introduction of management theory and organisational behaviour


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introduction of management theory and organisational behaviour

  1. 1. Management Theory & Organizational Behavior INTRODUCTION TO MANAGEMENT Management is universal in the modern industrial world and there is no substitute for good management. It makes human efforts more productive and brings better technology, product, and services to our society. It is a crucial economic resource and a life giving element in business. Without proper management the resources of production cannot be converted into production. Management is a must to accomplish desired goals through group action. It is essential to convert the disorganized resources of Men, Material, Machines and Methods into a useful and effective enterprise. Thus management is a vital function concerned with all aspects of the working of an organization. Meaning:It is very difficult to give a precise meaning to the term management. The concept of management is as old as the human race itself. Ever since people began forming groups to accomplish aims they could not achieve as individuals, managing has been essential to ensure the co-ordination of the individual’s efforts. Management is the function of getting things done through people and directing the efforts of individual towards a common objective. Definition:Management is the art of getting things done through and with the people in formally organized groups. -Harlod Koontz In the words of Henry Fayol – ―To manage is to forecast and to plan, to organize, to command, to coordinate and to control‖. According to Lawrence A Appley – ―Management is the development of people and not the direction of things‖. According to F.W Taylor, management is the art of knowing what you want to do and then seeing that is done in the best and cheapest way. NATURE, SCOPE AND CHARACTERISTICS OF MANAGEMENT: Management is Goal-Oriented: The success of any management activity is accessed by its achievement of the predetermined goals or objective. Management is a purposeful activity. It is a tool which helps use of human & physical resources to fulfill the pre-determined goals. For example, the goal of an enterprise is maximum consumer satisfaction by producing quality goods and at reasonable prices. This can be achieved by employing efficient persons and making better use of scarce resources. QIS College of Engineering and Technology, Ongole Page 1
  2. 2. Management Theory & Organizational Behavior Management is goal-oriented. Management is goal oriented activity which means the efforts and activities should be directed towards the attainment of pre-determined objectives. These objectives are the ends towards which all the management activities are systematicallydirected. Without knowing and directing our efforts towards these goals there can’t be any management. Management is social process:- management is a social process as it deals with people, it deals with how to integrate the human effort in achieving targets efficiently through coordination and cooperation. Organizations have to use the resources for the benefit of the society at large. Management is a distinct and universal process. Management is a distinct process which means it can be defined in terms of certain steps or stages. We can define the process of management which consists of the functions of planning, organizing, staffing, directing and controlling. The process of management involves decision-making and putting them into action. These functions are performed by the managers at all levels of organization and in all types of institutions. The management is universal process as its basic principles are universal in character which means can be applied at any level any area and in any situation, can be applied in different organizations and also in our day to day personal or pro fessional life. Management is a continuous process. The management is a continuous process as long as we keep having targets to be achieved and an on-going process and a never-ending process, because every activity is done to achieve a target once the target is achieved we define new targets hence the process becomes cyclic in nature so becomes continuous. Management is an integrative process. The management integrates the available resources and directs them in to achievement of the desired outcome. The major objective is to achieve these goals in most efficient and effective manner. Of all resources, the human resources are the most precious and difficult to manage. And a good management is able to make synergies out of human and non human resources by integrating their efforts in the most suitable manner. Management is intangible. Management is intangible as it is not seen as a thing or a material it is experiential in nature which means we can feel its presence in t he form of results such as efficient organizational structures, better and informed decisions, increased productivity, and heightened morale and motivation of employees. So management is intangible and can be felt by employee satisfaction, wealth creation etc. QIS College of Engineering and Technology, Ongole Page 2
  3. 3. Management Theory & Organizational Behavior Management is contingent. Management is contingent as there is no best way of doing things and each application or decision is based on the situation. A manager must take into account the prevailing situation to solve a particular problem. Management is multi-disciplinary. Management techniques, principles and theories are drawn from other disciplines of knowledge like sociology, psychology, engineering, anthropology, statistics etc. management depends upon wide knowledge and practices derived from various disciplines. Management as a field of study has grown taking the inputs of so many other disciplines. Management is a dynamic function. Management is a dynamic function of any organization as it keeps on changing to meet the requirements of the organization and at the same time change the organization to the requirement of the business environment. Management sometimes has to work to alter the business environment also. So we can say that management is a dynamic function which makes it more capable to face the challenges brought about by economic, social, political, technological or international factors. Management is system of authority:- management is distribution and use of authority in designating task allocating resources so as to achieve the targets, according to Drucker‖ management is a multipurpose organ that manages a business, manages managers and manages workers and work‖ managers at higher level have more authority than others. Management is both a Science and an Art. Management has an organized body of knowledge "which contains certain universal truths". So it is called a science. Management refers to a distinct class of activities about which knowledge can be obtained and skill in its application acquired. As an art, management implies to the ability and skill of a manager in applying these principles of management and achieving the targets through a team of people and resources available to them. Management is all pervasive. Management function is all pervasive which means we can apply the principles of management in all areas and levels of organization. Management is present in all the activities and department of the organization, and on a broader sense we can say that no function can be done without management. Management is for economic resource management is a factor of production like the money, material, machine, manpower etc, as the success and productivity of any organization depends on the quality of management, this is the reason even when a smaller organization with lesser QIS College of Engineering and Technology, Ongole Page 3
  4. 4. Management Theory & Organizational Behavior other resources are performing better than bigger lot as the management is more efficient and effective in the market place. Management as a Science and as an Art and as both Management as a Science Science is a systematic body of knowledge pertaining to a specific field of study that contains general facts which explains a phenomenon. It establishes cause and effect relationship between two or more variables and underlines the principles governing their relationship. These principles are developed through scientific method of observation and verification through testing. Science is characterized by following main features: 1. Universally acceptance principles – Scientific principles represents basic truth about a particular field of enquiry. These principles may be applied in all situations, at all time & at all places. E.g. – law of gravitation which can be applied in all countries irrespective of the time. Management also contains some fundamental principles which can be applied universally like the Principle of Unity of Command i.e. one man, one boss. This principle is applicable to all type of organization – business or non business. 2. Experimentation & Observation – Scientific principles are derived through scientific investigation & researching i.e. they are based on logic. E.g. the principle that earth goes round the sun has been scientifically proved. Management principles are also based on scientific enquiry & observation and not only on the opinion of Henry Fayol. They have been developed through experiments & practical experiences of large no. of managers. E.g. it is observed that fair remuneration to personal helps in creating a satisfied work force. 3. Cause & Effect Relationship – Principles of science lay down cause and effect relationship between various variables. E.g. when metals are heated, they are expanded. The cause is heating & result is expansion. The same is true for management; therefore it also establishes cause and effect relationship. E.g. lack of parity (balance) between authority & responsibility will lead to ineffectiveness. If you know the cause i.e. lack of balance, the effect can be ascertained easily i.e. in effectiveness. Similarly if workers are given bonuses, fair wages they will work hard but when not treated in fair and just manner, reduces productivity of organization. QIS College of Engineering and Technology, Ongole Page 4
  5. 5. Management Theory & Organizational Behavior 4. Test of Validity & Predictability – Validity of scientific principles can be tested at any time or any number of times i.e. they stand the test of time. Each time these tests will give same result. Moreover future events can be predicted with reasonable accuracy by using scientific principles. E.g. H2 & O2 will always give H2O. Principles of management can also be tested for validity. E.g. principle of unity of command can be tested by comparing two persons – one having single boss and one having 2 bosses. The performance of 1st person will be better than 2nd. It cannot be denied that management has a systematic body of knowledge but it is not as exact as that of other physical sciences like biology, physics, and chemistry etc. The main reason for the inexactness of science of management is that it deals with human beings and it is very difficult to predict their behavior accurately. Since it is a social process, therefore it falls in the area of social sciences. It is a flexible science & that is why its theories and principles may produce different results at different times and therefore it is a behavior science. Ernest Dale has called it as a Soft Science. Management as an Art Art implies application of knowledge & skill to trying about desired results. An art may be defined as personalized application of general theoretical principles for achieving best possible results. Art has the following characters – Practical Knowledge: Every art requires practical knowledge therefore learning of theory is not sufficient. It is very important to know practical application of theoretical principles. E.g. to become a good painter, the person may not only be knowing different colour and brushes but different designs, dimensions, situations etc to use them appropriately. A manager can never be successful just by obtaining degree or diploma in management; he must have also known how to apply various principles in real situations by functioning in capacity of manager. Personal Skill: Although theoretical base may be same for every artist, but each one has his own style and approach towards his job. That is why the level of success and quality of performance differs from one person to another. E.g. there are several qualified painters but M.F. Hussain is recognized for his style. Similarly management as an art is also personalized. Every manager has his own way of managing things based on his knowledge, experience and personality, that is why some managers are known as good managers (like Aditya Birla, Rahul Bajaj) whereas others as bad. QIS College of Engineering and Technology, Ongole Page 5
  6. 6. Management Theory & Organizational Behavior Creativity: Every artist has an element of creativity in line. That is why he aims at producing something that has never existed before which requires combination of intelligence & imagination. Management is also creative in nature like any other art. It combines human and non-human resources in useful way so as to achieve desired results. It tries to produce sweet music by combining chords in an efficient manner. Perfection through practice: Practice makes a man perfect. Every artist becomes more and more proficient through constant practice. Similarly managers learn through an art of trial and error initially but application of management principles over the years makes them perfect in the job of managing. Goal-Oriented: Every art is result oriented as it seeks to achieve concrete results. In the same manner, management is also directed towards accomplishment of pre-determined goals. Managers use various resources like men, money, material, machinery & methods to promote growth of an organization. Thus, we can say that management is an art therefore it requires application of certain principles rather it is an art of highest order because it deals with moulding the attitude and behavior of people at work towards desired goals. Management as both Science and Art Management is both an art and a science. The above mentioned points clearly reveal that management combines features of both science as well as art. It is considered as a science because it has an organized body of knowledge which contains certain universal truth. It is called an art because managing requires certain skills which are personal possessions of managers. Science provides the knowledge & art deals with the application of knowledge and skills. A manager to be successful in his profession must acquire the knowledge of science & the art of applying it. Therefore management is a judicious blend of science as well as an art because it proves the principles and the way these principles are applied is a matter of art. Science teaches to ’know’ and art teaches to ’do’. E.g. a person cannot become a good singer unless he has knowledge about various ragas & he also applies his personal skill in the art of singing. Same way it is not sufficient for manager to first know the principles but he must also apply them in solving various managerial problems that is why, science and art are not mutually exclusive but they are complementary to each other (like tea and biscuit, bread and butter etc.).The old saying that ―Manager are Born‖ has been rejected in favor of ―Managers are Made‖. It has been aptly remarked that management is the oldest of art and youngest of science. To conclude, we can say that science is the root and art is the fruit. QIS College of Engineering and Technology, Ongole Page 6
  7. 7. Management Theory & Organizational Behavior Various Concepts of Management: There are three basic concepts of Management Management as a Discipline: Discipline refers to a field of study having well-defined concepts and principles. When we refer to management as a discipline, we include in it the various relevant concepts and principles, the knowledge of which aids in managing Management as a Group of People: We refer to management as a group of people in which we include all those personnel who perform managerial functions in organizations. We refer to two distinct classes or groups of personnel in the organization. In the first category, we include all those persons who are responsible for managerial functions and in the second category, we include non-managerial personnel. Management as a process: In studying management discipline, we generally refer to management as a process. A process can simply be defined s systematic method of handling activates. However, the management process can be treated as a complex one which can be referred to as an identifiable flow of information through interrelated stages of analysis directed towards the achievement of an objective or set of objective. It is a concept of dynamic rather than static existence in which events and relationships must be seen as dynamic, continuous, and flexible, and as such, must be considered as a whole. Thus, management as a process includes various activities and sub activities. Level of management: It refers to the categories or layers of managerial positions in an organization. The level of management determines the amount of authority and status of the person occupying the position at that level. These managerial positions divided into various categories according to their amount and status, they are known as the level management. Top Level Management(CEO, G M, BOD, President, Vice-president) Mddle Level Management(Departmental managers, seniour manager, plant manager) Lower/ Supervisory Leel Management(foremen, section head, officer executive, engineer, supervisor.) QIS College of Engineering and Technology, Ongole Page 7
  8. 8. Management Theory & Organizational Behavior Managerial Hierarchy consists of: Top-level management or senior level Management Middle level Management. Lower level Management such as supervisors or team leaders Top-level management Require an extensive knowledge of management roles and skills. They have to be very aware of external factors such as markets. Their decisions are generally of a long-term nature Their decisions are made using analytic, directive, conceptual and/or behavioral/participative processes They are responsible for strategic decisions. They have to chalk out the plan and see that plan may be effective in the future. They are executive in nature. These includes board of Directors, CEO’s they comprise small groups but are responsible for overall management they formulate plans, decide objectives & communicate to middle level management. Middle Level of Management The branch managers and departmental managers constitute middle level. They are responsible to the top management for the functioning of their department. They devote more time to organizational and directional functions. In small organization, there is only one layer of middle level of management but in big enterprises, there may be senior and junior middle level management. Their role can be emphasized as – They execute the plans of the organization in accordance with the policies and directives of the top management. They make plans for the sub-units of the organization. They participate in employment & training of lower level management. They interpret and explain policies from top level management to lower level. They are responsible for coordinating the activities within the division or department. It also sends important reports and other important data to top level management. QIS College of Engineering and Technology, Ongole Page 8
  9. 9. Management Theory & Organizational Behavior They evaluate performance of junior managers. They are also responsible for inspiring lower level managers towards better performance. Lower Level of Management Lower level is also known as supervisory / operative level of management. It consists of supervisors, foreman, section officers, superintendent etc. According to R.C. Davis, ―Supervisory management refers to those executives whose work has to be largely with personal oversight and direction of operative employees‖. In other words, they are concerned with direction and controlling function of management. Their activities include – Assigning of jobs and tasks to various workers. They guide and instruct workers for day to day activities. They are responsible for the quality as well as quantity of production. They are also entrusted with the responsibility of maintaining good relation in the organization. They communicate workers problems, suggestions, and recommendatory appeals etc to the higher level and higher level goals and objectives to the workers. They help to solve the grievances of the workers. They supervise & guide the sub-ordinates. They are responsible for providing training to the workers. They arrange necessary materials, machines, tools etc for getting the things done. They prepare periodical reports about the performance of the workers. They ensure discipline in the enterprise. They motivate workers. The main objectives of management:, "A managerial objective is the goal which prescribes definite scope and suggests the efforts of a manager." - George R. Terry In the words of Peter F. Drucker, "Objectives in the key areas are the 'instrument panel' necessary to pilot the business enterprise. Without them the management flies by the 'seat of the pants' without landmarks, without maps and without having flow route before." QIS College of Engineering and Technology, Ongole Page 9
  10. 10. Management Theory & Organizational Behavior To increasing organizational effectiveness. To achieve optimum utilization of various resources. To have co-ordination between various department in the organization. To have co-ordination between various agencies, and company. To control the material quality. To reduces the execution time for various activities of the organization. To control the quality of workmanship. To manage and control economy execution. Functions of Management or Management Functions: Management consists of the functions given below. It is based on Henri Fayol's thinking on the functions of management. Planning: generating plans of action for immediate, short term, medium term and long term periods. Organizing: organizing the resources, particularly human resources, in the best possible manner. Staffing: positioning right people right jobs at right time. Directing (includes leading, motivating, communicating and coordinating): Communicate and coordinate with people to lead and enthuse them to work effectively together to achieve the plans of the organization. Controlling (includes review and monitoring): evaluating the progress against the plans and making corrections either in plans or in execution. Each of these functions is explained in some detail below. 1. Planning: Planning is decision making process. It is making decisions on future course of actions. Planning involves taking decisions on vision, mission, values, objectives, strategies and policies of an organization. Planning is done for immediate, short term, medium term and long term periods. It is a guideline for execution/implementation. It is a measure to check the effectiveness and efficiency of an organization. QIS College of Engineering and Technology, Ongole Page 10
  11. 11. Management Theory & Organizational Behavior 2. Organizing: Organizing involves determination and grouping of the activities. Designing organization structures and departmentation based on this grouping. Defining the roles and responsibilities of the departments and of the job positions within these departments. Defining relationships between departments and job positions. Defining authorities for departments and job positions. 3. Staffing: It includes manpower or human resource planning. Staffing involves recruitment, selection, induction and positioning the people in the organization. Decisions on remuneration packages are part of staffing. Training, retraining, development, mentoring and counseling are important aspects of staffing. It also includes performance appraisals and designing and administering the motivational packages. 4. Directing It is one of the most important functions of management to translate company's plans into execution. It includes providing leadership to people so that they work willingly and enthusiastically. Directing people involves motivating them all the time to enthuse them to give their best. Communicating companies plans throughout the organization is an important directing activity. It also means coordinating various people and their activities. Directing aims at achieving the best not just out of an individual but achieving the best through the groups or teams of people through team building efforts. 5. Controlling It includes verifying the actual execution against the plans to ensure that execution is being done in accordance with the plans. QIS College of Engineering and Technology, Ongole Page 11
  12. 12. Management Theory & Organizational Behavior It measures actual performance against the plans. It sets standards or norms of performance. It measures the effective and efficiency of execution against these standards and the plans. It periodically reviews, evaluates and monitors the performance. If the gaps are found between execution levels and the plans, controlling function involves suitable corrective actions to expedite the execution to match up with the plans or in certain circumstances deciding to make modifications in the plans. Management and administration Management and administration are at times used interchangeably; however, they are two different levels of the organization. The administration is the top level of the organization with the decisive functions. They are responsible for determining the policies and objectives of the organization or the firm. Management, on the other hand is the middle level executive function. They implement the policies and objectives as decided by the administration. The administration includes the people who are either owners or partners of the firm. They usually contribute to the firm’s capital and earn profits or returns on their investment. The main administrative function is handling the business aspects of the firm, such as finance. Other administrative functions usually include planning, organizing, staffing, directing, controlling and budgeting. Administration must integrate leadership and vision, to organize the people and resources, in order to achieve common goals and objectives for the organization. Management usually incorporates the employees of the firm who use their skills for the firm in return for remuneration. Management is responsible for carrying out the strategies of the administration. Motivation is the key factor of a management. Management must motivate and handle the employees. It can be said that management is directly under the control of administration. Further comparison between management and administration: Management Definition Administration Art of getting things done Formulation of broad through others by directing objectives, plans & policies. their efforts towards achievement of pre-determined QIS College of Engineering and Technology, Ongole Page 12
  13. 13. Management Theory & Organizational Behavior goals. Nature executing function, doing decision-making function Scope function, thinking function Decisions within framework set by the Major decisions of an the enterprise as a whole. administration. Level of authority Middle level activity Status Group of managerial personnel Consists of owners who invest who use knowledge their to Top level activity specialized capital in and receive profits fulfill the from an enterprise. objectives of an enterprise. Usage Used in business enterprises. Popular military, with government, educational, and religious organizations. Influence Decisions are influenced by the Influenced by public opinion, values, opinions, beliefs and government policies, customs decisions of the managers. etc. Main functions Motivating and controlling Planning and organizing Abilities Handles the employees. Handles the business aspects such as finance. Discuss the Qualities of a Successful Manager It is easy to find a bad manager, but much harder to find a successful one. So what makes a manager successful? Here are my top ten qualities of a successful manager: 1. Demonstrates integrity - A manager should walk the talk. The old saying, "Lead by example" is the first quality that makes a manager a stand out. QIS College of Engineering and Technology, Ongole Page 13
  14. 14. Management Theory & Organizational Behavior 2. Deals honestly and diplomatically - A manager, who owns their mistakes, deals openly, and honestly with others, earns the respect of those they are trying to lead. 3. Demonstrates flexibility - A manager who is responsive to the needs of the business and the needs of employees, is able to keep his team on target and yet achieve the goals of the business. 4. Shows commitment and reliability - A manager who delivers their promises shows their team that they are reliable and promotes trust. 5. Listens effectively - A manager who 'seeks first to understand, then to be understood' (Dr Steven Covey) is a manager who will always have their finger on the pulse of the business. 6. A good negotiator - A manager who comes to the table prepared to give a little that the outcome is a positive one for everyone, will not only earn the respect of his employees but be guaranteed of the opportunity for further negotiations in the future. 7. A thorough planner - 'If you fail to plan, you plan to fail.' This saying is especially true for managing. A manager is a coach to their team and the team are looking to them for the game plan. 8. Fair - A manager who doesn't take sides, show favoritism or victimize those they are supervising, will earn their trust and in turn, will have more personal power to influence their team for good. 9. Knows how to have fun and has a good sense of humor - A manager who is able to promote a safe and happy work environment where appropriate fun is embraced, will ensure the retention of staff. 10. Seeks to understand their workers - A manager who is able to accurately assess the skills, abilities and personalities of their work team, will be able to develop individual managers to maximize their effectiveness and help them reach their potential, whilst focusing their efforts on the goal. The different roles that managers To meet the many demands of performing their functions, managers assume multiple roles. A role is an organized set of behaviors. Henry Mintzberg has identified ten roles common to the work of all managers. The ten roles are divided into three groups: interpersonal, informational, and decisional. The informational roles link all managerial work together. The interpersonal roles ensure that information is provided. QIS College of Engineering and Technology, Ongole Page 14
  15. 15. Management Theory & Organizational Behavior The decisional roles make significant use of the information. Responsibilities of a managerial position 1. Supervise and manage the overall performance of staff in his department. 2. Achieve business and organization goals, visions and objectives. 3. Analyzing, reporting, giving recommendations and developing strategies on how to improve quality and quantity 4. Involved in employee selection, career development, succession planning and periodic training. 5. Working out compensations and rewards 6. Responsible for the growth and increase in the organizations' finances and earnings. 7. Identifying problems, creating choices and providing alternatives courses of actions. Importance of Management 1. It helps in Achieving Group Goals - It arranges the factors of production, assembles and organizes the resources, integrates the resources in effective manner to achieve goals. It directs group efforts towards achievement of pre-determined goals. By defining objective of organization clearly there would be no wastage of time, money and effort. Management converts disorganized resources of men, machines, money etc. into useful enterprise. These resources are coordinated, directed and controlled in such a manner that enterprise work towards attainment of goals. 2. Optimum Utilization of Resources - Management utilizes all the physical & human resources productively. This leads to efficacy in management. Management provides maximum utilization of scarce resources by selecting its best possible alternate use in industry from out of various uses. It makes use of experts, professional and these services leads to use of their skills, knowledge, and proper utilization and avoids wastage. If employees and machines are producing its maximum there is no under employment of any resources. 3. Reduces Costs - It gets maximum results through minimum input by proper planning and by using minimum input & getting maximum output. Management uses physical, human and QIS College of Engineering and Technology, Ongole Page 15
  16. 16. Management Theory & Organizational Behavior financial resources in such a manner which results in best combination. This helps in cost reduction. 4. Establishes Sound Organization - No overlapping of efforts (smooth and coordinated functions). To establish sound organizational structure is one of the objective of management which is in tune with objective of organization and for fulfillment of this, it establishes effective authority & responsibility relationship i.e. who is accountable to whom, who can give instructions to whom, who are superiors & who are subordinates. Management fills up various positions with right persons, having right skills, training and qualification. All jobs should be cleared to everyone. 5. Establishes Equilibrium - It enables the organization to survive in changing environment. It keeps in touch with the changing environment. With the change is external environment, the initial co-ordination of organization must be changed. So it adapts organization to changing demand of market / changing needs of societies. It is responsible for growth and survival of organization. 6. Essentials for Prosperity of Society - Efficient management leads to better economical production which helps in turn to increase the welfare of people. Good management makes a difficult task easier by avoiding wastage of scarce resource. It improves standard of living. It increases the profit which is beneficial to business and society will get maximum output at minimum cost by creating employment opportunities which generate income in hands. Organization comes with new products and researches beneficial for society. Scientific Management Fredrick Winslow Taylor ( March 20, 1856 – March 21, 1915) commonly known as ’Father of Scientific Management’ started his career as an operator and rose to the position of chief engineer. He conducted various experiments during this process which forms the basis of scientific management. It implies application of scientific principles for studying & identifying management problems.According to Taylor, ―Scientific Management is an art of knowing exactly what you want your men to do and seeing that they do it in the best and cheapest way‖. In Taylors view, if a work is analysed scientifically it will be possible to find one best way to do it. QIS College of Engineering and Technology, Ongole Page 16
  17. 17. Management Theory & Organizational Behavior Hence scientific management is a thoughtful, organized, dual approach towards the job of management against hit or miss or Rule of Thumb. According to Drucker, ―The cost of scientific management is the organized study of work, the analysis of work into simplest element & systematic management of worker’s performance of each element‖. Principles of Scientific Management 1. Development of Science for each part of men’s job (replacement of rule of thumb) a. This principle suggests that work assigned to any employee should be observed, analyzed with respect to each and every element and part and time involved in it. b. This means replacement of odd rule of thumb by the use of method of enquiry, investigation, data collection, analysis and framing of rules. c. Under scientific management, decisions are made on the basis of facts and by the application of scientific decisions. 2. Scientific Selection, Training & Development of Workers a. There should be scientifically designed procedure for the selection of workers. b. Physical, mental & other requirement should be specified for each and every job. c. Workers should be selected & trained to make them fit for the job. d. The management has to provide opportunities for development of workers having better capabilities. e. According to Taylor efforts should be made to develop each employee to his greatest level and efficiency & prosperity. 3. Co-operation between Management & workers or Harmony not discord a. Taylor believed in co-operation and not individualism. b. It is only through co-operation that the goals of the enterprise can be achieved efficiently. c. There should be no conflict between managers & workers. d. Taylor believed that interest of employer & employees should be fully harmonized so as to secure mutually understanding relations between them. 4. Division of Responsibility a. This principle determines the concrete nature of roles to be played by different level of managers & workers. QIS College of Engineering and Technology, Ongole Page 17
  18. 18. Management Theory & Organizational Behavior b. The management should assume the responsibility of planning the work whereas workers should be concerned with execution of task. c. Thus planning is to be separated from execution. 5. Mental Revolution a. The workers and managers should have a complete change of outlook towards their mutual relation and work effort. b. It requires that management should create suitable working condition and solve all problems scientifically. c. Similarly workers should attend their jobs with utmost attention, devotion and carefulness. They should not waste the resources of enterprise. d. Handsome remuneration should be provided to workers to boost up their moral. e. It will create a sense of belongingness among worker. f. They will be disciplined, loyal and sincere in fulfilling the task assigned to them. g. There will be more production and economical growth at a faster rate. 6. Maximum Prosperity for Employer & Employees a. The aim of scientific management is to see maximum prosperity for employer and employees. b. It is important only when there is opportunity for each worker to attain his highest efficiency. c. Maximum output & optimum utilization of resources will bring higher profits for the employer & better wages for the workers. d. There should be maximum output in place of restricted output. e. Both managers & workers should be paid handsomely. Techniques of Scientific Management 1. Time Study a. It is a technique which enables the manager to ascertain standard time taken for performing a specified job. b. Every job or every part of it is studied in detail. c. This technique is based on the study of an average worker having reasonable skill and ability. d. Average worker is selected and assigned the job and then with the help of a stop watch, time is ascertained for performing that particular job. QIS College of Engineering and Technology, Ongole Page 18
  19. 19. Management Theory & Organizational Behavior e. Taylor maintained that Fair day’s work should be determined through observations, experiment and analysis by keeping in view an average worker. Standard Time × Working Hours = Fair Day’s Work 2. Motion Study a. In this study, movement of body and limbs required to perform a job are closely observed. b. In other words, it refers to the study of movement of an operator on machine involved in a particular task. c. The purpose of motion study is to eliminate useless motions and determine the bet way of doing the job. d. By undertaking motion study an attempt is made to know whether some elements of a job can be eliminated combined or their sequence can be changed to achieve necessary rhythm. e. Motion study increases the efficiency and productivity of workers by cutting down all wasteful motions. 3. Functional Foremanship a. Taylor advocated functional foremanship for achieving ultimate specification. b. This technique was developed to improve the quality of work as single supervisor may not be an expert in all the aspects of the work. c. Therefore workers are to be supervised by specialist foreman. d. The scheme of functional foremanship is an extension of principle pf specialization at the supervisory level. QIS College of Engineering and Technology, Ongole Page 19
  20. 20. Management Theory & Organizational Behavior e. Taylor advocated appointment of 8 foramen, 4 at the planning level & other 4 at implementation level. The names & function of these specialist foremen are:  Instruction card clerk concerned with tagging down of instructions according to which workers are required to perform their job  Time & cost clerk is concerned with setting a time table for doing a job & specifying the material and labor cost involved in it.  Route clerk determines the route through which raw materials has to be passed.  Shop Disciplinarians are concerned with making rules and regulations to ensure discipline in the organization.  Gang boss makes the arrangement of workers, machines, tools, workers etc.  Speed boss concerned with maintaining the speed and to remove delays in the production process.  Repair boss concerned with maintenance of machine, tools and equipments.  Inspector is concerned with maintaining the quality of product. 4. Standardization a. It implies the physical attitude of products should be such that it meets the requirements & needs of customers. b. Taylor advocated that tools & equipments as well as working conditions should be standardized to achieve standard output from workers. c. Standardization is a means of achieving economics of production. d. It seems to ensure  The line of product is restricted to predetermined type, form, design, size, weight, quality. Etc  There is manufacture of identical parts and components.  Quality & standards have been maintained.  Standard of performance are established for workers at all levels. 5. Differential Piece Wage Plan a. This tech of wage payment is based on efficiency of worker. b. The efficient workers are paid more wages than inefficient one. c. On the other hand, those workers who produce less than standard no. of pieces are paid wages at lower rate than prevailing rate i.e. worker is penalized for his inefficiency. QIS College of Engineering and Technology, Ongole Page 20
  21. 21. Management Theory & Organizational Behavior d. This system is a source of incentive to workers who improving their efficiency in order to get more wages. e. It also encourages inefficient workers to improve their performance and achieve their standards. f. It leads to mass production which minimizes cost and maximizes profits. 6. Other Techniques a. Various other techniques have been developed to create ordeal relationship between management and workers and also to create better understanding on part of works. b. Those includes use of instruction cards, strict rules & regulations, graphs, slides, charts etc, so as to increase efficiency of workers. Criticism of Scientific Management Although it is accepted that the scientific management enables the management to put resources to its best possible use and manner, yet it has not been spared of severe criticism. Workers Viewpoint Unemployment - Workers feel that management reduces employment opportunities from them through replacement of men by machines and by increasing human productivity less workers are needed to do work leading to chucking out from their jobs. Exploitation - Workers feel they are exploited as they are not given due share in increasing profits which is due to their increased productivity. Wages do not rise in proportion as rise in production. Wage payment creates uncertainty & insecurity (beyond a standard output, there is no increase in wage rate). Monotony - Due to excessive specialization the workers are not able to take initiative on their own. Their status is reduced to being mere cogs in wheel. Jobs become dull. Workers loose interest in jobs and derive little pleasure from work. Weakening of Trade Union - To everything is fixed & predetermined by management. So it leaves no room for trade unions to bargain as everything is standardized, standard output, standard working conditions, standard time etc. This further weakens trade unions, creates a rift between efficient & in efficient workers according to their wages. QIS College of Engineering and Technology, Ongole Page 21
  22. 22. Management Theory & Organizational Behavior Over speeding - the scientific management lays standard output, time so they have to rush up and finish the work in time. These have adverse effect on health of workers. The workers speed up to that standard output, so scientific management drives the workers to rush towards output and finish work in standard time. Employer’s Viewpoint Expensive - Scientific management is a costly system and a huge investment is required in establishment of planning dept., standardization, work study, training of workers. It may be beyond reach of small firms. Heavy food investment leads to increase in overhead costs. Time Consuming - Scientific management requires mental revision and complete reorganizing of organization. A lot of time is required for work, study, standardization & specialization. During this overhauling of organization, the work suffers. Administrative Management - (Contribution of Henri Fayol) Henri Fayol was real father of modern Management. Henri Fayol is the French industrialist in 1841-1925. He was a mining engineer in. Henri Fayol spent his entire working career in French industry; French cool and iron combine of commentary fourchambault. Henri Fayol developed a generaltheory of Business Administration. Henri Fayol was concerned the principles of organization and the function of management. Fayol laid the foundation of management as a separate body of knowledge. He always insisted that if scientific forecasting and proper methods are used in management than company can get satisfactory results. According to Fayol, management was not personal talent; it is a knowledge base skill. Henri Fayol’s Administrative Management is based on six admin activities. They are Technical : Production and manufacture  Managerial : Planning, controlling, co-ordination  Commercial : Purchasing and selling  Financial : Use of capital  Accounting : Asset, Liabilities, cost, profits  Security : Protection of goods and Person QIS College of Engineering and Technology, Ongole Page 22
  23. 23. Management Theory & Organizational Behavior Fayol’s fourteen Principles of management Fayol derived the following fourteen principles.1. Division of work: Division of work means specialization. Each job and work should be divided into small task and should be assigned to specialist of it. 2. Authority and responsibility: Authority means right to give order and command while responsibility means to accomplish objective. 3. Discipline: Discipline is required at every level in every organization. Fayol stated discipline in terms of obedience, application, and respect to superiors. 4. Unity of command: A subordinate should receive order from only one boss. 5. Unity of direction: It means that all the works of an organization must work together to accomplish a common objective in under one plan and head. 6. Subordination of individual interest to common interest: Worker follows the common interest of organization rather than individual. 7. Remuneration: Remuneration should be fair and adequate. It includes both types of incentives financial as well as non financial. 8. Centralization: There should be one central point in organization which exercises overall direction and control of all the parts. 9. Scalar Chain: Scalar chain is the chain or line of command from superior to subordinates. 10. Order: Only proper order can give an efficient management. 11. Equity: Equity creates loyalty and devotion among the employees. 12. Stability of tenure personnel: Security of job for an employee in an organization is very important and pre-requisite condition. Retaining productive employee should always a higher priority of management. 13. Esprit de corps: Management should encourage harmony and proper understandings between workers. Fayol said that in union there is strength. Whole organization should work as a team. 14. Initiative: Manager should be encouraged the employees Initiative for creative working. QIS College of Engineering and Technology, Ongole Page 23
  24. 24. Management Theory & Organizational Behavior Hawthorne Experiment: In 1927, a group of researchers led by Elton Mayo and Fritz Roethlisberger of the Harvard Business School were invited to join in the studies at the Hawthorne Works of Western Electric Company, Chicago. The experiment lasted up to 1932. The Hawthorne Experiments brought out that the productivity of the employees is not the function of only physical conditions of work and money wages paid to them. Productivity of employees depends heavily upon the satisfaction of the employees in their work situation. Mayo’s idea was that logical factors were far less important than emotional factors in determining productivity efficiency. Furthermore, of all the human factors influencing employee behaviour, the most powerful were those emanating from the worker’s participation in social groups. Thus, Mayo concluded that work arrangements in addition to meeting the objective requirements of production must at the same time satisfy the employee’s subjective requirement of social satisfaction at his work place. The Hawthorne experiment consists of four parts. These parts are briefly described below:1. Illumination Experiment. 2. Relay Assembly Test Room Experiment. 3. Interviewing Programme. 4. Bank Wiring Test Room Experiment. 1. Illumination Experiment: This experiment was conducted to establish relationship between output and illumination. When the intensity of light was increased, the output also increased. The output showed an upward trend even when the illumination was gradually brought down to the normal level. Therefore, it was concluded that there is no consistent relationship between output of workers and illumination in the factory. There must be some other factor which affected productivity. 2. Relay Assembly Test Room Experiment: This phase aimed at knowing not only the impact of illumination on production but also other factors like length of the working day, rest hours, and other physical conditions. In this experiment, a small homogeneous work-group of six girls was constituted. These girls were friendly to each other and were asked to work in a very informal atmosphere under the supervision of a researcher. Productivity and morale increased considerably during the period of the experiment. Productivity went on increasing and stabilized at a high level even when all the improvements were taken away and the pre-test conditions were reintroduced. The researchers concluded that socio-psychological factors such as feeling of being QIS College of Engineering and Technology, Ongole Page 24
  25. 25. Management Theory & Organizational Behavior important, recognition, attention, participation, cohesive work-group, and non-directive supervision held the key for higher productivity. 3. Mass Interview Programme: The objective of this programme was to make a systematic study of the employees’ attitudes which would reveal the meaning which their ―working situation‖ has for them. The researchers interviewed a large number of workers with regard to their opinions on work, working conditions and supervision. Initially, a direct approach was used whereby interviews asked questions considered important by managers and researchers. The researchers observed that the replies of the workmen were guarded. Therefore, this approach was replaced by an indirect technique, where the interviewer simply listened to what the workmen had to say. The findings confirmed the importance of social factors at work in the total work environment. 4. Bank Wiring Test Room Experiment: This experiment was conducted by Roethlisberger and Dickson with a view to develop a new method of observation and obtaining more exact information about social groups within a company and also finding out the causes which restrict output. The experiment was conducted to study a group of workers under conditions which were as close as possible to normal. This group comprised of 14 workers. After the experiment, the production records of this group were compared with their earlier production records. It was observed that the group evolved its own production norms for each individual worker, which was made lower than those set by the management. Because of this, workers would produce only that much, thereby defeating the incentive system. Those workers who tried to produce more than the group norms were isolated, harassed or punished by the group. The findings of the study are: Each individual was restricting output.  The group had its own ―unofficial‖ standards of performance.  Individual output remained fairly constant over a period of time.  Informal groups play an important role in the working of an organization. Contributions of the Hawthorne Experiment: Elton Mayo and his associates conducted their studies in the Hawthorne plant of the western electrical company, U.S.A., between 1927 and 1930. According to them, behavioural science methods have many areas of application in management. The important features of the Hawthorne Experiment are:- QIS College of Engineering and Technology, Ongole Page 25
  26. 26. Management Theory & Organizational Behavior 1. A business organization is basically a social system. It is not just a techno-economic system. 2. The employer can be motivated by psychological and social wants because his behaviour is also influenced by feelings, emotions and attitudes. Thus economic incentives are not the only method to motivate people. 3. Management must learn to develop co-operative attitudes and not rely merely on command. 4. Participation becomes an important instrument in human relations movement. In order to achieve participation, effective two-way communication network is essential. 5. Productivity is linked with employee satisfaction in any business organization. Therefore management must take greater interest in employee satisfaction. 6. Group psychology plays an important role in any business organization. We must therefore rely more on informal group effort. 7. The neo-classical theory emphasizes that man is a living machine and he is far more important than the inanimate machine. Hence, the key to higher productivity lies in employee morale. High morale results in higher output. Maslow's Hierarchy of Needs: Maslow's Hierarchy of Needs is a theory in psychology that Abraham Maslow proposed in his 1943 paper A Theory of Human Motivation, which he subsequently extended. His theory contends that as humans meet 'basic needs', they seek to satisfy successively 'higher needs' that occupy a set hierarchy. Maslow studied exemplary people such as Albert Einstein, Jane Addams, Eleanor Roosevelt, and Frederick Douglass rather than mentally ill orneurotic people, writing that "the study of crippled, stunted, immature, and unhealthy specimens can yield only a cripple psychology and a cripple philosophy." QIS College of Engineering and Technology, Ongole Page 26
  27. 27. Management Theory & Organizational Behavior This diagram shows Maslow's hierarchy of needs, represented as a pyramid with the more primitive needs at the bottom. Maslow's hierarchy of needs is often depicted as a pyramid consisting of five levels: the four lower levels are grouped together as deficiency needs associated with physiological needs, while the top level is termed growth needs associated with psychological needs. While deficiency needs must be met, growth needs are continually shaping behaviour. The basic concept is that the higher needs in this hierarchy only come into focus once all the needs that are lower down in the pyramid are mainly or entirely satisfied. Physiological needs Physiological needs are the physical requirements for human survival. If these requirements are not met, the human body cannot function properly and will ultimately fail. Physiological needs are thought to be the most important; they should be met first. Air, water, and food are metabolic requirements for survival in all animals, including humans. Clothing and shelter provide necessary protection from the elements. While maintaining an adequate birth rate shapes the intensity of the human sexual instinct, sexual competition may also shape said instinct. Safety needs With their physical needs relatively satisfied, the individual's safety needs take precedence and dominate behavior. In the absence of physical safety – due to war, natural disaster, family violence, childhood abuse, etc. – people may (re-)experience post-traumatic stress disorder or trans generational trauma. In QIS College of Engineering and Technology, Ongole Page 27
  28. 28. Management Theory & Organizational Behavior the absence of economic safety – due to economic crisis and lack of work opportunities – these safety needs manifest themselves in ways such as a preference for job security, grievance procedures for protecting the individual from unilateral authority, savings accounts, insurance policies, reasonable disability accommodations, etc. This level is more likely to be found in children because they generally have a greater need to feel safe. Safety and Security needs include: Personal security Financial security Health and well-being Safety net against accidents/illness and their adverse impacts Love and belonging After physiological and safety needs are fulfilled, the third level of human needs is interpersonal and involves feelings of belongingness. This need is especially strong in childhood and can override the need for safety as witnessed in children who cling to abusive parents. Deficiencies within this level of Maslow's hierarchy – due to hospitalism, neglect, shunning, ostracism, etc. – can impact the individual's ability to form and maintain emotionally significant relationships in general, such as: Friendship Intimacy Family According to Maslow, humans need to feel a sense of belonging and acceptance among their social groups, regardless if these groups are large or small. For example, some large social groups may include clubs, co-workers, religious groups, professional organizations, sports teams, and gangs. Some examples of small social connections include family members, intimate partners, mentors, colleagues, and confidants. Humans need to love and be loved – both sexually and non-sexually – by others.[2] Many people become susceptible to loneliness, social anxiety, and clinical depression in the absence of this love or belonging element. This need for belonging may overcome the physiological and security needs, depending on the strength of the peer pressure. Esteem All humans have a need to feel respected; this includes the need to have self-esteem and self-respect. Esteem presents the typical human desire to be accepted and valued by others. People often engage in a profession or hobby to gain recognition. These activities give the person a sense of contribution or value. Low self-esteem or an inferiority complex may result from imbalances during this level in the hierarchy. QIS College of Engineering and Technology, Ongole Page 28
  29. 29. Management Theory & Organizational Behavior People with low self-esteem often need respect from others; they may feel the need to seek fame or glory. However, fame or glory will not help the person to build their self-esteem until they accept who they are internally. Psychological imbalances such as depression can hinder the person from obtaining a higher level of self-esteem or self-respect. Self-actualization "What a man can be, he must be." This quotation forms the basis of the perceived need for selfactualization. This level of need refers to what a person's full potential is and the realization of that potential. Maslow describes this level as the desire to accomplish everything that one can, to become the most that one can be. Individuals may perceive or focus on this need very specifically. For example, one individual may have the strong desire to become an ideal parent. In another, the desire may be expressed athletically. For others, it may be expressed in paintings, pictures, or inventions. As previously mentioned, Maslow believed that to understand this level of need, the person must not only achieve the previous needs, but master them. Herzberg's Two Factor Theory: The two-factor theory (also known as Herzberg's motivation-hygiene theory and dual-factor theory) states that there are certain factors in the workplace that cause job satisfaction, while a separate set of factors cause dissatisfaction. It was developed by Frederick Herzberg, a psychologist, who theorized that job satisfaction and job dissatisfaction act independently of each other. Two-factor theory fundamentals: Attitudes and their connection with industrial mental health are related to Maslow's theory of motivation. His findings have had a considerable theoretical, as well as a practical, influence on attitudes toward administration. According to Herzberg, individuals are not content with the satisfaction of lower-order needs at work, for example, those associated with minimum salary levels or safe and pleasant working conditions. Rather, individuals look for the gratification of higher-level psychological needs having to do with achievement, recognition, responsibility, advancement, and the nature of the work itself. So far, this appears to parallel Maslow's theory of a need hierarchy. However, Herzberg added a new dimension to this theory by proposing a two-factor model of motivation, based on the notion that the presence of one set of job characteristics or incentives leads to worker satisfaction at work, while another and separate set of job characteristics leads to dissatisfaction at work. Thus, satisfaction and dissatisfaction are not on a continuum with one increasing as the other diminishes, but are independent phenomena. This theory suggests that to improve QIS College of Engineering and Technology, Ongole Page 29
  30. 30. Management Theory & Organizational Behavior job attitudes and productivity, administrators must recognize and attend to both sets of characteristics and not assume that an increase in satisfaction leads to decrease in unpleasurable dissatisfaction. The two-factor, or motivation-hygiene theory, developed from data collected by Herzberg from interviews with a large number of engineers and accountants in the Pittsburgh area. From analyzing these interviews, he found that job characteristics related to what an individual does — that is, to the nature of the work one performs — apparently have the capacity to gratify such needs as achievement, competency, status, personal worth, and self-realization, thus making him happy and satisfied. However, the absence of such gratifying job characteristics does not appear to lead to unhappiness and dissatisfaction. Instead, dissatisfaction results from unfavorable assessments of such job-related factors as company policies, supervision, technical problems, salary, interpersonal relations on the job, and working conditions. Thus, if management wishes to increase satisfaction on the job, it should be concerned with the nature of the work itself — the opportunities it presents for gaining status, assuming responsibility, and for achieving self-realization. If, on the other hand, management wishes to reduce dissatisfaction, then it must focus on the job environment — policies, procedures, supervision, and working conditions.[1] If management is equally concerned with both, (as is usually the case), then managers must give attention to both sets of job factors. The theory was based around interviews with 203 American accountants and engineers in Pittsburgh, chosen because of their professions' growing importance in the business world. The subjects were asked to relate times when they felt exceptionally good or bad about their present job or any previous job, and to provide reasons, and a description of the sequence of events giving rise to that positive or negative feeling. Here is the description of this interview analysis: Briefly, we asked our respondents to describe periods in their lives when they were exceedingly happy and unhappy with their jobs. Each respondent gave as many "sequences of events" as he could that met certain criteria—including a marked change in feeling, a beginning and an end, and contained some substantive description other than feelings and interpretations... The proposed hypothesis appears verified. The factors on the right that led to satisfaction (achievement, intrinsic interest in the work, responsibility, and advancement) are mostly unipolar; that is, they contribute very little to job dissatisfaction. Conversely, the dis-satisfiers (company policy and QIS College of Engineering and Technology, Ongole Page 30
  31. 31. Management Theory & Organizational Behavior administrative practices, supervision, interpersonal relationships, working conditions, and salary) contribute very little to job satisfaction. Two-factor theory distinguishes between: Motivators (e.g. challenging work, recognition, responsibility) that give positive satisfaction, arising from intrinsic conditions of the job itself, such as recognition, achievement, or personal growth, and Hygiene factors (e.g. status, job security, salary, fringe benefits, work conditions) that do not give positive satisfaction, though dissatisfaction results from their absence. These are extrinsic to the work itself, and include aspects such as company policies, supervisory practices, or wages/salary. Essentially, hygiene factors are needed to ensure an employee is not dissatisfied. Motivation factors are needed to motivate an employee to higher performance. Herzberg also further classified our actions and how and why we do them, for example, if you perform a work related action because you have to then that is classed as "movement", but if you perform a work related action because youwant to then that is classed as "motivation". SOCIAL RESPONSIBILITIES OF MANAGEMENT Social responsibility towards Consumers Social responsibility towards share holders Social responsibility towards employees Social responsibility towards owners Business Social responsibility towards government QIS College of Engineering and Technology, Ongole Social responsibility towards society Page 31
  32. 32. Management Theory & Organizational Behavior Introduction:Social responsibility of the business is the main objective or principle of the business which help for survival and long run of business in the market. The survival of business or smooth running of the business is always supported by various factors such as Government, Consumer, Society, Share holders etc. The main responsibility of the business is to satisfy all these factors. Unless these factors are satisfied no business can survive for long time. Definition: social responsibility [koontz]:―It is a serious consideration, by the corporate sector, of the impact of, its actions, on society.‖ Social responsiveness: [koontz]:―It is the ability of the company to relate its operations and policies to the social environment in ways that are mutually beneficial, to the company and society as well.‖ 1. Responsibility towards the consumer:The primary responsibility of the business man is to satisfy the consumer by manufacturing suitable and good quality of product at right price, Satisfying needs and wants of the customer by giving after sakes service and satisfying them by providing various sales offers like discounts, 50% extra, Travel trip to foreign schemes etc. 1) Customer is a king and there is consumer sovereignty. This means that the corporate business sector obliged to cater to the needs of the consumers. This is the primary obligation. This obligation is to satisfy the needs of the consumers 2) Business has to ensure that the goods/services marketed must live up to the expected standards with regard to quality, quantity, cost, durability etc., 3) To maximize the consumer satisfactions with regard to quality aspect, the company must make its association with quality association viz; ISI, Agmark etc. clear to audience. 4) Continues supply of spare parts and good after sales service facility are also important obligations to be discharged. 2. Responsibility towards Society:It includes infrastructure development in the society, providing employment opportunity, optimum utilization of local resources, providing quality products to the society, implementing QIS College of Engineering and Technology, Ongole Page 32
  33. 33. Management Theory & Organizational Behavior ethical aspects in business like pollution control, optimum utilization of resources and protecting the society from pollution and adopting some villages nearby and developing them. 3. Responsibility towards the Government:Business responsibility towards the government means paying taxes to the government without postponing or delay, implementation of government reservations in organization, paying salary to employees according to the government norms, providing welfare facilities to the employees like provident fund, Employee state insurance etc according to government rules, producing quality products according to government standards (i.e. ISI) and finally developing the infrastructure in that location. It also includes providing employment to the local people.  To follow fair trade policies and practices.  Business must be a good corporate citizen. It must be good and prompt at the payment of all taxes to the government.  Business sector must comply with all legal frame work.  In all possible ways, corporate sector has to help the government and the society in general  Not to bribe Government officials. 4. Responsibility towards employees:It involves activities like giving preference to merit candidates, providing proper training to employees, implementing suitable incentives and various welfare facilities like insurance, provident fund, gratuity fund etc. It focuses on achieving employee satisfaction and employee cooperation.  Owners and management should be kind, just and considerate towards employees.  Good human resource management is needed.  Motivation and morale are sought to be developed.  Sense of belongingness must be promoted.  The treatment should be such that employees are stable with a lot of loyalty and commitment. 5. Responsibility towards share holders:Responsibility of the business towards the share holders is to sell their shares to share holders. Management has to run the organization and gain the profits. This profit should be distributed among the share holders rationally. They had to satisfy the share holders by providing adequate QIS College of Engineering and Technology, Ongole Page 33
  34. 34. Management Theory & Organizational Behavior information about the company and also by running the organization effectively by gaining profits and increase market value and share in the market.  Capital invested by the share holders is the hard earned money. It shall be utilized and safeguarded best. This is how the share holders are to be safe guarded.  Ensuring a stable rate of dividend, though not a high rate, is a minimum obligation to be met.  From time to time, the share holders must be informed of authentic and reliable information about the progress (or) otherwise of the organization.  Share holders also must never be misdirected and misled by the faulty accounting information. There must be a great deal of transparency in what they are doing, what they did and what they are going to do about.  There must be good corporate Governance. Etc., 6. Responsibility towards Owner:Manager has to satisfy all the responsibilities given to him. He had to satisfy all the above said factors and he had to satisfy him self by receiving equal profit for his efforts. Towards Trade Unions:  Normally, company and Trade Union are considered natural enemies. This must be replaced. Management must consider the trade unions as its friend but not a foe.  Company should always develop a positive attitude towards trade unions.  Good and cordial relations are sought to be promoted.  Collective bargaining and participative management concept must be given weightage and implemented etc. Thus, in all these possible ways, the business organizations will be discharging its obligations. Role of the management is to appreciate the value of systems concept that there is a lot of interdependence between companies on the one hand and the society on the other hand. QIS College of Engineering and Technology, Ongole Page 34
  35. 35. Management Theory & Organizational Behavior PLANNING A basic management function involving formulation of one or more detailed plans to achieve optimum balance of needs or demands with the available resources. The planning process (1) identifies the goals or objectives to be achieved, (2) formulates strategies to achieve them, (3) arranges or creates the means required, and (4) implements, directs, and monitors all steps in their proper sequence. Meaning and Concept of Planning: In simple words, planning is deciding in advance what is to be done, when where, how and by whom it is to be done. Planning bridges the gap from where we are to where we want to go. It includes the selection of objectives, policies, procedures and programmes from among alternatives. A plan is a predetermined course of action to achieve a specified goal. It is an intellectual process characterized by thinking before doing. It is an attempt on the part of manager to anticipate the future in order to achieve better performance. Planning is the primary function of management. Definition of Planning: According to Koontz and O' Donnell, "Planning is an intellectual process, conscious determination of course of action, the basing of decision on purpose, facts and considered estimates. Nature / Characteristics of Planning: 1. Planning is an Intellectual Process: Planning is an intellectual process of thinking in advance. It is a process of deciding the future on the series of events to follow. Planning is a process where a number of steps are to be taken to decide the future course of action. Managers or executives have to consider various courses of action, achieve the desired goals, go in details of the pros and cons of every course of action and then finally decide what course of action may suit them best. 2. Planning Contributes to the Objectives: Planning contributes positively in attaining the objectives of the business enterprise. Since plans are there from the very first stage of operation, the management is able to handle every problem successfully. Plan try to set everything right. A purposeful, sound and effective planning process knows how and when to tackle a problem. This leads to success. Objectives thus are easily achieved. QIS College of Engineering and Technology, Ongole Page 35
  36. 36. Management Theory & Organizational Behavior 3. Planning is a Primary Function of Management: Planning precedes other functions in the management process. Certainly, setting of goals to be achieved and lines of action to be followed precedes the organization, direction, supervision and control. No doubt, planning precedes other functions of management. It is primary requisite before other managerial functions step in. But all functions are inter-connected. It is mixed in all managerial functions but there too it gets precedence. It thus gets primary everywhere. 4. A continuous Process: Planning is a continuous process and a never ending activity of a manager in an enterprise based upon some assumptions which may or may not come true in the future. Therefore, the manager has to go on modifying revising and adjusting plans in the light of changing circumstances. According to George R. Terry, "Planning is a continuous process and there is no end to it. It involves continuous collection, evaluation and selection of data, and scientific investigation and analysis of the possible alternative courses of action and the selection of the best alternative. 5. Planning Pervades Managerial Activities: From primary of planning follows pervasiveness of planning. It is the function of every managerial personnel. The character, nature and scope of planning may change fro personnel to personnel but the planning as an action remains intact. According to Billy E. Goetz, "Plans cannot make an enterprise successful. Action is required, the enterprise must operate managerial planning seeks to achieve a consistent, coordinated structure of operations focused on desired trends. Without plans, action must become merely activity producing nothing but chaos." 6. Role, Significance, Importance & Advantages of Planning: An organisation without planning is like a sailboat minus its rudder. Without planning, organisation, are subject to the winds of organizational change. Planning is one of the most important and crucial functions of management. According to Koontz and O'Donnell, "Without planning business becomes random in nature and decisions become meaningless and adhoc choices." According to Geroge R. Terry, "Planning is the foundation of most successful actions of any enterprise." Planning becomes necessary due to the following reasons: 7. Reduction of Uncertainty: Future is always full of uncertainties. A business organisation has to function in these uncertainties. It can operate successfully if it is able to predict the uncertainties. Some of the uncertainties can be predicted by undertaking systematic. Some of the uncertainties can be predicted by undertaking systematic forecasting. Thus, planning helps in foreseeing QIS College of Engineering and Technology, Ongole Page 36
  37. 37. Management Theory & Organizational Behavior uncertainties which may be caused by changes in technology, fashion and taste of people, government rules and regulations, etc. 8. Better Utilization of Resources: An important advantage of planning is that it makes effective and proper utilization of enterprise resources. It identifies all such available resources and makes optimum use of these resources. 9. Increases Organizational Effectiveness: Planning ensures organizational effectiveness. Effectiveness ensures that the organisation is in a position to achieve its objective due to increased efficiency of the organisation. 10. Reduces the Cost of Performance: Planning assists in reducing the cost of performance. It includes the selection of only one course of action amongst the different courses of action that would yield the best results at minimum cost. It removes hesitancy, avoids crises and chaos, eliminates false steps and protects against improper deviations. 11. Concentration on Objectives: It is a basic characteristic of planning that it is related to the organizational objectives. All the operations are planned to achieve the organizational objectives. Planning facilitates the achievement of objectives by focusing attention on them. It requires the clear definition of objectives so that most appropriate alternative courses of action are chosen. 12. Helps in Co-ordination: Good plans unify the interdepartmental activity and clearly lay down the area of freedom in the development of various sub-plans. Various departments work in accordance with the overall plans of the organisation. Thus, there is harmony in the organisation, and duplication of efforts and conflict of jurisdiction are avoided. 13. Makes Control Effective: Planning and control are inseparable in the sense that unplanned action cannot be controlled because control involves keeping activities on the predetermined course by rectifying deviations from plans. Planning helps control by furnishing standards of performance. 14. Encouragement to Innovation: Planning helps innovative and creative thinking among the managers because many new ideas come to the mind of a manager when he is planning. It creates a forward-looking attitude among the managers. 15. Increase in Competitive Strength: Effective planning gives a competitive edge to the enterprise over other enterprises that do not have planning or have ineffective planning. This is because planning may involve expansion of capacity, changes in work methods, changes in quality, anticipation of tastes and fashions of people and technological changes etc. QIS College of Engineering and Technology, Ongole Page 37
  38. 38. Management Theory & Organizational Behavior 16. Delegation is Facilitated: A good plan always facilitates delegation of authority in a better way to subordinates. Steps involved in Planning: Planning is a process which embraces a number of steps to be taken. Planning is an intellectual exercise and a conscious determination of courses of action. Therefore, it requires courses of action. The planning process is valid for one organisation and for one plan, may not be valid for other organizations or for all types of plans, because various factors that go into planning process may differ from organisation to organisation or from plan to plan. For example, planning process for a large organisation may not be the same for a small organisation. However, the major steps involved in the planning process of a major organisation or enterprise are as follows: 1. Establishing objectives: The first and primary step in planning process is the establishment of planning objectives or goals. Definite objectives, in fact, speak categorically about what is to be done, where to place the initial emphasis and the things to be accomplished by the network of policies, procedures, budgets and programmes, the lack of which would invariably result in either faulty or ineffective planning. It needs mentioning in this connection that objectives must be understandable and rational to make planning effective. Because the major objective, in all enterprise, needs be translated into derivative objective, accomplishment of enterprise objective needs a concrete endeavor of all the departments. 2. Establishment of Planning Premises: Planning premises are assumptions about the future understanding of the expected situations. These are the conditions under which planning activities are to be undertaken. These premises may be internal or external. Internal premises are internal variables that affect the planning. These include organizational polices, various resources and the ability of the organisation to withstand the environmental pressure. External premises include all factors in task environment like political, social technological, competitors' plans and actions, government policies, market conditions. Both internal factors should be considered in formulating plans. At the top level mainly external premises are considered. As one moves downward, internal premises gain importance. 3. Determining Alternative Courses: The next logical step in planning is to determine and evaluate alternative courses of action. It may be mentioned that there can hardly be any occasion when there are no alternatives. And it is most likely that alternatives properly assessed may QIS College of Engineering and Technology, Ongole Page 38
  39. 39. Management Theory & Organizational Behavior prove worthy and meaningful. As a matter of fact, it is imperative that alternative courses of action must be developed before deciding upon the exact plan. 4. Evaluation of Alternatives: Having sought out the available alternatives along with their strong and weak points, planners are required to evaluate the alternatives giving due weight-age to various factors involved, for one alternative may appear to be most profitable involving heavy cash outlay whereas the other less profitable but involve least risk. Likewise, another course of action may be found contributing significantly to the company's long-range objectives although immediate expectations are likely to go unfulfilled. 5. Evidently, evaluation of alternative is a must to arrive at a decision. Otherwise, it would be difficult to choose the best course of action in the perspective of company needs and resources as well as objectives laid down. 6. Selecting a Course of Action: The fifth step in planning is selecting a course of action from among alternatives. In fact, it is the point of decision-making-deciding upon the plan to be adopted for accomplishing the enterprise objectives. 7. Formulating Derivative Plans: To make any planning process complete the final step is to formulate derivative plans to give effect to and support the basic plan. For example, if Indian Airlines decide to run Jumbo Jets between Delhi an Patna, obliviously, a number of derivative plans have to be framed to support the decision, e.g., a staffing plan, operating plans for fuelling, maintenance, stores purchase, etc. In other words, plans do not accomplish themselves. They require to be broken down into supporting plans. Each manager and department of the organisation is to contribute to the accomplishment of the master plan on the basis of the derivative plans. 8. Establishing Sequence of Activities: Timing an sequence of activities are determined after formulating basic and derivative plans, so that plans may be put into action. Timing is an essential consideration in planning. It gives practical shape and concrete form to the programmes. The starting and finishing times are fixed for each piece of work, so as to indicate when the within what time that work is to be commenced and completed. Bad timing of programmes results in their failure. To maintain a symmetry of performance and a smooth flow of work, the sequence of operation shaped be arranged carefully by giving priorities to some work in preference to others. Under sequence it should be decided as to who will don what and at what time. QIS College of Engineering and Technology, Ongole Page 39
  40. 40. Management Theory & Organizational Behavior 9. Feedback or Follow-up Action: Formulating plans and chalking out of programmes are not sufficient, unless follow-up action is provided to see that plans so prepared and programmes chalked out are being carried out in accordance with the plan and to see whether these are not kept in cold storage. It is also required to see whether the plan is working well in the present situation. If conditions have changed, the plan current plan has become outdated or inoperative it should be replaced by another plan. A regular follow-up is necessary and desirable from effective implementation and accomplishment of tasks assigned. 10. The plan should be communicated to all persons concerned in the organisation. Its objectives and course of action must be clearly defined leaving no ambiguity in the minds of those who are responsible for its execution. Planning is effective only when the persons involved work in a team spirit and all are committed to the objectives, policies, programmes, strategies envisaged in the plan. Management by Objectives (MBO) Management by objectives (MBO), also known as management by results (MBR), is a process of defining objectives within an organization so that management and employees agree to the objectives and understand what they need to do in the organization in order to achieve them. The term "management by objectives" was first popularized by Peter Drucker in his 1954 book The Practice of Management. The essence of MBO is participative goal setting, choosing course of actions and decision making. An important part of the MBO is the measurement and the comparison of the employee’s actual performance with the standards set. Ideally, when employees themselves have been involved with the goal setting and choosing the course of action to be followed by them, they are more likely to fulfill their responsibilities. According to George S. Odiorne, the system of management by objectives can be described as a process whereby the superior and subordinate jointly identify its common goals, define each individual's major areas of responsibility in terms of the results expected of him, and use these measures as guides for operating the unit and assessing the contribution of each of its members. QIS College of Engineering and Technology, Ongole Page 40
  41. 41. Management Theory & Organizational Behavior Definition of MBO: According to John Humble, MBO is "a dynamic system which seeks to integrate the company's needs to clarify and achieve its profits and growth goals with the manager's need to contribute and develop himself. It is a demanding and rewarding style of managing a business." Unique features and advantages of the MBO process: Behind the principle of Management by Objectives (MBO) is for employees to have a clear understanding of the roles and responsibilities expected of them. Then they can understand how their activities relate to the achievement of the organization's goal. Also places importance on fulfilling the personal goals of each employee. Some of the important features and advantages of MBO are: 1. Motivation – Involving employees in the whole process of goal setting and increasing employee empowerment. This increases employee job satisfaction and commitment. 2. Better communication and coordination – Frequent reviews and interactions between superiors and subordinates helps to maintain harmonious relationships within the organization and also to solve many problems. 3. Clarity of goals 4. Subordinates tend to have a higher commitment to objectives they set for themselves than those imposed on them by another person. 5. Managers can ensure that objectives of the subordinates are linked to the organization's objectives. 6. Everybody will be having a common goal for whole organization. That means, it is a directive principle of management. QIS College of Engineering and Technology, Ongole Page 41
  42. 42. Management Theory & Organizational Behavior Features of Management by Objectives:1. Superior-subordinate participation: MBO requires the superior and the subordinate to recognize that the development of objectives is a joint project/activity. They must be jointly agree and write out their duties and areas of responsibility in their respective jobs. 2. Joint goal-setting: MBO emphasizes joint goal-setting that are tangible, verifiable and measurable. The subordinate in consultation with his superior sets his own short-term goals. However, it is examined both by the superior and the subordinate that goals are realistic and attainable. In brief, the goals are to be decided jointly through the participation of all. 3. Joint decision on methodology: MBO focuses special attention on what must be accomplished (goals) rather than how it is to be accomplished (methods). The superior and the subordinate mutually devise methodology to be followed in the attainment of objectives. They also mutually set standards and establish norms for evaluating performance. QIS College of Engineering and Technology, Ongole Page 42
  43. 43. Management Theory & Organizational Behavior 4. Makes way to attain maximum result: MBO is a systematic and rational technique that allows management to attain maximum results from available resources by focussing on attainable goals. It permits lot of freedom to subordinate to make creative decisions on his own. This motivates subordinates and ensures good performance from them. 5. Support from superior: When the subordinate makes efforts to achieve his goals, superior's helping hand is always available. The superior acts as a coach and provides his valuable advice and guidance to the subordinate. This is how MBO facilitates effective communication between superior and subordinates for achieving the objectives/targets set. Steps in Management By Objectives Planning:1. Goal setting: The first phase in the MBO process is to define the organizational objectives. These are determined by the top management and usually in consultation with other managers. Once these goals are established, they should be made known to all the members. In setting objectives, it is necessary to identify "Key-Result Areas' (KRA). 2. Manager-Subordinate involvement: After the organizational goals are defined, the subordinates work with the managers to determine their individual goals. In this way, everyone gets involved in the goal setting. 3. Matching goals and resources: Management must ensure that the subordinates are provided with necessary tools and materials to achieve these goals. Allocation of resources should also be done in consultation with the subordinates. 4. Implementation of plan: After objectives are established and resources are allocated, the subordinates can implement the plan. If any guidance or clarification is required, they can contact their superiors. 5. Review and appraisal of performance: This step involves periodic review of progress between manager and the subordinates. Such reviews would determine if the progress is satisfactory or the subordinate is facing some problems. Performance appraisal at these reviews should be conducted, based on fair and measurable standards. Essential Conditions for Successful Execution of MBO: 1. Support from all: In order that MBO succeeds, it should get support and co-operation from the management. MBO must be tailored to the executive's style of managing. No MBO programme QIS College of Engineering and Technology, Ongole Page 43
  44. 44. Management Theory & Organizational Behavior can succeed unless it is fully accepted by the managers. The subordinates should also clearly understand that MBO is the policy of the Organisation and they have to offer cooperation to make it successful. It should be a programme of all and not a programme imposed on them. 2. Acceptance of MBO programme by managers: In order to make MBO programme successful, it is fundamentally important that the managers themselves must mentally accept it as a good or promising programme. Such acceptances will bring about deep involvement of managers. If manages are forced to accept NIBO programme, their involvement will remain superfluous at every stage. The employees will be at the receiving-end. They would mostly accept the lines of action initiated by the managers. 3. Training of managers: Before the introduction of MBO programme, the managers should be given adequate training in MBO philosophy. They must be in a position to integrate the technique with the basic philosophy of the company. It is but important to arrange practice sessions where performance objectives are evaluated and deviations are checked. The managers and subordinates are taught to set realistic goals, because they are going to be held responsible for the results. 4. Organizational commitment: MBO should not be used as a decorative piece. It should be based on active support, involvement and commitment of managers. MBO presents a challenging task to managers. They must shift their capabilities from planning for work to planning for accomplishment of specific goals. Koontz rightly observes, "An effective programme of managing by objective must be woven into an entire pattern and style of managing. It cannot work as a separate technique standing alone." 5. Allocation of adequate time and resources: A well-conceived MBO programme requires three to five years of operation before it provides fruitful results. Managers and subordinates should be so oriented that they do not look forward to MBO for instant solutions. Proper time and resources should be allocated and persons are properly trained in the philosophy of MBO. 6. Provision of uninterrupted information feedback: Superiors and subordinates should have regular information available to them as to how well subordinate's goal performance is progressing. Over and above, regular performance appraisal sessions, counseling and encouragement to subordinates should be given. Superiors who compliment and encourage subordinates with pay rise and promotions provide enough motivation for peak performance. QIS College of Engineering and Technology, Ongole Page 44
  45. 45. Management Theory & Organizational Behavior Advantages: 1. Develops result-oriented philosophy: MBO is a result-oriented philosophy. It does not favor management by crisis. Managers are expected to develop specific individual and group goals, develop appropriate action plans, properly allocate resources and establish control standards. It provides opportunities and motivation to staff to develop and make positive contribution in achieving the goals of an Organisation. 2. Formulation of dearer goals: Goal-setting is typically an annual feature. MBO produces goals that identify desired/expected results. Goals are made verifiable and measurable which encourage high level of performance. They highlight problem areas and are limited in number. The meeting is of minds between the superior and the subordinates. Participation encourages commitment. This facilitates rapid progress of an Organisation. In brief, formulation of realistic objectives is me benefit of M[BO. 3. Facilitates objective appraisal: NIBO provides a basis for evaluating a person's performance since goals are jointly set by superior and subordinates. The individual is given adequate freedom to appraise his own activities. Individuals are trained to exercise discipline and self control. Management by self-control replaces management by domination in the MBO process. Appraisal becomes more objective and impartial. 4. Raises employee morale: Participative decision-making and two-way communication encourage the subordinate to communicate freely and honestly. Participation, clearer goals and improved communication will go a long way in improving morale of employees. 5. Facilitates effective planning: MBO programmes sharpen the planning process in an Organisation. It compels managers to think of planning by results. Developing action plans, providing resources for goal attainment and discussing and removing obstacles demand careful planning. In brief, MBO provides better management and better results. 6. Acts as motivational force: MBO gives an individual or group, opportunity to use imagination and creativity to accomplish the mission. Managers devote time for planning results. Both appraiser and appraise are committed to the same objective. Since MBO aims at providing clear targets and their order of priority, employees are motivated. 7. Facilitates effective control: Continuous monitoring is an essential feature of MBO. This is useful for achieving better results. Actual performance can be measured against the standards QIS College of Engineering and Technology, Ongole Page 45