A.

Evolution of Scientific Management

Scientific Management by Taylor

Fredrick Winslow Taylor ( March 20, 1856 - March 21, 1915) commonly known as Father of
Scientific Management started his career as an operator and rose to the position of chief
engineer. He conducted various experiments during this process which forms the basis of
scientific management. It implies application of scientific principles for studying & identifying
management problems.
According to Taylor, Scientific Management is an art of knowing exactly what you want your
men to do and seeing that they do it in the best and cheapest way. In Taylors view, if a work is
analyzed scientifically it will be possible to find one best way to do it.
Hence scientific management is a thoughtful, organized, dual approach towards the job of
management against hit or miss or Rule of Thumb.
According to Drucker, The cost of scientific management is the organized study of work, the
analysis of work into simplest element & systematic management of workers performance of
each element.

Principles of Scientific Management

1. Development of Science for each part of mens job (replacement of rule of thumb)
a. This principle suggests that work assigned to any employee should be observed,
analyzed with respect to each and every element and part and time involved in it.
b. This means replacement of odd rule of thumb by the use of method of enquiry,
investigation, data collection, analysis and framing of rules.
c. Under scientific management, decisions are made on the basis of facts and by the
application of scientific decisions.
2. Scientific Selection, Training & Development of Workers
a. There should be scientifically designed procedure for the selection of workers.
b. Physical, mental & other requirement should be specified for each and every job.
c. Workers should be selected & trained to make them fit for the job.
d. The management has to provide opportunities for development of workers
having better capabilities.
e. According to Taylor efforts should be made to develop each employee to his
greatest level and efficiency & prosperity.

3. Co-operation between Management & workers or Harmony not discord

a. Taylor believed in co-operation and not individualism.
b. It is only through co-operation that the goals of the enterprise can be achieved
efficiently.
c. There should be no conflict between managers & workers.
d. Taylor believed that interest of employer & employees should be fully harmonized
so as to secure mutually understanding relations between them.

4. Division of Responsibility
a. This principle determines the concrete nature of roles to be played by different
level of managers & workers.
b. The management should assume the responsibility of planning the work whereas
workers should be concerned with execution of task.
c. Thus planning is to be separated from execution.
5. Mental Revolution
a. The workers and managers should have a complete change of outlook towards
their mutual relation and work effort.
b. It requires that management should create suitable working condition and solve
all problems scientifically.
c. Similarly workers should attend their jobs with utmost attention, devotion and
carefulness. They should not waste the resources of enterprise.
d. Handsome remuneration should be provided to workers to boost up their moral.
e. It will create a sense of belongingness among worker.
f. They will be disciplined, loyal and sincere in fulfilling the task assigned to them.
g. There will be more production and economical growth at a faster rate.
6. Maximum Prosperity for Employer & Employees
a. The aim of scientific management is to see maximum prosperity for employer and
employees.
b. It is important only when there is opportunity for each worker to attain his
highest efficiency.
c. Maximum output & optimum utilization of resources will bring higher profits for
the employer & better wages for the workers.
d. There should be maximum output in place of restricted output.
e. Both managers & workers should be paid handsomely.
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 Co-ordination, 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.
1. 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
pre-determined 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 predetermined goals. Planning is necessary to ensure proper utilization of human & nonhuman resources. It is all pervasive, it is an intellectual activity and it also helps in
avoiding confusion, uncertainties, risks, wastages etc.
2. 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.
3. 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.

4. 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.
5. 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 Haimann, 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.
Definition of Coordination
Co-ordination is the unification, integration, synchronization of the efforts of group
members so as to provide unity of action in the pursuit of common goals. It is a hidden force
which binds all the other functions of management. According to Mooney and Reelay, Coordination is orderly arrangement of group efforts to provide unity of action in the pursuit of
common goals. According to Charles Worth, Co-ordination is the integration of several parts
into an orderly hole to achieve the purpose of understanding.
Management seeks to achieve co-ordination through its basic functions of planning, organizing,
staffing, directing and controlling. That is why, co-ordination is not a separate function of
management because achieving of harmony between individuals efforts towards achievement of
group goals is a key to success of management. Co-ordination is the essence of management and
is implicit and inherent in all functions of management.
A manager can be compared to an orchestra conductor since both of them have to create rhythm
and unity in the activities of group members. Co-ordination is an integral element or ingredient
of all the managerial functions as discussed below: a. Co-ordination through Planning - Planning facilitates co-ordination by integrating the
various plans through mutual discussion, exchange of ideas. e.g. - co-ordination between
finance budget and purchases budget.
b. Co-ordination through Organizing - Mooney considers co-ordination as the very
essence of organizing. In fact when a manager groups and assigns various activities to
subordinates, and when he creates departments co-ordination uppermost in his mind.
c. Co-ordination through Staffing - A manager should bear in mind that the right no. of
personnel in various positions with right type of education and skills are taken which
will ensure right men on the right job.
d. Co-ordination through Directing - The purpose of giving orders, instructions &
guidance to the subordinates is served only when there is a harmony between superiors
& subordinates.

e. Co-ordination through Controlling - Manager ensures that there should be coordination between actual performance & standard performance to achieve
organizational goals.
From above discussion, we can very much affirm that co-ordination is the very much essence of
management. It is required in each & every function and at each & every stage & therefore it
cannot be separated.
Coordination and Cooperation
Co-ordination is an orderly arrangement of efforts to provide unity of action in the fulfillment of
common objective whereas co-operation denotes collective efforts of persons working in an
enterprise voluntarily for the achievement of a particular purpose. It is the willingness of
individuals to help each other.
Co-ordination is an effort to integrate effectively energies of different groups whereas cooperation is sort to achieve general objectives of business.
Though these two are synonymous but they are different as below:

Differences between Co-ordination and Co-operation

Basis

Co-ordination

Co-operation

Meaning

It is an orderly arrangement of

It means mutual help willingly.

group efforts in pursuit of common

goals.

Scope

It is broader than co-operation

It is termed as a part of co-ordination.

which includes as well because it

harmonizes the group efforts.

Process

The function of co-ordination is

The functions of co-operation are

performed by top management.

prepared by persons at any level.

Requirements

Relationship

Co-ordination is required by

Co-operation is emotional in nature

employees and departments at work

because it depends on the willingness

irrespective of their work.

of people working together.

It establishes formal and informal

It establishes informal relationship.

relationships.

Freedom

It is planned and entrusted by the

It depends upon the sweet will of the

central authority & it is essential.

individuals and therefore it is not

necessary.

Support

It seeks wholehearted support from

Co-operation without co-ordination is

various people working at various

fruitless & therefore it may lead to

levels.

unbalanced developments.

Therefore, existence of co-operation may prove to be effective condition or requisite for coordination. But it does not mean that co-ordination originates automatically from the voluntary
efforts of the group of members. It has to be achieved through conscious & deliberate efforts of
managers, therefore to conclude we can say that co-operation without co-ordination has no fruit
and co-ordination without co-operation has no root.

Management Levels
1. Top level management:- It includes board of directors, chief executive or general managers ,
senior strategist, decision making, directors . Corporate level goals, missions and objectives are
determined. The major functions of this level are: To formulate and determine the objectives and define the goals of the business
To establish policies and prepare plans to attain the goals
To set up an organizational structure to conduct the operations as per the plans
To provide the overall direction in the organization
To assemble the resources necessary for the attainment of the policy and execution of the
paln
To control effectively the business operations
To judge and evaluate the results

2. Middle level management:- It includes departmental managers, divisional heads and

section officers. It acts as a bridge between top level management and lower level management.
the major functions of this level are: To implement the task set up by top management
To implement the policies framed by the top management
To run the organizations effectively and efficiently
To cooperate for the smooth functioning of the organizations
To coordinate between different departments
To recruit , select and train the employees for the better functioning of the departments
To issue the instructions to the lower level management
To motivate the workers and staffs for higher productivity and to reward them.
To lead the departments and build up an organizational spirit
To report and make suitable recommendations to the top level management for the better
execution of the plans and policies
3. Lower level management:- It includes supervisors, foremen and workers. it is also known
as supervisory level of management in which the supervisors or foreman like sales officers ,
account officers etc. take responsibilities of the implementation and control of the operational
plans developed by the middle level managers. The function of this level are: To issue the orders and instruction to the workers to supervise and control the
performance
To plan the activities of the sections.
To direct and guide the workers about the work procedures
To provide job training to the workers
To arrange the necessary tools, equipment , materials for the workers and look after their
proper maintenance
To solve the problem of workers
To develop sense of cooperation and high group spirit among the workers
To advise the middle level about the work environment
To inform the unsolved problems of the workers to the middle level management

Top-level Managers (Strategic Managers)

Senior executives are responsible for the overall management and effectiveness of the
organization.
They also focus on long-term issues and emphasize the survival and growth of the organization.
They are concerned with the interaction between the organization and its external environment.
Top-level managers include Chief Executive Officer (CEO), Chief Operating Officer (COO);
company President, Vice-President, and members of the top executive committee.
Middle-level managers (Tactical Managers)

Managers located in the middle of the organizational hierarchy, reporting to top-level managers.
They are the link between top-level managers and frontline managers.
They are responsible for translating the general goals and plans developed by strategic managers
into more specific objectives and activities.
Frontline Managers (Operational Managers)
Lower level managers who supervise the operational activities of the organization.
They are the link between management and non-management personnel.
They implement the specific plans developed with middle managers and serve as the link
between management and non-management personnel.

Management skills
Technical skills
Technical skill is the ability to perform a specialized task involving a particular method or
process.
The tasks can be in the areas of engineering, business, computer, etc.
Conceptual and decision skills
Conceptual and decision skills are about a manager's ability,
To recognize complex and dynamic issues;
To examine the numerous and conflicting factors that influence these issues and problems;
To resolve the problems for the benefit of the organization and its members.
The overall objectives and strategy of the organization;
The interactions among different parts of the organization;
The role of the business in its external environment.
Interpersonal and communication skills
Interpersonal and communication skills are people skills. They are about the ability to lead,
motivate and communicate effectively with others.
This skill is very important because managers spend most of their time interacting with people.
The ability to get along with many diverse types of people is vital for a successful management
career.
_____________________________________________________________________________________

B. Organizational Structure
Structure

In an organisation, a number of activities are performed. These activities are required to be

coordinated. Organisation structure is designed for division of tasks, grouping of activities and
coordinating and controlling the tasks of the organisation. The detailed study of all components
and dimensions of organisational structure is required for creation of efficient and stable
structure. Well designed organization structure facilitates the smooth functioning of the
organisation. In this unit, you will learn the concept, components and types of organisation
structure. You will further learn the dimensions of structure and the
models of organisational designs. You will be familiarised with the determinants of the
organizational effectiveness.
Significance of Organisation Structure
The organisation structure contributes to the efficient functioning of organisation in the
following ways.
Clear-cut Authority Relationships : Organisation structure allocates authority and responsibility. It
specifies who is to direct whom and who is accountable for what results. The structure helps an
organization member to know what is his role and how does it relate to other roles.
Pattern of Communication : Organisation structure provides the patterns of communication and
coordination. By grouping activities and people, structure facilitates communication between
people centered on their job activities. People who have joint problems to solve often need to
share information.
Location of Decision Centres : Organisation structure determines the location of centres of decision
making in the organisation. A departmental store, for instance may follow a structure that leaves
pricing, sales promotion and other matters largely up to individual departments to ensure that
various departmental conditions are considered.
Proper Balancing : Organisation structure creates the proper balance and emphasizes on
coordination of group activities. Those more critical aspect for the success of the enterprise may
be given higher priority in the organisation. Research in a pharmaceutical company, for instance,
might be singled out for reporting to the general manager or the managing director of the
company. Activities of comparable importance might be given, roughly equal levels in the
structure to give them equal emphasis.
Stimulating Creativity : Sound organization structure stimulates creative thinking and initiative
among organisational members by providing well defined patterns of authority. Everybody
knows the area where he specialises and where his efforts will be appreciated.
Encouraging Growth : An organisation structure provides the framework within which an
enterprise functions. If it is flexible, it will help in meeting challenges and creating opportunities
for growth. A sound organisation structure facilitates growth of the enterprise by increasing its
capacity to handle increased level of activity.

Making use of Technological Improvements : A sound organisation structure which is adaptable to

change can make the best possible use of latest technology. It will modify the existing pattern of
authority - responsibility relationships in the wake of technological improvements. In short,
existence of good organisation structure is essential for better management. Properly designed
organisation can help in improving team work and productivity by providing a framework
within which the people can work together most effectively. Therefore, an organisation structure
should be developed according to the needs of the people in the organisation.

These organisational structures are briefly described in the following paragraphs:

1. Line Organisational Structure:

A line organisation has only direct, vertical relationships between different levels in the
firm. There are only line departments-departments directly involved in accomplishing the
primary goal of the organisation. For example, in a typical firm, line departments include
production and marketing. In a line organisation authority follows the chain of command.

Features:
Has only direct vertical relationships between different levels in the firm.

Advantages:

A line structure tends to simplify and clarify responsibility, authority and accountability
relationships. The levels of responsibility and authority are likely to be precise and
understandable.

A line structure promotes fast decision making and flexibility.

Because line organizations are usually small, managements and employees have greater
closeness.

Disadvantages:

As the firm grows larger, line organisation becomes more ineffective.

Improved speed and flexibility may not offset the lack of specialized knowledge.

Managers may have to become experts in too many fields.

There is a tendency to become overly dependent on the few key people who perform
numerous jobs.

2. Staff or Functional Authority Organizational Structure :

Functional structures typically work well for smaller and less complex organizations
dealing with only one or a few products or services. Also work best in relatively stable
environments that allow organizations to pursue consistent strategies.

Advantages:

Economies of scale with efficient use of resources,

Task assignments consistent with technical training,

High quality technical problem solving

In-depth training and skill development within functions

Clear cut career paths within functions

Disadvantages:

Poor communication and coordination across functions,

Having too many decisions referred upward in the hierarchy,

Loss of clear responsibility for product or service delivery, and slow innovation in
response to environmental changes.

One of the most serious disadvantages occurs when members of functional departments
become overspecialized, develop self-centered, narrow viewpoints, and lose the total
system perspective.

Failure to communicate and extend support across department lines is common in such
situations. This often slows decision making because problems must be referred up the
hierarchy for resolution

3. Project Organisational Structure:

The line, line and staff and functional authority organisational structures facilitate
establishment and distribution of authority for vertical coordination and control rather than
horizontal relationships. In some projects (complex activity consisting of a number of
interdependent and independent activities) work process may flow horizontally, diagonally,
upwards and downwards. The direction of work flow depends on the distribution of talents and
abilities in the organisation and the need to apply them to the problem that exists. The cope up
with such situations, project organisations and matrix organisations have emerged.

Feature:

Temporary organisation designed to achieve specific results by using teams of specialists from
different functional areas in the organisation.

Importance of Project Organisational Structure:

Work is defined by a specific goal and target date for completion.

Work is unique and unfamiliar to the organisation.

Work is complex having independent activities and specialized skills are necessary for
accomplishment.

Work is critical in terms of possible gains or losses.

Work is not repetitive in nature.

Characteristics of project organisation:

Personnel are assigned to a project from the existing permanent organisation and are
under the direction and control of the project manager.

The project manager specifies what effort is needed and when work will be performed
whereas the concerned department manager executes the work using his resources.

The project manager gets the needed support from production, quality control,
engineering etc. for completion of the project.

The authority over the project team members is shared by project manager and the
respective functional managers in the permanent organisation.

The services of the specialists (project team members) are temporarily loaned to the
project manager till the completion of the project.

There may be conflict between the project manager and the departmental manager on the
issue of exercising authority over team members.

Since authority relationships are overlapping with possibilities of conflicts, informal

relationships between project manager and departmental managers (functional
managers) become more important than formal prescription of authority.

Full and free communication is essential among those working on the project.

4. Matrix Organisational Structure:

It is a permanent organisation designed to achieve specific results by using teams of
specialists from different functional areas in the organisation.

Feature:
Superimposes a horizontal set of divisions and reporting relationships onto a hierarchical
functional structure

Advantages:

Decentralized decision making.

Strong product/project co-ordination.

Improved environmental monitoring.

Fast response to change.

Flexible use of resources.

Efficient use of support systems.

Disadvantages:

High administration cost.

Potential confusion over authority and responsibility.

High prospects of conflict.

Overemphasis on group decision making.

Excessive focus on internal relations.

This type of organisation is often used when the firm has to be highly responsive to a rapidly
changing external environment. In matrix structures, there are functional managers and product
(or project or business group) managers. Functional manager are in charge of specialized
resources such as production, quality control, inventories, scheduling and marketing. Product or
business group managers are incharge of one or more products and are authorized to prepare
product strategies or business group strategies and call on the various functional managers for
the necessary resources.
The problem with this structure is the negative effects of dual authority similar to that of
project organisation. The functional managers may lose some of their authority because product
managers are given the budgets to purchase internal resources. In a matrix organisation, the
product or business group managers and functional managers have somewhat equal power.
There is possibility of conflict and frustration but the opportunity for prompt and efficient
accomplishment is quite high.

Span of Control
The departmentation reflects the types of jobs which are grouped together. Different persons are
involved in performing these jobs. They are required to be supervised closely.
Span of control refers to the number of individuals a manager can effectively supervise. Thus, it
is expected that the span of control, that is, the number of subordinates directly reporting to a
superior should be limited so as to make supervision and control effective. This is because
executives have limited time and ability. It is sometimes suggested that the span of control
should neither be too wide nor too narrow. In other words, the number of subordinates should
not be too large or too small. The number of subordinates cannot be easily determined because
the nature of jobs and capacity of individuals vary from one organisation to another. Moreover,
the actual span of supervision affects the organisation in different ways. A wide span results in
fewer levels of supervision and facilitates communication. It permits only general supervision
due
to the limited availability of time. Narrow span, on the other hand, requires multiple levels of
supervision
and hence longer time for communication. It is more expensive and complicates the process of
communication. A narrow span, however enables managers to exercise close supervision and
control. Although there are certain limits to the span of control, the tendency in recent years has

been to avoid specifying absolute number because it has been recognised that the ideal span
depends on a number of factors.
Some of the important factors are discussed below :
Nature of the Work : If the work is simple and repetitive, the span of control can be wider.
However, if the work requires close supervision the span of control must be narrow.
Ability of the Manager : Some managers are more capable of supervising large number of people
than others. Thus for a manager who possesses qualities of leadership, decision-making ability
and communication skill in greater degree the span of control may be wider.
Efficiency of the Organisation : Organisations with efficient working systems and competent
personnel can have larger span of control.
Staff Assistants : When staff assistants are employed, contact between supervisors and
subordinates can be reduced and the span broadened.
Time Available for Supervision : The span of control should be narrowed at the higher levels
because top managers have less time available for supervision. They have to devote the major
part of their work time in planning, organising, directing and controlling.
Ability of the Subordinates : Fresh entrants to jobs take more of a supervisors time than trained
persons who have acquired experience in the job. Subordinates who have good judgement,
initiative, and a sense of obligation seek less guidance form the supervisor.
Degree of Decentralisation : An executive who personally takes many decisions is able to supervise
fewer people than an executive who merely provides encouragement and occasional direction. It
should be clear that the size of the span of control is related to numerous variables, and no
single limit is likely to apply in all cases. A variety of factors can influence the resulting number
of employees comprising the optimum span of control in any particular organisation. The span
of control also influence the creation of tall and flat structure. Let us learn the concept of tall and
flat structure

Authority, Responsibility & Delegation

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 sub-allocation 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
1. Assignment of tasks and duties
2. Granting of authority
3. Creating responsibility and accountability
4.
Delegation of authority is the base of superior-subordinate relationship, it involves following
steps:-

1. 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.
2. 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.
3. 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.

Differences between Authority and Responsibility

Authority

Responsibility

It is the legal right of a

person or a superior to
command his subordinates.

It is the obligation of subordinate to

perform the work assigned to him.

Authority is attached to the

position of a superior in
concern.

Responsibility arises out of superiorsubordinate relationship in which

subordinate agrees to carry out duty
given to him.

Authority can be delegated

by a superior to a
subordinate

Responsibility cannot be shifted and is

absolute

It flows from top to bottom.

It flows from bottom to top.

Principles of Management
A principle refers to a fundamental truth. It establishes cause and effect relationship between
two or more variables under given situation. They serve as a guide to thought & actions.
Therefore, management principles are the statements of fundamental truth based on logic which
provides guidelines for managerial decision making and actions. These principles are derived: a. On the basis of observation and analysis i.e. practical experience of managers.
b. By conducting experimental studies.
There are 14 Principles of Management described by Henri Fayol.
1. Division of Labor
a. Henri Fayol has stressed on the specialization of jobs.

b. He recommended that work of all kinds must be divided & subdivided and
allotted to various persons according to their expertise in a particular area.
c. Subdivision of work makes it simpler and results in efficiency.
d. It also helps the individual in acquiring speed, accuracy in his performance.
e. Specialization leads to efficiency & economy in spheres of business.

2. Party of Authority & Responsibility

a. Authority & responsibility are co-existing.
b. If authority is given to a person, he should also be made responsible.
c. In a same way, if anyone is made responsible for any job, he should also have
concerned authority.
d. Authority refers to the right of superiors to get exactness from their sub-ordinates
whereas responsibility means obligation for the performance of the job assigned.
e. There should be a balance between the two i.e. they must go hand in hand.
f. Authority without responsibility leads to irresponsible behavior whereas
responsibility without authority makes the person ineffective.

3. Principle of One Boss

a. A sub-ordinate should receive orders and be accountable to one and only one
boss at a time.
b. In other words, a sub-ordinate should not receive instructions from more than
one person because - It undermines authority
- Weakens discipline
- Divides loyalty
- Creates confusion
- Delays and chaos
- Escaping responsibilities
- Duplication of work
- Overlapping of efforts
c. Therefore, dual sub-ordination should be avoided unless and until it is absolutely
essential.
d. Unity of command provides the enterprise a disciplined, stable & orderly
existence.
e. It creates harmonious relationship between superiors and sub-ordinates.
4. Unity of Direction

a. Fayol advocates one head one plan which means that there should be one plan for
a group of activities having similar objectives.
b. Related activities should be grouped together. There should be one plan of action
for them and they should be under the charge of a particular manager.
c. According to this principle, efforts of all the members of the organization should
be directed towards common goal.
d. Without unity of direction, unity of action cannot be achieved.
e. In fact, unity of command is not possible without unity of direction.
_____________________________________________________________________________________

C. Organizational Ethics
1. Managerial Ethics :
The term ethics refers to principles, values, and beliefs that define what is right and
wrong behavior.
Factors That Affect Employee Ethics
Stages of Moral Development - Research confirms three levels of moral development. Each level has
two stages.
The first level is called preconventional. At this level, the individuals choice
between right or wrong is based on personal consequences involved.
At the second stage, which is labeled conventional, moral values reside in
maintaining expected standards and living up to the expectations of others.
The third levelthe principled levelthe individual makes a clear effort to
define moral principles apart from the authority of the groups to which the
person belongs.
Research on the stages of moral development indicates that people proceed
sequentially through the six stages of these three levels, with no guarantee of
continued development at any stage. The majority of adults are at Stage 4. The
higher the stage an employee reaches, the more likelihood that he or she will
behave ethically.

Individual Characteristics - A person joins an organization with a relatively entrenched set of

values.
Values are basic convictions about what is right and wrong. Values are broad
and cover a wide variety of issues.
Ego strength is a personality measure of the strength of a persons convictions.
Individuals who score high on ego strength are likely to resist impulses to act
unethically and are likely do what they think is right.
Locus of control is a personality attribute that measures the degree to which
people believe they control their own fate. Individuals with an internal locus of

control think that they control their destiny, while persons with an external locus
of control are less likely to take personal responsibility for the consequences of
their behavior and are more likely to rely on external forces. Externals believe
that what happens to them is due to luck or chance.
structural variables - A third factor influencing managerial ethics is structural variables. The
existence of structural variables such as formal rules and regulations, job descriptions, written
codes of ethics, performance appraisal systems, and reward systems can strongly
influence ethical behavior.
Organizations culture - The content and strength of an organizations culture influences ethical
behavior.
An organizational culture most likely to encourage high ethical standards is one
that is high in risk tolerance, control, and conflict tolerance.
A strong culture exerts more influence on managers than does a weak one.
However, in organizations with weak cultures, work groups and departmental
standards strongly influence ethical behavior.
Intensity of an issue - Finally, the intensity of an issue can affect ethical decisions. Six
characteristic determine issue intensity
Greatness of harm
Consensus of wrong
Probability of harm
Immediacy of consequences
Proximity to victim
Concentration of effect

2. Social Responsibilities of Managers

Social responsibility is defined as the obligation and commitment of managers to take steps for
protecting and improving societys welfare along with protecting their own interest. The
managers must have social responsibility because of the following reasons:
1.

Organizational Resources - An organization has a diverse pool of resources in form of

men, money, competencies and functional expertise. When an organization has these
resources in hand, it is in better position to work for societal goals.

2.

Precautionary measure - if an organization lingers on dealing with the social issues now, it

would land up putting out social fires so that no time is left for realizing its goal of
producing goods and services. Practically, it is more cost-efficient to deal with the social
issues before they turn into disaster consuming a large part if managements time.
3.

Moral Obligation - The acceptance of managers social responsibility has been identified
as a morally appropriate position. It is the moral responsibility of the organization to
assist solving or removing the social problems

4.

Efficient and Effective Employees - Recruiting employees becomes easier for socially
responsible organization. Employees are attracted to contribute for more socially
responsible organizations. For instance - Tobacco companies have difficulty recruiting
employees with best skills and competencies.

5.

Better Organizational Environment - The organization that is most responsive to the

betterment of social quality of life will consequently have a better society in which it can
perform its business operations. Employee hiring would be easier and employee would of
a superior quality. There would be low rate of employee turnover and absenteeism.
Because of all the social improvements, there will be low crime rate consequently less
money would be spent in form of taxes and for protection of land. Thus, an improved
society will create a better business environment.

But, managers social responsibility is not free from some criticisms, such as 1. High Social Overhead Cost - The cost on social responsibility is a social cost which will not
instantly benefit the organization. The cost of social responsibility can lower the
organizational efficiency and effect to compete in the corporate world.
2. Cost to Society - The costs of social responsibility are transferred on to the society and the
society must bear with them.
3. Lack of Social Skills and Competencies - The managers are best at managing business
matters but they may not have required skills for solving social issues.
4. Profit Maximization - The main objective of many organizations is profit maximization. In
such a scenario the managers decisions are controlled by their desire to maximize profits
for the organizations shareholders while reasonably following the law and social custom.

Social responsibility can promote the development of groups and expand supporting industries.

_____________________________________________________________________________________

D. Formation of Companies

1. SOLE PROPRIETORSHIP
The sole proprietorship is a form of business that is owned, managed and controlled by an
individual. He has to arrange capital for the business and he alone is responsible for its
management. He is therefore, entitled to the profits and has to bear the loss of business,
however, he can take the help of his family members and also make use of the services of others
such as a manager and other employees. This type of business organisation is also called single
ownership or single proprietorship. If the business primarily consists of trade, the organization
is a sole trading organization. Small factories and shops are often found to be sole proprietorship
organisations. It is the simplest and most easily formed business organization.
This is because not much legal formality is required to establish it. For instance to start a factory
the permission of the local authorities is sufficient. Similarly to start a restaurant, it is only
necessary to get the permission of local health authorities. Or again, to run a grocery store, the
proprietor has only to follow the rules laid down by local administration.
Features of Sole Proprietorship:
Individual Initiative: One person is the owner in a sole-proprietary form of organisation.
Risk Bearing: The proprietor is the sole beneficiary of profits in this form organisation. If there is
a loss he alone has to bear it. Thus the risks of business are borne by the proprietor himself.
Management and control: Management and control of this type of organisation is the
responsibility of the sole proprietor. He may, however, employ a manager or other people for the
purpose.
Minimum government regulations: The government does not interfere with the working of the sole
proprietorship organisation. However, they have to comply with the general laws and rules laid
down By government.
Unlimited liability: The sole proprietor has to bear the losses and is responsible for the liabilities
of the business. If the business assets are not sufficient to meet the liabilities, he may also have to
sell his personal property for that purpose.
Secrecy: All important decision taken by the owner himself. He keeps all the business secrets only
to himself.

Merits Of Sole Proprietorship:

A sole proprietary organisation has the following advantages:
Easy formation: A sole proprietorship business is easy to form where no legal formality involved
in setting up this type of organization. It is not governed by any specific law. It is simply
required that the business activity should

be lawful and should comply with the rules and regulations laid down by local authorities.
Better Control: In sole proprietary organisation, all the decisions relating to business operations
are taken by one person, which makes functioning of business simple and easy. The sole
proprietor can also bring about changes
in the size and nature of activity. This gives better control to business.
Sole beneficiary of profits: The sole proprietor is the only person to whom the profits belong. There
is a direct relation between effort and reward. This motivates him to work hard and bear the
risks of business.
Benefits of small-scale operations: The sole proprietorship is generally organized for small-scale
business. This helps the proprietors family members to be employed in business. At the same
time such a business is also entitled to certain concessions from the government. For example,
small industrial organisations can get electricity and water supply at concessional rates on a
priority basis.
Inexpensive Management: The sole proprietor does not appoint any specialists for various
functions. He personally supervises various activities and can avoid wastage in the business.
Limitations Of Sole Proprietorship:
Limitation of management skills: A sole proprietor may not be able to manage the business
efficiently as he is not likely to have necessary kills regarding all aspects of the business. This
poses difficulties in the growth of business also.
Limitation of Resources : The sole proprietor of a business is generally at a disadvantage in raising
sufficient capital. His own capital may be limited and his personal assets may also be insufficient
for raising loans against their security. This reduces the scope of business growth.
Unlimited liability: The sole proprietor is personally liable for all business obligations. For
payment of business debts, his personal property can also be used if the business assets are
insufficient.
Lack of continuity: A sole proprietary organisation suffers from lack of continuity. If the
proprietor is ill this may cause temporary closure of business. And if he dies the business may be
permanently closed. From the above account of the merits and limitations it becomes clear that it
is only personal services like repair work, tailoring etc. small factories, retail shops and
professional activities which can be set up as sole proprietary organisations. In India, this form
of organisation is quite popular and accounts for the largest number of business units.

2. PARTNERSHIP
Partnership is an association of persons who agree to combine their financial resources and
managerial abilities to run a business and share profits in an agreed ratio. Since the resources of
a sole proprietor to finance, and his capacity to manage a growing business is limited, he feels
the need for a partnership firm. Partnership business, therefore, usually grows out of the need
for expansion of business with more capital, better supervision and control, division of work
and spreading of risks. The Indian Partnership Act defines partnership as Partnership is the
relation between persons who have agreed to share the profits of a business carried on by all or
any one of them acting for all. The persons who have agreed to join in partnership are
individually called Partners and collectively a firm. A partnership firm can be formed with a
minimum of two partners and it can have a maximum of twenty partners.
Features of Partnership : Existence of an agreement: Partnership is formed on the basis of an
agreement between two or more persons to carry on business. It does not arise out of the
operation of law as in the case of joint Hindu family business. The terms and conditions of
partnership are laid down in a document known as Partnership Deed.
Engagement in business : A partnership can be formed only on the basis of a business activity. Its
business may include any trade, industry or profession. Thus, a partnership can engage in any
occupation production and/or distribution of goods and services with a view to earning profits.
Sharing of profits and losses: In a partnership firm, partners are entitled to share in the profits
and are also to bear the losses, if any.
Agency relationship : The partnership business may be carried on by all or any of the partners
acting for all. Thus, each partner is a principal and so can act in his own right. At the same time
he can act on behalf of other partners as their agent. Thus, every partner can bind the firm by his
acts.
Unlimited Liability : The liability of partners is unlimited as in the case of sole proprietorship. In
case some obligation arises then not only the partnership assets but also the private property of
the partners can be taken for the payment of liabilities of the firm.
Common Management : Every partner has a right to take part in the running of the business. It is
not necessary for all partners to participate in the day-to-day activities of the business but they
are entitled to participate. Even if partnership business is run by some partners, the consent of
all other partners is necessary for taking important decisions.
Restriction on transferability of share: No partner can transfer his share in partnership to any
other person. He may, however, do so with the consent of all other partners.
Registration : To form a partnership firm, it is not compulsory to register it. However, if the
partners so decide, it may be registered with the Registrar of Firms.There are advantages of
registration, which are discussed later.

Duration : The partnership firm continues at the pleasure of the partners. Legally a partnership
comes to an end if any partner dies, retires or becomes insolvent. However, if the remaining
partners agree to work together under the original firms name, the firm will not be dissolved
and will continue its business after settling the claim of the outgoing partner.

3. CO-OPERATIVE ORGANISATION
A co-operative form of business organization is different from other forms of organization. It is a
voluntary association of persons for mutual benefit and its aims are accomplished through selfhelp and collective effort. The main principle underlying a cooperative organization is mutual
help, i.e., each for one and all for each. A minimum of 10 persons are required to form a cooperative society. To be called a co-operative society it must be registered with the Registrar of
Co-operative Societies under the Co-operative Societies Act. The capital of a cooperative Society
is raised from its members by way of share capital. It can also obtain additional resources by way
of loans from the State and Central Co-operative Banks. A Co-operative society has much in
common with partnership, yet there are differences between the two types of organisation.
In partnership, mutual benefit is restricted to partners only, but in a co-operative society it
extends to its members as also the public. For example in a consumer co-operative store or a
co-operative credit society, the benefits are available to the members as well as the general
public. Besides, partnership requires the existence of some business activity whereas a
cooperative may be formed whenever individuals have common needs, which are difficult to
fulfill single-handed. Also, registration is optional in the case of partnership but it is
compulsory for a co-operative society.
Type of Co-operative Societies
Consumers co-operative societies : Consumer cooperatives are organised by consumers to
eliminate middlemen and to establish direct relations with the manufacturers or wholesalers.
These societies are formed by consumers to ensure a steady supply of goods and services of high
quality at reasonable prices. It purchases goods either from the manufacturers or wholesalers for
sale at reasonable prices. The profit if any , is distributed among members as dividend in the
ratio of capital contributed and also bonus in proportion to the purchases made by them.
Producers co-operative societies : Producers cooperative are formed to help the members in
procuring inputs for production of goods or services. These societies generally provide raw
material, tools and equipment and other common facilities to its members. This helps them

to concentrate their attention on production of goods. The society provides inputs to the
members and takes over their output for sale to outsiders. The basis for distribution of bonus is
the goods delivered for sale by each member.
Co-operative marketing societies : Co-operative marketing societies are voluntary associations of
small producers, who find it difficult to individually sell their products at a profit. The main
purpose of such a society is to ensure a steady and favourable market for the output
of its members. The output is pooled together and sold at the best price. The sale proceeds are
distributed in proportion to the contribution of the members to the pool. Marketing cooperatives eliminate middlemen and ensure honest trading practices in weighing, measuring
and accounting.
Co-operative credit societies : Such societies are formed to provide financial help in the form of
loans to members. The funds of these societies consist of share capital contributed by the
members and the deposits made by them and outsiders. The funds are used in giving loans
to needy members on easy terms. Thus, the members are protected from the exploitation of
moneylenders, who charge very high rates of interest. Another important purpose of credit cooperatives is to encourage the habit of thrift among their members.
Co-operative farming societies : In co-operative farming societies, small farmers join together and
pool their resources for cultivating their land collectively. Their objective is to achieve economies
of large scale farming and maximising agricultural output. Such societies are
particularly important in the case of countries like India, where agriculture suffers from
excessive sub-division and fragmentation of land. Co-operative farming makes it possible for
members to use modem tools and equipments, good seeds, fertilizer and irrigation facilities in
order to
achieve higher production.
Co-operative housing societies: They are formed to provide residential accommodation to the
members. They undertake the purchase and development of land and/or construction of
houses/flats on the land. Some housing co-operatives provide their members with necessary
loans
at low rates of interest to build houses. These societies are gaining popularity in big cities.
Merits of Co-operative Organisations
The co-operative form of organisation offers the following advantages:
Easy to form: A co-operative society is voluntary association and may be formed with a minimum
of ten adult members. Its registration is very simple and can be done without much legal
formalities.
Open membership: Membership in a Co-operative organisation is open to all having a common
interest . A person can become a member at any time he likes and can leave the society by
returning his shares without affecting its continuity.

Democratic management : A co-operative society is managed in a democratic manner. It is based

on principle of one man one vote. All members have equal rights and can have a voice in its
management.
Limited liability: The liability of the members of a cooperative society is limted to the extent of
capital contributed by them. They dont have to bear personal liability for the debts of the
society.
Stability: A co-operative society has a separate legal existence. It is not affected by the death,
insolvency, lunacy or permanent incapacity of any of its members. It has a fairly stable life and
continues to exist for a long period.
Economical operations: The operation of co-operative society is quite economical due to
elimination of middlemen and the voluntarily services provided by its members.
Government patronage: Government gives all kind of help to co-operatives, such as loans at lower
rates of interest and relief in taxation.
Other benefits: Certain non-economic benefits are also derived by members through cooperatives.
Credit cooperatives, for instance, promote habits of thrift and producers co-operative encourage
joint activity among members.
Limitations of Co-operative Organisations
As against the above-mentioned advantages of cooperatives the following limitations and
drawbacks of this form of organisation must also be noted:
Limited capital: Co-operatives are usually at a disadvantage in raising capital because of the low
rate of return on capital invested by members.
Inefficient management: The management of a cooperative society is generally inefficient because
the managing committee consists of part-time and inexperienced people. Qualified managers are
not attracted towards a co-operative on account of its limited capacity to pay adequate
remuneration.
Absence of motivation: A co-operative society is formed for mutual benefit and the interest of
individual members are not fully satisfied. There is no direct link between effort and reward.
Hence members are not inclined to put in their best efforts in a co-operative society.
Differences and factionalism among members: Once the initial enthusiasm about the co-operative
ideal is exhausted, differences and group conflicts arise among members. Then it becomes very
difficult to get full cooperation of the members. The selfish motives of members
begin to dominate and service motive is sometimes forgotten. But the society continues because
it functions in the interest of members.

Rigid rules and regulations: Excessive government regulation and control over Co-operatives affect
their functioning. For example, a Co-operative society is required to get its accounts audited by
the auditors of the co-operative department and submit its accounts
regularly to the Registrar. These regulations and control may adversely affect the flexibility of
operations and the efficiency of management in a co-operative society.

4. LIMITED LIABILITY PARTNERSHIP (LLP)

LLP, a legal form available world-wide is now introduced in India and is governed by the
Limited Liability Partnership Act 2008, with effect from April 1, 2009.. LLP combines the
advantages of ease of running a Partnership and separate legal entity status and limited liability
aspect of a Company.
Main features of a LLP
LLP is a separate legal entity separate from its partners, can own assets in its name, sue
and be sued.
Unlike corporate shareholders, the partners have the right to manage the business
directly
One partner is not responsible or liable for another partners misconduct or negligence.
Minimum of 2 partners and no maximum. Should be for profit business.
Perpetual succession.
The rights and duties of partners in LLP, will be governed by the agreement between
partners and the partners have the flexibility to devise the agreement as per their choice.
The duties and obligations of Designated Partners shall be as provided in the law.
Liability of the partners is limited to the extent of his contribution in the LLP. No
exposure of personal assets of the partner, except in cases of fraud.
LLP shall maintain annual accounts. However, audit of the accounts is required only if
the contribution exceeds Rs. 25 lakhs or annual turnover exceeds Rs.40 lakhs.
Merits
Lower cost of formation.
Lesser compliance requirements.
Easy to manage and run.
Easy to wind-up and dissolve.
No requirement of minimum capital contributions.
Partners are not liable for the acts of the other partners.
No minimum alternate tax (as of date).
Demerits
LLP cannot raise money from the public.
Financial Institution may not lend the large amount the LLP.

Understanding joint stock companies (Private & Public Limited)

In a partnership, there can be a maximum of 20 people. Because of this limit, the amount of
capital that can be generated is limited. Also, because of the unlimited liability of partnerships,
the partners may be discouraged from taking huge risks and further expanding their business.
To overcome these problems a public or a private company may be formed.
Private and public companies are much better investments because of Limited liability. This
means that if an investor has invested Rs.1000/- in a particular company, and the company goes
bankrupt, the investor only loses the money he has invested. To pay off the debt, the investors
property, bank accounts etc. are "not" used.
Because of this limited liability, many investors are interested in investing in these private or
public companies. Hence, a large capital can be generated and a huge business can be run.
The major disadvantage of Private and Public companies, is that they have a costly and elaborate
process of setting up. They are also closely regulated by the government.
So what are Public or Private companies?
These companies are also known as joint stock companies. The companies in India are
governed by the Indian Companies Act, 1956. The Act defines a company as an artificial person
created by law, having a separate legal entity, with perpetual succession and a common seal.
What this means is that, the company is different from the investors. The investors put in
money and capital is raised. But the company is treated as a virtual person. The company is
treated as a person who is different from its investors. The company has an identity of its own. If
someone sues the company, he does not sue the investors, he sues the virtual person that is the
company.
To understand the concept of joint stock (private and public limited) companies, consider the
following characteristics :
Legal formation : No single individual or a group of individuals can start a business and call it a
joint stock company. A joint stock company can come into existence only when it has been
registered after completion of all the legal formalities required by the Indian Companies Act,
1956.
Artificial person : Just like an individual takes birth, grows, enters into relationships and dies, a
joint stock company takes birth, grows, enters into relationships and dies. However, it is called
an artificial person as its birth, existence and death are regulated by law.

Separate legal entity : Being an artificial person, a joint stock company has its own separate
existence independent of its investors. This means that a joint stock company can own property,
enter into contracts and conduct any lawful business in its own name. It can sue and can be
sued by others in the court of law. The shareholders are not the owners of the property owned
by the company. Also, the shareholders cannot be held responsible for any of the acts of the
company.
Common seal : A joint stock company has a seal, which is used while dealing with others or
entering into contracts with outsiders. It is called a common seal as it can be used by any officer
at any level of the organization working on behalf of the company. Any document, on which the
company's seal is put and is duly signed by any official of the company, becomes binding on the
company.
For example, a purchase manager may enter into a contract for buying raw materials from a
supplier. Once the contract paper is sealed and signed by the purchase manager, it becomes
valid. The purchase manager may leave the company or may be removed from his job or may
have taken a wrong decision, yet, the contract is valid till a new contract is made or the existing
contract expires.
Perpetual existence : A joint stock company continues to exist as long as it fulfills the requirements
of law. It is not affected by the death, lunacy, insolvency or retirement of any of its investors. For
example, in case of a private limited company having four members, if all of them die in an
accident, the company will not be closed. It will continue to exist. The shares of the company
will be transferred to the legal heirs of the members.
Limited liability : In a joint stock company, the liability of a member is limited to the amount he
has invested. While repaying debts, for example, if a person has invested only Rs.10,000 then
only this amount that he has invested can be used for the payment of debts. That is, even if there
is liquidation of the company, the personal property of the investor cannot be used to pay the
debts and he will lose his investment worth Rs.10,000.
Democratic management : Joint stock companies have democratic management and control. Since
in joint stock companies there are thousands and thousands of investors, all of them cannot
participate in the affairs of management of the company. Normally, the investors elect
representatives from among themselves known as Directors to manage the affairs of the
company.

Special characteristics of Private Limited Companies

These companies can be formed by at least two individuals having minimum paid-up

capital of not less than Rupees 1 lakh.

As per the Companies Act, 1956 the total membership of these companies cannot exceed

50.
The shares allotted to its members are also not freely transferable between them.
These companies are not allowed to raise money from the pub-lic through open

invitation.
They are required to use Private Limited after their names.
The examples of such companies are Combined Marketing Services Private Limited,
Indian Publishers and Distributors Private Limited etc.

Special characteristics of Public Limited Companies

A minimum of seven members are required to form a public limited company.

It must have minimum paid-up capital of Rs 5 lakhs.
There is no restriction on maximum number of members.
The shares allotted to the members are freely transferable.
These companies can raise funds from general public through open invitations by selling

its shares or accepting fixed deposits.

These companies are required to write either public limited or limited after their
names.
Examples of such companies are Hyundai Motors India Limited, Jhandu
Pharmaceuticals Limited etc.

5. PUBLIC SECTOR ENTERPRISES

You have learnt about various forms of business organisations, which primarily relate to private
enterprises. Traditionally, business activities were left mainly to individual and private
organisations, and the government was taking care of only the essential services such as
railways, electricity supply, postal services etc. But, it was observed that private sector did not
take interest in areas where the gestation period was long, investment was heavy and the profit
margin was low; such as machine building, infrastructure, oil exploration, etc. Not only that,
industries were also concentrated in some regions that had certain natural advantages like
availability of raw materials, skilled labour , nearness to market. This led to regional imbalances.
Hence, the government while regulating the business activities of private enterprises went in for
direct participation in business and set up public enterprises in areas like coal industry, oil
industry, machine building, steel manufacturing, finance and banking, insurance etc. These units

are not only owned by central, state or local government but also managed and controlled by
them and are termed as Public Sector Enterprises.
As state earlier, the business units owned, managed and controlled by the central, state or
local government are termed as public sector enterprises or public enterprises. These are
also known as public sector undertakings. A public sector enterprise may be defined as any
commercial or industrial undertaking owned and managed by the government with a view to
maximize social welfare and uphold the public interest. Public enterprises consist of
nationalized private sector enterprises, such as, banks, Life Insurance Corporation of India and
the new enterprises set up by the government such as Hindustan Machine Tools (HMT), Gas
Authority of India (GAIL), State Trading Corporation (STC) etc.
Characteristics of Public Sector
Looking at the nature of the public enterprises their basic characteristics can be summarised
as follows:
Government Ownership and Management: The public enterprises are owned and managed by the
central or state government, or by the local authority. The government may either wholly own
the public enterprises or the ownership may partly be with the government and partly with the
private industrialists and the public. In any case the control, management and ownership
remains primarily with the government. For example, National Thermal Power Corporation
(NTPC) is an industrial organisation established by the Central Government and part of its share
capital is provided by the public. So is the case with Oil and Natural Gas Corporation Ltd.
(ONGC).
Financed from Government Funds: The public enterprises get their capital from Government Funds
and the government has to make provision for their capital in its budget.
Public Welfare: Public enterprises are not guided by profit motive. Their major focus is on
providing the service or commodity at reasonable prices. Take the case of Indian Oil
Corporation or Gas Authority of India Limited (GAIL). They provide petroleum and gas at
subsidized prices to the public.
Public Utility Services: Public sector enterprises concentrate on providing public
utility services like transport, electricity, telecommunication etc.
Public Accountability: Public enterprises are governed by public policies formulated by the
government and are accountable to the legislature.
Excessive Formalities: The government rules and regulations force the public enterprises to
observe excessive formalities in their operations. This makes the task of management very
sensitive and cumbersome

Basis of difference

Private sector enterprises

Public sector enterprises

Objective

Maximization of profit.

Maximize social welfare and ensure

balanced economic development.

Ownership

Owned by individuals.

Owned by Government.

Management

Managed by owner and

professional managers.

Managed by Government.

Capital

Raised by owners through

loans, private sources and
public issues.

Raised from Government funds and

sometimes through public issues.

Area of operation

Operates in all areas with

adequate return on investment

Operates in basic and public utility

sectors.

E. Operations Management

3. Flexible Manufacturing System

Advantages and disadvantages of FMSs implementation

Advantages
Faster, lower- cost changes from one part to another which will improve capital
utilization
Lower direct labor cost, due to the reduction in number of workers
Reduced inventory, due to the planning and programming precision
Consistent and better quality, due to the automated control
Lower cost/unit of output, due to the greater productivity using the same number of
workers
Savings from the indirect labor, from reduced errors, rework, repairs and rejects
Disadvantages
Limited ability to adapt to changes in product or product mix (ex. machines are of
limited capacity and the tooling necessary for products, even of the same family, is not
always feasible in a given FMS)
Substantial pre-planning activity
Expensive, costing millions of dollars
Technological problems of exact component positioning and precise timing necessary to
process a component
Sophisticated manufacturing systems

F. Human Resource Management

Introduction
Human Resource Management (HRM) is a relatively new approach to managing people in any
organisation. People are considered the key resource in this approach. it is concerned with
the people dimension in management of an organisation. Since an organisation is a body of
people, their acquisition, development of skills, motivation for higher levels of attainments, as
well as ensuring maintenance of their level of commitment are all significant activities. These
activities fall in the domain of HRM. Human Resource Management is a process, which consists
of four main activities, namely, acquisition, development, motivation, as well as maintenance of
human resources.
Nature of Human Resource Management :
Inherent Part of Management
Pervasive Function
Basic to all Functional Areas
People Centered
Personnel Activities or Functions
Continuous Process
Based on Human Relations
The basic objective of human resource management is to contribute to the realisation of the
organisational goals. However, the specific objectives of human resource management are as

follows.
To ensure effective utilisation of human resources, all other organisational resources will
be efficiently utilised by the human resources.
To establish and maintain an adequate organisational structure of relationship among all
the members of an organisation by dividing of organisation tasks into functions,
positions and jobs, and by defining clearly the responsibility, accountability, authority for
each job and its relation with other jobs in the organisation.
To generate maximum development of human resources within the organisation by
offering opportunities for advancement to employees through training and education.
To ensure respect for human beings by providing various services and welfare facilities
to the personnel.
To ensure reconciliation of individual/group goals with those of the organisation in such
a manner that the personnel feel a sense of commitment and loyalty towards it.
To identify and satisfy the needs of individuals by offering various monetary and nonmonetary rewards.
In order to achieve the above objectives, human resource management undertakes the following
activities :
Human Resource Planning, i.e., determining the number and kinds of personnel
required to fill various positions in the organisation.
Recruitment, selection and placement of personnel, i.e., employment function.
Training and development of employees for their efficient performance and growth.
Appraisal of performance of employees and taking corrective steps such as transfer from
one job to another.
Motivation of workforce by providing financial incentives and avenues of promotion.
Remuneration of employees. The employees must be given sufficient wages and fringe
benefits to achieve higher standard of living and to motivate them to show higher
productivity.
Social security and welfare of employees

The main functions of human resource management are classified into two categories:
Managerial Functions
Planning : The planning function of human resource department pertains to the steps taken in
determining in advance personnel requirements, personnel programmes, policies etc. After
determining how many and what type of people are required, a personnel manager has to
devise ways and means to motivate them.
Organisation : Under organisation, the human resource manager has to organise the operative
functions by designing structure of relationship among jobs, personnel and physical factors
in such a way so as to have maximum contribution towards organisational objectives. In this way
a personnel manager performs following functions :
preparation of task force;

allocation of work to individuals;

integration of the efforts of the task force;
coordination of work of individual with that of the department.

Directing : Directing is concerned with initiation of organised action and stimulating the people
to work. The personnel manager directs the activities of people of the organisation to get its
function performed properly. A personnel manager guides and motivates the staff of the
organisation to follow the path laid down in advance.
Controlling : It provides basic data for establishing standards, makes job analysis and
performance appraisal, etc. All these techniques assist in effective control of the qualities, time
and efforts of workers.
Operative Functions : The following are the Operative Functions of Human Resource
Management
Procurement of Personnel : It is concerned with the obtaining of the proper kind and number of
personnel necessary to accomplish organisation goals. It deals specifically with such subjects as
the determination of manpower requirements, their recruitment, selecting, placement and
orientation, etc.
Development of Personnel : Development has to do with the increase through training, skill that is
necessary for proper job performance. In this process various techniques of training are
used to develop the employees. Framing a sound promotion policy, determination of the basis of
promotion and making performance appraisal are the elements of personnel development
function.
Compensation to Personnel : Compensation means determination of adequate and equitable
remuneration of personnel for their contribution to organisation objectives. To determine the
monetary compensation for various jobs is one of the most difficult and important function of
the personnel management. A number of decisions are taken into the function, viz., jobevaluation, remuneration, policy, inventive and premium plans, bonus policy and
co-partnership, etc. It also assists the organisation for adopting the suitable wages and salaries,
policy and payment of wages and salaries in right time.
Maintaining Good Industrial Relation : Human Resource Management covers a wide field. It is
intended to reduce strifies, promote industrial peace, provide fair deal to workers and establish
industrial democracy. It the personnel manager is unable to make harmonious relations between
management and labour industrial unrest will take place and millions of man-days will be lost.
If labour management relations are not good the moral and physical condition of the employee
will suffer, and it will be a loss to an organisation vis-a-visa nation. Hence, the personnel anager
must create harmonious relations with the help of sufficient communication system and
co-partnership.

Record Keeping : In record-keeping the personnel manager collects and maintains information
concerned with the staff of the organisation. It is essential for every organisation because it
assists the management in decision making such as in promotions.
Personnel Planning and Evaluation : Under this system different type of activities are evaluated
such as evaluation of performance, personnel policy of an organisation and its practices,
personnel audit, morale, survey and performance appraisal, etc

Organization Culture
How often have you been asked What is your organisation culture like? Maybe in an interview
or during any informal discussion with one of your friends.
What are the answers that we generally come up with when encountered with such questions?
The culture is good, people are friendly, a very open culture in fact. This comes out when
positive and when it has to be negative, its like Its the worst culture that I have ever seen in
my professional career. Incompetent people are sitting at the top. Nobody is aware of his or
her work properly. HR and Finance never listen to you and above all my manager doesnt
know anything and he is sitting at that position. Only I know how am I surviving out there?
As if this question has triggered your emotional trauma and you have found a place to throw out
all that is lying within.
This is a general reaction that I have quoted when we are encountered with this question. But
have we actually given a thought or has somebody taken out time to explain the culture of our
organization that we may have been working for quite a long time when it is quite evident from
the above statements what impact it makes on the people.

How many of us actually understand the real meaning of Organisation Culture and further its
implications? May be out of curiosity, some of us will google out for the meanings or definitions
of the Organisation Culture after blurting out one of the above stated reaction on this question.
What is organization Culture?
There has been no single definition of Organization Culture and it is difficult to get a consensus
on the same but more or less they have settled to similar kinds of definitions as stated below:Organizational culture is an idea in the field of organizational studies and management which
describes the psychology, attitudes, experiences, beliefs and values (personal and cultural
values) of an organization. It has been defined as "the specific collection of values and norms
that are shared by people and groups in an organization and that control the way they interact
with each other and with stakeholders outside the organization. Ravasi and Schultz (2006)
stated that organizational culture is a set of shared mental assumptions that guide interpretation
and action in organizations by defining appropriate behaviour for various situations.
Now what do we understand from the above statements? How can we describe our organisation
culture on the basis of the above statements/ definitions?
Lets elaborate on it a bit more than perhaps we will be able to answer these questions. There are
commonly two types of cultures stated and understood to exist. They are:Strong and Weak Organisation Culture
Strong Cultured organisations are like well-greased machines which work very smoothly
without any major hitch. They carry a strong belief and employees well align with the
organizational values and everybody is well aware of his/ her responsibilities duties and they
almost respond to the stimuli of the Cultural values. The employees of Strong Organisation
Culture possess a strong belief that the processes they follow or the way they execute their
duties is right.
Whereas in case of Organizations of Weak Culture have employees who dont find much
alignment with the organizational values and generally they are controlled by some strong
measures and bureaucracy.
There are more classifications of the Organization Culture like Soft & Hard Culture, Formal &
Informal Culture but more or less they describe the same contradicting aspects of an
Organization Culture. I think when there are so many different aspects of looking at
Organization Culture that it is very difficult to assimilate all here. So we will not get into
definitions and classifications etc. but really would like to understand the difference between a
Good Culture and a Bad Culture and the factors that actually influence these.
First we will start with the ingredients that make up the Culture of an Organization.

1. I would like to start with this statement that the Culture percolates from above and
does not move up from below. So the blame can always be put on the higher
management for a Bad Culture? No, because the culture as a whole is built up by all the
employees but surely the foundation is the higher management.
2. The Mission/Vision of the Organization that gives a direction, a belief to the
organization and its people and in turn the culture. It has been seen that organizations
with vague and unrealistic Mission/Vision are uncertain about their way ahead and
generally succumb midway.
3. Policies of an organization are the behavioral guidelines for the employees of the
organization which gives a color to the Culture. It helps any new player on the block to
get into the groove immediately.
4. Process/ Procedures provide guidelines for the functioning of the organization. This
gives an identity to the organization.
5. Rules and Regulations may seem to be like restrictions but they are important to rectify
the hitched, the spills midway.
6. State of Organizational Development is the most important and includes all the above
stated points. Organization at young, growing, maturing or mature state of development.
It directly impacts the Organization Culture.
The above stated points can be concluded as the formal components of the Organization Culture
but there are components that can fall under the category of informal components of
Organization Culture and have an equally important effect on the same. They are:1. External Environment It influences as this is where the organization interacts for
business.
2. Industry Industry as obvious influencer as it determines all the other factors.
3. Size and nature of the Organizations Workforce is also a great influencer to the Culture
of an Organization as it affects the control of the Organization.
4. Technology used as it directly effects the functioning of the Organization.
5. Leaders of the organization as they are the people who recruit new employees and judge
their cultural fitment, the way they react to critical incidents, what they pay attention to,
control, the behaviors they model for others, the way the allocate rewards and resources.
6. The Organization History and ownership as it creates a legacy and continues to reflect in
the culture of the Organization through cultural transmissions(e.g. rites, stories.)
The above stated factors influence or in other words build up the Culture of any Organization in
question. Now the most difficult task ahead of describing a Culture to be the best or better than
any other culture as every culture has its unique identity, color, history and as stated the
influencing factors. So vividly it can be said that the Culture is best that suits and works for an
Organization. I dont find much of a difference between the social culture and organization
culture. Our social culture has also a great influence on our Organization Culture.
Now, what we to find is that what is a healthy Organization Culture and how important is it
for the success or failure of an Organization?

But, first we have to understand and contemplate that a Culture is build for, by and with the
people and not the machines though technology is one of the influencing factors but it also exists
for people.
One of the great all time example of this is actually between two of the best known companies in
the world: IBM and Microsoft. In this example, IBM didn't even necessarily have a terrible
organizational culture, but they did fall into several of the traps that caused them to become
stagnant.
This example is from the late 1980s. Microsoft was a fairly good company, with revenues in the
tens of millions--but a long way from what they are now. At the time, IBM had the largest market
share by far with over 80% of the mainframe market. Although long forgotten history by most
people, at that time IBM spent a large amount of time and money investing in a software system
that was supposed to "take over everything."
It was called OS/2, and at the time many people complained that there would be no more
experimentation because obviously OS/2 would be with every IBM which would put a strangle
hold on the industry. Obviously that didn't happen . . . but why? With 80% of the market
cornered, an international market, and their own new software, how did IBM not take over?
One of the obvious reasons is Microsoft. Microsoft has done what everyone thought IBM was
going to do in the late 1980s. What ended up happening was the OS/2 was really memory heavy
and not nearly as functional as it could have been. Bill Gates and Microsoft took advantage of
IBM's blunders to take over the market. IBM stopped analyzing its own corporate culture
because they were so dominate the thought became "everything we're doing is right," and in
retrospect, the higher ups at IBM were completely concerned with internal measures, internal
goals, and proving production.
They were so obsessed with keeping track of how many lines of programming were getting done
that many programmers did not write the best of most efficient programming--because it wasn't
enough lines!
Meanwhile, Microsoft's entire organizational culture was not focused on bureaucracy, but on
getting things done. The bottom line was a better product, followed by an even better product,
and so on. While IBM became so entangled with bulkier and bulkier programming and
bureaucracy (they even had a class on how to order document manuals from the main
company--just to get help).
Microsoft took advantage by making a product aimed at the customers, not at internal specs.
Because of this they absolutely dominated the computer market. IBM had a series of setbacks
that resulted in the stock tumbling and the need to hire a complete outsider to re-invent the
company.

This is an example where becoming overconfident, falling into dangers of bureaucracy, and
internal numbers and goals caused a company that never should have lost its near monopoly on
the market to almost bust, while an upstart company who "had no business competing with
IBM" according to most sources, had an outstanding organizational culture based on customers
needs and getting things done (as opposed to how they were done and measured--IBM's
downfall).
Microsoft is a sample organizational culture that showed how a company could work, and how
important that culture was. While IBM has recovered into a great company, the late eighties to
early nineties shows the cost of falling into the trap of weak organizational culture.
Organization Culture - II (Healthy Organizational Culture)
We just cant leave the discussion after categorizing the Organization Cultures as weak and
strong, soft and hard or formal and informal as all have some advantages and disadvantages for
e.g. as stated a strong culture has very hard lined processes and it acts as a drawback sometimes
as it may be difficult for a new incumbent to adapt to this culture easily and such cultures are
generally abstain from goodies in form of changes.
Hence, Organizations should strive for what is considered a healthy organizational culture in
order to increase productivity, growth, efficiency and reduce employee turnover and other
counterproductive behavior. On a broader prospect the following characteristics describe a
healthy culture, including:

Acceptance and appreciation for diversity

Regard for and fair treatment of each employee as well as respect for each employees
contribution to the company
Employee pride and enthusiasm for the organization and the work performed
Equal opportunity for each employee to realize their full potential within the company
Strong communication with all employees regarding policies and company issues
Strong company leaders with a strong sense of direction and purpose
Ability to compete in industry innovation and customer service, as well as price
Lower than average turnover rates (perpetuated by a healthy culture)
Investment in learning, training, and employee knowledge

Additionally, performance oriented cultures have been shown to possess statistically better
financial growth. Such cultures possess high employee involvement, strong internal
communications and an acceptance and encouragement of a healthy level of risk-taking in order
to achieve innovation. Additionally, organizational cultures that explicitly emphasize factors
related to the demands placed on them by industry technology and growth will be better
performers in their industries.
According to Kotter and Heskett (1992), organizations with adaptive cultures perform much
better than organizations with unadaptive cultures. An adaptive culture translates into

organizational success; it is characterized by managers paying close attention to all of their

constituencies, especially customers, initiating change when needed, and taking risks. An
unadaptive culture can significantly reduce a firm's effectiveness, disabling the firm from
pursuing all its competitive/operational options.
What is a healthy organizational culture? A healthy organizational culture is one which
should help all the supervisors and employees of the company to be on the same page as those
in charge. A good organizational culture is of benefit to every member of the company from
the very top to the very bottom. If any group of workers feels marginalized, then the culture
can be improved.
A good organizational culture has the ability to maximize employees' creative ideas and
strategies. There are certain behaviors that can undercut this type of a culture, and one way to
get an idea of a healthy culture is to look at some of the common traits of an unhealthy culture.
Some of the most common traits of a weak and ineffective organizational culture are:

Process is more importance than purpose. When supervisors are more concerned about
doing x number of say lines of programming, or phone calls, versus how good the
programming is or how effective the phone calls were, this is one example. Think of
that English teacher who gave a six page essay an 'A' even if it didn't make any sense
while a well thought out three page essay got a 'C' because it wasn't long enough. Same
concept.
Authority is more important than service. Any time people in power positions feel that
it is necessary for them to constantly exercise that power by riding the people under
them, it is assumed that its their exercise of authority that makes them work or deliver.
It's only a matter of time until the system collapses.
Form is more important than reality. Remember the recent global market collapse? Well
people kept buying stock when a company talked about "new strategy to corner the
market" but they never showed a profit in three years. What happened? They went
broke. No fancy marketing plans can pull you out of that. Companies keep on saying
that we are in a control of the situation while pieces are crumbling around.
Precedence is more important than adaptability. This often happens with really large
companies and is always a warning sign. See IBM's fall from goliath, to another
company, and how Microsoft took their place by being the most adaptable company
out there.

In contrast to this, a healthy organizational culture has several trademarks. Some of the most
common include the following:
Clearly defined purpose : A company with a good organizational culture knows exactly what
its goals are and what each employee's job entitles in order to get there.
Service : Service not only to customers, but a sense of service from each employee to the

company itself. They should want to work for the company and want to see the company
succeed.
Realistic : They know when they can expand, and when they can't. They can look at numbers
and instead of giving a glowing report when it looks like recession to keep the stock up, they
can analyze and see that hard times are coming and adjust accordingly.
Adaptability : Companies with healthy organizational cultures are very adaptable. They can
roll with good and bad markets, seize an advantage/opportunity when one comes along, and
can deal quickly with the unexpected.
These are all the signs of a strong company with a healthy organizational culture.
There are many different ways to measure a company's organizational culture. There are
exceptional corporate cultures, as well as disastrously bad ones, and obviously most
companies are going to fall somewhere in the middle of these two extremes. There are many
characteristics that make up a healthy corporation, and here is a ten point list of some of the
most common factors that will be found in virtually all healthy organizational cultures:
1. Organizational pride. Employees who are embarrassed to mention where they work are
obviously not in a good environment. Employees who work for a company that they
are will defend against slander, libel, or just plain criticism are a good sign of a
company doing something right with their culture.
2. Ambition towards being better. The difference between ambition for the sake of power
or respect and ambition to keep improving for the sake of improving is the difference
between night and day. Strong company culture focuses on improving and getting
better at every level.
3. Obvious teamwork and communication. The more open discussion there is, the more
open exchange of ideas, the more competitive and cutting edge that company is
capable of becoming. Period, end of statement.
4. Quality leadership. This isn't just at the very top. A brilliant CEO can have his greatest
plans destroyed by a few low level managers who alienate employees and can't lead by
example. Good managers are really interested in the problems that others are having,
and are happy to offer help when asked.
5. Constant review of profits and costs. It is not written in GEETA that it can be reviewed
from year to year. All financial records are studied, and especially expenses. Are
expenses justified? Are they really effective in making the company stronger and more
profitable? If not, they look for alternatives.
6. Employee relationships. A cut throat environment does not bring out the best in a
company. The corporations with employees who work together is far more likely to
succeed than a company where it's every man for themselves. Are employees willing to

7.

8.

9.
10.

sacrifice their co-workers and advance themselves over other people's blunders, or do
they aim for promotion through improvement? Huge difference. The team players will
help a company out far more in the long run.
Client and consumer relations. The customer is always right. As annoying as this can
be at times, the company that takes customer service as their true motto and keeps that
focus will succeed and create great organizational culture.
Honesty and safety. No one should ever be asked to do anything unsafe or blatantly
dangerous. Likewise, there are no five finger discounts from employees: they don't
even think about stealing from an employer who is treating them so well.
Education and developmental programs. The company is heavily invested in training
its employees and providing whatever education is necessary for them to succeed.
Cutting edge thinking. Companies with healthy organizational culture are innovative
and can think outside of common trends to move ahead of the pack. New ideas are
always considered, and employee participation in brain storming is encouraged.

These are ten of the most common traits you will find among the companies with the
healthiest organizational culture.
A recent example of the effect of change in the Organization Culture was the news of the job
market flooded with the Resumes of Senior Executives of Wipro after the change in the Top
Leadership.

Definition of Planning
Planning managerial functions where managers are required to establish goals and state
the ways and means by which these goals are to be attained. Therefore planning is taken as the
foundation for future activities. Or in simple terms; planning is deciding in advance what is to
be done. Planning is the thinking before doing.
Management every time has to look for planning long-range and short-range future
direction by estimating and evaluating the future behavior of the relevant environment and by
determining the enterprise's own desired role. Plans have two basic components: goals and
action statements. Goals represent an end state the targets and results that managers hope to
achieve.

Action statements represent the means by which an organization goes ahead to attain its
goals. Planning is a deliberate and conscious work by means of which managers determine a
future course of action for attaining a specific goal. To a manager means planning is thinking
about what is to be done, who is going to do it, and how and when he will do it.
Planning also required thinking about past events and about future opportunities and
impending threats. Planning process finds the organizational strengths and weaknesses.
The Importance of Planning in an Organization
Planning brings about success through teamwork.
Planning helps an organization chart a course for the achievement of its goals. The process
begins with reviewing the current operations of the organization and identifying what needs to
be improved operationally in the upcoming year. From there, planning involves envisioning the
results the organization wants to achieve, and determining the steps necessary to arrive at the
intended destination--success, whether that is measured in financial terms, or goals that include
being the highest-rated organization in customer satisfaction.
Efficient Use of Resources : All organizations, large and small, have limited resources. The
planning process provides the information top management needs to make effective decisions
about how to allocate the resources in a way that will enable the organization to reach its
objectives. Productivity is maximized and resources are not wasted on projects with little chance
of success.
Establishing Goals : Setting goals that challenge everyone in the organization to strive for better
performance is one of the key aspects of the planning process. Goals must be aggressive, but
realistic. Organizations cannot allow themselves to become too satisfied with how they are
currently doing--or they are likely to lose ground to competitors. The goal setting process can be
a wake-up call for managers that have become complacent. The other benefit of goal setting
comes when forecast results are compared to actual results. Organizations analyze significant
variances from forecast and take action to remedy situations where revenues were lower than
plan or expenses higher.

Managing Risk And Uncertainty : Managing risk is essential to an organizations success. Even
the largest corporations cannot control the economic and competitive environment around them.
Unforeseen events occur that must be dealt with quickly, before negative financial consequences
from these events become severe. Planning encourages the development of what-if scenarios,
where managers attempt to envision possible risk factors and develop contingency plans to deal
with them. The pace of change in business is rapid, and organizations must be able to rapidly
adjust their strategies to these changing conditions.
Team Building : Planning promotes team building and a spirit of cooperation. When the plan is
completed and communicated to members of the organization, everyone knows what their

responsibilities are, and how other areas of the organization need their assistance and expertise
in order to complete assigned tasks. They see how their work contributes to the success of the
organization as a whole and can take pride in their contributions. Potential conflict can be
reduced when top management solicits department or division managers input during the goal
setting process. Individuals are less likely to resent budgetary targets when they had a say in
their creation.
Creating Competitive Advantages : Planning helps organizations get a realistic view of their
current strengths and weaknesses relative to major competitors. The management team sees
areas where competitors may be vulnerable and then crafts marketing strategies to take
advantage of these weaknesses. Observing competitors actions can also help organizations
identify opportunities they may have overlooked, such as emerging international markets or
opportunities to market products to completely different customer groups.
Definition of Decision-making
Decision-making is the process of identifying a set of feasible alternatives and choosing a course
of action from them. Decision-making is a part in planning. Decision-making is an intermediatesized set of activities which begins with identifying problem and ends with choice making or
decision giving. Management is the constantly influencing organizations action and decision
making process is central to doing it.
In decision making process, a manager identifies a specific situation and finds the threats and
opportunities that it offers. Than the manager must find the available alternatives to tackle with
the situation. This is where planning comes in.
By planning; manager finds these alternatives by testing and measuring their
effectiveness. They identify the pros and cons of each alternative. After that the managers must
use their decision-making skills for selecting one path of action. Decision making is the core of
planning. Unless a decision has been made, a plan cannot be implemented in the field.
So we can say that planning and decision-making, both are interrelated. Decisions can be
made without planning but planning cannot be done without making decisions. Planning can be
defined as the process of selecting future course of action. Decision-making defined as the
process of selecting a course of action from the alternatives. They need to be accurate for the
welfare of the organization.
The term personality is derived from the Latin word persona meaning a mask. Personality is a
patterned body of habits, traits, attitudes and ideas of an individual as these are organized
externally into roles and statuses and as they relate internally to motivation, goals and various
aspects of selfhood.
According to Robert Park and Earnest Burgess Personality is the sum and organization of
those traits which determine the role of the individual in the group.
According to Linton, personality embraces the total organized aggregate of psychological
processes and status pertaining to the individual.Parsonality says Maclver is all that an
individual is and has experienced so far as this all can be comprehended as unity. According to

Lundberg the term personality refers to the habits, attitudes and other social traits that are
characteristic of a given individual's behavior.
By personality Ogburn means the integration of the socio-psychological behavior of the
human being, represented by habits of action and feeling, attitudes and opinions.
Davis regards personality a psychic phenomenon which is neither organic nor social but an
emergent from a combination of the two. According to Young personality is the totality of
behavior of an individual with a given tendency system interacting with a sequence of
situations.
On the basis of these definitions it may be said there are two main approaches to the
study of personality:
1. The psychological
2. The sociological
The psychological approach considers personality as a certain style peculiar to the
individual. This style is determined by the characteristic organization of mental trends,
complexes, emotions and sentiments. The psychological approach enables us to understand the
phenomena of personality disorganization and the role of wishes, of mental conflict and of
repression and sublimation in the growth of personality. The sociological approach considers
personality in terms of the status of the individual in the group, in terms of his conception of his
role in the group of which he is a member. What others think of us plays a large part in the
formation of our personality.
Thus personality is a sum of the ideas, attitudes and values of a person which determine
his role in society and form an integral part of his character.
Personality is acquired by the individual as a result of his participation in group life. As a
member of the group he learns certain behavior systems and symbolic skills which determine
his ideas, attitudes and social values. These ideas, attitudes and values which an individual
holds comprise his personality.
In brief it can be said:
1. Personality is not related to bodily structure alone. It includes both structure and
dynamics.
2. Personality is an indivisible unit.
3. Personality is neither good nor bad.
4. Every personality is unique
5. Personality refers to persistent qualities of the individual. It expresses consistency and
regularity.
6. Personality is acquired.
7. Personality is influenced by social interaction. It is defined in terms of behavior.
What is Personality?
The personality is the typical pattern of thinking, feeling, and behaviors that make a person
unique.
When we say that someone has a "good personality" we mean that they are likeable, interesting
and pleasant to be with.

Everyone wants to be attractive to others. To that end, having a good personality is vital probably even more so than good looks. In fact, approximately 85 percent of your success and
happiness will be a result of how well you interact with others. Ultimately, it is your personality
that determines whether people are attracted to, or shy away from you.
While we can only enhance our looks to a certain extent, we have the ability to improve the
personality as much as we want. We can develop or integrate any trait we deem fitting and
agreeable.
Here are someways we can accomplish this:
1. Be a better listener. Jacqueline Kennedy Onassis was considered one of the most
charming women in the world because she cultivated the skill of being an exceptional
listener. She was known for the way she would look a person in the eyes, hang on their
every word, and make them feel important. There is nothing more appealing than having
someone listen to you intently making you feel like you're the only person in the world.
2. Read more and expand your interests.The more you read and cultivate new interests,
the more interesting you are to others. When you meet new people it gives you the
opportunity to share what you know and to exchange your views with them.
3. Be a good conversationalist. This relates to how much you read and know. Once you
have much to contribute, learn how to talk about it with others. No one can read about or
know everything, so it's refreshing to learn from others those things we don't have the
time to about read ourselves. If you happen to be shy, join a group like Toastmasters that
encourages you to talk about what you know. Enjoy the article: The Art of Conversation
4. Have an Opinion.There is nothing more tiresome than trying to talk to someone who has
no opinion on anything. A conversation has nowhere to go if you have nothing to
expound on. If, however, you have an uncommon point of view or differing opinion, you
are more interesting and stimulating to be with socially (unless you're a know-it-all, of
course). A unique outlook expands everyone's perspective.
5. Meet New People. Make the effort to meet new people especially those unlike you. It not
only exposes you to different cultures and alternative ways of doing things, it broadens
your horizons.
6. Be yourself. The next most tiresome thing after having no opinions is trying to be
something you're not. Molding yourself in order to fit in, or be accepted, usually
backfires. Since each of us is unique, expressing that uniqueness is what makes us
interesting. Attempting to be a carbon copy of someone else not only falls flat, but reveals
a lack of authenticity.
7. Have a positive outlook and attitude. Who wants to be around people who are negative,
complain a lot, or have nothing good to say? In fact, most of us run when we see them

coming. Instead, be the kind of upbeat person who lights up a room with your energy
when you enter it. Do it by looking for the best in people and things. Smile warmly,
spread good cheer, and enliven others with your presence.
8. Be fun and see the humorous side of life. Everyone enjoys the company of someone
who makes them laugh, or smile, so look for the humorous, quirky side in a situation there always is one. Comic relief is a much welcome and needed diversion at times.
When you can add fun and lightheartedness to an otherwise dull or gloomy setting,
others will naturally be attracted to you, not to mention grateful.
9. Be supportive of others. Being supportive is probably the most endearing quality you
can integrate into your personality. Just as you yourself welcome it, be the support for
others when they need it. We all love a cheerleader in our corner; someone who is
encouraging, believes in us and helps pick us up when we're down.
10. Have Integrity and treat people with respect. Being honest and true to your word will
bring you the admiration, respect and gratitude of others. Nothing improves a person's
personality more than integrity and respect - respect for others, as well as respect for
yourself.
We humans have the power and ability to shape our personalities however we wish. When we
develop ourselves to be all that we can be, we contribute to our own, as well as the happiness of
others.