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Principle and practices of management

  1. 1. Def -1 (Harold Koontz) <br />“MANAGEMENT is the process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aims”.<br />-Harold Koontz and Heinz Weihrich <br />And therefore –<br />As manager people carry out the function of Planning, Organizing, Staffing, Leading and Controlling.<br /><ul><li>Management applies to any kind of organization.
  2. 2. It applies to Managers at all organisational level.
  3. 3. The aim of all Managers is the same: To Create Surplus.
  4. 4. Managing is concerned with productivity
  5. 5. Productivity implies effectiveness and efficiency.
  6. 6. Effectiveness is the achievement of objectives
  7. 7. Efficiency is the achievement of ends with the least amount of resources.</li></ul>Def – 2 (George R. Terry)<br />“MANAGEMENT is the distinct process consisting of activities of planning, organizing, actuating and controlling, performed to determine and accomplish stated objectives with the use of human beings and other resources.” - George R. Terry <br />Thus the six M’s of management, i.e. men (and women), materials, machines, methods, money and markets, or basic resources, as they are often called are subjected to the fundamental functions of management – planning, organizing, actuating and controlling to achieve stated objectives. <br />Def – 3 (Mary Parker Follet) <br />Management is the art of getting things done through people   <br />-    Mary Parker Follet <br /><ul><li>Fundamental difference between Manager and other personnel in the organisation.
  8. 8. Manager’s contribution to the organisation is indirect.
  9. 9. Person who is not a Manager contributes directly to the goal of the organisation.</li></ul>It does not mention various functions of management <br />Def – 4 (Another school of thought)<br />“Management is distinct process of effective utilization of human and material resources to achieve enterprise objectives.”  <br />-Another school of thought <br />Management involves following five major functions: - <br /><ul><li>Forecast
  10. 10. Plan
  11. 11. Organize
  12. 12. Command
  13. 13. Coordinate
  14. 14. Control</li></ul>Human resource imply <br /><ul><li>-The entire employee in an organization.
  15. 15. -Irrespective of their position. </li></ul>Material resource includes <br /><ul><li>-Capital
  16. 16. -Machines
  17. 17. -Materials
  18. 18. -Technology </li></ul>Managing human resources and getting the best out of them in terms of productivity, integrity, loyalty to the organization and their retention in the organisation is a difficult task. <br />Material resources are procured, preserved and utilized systematically to accomplish organisational goal.<br />Both human resource and material resources are to be utilized optimally by the management. And therefore………….<br />‘Management is an activity that converts disorganized human and physical resources into useful and effective results.’<br />Def – 5 (Henry Fayol)<br />Management is process of functions. <br />-Henry Fayol <br />Roles of a Manager <br /><ul><li>Interpersonal roles-
  19. 19. Figurehead: - Manager performs duties of a ceremonial nature like talking to an important customer.
  20. 20. Leader: - Motivates his employees and reconciles their needs and aspirations with organisational goals.
  21. 21. Liaison: - Cultivates contact outside vertical chain of command to collect information relevant to the organisation.
  22. 22. Informational roles -
  23. 23. Monitor: - This is continuous scanning of environment for information. This can be through personal contact or through subordinates or may be unsolicited information.
  24. 24. Disseminator: - Passing of information to subordinates in order to achieve goal of the organization.
  25. 25. Spokesman: - Relevant information is passed to various groups and people who influences the organization, they are – shareholders, government or any other organization including press.
  26. 26. Decisional role:-
  27. 27. Entrepreneur: - Look out for new ideas improves organization continually by adapting it to changing external environment.
  28. 28. Disturbance handler: - He is a fire fighter, finds solution for unanticipated problems. (i.e. strike, bankruptcy of major customer etc.).
  29. 29. Resource allocator: - Delegation of authority and allocation of resources.
  30. 30. Negotiator: - He spends considerable time in negotiation with supplier or employee. </li></ul>Management Art or Science<br /><ul><li>Managing as a practice is an Art
  31. 31. Organizational knowledge underlying the practice may be referred to as Science</li></ul>Managing is an art for it entails doing things in the light of realities of the situation. Yet manager can work better by using the organized knowledge about management i.e. Science.<br />The Elements of Science <br />Science is organized knowledge. The salient feature of any science is the application of the scientific method to the development of knowledge. <br />The Scientific Approach <br />The Scientific method involves the determination of fact through observation. After classifying and analyzing these facts, scientists look for casual relationships. When these generalizations or hypothesis are tested for accuracy and appear to be true, that is to reflect or explain reality, they are called “principles”. Principles have value in predicting what will happen in similar circumstances.<br /> Theory is systematic grouping of independent concepts and principles that ties together a significant area of knowledge. <br />Evolution of Management thought<br /><ul><li>Scientific Management
  32. 32. Operational Management Theory
  33. 33. Behavioral Science
  34. 34. Sociological Approach
  35. 35. Modern Management Thoughts</li></ul>Scientific Management <br />Fredrick W. Taylor (1856 – 1912) <br /><ul><li>Acknowledged as “the father of scientific management”
  36. 36. His famous work published in 1911 “Principles of Scientific Management”.
  37. 37. His primary concern: 
  38. 38. Increase productivity through greater efficiency
  39. 39. Increased pay for workers through scientific method
  40. 40. As chief engineer of Midvale steel co. in Philadelphia he applied
  41. 41. Time and motion studies to determine fair day’s work and best way of doing a given job.
  42. 42. Pay plans based on output in an attempt to increase productivity.
  43. 43. Pay the workers according to productivity.
  44. 44. Performance incentives
  45. 45. He also believed that worker should be carefully selected and trained, right man should be for the right job. Also believed in harmony between worker, manager and the owner.
  46. 46. He emphasized on careful advance planning by managers, design work systems and believed that relation between employers and men formed without question is the important part of art of management. </li></ul>Taylor’s Principles: <br /><ul><li>Replacing rule of thumb with science (organized knowledge).
  47. 47. Obtaining harmony in work group rather than discord.
  48. 48. Achieving cooperation of individual, rather than chaotic individualism.
  49. 49. Working for maximum output, rather than restricted output.
  50. 50. Developing all worker to the fullest extent possible for their own and their company’s highest prosperity.</li></ul>Henry L. Gantt (Disciple of Taylor)<br />Gantt (1861 – 1919) joined Taylor in Midvale steel in 1887 <br />He believed in “harmonious co-operation” and “in all problem of management human being is the most important one” <br />He developed graphic methods of describing plans, making possible better managerial control and emphasized the importance of time and cost planning and controlling work. The Gannt Chart was the forerunner of modern technique such as the PERT (Program Evaluation and Review Technique) . <br />Frank and Lillian Gilbreth <br />Frank (1868 – 1924) and Lillian (1878 – 1972) made motion and fatigue study using motion picture cameras. He tried to find most economical motion for bricklaying. He classified all movements employed in industrial work into 17 basic types and provided shorthand symbol for each so that the analyst could jot down each motion as he observed the worker in action. It enhanced workers morale not only because of their physical benefits but also for the management’s concern for them <br />Henri Fayol<br /><ul><li>Henri Fayol, (1841-1925) a French mining engineer, developed 14 principles of management based on his management experiences.
  51. 51. These principles provide modern-day managers with general guidelines on how a supervisor should organize his department and manage his staff.
  52. 52. Although later research has created controversy over many of the principles, they are still widely used in management theories. </li></ul>Fayol’s Activities in Industrial Undertaking<br /><ul><li>Commercial
  53. 53. Financial
  54. 54. Security
  55. 55. Accounting
  56. 56. Managerial
  57. 57. Technical</li></ul>Fayol’s Fourteen Principles of Management<br /><ul><li>Division of work
  58. 58. Division of work and specialization produces more and better work with the same effort.
  59. 59. Specialization allows the individual to build up experience, and to continuously improve his skills. Thereby he can be more productive.
  60. 60. Fayol applies the principle to all kinds of work, managerial as well as technical.
  61. 61. Authority and Responsibility
  62. 62. Authority is the right to give orders and the power to exact obedience. A manager has official authority because of her position, as well as personal authority based on individual personality, intelligence, and experience. Authority creates responsibility.
  63. 63. It is the right to issue commands, along with which must go the balanced responsibility for its function.
  64. 64. Discipline
  65. 65. Obedience and respect within an organization are absolutely essential. Good discipline requires managers to apply sanctions whenever violations become apparent.
  66. 66. Employees must obey, but this is two-sided: employees will only obey orders if management plays their part by providing good leadership.
  67. 67. Unity of Command
  68. 68. An employee should receive orders from only one superior.
  69. 69. Each worker should have only one boss with no other conflicting lines of command
  70. 70. Unity of Direction
  71. 71. Organizational activities must have one central authority and one plan of action.
  72. 72. People engaged in the same kind of activities must have the same objectives in a single plan. This is essential to ensure unity and coordination in the enterprise. Unity of command does not exist without unity of direction but does not necessarily flows from it.
  73. 73. Fayol did not in any sense mean that all decisions should be made at the top.
  74. 74. Subordination of Individual Interest to General Interest
  75. 75. The interests of one employee or group of employees are subordinate to the interests and goals of the organization.
  76. 76. Management must see that the goals of the firms are always paramount.
  77. 77. This is self explanatory; when two are found to differ management must reconcile them.
  78. 78. Remuneration of Personnel
  79. 79. Salaries - the price of services rendered by employees - should be fair and provide satisfaction both to the employee and employer.
  80. 80. Payment is an important motivator although by analyzing a number of possibilities, Fayol points out that there is no such thing as a perfect system.
  81. 81. Centralization
  82. 82. The objective of centralization is the best utilization of personnel. The degree of centralization varies according to the dynamics of each organization.
  83. 83. In this Fayol refers to the extent to which authority is concentrated or dispersed.
  84. 84. Scalar Chain
  85. 85. A chain of authority exists from the highest organizational authority to the lowest ranks.
  86. 86. Scalar chain refers to the number of levels in the hierarchy from the ultimate authority to the lowest level in the organization.
  87. 87. Fayol thinks of this as a “chain of superiors” from the highest to the lowest ranks, which while not to be departed from needlessly, should be short-circuited when to follow it scrupulously would be detrimental.
  88. 88. Order
  89. 89. Organizational order for materials and personnel is essential. The right materials and the right employees are necessary for each organizational function and activity.
  90. 90. Fayol follows the simple adage of “a place for everything [everyone], and everything [everyone] in its [his or her] place.” this is essentially a principle of organisation in the arrangement of things and people.
  91. 91. Equity
  92. 92. In organizations, equity is a combination of kindliness and justice. Both equity and equality of treatment should be considered when dealing with employees.
  93. 93. Loyalty and devotion should be elicited from personnel by a combination of kindliness and justice on the part of managers when dealing with subordinates.
  94. 94. . Stability of Tenure of Personnel
  95. 95. To attain the maximum productivity of personnel, a stable work force is needed.
  96. 96. Employees work better if job security and career progress are assured to them. An insecure tenure and a high rate of employee turnover will affect the organization adversely.
  97. 97. Finding unnecessary turnover to be both the cause and effect of the bad management, Fayol points out its dangers and costs.
  98. 98. Initiative
  99. 99. Thinking out a plan and ensuring its success is an extremely strong motivator. Zeal, energy, and initiative are desired at all levels of the organizational ladder.
  100. 100. Allowing all personnel to show their initiative in some way is a source of strength for the organization.
  101. 101. It may well involve a sacrifice of ‘personal vanity’ on the part of many managers.
  102. 102. Esprit de Corps
  103. 103. Teamwork is fundamentally important to an organization. Work teams and extensive face-to-face verbal communication encourages teamwork.
  104. 104. Management must foster the morale of its employees. He further suggests that: “real talent is needed to coordinate effort, encourage keenness, use each person’s abilities, and reward each one’s merit without arousing possible jealousies and disturbing harmonious relations.”
  105. 105. It refers to “unity is strength” or in union there is strength.</li></ul>The Sociological Approach to Mgt.<br />There were three outstanding scholars who wrote books and essays at the close of the nineteenth century:<br /><ul><li>Max Weber
  106. 106. Emile Durkheim
  107. 107. Vilfredo Pareto</li></ul>MAX WEBER<br />Max Weber was a German intellectual.<br />He empirically analysed church, government, the military and the business<br />He believed that hierarchy, authority, and bureaucracy lie at the foundation of all the Organisation <br />The theory is also called as the Theory of Bureaucracy<br />System Theory<br />Source ofEnergyInformationHuman ResourceI/PTransformingMechanismO/PUserExternal Interface Feedback MechanismInternal interface Feedback Mechanism<br />Chester Bernard<br />The task of managers is to maintain a system of cooperative effort in a formal organisation.<br />He suggested a comprehensive social system approach to managing.<br />His analysis of the manager is truly social system approach, since in order to comprehend analyze the functions of executives, he looked for their major tasks where they operate.<br />Michael E. Porter<br /><ul><li>Porter is an authority on competitive strategy and international competitiveness.
  108. 108. Strategy is way of doing something.
  109. 109. Originated from Greek term Strategia – means art or science of being a general
  110. 110. Effective generals had to plan and act. And therefore strategy is plan of action.
  111. 111. It is determination of basic long term goal, course of action and allocation of resources for achieving objectives.</li></ul>Porter’s Five Forces of Competition<br />IndustryCompe-titorsBuyersSubstitutesPotentialentrantsSuppliersThreat of intense segment rivalryThreat of Buyer’s growing bargaining powerThreat of new entrantsThreat of supplier’s growingBargaining powerThreat of substitute products<br />McKINSEY 7-S FRAMEWORK<br /><ul><li>Structure
  112. 112. Systems
  113. 113. Style
  114. 114. Staff
  115. 115. Skills
  116. 116. Strategy
  117. 117. Shared Values</li></ul>MANAGEMENT BY OBJECTIVES<br />Management by objective is a planning control device, though it also helps as a motivational tool besides is used as tool for performance appraisal. <br />Peter F. Drucker in 1954 emphasized that the objectives must be set in all areas where performance is necessary and that performance affect the health of the enterprise.<br />Definition<br />Management by objectives is a comprehensive managerial system that integrates many key managerial activities in a systematic manner and is consciously directed toward the effective and efficient achievement of organisational and individual objectives. <br />The Process of MBO<br /><ul><li>Setting Preliminary objective at the top
  118. 118. Top manager to determine what he/she perceives to be purpose, mission and goal of enterprise.
  119. 119. These goals need to be set for any period – a quarter, a year or 5 years or whatever is felt appropriate.
  120. 120. Objectives are desired to be coincided with the annual budget.
  121. 121. Certain goals to be set for shorter period and others for much longer period.
  122. 122. These goal are preliminary and based on analysis and judgment.
  123. 123. Goals set are in accordance with company’s strength and weaknesses in light of available opportunities and threats.
  124. 124. These goals are tentative and subject to modification while the entire chain of verifiable objectives are worked out by subordinates.
  125. 125. Objectives are not to be forced on subordinates as it may not give rise to sense of commitment.
  126. 126. Clarifying organisational roles
  127. 127. There should be maintenance of relationship between expected results and responsibility for attaining them.
  128. 128. Each goal and sub goal should be one particular person’s clear responsibility.
  129. 129. Specific parts of each coordinating manager’s contribution to the program should be clearly identified.
  130. 130. Setting subordinate’s objective
  131. 131. Inform subordinate managers pertinent general objectives, strategies and plan.
  132. 132. Superior now proceeds to work with subordinates in setting their objectives.
  133. 133. Superior asks what goal the subordinates believe they can accomplish and in what period, with what resources.
  134. 134. Preliminary thoughts and discussions about the feasibility goals are done.
  135. 135. Superiors must be a patient counselors and help subordinate develop consistent and supportive objectives and being careful not to set goals that are not attainable as this may weaken the entire program of MBO.
  136. 136. Superior must listen to and work with their subordinates, and also take responsibility for approving subordinates goals.
  137. 137. All managers at all level need capital, material and human resources in order to accomplish their goals. Careful setting up a network of verifiable goal shall help in allocating these resources economically.
  138. 138. Recycling objectives
  139. 139. Objectives cannot be set by setting at the top and dividing them among subordinates. It also cannot be started from the bottom. And therefore a degree of recycling is required.
  140. 140. Setting objectives thus should be interactive one and a joint process.
  141. 141. Top managers may have some idea what their subordinates’ objective should be - but they will almost certainly change these preconceived goals as the contributions of subordinates come into focus.</li></ul>How to Set Objectives<br /><ul><li>Without clear objectives, managing is haphazard.
  142. 142. Individual/group cannot expect to perform effectively and efficiently without clear aim.
  143. 143. And therefore objective should be measurable.</li></ul>Quantitative and qualitative objectives<br />To be measurable, objectives must be verifiable. Example of verifiable and non verifiable objectives is given on the table herein:<br />Non verifiable objectivesVerifiable objectives1. To make reasonable profit1. To achieve a return on investment of 12% at the end of current fiscal year2. To improve communication2. To issue a two page monthly newsletter beginning October 2005 involving not more than 40 working hours of time in preparation.3. To improve productivity of the production department3. To increase production output by 5% by March 31, 2006without additional cost and compromising quality.4. To develop better managers 4. To design and conduct training program for 90% managers for 200 hours and completed by 31st March 2005.<br />Guidelines for setting objectives<br /><ul><li>The list of objectives should not be too long.
  144. 144. It should cover main feature of the job.
  145. 145. Objective must be verifiable
  146. 146. Quality desired and the projected cost should be indicated.
  147. 147. Objective should present a challenge.
  148. 148. Objective should indicate priorities.
  149. 149. It should promote personal and professional growth and development.</li></ul>BENIFITS OF MANAGEMENT BY OBJECTIVES <br /><ul><li>Improvement of managing – it forces managers to think about planning and results, there is no better way to know the standards for control than having a set of clear goals.
  150. 150. Clarification of organisation – it clarifies organisational role and structures. It helps in identifying deficiencies in the organisation.
  151. 151. Encouragement of personal commitment – it encourages people to commit themselves to their goals. People become enthusiastic when they control their own fate.
  152. 152. Development of effective controls – it sparks more effective planning and develop effective controls.</li></ul>WEAKNESSES OF MANAGEMENT BY OBJECTIVES <br /><ul><li>Failure to teach the philosophy of MBO – many times managers fail to understand and appreciate a good deal about MBO.
  153. 153. Failure to give guidelines to goal setters – if corporate goals are vague unreal or inconsistent, it will be virtually impossible for managers to tune in with them.
  154. 154. Difficulty of setting goals – truly verifiable is difficult to set. Excessive concern for economic results puts pressure on individual that may encourage questionable behavior.
  155. 155. Emphasis on short run goals – there is a danger of emphasizing short run goals at the expense of the long range, all short run plans must be designed to serve longer range goals.
  156. 156. Danger of inflexibility – hesitation to change objectives when the objective is obsolete by revised corporate objectives or modified policies.
  157. 157. Other dangers – overuse of quantitative goals, attempt to use numbers where they are not applicable, downgrading of important goals that are difficult to state in terms of end results.</li></ul>Planning<br />Major aspect of Planning:<br /><ul><li>Its contribution to purpose and objectives
  158. 158. Its primacy among the manager’s tasks
  159. 159. Its Pervasiveness
  160. 160. The efficiency of resulting plans </li></ul>Purpose and objective of plans<br />Every plan and its supporting plans should contribute to the objective and purpose of the enterprise.<br />The primacy of planning<br />Planning logically precedes all other managerial functions <br />PLANSObjectives and how toachieve themNecessary for decidingWhat kind of Organisation structureto haveWhat kind of People we need and whenHow most effectively to lead peopleBy furnishing standards of controlWhich helps us knowWhich affects the kind of leadership we have and direction In order to ensure success of plans<br />Planning and controlling are inseparable – any attempt to plan without control or control without plan is meaningless since there is no way people to tell whether they are going where they want to go<br />NEW PLANSPLANNINGImplementation of PlansControlling:ComparingPlan with resultsCorrective ActionUndesirable deviationNo undesirable deviation from plans<br />Close Relationship of Planning and Controlling<br />The Pervasiveness of Planning<br />All managers plan, although the character and breadth of planning will vary with each managers authority and with the nature of the policies and plans outlined by the superior<br />The Efficiency of Plan <br /><ul><li>The efficiency of plans refers to its contribution to purpose and objectives, offset by the costs and other factors required to formulate and operate it.
  161. 161. A plan may enhance the attainment of objectives, but at an unnecessarily high cost.
  162. 162. Plans are efficient if they achieve their purpose at a reasonable cost, when cost is measured not only in terms of time or money but also in the degree of individual and group satisfaction.</li></ul>Types of Plans<br /><ul><li>Mission Of Purposes
  163. 163. Objective Or Goals
  164. 164. Strategies
  165. 165. Policies
  166. 166. Procedures
  167. 167. Rules
  168. 168. Programs
  169. 169. Budgets </li></ul>Steps in Planning<br /><ul><li>Being aware of Opportunities
  170. 170. Establishing Objectives
  171. 171. Developing Premises
  172. 172. Determining Alternative Courses
  173. 173. Evaluating Alternative Courses
  174. 174. Selecting a Course
  175. 175. Formulating Derivative Plans
  176. 176. Numberising Plans by Budgeting</li></ul>Advantages of Planning<br /><ul><li>Makes a purposeful and orderly activities
  177. 177. Points out need for future change
  178. 178. Answers “WHAT IF” question
  179. 179. Provides a basic control
  180. 180. Encourage achievement
  181. 181. Compels visualization of entirety
  182. 182. Increases and balances utilization of facilities.</li></ul>Limitation of Planning<br /><ul><li>Planning is limited by the accuracy of information and future goals
  183. 183. Planning costs too much
  184. 184. Planning has psychological barriers
  185. 185. Planning stifles initiative
  186. 186. Planning delays action
  187. 187. Planning is overdone by planners</li></ul>Decision Making<br />Decision-making is defined as the selection of course of action from among alternatives; it is the core of planning. <br />The importance and limitations of rational decision making <br />Decision making is considered as major part of planning, and therefore decision process is the core of planning. Thus in this context, the process leading to decision is:<br /><ul><li>Premising
  188. 188. Identifying alternatives
  189. 189. Evaluating alternatives
  190. 190. Choosing an alternative, that is making a decision</li></ul>Rationality in decision making<br /><ul><li>Effective decision making must be rational.
  191. 191. The decision maker must have the clear understanding of alternative courses by which a goal can be reached under existing circumstances and limitations.
  192. 192. They must have information and ability to analyse and evaluate alternatives in the light of the goal sought.
  193. 193. They must have desire to select best alternatives that shall meet the objective.</li></ul>Limited, or “Bounded” Rationality<br />Because of uncertainty involved in the future, it may be difficult to achieve complete rationality.<br />There may be difficulty in recognizing and analyzing the available alternatives.<br />A manager then settles for limited rationality, or “bounded” rationality.<br />Since the manager completely rational in practice, they sometimes allow their dislike for risk and they desire to “play it safe” –to interfere with the reach the best solution under the circumstances.<br />Herbert Simon has called this “satisfying”, that is, picking a course of action that is satisfactory or good enough under the circumstances. <br />Steps in Decision Making Process<br />Step 1 - The search for alternatives<br /><ul><li>The first step of decision making is to develop alternatives; this is done with the assistance of the limiting factor.
  194. 194. A limiting factor is something that stands in the way of accomplishing a desired objective. Recognizing the limiting factors in a given situation makes it possible to narrow the search for alternatives to those that will overcome the limiting factors.
  195. 195. Principle of the limiting factor –
  196. 196. By recognizing and overcoming those factors that stand critically in the way of goal, the best alternative course can be selected.</li></ul>Step 2 - Evaluation of alternatives<br />Once appropriate alternative is found, the next step is to evaluate them. This can by using following techniques:<br /><ul><li>Quantitative and Qualitative factor
  197. 197. Quantitative factors that can be measured in numerical terms, such as time or operating cost.
  198. 198. Qualitative or intangible factors that are difficult to measure numerically such as political situation, labour problems etc.
  199. 199. Marginal analysis
  200. 200. It compares additional revenues arising from additional costs. It can be used for comparing factors other than revenues – best output of a machine.
  201. 201. Cost effective analysis
  202. 202. Seeks the best ratio benefits and cost; this means finding the least costly way of reaching an objective.</li></ul>Step 3 - Selecting an alternative<br />While selecting alternatives managers can use three basic approaches –<br /><ul><li>Experience – reliance on past experience plays a larger part then it deserves in decision making.
  203. 203. Experimentation – an obvious way to decide among alternatives is to try one of them and see what happens.
  204. 204. Research and analysis – it involves search for relationship among more critical of the variables, constraints, and premises that bear upon the objectives.</li></ul>Organising<br />Organizing is that part of managing that involves establishing an intentional structure of roles for people to fill in an organization. Organizing therefore can be: <br /><ul><li>Identifying and classification of required activities
  205. 205. The grouping of activities necessary to attain the objectives
  206. 206. The assignment of each grouping to a manager with a responsibility to supervise it
  207. 207. The provision for coordinating horizontally or vertically</li></ul>Formal and Informal Organisation<br />Formal organisation refers to intentional structure of roles in a formally organized enterprise.<br />Informal organisation is a network of personal and social relations not established or required by the formal organisation but arising spontaneously as people associate with one another.<br />Distinction between Formal and Informal Organization <br />Formal organization <br /><ul><li>1.It is prescribed structure of roles and relationship consciously coordinated towards a common objective
  208. 208. Its value goals and tasks are predominantly oriented towards productivity, efficiency, growth and so on
  209. 209. It is well defined in shape. Majority of formal organizations are pyramid shaped. Ranks of individuals are made clear by the use of titles. Communication is simple. One can easily chart all relationships
  210. 210. There is a prescribed, mostly written system of rewards or punishment.
  211. 211. This organization is usually very enduring and may grow to any size </li></ul>Informal Organization <br /><ul><li>1.It is a natural and spontaneous structure arising out of the social tendency of people to associate and interact
  212. 212. Its values, goals and tasks predominantly center on individual and group satisfaction, esteem, affiliation etc.
  213. 213. It is shapeless. There are number of multidirectional, intricate relationships which cannot be easily charted
  214. 214. There is an unwritten system of reward and punishment
  215. 215. This organization is not very enduring, being dependent on the sentiments of members, which often change. It also tends to remain small.</li></ul>69850266700Organisation with Narrow Span<br />Advantages<br /><ul><li>Close supervision
  216. 216. Close control
  217. 217. Fast communication between subordinate and superiors</li></ul>Disadvantages<br /><ul><li>Superiors tend to get too involved in subordinate’s work
  218. 218. Many levels of management
  219. 219. High cost due to many levels
  220. 220. Excessive distance between lowest level and top level</li></ul>Organisation with Wide Span<br />8890099060<br />Advantages<br /><ul><li>Superiors are forced to delegate
  221. 221. Clear policies must be made
  222. 222. Subordinates must be carefully selected</li></ul>Disadvantages<br /><ul><li>Tendency of overloaded Superiors to become decision bottlenecks
  223. 223. Danger of superior’s loss of control
  224. 224. Requires exceptional quality of managers</li></ul>Departmentation<br />The word departmentation designates a distinct area, division or branch of an organisation over which a manager has authority for the performance for specified period. <br />The pattern of departmentation will depend on given situations, and on what the managers believe will yield the best result for them in the situation they face.<br />Types of Departmentation<br /><ul><li>Departmentation by Simple Numbers</li></ul>The simple numbers method of departmentation is by tolling of persons who are to perform the same duties and putting them under the supervision of a manager.<br />The method was important in the organisation of army, tribal etc. However it is rapidly falling into disuse in the modern society because of advance technology has demanded specialized and different skills and not on numbers. It is useful only at lower level of the organisation.<br /><ul><li>Departmentation by Time</li></ul>One of the oldest method of departmentation where it is used commonly for the lower levels of the organisation, this is group activities on the basis of time.<br />This refers to use of shifts which is very common in manufacturing and service industry.<br />Advantages-<br /><ul><li>Services available round the clock
  225. 225. Good for process require a continuing cycle
  226. 226. Extensive use of machinery
  227. 227. Students can get a job</li></ul>Disadvantages-<br /><ul><li>Lack of supervision during night shift
  228. 228. Fatigue factor prevails
  229. 229. Difficulty in coordination and control
  230. 230. Payment of overtime may increase cost
  231. 231. Departmentation By Enterprise Function</li></ul>It is grouping of activities into departments such as engineering, manufacturing, marketing, finance, etc. <br />Advantages-<br /><ul><li>Is logical reflections of functions
  232. 232. Maintains power and prestige of major functions
  233. 233. Follows principles of occupational specialization
  234. 234. Simplifies training
  235. 235. Furnishes means of tight control at top</li></ul>Disadvantages-<br /><ul><li>Tend to deemphasise overall company objectives
  236. 236. Overspecialises narrows viewpoints of key personnel
  237. 237. Reduces coordination between functions
  238. 238. Responsibility for profits at top only
  239. 239. Slow adaptation to changes in environment
  240. 240. Limits development of general mangers</li></ul>-469900283210<br />A FUNCTIONAL ORGANISATION (MANUFACTURING COMPANY)<br /><ul><li>Departmentation By Territory Or Geography</li></ul>This type of departmentation is attractive to large scale firms whose activities are physically or geographically dispersed.<br />Advantages-<br /><ul><li>Places responsibility at lower level
  241. 241. Place emphasis on local market and problems
  242. 242. Improve coordination in a region
  243. 243. Takes advantage of economies of local operations
  244. 244. Better face to face communication with local interests
  245. 245. Furnishes measurable training ground for general managers</li></ul>Disadvantages-<br /><ul><li>Requires more persons with general manager abilities
  246. 246. Tends to make maintenance of economical central services and may require service such as HR or purchase at the regional level
  247. 247. Increase problem of top management control</li></ul>PRESIDENTHRMMarketingPurchaseFinanceRegion 1Region 2Region 3Region 4Region 5EngineeringProductionHRMMarketingFinance<br />A Territorial or Geographic Organisation<br /><ul><li>CUSTOMER DEPARTMENTATION</li></ul>Grouping activities so that they reflect primary interest in customers. This is arrangement activities on the basis to cater to requirements of clearly defined customer groups.<br />Advantages-<br /><ul><li>Encourages concentration on customer needs
  248. 248. Gives customer feeling that they have an understanding supplier
  249. 249. Develops expertness in customer area</li></ul>Disadvantages-<br /><ul><li>May be difficult to coordinate operation between competing customer demands
  250. 250. Requires managers and staff experts in customers’ problems
  251. 251. Customer group may not be always clearly defined</li></ul>-57150170180<br />CUSTOMER DEPARTMENTATION BANKING SECTOR<br /><ul><li>PROCESS OR EQUIPMENT DEPARTMENTATION</li></ul>Manufacturing firms sometimes group activities around a process or a type of equipment. <br />Advantages-<br /><ul><li>Achieves economic advantage
  252. 252. Uses specialised technology
  253. 253. Utilises special skills
  254. 254. Simplifies training</li></ul>Disadvantages-<br /><ul><li>Coordination of departments is difficult
  255. 255. Responsibility for profit is at top
  256. 256. Unsuitable for developing general managers</li></ul>-266700106045<br />PROCESS OR EQUIPMENT DIVISION<br /><ul><li>DEPARTMENTATION BY PRODUCT</li></ul>Large scale enterprises group activities on the basis of products or product lines. Companies adopting this form of departmentation were typically organised by enterprise function. With the growth that led to complexity in managerial job and increase in number of subordinates recognition of Product Division became necessary.<br />Advantages-<br /><ul><li>Places attention and effort on product line
  257. 257. Facilitates use of specialised capital, facilities, skills, and knowledge
  258. 258. Permits growth and diversity of the products and services
  259. 259. Improves coordination of functional activities
  260. 260. Place responsibility for profits at divisional level
  261. 261. Furnishes measurable training ground for general managers</li></ul>Disadvantages-<br /><ul><li>Requires more persons with general manager abilities
  262. 262. Tends to make maintenance of economical central services difficult
  263. 263. Presents increased problem of top management control</li></ul>PRESIDENTHRMMarketingPurchaseFinanceDetergentsCosmeticsFood ProductsPharmacyFMCGEngineeringProductionHRMMarketingAccounting<br />PRODUCT ORGANISATION<br />Directing <br />Direction is part of management which actuates the people to work efficiently and effectively<br />Direction involves communication and providing leadership and motivation to the people to contribute to the best of the capabilities for the achievement of objectives of the enterprise.<br />Direction has a major concern with the ‘human element’ of the organisation. People are actuated through direction. Planning and organizing are only preparations for doing the work and the work actually starts when the direction of management is performed. It is the direction function of management which is related with the activities that deal directly with influencing, guiding, supervising and motivating people in organisation for the attainment of organisational objectives.<br />Elements of Direction<br />Direction consists of four elements:<br /><ul><li>Issuing orders that are clear, complete and within the capabilities of subordinates to accomplish.
  264. 264. Continuous training activity in which subordinates are instructed to carry out the particular assignment in the existing situation.
  265. 265. Motivation of subordinates to try to meet the expectations of the manager.
  266. 266. Maintaining discipline and rewarding those who perform properly.</li></ul>Features of Direction<br /><ul><li>Managerial function
  267. 267. Direction as a managerial function is the interpersonal aspect of management processes by which organisational members are led to understand and contribute effectively and efficiently to accomplish organisational objectives.
  268. 268. Direction is an important function of management. A good plan must have been chalked out, a sound organisation may have been evolved and a sound team of personnel may have been employed, but all these will be ineffective unless there is proper direction of the people in the use of planning and organizing.
  269. 269. Continuous activity
  270. 270. Direction is a continuous activity. It does not stop as long as the execution of plan is in process. A manager who issues an order and thinks his function is complete is committing a very serious error. He is supposed to continuously supervise the execution of his orders or instruments. He also has to lead and motivate his subordinates.
  271. 271. Pervasive function
  272. 272. Like all other functions of management, direction, is also performed by the managers, at all levels in the organisation.
  273. 273. Communication
  274. 274. Acceptance of order is essential if it is carried out effectively. Managers may elicit two types of behaviors from his subordinates when they issue orders.
  275. 275. Linear Behavior: It is obtained when there is a one way transmission of orders from superior to subordinates.
  276. 276. Circular behavior: It is two way communications between the superior and subordinates. The superiors can persuade the acceptance of the order more quickly.</li></ul>Importance of Direction<br />Direction involves functions of leadership, communication, motivation and morale. Directing is very important part of management process and the organisation. It sets the organisational machine into motion.<br />Importance of direction may be<br /><ul><li>Heart of administration
  277. 277. It is the directing function which involves determining the course, giving orders and instructions providing the dynamic leadership.
  278. 278. Initiation of action
  279. 279. Direction actuates action, an organisation may make good plans but nothing moves unless directed into operation.
  280. 280. Helps in achieving objectives
  281. 281. By directing a manager can utilize skills of the people and their time and energy to achieve the objectives of the organisation.
  282. 282. Helps to execute decision
  283. 283. Policies and procedures of an organisation are executed through the direction of the management.
  284. 284. Irreplaceable task
  285. 285. Direction in business is similar to strategy in war, despite presence of computers; robots etc. guidance to the people cannot be eliminated.
  286. 286. Helps utilize capabilities
  287. 287. Direction helps to explore talents of individuals and get maximum out of them.
  288. 288. Crucial to success of organisation
  289. 289. Direction is crucial to success of an organisation as it provides a test of managerial capability in running a business enterprise successfully and is very important in determining the success of the organisation.</li></ul>Benefits of Direction<br /><ul><li>It integrates individual efforts
  290. 290. It facilitates change in the organisation
  291. 291. It ensures stability and balance in the organisation
  292. 292. It is helpful in securing employee’s cooperation
  293. 293. It develops human resource and future managers</li></ul>Principles of Direction<br /><ul><li>Principle of directing objective: The more effective the direction the greater will be subordinate’s contribution in achieving organisational objectives.
  294. 294. Principle of harmony objective: Effective direction should facilitate integration of individual and organisational goals.
  295. 295. Principle of effective leadership: It requires that manager should adopt an appropriate style of leadership.
  296. 296. Principle of effective communication: Ensure effective communications.
  297. 297. Principle of unity of command: Subordinate get order from one boss.
  298. 298. Principle of individual contribution: Direction should be such that enable the subordinates to contribute their best.
  299. 299. Principle of human relations: Manager’s success in directing depends upon healthy human relations climate.
  300. 300. Principles of participation: Managers should invite ideas and suggestions from their subordinates.
  301. 301. Principle of direct supervision: direction supervision improves loyalty and morale of employees.
  302. 302. Principle of follow through: Mere issuing order is not enough, continuous feedback is necessary in monitoring behavior and performance of the subordinates.</li></ul>Controlling<br />Controlling is the measurement and correction of performance in order to make sure that enterprise objectives and the plans devised to attain them are being accomplished. Planning and controlling are closely related and without plans control is not possible, because performance has to be measured against some established criteria.<br />Control consist in verifying whether everything occurs in conformity with plans adopted, the instructions issued and principles established. <br />The process of controlling<br />The process of controlling has the following basic steps-<br /><ul><li>Establishing standards
  303. 303. Standards, by definition are criteria of performance. They are the selected points in an entire planning programme at which measures of performance are made so that managers can receive information about how things are going and thus do not have to watch every step in the execution of plan.
  304. 304. Measuring performance against standard and ascertain the difference
  305. 305. Measurement is the determination of the quantity or capacity of a well-defined entity. Means of measuring performance and obtaining data are given below:
  306. 306. Personal observation
  307. 307. Oral reports
  308. 308. Written reports
  309. 309. Correcting variations from standards and plans
  310. 310. This step ensures that operations are adjusted and efforts are made to achieve the results initially planned. It may involve modification of plan and is done by those who have authority. It is aimed at uncovering the real cause of discrepancy and initiate elimination of its source.</li></ul>Co-ordination<br />Coordination is the orderly arrangement of group effort to provide unity of action in pursuit of a common purpose <br />Types of Coordination<br /><ul><li>Internal coordination
  311. 311. External coordination
  312. 312. Vertical coordination
  313. 313. Horizontal coordination</li></ul>Leadership<br />Leadership Styles<br /><ul><li>Autocratic –
  314. 314. Hard Boiled Autocrat
  315. 315. Benevolent Autocrat
  316. 316. Manipulative Autocrat
  317. 317. Participative
  318. 318. Laissez-faire or Free rein
  319. 319. Paternalistic
  320. 320. Bureaucratic style