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1. ME398 Industrial Management
III/IV B.Tech. (all branches)
Functions of Management
KMM

2. Three Waves That Changed the World
• Agriculture
– Until the late nineteenth century, all economies were
agrarian.
• Industrialization
– From the late 1800s until the 1960s, most developed
countries moved from agrarian societies to industrial
societies.
• Information
– Information technology is transforming society from
its manufacturing focus to one of service.

3. The Changing Economy
Old Economy
• National borders serve to limit
competition
• Job opportunities are for blue-
collar industrial workers
• Population is relatively
homogeneous
• Customers get what business
chooses to give them
New Economy
• National borders no longer define
an organization’s operating
boundaries
• Job opportunities are for
knowledge workers
• Population is characterized by
cultural diversity
• Customer needs drive business

4. The Industrial Revolution’s Influence On
Management Practices
• Industrial revolution
– Machine power began to substitute for human power
• Lead to mass production of economical goods
– Improved and less costly transportation systems
became available
• Created larger markets for goods.
– Larger organizations developed to serve larger
markets
• Created the need for formalized management practices.

5. Nature of Management
a) Management is a social process
b) Management also denotes a ‘body of people’
involved in decision making
c) Management is omnipresent and universal
d) It is an inexact science
e) It is complex
f) Management is situational in nature
g) Management is a profession
h) Management is inter-disciplinary
i) Management has four types of resources – the
four M’s (Men, materials, machines and money
(the list is only inclusive).

6. Importance of Management
• Management helps to meet the challenge of change
• Accomplishment of group goals
• Effective utilization of resources
• Effective functioning of business
• Resource Development
• Sound organization Structure
• Management directs the organization
• Integrates various interests
• Stability
• Innovation
• Co-ordination and team-spirit
• Tackling problems / problem solving
• A tool for Personality Development

7. Evolution of management functions
Early concepts Plan Organize Command Discipline
Management
process as
defined by Fayol
Plan Organize Command &
Coordinate
Control
Further
modifications
Plan Organize Direct Control
Modified by
behavioural
influence
Plan Organize Motivate Control
Recent
modifications by
business
Plan Organize Integrate Measure
Suggested further Plan Organize Achieve Appraise

8. Management

9. Management Functions
Planning Organizing Leading
1.Defining goals 1.Determining 1.Directing
what needs to 2.Motivating
done all involved
parties
3.Resolving
2.How it will
be done?
3.who is to do conflicts
Controlling
Monitoring
activities to
ensure that
they are
accomplished
as planned
2.Establishing
strategy
3.Developing
sub-plans
coordinate
activities it?
Resulting in
Achieving the
organization’s
stated purpose

10. Management Process

11. GENERAL MANAGERIAL SKILLS
• Conceptual: Ability to see the ‘big picture’, to recognize and
understand significant elements in a situation (cause &
effect). A manager’s mental ability to coordinate all of the
organization’s interests and activities.
• Design: Ability to solve problems that will benefit enterprise.
Also ability to design a workable solution to the problems and
to avoid them in future. Strategic problem solving and providing for
growth and development.
• Human: Ability to work with people. Creation of an
environment in which people feel secure and free to express
their opinions. A manager’s ability to work with, understand, mentor,
and motivate others, both individually and in groups.
• Technical: Knowledge of and proficiency in activities involving
methods, processes and procedures. A manager’s ability to use
the tools, procedures, and techniques of a specialized field.

12. Specific Skills for Managers
• Behaviors related to a manager’s effectiveness:
– Controlling the organization’s environment and its resources.
– Organizing and coordinating.
– Handling information.
– Providing for growth and development.
– Motivating employees and handling conflicts.
– Strategic problem solving.
Management Charter Initiative Competencies for Middle Managers
1. Initiate and implement change and
improvement in services, products, and
systems
2. Monitor maintain, and improve service and
product delivery
3. Monitor and control the use of resources
4. Secure effective resource allocation for
activities and projects
5. Recruit and select personnel
6. Develop teams, individuals, and self to
enhanceperformance
7. Plan, allocate, and evaluate work carried out
by teams, individuals and self
8. Create, maintain, and enhance effective
working relationships
9. Seek, evaluate, and organize information for
action
10. Exchange information to solve problems and
make decisions

14. Relative Amount of Time That Managers Spend
on the Four Managerial Functions

15. Distribution of Time per Activity by Organizational
Level

16. Henry Mintzberg: Managerial Roles

17. Interpersonal Role
Role Activity Examples
Figurehead Perform social and legal
duties, act as symbolic
leader
Greet visitors, sign legal
documents, attend ribbon
cutting ceremonies,
host receptions, etc.
Leader Direct and motivate
subordinates, select and
train employees
Includes almost all
interactions with
subordinates
Liaison Establish and maintain
contacts within and outside
the organization
Business correspondence,
participation in meetings
with representatives
of other divisions or
organizations.
In the real world, these roles overlap and a manager must learn to balance them in
order to manage effectively. While a manager’s work can be analyzed by all these ten
individual roles, in practice they are intermixed and interdependent.

18. Informational Role
Role Activity Examples
Monitor Seek and acquire work-
related information
Scan/read trade
press, periodicals,
reports; attend seminars
and
training; maintain
personal contacts
Disseminator Communicate/
disseminate information
to others within the
organization
Send memos and
reports; inform staffers
and subordinates of
decisions
Spokesperson Communicate/transmit
information to outsiders
Pass on memos, reports
and informational
materials; participate in
conferences/meetings
and report progress

19. Decisional Role
Role Activity Examples
Entrepreneur Identify new ideas and
initiate improvement
projects
Implement innovations; Plan
for the future
Disturbance
Handler
Deals with disputes or
problems and takes
corrective action
Settle conflicts between
subordinates; Choose
strategic alternatives;
Overcome crisis situations
Resource
Allocator
Decide where to apply
resources
Draft and approve of plans,
schedules, budgets; Set
priorities
Negotiator Defends business
interests
Participates in and directs
negotiations within team,
department, and
organization
According to Henry Mintzberg : “The manager who only communicates or only conceives
never gets anything done, while the manager who only ‘does’ ends up doing it all alone.”

20. Importance of
Managerial Roles in
Small and Large
Businesses

21. DIFFERENCE BETWEEN MANAGEMENT AND ADMINISTRATION
MANAGEMENT ADMINISTRATION
Nature of work
It puts into action the policies and plans
laid down by the administration
It is concerned about the determination
of objectives and major policies of an
organization
Type of function It is an executive function. It is a determinative function
Scope
It takes decisions within the framework
set by the administration.
It takes major decisions of an enterprise
as a whole.
Level of authority It is a middle level activity. It is a top-level activity.
Nature of status
It is a group of managerial personnel,
who use their specialized knowledge to
fulfill the objectives of an enterprise.
It consists of owners who invest capital in
and receive profits from an enterprise
Nature of usage
It is used in business enterprises. It is popular with government, military,
educational, and religious organizations
Decision making
Its decisions are influenced by the
values, opinions, and beliefs of the
managers.
Its decisions are influenced by public
opinion, government policies, social, and
religious factors
Main functions
Motivating and controlling functions are
involved in it.
Planning and organizing functions are
involved in it.
Abilities
It needs administrative rather than
technical abilities.
It requires technical activities
Handles
Management handles the employees. Administration handles the business
aspects such as finance.

22. Functions of Management
Luther Gullick in 1937 asked the question:
“What is the work of the chief executive? What
does he do?” Gullick summarized his answer
in the acronym POSDCoRB, which stands for:
Planning, Organizing, Staffing, Directing,
COordinating, Reporting, and Budgeting.

23. POSDCoRB
1. Planning: This essentially refers to establishing a broad sketch of the work to be
completed and the procedures incorporated to implement them.
2. Organizing: Organizing involves formally classifying, defining and synchronizing the
various sub-processes or subdivisions of the work to be done.
3. Staffing: This involves recruiting and selecting the right candidates for the job and
facilitating their orientation and training while maintaining a favorable work
environment.
4. Directing: This entails decision making and delegating structured instructions and
orders to execute them.
5. Coordinating: This basically refers to orchestrating and interlinking the various
components of the work.
6. Reporting: Reporting involves regularly updating the superior about the progress or
the work related activities. The information dissemination can be through records or
inspection.
7. Budgeting: Budgeting involves all the activities that under Auditing, Accounting,
Fiscal Planning and Control.
Different experts have classified functions of management. But
the most widely accepted are functions of management given by
KOONTZ and O’DONNEL i.e. Planning, Organizing, Staffing,
Directing and Controlling.

24. Functions of Management Contd.
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.

25. Functions of Management Contd.
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.

26. Functions of Management Contd.
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.

27. Functions of Management Contd.
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 company’s 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.

28. Functions of Management Contd.
5. Controlling
• It includes verifying the actual execution against the plans to ensure
that execution is being done in accordance with the plans.
• It measures actual performance against the plans.
• It sets standards or norms of performance.
• It measures the effective and efficiency of execution against these
standards and the plans.
• It periodically reviews, evaluates and monitors the performance.
If the gaps are found between execution levels and the plans, controlling
function involves suitable corrective actions to expedite the execution to
match up with the plans or in certain circumstances deciding to make
modifications in the plans. Controlling has got two basic purposes
– It facilitates co-ordination
– It helps in planning

29. Planning
• Planning is fundamental function of
management – preceding all other functions
of management .
• To Govern is to foresee. Process through
which a manager looks into the future.
• Though future is uncertain, planning helps
instead of leaving things to chance.
• It involves developing goals, strategies,
policies, procedures and programmes

30. “Planning is deciding in advance what to do, how to do it,
when to do it and who is to do it. Planning bridges the gap
from where we are to where we want to go.” – Koontz and
O’Donnell
“Planning is a continuous process of making present
entrepreneurial decisions systematically, with best possible
knowledge of their futurity and organising systematically the
efforts needed to carry out these decisions and measuring
the results of these decisions against the expectations
through organised, systematic feedback.” – George Terry

31. COMPONENTS OF PLANNING:
• Forecasts: process of preparing for future; predicting things to
come based on past & present data
• Objectives: ends towards which activity is aimed – results to be
achieved
• Policies: specify what can be done, what cannot be done to achieve
objectives
• Strategies: course of action to be followed, how resources are to be
deployed to achieve objectives
• Procedures: outline how a task has to be carried out
• Schedules: what to do at a given point of time
• Budgets: plans expressed in quantifiable terms (sales budget, expense
budget etc)

32. • Standing Plans:
– Mission:
– Objectives:
– Strategies:
– Policies:
– Procedures:
– Rules:
• Single use plans:
» Programmes
» Budget
» Schedule
» Forecast
» Project

33. The hierarchy of organizational plans:
Founder, Board of Directors, or Top Managers
• Mission statement: Broad organizational goal which justifies
an organization's existence.
Top & Middle Managers
• Strategic plans:Plans designed to meet an organization's
broad goals.
Middle & First Line Managers
• Operational plans: Plans that contain details for carrying out,
or implementing, the strategic plans in day-to-day activities.

34. Socio-
economic
purpose
Mission
Overall Objective Of
The Organization
(Long-Range,
Strategic)
More Specific Overall
Objective (e.g. in key result
areas)
Division Objectives
Department And Unit Objectives
Individual Objective (1) Performance (2) Personal
Development objective
Lower-Level Managers
Middle-Level Managers
Top-Level Managers
Board Of Directors
Organizational Hierarchy
Hierarchy Of Objectives

35. Planning
• Is goal-oriented
• Is future-oriented
• Is the primary function
• Is an intellectual process
• Is all-pervasive
• Is both short range and long range
• Is Continuous
• Is actionable
• Is flexible
• Is an integrated system

36. Planning
Implementation
of plans
Controlling:
comparing
plans with
results
Corrective
action
No
undesirable
deviations
from plans
Undesirable
deviation
New plans
Close Relationship Of Planning and Controlling.

37. Steps in Planning
1. BEING AWARE OF OPPORTUNITIES:
2. ESTABLISHING OBJECTIVES
3. DEVELOPING PREMISES
4. DETERMINING ALTERNATIVE COURSES
5. EVALUTATIN ALTERNATIVE COURSES
 BEING AWARE OF OPPORTUNITIES:
An awareness of opportunities in the external environment as well as
within the organization is the real starting point for planning. All
managers should take a preliminary look at possible future
opportunities and see them clearly and completely know where
company stands in light of its strength and weaknesses, understand
what problems it has to solve and why, and know what it can expect
to gain.

38.  ESTABLISHING OBJECTIVES :
The second step in planning is to establish objectives for the entire
enterprise and then for each subordinate work unit. This is to be done for
a long term as well as for the short range. Objectives specify the expected
result and indicate the end points of what is to be done, where the
primary emphasis is to be placed. Enterprise objectives give direction to
the major plans, which, by reflecting these objectives of every major
department. Major departmental objectives, in turn, control the
objectives of subordinate departments, and so on down the line .In other
words objectives from a hierarchy.
 DEVELOPING PREMISES:
Premises are assumption about the environment in which the plan is to
be carried out. It is important for all managers involve in the plan to agree
on the premises. In fact, the major Principle of planning premises is this:
the more thoroughly individual charged with planning understand and
agree to utilize consistent planning premises, the more coordination
enterprise planning will be.

39.  DETERMINING ALTERNATIVE COURSES:
The forth step is planning is to research for and examine alternative courses of
action. The more common problem is not finding alternatives but reducing the
number of alternatives so that the most promising may be analyzed. The
planner must usually make a preliminary examination to discover the most
fruitful possibilities.
 EVALUTATING ALTERNATIVE COURSES :
After seeking out alternative courses and examining their strong and weak
points, the next step is to evaluate the alternatives by weighing them in light
of premises and goals.
 SELECTING A COURSES:
This is the point at which the plan is adopted-the real point of decision-making.
 FORMULATING DERIVATIVE PLANS :
When a decision is made, planning is seldom complete. Derivative plans are almost invariably
required to support the basic plans.
 QUANTIFYING PLANS BY BUDGETING:
After decisions are made and plans are set, the final step is to quantify them by converting
them into budgets. Budget of an enterprise represents the sum total of income and
expenses, with resultant profit.

40. ESSENTIALS OF SOUND PLANNING
• Plan should be easy to understand and execute
• Must be based on clear-cut objectives
• Must be suitable to the needs of an organization
• Must be comprehensive and integrated
• Must be flexible
• Should be based on rational forecast
• Should be consistent with the environment
• Must be realistic and not idealistic
• Must be efficient and economical
• Should be time bound
• Must win employee’s favour and confidence

41. NEED & IMPORTANCE OF PLANNING:
• Planning is complimentary to all management functions
• It helps management to face the future with confidence
• It focuses its attention on objectives
• It leads to optimum utilization of resources
• It increases overall efficiency
• It provides premises for effective control
• It guides decision making
• It facilitates coordination
• It helps in performance evaluation
• It makes provisions for contingencies
Benefits of Planning:
 Reduces uncertainty
 Ensures economical operations
 Facilitates control
 Encourages innovation & creativity
 Improves motivations
 Gives competitive edge to the enterprise
 Ensures better co-ordination & avoids duplication of efforts

42. LIMITATIONS OF PLANNING:
– Egoistic planning
– Wastage of resources
– Expensive
– Limits individual freedom
– Not an end
– Dynamic environment
– Non-availability of authentic and accurate data
– Unsuitable for small units
– Time consuming
– Delayed action due to deliberation
– Rapidly changing business environment / unrealistic
targets

43. DECISION-MAKING
• Decision-making is a conscious human process involving
both individual and social phenomenon, based upon factual
and value premises, which concludes with a choice of one
behavioural activity from among two or more alternatives
with the intention of moving towards some desired state of
affairs. – Shull
• Decision-making is the selection based on some criteria
from two or more possible alternatives – George Terry

44. Management by Objectives (MBO)
• Management by Objectives (MBO) is a process to accept
objectives within an organization so that management and
employees agree to the objectives and understand what they are in
the organization.
Benefits of Management by objectives:
 Improvement of managing through results-oriented planning
 Clarifications
 Encouragement
 Development
PROCESS OF MBO OBJECTIVE IS:
 S - SPECIFIC
 M- MEASURABLE
 A - ACHIEVABLE
 R - REALISTIC
 T - TIME BASED

45. PROCESS OF DECISION-MAKING
– Identification of a problem
– Diagnosing the problem
– Analysis of the problem
– Collecting information
– Identifying alternate courses of action
– Evaluation of alternatives
– Choice of best alternative
– Conversion of decision into action
– Progressive review

46. ORGANISATION
“Organising involves grouping of activities necessary to
accomplish goals and plans, the assignment of these activities
to the appropriate departments and the provisions for
authority delegation and coordination.’ – Koontz and
O’Donnell
“Organising is the process of identifying and grouping the
work to be performed, defining and delegating responsibility
and authority and establishing relationships for the purpose of
enabling the people to work most effectively together in
accomplishing objectives.” – Louis A Allen
• The term organisation is used in two senses:
– Organisation as a process
– Organisation as a structure

47. • Create a division of labor
• Set up teams or departments
• Allocate resources
• Assign tasks
• Establish procedures
• Adjust to new realities
STRUCTURING an ORGANIZATION

48. Three common characteristics of the organization
Organization
Every organization has its
purpose distinct purpose, which is
typically expressed in terms
of a goal or set of goals.
People
Organizations are
made up of people.
Making a goal into
reality entirely
depends on people’s
decisions and
activities in the
organization.
Structure
All organizations develop a systematic
structure that defines and limits the
behavior of its members.

49. Organizing
- the deployment of organizational resources
to achieve strategic goals.
- Organization structure is a tool that
managers use to harness (control) resources
for getting things done.
Strategy defines what to do;
Organizing defines how to do it.

50. Organizational Level
Managers - individuals in an organization who direct the
Top
managers
Middle-line
managers
First-line managers
Operatives
activities of other people.
Responsibility Title
Directing the day-to-day
activities of operatives
supervisors
Translating the goals set by top
management into specific details
that lower-level managers can perform
department or agency head/
project leader/ unit chief/
district manager/dean/
bishop/division manager
Making decisions about the direction
of the organization and establishing
policies that affect all organizational
members.
vice president/president/chancellor/
chief operating officer/
chief executive officer/
chairperson of the board

51. Business Functions –
first we should see what we’re actually structuring in a business
• Production – responsible for making goods. This department is responsible for
planning production schedules and for ensuring high quality standards
• Marketing – finds out what customers want through marketing research and
then plans marketing activities to attract customers
• Sales – the emphasis in sales is on convincing the customer that the product
meets their needs and requirements
• Finance & Accounts – responsible for preparing budgets (financial plans) and
for calculating the profit or loss made by various parts of the business and as a
whole. Creates financial reports
• Administration – responsible for creating and managing systems for keeping the
business running smoothly
• Human Resources – responsible for people management in the company
including hiring, firing, motivating
• Information Technology – create the information systems that keep the
business running smoothly.

52. In a hierarchical organisation employees are ranked at different levels, each
one above another. At each level, except the bottom, one person has a team of
people reporting to them. The resulting chart will be in a pyramid shape.
Hierarchical Organisations
As an example, the senior managers will be responsible for the overall
direction of the business whilst middle management will report to the senior
managers and be accountable for their department.

53. Definitions of organizational
structures
• They define the levels of management in organizations;
• Org.structures define relationships between jobs;
• They define the centers of decisions in any organization.
• They help to achieve organizational goals by grouping jobs,
defining relationship between positions as well as who takes
the responsibility in organnzation.

54. Work specialization: the degree to which organizational tasks are subdivided into individual jobs; also
called division of labor.
• When work specialization is extensive, employees specialize in a single task. Jobs
tend to be small, but they can be performed efficiently.
Chain of command: channels along which authority is passed down through the organization. It is an
unbroken line of authority that links all individuals in the organization and specifies who reports to
whom.
• Unity of command means that each employee is held accountable to only one supervisor.
• Scalar principle refers to a clearly defined line of authority in the organization that includes all
employees.
Authority: the formal and legitimate right of a manager to make decisions, issues orders, and allocate
resources to achieve organizationally desired outcomes.
• Without the establishment of authority, organization has no meaning.
• Authority flows down the vertical hierarchy.
• Authority is vested in organizational positions, not people.
Responsibility: The duty to perform the task or activity an employee has been assigned.
Moral/ethical concern with doing the job properly & achieving good results.
Accountability: The fact that the people with authority and responsibility are subject to reporting
and justifying task outcomes to those above them in the chain of command. It means standing
ready to account for success or failure in discharging responsibility and exercising authority.
Delegation: The process managers use to transfer authority and responsibility to positions below
them in the hierarchy. Manager should delegate authority commensurate with responsibility.

55. The Logic of Organizing Process
Enterprise
Objectives
Supporting
objectives,
policies &
plans
Identification &
classification of
required activities
Grouping of
activities in light
of resources and
situations
Delegation
of authority
Horizontal & vertical
coordination of authority &
information relationships
1. Establishing enterprise objectives
2. Formulating supporting objectives, policies and plans
3. Identifying and classifying the activities necessary to
accomplish these objectives
4. Grouping these activities in the light of the human and
material resources available and the best way, under the
circumstances, of using them
5. Delegating to the head of each group the authority necessary
to perform the activities
6. Tying the groups together horizontally and vertically, through
authority relationships and information flows

56. Nature & Characteristics of Organisation
• Organizing is the basic function of
management
• Organizing is always related to objectives
• Organizing is an entity
• Organizing as a group of people
• Organizing as a process
• Organizing as a structure

57. Importance of Organization
– Organization promotes specialization, creativity and
division of labour
– It avoids omissions, overlapping and duplication of
efforts
– It clarifies authority-responsibility relationships
– It aids in division of work and clarity in job description
– provides for effective delegation of authority
– It facilitates staffing
– It facilitates coordination
– It establishes communication links
– It increases efficiency of management
– Helps growth and diversification

58. Importance of Organization (contd.)
– It facilitates management by exception
– Effective location of responsibility
– Quick achievement of organizational goals
– Quick decision making
– Provides facility for training, testing and
development
– Prevents growth of intrigues and corruption

59. PRINCIPLES OF ORGANIZATION
1. Principle of delegation
of authority
2. Principle of
coordination
3. Principle of continuity
4. Principle of definition
5. Principle of explanation
6. Principle of equilibrium
balance
7. Principle of flexibility
8. Principle of unity of
objectives
9. Principle of responsibility
10. Principle of specialization

60. 11. Principle of span of
control
12. Principle of scalar chain
13. Principle of simplicity
and homogeneity
14. Principle of unity of
command
15. Principle of unity of
direction
16.Principle of uniformity
17.Principle of efficiency
18.Principle of leadership
19.Principle of exception
20.Principle of joint
decision

61. Line and Staff departments
• Line departments perform tasks that reflect the
organization’s primary goal and mission
– Line authority is a form of authority in which
individuals in management positions have the formal
power to direct and control immediate subordinates.
• Staff departments include all those that provide
specialized skills in support of line departments.
– Staff authority is a form of authority granted to staff
specialists in their area of expertise.

62. 1. Line Organizations
2. Line-and-Staff Organizations
3. Matrix-Style Organizations
4. Cross-Functional Self-Managed Teams
FOUR WAYS to STRUCTURE an
ORGANIZATION

63. • Line Organization -- Has direct two-way lines of
responsibility, authority and communication running
from the top to the bottom. Everyone reports to one
supervisor.
• There are no specialists, legal, accounting, human
resources or information technology departments.
• Line managers issue orders, enforce discipline and
adjust the organization to changes.
• Line Personnel -- Workers responsible for directly
achieving organizational goals, and include production,
distribution and marketing employees.
• Line personnel have authority to make policy decisions.
LINE ORGANIZATION

64. Line organization
Advantages Disadvantages
Simple and easy to understand Each executive is overloaded with work –
this affects efficiency
Authority & responsibility are clearly
defined for each personnel – avoids
confusion
Different jobs of different types to be
looked after & supervised by same
executive
Subordinates & workers are accountable
to one immediate superior, ensuing better
discipline- everyone knows who is
responsible.
For large scale enterprises where
specialization is required at each level,
this is not suitable
Facilitates greater control & better
direction
Excessive concentration of authority with
top executive. If the executive is
inefficient , the enterprise will suffer –
may also bring instability
Not elaborate & complicated in structure,
hence economical
Has flexible character, easily adjustable to
changing circumstances

65. Line and staff organization
• Goal is to minimize disadvantages of simple line
organizations
• They have both line and staff personnel
**the line personnel in this model responsible for achieving orgn. goals (incl
production labor, distribution people, and marketing people)
Staff Personnel -- Employees who advise and assist line
personnel in meeting their goals, and include marketing
research, legal advising, IT and human resource
employees.

66. Line and Staff organization
Advantages Disadvantages
All the benefits of Line organization accrue to
the enterprise
Growing conflict between line & staff
executives is responsible for defeating the goals
of the enterprise
Operational efficiency increases because of
expertise of the staff executives. All
technicalities are attended by staff with line
executives. There is high level of specialization.
There is a chance of misunderstanding the
advice of staff by line managers. Hence
specialization cannot be achieved.
Routine matters are attended by line managers
as their load is released because of staff
executives – this ensures discipline and stability
in the enterprise.
Staff executives are not accountable to any line
managers, hence they may not work up to the
expectation.
Staff executives support line managers in
decision making by providing right kind of
information.
Line managers have practical approach to the
problem, while staff executives being experts in
their field have theoretical approach.
This kind of organization structure is more
flexible as compared to line organization.
Distribution of work between line and staff is
not proper and clear. This affects coordination
adversely.
Staff executives provide help in training
supervisory personnel, aiding line managers to
develop skills of their subordinates

67. SAMPLE LINE-and-STAFF ORGANIZATION

68. MATRIX ORGANIZATION
Matrix Organization -- Specialists from different parts of the
organization work together temporarily on specific projects, but still
remain part of a line-and-staff structure.
Emphasis is on product development, creativity, special projects,
communication and teamwork.

69. Advantages of MATRIX Org
• Managers have flexibility in assigning people to projects.
• Inter-organizational cooperation and teamwork is encouraged.
• Creative solutions to product development problems are produced.
• Efficient use of organizational resources.
Disadvantages
• It’s costly and complex.
• Employees may be confused about where their loyalty belongs.
• Good interpersonal skills and cooperative employees are a must.
• It’s a temporary solution to a possible long-term problem.
• Teams are not permanent.

70. Authority
Authority may be defined as the power to make decisions
which guide the actions of another..
Characteristics of Authority:
a) Authority is a legitimate right to command & control
subordinates
b) Authority is granted to achieve the cherished goals of the
enterprise
c) Authority is a right to direct others to get things done
d) Authority is a commanding force binding individuals
together
e) Authority is delegated downwards.

71. Responsibility
Responsibility may be defined as the obligation of a
subordinate to whom a duty has been assigned to perform.
Characteristics of Responsibility:
a) Responsibility is to assign duty to human beings only.
b) Responsibility is the result of duty assigned to a human
being
c) Responsibility is the obligation to complete the assigned
task
d) Responsibility can never be delegated
e) Responsibility always flows upward from juniors to
seniors

72. Relationship between Authority and
Responsibility
a) Parity in authority and responsibility
b) Authority and responsibility flow in opposite
direction
c) Responsibility cannot be delegated
Authority Responsibility
It is the legal right of a person or a superior to
command his subordinates.
It is the obligation of subordinate to perform the
work assigned to him.
Authority is attached to the position of a superior
in concern.
Responsibility arises out of superior-subordinate
relationship in which subordinate agrees to carry
out duty given to him.
Authority can be delegated by a superior to a
subordinate
Responsibility cannot be shifted and is absolute
It flows from top to bottom. It flows from bottom to top.

73. Principles of Delegation
 The manager can delegate authority but cannot
delegate responsibility.
 Clarify the assignment.
 Delegate, don’t abdicate or renounce.
 Know what to delegate.
 Specify the subordinate’s range of discretion (limits).
 Authority should be commensurate with
responsibility.
 Make the person accountable for results.
 Beware of backward delegation.

74. Elements of Organization
– Defining responsibility
– Delegating Authority, and
– Establishing relationships between authority and
responsibility
Three significant elements of organising:
1. Line authority
2. Staff authority
3. Functional authority

75. Delegation vs Decentralisation
Basis Delegation Decentralization
Meaning
Managers delegate some of their function and
authority to their subordinates.
Right to take decisions is shared by top management and other
level of management.
Scope
Scope of delegation is limited as superior delegates
the powers to the subordinates on individual bases.
Scope is wide as the decision making is shared by the subordinates
also.
Responsibility
Responsibility remains of the managers and cannot
be delegated
Responsibility is also delegated to subordinates.
Freedom of Work
Freedom is not given to the subordinates as they
have to work as per the instructions of their
superiors.
Freedom to work can be maintained by subordinatesas they are
free to take decision and to implementit.
Nature It is a routine function It is an important decision of an enterprise.
Need on purpose
Delegationis important in all concerns whether big
or small. No enterprises can work without
delegation.
Decentralization becomes more important in large concerns and it
depends upon the decisionmade by the enterprise, it is not
compulsory.
Grant of Authority The authority is granted by one individual to another.
It is a systematicact which takes place at all levels and at all
functions in a concern.
Grant of
Responsibility
Responsibility cannot be delegated Authority with responsibility is delegated to subordinates.
Degree
Degree of delegation varies from concern to concern
and department to department.
Decentralization is total by nature. It spreads throughout the
organization i.e. at all levels and all functions
Process
Delegationis a process which explains superior
subordinates relationship
It is an outcome which explains relationship between top
managementand all other departments.
Essentiality Delegation is essential of all kinds of concerns Decentralization is a decisions function by nature.
Significance Delegation is essential for creating the organization
Decentralization is an optional policy at the discretion of top
management.
Withdrawal Delegated authority can be taken back.
It is considered as a general policy of top managementand is
applicable to all departments.
Freedom of Action Very little freedom to the subordinates Considerable freedom

76. Factors influencing Span of Control
• Managerial abilities- In the concerns where managers are capable, qualified and
experienced, wide span of control is always helpful.
• Competence of subordinates- Where the subordinates are capable and competent
and their understanding levels are proper, the subordinates tend to very
frequently visit the superiors for solving their problems. In such cases, the
manager can handle large number of employees. Hence wide span is suitable.
• Nature of work- If the work is of repetitive nature, wide span of supervision is
more helpful. On the other hand, if work requires mental skill or craftsmanship,
tight control and supervision is required in which narrow span is more helpful.
• Delegation of authority- When the work is delegated to lower levels in an efficient
and proper way, confusions are less and congeniality of the environment can be
maintained. In such cases, wide span of control is suitable and the supervisors can
manage and control large number of sub- ordinates at one time.
• Degree of decentralization- Decentralization is done in order to achieve
specialization in which authority is shared by many people and managers at
different levels. In such cases, a tall structure is helpful. There are certain concerns
where decentralization is done in very effective way which results in direct and
personal communication between superiors and sub- ordinates and there the
superiors can manage large number of subordinates very easily. In such cases,
wide span again helps.

77. Span of Management (Wide or Tall)
A wide span of management exists when a manager has a large
number of subordinates. Generally, the span of control may be
wide when
• The manager and the subordinates are very competent.
• The organization has a well‐established set of standard operating
procedures.
• Few new problems are anticipated.
A narrow span of management exists when the manager has
only a few subordinates. The span should be narrow when
• Workers are located far from one another physically.
• The manager has a lot of work to do in addition to supervising workers.
• A great deal of interaction is required between supervisor and workers.
• New problems arise frequently.
Keep in mind that the span of management may change from
one department to another within the same organization.

78. Each middle manager will have a team of people who manage the day-to-
day work of multiple staff on the bottom layer.
A tall hierarchy will typically have narrow spans of control (the number of
people working for another).
As each manager only manages a few people, the team can be closely
supervised but this can restrict responsibility and make decision-making
slow as approval has to be sought higher up the layers of management.
TALL HEIRARCHY

79. • Advantages
– Good coordination of
activities
– Uniformity throughout
organisation
– Clear channels of
communication
– Established job roles
and opportunities for
promotion
TALL HEIRARCHY
What are some advantages and Disadvantages of Tall Hierarchy's?
• Disadvantages
– Bureaucratic
– Long channels of
communication
– Slow decision-making
– Operatives and support
staff may feel less
significant

80. If there are many layers the hierarchy is said to be tall and if there are
few layers it would be called flat.
In a flat hierarchy the chain of command is much shorter (fewer layers) and
the span of control wider. This can lead to improved communications and
strong team spirit.
FLAT HEIRARCHY
However it can limit growth or the organisation as more layers would need
to be added and functions can get blurred.

81. • Advantages
– Shorter channels of
communication
– Faster decision-making
– More responsibility for
managers and others
increasing motivation
– More cost-effective
• Disadvantages
– Less control/co-
ordination
– Wider areas of
responsibility may lead to
inefficiency
– Fewer opportunities for
promotion leading to
lower morale
What are some advantages and Disadvantages of Flat Hierarchy's?

82. Formal Structure
The organizational structure is defined as
 The set of formal tasks assigned to individuals and departments
 The formal reporting relationships, including lines of authority, decision
responsibility, number of hierarchical levels, and span of managerial control
 The design of systems to ensure effective coordination of employees across
departments

83. Informal Structure
• Informal Structure
– Unofficial but important working relationships
between members.

84. Types of Internal Organisation
1. Formal Organisation
2. Informal Organisation
Features of Formal Organisation Features of Informal Organisation
It is the result of deliberate managerial
planning
Informal organisations do not appear on
the formal chart of the enterprise
It is based on the principle of division of
labour and specialisation
Informal organisations are based on
personal attitudes, likes and dislikes,
understanding, customs, traditions, etc.
It is based on the activities to be performed
and not on the individuals who perform such
activities
Informal organization exists at all levels of
organization from top to bottom
It is formally proclaimed by the top
management and hence, shown on the
organization charts
Although, there is no specific channel of
communication, informal channel is much
more powerful than formal channel
It sets up the boundaries and specific part of
actions, which must be strictly followed.

85. Informal Structure
• Informal Structures have good and
bad points
–Social network analysis identifies
communication relationships
–Good points include problem solving,
support, friendship and fill gaps in the
formal structure
–Bad points include rumors, inaccurate
information and resistance to change

86. Organizational Charts
What You Can Learn from an Organization Chart
• The organizational structure provides a framework for the hierarchy, or vertical structure, of
the organization. An organizational chart is the visual representation of this vertical
structure.
Division of work • Positions and titles show work responsibilities.
•Lines between positions show who reports to whom in the chain
of command.
Supervisory relationships
•The number of persons reporting to a supervisor.
Span of control
Communication channels •Lines between positions show routes for formal communication
flows.
•Which job titles are grouped together in work units,
departments, or divisions.
Major subunits
•Staff specialists that support other positions and parts of the
organization.
Staff positions
•The number of management layers from top to bottom.
Levels of management
A manager should determine the vertical (decision‐making) and horizontal (coordinating)
relationships of the organization as a whole. Next, using the organizational chart, a
manager should diagram the relationships.

87. Common Types of Structures
• Functional structures group together people
using similar skills
• Divisional structures group together people
by products, customers or locations
• Matrix structures combine the functional and
divisional structures
• Team structures use many permanent and
temporary teams
• Network structures extensively use strategic
alliances and outsourcing

88. Size: Larger companies will tend to have a longer chain of command and more levels of
hierarchy.
Employee skills: Matrix structures are particularly suited to organisations where the
employee skill level is high.
Leadership style: If the owners of a business wish to keep as much control over their
business as possible there will be a narrow span of control whereas those who wish to
motivate their teams may delegate decision-making to others and therefore have a wider
span of control.
Business objectives: If a company decides to expand quickly, through a merger or
acquisition, the span of control will become much wider.
External factors: A recession may cause the need to cut back and make many roles
redundant. This can result in layers of management being taken out of the business
reducing the chain if command and making the organisation much flatter.
Changes in technology: A new IT system could reduce the need for administration staff
and enable layers of workers to be removed from the structure.
A company must choose its structure carefully. The wrong structure could lead to slow
decision-making, a lack of co-ordination, rising costs, failure to share ideas and motivation
falling because they don’t know what’s happening or why.
Factors Influence The Choice Of Structure:

89. Departmentalization
• Departmentation enables an organization to avail the
benefits of specialisation. When every department
looks after one major function, expertise is
developed and efficiency of operation increases.
– Expansion
– Fixation of responsibilities
– Appraisal
– Administrative control

90. Departmentalization - Ways to Structure a Business
- The process through which an organization’s activities are grouped together and assigned to
managers; the organization wide division of work.
• Functional
– The grouping of activities by functions performed such as
manufacturing, sales, or finance; arranging the business according to
what each section
or department does
• Product
– The grouping of activities by product produced; organising according to
the different products made.
• Customer
– The grouping of activities by common customers; where different
customer groups have different needs
• Geographic
– geographical or regional structure - the grouping of activities by
territory
• Process
– The grouping of activities by work or customer flow. where products
have to go through stages as they are made.

91. DEPARTMENTALIZATION
-- Divides organizations into separate units.
-- Workers are grouped by skills and expertise to specialize their skills.
Advantages
• Employees develop skills and progress within a department as they master skills.
• The company can achieve economies of scale.
• Employees can coordinate work within the function and top management can easily
direct activities.
Disadvantages
• Departments may not communicate well.
• Employees may identify with their department’s goals rather than the organization’s.
• The company’s response to external changes may be slow.
• People may not be trained to take different managerial responsibilities, instead they
become specialists.
• Department members may engage in groupthink and may need outside input.

92. COMMON ORGANIZATIONAL STRUCTURES
Functional Structures
Common functional structure

93. Functional Organisation grouping
ADVANTAGES DISADVANTAGES
Is logical reflection of functions Deemphasis of overall company
objectives
Maintains power & prestige of major
functions
Overspecializes and narrows viewpoints
of key personnel
Follows principle of occupational
specialization
Reduces coordination between functions
Simplifies training Responsibility for profits is at the top
only
Furnishes means for tight control at the
top
Slow adaptation to changes in
environment
Limits development of general managers

94. Divisional Structures
Common divisional structures

95. Product Orgnisation grouping
ADVANTAGES DISADVANTAGES
Places attention and effort on product line Requires more persons with general
managerial abilities
Facilitates use of specialized capital, facilities, skills
and knowledge
Tends to make maintenance of
economical central services difficult
Permits growth and diversity of products and
services
Presents Increased problem of top
management control
Improves coordination of functional activities
Places responsibility for profits at the division level
Furnishes measurable training ground for general
managers

96. Territorial or Geographic Orgnisation grouping
ADVANTAGES DISADVANTAGES
Places responsibility at lower level Requires more persons with general managerial
abilities
Places emphasis on local markets
and problems
Tends to make maintenance of economical central
services difficult and may require services such as
personnel or purchasis at the regional level
Improves coordination in the
region
Increases problem of top management control
Takes advantage of economies of
local operations
Better face-to-face communication
with local interests
Furnishes measurable training
ground for general managers

97. Customer Departmentation
ADVANTAGES DISADVANTAGES
Encourages concentration of customer
needs
May be difficult to coordinate
operations between competing
customer demands
Gives customers a feeling that they
have an understanding supplier
Requires managers and staff with
expertise in customers problems
Develops expertise in customer area Customer groups may not always be
clearly defined

98. Process Orgnisation grouping
ADVANTAGES DISADVANTAGES
Achieves economic
advantage
Coordination of
departments is difficult
Uses specialized
technology
Responsibility for profit is at
the top
Utilizes special skills Is unsuitable for developing
general managers

99. Matrix Structures
Matrix Structures combine functional and
divisional structures
• uses permanent cross functional teams to try
to gain the advantages of both the functional
and divisional approaches

100. Matrix Structures

101. Matrix Orgnisation
ADVANTAGES DISADVANTAGES
Is oriented towards end
results
Conflict in organization
authority exists
Professional identification is
maintained
Possibility of disunity of
command exists
Pinpoints product-profit
responsibility
Requires manager effective in
human relations

102. Team Structures
Team Structures
• Make use of permanent and temporary cross
functional teams
• Improved problem solving and project
management

103. COMMON ORGANIZATIONAL STRUCTURES
Team Structures
Team structure example

104. COMMON ORGANIZATIONAL STRUCTURES
Team Structures
Possible advantages of Team structures
• Team assignments improve communication,
cooperation, and decision-making.
• Team members get to know each other as
persons, not just job titles.
• Team memberships boost morale, and
increase enthusiasm and task involvement.

105. Staffing
Staffing involves:
• Manpower Planning (estimating man power in
terms of searching, choose the person and giving
the right place).
• Recruitment, Selection & Placement.
• Training and Development
• Remuneration.
• Performance Appraisal.
• Promotions & Transfer.

106. Staffing Process - Steps in Staffing
• Manpower requirements- The very first step in staffing is to plan the
manpower inventory required by a concern in order to match them with
the job requirements and demands. Therefore, it involves forecasting and
determining the future manpower needs of the concern.
• Recruitment- Once the requirements are notified, the concern invites and
solicits applications according to the invitations made to the desirable
candidates.
• Selection- This is the screening step of staffing in which the solicited
applications are screened out and suitable candidates are appointed as
per the requirements.
• Orientation and Placement- Once screening takes place, the appointed
candidates are made familiar to the work units and work environment
through the orientation programmes. placement takes place by putting
right man on the right job.

107. Staffing Process - Steps in Staffing Contd.
• Training and Development- Training is a part of incentives given to the workers in
order to develop and grow them within the concern. Training is generally given
according to the nature of activities and scope of expansion in it. Along with it, the
workers are developed by providing them extra benefits of indepth knowledge of
their functional areas. Development also includes giving them key and important
jobsas a test or examination in order to analyse their performances.
• Remuneration- It is a kind of compensation provided monetarily to the employees
for their work performances. This is given according to the nature of job- skilled or
unskilled, physical or mental, etc. Remuneration forms an important monetary
incentive for the employees.
• Performance Evaluation- In order to keep a track or record of the behaviour,
attitudes as well as opinions of the workers towards their jobs. For this regular
assessment is done to evaluate and supervise different work units in a concern. It
is basically concerning to know the development cycle and growth patterns of the
employeesin a concern.
• Promotion and transfer- Promotion is said to be a non- monetary incentive in
which the worker is shifted from a higher job demanding bigger responsibilities as
well as shifting the workers and transferring them to different work units and
branches of the same organization.

108. Direction has got following characteristics:
• Pervasive Function - Directing is required at all levels of organization.
Every manager provides guidance and inspiration to his subordinates.
• Continuous Activity - Direction is a continuous activity as it continuous
throughout the life of organization.
• Human Factor - Directing function is related to subordinates and therefore
it is related to human factor. Since human factor is complex and behaviour
is unpredictable, direction function becomes important.
• Creative Activity - Direction function helps in converting plans into
performance. Without this function, people become inactive and physical
resources are meaningless.
• Executive Function - Direction function is carried out by all managers and
executives at all levels throughout the working of an enterprise, a
subordinate receives instructions from his superior only.
• Delegate Function - Direction is supposed to be a function dealing with
human beings. Human behaviour is unpredictable by nature and
conditioning the people’s behaviour towards the goals of the enterprise is
what the executive does in this function. Therefore, it is termed as having
delicacy in it to tackle human behaviour.

109. PRINCIPLES OF DIRECTION
1. Principle of maximum individual
contribution
2. Principle of harmony of objectives
3. Principle of efficiency
4. Principle of direct supervision
5. Principle of unity of command
6. Principle of follow through
7. Principle of communication
8. Principle of leadership
Important elements of Directing are:
1. Supervision
2. Motivation
3. Leadership
4. Communication
Importance of Directing:
1. Initiates action
2. Integrates efforts
3. Means of motivation
4. Provides stability and balance
5. Coping with changes
6. Efficient utilization of resources
Characteristics of directing are:
1. All pervasive
2. Continuous activity
3. Human factor
4. Creative activity
5. Executive and delegating function

110. A supervisor plays multiple roles at one time, like:
• A Planner - A supervisor has to plan the daily work schedules in the factory. At the
same time he has to divide the work to various workers according to their abilities.
• A Manager - It is righty said that a supervisor is a part of the management team of
an enterprise. He is, in fact, an operative manager.
• A Guide and Leader - A factory supervisor leads the workers by guiding them the
way of perform their daily tasks. In fact, he plays a role of an inspirer by telling
them.
• A Mediator - A Supervisor is called a linking pin between management and
workers. He is the spokesperson of management as well as worker.
• A Inspector - An important role of supervisor is to enforce discipline in the factory.
For this, the work includes checking progress of work against the time schedule,
recording the work performances at regular intervals and reporting the deviations
if any from those. He can also frame rules and regulations which have to be
followed by workers during their work.
• A Counselor - A supervisor plays the role of a counselor to the worker’s problem.
He has to perform this role in order to build good relations and co-operation from
workers. This can be done not only by listening to the grievances but also handling
the grievances and satisfying the workers.

111. CONTROLLING
Controlling: Comparing operating results with plans and taking
corrective actions when results deviate from plans.
• Results of operation should be measured in some way
• Measured at some key points in operation at key times and
transmitted to the executive at proper time
• Efficient control systems helps to predict deviations before they
occur
Characteristics: last phase of
management process.
1. End function
2. Pervasive function
3. Forward looking
4. Dynamic process
5. Related with planning
Process of Control:
1. establishment of standards
2. Measurement of performance
3. Comparison of actual and
standard performances
4. Taking remedial actions

112. Characteristics of Controlling function of management
• Controlling is an end function- A function which comes once the
performances are made in confirmity with plans.
• Controlling is a pervasive function- which means it is performed by
managers at all levels and in all type of concerns.
• Controlling is forward looking- because effective control is not
possible without past being controlled. Controlling always look to
future so that follow-up can be made whenever required.
• Controlling is a dynamic process- since controlling requires taking
review methods, changes have to be made wherever possible.
• Controlling is related with planning- Planning and Controlling are
two inseperable functions of management. Without planning,
controlling is a meaningless exercise and without controlling,
planning is useless. Planning presupposes controlling and
controlling succeeds planning.