Unit 1

Management:
Definition of Management:
Management is an art of getting things done through and with the people in formally
organized groups. It is an art of creating an environment in which people can perform and
individuals and can co-operate towards attainment of group goals.
Harold Koontz.
Management is an art of knowing what to do, when to do and see that it is done in the best
and cheapest way.
- F.W. Taylor
Scope and Signification of Management:
Importance of Management
According to Peter Drucker,
"Management is what the modern world is all about."
This statement means that all the development that has taken place in the world is due to
efficient management.
The points below bring out the significance or importance of management.
1. Encourages Initiative
Management encourages initiative. Initiative means to do the right thing at the right time
without being told or influenced by the superior. The employees should be encouraged to
make their own plans and also to implement these plans. Initiative gives satisfaction to
employees and success to organizations.
2. Encourages Innovation
Management also encourages innovation in the organisation. Innovation brings new ideas,
new technology, new methods, new products, new services, etc. This makes the
organisation more competitive and efficient.
3. Facilitates growth and expansion
Management makes optimum utilisation of available resources. It reduces wastage and
increase efficiency. It encourages team work and motivates employees. It also reduces
absenteeism and labour turnover. All this results in growth, expansion and diversification of
the organisation.
4. Improves life of workers
Management shares some of its profits with the workers. It provides the workers with good
working environment and conditions. It also gives the workers many financial and nonfinancial incentives. All this improves the quality of life of the workers.
5. Improves corporate image
If the management is good, then the organisation will produce good quality goods and
services. This will improve the goodwill and corporate image of the organisation. A good
corporate image brings many added benefits to the organisation.
6. Motivates employees
Management motivates employees by providing financial and non-financial incentives. These
incentives increase the willingness and efficiency of the employees. This results in boosting
productivity and profitability of the organisation.
7. Optimum use of resources
Management brings together the available resources. It makes optimum (best) use of these
resources. This brings best results to the organisation.
8. Reduces wastage
Management reduces the wastage of human, material and financial resources. Wastage is
reduced by proper production planning and control. If wastage is reduced then productivity
will increase.

9. Increases efficiency
Efficiency is the relationship between returns and cost. Management uses many techniques
to increase returns and to reduce costs. Higher efficiency brings many benefits to the
organisation.
10. Improves relations
Management improves relations between individuals, groups, departments and between
levels of management. Better relations lead to better team work. Better team work brings
success to the organisation.
11. Reduces absenteeism and labour turnover
Absenteeism means the employee is absent without permission.
Labour Turnover means the employee leaves the organisation.
Labour absenteeism and turnover increases the cost and causes many problems in the
smooth functioning of the organisation. Management uses different techniques to reduce
absenteeism and labour turnover in the organisation.
12. Encourages Team Work
Management encourages employees to work as a team. It develops a team spirit in the
organisation. This unity bring success to the organization
FUNCTIONS OF MANAGEMENT:
Management has been described as a social process involving responsibility for economical
and effective planning & regulation of operation of an enterprise in the fulfillment of given
purposes. It is a dynamic process consisting of various elements and activities. These
activities are different from operative functions like marketing, finance, purchase etc. Rather
these activities are common to each and every manger irrespective of his level or status.
Different experts have classified functions of management. According to George & Jerry,
There are four fundamental functions of management i.e. planning, organizing, actuating
and controlling. According to Henry Fayol, To manage is to forecast and plan, to organize,
to command, & to control. Whereas Luther Gullick has given a keyword POSDCORB
where P stands for Planning, O for Organizing, S for Staffing, D for Directing, Co for Coordination, R for reporting & B for Budgeting. But the most widely accepted are functions of
management given by KOONTZ and ODONNEL i.e. Planning, Organizing, Staffing, Directing
and Controlling.
For theoretical purposes, it may be convenient to separate the function of management but
practically these functions are overlapping in nature i.e. they are highly inseparable. Each
function blends into the other & each affects the performance of others.

Planning
It is the basic function of management. It deals with chalking out a future course of action &
deciding in advance the most appropriate course of actions for achievement of predetermined goals. According to KOONTZ, Planning is deciding in advance - what to do,
when to do & how to do. It bridges the gap from where we are & where we want to be. A
plan is a future course of actions. It is an exercise in problem solving & decision making.
Planning is determination of courses of action to achieve desired goals. Thus, planning is a
systematic thinking about ways & means for accomplishment of pre-determined goals.

Planning is necessary to ensure proper utilization of human & non-human resources. It is all
pervasive, it is an intellectual activity and it also helps in avoiding confusion, uncertainties,
risks, wastages etc.
Organizing
It is the process of bringing together physical, financial and human resources and
developing productive relationship amongst them for achievement of organizational goals.
According to Henry Fayol, To organize a business is to provide it with everything useful or
its functioning i.e. raw material, tools, capital and personnels. To organize a business
involves determining & providing human and non-human resources to the organizational
structure. Organizing as a process involves:
Identification of activities.
Classification of grouping of activities.
Assignment of duties.
Delegation of authority and creation of responsibility.
Coordinating authority and responsibility relationships.
Staffing
It is the function of manning the organization structure and keeping it manned. Staffing has
assumed greater importance in the recent years due to advancement of technology,
increase in size of business, complexity of human behavior etc. The main purpose o staffing
is to put right man on right job i.e. square pegs in square holes and round pegs in round
holes. According to Kootz & ODonell, Managerial function of staffing involves manning the
organization structure through proper and effective selection, appraisal & development of
personnel to fill the roles designed un the structure. Staffing involves:
Manpower Planning (estimating man power in terms of searching, choose the person
and giving the right place).
Recruitment, selection & placement.
Training & development.
Remuneration.
Performance appraisal.
Promotions & transfer.
Directing
It is that part of managerial function which actuates the organizational methods to work
efficiently for achievement of organizational purposes. It is considered life-spark of the
enterprise which sets it in motion the action of people because planning, organizing and
staffing are the mere preparations for doing the work. Direction is that inert-personnel
aspect of management which deals directly with influencing, guiding, supervising,
motivating sub-ordinate for the achievement of organizational goals. Direction has following
elements:
Supervision
Motivation
Leadership
Communication
Supervision- implies overseeing the work of subordinates by their superiors. It is the act of
watching & directing work & workers.
Motivation- means inspiring, stimulating or encouraging the sub-ordinates with zeal to work.
Positive, negative, monetary, non-monetary incentives may be used for this purpose.
Leadership- may be defined as a process by which manager guides and influences the work
of subordinates in desired direction.
Communications- is the process of passing information, experience, opinion etc from one
person to another. It is a bridge of understanding.

Controlling
It implies measurement of accomplishment against the standards and correction of
deviation if any to ensure achievement of organizational goals. The purpose of controlling is
to ensure that everything occurs in conformities with the standards. An efficient system of
control helps to predict deviations before they actually occur. According to Theo Haiman,
Controlling is the process of checking whether or not proper progress is being made
towards the objectives and goals and acting if necessary, to correct any deviation.
According to Koontz & ODonell Controlling is the measurement & correction of performance
activities of subordinates in order to make sure that the enterprise objectives and plans
desired to obtain them as being accomplished. Therefore controlling has following steps:
Establishment of standard performance.
Measurement of actual performance.
Comparison of actual performance with the standards and finding out deviation if
any.
Corrective action.
PRINCIPLES OF MANAGEMENT:
Management Principles developed by Henri Fayol:
1. DIVISION OF WORK: Work should be divided among individuals and groups to
ensure that effort and attention are focused on special portions of the task. Fayol
presented work specialization as the best way to use the human resources of the
organization.
2. AUTHORITY: The concepts of Authority and responsibility are closely related.
Authority was defined by Fayol as the right to give orders and the power to exact
obedience. Responsibility involves being accountable, and is therefore naturally
associated with authority. Whoever assumes authority also assumes responsibility.
3. DISCIPLINE: A successful organization requires the common effort of workers.
Penalties should be applied judiciously to encourage this common effort.
4. UNITY OF COMMAND: Workers should receive orders from only one manager.
5. UNITY OF DIRECTION: The entire organization should be moving towards a
common objective in a common direction.
6. SUBORDINATION OF INDIVIDUAL INTERESTS TO THE GENERAL INTERESTS:
The interests of one person should not take priority over the interests of the
organization as a whole.
7. REMUNERATION: Many variables, such as cost of living, supply of qualified
personnel, general business conditions, and success of the business, should be
considered in determining a workers rate of pay.
8. CENTRALIZATION: Fayol defined centralization as lowering the importance of the
subordinate role. Decentralization is increasing the importance. The degree to which
centralization or decentralization should be adopted depends on the specific
organization in which the manager is working.
9. SCALAR CHAIN: Managers in hierarchies are part of a chain like authority scale.
Each manager, from the first line supervisor to the president, possess certain
amounts of authority. The President possesses the most authority; the first line
supervisor the least. Lower level managers should always keep upper level managers
informed of their work activities. The existence of a scalar chain and adherence to it
are necessary if the organization is to be successful.
10. ORDER: For the sake of efficiency and coordination, all materials and people related
to a specific kind of work should be treated as equally as possible.
11. EQUITY: All employees should be treated as equally as possible.
12. STABILITY OF TENURE OF PERSONNEL: Retaining productive employees should
always be a high priority of management. Recruitment and Selection Costs, as well
as increased product-reject rates are usually associated with hiring new workers.

13. INITIATIVE: Management should take steps to encourage worker initiative, which is
defined as new or additional work activity undertaken through self direction.
14. ESPIRIT DE CORPS: Management should encourage harmony and general good
feelings among employees.
ROLES OF MANAGER:
A managers role is very crucial in an organization. The success of organization depends
upon managers ability in utilizing the resources for achieving the pre determined goals.
Henry Mintzberg suggested three areas where a manger has to work.

Interpersonal Role

Informational Role

Decisional Role
Interpersonal role:
A manger is concerned with his interacting with people both inside the organization and
outsiders. There are three types of interpersonal roles.
Figure Head: In figure head role manager performs activities which are ceremonial and
symbolic nature. These include greeting the visitors attending the social functions involving
employees, handing out merit certificates and other awards to outstanding employees.
Leader: Managers leader role involves leading his subordinates and motivating them for
willing contributions. Manager is responsible for activities of his subordinates. He has to set
example of hard work and dedication so that subordinate follow his directions with respect.
Liaison Role: In liaison role manager serves as a connecting link between his and outsiders
or between his unit and other organizational units.
Informational Role
Informational role involves receiving collecting of information and distributing them as
required. It is of three types
Monitor: In monitoring role manager collects the information which can affect the
organizational activities by reading magazines and periodicals, reports from the
departments, talking with others to learn changes in the publics taste.
Disseminator: In disseminator role manger distribute the information to his subordinates
and superiors by sending circulars, holding meetings and making phone calls.
Spokesperson: In spokesperson role the manager represents his organization or unit with
interacting with outsiders. These may customer, financer, govt. suppliers or other agencies
in society. It can be done by attending press conferences, meetings and by issuing notices.
Decisional Role:
It is very important role. Manager has to take decisions daily. In decisional role he performs
four roles.
Entrepreneur: As an entrepreneur the manger assumes certain risks which can affect the
organization. He has to take decisions like expansion or diversification, initiation of new
projects, development of older procedures etc.
As a Conflict Handler: As a conflict handler he has to take care of certain disturbance in
organization such as resolving employee disputes and strikes etc.
Resource Allocator: As a resource allocator managers fulfill the demand of various units
in terms of human physical and financial. He tries to utilize these resources in such way that
no department suffers for their inadequacy.
Negotiator: As negotiator manager has to take decisions regarding prices with suppliers
and customers. He also deals with trade unions and negotiates with them regarding working
conditions and wage fixation.
SOCIAL RESPONSIBILITY AND ETICHS IN MANAGEMENT:
Social Responsibilities of Management
The term social responsibilities can be defined as the obligation of management towards the
society and others concerned.
Reason for Social Responsibilities: Business enterprises are creatures of society and should
respond to the demands of society. If the management does not react to changes in social

demands, the society will either force them to do so through laws or will not permit the
enterprise to survive. Therefore the long term interests of business are best served when
management assume social responsibilities. The image of business organization liked with
the quality of its products and customer service and the extent to which it fulfills the
expectations of owners, employees, consumers, government and the community at large.
For long term success it matters a great deal if the firm has a favorable image in the public
mind. Every business enterprise is a organ of society and its activities have impact on the
social scene. Therefore, it is important for management to consider whether their policies
and actions are likely to promote the public good, advances the basic values of society, and
constitute to its stability, strength and harmony.
Increasing concern for the social responsibility of management, it is now recognized that
besides taking care of the financial interest of owners, managers of business firms must also
take into account the interest of various other groups such as employees, consumers, the
government and the community as a whole. These interested groups are directly or
indirectly affected by the pursuit of business activities and they are the stake-holders of the
business enterprise.
Responsibility towards owners: The primary responsibilities of management is to assure
a fair and reasonable rate of return on capital and fair return on investment can be
determined on the basis of difference in the risks of business in different fields of activity.
With the growth of business the shareholders can also expect appreciation in the value of
their capital.
Responsibility towards employees: Management responsibility towards employees relate
to the fair wages and salaries, satisfactory work environment, labour management relations
and employee welfare. Fair wages should be fixed in the light of labor productivity, the
prevailing wage rates in the same or neighboring areas and relative importance of jobs.
Managers salaries and allowances are expected to be linked with their responsibility,
initiative and skill. But the spread between minimum wages and highest salaries should be
reasonable. Employees are expected to build up and maintain harmonious relationships
between superior and subordinates. Another aspect of responsibility towards employees is
the provision of welfare amenities like safety and security of working conditions, medical
facilities, and housing, canteen, leave and retirement benefits.
Responsibility towards consumers: In a competitive market, serving consumers is
supposed to be a prime concern of management. But in reality perfect competition does not
prevail in all product markets. In the event of shortage of supply there is no automatic
correction. Besides consumers are often victims of unfair trade practices and unethical
conduct of business. Consumer interests are thus protected to some extent with laws and
pressure of organized consumer groups. Management should anticipate these
developments, satisfy consumer needs and protect consumer interests. Goods must be of
appropriate standard and quality and be available in adequate quantities at reasonable
prices. Management should avoid resorting to hoarding or creating artificial scarcity as well
as false and misleading advertisements.
Responsibility towards the Governments: As a part of their social responsibility,
management must conduct business affair in lawful manner, honestly pay all the taxes and
dues, and should not corrupt public officials for selfish ends. Business activities must also
confirm to the economic and social policies of the government.
Responsibility towards the community and society: The socially responsible role of
management in relation to the community are expected to be revealed by its policies with
respect to the employment of handicapped persons, and weaker sections of the community,
environmental protection, pollution control, setting up industries in backward areas, and
providing relief to the victims of natural calamities etc.
CLASSICAL THEORY:
Classical theory of management
BUREAUCRACY MANAGEMENT (Max Weber-1900)

Bureaucracy management is a stream of classical theory of management. Max Weber was

the first of management theorists who were concerned the management structure with the
sets of rule and regulations. Bureaucracy management depends upon administration
devices. Max Weber presents the ideal organization structure. There are four major
characteristics of organizational structure.
Hierarchical positions

Rules of system

Division of labour for specialization

Impersonal relationship
Advantage of bureaucracy management:

Hierarchy of authority.

Employment is based on the technical efficiency.

Eliminate managerial inconsistencies.

A well understood system.

Maintain the consistency of working.

Rules and regulation of the duties are followed by the employees.

Records are kept for future references.

People are given authority according to their position in organization.

Disadvantage of bureaucracy management:

Human resources are not tackled.

Inter personal relations are discarded.

It does not allow for personal growth and development.

It does not possess adequate.

Organization becomes static and change is not anticipated.

Difficult to keep co-ordination and communication between employees.

It is a closed system.
NEO CLASSICAL THEORY:
Neo- classical theory is also referred to as behavioral science approach to modifying and
improving the classical theory. While classical theories focused more on structure and
physical aspects of the worker and Neo-classical theory gives importance to human and
social aspects of the worker and his relations in the organization.
The neo-classical theory is based on the Hawthrone experiments. Elton Mayo conducted the
Hawthrone experiments at Hawthron plant of General Electronic Company (GEC) between
1927 and 1993 at Chicago with 30,000 workers. The Hawthron plant was manufacturing
telephone system bell. The objective of the experiment was to find out the behavior and
attitude of workers at workplace under better working conditions. In the company, when
management provide the benefits of medical allowance and pension with recreational
facilities. Even thought workers get all facilities but the productivity was not up to
expectation. So, in 1924, the professor Elton Mayo and his research team investigate the
reasons for dissatisfaction of employees and decrease in productivity.
Four Phase of Hawthrone experiments:
Prof. Elton Mayo and his team conducted researches in four phases.

Illumination experiments (1924 1927)

Relay assembly room experiments (1927 1928)

Mass interviewing programme (1928 -1930)

Bank wiring room study (1931 1932)

Result of Hawthrone Experiments:
Motivation: Employees are not motivated by only money (bonus scheme and incentive).
Communication: communication helps the management and employees to have better
mutual understanding. Through proper communication, management can easily identified
the problem faced by its employees and can easily solve out.
Social factors: Social factors are responsible for deciding the level of output.

Behavior of workers: workers are not as individual identity but as members of a group in an
organization and they have their own norms and beliefs. Workers behavior depends upon
his mental level and emotions. Workers began to influence their group behavior towards
management.
Relationship: Employees do not like order and command. They preferred to maintain
amicable relationship with their co-workers. They want co-operative attitude from their
superiors.
Production level: Teamwork and Group psychology increases productivity.
Criticism of Hawthrone Experiments:

Hawthrone experiment was not conducted scientifically.

In the experiment, various format and structure are not feasible.

Eltone Mayo gives more importance to human aspect and ignoring other important
aspects.

Group conflict is prevalent in an organization.

Hawthrone experiment did not give any recognition to the forces which are responsible for
productivity in the organization.
During
experiment, Eltone Mayo has assumed that a satisfied employee would be
productive. But the finding was different. There is no link between working condition and
productivity.
Major contributors of Neo-classical theory are:
Chris Argyris- He recommended that worker should be given freedom to make their own
judgments.
Mary Praker Follett: He referred group influence.
Dougals Me Gorgor: he referred two views.
X-theory- it is based on classical theory and
Y-theory- it is based on neo-classical theory.
Abraham Maslow: He referred individual needs.

Unit 2: Planning and Decision Making

Planning means looking ahead and chalking out future courses of action to be followed. It is
a preparatory step. It is a systematic activity which determines when, how and who is going
to perform a specific job. Planning is a detailed programme regarding future courses of
action. It is rightly said Well plan is half done. Therefore planning takes into consideration
available & prospective human and physical resources of the organization so as to get
effective co-ordination, contribution & perfect adjustment. It is the basic management
function which includes formulation of one or more detailed plans to achieve optimum
balance of needs or demands with the available resources.
According to Urwick, Planning is a mental predisposition to do things in orderly way, to
think before acting and to act in the light of facts rather than guesses. Planning is deciding
best alternative among others to perform different managerial functions in order to achieve
predetermined goals.
According to Koontz & ODonell, Planning is decid
ing in advance what to do, how to do and who is to do it. Planning bridges the gap between
where we are to, where we want to go. It makes possible things to occur which would not
otherwise occur.
Steps in Planning Function
Planning function of management involves following steps:Establishment of objectives
a) Planning requires a systematic approach.
b) Planning starts with the setting of goals and objectives to be achieved.
c) Objectives provide a rationale for undertaking various activities as well as indicate
direction of efforts.
d) Moreover objectives focus the attention of managers on the end results to be
achieved.
e) As a matter of fact, objectives provide nucleus to the planning process. Therefore,
objectives should be stated in a clear, precise and unambiguous language. Otherwise
the activities undertaken are bound to be ineffective.
f) As far as possible, objectives should be stated in quantitative terms. For example,
Number of men working, wages given, units produced, etc. But such an objective
cannot be stated in quantitative terms like performance of quality control manager,
effectiveness of personnel manager.
g) Such goals should be specified in qualitative terms.
h) Hence objectives should be practical, acceptable, workable and achievable.
Establishment of Planning Premises
1. Planning premises are the assumptions about the lively shape of events in future.
2. They serve as a basis of planning.
3. Establishment of planning premises is concerned with determining where one tends
to deviate from the actual plans and causes of such deviations.
4. It is to find out what obstacles are there in the way of business during the course of
operations.
5. Establishment of planning premises is concerned to take such steps that avoids these
obstacles to a great extent.
6. Planning premises may be internal or external. Internal includes capital investment
policy, management labour relations, philosophy of management, etc. Whereas
external includes socio- economic, political and economical changes.
7. Internal premises are controllable whereas external are non- controllable.
Choice of alternative course of action
1. When forecast are available and premises are established, a number of alternative
course of actions have to be considered.
2. For this purpose, each and every alternative will be evaluated by weighing its pros
and cons in the light of resources available and requirements of the organization.

3. The merits, demerits as well as the consequences of each alternative must be

examined before the choice is being made.
4. After objective and scientific evaluation, the best alternative is chosen.
5. The planners should take help of various quantitative techniques to judge the
stability of an alternative.
Formulation of derivative plans
1. Derivative plans are the sub plans or secondary plans which help in the achievement
of main plan.
2. Secondary plans will flow from the basic plan. These are meant to support and
expediate the achievement of basic plans.
3. These detail plans include policies, procedures, rules, programmes, budgets,
schedules, etc. For example, if profit maximization is the main aim of the enterprise,
derivative plans will include sales maximization, production maximization, and cost
minimization.
4. Derivative plans indicate time schedule and sequence of accomplishing various tasks.
Securing Co-operation
1. After the plans have been determined, it is necessary rather advisable to take
subordinates or those who have to implement these plans into confidence.
2. The purposes behind taking them into confidence are :a. Subordinates may feel motivated since they are involved in decision making
process.
b. The organization may be able to get valuable suggestions and improvement in
formulation as well as implementation of plans.
c. Also the employees will be more interested in the execution of these plans.
Follow up/Appraisal of plans
1. After choosing a particular course of action, it is put into action.
2. After the selected plan is implemented, it is important to appraise its effectiveness.
3. This is done on the basis of feedback or information received from departments or
persons concerned.
4. This enables the management to correct deviations or modify the plan.
5. This step establishes a link between planning and controlling function.
6. The follow up must go side by side the implementation of plans so that in the light of
observations made, future plans can be made more realistic.
STEPS IN PLANNING PROCESS:
As planning is one of great importance to an organisation, the entire process of planning
should be carried out in a systematic manner. Planning is an intellectual process which an
executive carries out before he does any job with the help of other people. It involves the
following steps:
1. Determination of the objectives:
The first step in planning is to identify certain objectives. The objectives set must clearly
indicate what is to be achieved, where action should take place, who should perform it and
when it is to be accomplished. The objectives should be established for the entire
organisation and for each and every department. Planning has no utility if it is not related to
certain objectives.
2. Collection and forecasting of Information:
Sufficient information must be collected in order to make plans and sub plans. Necessary
information includes the critical assessment of current status of the organisation together
with a forward look at the environment that is anticipated. The collection and forecasting of
the information must be done in terms of external and internal environment. The
considerations of the external environments must the competitions now and in the future.
The assessment of internal environment may consist of the strong and weak point of the
organisation. This is an important step of planning process.

3. Development of planning premises:

The next step is the establishment of planning premises. Planning premises are the
assumptions and predictions about the future. The assumptions are the basis of planning.
Forecasting is important in premising. It helps in making realistic assumptions about sales,
costs, prices, products etc in future. This requires a collection of data on present trends and
future possibilities.
4. Discovering alternative courses of action:
Usually, there are several alternatives for any plan. The manager should try to find out all
the possible alternatives.At the time of developing alternatives he should screen out most
viable alternatives. So he has to analyse in detail a limited number of alternatives.
5. Selection of best alternative:
The various alternatives identified are evaluated and compared in terms of their expected
costs and benefits. Many quantitative techniques are available to evaluate alternatives. after
evaluating the various alternatives the best alternative should be selected for
implementation.
6. Formulation of derivative plans:
The next step is to develop detailed sub plans for its implementation. Derivative plans are
required to support the overall plans. The derivative plans are developed in the frame work
of overall plans.These are drawn up with respect to different areas of activity.
7. Communicating the plan :
It is very important to get the co operation of the subordinates at every stage of its
implementation. For this purpose the plans should be communicated and explained to them
so that they can get the clear picture of what to be done. An organisation is not benefited
from planning process until they are put into action.
8. Follow up measures:
To ensure the plans are proceeding along the right lines, the actual performance is
compared with the planned performance. In this way, any short coming can be noted and
suitable remedial action can be taken.
OBJECTIVES:
The main objectives of management are:
Getting Maximum Results with Minimum Efforts - The main objective of management
is to secure maximum outputs with minimum efforts & resources. Management is basically
concerned with thinking & utilizing human, material & financial resources in such a manner
that would result in best combination. This combination results in reduction of various costs.
Increasing the Efficiency of factors of Production - Through proper utilization of
various factors of production, their efficiency can be increased to a great extent which can
be obtained by reducing spoilage, wastages and breakage of all kinds, this in turn leads to
saving of time, effort and money which is essential for the growth & prosperity of the
enterprise.
Maximum Prosperity for Employer & Employees - Management ensures smooth and
coordinated functioning of the enterprise. This in turn helps in providing maximum benefits
to the employee in the shape of good working condition, suitable wage system, incentive
plans on the one hand and higher profits to the employer on the other hand.
Human betterment & Social Justice - Management serves as a tool for the upliftment as
well as betterment of the society. Through increased productivity & employment,
management ensures better standards of living for the society. It provides justice through
its uniform policies.
STRATEGIES:
Strategy is an action that managers take to attain one or more of the organizations goals.
Strategy can also be defined as A general direction set for the company and its various
components to achieve a desired state in the future. Strategy results from the detailed
strategic planning process.

A strategy is all about integrating organizational activities and utilizing and allocating the
scarce resources within the organizational environment so as to meet the present
objectives. While planning a strategy it is essential to consider that decisions are not taken
in a vaccum and that any act taken by a firm is likely to be met by a reaction from those
affected, competitors, customers, employees or suppliers.
Strategy can also be defined as knowledge of the goals, the uncertainty of events
and the need to take into consideration the likely or actual behavior of others. Strategy is
the blueprint of decisions in an organization that shows its objectives and goals, reduces the
key policies, and plans for achieving these goals, and defines the business the company is to
carry on, the type of economic and human organization it wants to be, and the contribution
it plans to make to its shareholders, customers and society at large.
Features of Strategy
Strategy is Significant because it is not possible to foresee the future. Without a perfect
foresight, the firms must be ready to deal with the uncertain events which constitute the
business environment.
Strategy deals with long term developments rather than routine operations, i.e. it deals with
probability of innovations or new products, new methods of productions, or new markets to
be developed in future.
Strategy is created to take into account the probable behavior of customers and
competitors. Strategies dealing with employees will predict the employee behavior.
Strategy is a well defined roadmap of an organization. It defines the overall mission, vision
and direction of an organization. The objective of a strategy is to maximize an organizations
strengths and to minimize the strengths of the competitors.
Strategy, in short, bridges the gap between where we are and where we want to be
POLICIES;
Policies - Definition and Types
Policies are guides to thinking in decision making. They reflect and interpret objectives and
guide decisions to to achieve the objectives. They establish the framework for planning
programs. They establish limits or boundaries to plans whereas planning premises provide
the operational background.
Policies themselves are plans. They are also the result of planning and decision making.
Policies also have levels. A policy can be a major as that of financing growth through
retained profits.
Policies can be categorized as originated policy, appealed policy, implied policy, and
externally imposed policy.
The most logical way of policy setting is that originated by managers at a certain level for
the express purpose of guiding their decisions and the decisions of their subordinates in the
operation of business.
The decisions made by superiors in the on problems referred to them can develop into
policies and such policies are termed as appealed policy.
Many times policies develop from the actions that people see about them. If a company
talks of high quality in speeches and slogans, but is frequently producing and selling shoddy
goods, people working in the company assume that poor quality is the policy of the
company. Implied policy emerges from instances where stated policy is not enforced.
Government, trade associations and trade unions impose certain policies on the
organizations.
Guidelines for Effective Policies
Policies should reflect objectives and plans.
Policies should be consistent.
Policies should be flexible
Policies should be distinguished from rules and procedures.
Policies should be in writing.

In the

Policies should be taught.

Policies should be controlled
Policies in Various Functional Areas of Business
following functional areas, policies are announced generally to guide decision making.
Product selection and development
Pricing
Sales promotion
Distribution channels
Production and inventory
Finance
Personnel selection and training
Compensation
Employee benefits

PLANNING PREMISES:
Meaning of Planning Premises
Planning premises are the basic assumptions about the environment.
These assumptions are essential to make plans more realistic and operational. Planning
premises provide a framework. All plans are made within this framework. There are many
environmental factors, which influence the plan. Assumptions are made about these factors.
These assumptions are called premises.
Types of Planning Premises
Different types of planning premises are depicted in the picture (figure) below.

1. Internal and External Premises

Internal Premises come from the business itself. It includes skills of the workers, capital
investment policies, philosophy of management, sales forecasts, etc.
External Premises come from the external environment. That is, economic, social, political,
cultural and technological environment. External premises cannot be controlled by the
business.
2. Controllable, Semi-controllable and Uncontrollable Premises
Controllable Premises are those which are fully controlled by the management. They include
factors like materials, machines and money.
Semi-controllable Premises are partly controllable. They include marketing strategy.
Uncontrollable Premises are those over which the management has absolutely no control.
They include weather conditions, consumers' behavior, government policy, natural
calamities, wars, etc.
3. Tangible and Intangible Premises
Tangible Premises can be measured in quantitative terms. They include units of production
and sale, money, time, hours of work, etc.
Intangible Premises cannot be measured in quantitative terms. They include goodwill of the
business, employee's morale, employee's attitude and public relations.
4. Constant and Variable Premises

Constant Premises do not change. They remain the same, even if there is a change in the
course of action. They include men, money and machines.
Variable Premises are subject to change. They change according to the course of action.
They include union-management relations.
MANAGEMENT BY OBJECTIVES:
An effective management goes a long way in extracting the best out of employees and make
them work as a single unit towards a common goal.
The term Management by Objectives was coined by Peter Drucker in 1954.
What is Management by Objective ?
The process of setting objectives in the organization to give a sense of direction to the
employees is called as Management by Objectives.
It refers to the process of setting goals for the employees so that they know what they are
supposed to do at the workplace.
Management by Objectives defines roles and responsibilities for the employees and help
them chalk out their future course of action in the organization.
Management by objectives guides the employees to deliver their level best and achieve the
targets within the stipulated time frame.
Need for Management by Objectives (MBO)
The Management by Objectives process helps the employees to understand their
duties at the workplace.
KRAs are designed for each employee as per their interest, specialization and
educational qualification.
The employees are clear as to what is expected out of them.
Management by Objectives process leads to satisfied employees. It avoids job
mismatch and unnecessary confusions later on.
Employees in their own way contribute to the achievement of the goals and
objectives of the organization. Every employee has his own role at the workplace.
Each one feels indispensable for the organization and eventually develops a feeling of
loyalty towards the organization. They tend to stick to the organization for a longer
span of time and contribute effectively. They enjoy at the workplace and do not treat
work as a burden.
Management by Objectives ensures effective communication amongst the
employees. It leads to a positive ambience at the workplace.
Management by Objectives leads to well defined hierarchies at the workplace. It
ensures transparency at all levels. A supervisor of any organization would never
directly interact with the Managing Director in case of queries. He would first meet
his reporting boss who would then pass on the message to his senior and so on.
Every one is clear about his position in the organization.
The MBO Process leads to highly motivated and committed employees.
The MBO Process sets a benchmark for every employee. The superiors set targets for
each of the team members. Each employee is given a list of specific tasks.
Limitations of Management by objectives Process
It sometimes ignores the prevailing culture and working conditions of the
organization.
More emphasis is being laid on targets and objectives. It just expects the employees
to achieve their targets and meet the objectives of the organization without
bothering much about the existing circumstances at the workplace. Employees are
just expected to perform and meet the deadlines. The MBO Process sometimes do
treat individuals as mere machines.
The MBO process increases comparisons between individuals at the workplace.
Employees tend to depend on nasty politics and other unproductive tasks to outshine

their fellow workers. Employees do only what their superiors ask them to do. Their
work lacks innovation, creativity and sometimes also becomes monotonous.
DECISION MAKING PROCESS:
Six steps in the decision making process with diagram are discussed below.
1. Defining and Analysing the real problem
The manager should first find out what is the real problem. The problem may be due to bad
relations between management and employees, decrease in sales, increase in cost, etc.
After finding out the true problem manager must analyse it carefully. He should find out the
cause and effect of the problem.
2. Developing Alternative Solutions
After defining and analysing the real problem, the manager should develop (make)
alternative (different) solutions for solving the problem. Only realistic solutions should be
considered. Group participation and computers should be used for developing alternative
solutions.
3. Evaluating the Alternative Solutions
The manager should carefully evaluate the merits and demerits of each alternative solution.
He should compare the cost of each solution. He should compare the risks involved. He
should also compare the feasibility of each solution. He should find out which solution will be
accepted by the employees.
4. Selecting the best Solution
After evaluating all the solutions, the manager should select the best solution. He should
select a solution which is less costly and less risky. He should select a solution which is most
feasible and which is accepted by the employees. In short, the manager should select a
solution which has the most merits and least demerits. The best solution is called the
"Decision".
5. Implementing the Decision
After making the decision, the manager should implement it. That is, he should put the
decision into action. He should communicate the decision to the employees. He should
persuade the employees to accept the decision. This can be done by involving them in the
decision making process. Then the manager should provide the employees with all the
resources, which are required for implementing the decision. He should also motivate them
to implement the decision.
6. Follow Up
After implementing the decision, the manager must do follow up. That is, he must get the
feedback about the decision. He should find out whether the decision was effective or not.
This is done by comparing the decision with the action, finding out the deviations
(differences) and taking essential steps to remove these deviations. So, follow-up is just like
the control function. It helps to improve the quality of future decisions.
UNIT 3
Concepts of Organizing
The working relationships vertical and horizontal associations between individuals and
groups that exist within an organization affect how its activities are accomplished and
coordinated. Effective organizing depends on the mastery of several important concepts:
work specialization, chain of command, authority, delegation, span of control, and
centralization versus decentralization. Many of these concepts are based on the principles
developed by Henri Fayol.
Work specialization
One popular organizational concept is based on the fundamental principle that employees
can work more efficiently if they're allowed to specialize. Work specialization, sometimes
called division of labor, is the degree to which organizational tasks are divided into separate
jobs. Employees within each department perform only the tasks related to their specialized
function.

When specialization is extensive, employees specialize in a single task, such as running a

particular machine in a factory assembly line. Jobs tend to be small, but workers can
perform them efficiently. By contrast, if a single factory employee built an entire automobile
or performed a large number of unrelated jobs in a bottling plant, the results would be
inefficient.
Despite the apparent advantages of specialization, many organizations are moving away
from this principle. With too much specialization, employees are isolated and perform only
small, narrow, boring tasks. In addition, if that person leaves the company, his specialized
knowledge may disappear as well. Many companies are enlarging jobs to provide greater
challenges and creating teams so that employees can rotate among several jobs.
Chain of command
The chain of command is an unbroken line of authority that links all persons in an
organization and defines who reports to whom. This chain has two underlying principles:
unity of command and scalar principle.
Unity of command: This principle states that an employee should have one
and only one supervisor to whom he or she is directly responsible. No
employee should report to two or more people. Otherwise, the employee may
receive conflicting demands or priorities from several supervisors at once,
placing this employee in a no-win situation.
Sometimes, however, an organization deliberately breaks the chain of
command, such as when a project team is created to work on a special
project. In such cases, team members report to their immediate supervisor
and also to a team project leader. Another example is when a sales
representative reports to both an immediate district supervisor and a
marketing specialist, who is coordinating the introduction of a new product, in
the home office.
Nevertheless, these examples are exceptions to the rule. They happen under
special circumstances and usually only within a special type of employee
group. For the most part, however, when allocating tasks to individuals or
grouping assignments, management should ensure that each has one boss,
and only one boss, to whom he or she directly reports.
Scalar principle: The scalar principle refers to a clearly defined line of
authority that includes all employees in the organization. The classical school
of management suggests that there should be a clear and unbroken chain of
command linking every person in the organization with successively higher
levels of authority up to and including the top manager. When organizations
grow in size, they tend to get taller, as more and more levels of management
are added. This increases overhead costs, adds more communication layers,
and impacts understanding and access between top and bottom levels. It can
greatly slow decision making and can lead to a loss of contact with the client
or customer.
Authority
Authority is the formal and legitimate right of a manager to make decisions, issue orders,
and allocate resources to achieve organizationally desired outcomes. A manager's authority
is defined in his or her job description.
Organizational authority has three important underlying principles:
Authority is based on the organizational position, and anyone in the same
position has the same authority.
Authority is accepted by subordinates. Subordinates comply because they
believe that managers have a legitimate right to issue orders.

Authority flows down the vertical hierarchy. Positions at the top of the
hierarchy are vested with more formal authority than are positions at the
bottom.
In addition, authority comes in three types:
Line authority gives a manager the right to direct the work of his or her
employees and make many decisions without consulting others. Line
managers are always in charge of essential activities such as sales, and they
are authorized to issue orders to subordinates down the chain of command.
Staff authority supports line authority by advising, servicing, and assisting,
but this type of authority is typically limited. For example, the assistant to
the department head has staff authority because he or she acts as an
extension of that authority. These assistants can give advice and
suggestions, but they don't have to be obeyed. The department head may
also give the assistant the authority to act, such as the right to sign off on
expense reports or memos. In such cases, the directives are given under the
line authority of the boss.
Functional authority is authority delegated to an individual or department
over specific activities undertaken by personnel in other departments. Staff
managers may have functional authority, meaning that they can issue orders
down the chain of command within the very narrow limits of their authority.
For example, supervisors in a manufacturing plant may find that their
immediate bosses have line authority over them, but that someone in
corporate headquarters may also have line authority over some of their
activities or decisions.
Why would an organization create positions of functional authority? After all, this authority
breaks the unity of command principle by having individuals report to two bosses. The
answer is that functional authority allows specialization of skills and improved coordination.
This concept was originally suggested by Frederick Taylor. He separated planning from
doing by establishing a special department to relieve the laborer and the foreman from the
work of planning. The role of the foreman became one of making sure that planned
operations were carried out. The major problem of functional authority is overlapping
relationships, which can be resolved by clearly designating to individuals which activities
their immediate bosses have authority over and which activities are under the direction of
someone else.
Delegation
A concept related to authority is delegation. Delegation is the downward transfer of
authority from a manager to a subordinate. Most organizations today encourage managers
to delegate authority in order to provide maximum flexibility in meeting customer needs. In
addition, delegation leads to empowerment, in that people have the freedom to contribute
ideas and do their jobs in the best possible ways. This involvement can increase job
satisfaction for the individual and frequently results in better job performance. Without
delegation, managers do all the work themselves and underutilize their workers. The ability
to delegate is crucial to managerial success. Managers need to take four steps if they want
to successfully delegate responsibilities to their teams.
Specifically assign tasks to individual team members.
The manager needs to make sure that employees know that they are
ultimately responsible for carrying out specific assignments.
Give team members the correct amount of authority to accomplish
assignments.
Typically, an employee is assigned authority commensurate with the task.
A classical principle of organization warns managers not to delegate
without giving the subordinate the authority to perform to delegated task.

When an employee has responsibility for the task outcome but little
authority, accomplishing the job is possible but difficult. The subordinate
without authority must rely on persuasion and luck to meet performance
expectations. When an employee has authority exceeding responsibility,
he or she may become a tyrant, using authority toward frivolous
outcomes.
Make sure that team members accept responsibility.
Responsibility is the flip side of the authority coin. Responsibility is the
duty to perform the task or activity an employee has been assigned. An
important distinction between authority and responsibility is that the
supervisor delegates authority, but the responsibility is shared. Delegation
of authority gives a subordinate the right to make commitments, use
resources, and take actions in relation to duties assigned. However, in
making this delegation, the obligation created is not shifted from the
supervisor to the subordinate it is shared. A supervisor always retains
some responsibility for work performed by lower-level units or individuals.
Create accountability.
Team members need to know that they are accountable for their projects.
Accountability means answering for one's actions and accepting the
consequences. Team members may need to report and justify task
outcomes to their superiors. Managers can build accountability into their
organizational structures by monitoring performances and rewarding
successful outcomes. Although managers are encouraged to delegate
authority, they often find accomplishing this step difficult for the following
reasons:
Delegation requires planning, and planning takes time. A manager may
say, By the time I explain this task to someone, I could do it myself. This
manager is overlooking the fact that the initial time spent up front training
someone to do a task may save much more time in the long run. Once an
employee has learned how to do a task, the manager will not have to take
the time to show that employee how to do it again. This improves the flow
of the process from that point forward.
Managers may simply lack confidence in the abilities of their subordinates.
Such a situation fosters the attitude, If you want it done well, do it
yourself. If managers feel that their subordinates lack abilities, they need
to provide appropriate training so that all are comfortable performing their
duties.
Managers experience dual accountability. Managers are accountable for
their own actions and the actions of their subordinates. If a subordinate
fails to perform a certain task or does so poorly, the manager is ultimately
responsible for the subordinate's failure. But by the same token, if a
subordinate succeeds, the manager shares in that success as well, and the
department can be even more productive.
Finally, managers may refrain from delegating because they are insecure
about their value to the organization. However, managers need to realize
that they become more valuable as their teams become more productive
and talented.
Despite the perceived disadvantages of delegation, the reality is that a manager can
improve the performance of his or her work groups by empowering subordinates through
effective delegation. Few managers are successful in the long term without learning to
delegate effectively.

So, how do managers learn to delegate effectively? The following additional principles may
be helpful for managers who've tried to delegate in the past and failed:
Principle 1: Match the employee to the task. Managers should carefully consider the
employees to whom they delegate tasks. The individual selected should possess the skills
and capabilities needed to complete the task. Perhaps even more important is to delegate to
an individual who is not only able to complete the task but also willing to complete the task.
Therefore, managers should delegate to employees who will view their accomplishments as
personal benefits.
Principle 2: Be organized and communicate clearly. The manager must have a clear
understanding of what needs to be done, what deadlines exist, and what special skills are
required. Furthermore, managers must be capable of communicating their instructions
effectively if their subordinates are to perform up to their expectations.
Principle 3: Transfer authority and accountability with the task. The delegation process is
doomed to failure if the individual to whom the task is delegated is not given the authority
to succeed at accomplishing the task and is not held accountable for the results as well.
Managers must expect employees to carry the ball and then let them do so. This means
providing the employees with the necessary resources and power to succeed, giving them
timely feedback on their progress, and holding them fully accountable for the results of their
efforts. Managers also should be available to answer questions as needed.
Principle 4: Choose the level of delegation carefully. Delegation does not mean that the
manager can walk away from the task or the person to whom the task is delegated. The
manager must maintain some control of both the process and the results of the delegated
activities. Depending upon the confidence the manager has in the subordinate and the
importance of the task, the manager can choose to delegate at several levels.
Span of control
Span of control (sometimes called span of management) refers to the number of workers
who report to one manager. For hundreds of years, theorists have searched for an ideal
span of control. When no perfect number of subordinates for a manager to supervise
became apparent, they turned their attention to the more general issue of whether the span
should be wide or narrow.
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.
Centralization versus decentralization
The general pattern of authority throughout an organization determines the extent to which
that organization is centralized or decentralized.
A centralized organization systematically works to concentrate authority at the upper levels.
In a decentralized organization, management consciously attempts to spread authority to
the lower organization levels.
A variety of factors can influence the extent to which a firm is centralized or decentralized.
The following is a list of possible determinants:

The external environment in which the firm operates. The more

complex and unpredictable this environment, the more likely it is that top
management will let low-level managers make important decisions. After all,
low-level managers are closer to the problems because they are more likely
to have direct contact with customers and workers. Therefore, they are in a
better position to determine problems and concerns.
The nature of the decision itself. The riskier or the more important the
decision, the greater the tendency to centralize decision making.
The abilities of low-level managers. If these managers do not have
strong decision-making skills, top managers will be reluctant to decentralize.
Strong low-level decision-making skills encourage decentralization.
The organization's tradition of management. An organization that has traditionally practiced
centralization or decentralization is likely to maintain that posture in the future.
In principle, neither philosophy is right or wrong. What works for one organization may or
may not work for another. Kmart Corporation and McDonald's have both been very
successful both practice centralization. By the same token, decentralization has worked
very well for General Electric and Sears. Every organization must assess its own situation
and then choose the level of centralization or decentralization that works best.
SPAN OF MANAGEMENT:
Span of management refers to the number of subordinates that a manger can efficiently
manage. Number of subordinate directly reporting to a manager is known as span. Span of
management is important for
1. Determining the complexity of an individual managers job and
2. Determining shape and structure of the organisation
Fewer the number of subordinates reporting to a manger larger the number of managers
required. Therefore span for control should be fixed.
Factors determining the span of management:
Capacity of manager: Each manager has different capacity and ability in terms of decision
making, leadership, communication, judgment, guidance and control etc. mangers having
more abilities in respect to these factors may have more number of subordinates.
Capacity of subordinates: capacity of subordinates also affects the span of a manager.
Efficient and trained subordinates may work without much help of their manager. They may
just need broad guidelines and they will perform accordingly. They would require lesser time
from their superior due to which manager can have large number of subordinates under
him.
Nature of work: If subordinates are performing similar and repetitive routine work they
can do their work without having much time of the manager. Frequent changes in work
would require more detailed instructions from manager whenever there is change in work.
Type of technology used also affects the span of control.
Degree of Decentralization: degree of centralization or decentralization affects the span
by affecting the involvement in decision making process. If manager clearly delegates his
authority and defines it fully this would require less time to devote to manage his
subordinates as subordinates will take most of the actions by their own. Hence manager can
have wider span.
Degree of Planning: If the planning is effectively done particularly if standing plans
procedures rules methods are clear then subordinates can make their decisions on their
own. If they have to make their own plans they would require more guidelines by superiors
and manager can handle narrow span in the case of improper planning.
Communication System: If communication system is modern i.e. tools like electronic
devices will save time of face to face interaction, which require more time, span of manager
can be increased
Level of Management: level of management also affects the span. Higher the level of
management lesser the number of subordinates as higher level management does not have

much time to supervise. They spend their most of time in planning and other functions.
Lower level managers can have wider span than the higher level managers.
Physical location: If all the persons to be supervised are located at same place within the
direct supervision of manager, he can supervise more number of people. If subordinates are
at different locations then manager can supervise less number of spans.
DEPARTMENTATION:
Departmentation is a means of dividing the large functional organisation into smaller,
flexible administrative units. It makes grouping of activities into units and sub-units created
through departmentation which are known as department, division, section, branch etc. The
process of departmentation takes place at all levels in the organisation. At the top level, the
break up of functions into activities is called Primary Departmentation. Grouping activities
into separate units at the middle level is called Intermediate Departmentation and at the
lower level it is called Ultimate Departmentation or Secondary Departmentation. Let us
discuss some definitions of Departments.

According to Louis Allen, Departmentation is a means of dividing the large and

monolithic functional organisation into smaller flexible administrative units.

According to koonts and ODonnell : A department is a distinct area, division or

branch of an enterprise over which a manager has authority for the performance of
specified activities.
In short, we need departmentation in an enterprise to divide the activities along with
authority, responsibility and accountability with sole objective to get the work done
smoothly and in the best possible way.
Importance of Departmentation
The importance of departmentation is to facilitate successful operation and to create an
environment for effective performance. Grouping of activities and employees into
departments makes it possible to expand an organisation to a large extent. It enables the
organisation to recapture some of the advantages of the small functional organisation while
minimising the disadvantages of that which comes with increasing size, diversity and
dispersion.
The importance of Departmentation may be stated in the following way:
Specification: Departmentation helps to grow specification in various activities which leads
to improving the efficiency of operation.
Feeling of autonomy: Departmentation gives independent charges to managers. The
feeling of independence provides satisfaction and in turn increases their responsibilities and
efficiency.
Fixation of responsibility: Through Departmentation, responsibilities of the work can be
precisely and accurately fixed. The authority and responsibility of each department is
defined precisely.
Development of Management: The managers of each department perform specialised
functions. They take independent decision and develop themselves for higher positions.
Departmentation facilitates the development of managerial personnel by providing them
opportunities for exercising initiatives.
Facility in Appraisal: Since the managers perform specified jobs, their performance
appraisals become easier. Departmentation facilitates administrative control as standards of
performance are laid down separately for each department.
Budget Preparation: It makes the preparation of budget for departments easier as well as
for the organisation as a whole easier.
Proper Supervision: As the authority for making decisions is diffused to the managers of
the departments and works are assigned to each individual department wise, supervision
and control become easier.
After discussing the meaning and importance of Departmentation, we will discuss the bases
on which various groups or departments are created in an organisation. Following are the
most widely used bases for Departmentation.


Departmentation by Function

Departmentation by Product

Departmentation by Territory or Geographic Area

Departmentation by Customer or Market

Departmentation by Process or Equipment

Composite or Combined Departmentation.

DELIGATION:
A manager alone cannot perform all the tasks assigned to him. In order to meet the targets,
the manager should delegate authority. Delegation of Authority means division of authority
and powers downwards to the subordinate. Delegation is about entrusting someone else to
do parts of your job. Delegation of authority can be defined as subdivision and suballocation of powers to the subordinates in order to achieve effective results.
Elements of Delegation
Authority - in context of a business organization, authority can be defined as the power
and right of a person to use and allocate the resources efficiently, to take decisions and to
give orders so as to achieve the organizational objectives. Authority must be well- defined.
All people who have the authority should know what is the scope of their authority is and
they shouldnt misutilize it. Authority is the right to give commands, orders and get the
things done. The top level management has greatest authority. Authority always flows from
top to bottom. It explains how a superior gets work done from his subordinate by clearly
explaining what is expected of him and how he should go about it. Authority should be
accompanied with an equal amount of responsibility. Delegating the authority to someone
else doesnt imply escaping from accountability. Accountability still rest with the person
having the utmost authority.
Responsibility - is the duty of the person to complete the task assigned to him. A person
who is given the responsibility should ensure that he accomplishes the tasks assigned to
him. If the tasks for which he was held responsible are not completed, then he should not
give explanations or excuses. Responsibility without adequate authority leads to discontent
and dissatisfaction among the person. Responsibility flows from bottom to top. The middle
level and lower level management holds more responsibility. The person held responsible for
a job is answerable for it. If he performs the tasks assigned as expected, he is bound for
praises. While if he doesnt accomplish tasks assigned as expected, then also he is
answerable for that.
Accountability - means giving explanations for any variance in the actual performance
from the expectations set. Accountability can not be delegated. For example, if A is given a
task with sufficient authority, and A delegates this task to B and asks him to ensure that
task is done well, responsibility rest with B, but accountability still rest with A. The top
level management is most accountable. Being accountable means being innovative as the
person will think beyond his scope of job. Accountability, in short, means being answerable
for the end result. Accountability cant be escaped. It arises from responsibility.
For achieving delegation, a manager has to work in a system and has to perform following
steps :
Assignment of tasks and duties

Granting of authority

Creating responsibility and accountability

Delegation of authority is the base of superior-subordinate relationship, it involves following
steps:Assignment of Duties - The delegator first tries to define the task and duties to the
subordinate. He also has to define the result expected from the subordinates. Clarity of duty
as well as result expected has to be the first step in delegation.
Granting of authority - Subdivision of authority takes place when a superior divides and
shares his authority with the subordinate. It is for this reason, every subordinate should be

given enough independence to carry the task given to him by his superiors. The managers
at all levels delegate authority and power which is attached to their job positions. The
subdivision of powers is very important to get effective results.
Creating Responsibility and Accountability - The delegation process does not end once
powers are granted to the subordinates. They at the same time have to be obligatory
towards the duties assigned to them. Responsibility is said to be the factor or obligation of
an individual to carry out his duties in best of his ability as per the directions of superior.
Responsibility is very important. Therefore, it is that which gives effectiveness to authority.
At the same time, responsibility is absolute and cannot be shifted. Accountability, on the
others hand, is the obligation of the individual to carry out his duties as per the standards of
performance. Therefore, it is said that authority is delegated, responsibility is created and
accountability is imposed. Accountability arises out of responsibility and responsibility arises
out of authority. Therefore, it becomes important that with every authority position an equal
and opposite responsibility should be attached.
Therefore every manager,i.e.,the delegator has to follow a system to finish up the delegation
process. Equally important is the delegatees role which means his responsibility and
accountability is attached with the authority over to here.
Relationship between Authority and Responsibility
Authority is the legal right of person or superior to command his subordinates while
accountability is the obligation of individual to carry out his duties as per standards of
performance Authority flows from the superiors to subordinates,in which orders and
instructions are given to subordinates to complete the task. It is only through authority, a
manager exercises control. In a way through exercising the control the superior is
demanding accountability from subordinates. If the marketing manager directs the sales
supervisor for 50 units of sale to be undertaken in a month. If the above standards are not
accomplished, it is the marketing manager who will be accountable to the chief executive
officer. Therefore, we can say that authority flows from top to bottom and responsibility
flows from bottom to top. Accountability is a result of responsibility and responsibility is
result of authority. Therefore, for every authority an equal accountability is attached.

Centralization is said to be a process where the concentration of decision making is in a

few hands. All the important decision and actions at the lower level, all subjects and actions
at the lower level are subject to the approval of top management. According to Allen,
Centralization is the systematic and consistent reservation of authority at central points in
the organization. The implication of centralization can be : Reservation of decision making power at top level.
Reservation of operating authority with the middle level managers.
Reservation of operation at lower level at the directions of the top level.
Under centralization, the important and key decisions are taken by the top management and
the other levels are into implementations as per the directions of top level. For example, in
a business concern, the father & son being the owners decide about the important matters
and all the rest of functions like product, finance, marketing, personnel, are carried out by
the department heads and they have to act as per instruction and orders of the two people.
Therefore in this case, decision making power remain in the hands of father & son.

On the other hand, Decentralization is a systematic delegation of authority at all levels of

management and in all of the organization. In a decentralization concern, authority in
retained by the top management for taking major decisions and framing policies concerning
the whole concern. Rest of the authority may be delegated to the middle level and lower
level of management.
The degree of centralization and decentralization will depend upon the amount of authority
delegated to the lowest level. According to Allen, Decentralization refers to the systematic
effort to delegate to the lowest level of authority except that which can be controlled and
exercised at central points.
Decentralization is not the same as delegation. In fact, decentralization is all extension of
delegation. Decentralization pattern is wider is scope and the authorities are diffused to the
lowest most level of management. Delegation of authority is a complete process and takes
place from one person to another. While decentralization is complete only when fullest
possible delegation has taken place. For example, the general manager of a company is
responsible for receiving the leave application for the whole of the concern. The general
manager delegates this work to the personnel manager who is now responsible for receiving
the leave applicants. In this situation delegation of authority has taken place. On the other
hand, on the request of the personnel manager, if the general manager delegates this power
to all the departmental heads at all level, in this situation decentralization has taken place.
There is a saying that Everything that increasing the role of subordinates is decentralization
and that decreases the role is centralization. Decentralization is wider in scope and the
subordinates responsibility increase in this case. On the other hand, in delegation the
managers remain answerable even for the acts of subordinates to their superiors.
Implications of Decentralization
There is less burden on the Chief Executive as in the case of centralization.
In decentralization, the subordinates get a chance to decide and act independently
which develops skills and capabilities. This way the organization is able to process
reserve of talents in it.
In decentralization, diversification and horizontal can be easily implanted.
In decentralization, concern diversification of activities can place effectively since
there is more scope for creating new departments. Therefore, diversification growth
is of a degree.
In decentralization structure, operations can be coordinated at divisional level which
is not possible in the centralization set up.
In the case of decentralization structure, there is greater motivation and morale of
the employees since they get more independence to act and decide.
In a decentralization structure, co-ordination to some extent is difficult to maintain
as there are lot many department divisions and authority is delegated to maximum
possible extent, i.e., to the bottom most level delegation reaches. Centralization and
decentralization are the categories by which the pattern of authority relationships
became clear. The degree of centralization and de-centralization can be affected by
many factors like nature of operation, volume of profits, number of departments, size
of a concern, etc. The larger the size of a concern, a decentralization set up is
suitable in it.
LINE & STAFF ORGANIZATION STRUCTURE:
Line and staff organization is a modification of line organization and it is more
complex than line organization. According to this administrative organization, specialized
and supportive activities are attached to the line of command by appointing staff
supervisors and staff specialists who are attached to the line authority. The power of
command always remains with the line executives and staff supervisors guide, advice and
counsel the line executives. Personal Secretary to the Managing Director is a staff official.

Features of Line and Staff Organization

1. There are two types of staff :
a. Staff Assistants- P.A. to Managing Director, Secretary to Marketing Manager.
b. Staff Supervisor- Operation Control Manager, Quality Controller, PRO
2. Line and Staff Organization is a compromise of line organization. It is more complex
than line concern.
3. Division of work and specialization takes place in line and staff organization.
4. The whole organization is divided into different functional areas to which staff
specialists are attached.
5. Efficiency can be achieved through the features of specialization.
6. There are two lines of authority which flow at one time in a concern :
a. Line Authority
b. Staff Authority
7. Power of command remains with the line executive and staff serves only as
counselors.
Merits of Line and Staff Organization
Relief to line of executives- In a line and staff organization, the advice and
counseling which is provided to the line executives divides the work between the
two. The line executive can concentrate on the execution of plans and they get
relieved of dividing their attention to many areas.
Expert advice- The line and staff organization facilitates expert advice to the line
executive at the time of need. The planning and investigation which is related to
different matters can be done by the staff specialist and line officers can concentrate
on execution of plans.
Benefit of Specialization- Line and staff through division of whole concern into two
types of authority divides the enterprise into parts and functional areas. This way
every officer or official can concentrate in its own area.
Better co-ordination- Line and staff organization through specialization is able to
provide better decision making and concentration remains in few hands. This feature
helps in bringing co- ordination in work as every official is concentrating in their own
area.
Benefits of Research and Development- Through the advice of specialized staff,
the line executives, the line executives get time to execute plans by taking
productive decisions which are helpful for a concern. This gives a wide scope to the
line executive to bring innovations and go for research work in those areas. This is
possible due to the presence of staff specialists.
Training- Due to the presence of staff specialists and their expert advice serves as
ground for training to line officials. Line executives can give due concentration to
their decision making. This in itself is a training ground for them.

Balanced decisions- The factor of specialization which is achieved by line staff

helps in bringing co- ordination. This relationship automatically ends up the line
official to take better and balanced decision.
Unity of action- Unity of action is a result of unified control. Control and its
effectivity take place when co- ordination is present in the concern. In the line and
staff authority all the officials have got independence to make decisions. This serves
as effective control in the whole enterprise.
Demerits of Line and Staff Organization
Lack of understanding- In a line and staff organization, there are two authority
flowing at one time. This results in the confusion between the two. As a result, the
workers are not able to understand as to who is their commanding authority. Hence
the problem of understanding can be a hurdle in effective running.
Lack of sound advice- The line official get used to the expertise advice of the staff.
At times the staff specialist also provide wrong decisions which the line executive
have to consider. This can affect the efficient running of the enterprise.
Line and staff conflicts- Line and staff are two authorities which are flowing at the
same time. The factors of designations, status influence sentiments which are related
to their relation, can pose a distress on the minds of the employees. This leads to
minimizing of co- ordination which hampers a concerns working.
Costly- In line and staff concern, the concerns have to maintain the high
remuneration of staff specialist. This proves to be costly for a concern with limited
finance.
Assumption of authority- The power of concern is with the line official but the staff
dislikes it as they are the one more in mental work.
Staff steals the show- In a line and staff concern, the higher returns are
considered to be a product of staff advice and counseling. The line officials feel
dissatisfied and a feeling of distress enters a concern. The satisfaction of line officials
is very important for effective results.
SYSTEM APPROACH TO HRM:
A system is a set of interrelated but separate elements or parts working towards a common
goal.
The enterprise procures and transforms inputs such as physical, financial and human
resources into outputs such as products, services and satisfactions offered to people at
large.
To carry out its operations, each enterprise has certain departments known as subsystems
such as production sub-system, finance sub-system, marketing sub-system, HR sub-system
etc. Each sub-system consists of a number of other subsystems.
Note: It should be noted here that, the various internal sub-systems of the organisation
operate within the framework of external environment consisting of political, social,
economic and technological forces operating within and outside a nation.
Management is primarily dealing with human beings and human problems are present
everywhere. According to Lawrence Apply, management is the development of people, not
the direction of things.
As the central sub-system, HRM interacts closely and continuously with all other subsystems of an organisation.
The quality of people in all sub-systems depends largely upon the policies, programmes and
practices of the HRM sub-system.
HRM has become very significant in the modern era of automation and computerisation,
because machine is useless without competent people who can run it. The significance is
due to the following factors:
1. Increase in the size and complexity of organisations.
2. Rise of professional and knowledgeable workers.

3.
4.
5.
6.
7.

Rapid technological developments.

Increasing proportion of women in the workforce.
Growing expectations of society from employers.
Revolution in information technology.
Rapidly changing jobs and skills requiring long-term manpower planning.

UNIT 4
DIRECTING is said to be a process in which the managers instruct, guide and oversee the
performance of the workers to achieve predetermined goals. Directing is said to be the
heart of management process. Planning, organizing, staffing have got no importance if
direction function does not take place.
Directing initiates action and it is from here actual work starts. Direction is said to be
consisting of human factors. In simple words, it can be described as providing guidance to
workers is doing work. In field of management, direction is said to be all those activities
which are designed to encourage the subordinates to work effectively and efficiently.
According to Human, Directing consists of process or technique by which instruction can be
issued and operations can be carried out as originally planned Therefore, Directing is the
function of guiding, inspiring, overseeing and instructing people towards accomplishment of
organizational goals.
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 peoples 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.
LEADERSHIP VS MANAGEMENT

Leadership and managership are two synonymous terms is an incorrect statement.

Leadership doesnt require any managerial position to act as a leader. On the other hand, a
manager can be a true manager only if he has got the traits of leader in him. By virtue of his
position, manager has to provide leadership to his group. A manager has to perform all five
functions to achieve goals, i.e., Planning, Organizing, Staffing, Directing, and Controlling.
Leadership is a part of these functions. Leadership as a general term is not related to
managership. A person can be a leader by virtue of qualities in him. For example: leader of
a club, class, welfare association, social organization, etc. Therefore, it is true to say that,
All managers are leaders, but all leaders are not managers.
A leader is one who influences the behavior and work of others in group efforts towards
achievement of specified goals in a given situation. On the other hand, manager can be a
true manager only if he has got traits of leader in him. Manager at all levels are expected to
be the leaders of work groups so that subordinates willingly carry instructions and accept
their guidance. A person can be a leader by virtue of all qualities in him.

Leaders and Managers can be compared on the following basis:

Basis

Manager

Leader

Origin

A
person
becomes
a
manager by virtue of his
position.

A person becomes a leader on basis of

his personal qualities.

Formal Rights

Manager has got formal

rights in an organization
because of his status.

Rights are not available to a leader.

Followers

The subordinates are

followers of managers.

The group of employees whom

leaders leads are his followers.

Functions

A manager performs all five

functions of management.

Leader influences people to work willingly

for group objectives.

Necessity

A manager is very essential

to a concern.

A leader is required to create cordial

relation between person working in and
for organization.

Stability

It is more stable.

Leadership is temporary.

Mutual
Relationship

All managers are leaders.

All leaders are not managers.

Accountability

Manager is accountable for

self
and
subordinates
behaviour and performance.

Leaders
have
accountability.

Concern

A managers concern
organizational goals.

A leaders concern is group goals and

members satisfaction.

the

is

no

well

the

defined

Followers

People follow manager by

virtue of job description.

People follow them on voluntary basis.

Role
continuation

A manager can continue in

office till he performs his
duties
satisfactorily
in
congruence
with
organizational goals.

A leader can maintain his position only

through day to day wishes of followers.

Sanctions

Manager has command over

allocation and distribution of
sanctions.

A leader has command over different

sanctions and related task records. These
sanctions are essentially of informal
nature.

LEADERSHIP STYLES:
All leaders do not possess same attitude or same perspective. As discussed earlier, few
leaders adopt the carrot approach and a few adopt the stick approach. Thus, all of the
leaders do not get the things done in the same manner. Their style varies. The leadership
style varies with the kind of people the leader interacts and deals with. A perfect/standard
leadership style is one which assists a leader in getting the best out of the people who follow
him.
Some of the important leadership styles are as follows:
Autocratic leadership style: In this style of leadership, a leader has complete command
and hold over their employees/team. The team cannot put forward their views even if they
are best for the teams or organizational interests. They cannot criticize or question the
leaders way of getting things done. The leader himself gets the things done. The advantage
of this style is that it leads to speedy decision-making and greater productivity under
leaders supervision. Drawbacks of this leadership style are that it leads to greater employee
absenteeism and turnover. This leadership style works only when the leader is the best in
performing or when the job is monotonous, unskilled and routine in nature or where the
project is short-term and risky.
The Laissez Faire Leadership Style: Here, the leader totally trusts their employees/team
to perform the job themselves. He just concentrates on the intellectual/rational aspect of his
work and does not focus on the management aspect of his work. The team/employees are
welcomed to share their views and provide suggestions which are best for organizational
interests. This leadership style works only when the employees are skilled, loyal,
experienced and intellectual.
Democrative/Participative leadership style: The leaders invite and encourage the team
members to play an important role in decision-making process, though the ultimate
decision-making power rests with the leader. The leader guides the employees on what to
perform and how to perform, while the employees communicate to the leader their
experience and the suggestions if any. The advantages of this leadership style are that it
leads to satisfied, motivated and more skilled employees. It leads to an optimistic work
environment and also encourages creativity. This leadership style has the only drawback
that it is time-consuming.
Bureaucratic leadership: Here the leaders strictly adhere to the organizational rules and
policies. Also, they make sure that the employees/team also strictly follows the rules and
procedures. Promotions take place on the basis of employees ability to adhere to
organizational rules. This leadership style gradually develops over time. This leadership style
is more suitable when safe work conditions and quality are required. But this leadership
style discourages creativity and does not make employees self-contented.

MOTIVATION:
Motivation is the word derived from the word motive which means needs, desires, wants or
drives within the individuals. It is the process of stimulating people to actions to accomplish
the goals. In the work goal context the psychological factors stimulating the peoples
behaviour can be desire for money
success
recognition
job-satisfaction
team work, etc
One of the most important functions of management is to create willingness amongst the
employees to perform in the best of their abilities. Therefore the role of a leader is to arouse
interest in performance of employees in their jobs. The process of motivation consists of
three stages: A felt need or drive
A stimulus in which needs have to be aroused
When needs are satisfied, the satisfaction or accomplishment of goals.
Therefore, we can say that motivation is a psychological phenomenon which means needs
and wants of the individuals have to be tackled by framing an incentive plan.
IMPORTANCE OF MOTIVATION:
Motivation is a very important for an organization because of the following benefits it
provides:1. Puts human resources into action
Every concern requires physical, financial and human resources to accomplish the
goals. It is through motivation that the human resources can be utilized by making
full use of it. This can be done by building willingness in employees to work. This will
help the enterprise in securing best possible utilization of resources.
2. Improves level of efficiency of employees
The level of a subordinate or a employee does not only depend upon his
qualifications and abilities. For getting best of his work performance, the gap
between ability and willingness has to be filled which helps in improving the level of
performance of subordinates. This will result intoa. Increase in productivity,
b. Reducing cost of operations, and
c. Improving overall efficiency.
3. Leads to achievement of organizational goals
The goals of an enterprise can be achieved only when the following factors take place
:a. There is best possible utilization of resources,
b. There is a co-operative work environment,
c. The employees are goal-directed and they act in a purposive manner,
d. Goals can be achieved if co-ordination and co-operation takes place
simultaneously which can be effectively done through motivation.
4. Builds friendly relationship
Motivation is an important factor which brings employees satisfaction. This can be
done by keeping into mind and framing an incentive plan for the benefit of the
employees. This could initiate the following things:
a. Monetary and non-monetary incentives,
b. Promotion opportunities for employees,
c. Disincentives for inefficient employees.
5. In order to build a cordial, friendly atmosphere in a concern, the above steps should
be taken by a manager. This would help in:

a. Effective co-operation which brings stability,

b. Industrial dispute and unrest in employees will reduce,
c. The employees will be adaptable to the changes and there will be no
resistance to the change,
d. This will help in providing a smooth and sound concern in which individual
interests will coincide with the organizational interests,
e. This will result in profit maximization through increased productivity.
6. Leads to stability of work force
a. Stability of workforce is very important from the point of view of reputation
and goodwill of a concern. The employees can remain loyal to the enterprise
only when they have a feeling of participation in the management. The skills
and efficiency of employees will always be of advantage to employees as well
as employees. This will lead to a good public image in the market which will
attract competent and qualified people into a concern. As it is said, Old is
gold which suffices with the role of motivation here, the older the people,
more the experience and their adjustment into a concern which can be of
benefit to the enterprise.
From the above discussion, we can say that motivation is an internal feeling which can be
understood only by manager since he is in close contact with the employees. Needs, wants
and desires are inter-related and they are the driving force to act. These needs can be
understood by the manager and he can frame motivation plans accordingly. We can say that
motivation therefore is a continuous process since motivation process is based on needs
which are unlimited. The process has to be continued throughout.
We can summarize by saying that motivation is important both to an individual and a
business. Motivation is important to an individual as:
Motivation will help him achieve his personal goals.
If an individual is motivated, he will have job satisfaction.
Motivation will help in self-development of individual.
An individual would always gain by working with a dynamic team.
Similarly, motivation is important to a business as:
The more motivated the employees are, the more empowered the team is.
The more is the team work and individual employee contribution, more
profitable and successful is the business.
During period of amendments, there will be more adaptability and creativity.
Motivation will lead to an optimistic and challenging attitude at work place.
MOTIVATIONAL THEORIES:
The motivation concepts were mainly developed around 1950s. Three main theories were
made during this period. These three classical theories are Maslows hierarchy of needs theory
Herzbergs Two factor theory
Theory X and Theory Y
These theories are building blocks of the contemporary theories developed later. The
working mangers and learned professionals till date use these classical theories to explain
the concept of employee motivation.
Abraham Maslow is well renowned for proposing the Hierarchy of Needs Theory in 1943.
This theory is a classical depiction of human motivation. This theory is based on the
assumption that there is a hierarchy of five needs within each individual. The urgency of
these needs varies. These five needs are as followsPhysiological needs- These are the basic needs of air, water, food, clothing and shelter. In
other words, physiological needs are the needs for basic amenities of life.

Safety needs- Safety needs include physical, environmental and emotional safety and
protection. For instance- Job security, financial security, protection from animals, family
security, health security, etc.
Social needs- Social needs include the need for love, affection, care, belongingness, and
friendship.
Esteem needs- Esteem needs are of two types: internal esteem needs (self- respect,
confidence, competence, achievement and freedom) and external esteem needs
(recognition, power, status, attention and admiration).
Self-actualization need- This include the urge to become what you are capable of
becoming / what you have the potential to become. It includes the need for growth and selfcontentment. It also includes desire for gaining more knowledge, social- service, creativity
and being aesthetic. The self- actualization needs are never fully satiable. As an individual
grows psychologically, opportunities keep cropping up to continue growing.
According to Maslow, individuals are motivated by unsatisfied needs. As each of these needs
is significantly satisfied, it drives and forces the next need to emerge. Maslow grouped the
five needs into two categories - Higher-order needs and Lower-order needs. The
physiological and the safety needs constituted the lower-order needs. These lower-order
needs are mainly satisfied externally. The social, esteem, and self-actualization needs
constituted the higher-order needs. These higher-order needs are generally satisfied
internally, i.e., within an individual. Thus, we can conclude that during boom period, the
employees lower-order needs are significantly met.

FIGURE: Maslows Need Hierarchy Model

Implications of Maslows Hierarchy of Needs Theory for Managers
As far as the physiological needs are concerned, the managers should give
employees appropriate salaries to purchase the basic necessities of life. Breaks and
eating opportunities should be given to employees.
As far as the safety needs are concerned, the managers should provide the
employees job security, safe and hygienic work environment, and retirement benefits
so as to retain them.
As far as social needs are concerned, the management should encourage teamwork
and organize social events.
As far as esteem needs are concerned, the managers can appreciate and reward
employees on accomplishing and exceeding their targets. The management can give
the deserved employee higher job rank / position in the organization.
As far as self-actualization needs are concerned, the managers can give the
employees challenging jobs in which the employees skills and competencies are fully
utilized. Moreover, growth opportunities can be given to them so that they can reach
the peak.

 The managers must identify the need level at which the employee is existing and
then those needs can be utilized as push for motivation.
Limitations of Maslows Theory
It is essential to note that not all employees are governed by same set of needs. Different
individuals may be driven by different needs at same point of time. It is always the most
powerful unsatisfied need that motivates an individual.
The theory is not empirically supported.
The theory is not applicable in case of starving artist as even if the artists basic needs are
not satisfied, he will still strive for recognition and achievement.
In 1959, Frederick Herzberg, a behavioural scientist proposed a two-factor theory or the
motivator-hygiene theory. According to Herzberg, there are some job factors that result in
satisfaction while there are other job factors that prevent dissatisfaction. According to
Herzberg, the opposite of Satisfaction is No satisfaction and the opposite of
Dissatisfaction is No Dissatisfaction.

Herzberg classified these job factors into two categoriesHygiene factors- Hygiene factors are those job factors which are essential for existence of
motivation at workplace. These do not lead to positive satisfaction for long-term. But if
these factors are absent / if these factors are non-existant at workplace, then they lead to
dissatisfaction. In other words, hygiene factors are those factors which when
adequate/reasonable in a job, pacify the employees and do not make them dissatisfied.
These factors are extrinsic to work. Hygiene factors are also called as dissatisfiers or
maintenance factors as they are required to avoid dissatisfaction. These factors describe the
job environment/scenario. The hygiene factors symbolized the physiological needs which the
individuals wanted and expected to be fulfilled. Hygiene factors include:
Pay - The pay or salary structure should be appropriate and reasonable. It must be
equal and competitive to those in the same industry in the same domain.
Company Policies and administrative policies - The company policies should not be
too rigid. They should be fair and clear. It should include flexible working hours,
dress code, breaks, vacation, etc.
Fringe benefits - The employees should be offered health care plans (mediclaim),
benefits for the family members, employee help programmes, etc.
Physical Working conditions - The working conditions should be safe, clean and
hygienic. The work equipments should be updated and well-maintained.
Status - The employees status within the organization should be familiar and
retained.
Interpersonal relations - The relationship of the employees with his peers, superiors
and subordinates should be appropriate and acceptable. There should be no conflict
or humiliation element present.

 Job Security - The organization must provide job security to the employees.
Motivational factors- According to Herzberg, the hygiene factors cannot be regarded as
motivators. The motivational factors yield positive satisfaction. These factors are inherent to
work. These factors motivate the employees for a superior performance. These factors are
called satisfiers. These are factors involved in performing the job. Employees find these
factors intrinsically rewarding. The motivators symbolized the psychological needs that were
perceived as an additional benefit. Motivational factors include:
Recognition - The employees should be praised and recognized for their
accomplishments by the managers.
Sense of achievement - The employees must have a sense of achievement. This
depends on the job. There must be a fruit of some sort in the job.
Growth and promotional opportunities - There must be growth and advancement
opportunities in an organization to motivate the employees to perform well.
Responsibility - The employees must hold themselves responsible for the work. The
managers should give them ownership of the work. They should minimize control but
retain accountability.
Meaningfulness of the work - The work itself should be meaningful, interesting and
challenging for the employee to perform and to get motivated.
Limitations of Two-Factor Theory
1. The two factor theory is not free from limitations:
2. The two-factor theory overlooks situational variables.
3. Herzberg assumed a correlation between satisfaction and productivity. But the
research conducted by Herzberg stressed upon satisfaction and ignored productivity.
4. The theorys reliability is uncertain. Analysis has to be made by the raters. The raters
may spoil the findings by analyzing same response in different manner.
5. No comprehensive measure of satisfaction was used. An employee may find his job
acceptable despite the fact that he may hate/object part of his job.
6. The two factor theory is not free from bias as it is based on the natural reaction of
employees when they are enquired the sources of satisfaction and dissatisfaction at
work. They will blame dissatisfaction on the external factors such as salary structure,
company policies and peer relationship. Also, the employees will give credit to
themselves for the satisfaction factor at work.
7. The theory ignores blue-collar workers. Despite these limitations, Herzbergs TwoFactor theory is acceptable broadly.
Implications of Two-Factor Theory
The Two-Factor theory implies that the managers must stress upon guaranteeing the
adequacy of the hygiene factors to avoid employee dissatisfaction. Also, the managers must
make sure that the work is stimulating and rewarding so that the employees are motivated
to work and perform harder and better. This theory emphasize upon job-enrichment so as to
motivate the employees. The job must utilize the employees skills and competencies to the
maximum. Focusing on the motivational factors can improve work-quality.
In 1960, Douglas McGregor formulated Theory X and Theory Y suggesting two aspects of
human behaviour at work, or in other words, two different views of individuals (employees):
one of which is negative, called as Theory X and the other is positive, so called as Theory Y.
According to McGregor, the perception of managers on the nature of individuals is based on
various assumptions.
Assumptions of Theory X
An average employee intrinsically does not like work and tries to escape it whenever
possible.
Since the employee does not want to work, he must be persuaded, compelled, or
warned with punishment so as to achieve organizational goals. A close supervision is
required on part of managers. The managers adopt a more dictatorial style.

Many employees rank job security on top, and they have little or no aspiration/
ambition.
Employees generally dislike responsibilities.
Employees resist change.
An average employee needs formal direction.
Assumptions of Theory Y
Employees can perceive their job as relaxing and normal. They exercise their
physical and mental efforts in an inherent manner in their jobs.
Employees may not require only threat, external control and coercion to work, but
they can use self-direction and self-control if they are dedicated and sincere to
achieve the organizational objectives.
If the job is rewarding and satisfying, then it will result in employees loyalty and
commitment to organization.
An average employee can learn to admit and recognize the responsibility. In fact, he
can even learn to obtain responsibility.
The employees have skills and capabilities. Their logical capabilities should be fully
utilized. In other words, the creativity, resourcefulness and innovative potentiality of
the employees can be utilized to solve organizational problems.
Thus, we can say that Theory X presents a pessimistic view of employees nature and
behaviour at work, while Theory Y presents an optimistic view of the employees nature and
behaviour at work. If correlate it with Maslows theory, we can say that Theory X is based on
the assumption that the employees emphasize on the physiological needs and the safety
needs; while Theory X is based on the assumption that the social needs, esteem needs and
the self-actualization needs dominate the employees.
McGregor views Theory Y to be more valid and reasonable than Theory X. Thus, he
encouraged cordial team relations, responsible and stimulating jobs, and participation of all
in decision-making process.
Implications of Theory X and Theory Y
Quite a few organizations use Theory X today. Theory X encourages use of tight
control and supervision. It implies that employees are reluctant to organizational
changes. Thus, it does not encourage innovation.
Many organizations are using Theory Y techniques. Theory Y implies that the
managers should create and encourage a work environment which provides
opportunities to employees to take initiative and self-direction. Employees should be
given opportunities to contribute to organizational well-being. Theory Y encourages
decentralization of authority, teamwork and participative decision making in an
organization. Theory Y searches and discovers the ways in which an employee can
make significant contributions in an organization. It harmonizes and matches
employees needs and aspirations with organizational needs and aspirations.
CONTROLLING:
What is controlling?
Controlling consists of verifying whether everything occurs in confirmities with the plans
adopted, instructions issued and principles established. Controlling ensures that there is
effective and efficient utilization of organizational resources so as to achieve the planned
goals. Controlling measures the deviation of actual performance from the standard
performance, discovers the causes of such deviations and helps in taking corrective actions
According to Brech, Controlling is a systematic exercise which is called as a process of
checking actual performance against the standards or plans with a view to ensure adequate
progress and also recording such experience as is gained as a contribution to possible future
needs.

According to Donnell, Just as a navigator continually takes reading to ensure whether he is

relative to a planned action, so should a business manager continually take reading to
assure himself that his enterprise is on right course.
Controlling has got two basic purposes
It facilitates co-ordination
It helps in planning
Features of Controlling Function
Following are the characteristics of controlling function of management Controlling is an end function- A function which comes once the performances are
made in conformities 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 reviewal
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.
PROCESS & CONTROLLING:
Controlling as a management function involves following steps:
Establishment of standards- Standards are the plans or the targets which have to be
achieved in the course of business function. They can also be called as the criterions for
judging the performance. Standards generally are classified into twoa. Measurable or tangible - Those standards which can be measured and
expressed are called as measurable standards. They can be in form of cost,
output, expenditure, time, profit, etc.
b. Non-measurable or intangible- There are standards which cannot be
measured monetarily. For example- performance of a manager, deviation of
workers, their attitudes towards a concern. These are called as intangible
standards.
Controlling becomes easy through establishment of these standards because controlling is
exercised on the basis of these standards.
Measurement of performance- The second major step in controlling is to measure the
performance. Finding out deviations becomes easy through measuring the actual
performance. Performance levels are sometimes easy to measure and sometimes difficult.
Measurement of tangible standards is easy as it can be expressed in units, cost, money
terms, etc. Quantitative measurement becomes difficult when performance of manager has
to be measured. Performance of a manager cannot be measured in quantities. It can be
measured only bya. Attitude of the workers,
b. Their morale to work,
c. The development in the attitudes regarding the physical environment, and
d. Their communication with the superiors.
It is also sometimes done through various reports like weekly, monthly, quarterly, yearly
reports.
Comparison of actual and standard performance- Comparison of actual performance
with the planned targets is very important. Deviation can be defined as the gap between
actual performance and the planned targets. The manager has to find out two things hereextent of deviation and cause of deviation. Extent of deviation means that the manager has

to find out whether the deviation is positive or negative or whether the actual performance
is in conformity with the planned performance. The managers have to exercise control by
exception. He has to find out those deviations which are critical and important for business.
Minor deviations have to be ignored. Major deviations like replacement of machinery,
appointment of workers, quality of raw material, rate of profits, etc. should be looked upon
consciously. Therefore it is said, If a manager controls everything, he ends up controlling
nothing. For example, if stationery charges increase by a minor 5 to 10%, it can be called
as a minor deviation. On the other hand, if monthly production decreases continuously, it is
called as major deviation.
Once the deviation is identified, a manager has to think about various cause which has led
to deviation. The causes can bea. Erroneous planning,
b. Co-ordination loosens,
c. Implementation of plans is defective, and
d. Supervision and communication is ineffective, etc.
Taking remedial actions- Once the causes and extent of deviations are known, the
manager has to detect those errors and take remedial measures for it. There are two
alternatives herea. Taking corrective measures for deviations which have occurred; and
b. After taking the corrective measures, if the actual performance is not in
conformity with plans, the manager can revise the targets. It is here the
controlling process comes to an end. Follow up is an important step because it
is only through taking corrective measures, a manager can exercise
controlling.
CONTROLLING TECHNIQUES:
Organizational Control Techniques
Control techniques provide managers with the type and amount of information they need to
measure and monitor performance. The information from various controls must be tailored
to a specific management level, department, unit, or operation.
To ensure complete and consistent information, organizations often use standardized
documents such as financial, status, and project reports. Each area within an organization,
however, uses its own specific control techniques, described in the following sections.
Financial controls
After the organization has strategies in place to reach its goals, funds are set aside for the
necessary resources and labor. As money is spent, statements are updated to reflect how
much was spent, how it was spent, and what it obtained. Managers use these financial
statements, such as an income statement or balance sheet, to monitor the progress of
programs and plans. Financial statements provide management with information to monitor
financial resources and activities. The income statement shows the results of the
organization's operations over a period of time, such as revenues, expenses, and profit or
loss. The balance sheet shows what the organization is worth (assets) at a single point in
time, and the extent to which those assets were financed through debt (liabilities) or
owner's investment (equity).
Financial audits, or formal investigations, are regularly conducted to ensure that financial
management practices follow generally accepted procedures, policies, laws, and ethical
guidelines. Audits may be conducted internally or externally. Financial ratio analysis
examines the relationship between specific figures on the financial statements and helps
explain the significance of those figures:
Liquidity ratios measure an organization's ability to generate cash.
Profitability ratios measure an organization's ability to generate profits.
Debt ratios measure an organization's ability to pay its debts.
Activity ratios measure an organization's efficiency in operations and use of assets.

In addition, financial responsibility centers require managers to account for a unit's progress
toward financial goals within the scope of their influences. A manager's goals and
responsibilities may focus on unit profits, costs, revenues, or investments.
Budget controls
A budget depicts how much an organization expects to spend (expenses) and earn
(revenues) over a time period. Amounts are categorized according to the type of business
activity or account, such as telephone costs or sales of catalogs. Budgets not only help
managers plan their finances, but also help them keep track of their overall spending.
A budget, in reality, is both a planning tool and a control mechanism. Budget development
processes vary among organizations according to who does the budgeting and how the
financial resources are allocated. Some budget development methods are as follows:

Top-down budgeting. Managers prepare the budget and send it to subordinates.

Bottom-up budgeting. Figures come from the lower levels and are adjusted and
coordinated as they move up the hierarchy.
Zero-based budgeting. Managers develop each new budget by justifying the
projected allocation against its contribution to departmental or organizational goals.
Flexible budgeting. Any budget exercise can incorporate flexible budgets, which
set meet or beat standards that can be compared to expenditures.
Marketing controls
Marketing controls help monitor progress toward goals for customer satisfaction with
products and services, prices, and delivery. The following are examples of controls used to
evaluate an organization's marketing functions:
Market research gathers data to assess customer needsinformation critical to an
organization's success. Ongoing market research reflects how well an organization is
meeting customers' expectations and helps anticipate customer needs. It also helps
identify competitors.
Test marketing is small-scale product marketing to assess customer acceptance.
Using surveys and focus groups, test marketing goes beyond identifying general
requirements and looks at what (or who) actually influences buying decisions.
Marketing statistics measure performance by compiling data and analyzing results.
In most cases, competency with a computer spreadsheet program is all a manager
needs. Managers look at marketing ratios, which measure profitability, activity, and
market shares, as well as sales quotas, which measure progress toward sales goals
and assist with inventory controls.
Unfortunately, scheduling a regular evaluation of an organization's marketing program is
easier to recommend than to execute. Usually, only a crisis, such as increased competition
or a sales drop, forces a company to take a closer look at its marketing program. However,
more regular evaluations help minimize the number of marketing problems.
Human resource controls
Human resource controls help managers regulate the quality of newly hired personnel, as
well as monitor current employees' developments and daily performances.
On a daily basis, managers can go a long way in helping to control workers' behaviors in
organizations. They can help direct workers' performances toward goals by making sure that
goals are clearly set and understood. Managers can also institute policies and procedures to
help guide workers' actions. Finally, they can consider past experiences when developing
future strategies, objectives, policies, and procedures.
Common control types include performance appraisals, disciplinary programs, observations,
and training and development assessments. Because the quality of a firm's personnel, to a
large degree, determines the firm's overall effectiveness, controlling this area is very crucial.
Computers and information controls

Almost all organizations have confidential and sensitive information that they don't want to
become general knowledge. Controlling access to computer databases is the key to this
area.
Increasingly, computers are being used to collect and store information for control purposes.
Many organizations privately monitor each employee's computer usage to measure
employee performance, among other things. Some people question the appropriateness of
computer monitoring. Managers must carefully weigh the benefits against the costsboth
human and financialbefore investing in and implementing computerized control
techniques.
Although computers and information systems provide enormous benefits, such as improved
productivity and information management, organizations should remember the following
limitations of the use of information technology:
Performance limitations. Although management information systems have the potential
to increase overall performance, replacing long-time organizational employees with
information systems technology may result in the loss of expert knowledge that these
individuals hold. Additionally, computerized information systems are expensive and difficult
to develop. After the system has been purchased, coordinating itpossibly with existing
equipmentmay be more difficult than expected. Consequently, a company may cut corners
or install the system carelessly to the detriment of the system's performance and utility. And
like other sophisticated electronic equipment, information systems do not work all the time,
resulting in costly downtime.
Behavioral limitations. Information technology allows managers to access more
information than ever before. But too much information can overwhelm employees, cause
stress, and even slow decision making. Thus, managing the quality and amount of
information available to avoid information overload is important.
Health risks. Potentially serious health-related issues associated with the use of computers
and other information technology have been raised in recent years. An example is carpal
tunnel syndrome, a painful disorder in the hands and wrists caused by repetitive
movements (such as those made on a keyboard).
Regardless of the control processes used, an effective system determines whether
employees and various parts of an organization are on target in achieving organizational
objectives.
MIS - Understanding Information Systems
Introduction
In todays information and communication age, there is a constant reference to information
systems and management of information systems. In the digital age data, storage and
retrieval are done through various systems and interfaces.
Information System
An information system, therefore, can be defined as set of coordinated network of
components which act together towards producing, distributing and or processing
information. An important factor of computer based information system is precision, which
may not apply to other types of systems.
System
In a system, network of components work towards a single objective, if there is lack of coordination among components, it leads to counterproductive results. A system may have
following features:
Adaptability: some systems are adaptive to the exterior environment, while some systems
are non-adaptive to the external environment. For example, anti-lock braking system in car
reacts depending on the road conditions, where as the music system in the car is
independent of other happening with the car.
Limitation: every system has pre-defined limits or boundaries within which it operates.
This limits or boundaries can be defined by law or current state of technology.
Information

Common definition of information is data. However, data is no true information. Data gets
its meaning and significance if only it is information. Information is represented with data,
symbols and letters.
Information has following properties:
Objective: One of the key properties of information is its objectiveness. Objective
information is a key component of any modern scientific research.
Subjective: Set of information which is useful to science may be abstract or irrelevant for
others. Therefore, information is subjective also.
Temporary: Information is temporary with every update in the database.
Representation of Information
Information is represented with help of data, numbers, letters or symbols. Information is
perceived in a way it gets represented. Decimal system and binary system are two ways of
representing information. The binary circuits of computers are designed to operate under
two states (0,1).
Organization of Information
The way in which information is organized directly affect the way the information is
managed and retrieved.
The simplest way of organizing information is through linear model. In this form, data is
structured one after another, for example, in magnetic tapes, music tapes, etc.
In a binary tree model, data is arranged in an inverted tree format where it assumes two
values.
The hierarchy model is derived from a binary tree model. In this model, branch can assume
multi-value data, for example in the UNIX operating system this model is used for its file
system.
The hypertext model is another way of organizing information; World Wide Web is an
example of this model.
Random access model is another way of organizing information. This model is used for
optimum utilization of available computer storage space. Here data is stored in specified
location under direction of the operating system.
Networking Information
Information is networked through network topology. The layout of all the connected devices,
and it provides virtual shape or structure to the network is known as network topology. The
physical structure may not be representative of network topology. The basic types of
topology are bus, ring, star, tree and mesh.
The above topologies are constructed and managed with help of Hubs, Switches, Bridges,
Routers, Brouters and Gateways.
Securing Information
Security of information as well as an information system is critical. Data back-up is on the
way through which Information can be made secured. Security management for network
and information system is distinct for different setup like home, small business, medium
business, large business, school and government.

UNIT - 3
UNDERSTANDING ORGANISATION BEHAVIOUR
NATURE AND SCOPE OF OB
Organizational Behaviour is concerned with the understanding, prediction and control
of human behaviour in organizations. It focuses on the individuals, the groups and the
organization and also on their interactional relationships. It is the study and application of
knowledge about how people act with organizations.
It is a human tool for human benefit. It applies broadly to the behaviour of people in
all types of organizations. Wherever organizations are, there is a need to understand
organizational behaviour.
Features (Characteristics) of OB
1. OB is a part of general management and not the whole of management. It
represents behavioural approach to management.
2. OB contains a body of theory, research and application associated with a growing
concern for people at the work place. It helps in understanding human behaviour in
work organizations.
3. OB is a human tool for human benefit. It helps in predicting the behaviour of
individuals.
4. OB is inter-disciplinary field of study. It tries to synthesize knowledge drawn from
various behavioural and social sciences such as Psychology, Sociology, Anthropology,
Political-science, Economics, etc. In fact, OB is an applied behavioural sciences.
5. OB involves three levels of analysis of behaviour-individual behaviour, group
behaviour and behaviour of the organization itself.
6. OB is an action-oriented and goal-directed discipline. It provides a rational thinking
about people and their behaviour
7. OB is both a science and an art. The systematic knowledge about human behaviour
is a science. The application of behvioural knowledge and skills clearly leans towards
being an art.
8. OB seeks to fulfil both employees needs and organizational objectives.
Scope of OB
The scope of OB may be summed up in the words of S.P.Robbins as follows:

OB is a field of study that investigates the impact that individuals, groups, and
structure have on behaviour within organizations, for the purpose of applying such
knowledge towards improving an organizations effectiveness.
The scope of OB involves three levels of behaviour in organizations: individuals,
groups and structure.
1. Individual Behaviour
(i)

Personality

(ii)

Perception

(iii)

Values and Attitudes

(iv)

Learning

(v)

Motivation

2. Group Behaviour
(i)

Work groups and group dynamics

(ii)

Dynamics of conflict

(iii)

Communication

(iv)

Leadership

(v)

Morale

3. Organization: Structure, Process and Application

(i)

Organizational Climate

(ii)

Organizational Culture

(iii)

Organizational Change

(iv)

Organizational Effectiveness

(v)

Organizational Development

Key Elements in OB
The key elements in organizational behaviour are people, structure technology and the
environment in which the organizations operates. When people join together in an
organisation to accomplish an objective, some kind of structure is required. People also use
technology to help get the job done, so there is an interaction of people, structure and the
technology as shown in fig.1.

In addition, these elements are influenced by the external

environment, and they influence it.

People

Environment

Environment

Organization
Technology
Environment

Fig. 1: Key elements in

organizational behaviour

Each of the four elements of organizational behaviour will be considered briefly.

People: People make up the internal social system of the organisation. They consist of
individuals and groups. There are formal and informal groups. Groups are dynamic. They
form, change and disband. Organizations exist to serve people, rather than people existing
to serve organizations.
Structure: Structure defines the formal relationships of people in organisations. Different
jobs are required to accomplish all of an organisations activities. There are managers and
employees, accountants and assemblers. These people have to be related in some structural
way so that their work can be effectively co-ordinated. These relationships create complex
problems of co-operation, negotiation and decision-making.
Technology: Technology provides the resources with which people work and affects the
tasks that they perform. The technology used has a significant influence in working
relationships. The great benefit of technology is that it allows people to do more and better
work, but it also restricts people in various ways. It has costs as well as benefits.
Environment: All organizations operate within an external environment A single
organisation does not exist alone. It is part of a larger system that contains many other
elements such as Govt, the family, and other organizations.
All of these mutually influence each other in a complex system that creates a context for a
group of people. Individual organizations, such as factory or a school, cannot escape being
influenced by this external environment. It influences the attitudes of people, affects
working conditions, and provides competition for resources and power. It must be
considered in the study of human behaviour in organizations.
FUNDAMENTAL CONCEPTS
Organizational behaviour starts with a set of six fundamental concepts revolving around the
nature of people and organizations. They are as follows:
The Nature of people:

Individual differences

A whole person

Motivated behaviour

Value of the person (human dignity)

The Nature of organisations

Social systems

Mutual Interest

Result

Holistic organizational behaviour

1.INDIVIDUAL DIFFERENCES: People have much in common (they become excited, or

they are grieved by the loss of loved one), but each person in the world is also individually
different. Each one is different from all others, probably in millions of ways, just as each of
their fingerprints is different, as a far as we know. And these differences are usually
substantial rather than meaningless. All people are different. This is a fact supported by
science.
The idea of individual differences comes originally from psychology. From the day of birth,
each person is unique, and individual experiences after birth tend to make people even
more different. Individual differences mean that management can get the greatest
motivation among employees by treating managers approach to employees should be
individual, not statistical. This belief that each person is different from all others is typically
called the Law of Individual Differences.
2. A WHOLE PERSON: Although some organisations may wish they could employ a
persons skill or brain, they actually employ a whole person, rather than certain
characteristics. Different human traits may be separately studied, but in the final analysis
they are all part of one system making up a whole person. Skill does not exist apart from
background or knowledge. Human life is not totally separable from work life and emotional
conditions are not separate from physical conditions. People function as total human beings.
3. MOTIVATED BEHAVIOUR: From psychology we learn that normal behaviour has certain
causes. These may relate to a persons needs and / or the consequences that result from
acts. In the case of needs, people are motivated not by what we think they ought to have
but by what they themselves want. To an outside observer a persons needs may be
unrealistic, but they are still controlling. This act leaves management with two basic ways to
motivate people. It can show them how certain actions will increase their need fulfillment, or
it can threaten decreased need fulfillment if they follow an undesirable course of action.
Clearly a path towards increased need fulfillment is the better approach.
4. VALUE OF THE PERSON (HUMAN DIGNITY): This concept is of a different order from
the other three because it is more an ethical philosophy than a scientific conclusion. It
asserts that people are to be treated differently from other factors of production because
they are of a higher order in the universe. It recognizes that because people are of a higher
order they want to be treated with respect and dignity and should be treated this way. The
concept of human dignity rejects the old idea of using employees as economic tools.
5. SOCIAL SYSTEMS: From sociology we learn that organisations are social systems;
consequently activities there-in are governed by social laws as well as psychological laws.

Just as people have psychological needs, they also have social roles and status. Their
behaviour is influenced by their group as well as by their individual drives. In fact, two types
of social systems exist side by side in organisations. One is the formal (official) social
system, and the other is the informal social system.
The existence of a social system implies that the organizational environment is one of
dynamic change rather than a static set of relations. All parts of the system are
interdependent and subject to influence by any other part. Everything is related to
everything else.
The idea of a social system provides a frame work for analyzing
organizational behaviour issues. It helps make organizational behaviour problems
understandable and manageable.
6. MUTUAL INTEREST: Mutual interest is represented by the statement organisations,
need people, and people also need organisations. Organisations have a human purpose.
They are formed and maintained on the basis of some mutuality of interest among their
participants. People see organisations as a means to help them reach their goals, while
organisations need people to help reach organizational objectives. As shown in the following
figure, mutual interest provides a superordinate goal that integrates the efforts of
individuals and groups. The result is that they are encouraged to attack organizational
problems rather than each other.

Employe
e

Employee
goals

Organisation
al
goals

Superordin
ate
Goal of
Mutual
interest

Mutual
accomplishm
ent of goals

Organisati
on

Fig. 2. Mutual interest provides a superordinate goal for organization.

7.HOLISTIC ORGANIZATIONAL BEHAVIOUR: When the six fundamental concepts of
organizational behaviour are considered together, they provide a holistic concept of the
subject. Holistic organizational behaviour interprets people-organisation relationships in
terms of the whole person, whole group, whole organisation, and whole social system. It
takes an across-the board view of people in organisations in an effort to understand as
many as possible of the factors that influence their behaviour. Issues are analysed in terms
of the total situation affecting them rather than in terms of an isolated event or problem.

BASIC APPROACHES TO OB
1. A human resources (supportive) approach:

The human resources approach is

developmental. It is concerned with the growth and development of people towardss higher
levels of competency, creativity, and fufillment, because people are the central resource in
any organisation and any society. The nature of the human resources approach can be
understood by comparing it with the traditional management approach in the early 1900s.
In the traditional approach, managers decided what should be done and management was
directive and controlling.
The human resources approach, on the other hand, is supportive. It helps employees
become better, more responsible persons, and then tries to create a climate in which they
may contribute to the limits of their improved abilities. Essentially, the human resources
approach means that better people achieve better results. It is somewhat illustrated by this
ancient proverb:
Give a person a fish, and you feed that person for a day
Teach a person to fish, and you feed that person for life
2. A contingency approach: Traditional management relied on the principle of one best
way of managing. There was a correct way to organize, to delegate and to divide work. The
correct way applied regardless of the type of organisation or situation involved. The
contingency approach to organizational behaviour means that different situations require
different behavioural practices for effectiveness.
No longer is there a one best way. Each situation must be analysed carefully to determine
the significant variables that exist in order to establish the kinds of practices that will be
more effective. The strength of the contingency approach is that it encourages analysis of
each situation prior to action, while at the same time discouraging habitual practice based
on

Universal

assumptions

about

people.

The

contingency

approach

also

is

more

interdisciplinary, more system-oriented, and more research-oriented than the traditional

approach. Thus it helps to use in the most appropriate manner all the current knowledge
about people in organisations.
3. A productivity approach: Productivity is a ratio that compares units of output with
units of input. If more outputs can be produced from the same amount of inputs,
productivity is improved or if fewer inputs can be used to produce the same amount of
outputs, productivity has increased. The idea of productivity does not imply that one should
produce more output; rather it is a measure of how efficiently one produces whatever
output is desired. Consequently, better productivity is a valuable measure of how well

resources are used in society. It means that less is consumed to produce each unit of
output. There is less waste and better conservation of resources.
Productivity often is measured in terms of economic inputs and outputs, but human and
social inputs and outputs are also important, For example. if better organizational behaviour
can improve job satisfaction, a human output or benefit occurs. In the same manner, when
employee development programmes lead to a by-product of better citizens in a community,
a valuable social output occurs.
Equations showing the role of organizational behaviour is work systems:
1.

Knowledge x skill

Ability

2.

Attitude x situation

Motivation

3.

Ability x Motivation

Potential human performance

4.

Human performance x resources

organizational productivity

4. A systems Approach:
A system implies that there are many variables in organisations and that each of them
affects all the others in a complex relationship. All people in organisations should be
concerned with improving organizational behaviour. Managers represent the administrative
system and their role is to use organizational behaviour to improve people organisation
relationships as shown in the following figure.
Managers try to build a climate in which people are motivated work together, productively,
and become more effective persons.

Human
objectives

Administrativ
e

Organisation
al

system

behaviour

Better
people
Orgn.
relationship
s

Organisation
al
objectives
Social

objectives
Fig.3 The administrative system in organizational behaviour
When organizational behaviour is applied with a systems approach it creates a triple reward
system in which human, organizational and social objectives are met. People find more
satisfaction in work when there is cooperation and teamwork. They are learning growing and
contributing. The orgn also is more successful, because it operates more effectively. Quality
is better and costs are less. Perhaps the greatest beneficiary of the triple reward system is

society itself; because it has better products and services, better citizens and a climate of
co-operation and progress.
CONCEPTUAL FRAMEWORK FOR ORGANIZATIONAL BEHAVIOUR
A conceptual framework for understanding organizational behaviour is presented by
Durbin consisting of four core propositions, which are:
1. Organizational behaviour follows the principles of human behaviour.
2. Organizational behaviour is situational.
3. Organizational behaviour is based on system approach.
4. Organizational behaviour represents a constant interaction between
structure and process variables.
1. Organizational behaviour follows the principles of human behaviour:
Human beings in the organization are governed by the same physiological mechanisms both
on and off the job. Internal mechanism s provide people an extra spurt of the appropriate
harmone during times of stress, whether this stress is job or non job related. Similarly,
people at work are governed by the same psychological principles both inside and outside
organizational life. Organizational behaviour is human behaviour in a particular setting.
2. Organizational Behaviour is situational:
Psychologists and other behvaioural scientists have emphasized for years that individual is a
function of the interaction between personal characteristics of the individual and
environmental variables. In order to understand a persons behaviour, the pressures placed
upon him in a given situation must be understood.

Aggressive behvaiour, for example,

surfaces when a normally calm individual is forced into constant and close physical
proximity with other people.
Pigors and Myres developed the concepts of situational thinking. Their analysis suggests
that four situational variables are basic for anyone responsible for getting results
accomplished through people.
These are:
a)

The human element such as individual differences. This category includes

interpersonal relationships and other social aspects of the situation.

b)

The

technical

factor

such

as

production

methods

and

equipment,

management procedure, and specialized skills in any job function.

c)

Space time dimensions and relationships such as the size and location of
a plant, office or work station.

d)

Organizational wide policies designed to achieve major organizational

objectives.

3. Organizational Behaviour is based on system approach:

Systems thinking is an integral part of modern organization theory. Organizations
are viewed as complex systems consisting of inter related and inter locking sub
systems.

Changes in any one part of the system has both known and unknown

consequences in other parts of the system.

When modifications in the system lead to

desired, positive consequences, they are called functions.

Unintended consequences in

response to modification in the systems are called dysfunctions. According to the system
point of view, every inter action has both functions and dysfunctions.
4. Organizational Behaviour represents a constant interaction between structure
and process variables:
Structure refers to organizational design and position.

Process refers to what

happens, with or without the structure. A retail store may use both formal advertising and
public relations functions (structure) to help build its image in the community. However,
most of the stores image is formed by words of mouth from satisfied and dissatisfied
customers and employees.
Processes emerging within a group or organization are often evident only after they
are heading towardss completion. It is almost structural requirement in any organization
that managers deal with the discontents of their people, yet employees sometimes find
other processes for handling them.
The difference between structure and process represents a vital concept for
understanding organizational behaviour.

Classical approaches to management neglected

interpersonal processes the human side of organization life.

Erring in the opposite

direction (neglecting the influence of structural and technological factors) is a tendency on

the part of some social psychologists.

Deeper understanding of organizational behaviour

requires an ability to follow the complex shifting in relative importance between structure
and process variables.
MODELS OF ORGANISATIONAIZATIONAL BEHAVIOUR
Since the dawn of industrial revolution, four models of organizational behaviour have
been followed by managers of different organizations at different times.
autocratic, custodial, supportive and collegial as shown in table 1.

These are

Table 1: Models of Organizational Behaviour

Model

Autocratic

Custodial

Supportive

Collegial

Basis of Model

Power

Leadership

Partnership

Managerial
orientation

Economic
resources

Authority

Money

Support

Teamwork

Employee
orientation

Obedience

Job performance

Employee
psychological
result

Security
benefits

Responsible
behaviour

Dependence
boss

Participation

Self discipline

Employee
needs met

Subsistence

Security

Performance
result

Minimum

Passive
operation

on

Dependence
organization

and
on

Status
recognition
co-

and

Awakened drives

Self
actualization
Moderate
enthusiasm

CONTRIBUTING DISCIPLINES TO THE OB FIELD

PERSONALITY
Personality refers to the sum total of ways in which an individual reacts and interacts with
others. Personality determinants include heredity, environment and situation.

Personality traits: The early work in the structure of personality revolved around attempts
to identify and label enduring characteristics that describe an individuals behaviour. Popular
characteristics include shy, aggressive, submissive, lazy, ambitious, loyal, or timid. These
characteristics, when they are exhibited in a large number of situations, are called traits.
1. Reserved
2. Less Intelligent
3. Affected by feelings
4. Submissive
5. Serious
6. Expedient
7. Timid
8. Tough-minded
9. Trusting
10. Practical
11.Forthright
12. Self-assured
13. Conservative
14. Group-dependent
15. Uncontrolled
16. Relaxed

Outgoing
More intelligent
Emotionally stable
Dominant
Happy-go-luck
Conscientious
Venturesome
Sensitive
Suspicious
Imaginative
Shrewd
Apprehensive
Experimenting
Self-sufficient
Controlled
Tense
Table 1 Sixteen source traits

Determinants of Personality
(1) Biological Factors:
(i)

Heredity: It means the transmission of the qualities such as physical stature,

facial attractiveness, sex, temperament, muscle composition, reflexes etc,
from the ancestors and parents to the descendants. Heredity is generally
more important in determining a persons temperament than his values and
ideals.

(ii)

Brain: There is a general feeling that brain plays an important role in the
development of ones personality. However, no conclusive proof is available so
far about the nature of relationship between the brain and personality.

(iii)

Physical features:

An individuals external appearance may have a

tremendous effect on his personality. Such factors include height, weight,

colour, facial features, etc. of the individual.
(2) Family and Social factors: The development of individuals personality is also
influenced by his family and other social groups. The infant acquires those behaviour
patterns that are customary and acceptable to the standards of the family and the

community where the family lives. The status of the family in the society influences
individuals perception about self, others, work, money, etc.,
(3) Situational factors: An individuals personality may change in different situations. The
demands of different situations may call for different aspects of ones personality. Therefore,
we should not look at the personality factor in isolation.
Group and culture are the early environmental factors that influence later behaviour.
Family and the social setting during early stages of education are the important factors
which influence the initial formation of personality. Whatever the child learns lasts for life
time. Later in life, it is the peer groups of primary affiliations at work, social activities etc.
which shape the personality of an individual.
(4) Other factors:

a) Temperament: Temperament is the degree to which one responds emotionally.

b) Interest: An Individual normally has many interests in various areas. The successful
persons in the same occupation have to a large extent, the same interests.

c) Character: Character primarily means honesty. It is resistance to stealing and cheating

others.

d) Schema: It is an individuals belief, frame of reference, perception and attitude which

the individual possesses towardss the management, the job, working conditions, pay,
fringe benefits, incentive system, and development programmes in the organization.

e) Motives: Motives are the inner drives of an individual. They represent goal directed
behaviour of individual.
Development of Personality
(1) Freudian Stages: Sigmund Freud propounded psychoanalytic theory of personality
which is based on the notion that man is motivated more by unseen forces than by
conscious and rational thought. Freud noted that his clients behaviour could not always be
consciously explained. This clinical finding led him to conclude that major motivating force in
man is unconscious framework. This framework contains three aspects, though inter-related
but often conflicting. These are Id, Ego and Superego. Their brief description is as follows:

(i)

The Id: The id is the source o psychic energy and seeks immediate gratification for
biological or instinctual needs such as hunger, thirst and sex. The id would proceed
unchecked to satisfy motives, particularly the sexual relations and pleasures, were it
not for the channeling activity into acceptable ways by the ego. As an individual
matures, he learns to control the id. But even then, it remains a driving force
throughtout life and an important source of thinking and behaving.

(ii)

The Ego: The ego is the conscious and logical part of human personality and is
associated with the reality principle. While id represents the unconscious part, ego is
conscious about the realities of the external environment. The ego keeps the id in
check through intellect and reason.

(iii)

The Super ego: The super ego represents societal and personal norms and serves
as an ethical constraint on behaviour. It can best be described as the conscience. The
superego provides norms to ego to determine what is wrong or right. However, a
person is not aware of the working of the super ego, and conscience is developed by
absorption of cultural values and norms of the society.

(2) Erikson Stages: Erikson criticized the heavy emphasis given by Freud on the sexual
and biological factors in the development of personality. He felt that relatively more
attention should be given to the social factors. Erikson identified eight stages of life that
characterize the unending development of a person.
(i)

Infancy: During the first year of life, a child resolves the basic crisis of trust Vs
mistrust. An infant who is cared for in an affectionate way learns to trust other
people. Lack of love and affection results in mistrust. This stages makes a serious
impact on a child that influences events for remaining life.

(ii)

Early childhood: In the second and third years of life, a child begins to assert
independence. If the child is allowed to control these aspects of life that the child
is capable of controlling, a sense of autonomy will develop. If the child encounters
constant disapproval by elders a sense of self-doubt and shame is likely to
develop.

(iii)

Play age: The four and five year old seeks to discover just how much he can do.
If a child is encouraged to experiment and to achieve reasonable goals, he will
develop a sense of initiative. If the child is blocked and made to feel incapable, he
will develop a sense of guilt and lack of self confidence.

(iv)

School age: From ages 6 to 12, a child learns many new skills and develops
social abilities. If a child experiences real progress at a rate comparable with
abilities, he or she will develop a sense of enterprise. The reverse situation
results in a sense of inferiority.

(v)

Adolescence: The crisis of teenage years is to gain a sense of identity rather

than to become confused about who you are. While undergoing rapid biological
changes, the teenager is also trying to establish himself or herself as socially
separate from the parents. The autonomy, initiative and enterprise developed in

earlier stages are very important in helping the teenager to successfully resolve
this crisis and prepare for adulthood.
(vi)

Early adulthood: The young adult during the twenties faces the crisis of
intimacy Versus isolation. The sense of identity developed during the teenage
years allows the young adult to begin developing deep and lasting relationships.

(vii)

Adulthood: During this stage, the adults face the crisis of generativity Versus
self-absorption. Self-absorbed persons never develop an ability to look beyond
themselves. They become absorbed in career advancement and maintenance;
and they never learn to have concern for future generations, the welfare of
organizations to which they belong or the welfare of society as a whole.
Generative people see the world as much bigger than themselves. Productivity at
work and societal advancement become important to them. Through innovation
and creativity, they begin to exert influence that benefits their organizations.

(viii)

Mature adulthood: The person is developed as a highly mature person. He has

gained a sense of wisdom and perspective that can really guide the younger
generations.

(3) Chris Argyris Immaturity Maturity Theory:

Chris Argyris argued that personality of an individual develops along a continuum
from immaturity as an infant to maturity as an adult. He identified seven characteristics
in the continuum as given in the following table.
Table 2 : Immaturity Maturity Continuum
Immaturity Characteristics
Passivity
Dependence
Few ways of behaving
Shallow interests
Short-time perspective
Subordinate position
Lack of self awareness
Chris Argyris further contended that:
(i)

Maturity Characteristics
Activity
Independence
Diverse behaviour
Deep interests
Long-time perspective
Super ordinate position
Self awareness and control

The seven dimensions represent only one aspect of the total personality. Much
also depends upon individuals perception, self-concept and adaptation and
adjustment.

(ii)

The seven dimensions continually change in degree from the infant to the adult
end of the continuum

(iii)

The model, being only a construct, cannot predict specific behaviour.

(iv)

The seven dimensions are based upon latest characteristics of personality which
may be quite different from the observable behaviour.

4.Big Five Model

Five personality traits (the so called big five) have recently emerged from research
as being especially related to job performance. Characteristics of these traits can be
summarized briefly as follows:
(1) Extraversion

Sociable, talkative and assertive

(2) Agreeableness

Good natured, co-operative, and trusting

(3) Conscientiousness

Responsible, dependable, persistent and

achievement-oriented

(4) Emotional Stability

-- Viewed from a negative stand point:

tense, insecure and nervous

(5) Openness to experience Imaginative, artistically sensitive and

intellectual
5. Friedman and Rosenmans studies
Table 3 : Profiles of Type A and Type B Personalities
Type A Profile
Is always moving
Walks rapidly
Talks rapidly
Eats rapidly
Is impatient
Des two things at once
Cant cope with leisure time
Is obsessed with numbers
Measures success by quantity
Is aggressive
Is competitive
Constantly feels under time pressure

Type B Profile
Is not concerned about time
Is Patient
Doesnt brag
Plays for fun, not to win
Relaxes without guilt
Has not pressing deadlines
Is mild-mannered
Is never in a hurry

The Self concept: Self Esteem and Self efficacy

Peoples attempts to understand themselves are called the self-concept in personality
theory. The self is a unique product of many interacting parts and may be thought of as the
personality viewed from within. This self is particularly relevant to the concepts of self
esteem and self-efficacy in the field of organizational behaviour.
Peoples self esteem has to do with their self-perceived competence and self-image.
There is considerable research on the role that self-esteem may play in organizational
behaviour and its outcomes. Employees with high self esteem feel unique, competent,
secure, empowered, and connected to the people around them.

Self-efficacy is concerned with self perceptions of how well a person can cope with
situations as they arise. Those with high self-efficacy feel capable and confident of
performing well in a situation.
6. Levinsons Adult Life Stages
The work of Daniel Levinson on adult life stages has received attention. At first, he
believed that the life structure evolves through a relatively orderly sequence throughout
the adult years, and, unlike other stage theories that were event-oriented (for example,
marriage, parenthood or retirement), his was age-based. In particular he believed there was
little variability (a maximum of two or three years) in four identifiable stable periods.
1. Entering the adult world (ages 22-28)
2. Settling down (ages 33-40)
3. Entering middle adulthood (ages 45-50)
4. Culmination of middle adulthood (ages 55-60)
He identified four transitional periods:
1. Age-thirty transition (ages 28 33)
2. Mid-life transition (ages 40-45)
3. Age-fifty transition (ages 50-55)
4. Late adult transition (ages 60-65)
7. Douglas T.Halls Career Stage Model
Hall has synthesized Levinsons theory and other adult stage theories (in particular
the work of Erikson) into an overall model for career stages. The following figure shows that
there are four major career stages.