

people who use it (d) greater emphasis on quantifiable and easily measurable results instead of

important results and (e) over-emphasis on short-term goals at the cost of long-term goals.

9. Lack of appreciation: Lack of appreciation of MBO is observed at different levels of the

Organisation. This may be due to the failure of the top management to communicate the

philosophy of MBO to entire staff and all departments. Similarly, managers may not delegate

adequately to their subordinates or managers may not motivate their subordinates properly. This

creates new difficulties in the execution of MBO programme.



Decision Making

Introduction:

Decision making is a daily activity for any human being. There is no exception about that. When it

comes to business organizations, decision making is a habit and a process as well. Effective and

successful decisions make profit to the company and unsuccessful ones make losses. Therefore,

corporate decision making process is the most critical process in any organization. In the decision

making process, we choose one course of action from a few possible alternatives. In the process of

decision making, we may use many tools, techniques and perceptions. In addition, we may make our

own private decisions or may prefer a collective decision. Usually, decision making is hard. Majority of

corporate decisions involve some level of dissatisfaction or conflict with another party. Let's have a look

at the decision making process in detail.

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.



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?

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.



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.

4. Brainstorm and analyze 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.

5. Evaluation of alternatives: Use your judgment principles and decision-making criteria to evaluate

each alternative. In this step, experience and effectiveness of the judgment principles come into play.

You need to compare each alternative for their positives and negatives.

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.

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.

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 favor 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.

Importance of decision making

1. Implementation of managerial function: Without decision making different managerial function

such as planning, organizing, directing, controlling, staffing can’t be conducted. In other words, when an



employee does, s/he does the work through decision making function. Therefore, we can say that

decision is important element to implement the managerial function.

2. Pervasiveness of decision making: the decision is made in all managerial activities and in all

functions of the organization. It must be taken by all staff. Without decision making any kinds of

function is not possible. So it is pervasive.

3. Evaluation of managerial performance: Decisions can evaluate managerial performance. When

decision is correct it is understood that the manager is qualified, able and efficient. When the decision is

wrong, it is understood that the manager is disqualified. So decision making evaluate the managerial

performance.

4. Helpful in planning and policies: Any policy or plan is established through decision making.

Without decision making, no plans and policies are performed. In the process of making plans,

appropriate decisions must be made from so many alternatives. Therefore decision making is an

important process which is helpful in planning.

5. Selecting the best alternatives: Decision making is the process of selecting the best alternatives. It

is necessary in every organization because there are many alternatives. So decision makers evaluate

various advantages and disadvantages of every alternative and select the best alternative.

6. Successful; operation of business: Every individual, departments and organization make the

decisions. In this competitive world; organization can exist when the correct and appropriate decisions

are made. Therefore correct decisions help in successful operation of business.

CO-ORDINATION:

The synchronization and integration of activities, responsibilities, command and control structures to

ensure that the resources of an organization are used most efficiently in pursuit of the specified

objectives. Along with organizing, monitoring, and controlling, coordinating is one of the key functions

of management.



Definition:

According to Charles Worth, “Co-ordination is the integration of several parts into an orderly hole to achieve the

purpose of understanding”.

Characteristics of Co-ordination in an Organization:

Co-ordination is a process to establish harmony among the different activities of an organisation, so that

the desired objectives can be achieved. Definitions of coordination present the following facts about its

characteristics:

Characteristics of coordination in an organisation:

(1) Co-ordination Integrates Group Effort:

The need for coordination is felt when group effort is needed for the accomplishment of an objective. In

short, it can be said that coordination is related to group effort and not individual effort. The question of

coordination does not arise, if the job is done by one person only.

(2) Co-ordination Ensures Unity of Action:

The nature of coordination is of creating unity in action. It means during coordinating process an effort

is made to create unity among the various activities of an organisation. For example, the purchase and

sales departments have to coordinate their efforts so that supply of goods takes place according to

purchase orders.

(3) Co-ordination is a Continuous Process:

It is not a job which can be performed once and for all, but its need is felt at every step. Many activities

are performed in a business. Sometimes or the other, if any one of the activities goes on fluctuating

either for more or less than required, the whole organisational balance is disrupted. Thus, a close watch

has to be kept on all the activities to maintain the balance.

(4) Co-ordination is an All-pervasive Function:

Pervasiveness refers to that truth which is applicable to all spheres (business and non-business

organisations) and places uniformly. The nature of coordination is pervasive. Like making of timetable

in an educational institution is an apt example of establishing coordination.



In the game of cricket, the placement of players at pre-determined positions is nothing but coordination.

In the same manner, to synchronise the activities of different departments, like purchase, sales,

production, finance, etc. in a business organisation is coordination.

(5) Co-ordination is the Responsibility of All Managers:

Co-ordination is needed at all the three, i.e., top, middle and lower managerial levels. Different activities

performed at all the levels are equally important. Thus it is the responsibility of all the managers that

they make efforts to establish coordination. That is why, it could not be said that coordination is of more

importance to any one particular managerial level or a manager.

(6) Co-ordination is a Deliberate Function:

Co-ordination is never established by itself but it is a deliberate effort. Only cooperation does not suffice

but coordination is also needed. For example, a teacher aspires to teach effectively (this is cooperation)

but the timetable is not prepared in the school (this is lack of coordination).

In this situation, classes cannot be arranged for. Here, the effort made by the teacher is meaningless, in

the absence of coordination. On the other hand, in the absence of cooperation, coordination dissatisfies

the employees. Thus, both are required at a given point of time.

Why Co-ordination is necessary:

According to management experts, co-ordination is necessary because :-

"Co-ordination is the Essence of Management." i.e. co-ordination effects all the functions of

management, viz., Planning, Organising, Staffing, etc.

Co-ordination is a function of management.

Co-ordination is a principle of management, and all other principles are included in this one

principle, i.e. co-ordination is the "Mother Principle".

According to Mary Parker Follett, Co-ordination is the "Plus value of the group". That is, if there

is good Co-ordination then the combined group achievement will be greater than the total of the

individual achievement, i.e. 2+2=5. This is impossible in the physical world, but it is possible in

human affairs through co-ordination.

Importance of Co-ordination:



1. Coordination encourages team spirit:

There exist many conflicts and rivalries between individuals, departments, between a line and staff, etc.

Similarly, conflicts are also between individual objectives and organisational objectives. Coordination

arranges the work and the objectives in such a way that there are minimum conflicts and rivalries. It

encourages the employees to work as a team and achieve the common objectives of the organisation.

This increases the team spirit of the employees.

2. Coordination gives proper direction:

There are many departments in the organisation. Each department performs different activities.

Coordination integrates (bring together) these activities for achieving the common goals or objectives of

the organisation. Thus, coordination gives proper direction to all the departments of the organisation.

3. Coordination facilitates motivation:

Coordination gives complete freedom to the employees. It encourages the employees to show initiative.

It also gives them many financial and non-financial incentives. Therefore, the employees get job

satisfaction, and they are motivated to perform better.

4. Coordination makes optimum utilisation of resources:

Coordination helps to bring together the human and materials resources of the organisation. It helps to

make optimum utilisation of resources. These resources are used to achieve the objectives of the

organisation. Coordination also minimise the wastage of resources in the organisation.

5. Coordination helps to achieve objectives quickly:

Coordination helps to minimise the conflicts, rivalries, wastages, delays and other organisational

problems. It ensures smooth working of the organisation. Therefore, with the help of coordination an

organisation can achieve its objectives easily and quickly.

6. Coordination improves relations in the organisation:



The Top Level Managers co-ordinates the activities of the Middle Level Managers and develops good

relations with them. Similarly, the Middle Level Managers co-ordinates the activities of the Lower Level

Managers and develops good relations with them. Also, the Lower Level Managers co-ordinates the

activities of the workers and develops good relations with them. Thus, coordination overall improves the

relations in the organisation.

7. Coordination leads to higher efficiency:

Efficiency is the relationship between Returns and Cost. There will be higher efficiency when the

returns are more and the cost is less. Since coordination leads to optimum utilisation of resources it

results in more returns and low cost. Thus, coordination leads to higher efficiency.

8. Coordination improves goodwill of the organisation:

Coordination helps an organisation to sell high quality goods and services at lower prices. This improves

the goodwill of the organisation and helps it earn a good name and image in the market and corporate

world.

Co-ordination as integral part of Managerial functions:

a. Co-ordination through Planning - Planning facilitates co-ordination by integrating the various

plans through mutual discussion, exchange of ideas. e.g. - co-ordination between finance budget

and purchases budget.

b. Co-ordination through Organizing - Mooney considers co-ordination as the very essence of

organizing. In fact when a manager groups and assigns various activities to subordinates, and

when he creates department’s co-ordination uppermost in his mind.

c. Co-ordination through Staffing - A manager should bear in mind that the right no. of personnel

in various positions with right type of education and skills are taken which will ensure right men

on the right job.

d. Co-ordination through Directing - The purpose of giving orders, instructions & guidance to the

subordinates is served only when there is a harmony between superiors & subordinates.

e. Co-ordination through Controlling - Manager ensures that there should be co-ordination

between actual performance & standard performance to achieve organizational goals.




Education

introduction of management theory and organisational behaviour