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  1. 1. MANAGEMENT A. ANANDA KUMAR Department of Management Studies, Christ College of Engg. & Tech. Puducherry, India. Mobile: +91 99443 42433 E-mail:
  2. 2. MANAGEMENT “Management is the process of designing and maintaining of an environment in which individuals working together in groups efficiently accomplish selected aims.” -Koontz & Weihrich “Management is the art of knowing what do you want to do and then seeing that it is done in the best and cheapest way.” - F. W. Taylor
  3. 3. MANAGEMENT “Management is the coordination of all resources through the process of planning, organizing, directing and controlling in order to attain stated goals.” - Henry L. Sisk
  4. 4. MANAGERIAL SKILLS 1. Technical Skill 2. Human Skill 3. Conceptual Skill
  5. 5. 1. Technical Skill • It refers to the ability to the tools, equipment, procedures and techniques. • Effective supervision and coordinating of the work of the subordinates. Therefore depends on the technical possessed by the lower level market.
  6. 6. 2. Human Skill • Human skill refers to the ability of the manager to work effectively as a group member and to build cooperative effort in the team he leads. • Human skills are concerned with understanding of ‘people’. • Manager’s skill in working with others is natural and conditions.
  7. 7. 3. Conceptual Skills • This skill also called design and problem. Solving skill involves the ability. • To see the organisation and the various components of it as a whole. • To understand how its various parts and functions mesh together. • A higher degree of conceptual skill helps in analyzing the environment and in identifying the opportunities.
  8. 8. MANAGEMENT LEVELS Top Level Management Middle Level Management Lower Level Management
  9. 9. Top Level Management: The main functions of top management are • To formulate goals and policies of the company. • To formulate budgets. • To appoint top executives. • To provide overall direction and leadership of the company. • To decide the distribution of profits etc.
  10. 10. Middle Level Management: The important functions of middle level management. • To monitor and control the operating performance. • To train, motivate and develop supervisory level. • To co-ordinate among themselves so as to integrate the various activities of a department.
  11. 11. Lower Level or Supervisory Management: The main functions of lower level management • To train and develop the efficiency of the workers. • To assign jobs to workers • To give orders and instructions. • To maintain discipline and good human relations among workers. • To report feedback information about workers.
  12. 12. FUNCTIONS OF MANAGEMENT 1. Planning 2. Organising 3. Staffing 4. Directing 5. Controlling
  13. 13. 1. Planning: Planning is simple looking ahead. It is preparing for the future. Effective planning leads to efficient management. Effective planning provides answers to questions like – what to do? When to do? How to do? Who is to do?
  14. 14. 2.Organising: Organizing establishes harmonious relationship among all the workers of an organization by providing them with suitable authority and responsibility. According to Louis A. Allen “Organisation involves identification and grouping the activities to be performed and dividing them among the individuals and creating authority and responsibility relationships among them for the accomplishment of organizational objectives”.
  15. 15. 3. Staffing Staffing process involves selecting candidates for positions, fixing salary, training and developing them for effective organizational functions. The manager performs the duties of job analysis, job description etc. which come under the staffing function.
  16. 16. 4. Directing One plans are made and the organisation is created next step is to achievement of objectives of the organisation. Directing is involves activities like guiding, supervising and motivating the subordinates in their jobs. Motivation, leadership and communication are three important sub function of directing. Motivation helps to increase the performance of the workers. Communication provides with proper information to improve the effective management. Leadership the process by which a manager guide and influences the work of his subordinates.
  17. 17. 5. Controlling Controlling as a function of management deals with checking and verifying the activities against the predetermined standards. The process of ensuring that actual activities conform to planned activities. Controlling process involves the following steps. 1. Establishing standards 2. Measuring current performance. 3. Comparing this performance to the established standards. 4. Taking corrective actions of deviation are detected.
  18. 18. IMPORTANCE OF MANAGEMENT 1. Attainment of group goals 2. Effective functioning of business 3. Resource development 4. Management control the organisation 5. Integrates individual efforts 6. Motivation 7. Communication 8. Coordination 9. Decision-making 10. Leadership quality
  20. 20. Points of Distinction Administration Management 1. Nature It is a determinative thinking function. It is an executive or doing function. 2. Scope It is concerned with the determination of major objectives and policies. It is concerned with the implementation of policies. 3. Level It is mainly a top-level function It is a largely a middle and lower-level function. 4. Influence Administrative decisions are influenced mainly by public opinion and other outside forces. Managerial decisions are influenced mainly by objectives and policies of the organisation. 5. Direction of human efforts It is not directly concerned with direction of human efforts. It is actively concerned with direction of human efforts in the execution of plans. 6. Main functions Planning and control are the main functions involved in it. Directing and organizing are the main functions involved in it. 7. Skills required Conceptual and human skills. Technical and human skills.
  21. 21. NATURE & CHARACTERISTICS OF MANAGEMENT 1. Management is Universal 2. Management is Purposeful 3. Management is an Integrative Force 4.Management is a Social Process 5.Management is Multidisciplinary 6.Management is a Continuous Process 7.Management is Intangible 8.Management is an Art as well as a Science
  23. 23. What is Science?  The science portion of management is apparent in the body of management knowledge, its fundamental principles and what experience and experimentation have shown.  In some management subjects, we can build models and use mathematics to prove our study toward the scientific end of the spectrum.  Management as a discipline fulfills the science criterion. The application of these principles helps any practicing manager to achieve the desired goals.
  24. 24.  Science classified into two types. They are exact science and inexact science. Exact science where the results are accurate. In the case of management it is an inexact science. What is Science?
  25. 25. Management is inexact science because  Every organizations human resources are different attitude, aspirations and perceptions. So standard results may not be obtained.  Readymade and standard solutions cannot be obtained  Management is complex and unpredictable.  Every organisation decisions are influenced by the environment. The environment is so complexes and unexpected changes. What is Science?
  26. 26. What is an art? Art means application of skill in finding a desired result. Art is the way of doing things skillfully. Management is an art because of the following facts.  Management process involves the use of practical knowledge and personal skill.  Management is creative.  Application of practical knowledge and certain skills helps to achieve concrete results.
  27. 27. Management is both – science and an art: Management is a science because it contains general principles. It is also an art because it requires certain personal skills to achieve desired results.
  28. 28. HENRY FAYOL’S CONTRIBUTION – (1841 – 1925)  Fayol was a contemporary of Taylor.  He started his career as a junior engineer in a coal mining company in France in 1860 and became its general manager in 1880.  We published his famous book Administration Industrielle et Generale in 1916 which was published in English in 1949 under the title ‘General and Industrial Management’.  This book is now considered to be one of the best classics in management.
  29. 29. Principles of Management 1. Division of Work 2.Authority & Responsibility 3.Discipline 4. Unity of Command 5. Unity of Direction 6.Subordination of Individual interest to General interest 7.Remuneration of personnel 8. Centralization
  30. 30. 9. Scalar Chain 10. Order 11. Equity 12. Stability of Staff 13. Initiative 14. Esprit-de-corps
  31. 31. Case Study ABI Ltd., is a medium sized company Mr. Pramod has been working in the company for over 12 years as a secretary. He has got an excellent track record and recently he has been raised to the position of Administrative Manager. As a result of this change, the output of his work in the office dropped considerably and morale become low. There was alarming increased in Staff turnovers.
  32. 32. To study the situation, the managing director engaged a consultant. His report while praising the aspects of office administration pointing out his incapabilities especially in dealing with people. Surprisingly, Mr. Pramod enjoyed much popularity of the senior executives of the company. He won their appreciation for his valuable service as a manager. They were much worried over the incapabilities of Mr. Pramod in dealing with people. They were helpless.
  33. 33. Questions: 1.What is the real possible cause of this problem? 2.What can be done to rectify the situation considering Mr. Pramod’s value to the company?
  34. 34. ROLE OF A MANAGER 1. Director 2.Motivation 3. Human being 4. Guide 5. Friend 6. Planner 7. Supervisor 8. Reporter
  35. 35. TASKS / RESPONSIBILITIES OF A PROFESSIONAL MANAGER 1. Planning of work 2. Proper and Effective Communication 3. Co-ordination of Efforts 4. Getting co-operation of employees 5. Encourages a team spirit 6. Better utilization of Resources 7. Selecting the Procedure 8. Maintaining good human relations 9. Solve the problem 10. Arranging training and development facilities
  36. 36. QUALITIES OF MANAGER 1. Physical 2. Mental 3. Moral 4. General Education 5. Special knowledge 6. Experience
  37. 37. SYSTEM APPROACH TO MANAGEMENT Introduction: Like a human organism an organisation is a system. In an organisation also people, tasks and the management are interdependent.
  38. 38. System concepts: System theory was first applied in the fields of science and engineering. “A system is essentially a set or assemblage of things interconnected or independent, so as to form a complex unity”. Just as a doctor effective manager should collect information about all parts of the organisation in order to diagnosis a problem and take necessary corrective action.
  39. 39. Some key concepts: Subsystem: While an organisation as a whole is a system, the various components or parts within it are called the subsystem. Thus a department is a subsystem of the organisation. Closed system: A system that does not interact with its environment. A closed system has fixed boundaries, its operation is relatively independent of the environment outside the system. Open system: A system that interacts with its environment. Thus an open system is one which constantly comes into contact with the environment. Synergy: Synergy means that departments that interact cooperatively are more productive than they would be if they operated in isolation.
  40. 40. Open system model of an Organisation External Environment Information INPUTS Human Machines Money Technology Transformation Feedback OUTPUTS Goods & Services
  41. 41. SOCIAL RESPONSIBILITIES OF A BUSINESS 1. Responsibility towards shareholder/owners 2. Responsibility towards Employees 3. Responsibility to customers 4. Responsibility towards Government 5. Responsibility towards community
  42. 42. 1. Responsibility towards shareholder/owners • a fair return on investment • safety of investment • steady appreciation of investment • regular, accurate and full information about the working and progress of the company.
  43. 43. 2. Responsibility towards Employees • Fair wages and salaries • Good and safe working conditions • Adequate service benefits such as housing, medical facilities insurance cover, retirement benefits • Recognition of workers’ rights to form trade unions, to collective bargaining and strike • Opportunities for education, training and promotion. • Workers’ participation in decision-making.
  44. 44. 3. Responsibility to customers • Regular supply of quality goods at right time and place • Change reasonable prices • Supply goods that meet the needs of different classes and taste with different purchasing power. • Prompt, adequate and continuous service • Prompt, redressal of customers’ grievances • True and fair information through advertisements • Avoid unfair and unethical practices like adulteration, hoarding and black marketing.
  45. 45. 4. Responsibility towards Government • To abide by the laws of the land • To pay taxes honestly and in time • To avoid corrupting public servants • To encourage fair trade practices • To avoid monopoly and concentration of economic power
  46. 46. 5. Responsibility towards community • To make the best possible or efficient use of the society’s resources • To provide maximum possible employment opportunities • To keep the environment healthy and free from all types pollution • To refrain from indulging in anti-social and unethical practice • To improve public health, education and cultural life of the community.
  47. 47. PLANNING • Planning is the most basic of all management functions. • Lots of planning activities are done by the management people at all levels. • Planning is the process of selecting objectives and determining the course of action required to achieve these objectives. • Planning bridges the gap from where we are and where we want to go.
  48. 48. Definition According to Koontz and O’Donnell, “Planning is deciding in advance what to do, how to do it, when to do it, and who is to do it. It is the selection among alternatives of future course of action for the enterprise as a whole and each department within it. Plans involve selecting enterprise objectives and determining ways of achieving them”.
  49. 49. Definition In the words of Mary Cushing Niles, “Planning is the conscious of selecting and developing the best course of action to accomplish an objective. It is the basis from which future management action spring”.
  51. 51. STEPSINPLANNINGPROCESS Identification of opportunities Establishment of objectives Evaluation of Alternatives Identification of Alternatives Developing Planning Premises Selecting an Alternatives Formulating Derivative Plans Establishing Sequence of Activities
  52. 52. 1. Identification of Opportunities Identification of awareness of the opportunity is the starting point of planning. First of all, we should identify the possible future opportunities and analyze them clearly and completely. From that, we should know:  Where we stand,  What is our strength and weakness,  What problem we wish to solve and why, and  What we expect to gain.
  53. 53. 2. Establishment of Objectives The next step in planning is to establish objectives for the entire organization and then for each subordinate units. Objectives specify and indicate the results expected.  What is to be done?  Where is the primary emphasis to be placed?  What is to be accomplished by the various types of plans?
  54. 54. 3. Developing planning premises Planning premises are the assumptions that should be made about the various elements of the environment. It provides the basic framework in which plans operate. These premises may be internal or external. Internal premises include organizational, policies, resources of various types, sales forecasts and the ability of the organisation to withstand the environmental pressure. External premises include the total factors in task environment like political, social, technological, competitors, plans and actions, and government policies etc.
  55. 55. 4. Identification of Alternatives A particular objective can be achieved through a number of ways. The entire alternative cannot be analysed. Some alternative can be rejected at its preliminary stage itself by considering preliminary criteria such as minimum investment required, matching with the present business, market conditions government control, skilled workers, technique available etc. Only the alternatives which meet the preliminary criteria may be chosen for further detailed analysis.
  56. 56. 5. Evaluation of Alternatives The alternatives considered for the analysis according to preliminary criteria may be taken for further evaluation. Each alternative course of action is evaluated on the basis of profitability, capital investment, risk involved, gestation period etc. It presents a problem because each of these alternatives may have certain advantages and disadvantages. For instance, an alternative may appear to be must profitable. But, it requires a large cash outlet with slow payback; another may be less profitable but involves less risk factors.
  57. 57. 6. Selecting Alternatives After the evaluation of various alternatives, the most appropriate course of action is selected. If more than one alternative is suitable, then any are alternative may be chosen for execution. When the situation changes and the selected plan do not provide to be the best, the other alternative may be tried.
  58. 58. 7. Formulation of derivative plans The derivative plans are formulated on the basis of the major plans. There are several minor plans required to support and execute the major plans. These plans are known as derivative plans. The various derivative plans are planning for buying equipment, buying raw materials, recruiting and training personal, developing new product etc.
  59. 59. 8. Establishing sequence of activities After formulating basic and derivative plans, the sequence of activities is determined so that plans are put into action while formulating derivative plans, a built in mechanism should be created for periodic review and updating of various plans whenever necessary. The starting and finishing times are fixed for each piece of work so as to indicate when and within what time that work is to be commenced and completed.
  60. 60. PURPOSE or OBJECTIVES OF PLANNING 1. Primary of Planning 2. To achieve objectives 3. To cope with uncertainty and change 4. To Facilitate control 5. To help in coordination 6. To increase organizational effectiveness 7. To guide decision making
  61. 61. PRINCIPLES OF PLANNING 1. Principle of the Contribution to objectives 2. Principle of the Primacy of planning 3. Principle of the Pervasiveness of Planning 4. Principle of the Flexibility of Planning 5. Principle of Periodicity 6. Principle of Planning Premises 7. Principle of Efficiency of Operations
  62. 62. ADVANTAGES OF PLANNING 1. Helps in achieving objectives 2. Better utilization of resources 3. Economy in operation 4. Reduces uncertainty and risk 5. Improves competitive strength 6. Effective Control 7. Coordination 8. Encourages Motivation
  63. 63. LIMITATIONS OF PLANNING 1. Lack of accurate information 2. Time and Cost 3. Inflexibility 4. Delay during emergency period 5. False sense of security
  64. 64. NATURE / CHARACTERISTICS OF A SOUND PLAN 1. Primary 2. Continuity 3. Flexibility 4. Unity 5. Precision 6. Pervasiveness
  65. 65. RANGE OF PLANNING  It involves deciding a future course of action, plans always have some time frame-the period in future that a plan covers.  Based on the length of time involved, plans are usually classified as strategic range and operational plans or short range plans
  66. 66. LONG RANGE PLANNING / STRATEGIC PLANNING / CORPORATE PLANNING Strategies are the large scale action plans for interacting with environment in order to achieve long term goals. Strategic plans focus on the board future of the organisation and incorporate both external environment demands and internal resources into the actions managers need to take to achieve the long term goals of the organization. Typically, strategic plans cover the major aspects of the organization, including its products, services, finances, technology and human resources.
  67. 67. SHORT RANGE PLANNING / OPERATIONAL PLANNING Operational plans translate tactical plans into specific goals and actions for small units of the organization and focus on the near term, typically 12 months or less. Strategic planning provides guidance and boundaries for operational planning. For example, if the strategic plan is to face competition with new and innovative products, major tasks to achieve this goal would be clarified by operational planning.
  68. 68. OBJECTIVES Objectives are the aims, purposes or goals that an organization wants to achieve over varying periods of time. Objectives simply let people know what they are trying to do, or what is expected of them at the close of the evaluation period.
  69. 69. SETTING OBJECTIVES Objective features in all branches of management. For setting the initial objectives, all organizations have a formal, explicitly recognized, legally specified organization. In general, the overall objective of the organization is set by the top management.
  70. 70. Conti…. However, in some organizations, the objectives are set by the vote of the shareholders; in others, by a vote of the members, by a small number of trustees or by a few individuals who will win and run the organization. In large organizations, objectives are set by the board of directors, governing board, executive committee.
  71. 71. MANAGING BY OBJECTIVES (MBO) “MBO is a process whereby the superior and the subordinate managers of an enterprise jointly identify its common goals; define each individual’s major areas of responsibility in terms of results expected of him, and use these measures as guides for operating the unit and assessing the contribution of each of its members”. - George Odiorne
  72. 72. Conti…. MBO is a process whereby superiors and subordinates sit together to identify the common objectives and set the results which are to be achieved by the subordinates.
  73. 73. THE PROCESS OF MBO 1. Setting Preliminary objectives 2. Fixing Key result areas 3. Setting subordinate’s objectives 4. Recycling objectives 5. Matching resources with objectives 6. Periodic performance reviews 7. Appraisal
  74. 74. BENEFITS OF MBO 1. Improvement of managing 2. Clarification of organization 3. Personnel satisfaction 4. Team work 5. Development of Effective Control 6. Fast Decision making
  75. 75. WEAKNESS OF MBO 1. Failure to teach the philosophy of MBO 2. Failure to give guidelines to goals setters 3. Difficulty of setting goals 4. Emphasis on short-term goals 5. Danger of Inflexibility 6. Time consuming 7. Increased paper work
  76. 76. REASONS WHY MBO FAIL Lack of top management involvement and support. Lack of understanding of the philosophy behind MBO. Difficultly insetting realistic and meaningful objectives. Increased time pressure. Lack of relevant skills. Lack of individual motivation. Poor integration with other systems
  77. 77. POLICIES  A policy is a broad statement formulated to provide guidance in decision making.  “A policy is the statement or general understanding which provides guidance in decision making to members of an organisation in respect to any course of action. - L.M. Prasad  “Policies are general statements of understandings which guide or channel thinking in decision making or subordinates”. - Weihrich and Koontz
  78. 78. NEED or IMPORTANCE or PURPOSE OF POLICY 1. To operationalise objectives 2. To save time and effort 3. To facilitate delegation of authority 4. To speedup decision making 5. To control administration
  79. 79. FORMULATION OF A POLICY 1. Identification of area 2. Objectives 3. Analysis of Environment 4. Corporate Analysis 5. Collection of Information 6. Analysing the information 7. Identification of Alternatives 8. Appraisal of Policies 9. Selection of a Policy 10. Approval of policy 11. Communicating the policy
  80. 80. TYPES OF POLICIES 1. Formulated Policies 2. Appealed Policy 3. Imposed Policy
  81. 81. STRATEGIES “Strategy is the determination of basis long- term objectives and the adoption of the course of action and allocation of resources to achieve these goals’. - Alfred D. Chandler A strategy may also be defined as a special type of plan prepared for meeting the challenge posted by the activities of competitors and other environmental forces. Strategy is a course of action through which an organisation relates itself with environment so as to achieve its objectives.
  82. 82. PROCEDURES Policies are subdivided and stated in terms of procedures. For example: A company’s policy may be to sell the obsolete products at a discount. The procedure may explain how to decide which product is obsolete and what percentage of discount is to be offered. Procedures for placing orders for material and equipment, for sanctioning different types of employee’s leave, for handling grievances at the shop floor level, etc., suggest how each of these has to be handled.
  83. 83. PROGRAMMES A programme is a broad term which includes goals, policies, procedures, rules and steps to be taken in putting a plan into action. Terry and Frankin define programme as “a comprehensive plan that includes future use of different resources in an integrated pattern and establishes a sequence of required and time schedules for each in order to achieve stated objectives’.
  84. 84. FORECASTING In all organizations, managers plan their future course of action based on some predictions of the future. Forecasting provides them the knowledge of the future trends. Forecasting is the process of estimating the future, based on the analysis of their past and present behaviour. Its aim is to provide information for planning and decision making.
  85. 85. BUDGETS Budgets are used to quantify and allocate resource to specific activities. In most organizations, budgets are proposed and annually. A variety of resources can be quantified in budgets, but money is most commonly used. There are several types of budgets. For example, a capital expenditure budget specifies the amount of money to be spent on specific items that have long term use and require significant amounts of money to acquire. These items might include such things as equipment, land or buildings.
  86. 86. DECISION-MAKING Decision-making is defined as the process of choosing a course of action from among alternatives to achieve a desired goal. It is one of the functions of management and also a core process of planning. The management executive takes a number of decisions every day. There are number of alternatives available to the management. The best one is selected out of the available alternatives.
  87. 87. Definition Knootz and Weihrich, “Decision making is defined as the selection of a course of action from among alternatives”. Georage R. Terry, “Decision making is the selection based on some criteria from two or more possible alternatives”.
  88. 88. DECISION MAKING PROCESS / PHASES OF DECISION MAKING Identification of Problem Implementation and follow-up Selecting an Alternatives Evaluation of Alternatives Search for Alternatives Diagnosis and analysis the problem
  89. 89. ORGANISINGORGANISING  Organising is the process of identifying and grouping of activities required to attain the objectives, delegating authority, creating responsibility and establishing relationships for the people to work effectively.
  90. 90. Definition  According to Haimann, “Organising is the process of defining and grouping the activities of the enterprise and establishing the authority relationships among them”.  Koontz and O’Donnel define organizing as “the grouping of activities necessary to attain objectives, the assignment of each grouping to a manager with authority necessary to supervise it, and the provision for co-ordination horizontally and vertically in the enterprise structure”.
  91. 91. NATURE OF ORGANIZATION 1. Common Objectives 2. Specialization or Division of Labour 3. Authority of Structure 4. Group of Persons 5. Co-ordination 6. Communication 7. Environment 8. Rule and Regulations
  92. 92. SPAN OF CONTROL or SPAN OF MANAGEMENT  Span of management means the number of people managed effectively by a single superior in an organization.  The term “Span of management” is also known as “Span of supervision”, “Span of authority” and “Span of responsibility”.  If the number of members is too large, it will be very difficult to manage the persons and perform the work effectively.
  93. 93. Definition According to L. Urwick, the ideal number of subordinates is four in case of higher level management and eight to twelve in case of bottom level management.
  94. 94. DETERMINATION OF SPAN OF MANAGEMENT 1. Direct single relationship 2. Direct group relationships 3. Cross relationship
  95. 95. 1. Direct single relationship: It is one in which a supervisor has direct relationship with his subordinates individually. If X supervises Y and Z who are subordinates, there are two direct single relationships. Supervisor Subordinates X ZY
  96. 96. 2. Direct group relationships: In direct group relationship, a supervisor has direct relationship with his subordinates jointly. Supervisor Consultation Consultation Subordinates Z X Y
  97. 97. 3. Cross relationship: In cross relationship, a subordinate has relationship with another subordinate mutually. Supervisor Relationship Subordinates Z X Y
  98. 98. FORMAL ORGANISATION A formal organisation typically consists of a classical hierarchical structure in which positions, responsibility, authority, accountability and the line of command are clearly defined and established. Each and every person is assigned the duties and given the required amount of authority and responsibility to carryout the job. The inter relationship of staff members can be shown in the organisation chart and manuals
  99. 99. Advantages of Formal Organisation Since the definite boundary of each worker is clearly defined, the conflict among the workers is automatically reduced. Overlapping of responsibility is easily avoided. More stable organization can be ensured. It makes the organization less dependent on one man. A sense of security arises from classification of the task. It motivates the employees.
  100. 100. INFORMAL ORANISATION Informal organisation is an organisation which establishes the relationship on the basis of member’s interaction, communication, personal likings and disliking, and social contacts within as well as outside the organisation. It arises naturally on the basis of friendship or some common interest which may or may not be related with work.
  101. 101. Advantages of informal organisation Since informal organisation gives satisfaction to the workers, it motivates workers and also maintains the stability of the work. It fills up the gaps and deficiency of the formal organisation. It fills up the gaps among the abilities of the managers. The presence of informal organisation encourages the executives to plan the work correctly and act accordingly.
  102. 102. DIFFERENCE BETWEEN FORMAL AND INFORMAL ORGANISATION Point of view Formal Organisation Informal Organisation Origin It is created deliberately and consciously by the frames of the organisation. It is created spontaneously and naturally. Purpose It is created for achieving legitimate objectives of the organisation. It is created by the members of the organisation for social and psychological satisfaction. Nature Planned and official Unplanned and unofficial. Size It may quite large. It may be small in size. Nature of groups It may be stable and continue for a very long. It is quite unstable in nature.
  103. 103. Point of view Formal Organisation Informal Organisation Number of groups More Less Structure Definite structure, mechanical and rational Structure less, impersonal and emotional. Authority Authority flows from top to bottom It may flow upward to downwards from or horizontally. Communication Communication normally flows through the prescribed chain of command. Communications pass through the informal channels which do not have one single form.
  104. 104. ORGANISATIONAL CHARTS Organisational charts are prepared for the purpose of describing the organisational structure clearly. An organisation chart is a graphical portrayal of the various positions in the enterprise and the formal relationships among them. It shows the organisational relationships and activities within an organisation.
  105. 105. KINDS OF ORGANISATION CHARTS 1. Vertical Chart 2. Horizontal Chart or Left to Right Chart 3. Circular Chart or Concentric Chart
  106. 106. 1. Vertical Chart Chairmen Marketing Manager Production Manager Managing Director Supervisor for Operation B Supervisor for Operation A Personnel Manager Supervisor for Operation C Workman IIIWorkman IIWorkman I
  107. 107. 2. Horizontal chart or Left to right chart President Salesman II Branch Manager II Managing Director Managing Director Managing Director Managing Director Salesman I Salesman III Branch Manager I Branch Manager III
  108. 108. 3. Circular Chart or Concentric Chart Supervisor III Supervisor II Supervisor I Production Marketing Manager Manager Personnel Finance Manager Manager Chai rman
  109. 109. STEPS IN ORGANISING PROCESS 1. Determination of Activities 2. Grouping of Activities 3. Assignment of Duties 4. Delegation of Authority 5. Establishment of Structural Relationship 6. Co-ordination of Activities
  110. 110. DEPARTMENTATION / FUNCTIONAL DEPARTMENTATION Departmentation means the process of grouping of similar activities of the business into department, division or other homogeneous units. It is used for the purpose of facilitating smooth administration at all levels. Departmentation involves grouping of people or activities with similar characteristics into a single department or unit.
  111. 111. DEPARTMENTATION BY DIFFERENT STRATEGIES 1. Departmentation by Numbers 2. Departmentation by Time 3. Departmentation by Enterprise Function 4. Departmentation by Territory or Geography 5. Departmentation by Customers 6. Departmentation by Process or Equipment
  112. 112. 1. Departmentation by Numbers In this case, departments are created on the basis of number of persons forming the department. Similar types of activities are performed by small groups. In such case, the each group is controlled by a supervisor or an executive. For example, in the army soldiers are grouped into squads on the basis of the number prescribed for each unit.
  113. 113. 2. Departmentation by Time: Under this base, the business activities are grouped together on the basis of the time of performance. For example, a manufacturing unit working in three shifts of eight hours each per day may group the activities shift wise and thus having separate department for each shift. The basic idea is to get the advantages of people specialized to work in a particular shift.
  114. 114. 3. Departmentation by Enterprise Function Finance DeptPersonnel DeptProduction Dept Production Planning Repairs Tooling Purchasing Production Engineering Recruitment & Selection Financial Planning Labour Training Cost Accounting General Accounting Budgets President Vice-president MD Marketing Dept Market Research Advertising Sales Administration Market Planning
  115. 115. 4. Departmentation by Territory or Geography President Northern Region Managing Director Central Region Western Region Southern Region Eastern Region
  116. 116. 5. Departmentation by Customers Manager Personal Loans Manager Agricultural Loans Branch Manager Manager Housing Loans Manager Business Loans Manager Cooperative Loan
  117. 117. 6. Departmentation by Process or Equipment President Ginning General Director WeavingSpinning Packing & Sale Dying & Printing
  118. 118. 7. Departmentation by Product or Service General Manager Automobile Heavy Engg Division Finance Person nel Product ion Sales Finance Person nel Product ion Sales Earth Moving Equipment Division Finance Person nel Product ion Sales Power Products Division Finance Person nel Product ion Sales
  119. 119. AUTHORITY According to Hendry Fayol, “Authority is the right to give orders and the power to exact obedience”. Koontz and O’Donnell have defined authority as, “Authority is the power to command other to act or not to act in a manner deemed by the possessor of the authority to further enterprise or departmental purposes”.
  120. 120. LINE AUTHORITY or LINE ORGANISATION Line authority exists between superior and his subordinate. Line authority is the direct authority which a superior exercises over a number of subordinates to carry out orders and instructions. In organisation process, authority is delegated to the individuals to perform the activities.
  121. 121. Manager Superintendent 1 Superintendent 2 Foreman 1 Foreman 1Foreman 2 Foreman 2 W WWWWWW WWWWW
  122. 122. STAFF AUTHORITY Staff authority is exercised by a man over line personnel. The relationship between a staff manager and the line manager with whom he works depends in part on the staff duties. In a management, staff refers to those elements of the organisation which help the line to work most effectively in accomplishing the primary objectives of the enterprise, the nature of the staff relationship is advisory.
  123. 123. The function of staff is to investigate research and give advice to line managers. Staff personnel’s having specialized knowledge and skills reduce the burden of line personnel’s.
  124. 124. DECENTRALISATION OF AUTHORITY  Centralization and decentralization refer to the location of decision-making authority in an organisation.  “Centralisation” means that the authority for most decisions is concentrated at the top of the managerial hierarchy whereas ‘decentralisation’ requires such authority to be dispersed by extension and delegation through all levels of management.
  125. 125. Louis A.Allen has defined both the terms as, “Centralisation is the systematic and consistent reservation of authority at central points within an organisation. Decentralisation applies to the systematic delegation of authority in an organisation-wide context”.
  126. 126. MAKING DECENTRALISATION EFFECTIVE 1. Centralized Top Policy 2. Appreciation of Concept of Decentralization 3. Development of managers 4. Competition among units 5. Open Communication 6. Effective Co-operation
  127. 127. DELEGATION OF AUTHORITY  Delegation of authority is a process which enables a person to assign works to others and delegate them with adequate authority to do it.  Delegation consists of granting authority or the right to decision-making in certain defined areas and charging the subordinate with responsibility for carrying through an assigned task
  128. 128. COMPARISON BETWEEN DELEGATION AND DECENTRALISATION Sl. No Delegation Decentralization 1. It is the process of devolution of authority. It is the end result achieved by the delegation. 2. It implies the relationship between a superior and a subordinate. It implies the relationship between top management and various departments and sections. 3. The delegation control rests entirely with the superior. Here, the top management exercises only control and delegates the authority for control to the departmental heads. 4. It is must for management. It is optional 5. It is a technique of management to get things done. It is both technique and philosophy of management. 6. It can take place without decentralization. There cannot be decentralization without delegation.
  129. 129. STRATEGY AND ORGANIZATION DESIGN  A well-developed design enhances the accomplishment of strategic objectives, and these strategic objectives should have carefully selected to ensure successful organizational performance.  Organization design is overall plans for organizing the work, goals, relationships, and decisions of an organization in such a way that people can perform to the best of their abilities.
  130. 130. DESIGN ORGANIZATIONS TO MATCH THEIR ENVIRONMENTS Some of the pioneering work on the relationship between organization design and environment was done by Tom Burns and G.M. Stalker. They found that successful organizations were designed differently in different environments. They distinguished between two types of organization designs: a mechanistic design and an organic design.
  131. 131. Mechanistic Designs: A mechanistic design follows Weber’s bureaucratic model very closely in that it is characterized by specialized activities, specific rules and procedures, an emphasis on formal communicational and a well- defined chain of command. Because mechanistic designs tend to be inflexible and resistant to change, this type of design is more successful in a stable environment.
  132. 132. Organic Designs: In an organic design, task activities are loosely defined, there are very few rules and procedures, and great emphasis falls on self-control, participative problem solving, and horizontal communication. Organic designs are more successful in dynamic, rapidly changing environments that require adaptability to change.
  133. 133. STAFFING  Staffing is defined as filling and keeping filled, positions in the organization structure.  It includes identifying work force requirements, inventorying the people available and recruiting, selecting, placing promoting, appraising and training developing both candidates and current jobholders to accomplish their tasks effectively and efficiently.
  134. 134. ROLE OF STAFFING  Massive increase in the number of employees.  Technological innovations that require more skilled and experienced staff.  Changing employee roles and values.  Increasing the percentage of woman employees.  Effective utilization of skills and potential of the work force.  Provision of job satisfaction to employees.
  135. 135. JOB ANALYSIS  It is an attempt to match the jobs and job- holders.  Job analysis is a detailed study of a job to identify the skills, experience and aptitude required for the job.
  136. 136. JOB ANALYSIS Job SpecificationJob Description Job Title: A Title of the Job Job Activities: Tasks performed, materials used. Working Conditions: Light, Heat, Noise. Social Environment: Size of work group members etc. Personal Characteristics: Age, Sex, Education. Physical Characteristics: Length, Weight, Vision. Mental Characteristics: General intelligence, Memory, Judgment. Social & Psychological Characteristics: Emotional Stability, Initiative, Creativity.
  137. 137. Job Description: Job description is a written statement showing job title, tasks duties and responsibilities involved in a job. Job Specification: Job specification also known as man or employee specification is a statement of minimum acceptable qualities required in a job incurrent for the effective performance of the job.
  138. 138. JOB DESIGN The job design is usually broad enough to accommodate people’s needs and desires. It may be especially appropriate to design jobs for exceptional persons in order to utilize their potential. People spend a great deal of time on the job and it is therefore important to design jobs so that individuals feel good about their work.
  139. 139. Two important goals of job design are: 1.To meet the organisational requirement such as higher productivity, operational, efficiency, quality of product/service etc. 2.To satisfy the needs of the individual employees like interests, challenge, achievement etc.
  140. 140. TECHNIQUES FOR DESIGNING JOBS The following factors are the designing of jobs. 1. Job Enlargement 2. Job Rotation 3. Job Enrichment
  141. 141. Job Enlargement Job Enlargement is several short tasks which are given to one worker. Thus the scope of the job is increased because there are many tasks of be performed by the same worker. Job enlargement does not increase the depth of a job. Enlarged jobs require longer training period because there are more tasks to be learned. If workers are more satisfied with jobs, job enlargement should be successful.
  142. 142. Job Rotation  Job rotation refers in the movement of an employee from the job to another.  An employee who works on a routine job is affected from boredom and monotony.  Job rotation improves employees skills. Thus the role of job rotation is motivating people is limited.
  143. 143. Job Enrichment Job enrichment is based on herzberg’s two- factor theory of motivation. It is based on the assumption that in order to motivate workers. The job itself must provide opportunities for achievement, recognition and responsibility. The job enrichment approach to boring jobs is to give the individual employee more autonomy in the job. Employee receives a greater sense of accomplishment as well as more authority and responsibility.
  144. 144. RECRUITMENT Recruitment is defined as “a process to discover the sources of manpower to meet the requirements of the staffing schedule and to employ effective measures for attracting that manpower in adequate members to facilitate effective selection of an efficient work force”. B.Flippo defined recruitment as “The process of search for prospective employees and stimulating them to apply for jobs in the organization”.
  146. 146. Internal Sources:  Present permanent employees  Present temporary/Casual employees  Retired employees
  147. 147. External Sources:  Advertisements  Employment exchanges  Campus Recruitment  Recruitment at the factory gates or gate hiring  Jobbers / Contractors / Personnel consultants  Recommendations of existing employees
  148. 148. SELECTION Selection is the process that enables the enterprise to pick up the candidates with the required qualifications, training and skill for the job after careful screening and rejecting the undesirables at each successive step. The selection procedure is the system of functions and devices adopted in a given company to ascertain whether the candidate’s specifications are matched with the job specifications and requirements.
  149. 149. STEPS OF SELECTION PROCESS Screening of Applications Medical Examinations Preliminary Interview Selection Tests Placement Approval Final Interview
  150. 150. PERFORMANCE APPRAISAL Appraising the performance of individuals, groups and organization is a common practice of all societies. Thus teachers evaluate the performance of students, bankers evaluate the performance of creditors, parents evaluate the behaviour of their children and all of us consciously or unconsciously evaluate our own actions from time to time.
  151. 151. Meaning: Performance appraisal evaluate not only the performance of worker but also his potential for development. Performance appraisal is a continuous process Appraisals are arranged periodically according to a definite plan. The performance appraisal is the process of determining and communicating to an employee how well he is performing the job. Performance appraisal is the employee’s job relevant strength and weaknesses.
  152. 152. PROMOTION Promotion means shifting of personnel to a higher position carrying increased wages and responsibilities. It is a movement from lower to higher rank involving higher salary, responsibility and increase in status.
  153. 153. TRAINING AND DEVELOPMENT Training plays a very important role in human resource development. Training involves the department of skills that are usually necessary to perform a specific job. According to Edwin B.Flippo “Training is the act of increasing the knowledge and skills of an employee for doing a particular job”.
  154. 154. Development means all round improvement in the job performance, personality growth in proficiency, advancement and progress in all other personality traits that make an employee a better man and a better citizen.
  155. 155. NEED FOR TRAINING Every organization should provide training to all employees irrespective of their qualification, skill, suitability of the job etc. 1. Training is necessary to prepare existing employees for higher level jobs. 2. Training is necessary when a person is shifted from one job to another. 3. Training is necessary to make employee mobile and versatile. 4. Training provides a sense of security and self confidence to employees.
  156. 156. Cont… 5. Training is needed to bridge the gap between what the employee has and what the job demands. 6. Training develops new skill to the employees. 7. There are three other factors which could necessitate training
  157. 157. TRAINING METHODS Training Methods On-the Job Training Methods Off-the Job Training Methods 1. Job Rotation 2. Apprenticeship & Coaching 3. Committee Assignments 4. Experience 5. Temporary Promotions 1. Lecture 2. Conference & Seminars 3. Role Playing 4. Case Studies 5. Programmed Instructions 6. Business Game 7. In basket method 8. Sensitivity Training
  158. 158. ORGANISATIONAL CHANGE The term change refers to an alteration in a system whether physical biological or social. Thus organisational change is the alteration of work environment in organization. 1. Organisational change is a continuous change. 2. Any changes may affect part of organization positively or negatively. 3. When change occurs in any part of the organization, it disturbs the old equilibrium necessitating the development new equilibrium.
  159. 159. FACTORS INFLUENCING ORGANISATIONAL CHANGE Organisational Change External Factors 1. Technologies 2. Social 3. Political Internal Factors 1. Change in Managerial Personnel 2. Deficiency in Existing organisation
  160. 160. ORGANISATION DEVELOPMENT  Organisation development is a systematic and continuous process of learning and growth. It improves the managerial effectiveness. It is basically long range programme.  Organisational development is attempting to change the behavioural attitudes and performance of the total organisation.  Organisation development is an education strategy which focuses on the whole culture of the organisation in order to bring about planned change.
  161. 161. DIRECTING Directing may be defined as the process of instructing, guiding and inspiring human factors in the organisation to achieve organisation objectives. It is not only issuing orders and instruction by a superior to his subordinates but also including the process of guiding and inspiring them to work effectively.
  162. 162. Cont.. Directing includes the following elements: 1. Leadership 2. Motivation 3. Communication
  163. 163. LEADERSHIP Leadership is the process of influencing the behaviour of other towards the accomplishment of goals in a given situation. Koontz and O’Donnel have defined, “Leadership is the art of process of influencing people so that they will strive willingly towards the achievement of group goals”.
  164. 164. IMPORTANCE OF LEADERSHIP 1. Motivating employees 2. Leader develops team work 3. Better utilization of Manpower 4. Creating Confidence to followers 5. Directing group activities 6. Maintaining Discipline
  165. 165. TYPES OF LEADERSHIP STYLES 1. Autocratic or Dictatorial leadership 2. Participative or Democratic leadership 3. Laissez-faire or Free rein leadership
  166. 166. THANK YOU