Notes on

MANAGEMENT
FOR
ICMAP STUDENTS
Notes Prepared by
Reviewed by

Muhammad Akhlaq Khan

Aziz-ur-Rehman Waseem Saadat.

Books Cunsulted

1 2

Management Foundations and Practices 5thEd. By: Dalton E Mc Farland Management A Globe Perspective 10th Ed. By: Harold Koontz

CHAPTER-I MANAGEMENT THEORY AND PRACTICE

Most successful corporations are those which are translating modern management theory into practical action rather than continuing to depend upon traditional individual managers experience and trail and error. Persuasiveness of Management Management is not confined to factories, stores, or offices. Homes, clubs and ones personal affairs all need to be managed. There are also subtle but important differences in management styles, leadership effectiveness employee morale, organizational health, and ability to innovate. WHAT IS MANAGEMENT ______________________________________________ The word management has several uses depending on context and purpose. There is no universally accepted standard definition of management. The loose usage of the word as a synonym for business administration. It comes in English from Italian word maneggiare means to handle later it becomes confused with French work manager means use carefully." It is originally a noun used to indicate the process of managing, training or directing. There are four important uses of the word management One an administrative process Two as a discipline Three a group of individuals running organization Four management as a career 1 Management as a Process An important and consistent use of this term as a fundamental integrating process designed to achieve organized, purposeful results. So management is a process by which manager creates direct and maintains a purposive organization through coordinated, cooperative human effort. This definition implies four ideas one management is dynamic, second continuous, third change is a way of life in organizations four managerial actions direct and control the nature extent and pace of activities.

Management & Administration Difference

In general, the terms management and administration are synonymous. Usage provides some minor distinction between these two terms. In government agencies administration is the preferred term, although in recent years management has become more widely used. In government units, policies and goals are set by legislators to be executed by administrators. In business firms, administration refers to higher, policy-determining levels. One seldom regards the first-line supervisor as an administrator, he is a manager. Koontz define management as the process of designing and maintaining an environment in which individuals, working together in groups efficiently accomplish selected aims. 2 Management as a Discipline Management is also defined as a field of learning. It is an organized, formal discipline researched and taught in institutions of higher learning. As a discipline its boundaries are not exact just like all natural and physical sciences. Management is both art and science. When it is practiced it is an art and when it is seen as a knowledge underlying the practice then it is a science. 3 Management as People A third use of this term is to denote, in collective sense, the managerial group within the organization. It includes all those persons who exercise supervisory authority over others, i.e., first line supervisor, departmental heads and all executives including chief executive. Its collective reference is often ambiguous, e.g., when one says the management of this company is efficient it is not clear that whether the managers as a group or the process by which they manage or both. So the term of management is restricted to refer the process and the term managers to refer the people. 4 Management as a Career Lastly it denotes a career or occupation. Certain business careers are non-managerial e.g. a stock-broker or an insurance sales man. A career in management means that an individual is devoting his working lifetime to the practice of management. As a career/occupation it is a broad concept. Management itself can be regarded as a career, but it also presents a variety of interesting and challenging careers focused on specialized occupations in such fields as marketing finance and personnel. THEORY IN MANAGEMENT 2

At present there is no unified, comprehensive theory of management. Some researchers focus on organization theory, some on administrative theory, and others on human relations--or group--theory. Some emphasis on decision theory as a critical element in explaining managerial behavior and action. Still others emphasize the managers task and functions. Koontz has aptly described this proliferation of parallel theories as the management theory jungle." Stages of Management Theory Theories emerged slowly prior to this century, but it has developed more rapidly since then. It may be called evolution in management thought. Theories can be subdivided into four eras. 1 Early influences It contains the period prior to this century, i.e., prior to 1900s. 2 Scientific management theory It begun about 1910 and waned in the 1950s as human relations movement 3 Humans relations movement It altered management practices with respect to group processes and interpersonal relations but its contributions to management theory were limited in that large, complex organizations were not studied. 4 Management science and It is currently emerged from the work of revisionists researchers related system approaches. who saw the limitations of the previous research and increased the use of scientific methods of behavioral and quantitative empirical research. Their theories led to improved conceptualization.

Management as Applied Science

Management is an applied science that lacks a coherent body of its own theoretical concepts, so that management has borrowed them from other disciplines. Some borrowing from mathematics, statics, and the behavioral sciences is no doubt necessary and desirable but it may have deprived management theorists of the motivation to devise their own conceptual framework. Being an applied science, its theory is influenced by such fields as organization theory, decision theory, personality theory, game theory, information theory, communication theory, learning theory, group theory, and motivational theory. The problem of management theory is to identify the application of these fields to management and to demonstrate their importance for management practice. Theory and Practice in Management All managerial action proceeds from explicit or at least implicit theory. The alliance between theory and practice is an intimate one. they reinforce one another in a continuous process of interaction. When we speak of management theory, we are speaking of scientific theory. The purpose of scientific theory is to provide a framework for the explanation and interpretation of facts, so that phenomena can be explained, understood predicted and controlled. There are clear discrepancies between management theory and management practice. Theory is still in a state of development. One reason for gap between theory and practice is that a time lag occurs between the discovery of a theory and its translation into the decisions and practices of managers. Eventually academicians, writers and consultants spread new information into wider channels, encouraging the trail of new ideas, but this process takes time. Five or even ten or more years may fall before many managers learn of a major discovery. But a good theory is better than poor theory, or no theory. In the absence of appropriate theory, managers will provide their own, which may or may note be right. The test of good theory is whether it explains observed phenomena and is useful in practicing behavior and controlling results. Comparative Management Theory It describes tow sets of phenomena. First, it examines the management process cross-culturally, i.e. across the boundaries of nations or of cultural grouping of nations. The second use of the term reflects variations within a given culture. e.g. one may compare management process in schools with those in hospitals or in business. System Theory Another tree of management theory jungle is, system theory. It may potentially integrate other streams of knowledge with each other and with ongoing management practice. It implies the possibility of the unity of all science and it is increasingly important in the biological, physical, 3

and behavioral sciences. Beers define a system as anything that consists of parts connected together It is a powerful concept for the analysis of organizations and organization behavior as well as for the design of organization structures and policies. Every scientific management thinker (many of whom were engineers) saw in the development of machines the possibilities of the automatic factory ~~ in effect, a production system integrating the flow of inputs, processing, and the flow of outputs into a whole. Nevertheless many other aspects of organizations are proving amenable to systems, engineering and scientific functions financial activities, and interrelationships of people at work. Almost every type of organization can employ systems thinking. Any organization can be designed or studied as a system, with the aid of the computer and accompanying simulation techniques. System may be either relatively open or relatively closed. A system is open to the degree that in can be affected by influences from the environment. It is closed to the degree that there is relatively little or no influence on the system coming across its boundary from out side. Contingency Theory A recent theoretical approach. It is harmonize with the system views: both approaches consider organizations as managed systems or subsystems interacting in relevant environments. It provides a way of looking at organizations (and their management) with emphasis on situational nature of events and activities Managers must act under uncertain conditions and risky conditions The managers and their organizational system need flexibility and openness to change in order to: (1) Cope with change. (2) Meet society demands and (3) Exploit the opportunities presented to it. Thus the open-systems concepts best rationale in contingency theory views.

Chapter 3 Managers and Their Careers

Definitions The terms managers, executive, administrator, businessman and entrepreneur are closely related and are sometimes used interchangeably despite technical differences. BUSINESSMAN: There are many accusations in business such as that of a stockbroker, that are non-managerial: and many managers are not businessmen because they work for the government, trade associations, or other nonprofit and service agencies such as hospitals or schools. ENTREPRENEUR: a special type of businessman --- who is generally the owner and initiator of a business and who may or may not be a manager in it as well. It is an ambiguous term and generally denotes a business risk-taker or owner or a creator of a new enterprise. More recently it is used to indicate the aggressive businessman. The term manager and executive denote the managerial employees who run our organizations. In this book the term ENTREPRENEUR indicates only the innovators and ventures, including owners, who undertake risk through establishing new organizational units. MANAGER, EXECUTIVE, ADMINISTRATOR: are often used interchangeably. The term manager is interchangeable with the terms executive and administrator. When the word executive or administrator is used, their special meanings will be clear from the context, generally these terms denote who's in or near the top echelons. The management is generally subdivided into three sub groups. 1 Top Management Group. 2 Middle Management. 3 Supervisory Levels. Managerial Skills Managerial skills are of four types. At every level the importance of different type of skills is different. These four skills are given bellow: TECHNICAL SKILLS: Knowledge of activities involving methods, processes and procedures. It involves working with specific tools and techniques. These skills are generally of more importance at lover level and less important at the upper levels. HUMAN SKILLS: Ability to work with people, cooperativeness and teamwork. It is the ability to create an environment in which people feels secure and free to express their opinions. These skills are of equal importance at all levels. CONCEPTUAL SKILLS: Ability to see the, big picture to recognize significant elements in a situation and to under stand the relationships among the elements. This type of skills are more important at upper level than for a manager at middle or lower levels. DESIGN SKILLS: Ability to solve the problems in such a way to benefit the organization. To be effective, particularly, upper level managers must be able to do more than only seeing a problem. They must have the skill of a good design engineer to work out a practical solution to the problem. These are also more important for upper level or top level managers. The Hierarchy Managerial relationships pertain to what is technically known as the hierarchy. An organization consists of levels, each having an appropriate status and degree of authority for position holders. This hierarchy is of central importance to organization theory and practice. It is also key factor in understanding the managerial behavior. Difference between Manager and Worker Most organizations distinguish between manager and non-manager. Non-managers are often called rank and file and include workers like assembly line or other operations workers. This distinction is for the matter of convenience, custom and usage. It does not imply that managers do not work in the sense of productive effort. The importance of distinction lies in the nature of managerial tasks compared to the work of rank and file employees. Despite the distinction between managers and non-managers' tasks it is important to note that managers are not employees. In many respects the view themselves as job-holders and their needs are similar to those of other employees. The differences are in degree rather than in kind. MANAGERIAL ROLES, TASKS, AND RESPONSIBILITIES A roll is a set of related activities to fulfill the expectations of others in given contexts/situation. Organizations prescribe official tasks roles through job title and job description but roles also have a more informal context consisting of the expectations of superiors, subordinates or even customers or suppliers. Change in basic Roles 5

1 2 3 4

1 2

3 4 5

External and internal conditions, which affect the managerial role are continuously changing, therefore, the roles of managers also change. Some roles have undergone substantial change over time. As some roles change or disappear, others come into being. As great organizations grew in size and complexity, the managers role becomes more bureaucratic. BUREAUCRACY refers to the highly (1)rational, (2)systematic, (3)hierarchical organizational structure and the accompanying assumptions that most organizations employ today. In it managers occupy assigned positions in the hierarchy, with corresponding duties and rewards. Many organizations today are trying to reduce the emphasis on bureaucratic roles, replacing them with roles more oriented to innovation, employees participation and involvement. In addition to the characteristics of change an other characteristic of roles is that it can be learned and tough. A great deal of educational activities, (both formal and informal) is centered upon the cultivation of appropriate roles. Many roles are learned through observation and imitation. Some Key Roles of a Manager The roles of a manager are infinite some of the important ones are as actor, catalyst, guardian, friend, owner, and technical. (1)As ACTOR executives are doers, persons of actions, they act to achieve their goals. (2) As CATALYSTS, they harmonize the conflicting interests that they encounter. (3) As GUARDIANS the guard the resources to facilitate the growth and welfare of the organization. (4) As FRIENDS they display attitudes that strengthen their relationships with others. (5) As OWNERS the work to make the business grow and (6) As TECHNICIAN they must learn the techniques and process to master. Managerial work Vs. Technical Work In addition to managerial work every manager also performs as a measure of technical or professional work. However the extent varies because as the manager rise in level the technical works become less important and conceptual and managerial process more important. To see the relationships among executive functions, Executive Actions and Results see the figure 3-4 on page 55 of the book. Managerial Responsibilities Responsibilities are of two general types. I) Responsibility for the desired out come and (II) Responsibilities to the number of groups having a stake in the organization as to what is happening in organizations. Leadership is one of the most fundamental responsibilities of the managers. Koontz Management Fad: A management fad can be defined as a managerial interest or practice followed for a period of time with craze. But fads come and go, some quickly; others slowly; some survive and others fell by the wayside. These fads can be found in all managerial functions. FUNCTIONS OF MANAGEMENT There are five functions of management: Planning It is the selection of missions or objectives and the selection of actions to achieve them. It requires decision making. Organizing Establishing an intentional structure of roles to be played by people in an organization. By intentional structure is meant that all the tasks to accomplish goals are assigned to the people who can do them best. It helps in creating an environment of human performance. Staffing The process of filling and keeping filled the positions in the organization structure. It includes recruiting, selecting, placing, promoting, appraising and planning the methods of training and compensating or otherwise developing both candidates and current job holders. Leading Influencing people to contribute to organization and group goals. All managers would agree that their important problems arise from people and that effective managers also need to be effective leaders. It includes motivation. Controlling: Measuring and correcting individual and organizational performance. Measuring the performance against goals and plans, showing where deviations from standards exist and helping to correct them. (Selection from Koontz) FORMULATION OF CAREER STRATEGY: Performance appraisal identify the strengths and weaknesses of an individual; it is the starting point for a career plan. The personal strategy should be to utilize strengths and to overcome weaknesses to take the advantages of career opportunities. There are different approaches to career development. The process of developing a personal strategy is similar to an organization strategy, which is given bellow: 6

Preparation of Personal Profile: A most difficult task is to gain insight into oneself. Yet it is an essential step in developing a career strategy. It helps in determining the direction of the professional career. 2 Developing Long-Range Goals and Professional Goals: On the basis of the above profile the manager determines the direction of their lives. People often resist career planning because it involves the decision making. By choosing one goal a person gives up the opportunities to pursue others. For example if an individual studies to become a lawyer he cannot become a doctor at the same time. 3 Analysis of the Environment: Threats and Opportunities: In the analysis of environment many diverse factors are taken into account. They include economic, social, political, technological and demographic factors. They also includes the labor market competition and other factors relevant to the particular situation. One has to be concerned not only about the present but also about the future environment. 4 Analysis of Personal Strengths and Weaknesses: For successful career planning the environmental opportunities and threats must be matched with the strengths and weaknesses of individuals. 5 Development of Strategic Career Alternatives: In the light of personal as well as environmental weaknesses and strengths several alternatives are developed, e.g. the appropriate strategy might be to find employment in an expanding firm or in a growing industry. 6 Consistency Testing and Strategic Choices: In developing a personal strategy one must realize that rational choice based on strengths and opportunities is not always the most fulfilling alternative. Some alternatives involve high risks, others low risks. Some demand action now, others may require to wait. Career that were glamorous in the past may have an uncertain future. Rational and systematic analysis is just one step in career planning process, for a choice also involves personal preferences, personal ambitions and personal values. 7 Development of Short Range Career Objectives and Action Plans Strategy has to be supported by short term objectives and action plans which can be a part of the performance appraisal process. 8 Development of Contingency Plan: Future cannot be predicted with great accuracy, therefore, contingency plans based on alternatives assumptions should be prepared. 9 Implementation of Career Plans: Career planning may start during the performance appraisal. At that time the persons growth and development should be discussed. Career goals and personal ambitions can be considered in selecting and promoting and in designing training and development programs. 10 Monitoring Process A process of evaluating progress towards goals and making necessary corrections in the aims and plans from time to time. Progress should be monitored at other times such as at the completion of an important task or project.

PART--II
MANAGERIAL DECISION AND ACTION
CHAPTER-4 DECISION MAKING FUNDAMENTALS
Decision making is every managers primary responsibility. A manager's decisions are determined by his personal skills and abilities, and also by the resources and constraints that organizations provide. The decision of the manager gives form and direction to the work of an organization. Koontz calls decision making is the process of selection of a course of action from among alternatives THE NATURE OF DECISION MAKING The simplest view of the decision making is that of a manager choosing one of the several alternatives. More often it produces tangible results but sometimes the result is intangible. However, a decision not to decide is still a decision. A plan cannot exist unless a decision has been made. The Process of Decision Making Viewing decision making solely as a choice among alternatives is too simplistic but it ignores the whole lengthy, complex process of exploring and analyzing that precedes the final moment. The process of decision making reveals the influence of time: (1) The Past:In which (a)problems develop, (b) information accumulated, and (c) the need for decision is perceived; (2) The Present: In which (a) alternatives are found and (b) the choice is made; and (3) The Future: In which (a) decisions are carried out (b) evaluated or (c) changed. Moreover, major decisions involve a series of related detailed decisions as time unfolds and consequences appear. The concept of Commitment: Decisions require a degree of performance described as commitment. Commitment is a sticky quality that arises in part because the decider and the organization become committed to the success of the decision. A manager's reputation depends on the decisions, so the reversal is difficult. Commitment is also a managers inherent need for time to carry out a decision and to observe its consequences. A decision, once made, provide an element of stability for both the organization and its members. Commitment is not, however, equivalent to support. Support may exist while a decision is tried out,but it may fadewhile commitment continues. Commitment can develop without support through the general expectations of the authority system. The managers roll as leader frequently calls for persuading subordinates to carry out decisions that are unpopular. Ultimately commitment rests on the judgments of managers and on the impact of forces that reveal the wisdom or error of a given decision so that pressures for change arise. As the need for change increases, the constraint of commitment fades. Rationality in decision Making: A human being who has the ability to learn, imagine, remember, and organize complexity is highly rational. By rational analysis, managers may choose among alternative decisions according to purpose. Rationality is a relative concept. It does not produce perfect decision making. The principle of bonded rationality (that rationality is limited in explaining decision making) is based on the premise that a manager at any time is exposed to a bounded area of information that often does not include all the information he needs. According to this principle, managers can seldom find the optimum decision. They consider only reasonable, probable outcomes, and select a strategy calculated to result in a satisfactory, but not necessarily optimum, outcome. Rationality implies that the decision maker tries to choose the best action for achieving the optimum solution to a problem. The fact that manager cannot be perfectly or objectively rational does not invalidate the concept of rationality, which remains the model of most decision-making behavior. Short of attaining perfection, the manager accepts necessary limitations and attempts to make the best possible decision within given constraints of cost and time. Choices depend on managers ability to determine the alternatives and the time available to find them. Some factors are beyond control, and others are beyond the deciders knowledge. Hence rationality is limited.

Koontz divide the rational decision making process, into following four steps: (1) premising, (2) identifying alternatives (3) evaluating alternatives, (4) choosing the best suitable one. People are said be rational when: they have clear understanding of alternative courses of actions under the existing circumstances and limitations, 2. have the information and also the ability to analyze and evaluate the alternatives in the light of the goals 3. The must have a desire to come to the best solution by selecting the alternative that most effectively satisfies goals achievement. 1 PREMISING Means forecasting the future situations and conditions in which the organization will operate. Though it is not a part of decision making process, but the real decision making depends upon it. 2 SEARCHING ALTERNATIVES: The first step in decision making is to develop alternatives. Developing of alternatives is as much important as the decision making. Common sense often uncovered so many choices that all of them cannot be adequately evaluated. The manager needs to use the limiting factor the principal of Limiting Factor is: by recognizing and overcoming those factors that stand critically in the way of a goal. The best alternative cause of action can be selected. 3 EVALUATING ALTERNATIVES: After developing alternatives the next step is the evaluation of alternatives, and selecting the best suitable alternative. It is the ultimate decision making. Following are the few ways of evaluating the alternatives IQuantitative and Qualitative Factors: While evaluating alternatives both the quantitative and qualitative factors should be considered. Qualitative or intangible factors are those, which are difficult to measure numerically, e.g., quality of labor relations, risk of technical change or political change etc. To evaluate intangible factors managers first have to recognize them, then to determine, whether a reasonable quantitative measurement can be given to them. If not they should find out as much as possible their importance by comparing their probable influence on the outcome with that of the quantitative factors and then come to decision. iiManagerial Analysis: The comparison of additional revenues arising from additional costs in a situation where object is to minimize the profits. When the additional revenues and additional costs are equal the goals will be reached. This method can be used in comparing factors other than costs and revenues e.g. to find the lost output of a machine inputs should be veried against output. Until the additional input equals the output. This would be the point of maximum efficiency of the machine. iiiCost Effective Analysis: It is an important shape of marginal analysis. It seeks the best ratio of cost and benefits e.g., finding the least costly way of reaching an objective or getting the greatest value for given expenditures. It is a technique of choosing the best plan when the objectives are less specific than sales costs or profits. 4 SELECTING AN ALTERNATIVE: A manager can use three approaches while selecting alternative 1) Experience, 2) experimentation, 3) research and analysis. IExperience: In it the reliance is on the past experience. Experienced managers usually believes that the things the have successfully accomplished and the mistakes they have made, furnish almost infallible guides to the future. To some extent experience is the best teacher. But relying on the past blindly for future actions is dangerous, because most people do not recognize the reasons for their mistakes and failures, moreover, the experience may be inapplicable to the new problems. Good decisions must be evaluated against future events. IIExperimentation: Different alternatives are adopted and then seen, shat happens. This technique is often used in scientific inquiry. People generally argue that it should also be applied in managing. This technique is most expensive of all techniques. Besides after an experiment has been tried, their may still be doubt about what it proved since the future may not duplicate present. Therefore this technique should be used after considering other alternatives. It may be used in other ways like: firm may test a new product in a certain market before expanding its sale nationwide. Organizational techniques can be tried in a branch office or plant before being applied over an entire company. IIIResearch and Analysis: A most effective technique for selecting from alternatives when major decisions are involved. It applies solving a problem by: 1) first comprehending the problem, 2) searching for relations among more critical variables, constraints and premises. It is a pencil and paper approach to decision making. It involve breaking the problem into components and studying the various quantitative and qualitative factors. A major step in this technique is to develop a model for simulating the problem. In it different variables are found by

1-

2-

4-

mathematical terms and relationships. One of the most comprehensive research and analysis approaches to decision making is operations research.(End of Koontz) Types of Decisions: Decisions may be: 1Organizational and Personal. 2Basic or Routine. 3Programmed and Nonprogrammed. 4 Group Decisions. 5Committee Decisions. ORGANIZATIONAL & PERSONAL DECISIONS In their formal/official role managers make organizational decisions, which can be and frequently delegated to others. Such decisions usually call for supporting and elaborating decisions by other executives. The right and responsibility to decide confer substantial power on managers, assuming them of influence and control over the activities and resources of the organization. The managers personal interests and organizational interests are so intertwined that it is difficult to separate them. Personal decisions pertain to managers as individuals. Throughout their career, managers make many choices in their own interest. Personal decisions cannot be delegated. Howsoever, most such decisions also affect the organization, as in the case of a president deciding to resign. Many managers view their personal and their organizational decisions separately. Some make organizational decisions that contradict their personal beliefs. Managers are to some extent personally involved in any organizational decision they make and they need to resolve the conflicts that occur between organizational and personal decisions. BASIC AND ROUTINE DECISIONS: Basic decisions are unique, one-time decisions involving long-range relatively permanent commitments and large investments. In such decisions a mistake might seriously hurt the organization. They are difficult to decide in view of uncertainties in the environment. An example of a basic decision is one concerning plant location. Most policy decisions at higher levels in the organization are basic decisions, as are the decisions on organization design, capital expenditures, and selection of key executives. Such decisions provide the context in which routine decisions occur. Routine decisions, require relatively little deliberation or are made repetitively, tend to have only minor effects on the welfare of the organization. Standard procedures can be established for making large numbers of such decisions, which require little investigation and analysis and can easily be canceled or reversed. Many, perhaps most decisions __ more than 90%___are repetitive and routine. An important task for the manager, is to separate routine from nonroutine decision making and develop appropriate policy approaches for each category. PROGRAMMED AND NONPROGRAMMED DECISIONS: These words are borrowed from language of computer technology. These categories correspond roughly to those of basic and routine types that have been described above. Decisions are programmed to the extent that they are repetitive and routine and to the extent that systematic procedures are devised so that each one does not have to be treated as a unique case. Decisions are nonprogrammed (basic) to the extent that they are unstructured, ill-structured, or consequential. The decisions to change to a decentralized from an organization, for example, would be a nonprogrammed decision. GROUP DECISIONS: Group decision making refers to the process whereby individuals participate as a group in reaching a decision. Research on group behavior supports the idea that group decisions are under certain conditions better that those imposed by the leader on a group, and that a group will take greater risks than would individuals acting alone. There are also following uncertainties and limitations (1) Ultimate responsibility for the outcome of decisions may be unclear. (2) Group may be better in discovering alternatives but not in making final choice. (3) In some studies, group decision methods are unsuccessful in increasing productivity. (4) Also, problems of personality change, emotional involvement, and other psychological phenomena affect the ability of group members to work with one another. Delphi Techniques of Group Decision Making. This technique employs a sequence of written questionnaires distributed to a panel of experts or resource persons. At each round of questionnaires, summary results of the previous round are reported to the panel members, In the next round, the participants can reassess and independently evaluate their earlier responses. The result is a consensus estimate that refines the decision through group judgment. The central element is that the panel members are anonymous, unknown to each other. The entire procedure is by mailed questionnaires. Often the process goes through several rounds, although the results are seldom changed after two rounds. The Delphi technique is widely used

10

in estimating various kinds of change, such as predicting the future of management by objectives." 5COMMITTEE DECISIONS Committees are of two main types: (1) Ad hoc and (2) Structural. Q==>| (I) Ad hoc committees are temporary, appointed for specific task or projects. They are usually formed to assist decision makers by conducting studies, pooling information, gathering data, or investigating problems. Their decisions take the form of recommendations, which must usually be adopted or accepted by appropriate decision makers. (II) Structural committees are permanent features of the top levels of an organization. They are sometimes called standing committees, and are typically elected or appointed under the bylaws of corporation boards of directors, trustees, or other administrative boards. In corporations, the responsibilities of structural committees are broad, and they are relatively permanent. The members are generally senior corporate officers. Examples are the corporate finance committee, or the executive committee of the board of directors. ADVANTAGES: Problems of large scale, complex operations are made more manageable. Basic decisions can be made with inputs with inputs from major sections of organization with specialists contributing their knowledge and point of view. Decisions are made by consensus or majority vote, therefore, they are more acceptable. They can generate authenticity and support, increasing the confidence of those in lower levels of the organization. Others share the burden and the risk of top administrator,(although ultimate responsibility is retained by him). DRAWBACKS Structural committees may delute the power and authority of certain managers e.g. a strong executive committee may make to top executive appear to be as mere figurehead. Decision making may become too slow. Need for agreement on a decision may result in the discouragement of aggressive individuals. This is called the leveling process that may water down the quality of the decision. Possible confusion about the responsibility for results, so that a manager might tend to blame a poor decision on the committee that produced on influenced it. (Koontz Section) A committee is a group of persons to whom, as a group some matter is committed. Group Process in Committees: Some say that group go through four stages: (1) forming (members know one an other), (2) storming (determination of objectives, (3) norming (norms and behavior rules), and (4) performing (they perform their task). Functions and Formalities of Committees: Some committees undertake managerial functions, and others do not. Some make decisions, while others deliberately on problems without authority to decide. Some have authority to make recommendations to a manager, who may or may not accept them, while others are formed to receive information, without making recommendations or decisions. 1 2 3 4 5 6 7 REASONS FOR USING COMMITTEES For group deliberation and judgment: It is, perhaps the most important reason for the use of committees, because two heads are better than one. Most problems require more knowledge, experience, and judgment that any individual possesses. Fear of Too Much Authority in a Single Person: This fear is especially pronounced in govt. Such a committee may also be established because the department head does not wish to take full responsibility for making decision. Representation of Interested Groups: Coordination of Departments, Plans, and Policies: Transmission and Sharing of Information: Consolidation of Authority: A manager is a department often has only a portion of the authority necessary to accomplish a program. ( as in case of splintered authority). Motivation through Participation: Committee permit participation in decision making. Persons who take part in planning or decision making usually feel more enthusiastic about accepting and executing it.

11

3 4 5 6

1 2

3 4

1 2

Avoidance of Action: Sometimes committees are appointed by managers when they want to avoid action. it is one of the surest ways to delay the handling of a problem, and even to postpone a decision indefinitely. Disadvantages of Committees: Although there are good reasons for using committees there are also disadvantages of doing so, which are as fallow: High Cost in Time and Money: A committee may require the members to travel some distance to reach a meeting. During meeting, all members have the right to be heard, to challenge and cross-examine the presentations of others and to analyze the reasons for a conclusion. Sometimes it is waste of time for those who must listen. If the committee is supposed to reach decision unanimous decision, the discussion is likely to he lengthy. Compromise at the Least Common Denominator: When committees are required to come to some conclusion there is the danger that their action will not result in an optimum solution. If the matter is so simple that differences of opinion do not exist, the use of committee time is probably wasteful. If difference of opinion exist the point at which all or majority of the committee members can agree tends to be at the least common denominator. Most often this is not as strong and positive a course of action as that undertaken by an individual. Indecision Discussion of peripheral or tangential subjects takes up valuable time and often results in adjournment without action. Tendency to Be Self-Destructive: Indecisiveness may give the chairman or a strong member an opportunity to force the committee into a decision the way he or she wants to go. Splitting of Responsibility: In a committee decision the authority is dispersed throughout the group. Thus, individual me-mbers hardly feel the same degree of responsibility that they would if they personally were charged with the same task. Tyranny by a Few Persons: Committees generally tend to seek unanimous or nearly unanimous conclusions. A few me-mbers who may represent a minority view are thus in a strong position to impose their will on the majority of members. The plural Executive and the Boar of Directors: Plural executive is the delegation of power to the committee to make decision and to undertake one or all of the managerial functions. An example of the plural executive is the board of directors. MISUSE OF COMMITTEES: Following are the five misuses of the committee which should be avoided when committees are set up and operated. As Replacement of Manager: If decision-making is to be sharp, clear, prompt, and subject to unquestioned responsibility, it is better exercised by an individual. for Research or Study: A group of people meeting together can hardly engage in research or study, even though it may well weigh and criticize the results of each of these activities. When the solution to a problem requires data not available to a committee, no discussion or consideration can turn up the missing information. Gathering information is essentially an individual function even though he may be coordinated into a team with individual research assignments. Unimportant Decisions: Use of committee should be limited to important matter. Moreover, no intelligent specialist or manager can help feeling uncomfortable when time is wasted by a group deliberating at length on trivial subjects. For Decisions beyond Participants Authority: Generally the executives with the requisite authority cannot attend a committee meetings and sent subordinates who do not have superiors authority delegated to them or who hesitate to bind the superiors. The result is that the committee cannot function is intended. To Consolidate Divided Authority: If the problem of divided authority can be eliminated by changing the organization structure or by delegating authority, the use of a committee is inappropriate. SUCCESSFUL OPERATION OF COMMITTEE Attempting to overcome the disadvantages of committees, managers may find the following guidelines useful: Authority: A committees authority should be spelled out so that the members know whether their responsibility is to make decisions, make recommendations, or merely deliberate and give the chairperson some insight into the issue under discussion. Size: The size of the committee is very important. If the group is too large, there may not be enough opportunities for adequate communication among its members.

12

3 4 5

6 7

Membership The members of a committee must be selected carefully. For a committee to be successful the members must be representative of the interests they are expected to serve. Subject Matter: The subject must be carefully selected. Committee work should be limited to subject matter that can be handled in group discussion. Chair Person: Selection of chairperson is crucial for an effective committee meeting. Such a person can avoid the wastes and drawbacks of committees by planning the meeting, preparing agenda, seeing that the results of research are available to the members ahead of time formulating definite proposals for discussion or action and conducting the meeting effectively. Minutes Effective communication in committees usually requires circulating minutes and checking conclusions. Cost Effectiveness: A committee must be worth it cost. It may be difficult to count the benefits especially such intangible factors was morale, enhance teamwork. But the committee can be justified only if the costs are offset by tangible and intangible benefits. Attitudes Towards Risk: In order to give probabilities practical meaning in decision making, it is necessary to understand individual decision makers acceptance of risk. Higher-level managers are accustomed to take larger risks. A company president may have to take great risks in launching a new product, or in selecting an advertising program while a first level manager or supervisors risk may be limited to hiring or promoting semiskilled workers. Personal Risk: Some people are risk avatars in some situations and gambler in other ones. Some have, by nature, high aversion to risk while others have low aversion. Studies show that most of us are gamblers when small stakes are involved and become risk avatars when stake is at risk. (End of Koontz Section)

Exam DECISION AND PROBLEM SOLVING Q==> To a large degree, decision making is directed at solving problems. This is particularly true in the use of operations research. The earlier scientific management approach was centered on: 1) state the problem, 2) list the alternatives, and 3) select the best alternative. Problem solving is an important generator of decision-making behavior. Problem solving stresses the need for answers, whereas it may be more important, to find the right question or to prevent problem from occurring. Moreover, the problem-solving decision often be unimportant, routine, short-range, or tactical decision, rather than the important, strategic, longrange decision. Problem solving, therefore, must be broadly conceived as more than mere answer getting. Human Capabilities Intelligence Intuition Common Sense Logical thought Communication Working in Groups

Creativity

Scientific Method

Operations Research

1 2 3 4 5

Awareness of Problem Gathering Relevant Data Forming Hypotheses and Finding Alternatives Pausing for incubation and Alteration Pausing for incubation and

Define the Problem State objectives Formulate Hypotheses Collect Data Analyze and interpret data

Determine Prices Problem Construct a model to represent the Relevant System Drive a solution for the Model Test the Model and the Solution. Put the Solution to Work

13

Illumination 6 Putting Ideas Together Synthesis Actuate the 7 Evaluating ideas and Actions Draw conclusions; Make Hypotheses Take Actions Based on Conclusions. Establish Controls to mainGeneralizations, from New Solution. -----tain and

Figure: Fundamental Approaches to Problem Solving and Decision Making. Perceiving and Defining Problems The process of correctly identifying and defining the problem is the starting point of successful decision making. Clear and prompt understanding of problems is not easy. Delays result from uncertainty about the nature of the problem and its sources. Perhaps vital facts are missing or are in conflict, requiring skillful interpretation. Taking Action on Problems Definition of problem is necessary but not sufficient for effective decisions. Action can follow only when there is sufficient consensus that a problem exists and should be dealt with managers need an understanding of the norms or standards that govern the selection and definition of problems. In some cases norms are more specific (e.g. space per clerical worker is fixed fifty square feet) and in some cases are less precise. It is imperative to define a problem in terms that make action possible The hypothesis gives direction to the information-gathering activities that lead to testing it. Information is gathered by search techniques such as observation, interviewing, questionnaires, special reports, and other sources of information. Information from persons close to the problem is particularly desirable, even though such information may contain biases. However, problems arising from turbulent, uncertain environments may not be amenable to the logic of findings causes and developing hypotheses. EFFECTIVE DECISION MAKING The effectiveness of a decision cannot be known with certainty in advance, nor are there concrete measures of the quality of decisions. Bad or wrong decisions become evident through their undesirable consequences, as brilliant, outstanding decisions are recognized in their desirable consequences. Between these extremes' lies a wide range of ordinary decision making that sustains an organization from day to day. Within this range of decisions, there are four key roles of managers: (1) The entrepreneur; (2) the disturbance handler; (3) the resources allocator and (4) the negotiator. 1In the role of ENTREPRENEUR the manager is the initiator and designer of the controlled change in an organization this involves ( i ) the exploiting the opportunities, (ii) evolving strategies, and (iii) solving broad rang problems. Such decisions lead to the improvement of some aspects of the organizations activities. 2In the role of DISTURBANCE HANDLER the manager deal with events that demand his attention. In such role the manager deals with such situation that is at least in part out of his control. Forces beyond the managers control initiate the action.. 3As a RESOURCES ALLOCATOR a manager makes important choices that reflect the organizations basic strategies. Resources,(like people, money, time etc., )are in scarce, and are demanded by competing interests. The decisions of the resources allocator include ( i ) the scheduling of time, (ii) the programming of the work, and (iii) the authorization of actions, projects, or programs. 4NEGOTIATION represents the bargaining function. A manager has to deal with other managers, special groups and with other organizations representatives. Bargaining with labor union officials is a common example of negotiations, but many other situations involve transactions that are negotiated, i.e. settling a customer complaint. The manager must have the authority to resolve the issue under negotiation, committing resources if necessary. Evaluating decisions: Some decision can be evaluated by objective criteria, others must be judged by qualitative standards. Evaluation is difficult for managers they may hesitate to acknowledge failure. The fear of evaluation lead to defensive or covering behavior by the manager. Sometimes decisions are made for the sake of appearance, while sometimes satisfactory or even brilliant decisions may go unnoticed, but one bad decision may attract quick criticism. Judging a decision is also complicated due to the fact that there is often a long time between the making of the decision and its outcome. 14

Satisficing: The degree to which a decision will be correct depends on a number of factors, including the amount and accuracy of information on which they are based and the abilities of deciders. As noted earlier that purely rational decisions are impossible nor it is always necessary to find an optimal or perfect solution. For most situations' decisions will be good enough. Simon call such situations as satisficing." SATISFICING occur when the decision maker selects an alternative that is reasonably good but not prefect. The alternative chosen is suitable enough to permit halting the costly search for further information or additional alternatives. It is satisfactory enough to minimize criticism, and does not seen the warrant further delays. Factors Influencing the Quality of Decisions: Following are the factors (1) Environment of the decision (2) personalities of deciders, (3) the timing and communication of decision making (4) the participation of those affected by decision ENVIRONMENT A decision may be influenced by both environments internal as well as external. i) In INTERNAL ENVIRONMENT managers interact with other individuals and groups. It includes not only physical elements but also the intangibles of human interaction among executives and employees. ii) In the EXTERNAL ENVIRONMENT are the social, political, and economic phenomena of the community, the state, nation and the world. It also includes the decisions and actions of competitors, the evolution of science and technology, the banking and financial system, government regulations and controls, and many other elements. PERSONALITIES OF DECIDERS Managers vary with respect to temperament. Some are disturbed when they cannot reach a decision immediately, and other debate endlessly with themselves over possible actions they should take. Managers differ, too in their speed of action and reaction and in their willingness to "go out on a limb. Some are conservative, patient, and slow to decide; other are brash and vigorous in making up their minds. Both eagerness and unnecessary delay are disastrous to effective decision making. TIMING AND COMMUNICATION OF DECISION Decisions are the mechanisms by which strategy goes into action. Moreover a decision reveals a strategy to opposing interests, such as competitors. Hence the timing to the decision is important not only to the deciders but also to their associates and subordinates. Those affected by the decision, like to know of it in a timely manner. Central to timing is the sensitivity and the degree of urgency involved in a decision and to the appropriateness with which a decision fits into other events. Decision must be formulated not only with reference to timing within overall strategies but also to the timing of their announcement. If the announcement of the decision is too delayed those, affected will have difficulty in adjusting to it. Moreover, in the mean time the informal system or grapevine will begin to function, causing undue concern over what the future may hold. As people perceive that a decision is near, recognize deadliness and see data accumulated, they feel the pressure of uncertainty. In such cases decision should be communicated promptly and rapidly and formally disseminated through the entrusted and affected parties of the organization. PARTICIPATION OF AFFECTED PARTIES: Participation encourages the members of an organization to influence and contribute in decisions. The extent of participation in decisions depends primarily upon the willingness of the manager to listen, as well as upon the way they manage participation processes. The roots of participative decision making lie in company philosophy and managerial style, and in the overall climate of the organization. Organizations in which the participation is minimum are said to be authoritarian. Organizations with greater participation are to that extent democratic.

CHAPTER --5 DECISION MAKING: QUANTITATIVE TOOLS AND PROCESSES

An expert is that who knows some of the worst mistakes that can be made in his subject and how to avoid them. Quantitative techniques greatly increase the rationality and effectiveness of many types of decision problems. Quantitative techniques draw together several aspects of the decision process: problem definition, the search for alternatives, information storage and processing, estimated probabilities, statistical and mathematical tools, and computer. 15

1-

2-

1) 2) 3) 4)

OPERATIONS RESEARCH (OR): Operations research is a term denoting the quantitative aspects of management science. The field consists of the work of applied mathematicians, statisticians, management scientists, and other decision theorists. Their common interests are in regorous analysis, theory building, and the development of scientific methods of decision making. Operations Research builds upon the work of engineers and the early practitioners of scientific management. It is a logical extension of their concepts. Computes increase the ability to pout decisions problems by which mathematical solution can be obtained through rapid computation. Electronic Data processing made it possible to store sort and manipulate large quantities of data. System Framework for Decisions: Much of the work of the operations research comes to a focus in the systems approach, in which the inter-relatedness of decisions is a major element. Analysis starts with the system as a whole. Then elements of the system are identified and designation so that decisions are made in the light of their implications for the system as a whole. Economic analysis, engineering, and psychological and sociological concepts are brought together with mathematical and computer techniques for analyzing the dynamic behavior of complex systems. Feedback, which is required for control, is achieved by comparing output with a standard or criterion. Control is exercised over input, process, and output through the feedback principle. Systems may be classified according to their relevant characteristics for decision making. Beer Classifies systems according to (1) their complexity, (2) on the basis as whether they are deterministic or probabilistic. Complexity: System may be Simple and readily described or complex but described, or exceedingly complex and not precisely describable. Deterministic or Probabilistic: Deterministic system is one in which the parts interact in a predictable way, it is possible to predict its next state without risk of error, e.g. a machine adjusted to cut steel bars to a given length. In a probabilistic system, on the other hand, no detailed or precise predictions can be made. There is no predetermination of outcome, and predictions are subject to the limitations of the probabilities in terms of which the systems behavior must be prescribed, e.g. offering money to an employee to induce a specific behavior, predicting how a human being will react is a matter of probabilistic logic. MANAGEMENT INFORMATION SYSTEM: A key requirement for effective decisions is the ability to obtain and analyze a sufficient quantity of relevant information. By treating information flows as one type of system and by using computers to obtain necessary information, store sort , and make it quickly available, decisions processes are greatly improved. At first, computer had only minor effects on decision making: they were used mainly OT speed up routine clerical tasks, Todays computers can provide support for a complete information flow system of interacting parts. formerly segmented activities such as planning, market analysis, financial considerations, scheduling manpower development and many more can come together as part of a total decision system based on information flows. An example is electronic cash-register systems, which can provide detailed information on sales, inventories, accounting data, billing procedures, sales forecasts, credit checking etc. MIS when properly designed, usually bring about changes in organization patterns and management responsibilities. It must be individually designed for each organization, tailor-made to particular purposes and objectives. CONCEPT OF OPERATIONS RESEARCH Conceptually, operations research is based on scientific methods i.e. observation, analysis, hypothesis formulation, experimentation, and verification. It translates the methodology of science into a specials framework: Discovering strategies and states of nature, Handling large numbers of decisions strategies, Determining the outcome of applying various strategies to particular states of nature, and Selecting an appropriate strategy with respect to a given problem. The steps are same whether mathematical or non mathematical processes are used. However, the development of models and the use of quantitative tools help to generate

16

alternative solutions. A computer calculates the optimum solution, which then must be interpreted and applied. Classes of decisions: Their are four main type of decision making situations, each involving important procedural differences.(1) Decision making under certainty (2) Decision making under risk (3) Decision making under uncertainty and(4) Decision making under conflict or competition. 1- Decision Making Under Certainty: In certainty there exist only one state of nature and the decider knows it. However, there are large number of strategies from which to choose. The rational decider will choose the strategy that is most likely to yield the desired goals. Many of the decisions are made under conditions approaching certainty. But economic theories employ marginal analysis to explain how a firm operates, the form of analysis used by operations researchers is called mathematical programming. Linear programming for example, is used to find the optimum combination of several limited resources to achieve a given objective such as the maximization of profits. 2- Decision Making under Risk : In it the decider estimates the mathematical probabilities with which each of two or more states of nature will occur. In many cases probability and relative frequency are determined from past experience under various conditions. The decision maker estimate the various probabilities for each strategy in the payoff matrix. The decision problem then become one of selecting a strategy. The rational decision maker will select that strategy calculated to yield the largest expected utility, or, as it is often called, the expected value. 3- Decision Making under Uncertainty: When the decision maker cannot assign objective mathematical probabilities to the state of nature ( that affect the payoffs of strategies,) conditions of uncertainty exist. There arise the question of what criterion the decision maker can use for selecting a strategy. Such criteria are subjective and somewhat personal to the decider, who construct a unique payoff table. Some criteria are optimistic and other are pessimistic. The pessimistic criterion assumes that nature will be benevolent and will attempt to minimize the deciders payoff. The optimistic criterion assumes, on the contrary, that nature will be kind. 4 Decision Making under Conflict or Competition is found where opponents are in conflict of interest. In making such decisions opponents actions or probable actions are taken into account This type of decision are analyzed as game theory, which will be more fully examined later in this chapter. Decision made in negotiations with labor union are illustrative. Models: A model is a way of describing a situation or set of conditions so that behavior within it can be described, explained, predicted, or controlled. An OR model is a simplified representation of a problem utilizing only those aspects of elements that are deemed critical to the problem being studied. A model need not be composed of physical or quantitative dimension it may also be conceptual, e.g. a description of duties and responsibilities of a particular job is actually a model depicting the companys expectation as to what work shall be done. Such intangibles as time, employee satisfaction, or customer preference may be components of model. Ideas about the kind of employees we want in this company are, in effect a model representing what the prospective employees should be like. Most models in OR and in the Sciences generally, are mathematical in form consisting of equation or sets of equations relating key variables to the desired outcome, say profit maximization or cost/time minimization. Some models are precise and are used in situations of relative certainty Other models are probabilistic i.e. they are used in decision making under conditions of uncertainty. Decisions are based on estimates of the relevant factors in the problem. Quantitative models are of tow types (1) Problem-solving models and (2) Optimum-value models. Problem-solving methods are used to find relationships among variables, A problem can be solved by following by following one of several alternative strategies, and problem-solving models are used to discover the outcome that will result from the use of the different strategies.

17

2 3

DECISION PROBLEMS AND METHODS Application of operation research methods will be described according to four main kind of decision problems: (1) Resources allocator (2) Inventory control, (3) waiting lines, and (4) game models. In addition to these two additional techniques are the decision trees and heuristic programming. Resources Allocation Programs: Problems of resources allocation arise from limited resources The alternate uses of resources are measured in terms of opportunity cost, i.e. opportunities that are foregone because limited resources are used to chosen ways and therefore, cannot be used in other income producing ways. Linear programming is frequently used in resources allocations. LINEAR PROGRAMMING is an analytical method of finding the optimum combination of limited resources to achieve a given objective. It describes problems in the form of algebraic equations in which the symbols represent quantities. Solving these equations yields the optimum combination, as measured by an algebraic statement of the payoff criterion. Inventory Control: It is in reality a special case of the resource allocation problem but they are so numerous and have been so extensively used that they form a special category of their own. Waiting Lines: It occur whenever a service is required to meet irregular demands. Queuing theory are applied to any situation that produces a need to balance the cost of increasing available service against the cost of living units wait. Games Models:: It is the competitive strategies. It is not widely applied to the solution of actual problems involving competitors, but it has provided useful insights into situation involving elements of competitions, bargaining, and negotiations. It is used when rational opponent is involved, so that resulting effects are dependent on the specific strategies selected by the decision maker and the opponent. This assumes that an opponent will carefully consider what the decision maker may do before he selects his won strategy. There exist a definite conflict of interests between the opponents, as in the case of games played for fun. Decision Tree: A graphic method by which a decision maker can more readily visualize alternative together with the risks, possible outcomes, and information needs involved in each choice. Decision trees are used primarily to visualize over a time span decision making under conditions of uncertainty. Hence the basic data of a decision-tree diagram could be the data from a problems payoff matrix. It is useful to prepare a decision tree where the decision maker must make a choice or a series of choices from alternative courses of action, and where such choice will ultimately lead to some uncertain consequences dependent upon an unpredictable event or set of conditions. Heuristic Programming: Also called heuristic problem solving, is an approach to decision making that has gained increasing use. In fact it is a branch of simulation model analysis. It is applied to problems in such areas as assembly line balancing, plant lay out, job shop scheduling, wherehouse location, inventory control, and resources allocation. A heuristic is any device or procedure used to reduce problem-solving effort. A commonly used heuristic is the rule of thumb e.g. dont drink liquor and drive a car. Much business behavior and much of every day life is guided by this kind of rules. It is important to note, that although heuristic systems involve rules, they also involve the recognition of how the rules should be applied at the time the needs are identified. When heuristics are combined to solve a problem, a heuristic program is formed. Complex programs require computes for their solution. Heuristic programs are used whenever the problem is too large or complex to solve by mathematical or statistical techniques, such as linear programming and when dealing with ill-structured problems that cannot be stated in mathematical terms, so that quantitative techniques are unsuitable. Operation research and heuristics are thus on opposite ends of the scale as far as rigor of methodology is concerned. (Koontz Section) Decision Support Systems (DSSs) It is the use of computer to facilitate the decision making process of semistructured talks these system are not developed to replace managers judgment but to support them. It also helps the manager in quickly searching a change need. It is an important tool for decision making at a low cost under the control of managers. It is similar to management information system subject to the following differences: 18

1 2 3

MIS DSSs. 1 It focuses on structured talks and routine decisions It focuses on semistructured tasks requiring managerial judgment. 2 In MIS emphasis is on data storage. In DSSs emphasis on data manipulation. 3 In MIS managers generally have indirect access In DSSs managers have direct access to data and to data. computer. 4 In it reliance is on computer experts. In it reliance on managers own judgment. 5 In MIS manager is not completely understanding Manager is completely aware of decision environment. the nature of decisions 6 In MIS emphasis is on efficiency In DSSs emphasis is on effectiveness. Traditionally the designers of MIS are technical experts and managers only make minor inputs, while in DSS the managers in cooperation with the technical professionals design the system, suitable for a particular position. Manager having access to databases in DSSs can manipulate date and explore the effectiveness of alternative courses of action. Creativity and Innovation: Creativity refers to the ability and power to develop new ideas, while innovation usually means the use of ideas developed by creativity. Creative Process: The creative process is seldom simple it generally consist of four interchanging phases (1) Unconscious Scanning, (2) Intuition, (3) Insight and (4) Logical Formulation. UNCONSCIOUS SCANNING: It is difficult to explain because it is beyond consciousness. It usually require an absorption in the problem which may be vague in mind. INTUITION: The second phase is the intuition which connects the unconscious scanning with the consciousness. INSIGHT: It is mostly the result of hard work. It is interesting that insight may come at time when thoughts are not directly focused on the problem at hand. Moreover, it last only for a few minutes and effective managers benefit from them by having a paper and pencil ready to make notes of their creative ideas.. LOGICAL FORMULATION The last phase is the logical formulation or verification. Insight is needed to be tested through logic or experiment. Techniques to Enforce Creativity: Creative thoughts are often fruit of extensive efforts. Several techniques are available to nurture these thoughts. Some techniques focuses on group interactions others on individual actions. Two techniques are very popular (1) Brain Storming and (2) Synectics: BRAIN STORMING: It involves improving problem solving capabilities by finding new and unusual solutions. Its rules are as follows: No Ideas are ever criticized, 2. the more radical the idea the better it will be, 3. the quantity of idea production is stressed, 4. Improvement of ideas by others is encouraged In it emphasis is on group thinking but research showed that individual could develop better ideas by themselves, rather then by working in groups. However in some situations group approach works well. SYNECTICS: Originally known as Gorden Technique. In it a team is suitable experts is carefully selected to deal with the problems. The leader of the team plays a vital role in synectics. In fact only he knows the specific nature of the problem. He carefully leads and narrows down the discussion without revealing the actual problem itself, to prevent the group from reaching the premature solution of the problem. The system involves a complex set of interactions from which a solution emerges. LIMITATIONS OF TRADITIONAL GROUP DISCUSSION: The techniques of brainstorming and synactics may result in creative ideas but it would be incorrect to assume that creativity flourish only in groups. indeed, the usual group discussion can inhibit creativity. The creative Manager: Often it is assumed that most of the people are non creative, it is detrimental to the organization virtually al people are capable of being creative. Though the degree of creativity varies considerably among individuals. Generally speaking creative people are inquisitive and come up with many new and unusual ideas. They are seldom satisfied with status quo. The System Approach and Decision Making: 19

Decision cannot be made in a close system environment. Because many elements on the environment of planning lies outside the enterprise. Moreover, every department have a subsystem of the entire enterprise, managers of these units must be responsive to the policies and programs of other organizational units and of the total enterprise. Moreover, people within the enterprise are a part of a social system and their thinking and attitudes must be taken into account by the manager while making decision. (End of Koontz Section)

20

CHAPTER - 6 PLANNING
Planning is both an organizational necessity and managerial responsibility. Through planning organization choose goals based on estimates or forecasts of the future, giving form and direction to the efforts of managers and workers. The purpose of planning is therefore twofold: (1) to determine appropriate goals, and (2) to prepare for adaptive and innovative change. No organization is free of change, so all must plan effectively for survival and growth. Impact of change: Planning need arise externally from economic, social, political and technological change. External changes call for internal changes in size, organization structure, staffing, work methods and products or services. Definition of Planning: It is an activity by which managers analyze present conditions to determine ways of reaching a desired future state. It embodies the skills of anticipating, influencing, and controlling the nature and direction of change. Planning is a pervasive and continuous function involving complex processes of perception, analysis conceptual thought, communication, decision, and action Planning is a process rather than behavior at a given point in time. Some authorities define planning as all the thinking that takes place prior to actions or decisions, Its central concern is with the future. It is anticipatory decision making. Planning is done to decide what to do and how to do it prior to taking action. Koontz ELEMENTS OF PLANNING 1 Selection of missions, (2) selection of objectives and (3) selecting actions to achieve them. By selection means the decision making, e.i., choosing from among alternative future courses of actions. Types of Plans are: 1 PURPOSE OR MISSION: The basic functions or task of an enterprise or any art of it. A mission is a social expression of business. 2 OBJECTIVES OR GOALS: These are the ends towards which activities are aimed. They represent the end point of the planning and of all managerial operations, i.e., organizing staffing controlling etc. Enterprise objective is the basic plan, a department may also have its own objectives which contributes towards the attainment of enterprise objectives but the two sets of goals may be entirely different. The mission should be one of the whole organization and objective of the organization may be more than one at the same time while the objectives of every department may be more different. 3 STRATEGIES: It is defined as the determination of basic long term objectives of an enterprise and adoption of courses of action and allocation of resources necessary to achieve these goals. 4 POLICY A general statement that guide thinking in decision making. Policy defines an area within which a decision is to be made, to ensure that such decision will be consistent with and contribute to an objective. A policy must allow some discretion otherwise it will not be a policy. It will be a rule. 5 PROCEDURE A required method, procedure or sequence of handling future activities. They are the chronological sequence of required sequence. 6 RULES: Specifying required actions or non actions, allowing no discretion. They are the simplest type of plans and are a control device. Rules are unlike procedures but they guide action without specifying a time sequence. In fact a procedure is a sequence of rules. A rule, however, may or may not be a part of a procedure. 7 PROGRAMS A complex of goals, policies, procedures, necessary to carry out a given course of action, ordinarily supported by budgets. 8 BUDGET: A statement of expected results in numerical terms or may be called numbarized program. It may be expressed in financial terms or in terms of labor hours, machine hours, units of product or in any other numerically measurable terms. They are also called the control devices but preparation of budget is a part of planning. The budget may be program budget, flexible budget or zero base budget. BASIC ELEMENTS IN PLANNING PROCESS: There are five important fundamental activities that are basic to the planning process: Evaluation of present conditions 2. the factor of time, 3. the problem of forecasting, 4. the collection and analysis of data, 21

the condition of plans. 1- Evaluation of Present Conditions: The central task in planning is to recognize the present conditions inadequacies that point to the desirability of change. Dissatisfaction with current, goals, programs, or activities generates planning as a way to achieve improvement. The dissatisfactions may arise from lack of progress toward goals, new goals or recognition of critical problems. Planning is needed to prevent or correct problems and to give the organization its forward momentum. 2- The factor of Time: Planning is both short run and long run. It is continuous in practice. Short run planning is concerned with the relatively near future and long range planning attempts to force conditions and courses of action for longer period i.e. one year, five or even more. As the time span increases, the accuracy of planning tends to decrease. The more remote the future the manager is considering, the more difficult it becomes to foresee what will happen. Moreover, another time factor is that the present plays a stronger role that the manager may realize. For example, by recognizing trend for expansion, one company planned a new building 1/3 larger than the present, but soon after occupying the building, it become clear that the companys growth had been grossly underestimated, and thats why company have to make additions to the new building in the first year. The factors that a manager desires to take into account while making planning are: technology, consumer tastes and desires, business conditions, the speed of change etc. Long range planning is generally strategic planning. That is , it concerns the appropriateness and nature of goals and ways of attaining them. Strategic planning requires the utmost skill in anticipation of the future and in relating to the external environment. Contingency planning is a form of strategic planning. 3- Forecasting Forecasting includes procedures and techniques for predicting conditions or events that are expected to prevail in the future. Its important focus is on the general level of conditions in the economic, government, economic conditions, financial conditions, the level of consumption, and population changes are critical. It is not an exact science, it is a matter of judgment and will always remain an art. Many firms employ professional economists and other experts to make careful and detailed forecast for use in planning. Forecast may be general or specific. 4- Collection and Analysis of Data: Effective planning depends on the quality and quantity of data available to the planner, Planners need to establish reliable sources of information and get the information in a timely manner. The information must be organized, evaluated, and distributed to those who need it. Storage and retrieval systems must be established. Information is perceived and evaluated differently by different groups or individuals involved in a program, even if accurate information is found. Skill is, therefore, required not in collecting and organizing information, but also in interpreting facts and drawing conclusions. Knowing what information is relevant, the manner has guidelines for reducing his monitoring efforts to the reasonable level. 5- The Coordination of Plans: A major element in planning is the fact that plans relate to each other vertically and horizontally, leading to problems of coordination. Plans form a hierarchy corresponding approximately to the levels of the organization. ACCORDING TO KOONTZ STEPS IN PLANNING OR PLANNING PROCESS IS: BEING AWARE OF OPPORTUNITIES : It precedes the panning and not a part of planning, but actual starting point of planning is being aware of external environment and internal strengths and weaknesses. 2. ESTABLISHING OBJECTIVES: Objectives specify the expected results and indicate the end point which is to be achieved. It tells where we are and where we want to go. 3. ESTABLISHING PLANNING PREMISES: Making assumptions about future environment in which plan is to be carried out it include forecast; to keep within limits. 4. DETERMINING ALTERNATIVE COURSE OF ACTION: What are premising alternatives to accomplish objectives. 5. EVALUATING ALTERNATIVE COURSES OF ACTION: A process of determining the best alternative which will give the best results to meet with organizational goals at lowest cost and high profits. 6. SELECTING THE COURSE OF ACTION: It is really a point of decision making.

22

FORMULATING DERIVATIVE/SUPPORTING PLANES: Supporting planes are almost imperative to support the basic plan. 8. NUMBERING THE PLAN BY BUDGETS: The final step is numberizing plan by converting it in to budgets. OBSTACLES IN EFFECTIVE PLANNING The chief obstacles to effective planning can be grouped in to broad categories (1) Administrative problems and (2) human factors. 1- Administrative Problems: Some general administrative problems are: It is difficult to create an organizational climate in which planning thrives. Planning failures discourage managers in further planning. Plans impose arbitrary resistance and involves hard work but are then are filed and forgotten. Some administrators feel that planning is useless because it looks useless and often displays little over physical activities. Other administrative problems are as follows: i) INFORMATION FLOWS : Lack of sufficient information or deficiency in accuracy or quality of information. The quality and quantity of information is partly a function of the time period involved in planning. The time available for search is limited. A balance has to be struck between acting on inadequate information or not acting at all while waiting for complete information. Oversupply of information occurs when large amount of information, relatively unanalyzed unorganized, are distributed, It often happens when a large corporation centralizes its computers and other information handling systems in the headquarters office to achieve economies of scale. Another obstacle to effective planning is failure to relate the responsibility for individual managers planning to various types of specialists planning groups. The work of formal planning units necessarily over laps that of individual planners, who may also be responsible for accomplishing the plans. Therefore, the utilization of formal planning groups should interrelate their work smoothly into the work of the entire organization. ii) PLANNING COSTS: Planning is costly and requires time money and information. It not includes the salaries of executives who plan, but the costs of false starts that result when planning, as it often will be, incomplete or incorrect. Costs are incurred in acquiring, storing, and retrieving planning data, and in training planners. The expenses on planning are severely curtailed when economic conditions deteriorate. These are part of overhead, or fixed costs. Organizations can save money by careful control of planning costs. iii) OPPOSITION TO PLANNING: Even after plans are fully developed and officially approved, resentful members may block them or fail to carry them out. Plans may also be blocked or attacked by external dissidents/stake-holders, such as clients, constituents, or the public. 2- Human Elements: The principal psychological barrier to planning is that managers like most people, have more regard for the present that for the future. Not only is the present more certain, but it may also be preferable to the unknown. Resistance to change is common. Planning often depends on the recognition of needed changes that many would prefer to ignore. Planning that lacks consideration for humans and for relations amount them runs into difficulties. Planners should realize that they cannot make change solely in tangible arrangements, and that every change affects the relationships among workers, between workers and management, and among managers. Another human difficulty in planning is that it is essentially intellectual. A plan is the tangible evidence of the thought process. Thought requires effort and, often involves the painful contemplation of unfortunate and undesirable events, such as past errors. A final obstacle to planning occurs when plans, once made, are not acted upon. The investments of time and effort seem wasted, and top management appears to have been Crying Wolf. Plans should be kept flexible and up to date to prevent them from being unnecessarily filed or scrapped. METHODS OF EFFECTIVE PLANNING The following aspects of this problem will be analyzed: Criteria for judging the effectiveness of plans, 23

7.

2. organization for planning, 3. simulation and planning, and 4. participative approaches to planning. 1- Criteria for evaluation: Effective planning requires top management direction and support. It also needs an appropriate organizational climate in which planning is made meaningful at all levels. The following criteria are important: Objectives must be clearly defined and properly selected; 2. Simplicity is preferable to complexity 3. Reward and recognition for planners motivates better planning effort. 4. Flexibility should be built in plan so as to be adjusted while they are under way. 5. Acceptance by those affected or who must execute plans is vital. 6. Feasibility standards show the wisdom and reality of plans compared to realistic conditions. 7. Completeness indicates that nothing important will be taken for granted. Writing the plans sharpens thought, enhances preparation, provides valuable learning experiences, and aids in the dissemination and follow-up processes. All elements of a situation are not important, some are more important than others, getting to the hear of problems requiring planning requires raising crucial questions. Typical questions are the following: How long do we have before definite action must be taken? 2. Have we tried anything like this before? 3. What makes this problem so urgent? 4. What makes this problem so urgent? 5. Why do some departments withhold cooperation in this matter? 6. Have we succeeded in defining the real problem? 7. Where can we get more information? 8. How much money do we have available to spend? 9. Who gains and who loses by what is going on? 2- Organization for Planning: Problem of planning can be handled within the planning process itself. Planning itself must be planned and organized. Although planning is a managerial function and hence the task of every manager, certain types of coordinated, long range planning require structural and administrative devices to pool and coordinate planning. Among them are the use of (1) Central Cooperate planning group and Planning specialists. i) Central Corporate Group: More and more organizations are establishing central planning units in head office with smaller units in branches, divisions, or departments. Schools, hospitals, and trade associations, as well as business firms, increasingly use planning groups of various types. They often directly report to top management. They are headed by persons bearing titles as Director of Long range Planning. Large firms have their counterparts in various divisions. They help to integrate company-wide planning efforts, providing guidance and eliminating duplication and overlapping. ii) Planning by Specialists: Much of the planning in organizations is assigned to units set up as staff groups in specific functional areas, such as personnel management or research and development. The creation of staff units to aid in planning provides the advantages of specialization and the allocation of specific resources to planning but not without a force. Separating planning from doing has in many cases gone too far, creating confusion as to the responsibility for ultimate results. Moreover, removing the planning from the actual work activity tends to rob the work of interest and meaning to the individuals involved. It is impossible to separate all planning from the job of doing something. Simulation and Planning: The simulation techniques are useful in planning and development. Game Simulation is a suggested technique for helping planners to determing which action will improve a systems performance. It represents a combination of business games, which are relatively unstructured, and traditional computer simulation, which is rigidly controlled. The output of simulation models is used chiefly by senior managers. The modal were used mainly for financial planning, control, and review, and most were based on a deterministic model, What-if. Participate approaches to planning: Some organizations adopt a kind of participate management, emphasizing the importance of ideas, suggestions, feelings, and opinions form the appropriate members of the organization. 24

This process facilitates planning by key nothing problem areas and by bringing more resources to bear on them. Committees, groups discussions, suggestion systems and opinion surveys help provide a system of pooled thinking that can stimulate improved planning. It increases the understanding and acceptance of plans and improves the search for information. To those who are affected can contribute points of view that are not known to the planner, and can prevent disaster. Top executives cannot possible be familiar enough with operating conditions to be able to make a final and complete determination of plans. Managers who are close to actual operations are sensitive to problems and bottlenecks that hinder their work. The see the need for plans that will help them work their way out of the unsatisfactory conditions. In this way a connection is made in management between the broad, high-level planning of top executives and the planning behavior of the managers at the lower levels of the business. a common reaction to the annual budget preparation is that it is a waste of time. When the final version is submitted, people sight with relief and hope not to be bothered until next year.

25

CHAPTER - 7 OBJECTIVES
OBJECTIVES DEFINED Objectives are the results that organizations expect to achieve. They are related to the future in the sense that their attainment is distant in time and hence must be the subject of careful planning. TYPES OF OBJECTIVES: Some objectives are broad and long-range e.g. such as those as specified in a corporate charter. Some are immediate and specific. Still others are in the intermediate according to the level at which they are being implemented. Organizations pursue multiple objectives with differing degrees of importance at different times which poses problems for managers. The need for planning of objectives is continuous, but it is intensified at times of organizational crisis, e.g. in a sever economic cutback a firm may have to cancel building plans etc. The words AIMS, GOALS, MISSION, OBJECTIVE, AND PURPOSE are often used interchangeably, with little attempt to differentiate their meanings. MISSION: it is a general term, describing an organizations fundamental reason for existence. They are based on strong commitments by organization members, and typically call for impossible or very difficult results. For example, labor unions have the mission of organizing the unorganized workers. A mission reflects the nature of an organizations basic long-run commitment, helping to establish its identity and direction. The concept of mission is more widely used in non business organizations. Government programs for fighting poverty, unemployment, or pollution are examples. Many organizations state their missions in writing, others use informal methods, such as statements by the president. Declarations of organizational mission are very broad, reflecting values, beliefs, and a philosophy of management.
We want to render values usually new ones that men have not enjoyed before . . . We want to be part of an industry that gives men something worth getting. . . . to make increasing knowledge more broadly useful.

PURPOSE: It is an all inclusive term referring to any commitments to desired future situations. An objective is a specific category of purpose that includes the attainment by an organization of certain states or conditions, such as the satisfaction of the interests of organization members. the production of goods and services, rationality, and the observance of codes or disciplines behavior. A goal is even more specific than an objective or purpose. An objective expressed in terms of one or more specific dimensions, such as the quantity or quality of production, or costs per unit of output. NORMS: It indicate goal having a cardinal or an ordinal value or a rough order of magnitude, such as increasing production by 20 units per man hour, per week. When used to evaluate individual performance, a norm becomes a standard. Advantages of Objectives: Objectives provide a basis for planning and for coordinating many persons who work together in organization. Careful planning helps managers in giving organization members the sense of direction and purpose that is essentially effective results. Objectives are the focal points around which managers mold the efforts of their team. Among the specific benefits of chosen objectives some are as fallows: The give the basic ideas and fundamental theories as to what the organization is trying to accomplish. It is dangerous to assume that the organizations objectives will be understood automatically. 2. The help in organizing and inking the groups upon which its existence depends. an organization does not exist apart from groups that have an interest in it, such as customers or workers. 3. they provides guidelines for guiding, leading and directing an organization. 4. They provides standards that aid in control of human effort in an organization. 5. They help in motivating people. Koontz says the aim of business managers is not only to make profit but an important goal is the long term increase in the value of their organization. Managers must establish an environment in which (people can accomplish, group goals, with the least amount of time, money materials and personal dissatisfaction. They can achieve as much as possible of desired goals with available resources. GENERAL OBJECTIVES

26

The are the broad aims that the organizations peruse. Top executives determine the over-all objectives. Governing boards, trustees, board of directors, and executive committee approve, authenticate, and disseminate the objectives. In this function they are guided by the board or the president. Any of these persons or groups may initiate a change in objectives ore proposes new objectives. Druker has indicated basic objectives for four key areas that affect performance and results, (1) market standing, (2) innovation (3) productivity, (4) physical and financial resources, (5) profitability, (6) managers performance and development, (7) Worker performance and attitudes, and (8) public responsibility. Developing key objectives enables managers to : Organize and explain the whole range of business phenomena in a small number of general statements, 2. test those statements in actual experience, 3. predict behavior, 4. appraise the soundness of decisions when they are still being made, 5. analyze their own experiences and as a result, improve their performance. Certain long range objectives are common to all organizations, although, (from time to time and organization to organization) the emphasis may shift for one objective to an other. These objectives are: (1) Survival, (2) Growth, (3) Social obligations, and (4) Profit making. 1 Survival: A basic objective of most organizations. It is not always explicitly stated, because it is the minimum possible objective. For a company, the ability to survive is the ability to earn profits sufficient to attract outside capital, which depends upon the company, selling its products and services at a competitive price for a given standard of quality. It depends upon the ability to cover the costs of staying in business. Thus survival represents the minimum conditions under which the owners of resources will continue to employ them in that particular way. Survival is a function of (1) general business conditions in the economy as a whole, (2) the financial strength developed by the company, (3) factors applying to the health of its industry, and (4) The management skills applied by the firms executives. Survival is urgent during adverse economic conditions. When survival is relatively assured, managers choose objectives that far exceed mere survival. Organizations whose survival is threatened often find it possible to continue in some other form by reorganizing or selecting new objectives. Marginal firms may be the targets of merger or acquisition plans of other companies, or they may fail. In non business organizations survival depends on accomplishment of a mission (or on disappearance of purpose or the absence of funding) rather than on profits. However, such organizations often survive by changing their purposes, acquiring new missions and finding new funding. 2 Growth: It is a key objective in most organizations. An organization cannot stand still, it either move forward or towards death. Some firms, however, deliberately limit their output and growth, e.g. a school or college department limiting its enrollment to maintain quality education. Size of an organizations are measured by number of employees, amount of capital invested, net value of assets, sales volume, quantities of raw material processed, gross or net profits, production and marketing capacities, or combinations of these elements. Firms try to achieve the greatest possible rate of corporate growth as measured by scales. However, it is more realistic to view the firm as pursuing a number of related goals simultaneously. Growth can be considered along five dimensions: Local operations, 2. small temporary operation, 3. large territory operation, 4. national operation, and 5. international operation. Each organization faces such limiting factors as the nature of its product or service and of current or possible markets. Growth can bring problems as well as benefits. Rapid growth may enlarge the scope of activities and interests so extensively that the abilities of managers are no longer adequate for control, effectiveness, and profitability. The growth of business organizations raises the problem of monopolies and the domination of markets by giant corporations. An environment of growth 27

simulates creativity, ingenuity, morale, and opportunities for progress in the careers of individuals. Social obligation: Organizations inevitably focus upon its contributions to the needs of society, tangible and intangible. Its contribution may be in terms of goods or of services, or both, The nature and extent of these contributions may change from time to time, as society or the organizations perceive shifting demands and needs. In recent years, organizations have give increasing attention to broad social obligations, at local, national, or internationals levels. Organizations need an environment that is safe from crime, is clean, and is well governed by responsible officials. They need goods transportation, and communications systems, churches, schools, and social agencies, so that they can attract and hold good employees, But the needs are reciprocal: public agencies also need the help and cooperation of all types of organizations. The importance of social obligations in organizational goals has been increased due to pressures from public . These pressures have arisen due to several social problems such as, crime, inequality, urban decay, or environmental pollution etc. Organizations meet social obligations in several ways. One is philanthropy, another way is being a good citizen Profit Making: The acceptance of social responsibilities does not require the substitution of the objective of profit making. To conduct a business in the light of social purpose and the full range of human needs is not only compatible with profits but indeed may even be essential to them. Profit lies at the core of business activity, but as an objective it is too general and diffuse. Managers must consider profit along with other objectives and with the long run interests of the business. The vital functions of profits include assuring the amount needed for safety and survival and for attracting future supplies of capital, or of providing it through earnings. Profits provide only a rough measure of the effectiveness of organizational effort and the competence of managers. Profit may be greatly affected by conditions not directly within the control of the managers. The profit objective is often confused with the profit motive . BASIC OBJECTIVES: Within the framework of over-all objectives stated in general terms managers must determine the specific objectives that they and their units seek to attain. Specific objectives tend to be short-range in character and have definite time limits within which executives expects to attain them. The following are example of specific objectives for various types of organizations: Companies To diversify the line of products. 2. to reorganize the firm 3. to liquidate an unprofitable division. 4. To establish market contracts abroad. Trade Associations: To increase the number of member. 2. To lobby for or against a bill in Congress. 3. To launch a management development program for member firms. Government To adopt a new ordinance. 2. To launch a consumer assistance program. 3. to establish a new bureau. Schools To establish an in service teachers training program. 2. To secure increase research funds. The more clear specific objectives can be stated the more readily they can be worked into the fabric of the organizations effort. Starting specific objectives in writing and disseminating them properly permit plans to be built for their achievement. Specific objectives arise out of and are related to broad general objectives and the basic strategies of the organization. PERSONAL OBJECTIVES OF A MANAGER In addition to organizational objectives managers have personal objectives. Personal objectives are also general and specific, e.g. living a good life is a general objective and getting promoted next year is a specific one. It is important that as far as possible the personal goals of 28

organizations members be in harmony with organizational goals, so that the same actions bring about both sets of goals. Personal goals are often largely hidden or kept subservient to organizational goals.

29

EFFECTIVE MANAGEMENT OF OBJECTIVES: It is the primary function of a managers to specify clearly the goals of their group members. Broad organizational goals must be translated into specific aims to guide the efforts of group members. The task of a manager, as a leader, to blend the several specific and other objectives in to an integrated pattern. The overall pattern of goals consists of a hierarchy that corresponds to the levels of and organization. The approach to the management of objectives varies at different levels. At top levels, goals are broader, (more strategic) and of longer range. At the middle and supervisory levels, goals are (less strategic and) increasingly related to operations. At the level of the individual organization member, goals are almost entirely operational. Goals and objectives can be managed according to the problems given below: (1) strategy (2) evaluation (3) multiple goals (4) acceptance, (5) Changes, and (6) individual goals and MBO programs.

1 STRATEGY
Strategy is defined as behavior whose purpose is to achieve success for organizational or personal goals in a competitive environment, based on the actual or probable actions of others (Chiefly market competitors, suppliers, customers, employees, and governmental units) and on probable events occurring in the organizations Strategy includes: choosing of goals, 2. the unpredictability and uncertainty of events, and the need to adjust tactics to the operable or actual behavior of others, principally opponents or competitors. WHAT IS TACTICS: Strategies should be distinguished from tactics. Tactics are actions based on the executives judgment and experience in a strategic situation calling for a decision. STRATEGY involves planning for possible alternatives setting policies, standards, and objectives; and making decisions that indicate what tactical decisions should be made. Strategy helps in removing uncertainty from the choice of tactics. Strategic plan provide constraints over the tactical behavior of managers. As strategies develop over time, they become institutionalized and known to outsiders, calling for further work on both strategy and tactics. TYPES OF STRATEGIES: The pattern of goal directed activities reflect a strategic posture(situation) for the organization with respect to the actions and strategies of other organizations or groups. Managers choose or modify strategies in response to forces both inside and outside the organization. Strategies may be explicit or implicit. Implied strategies exist in all courses of action or inaction. The knowledge of deliberate strategies is often kept restricted to limited number of persons because opponents may limit or destroy their value. Restricted strategies become known and hence become explicit strategies. The observer take note of managerial or company behavior and deduce the strategy for it. Both the implied and the explicit strategies require continuous adjustments dictated by changes in the environments. Selection of strategies involves prediction about future events and the probably behavior of the organization. Moore classify company strategies in to three types: (1) External economic strategies, (2) external social strategies and (3) internal organizational strategies. 1- External Economic Strategies relate the company to economic and technological elements of its environment and also to its customers. These strategies center upon inputs and outputs and define the companys economic activities and contributions. 2- External Social Strategies: are about relations with community at large, including government units, public welfare associations, and the general public, generate the companys external social strategies. The company desires to fulfill its obligations to stockholders and also to maintain the economic, social and political rights and privileges to which it is entitled. 3- Internal Organizational Strategies: they define, how a company allocates and uses its resources to accomplish its objectives are the internal organizational strategies. Examples of such strategies are the development of organization structures; personnel assignments; plans for the use of labor, tools, and equipment, and the distribution of authority. STRATEGIES AND ORGANIZATION STRUCTURE: Among other things organizational structure is also and instrument of corporate strategy. The decisions made in an organization depend on (!) the extent of agreement on objectives, and (2) whether cause-and-effect relationships are known, so that agreement is possible on how to attain the objectives. Combinations of these two factors yield four types of decision strategies and organization patterns: 1 Computational Strategies: If there is agreement on both the objectives and the methods of attaining them, decisions can be based on rational calculations.

30

2 3 4

Judgmental Strategies: If their is agreement on objectives but cause-and-effect relationships are not well known, judgmental strategies employing the use of insight will be used. Compromise strategies: If their is agreement on how to achieve objectives, but the priorities among objectives are in dispute, compromise strategies make action possible. This situation is typical in representative bodies, such as legislatures. Inspirational strategies: If there is little or no agreement on either objectives or how to achieve them inspirational strategies may produce action and decision. This situation occurs where there is a little or no formal organization to foster the decision process.

2 EVALUATION AND SELECTION OF OBJECTIVES Managers must help subordinates to understand the differences in varying objectives and emphasis desired for different objectives. The leaders have the responsibility for pointing out which objectives are primary and which are secondary and of keeping subordinates aware of changes. The choice among alternative objectives to be emphasized cannot be left to subordinates alone, although they may provide valuable inputs. Standards for measuring goal achievement can be more readily specified for operational goals that for strategic goals. e.g. making a ten percent gain in sales is more measurable that the goal of improving customer relations. Measurement also depends upon how the goals are stated. If the goal of improving customer relations is stated as getting a 5% reduction in formal customer complaints, it is not only clearer but also more readily measured. Goals are sometime kept vague and ambiguous to avoid objective measurement. Managers may prefer unstated or ambiguous goals as they give them added flexibility or to guide their own limitations. Good achievement is not an adequate measurement of organizational performance; their remains the larger question of whether the right goals are chosen. Also, goals may fade or conditions change as the achievement of those goals nears, so that measurement is less significant. Goals can be classified in to four levels according to their importance with respect to content and to managerial behavior: (1) Organizational efficiency, (2) High productivity and (3) profit maximization. 3 MULTIPLE GOALS: Managers face multiple objectives and have to make decisions that are often directed toward courses of action that deal with a number of constraints at once. Often some of the objectives are in conflict with one another. For example, objectives of profit might seem to rule out the expenditure of funds for improving worker morale or for entirely compatible with the requirements of mass production. Economy drives may necessitates the canceling of otherwise desirable objectives. It is hard to compare long-range objectives in monetary terms. In practice managers use their best judgment to determine how much conflicts can be adjusted. Expenditures for building worker morale may not contribute to a measurable, immediate profit, yet many companies undertake such a goal in the belief that the long-run interests of the company will flourish. There are several ways of coping with the problem of multiple goals. One is to make satisficing decisions rather than optimal ones i.e. choose a set of goals that will satisfy the need for goals even though they are not ideal or cannot be fully achieved. (2) Another way is to keep stated goals intangible, idealistic, or even ambiguous. However, this may result in goal displacement, and the real goals evidenced in the organizations behavior will come to differ from stated goals. Intangible goals provide a measure of flexibility and adaptation and the ability to change short-term, immediate working goals. Advantages: Generating expectations that cannot be accomplished, leading to frustration and disappointment. 2. creating anxiety and role conflict through ambiguous or contradictory directives; and 3. letting intangible goals fade, as disillusionment over failure to accomplish them increases. Goal displacement in a business organization occurs when decision makers, substitute tangible goals for broader, riskier, more uncertain, longer-range goals. GOALS CONGRUENCE: Another problem of multiple goals is that of achieving a reasonable degree of congruence among the different goals, and between individual goals and organizational goals

31

Goals need to be examined for possible conflicts across the departmental or functional structure of the organization, as well as among the vertical levels. Otherwise possible conflicts in sub-goals will emerge. Congruence between personal and organizational goals requires getting goals accepted by organization members by means of clarifying a degree of identity between the tow sets of goals. Some managers tend to assume the acceptance of organizational aims by subordinates or to impose aims without regard for the effects that lack of acceptance might bring. Successful managers try to clarify objectives, both general and specific, so that their subordinates understand them. Such understanding will be more conducive to acceptance and cooperation that force, threats, coercion, or the stem application of authority. The aims of top management are not automatically adopted by middle managers, supervisors, or workers. Acceptance may at times be reluctant and partial, often because the organizational goals appear to be incongruent with personal aims. A practical approach to the problem of acceptance of objectives involves recognizing that the managers responsibility as a leader is to state objectives in terms that invite confidence and produce positive attitudes in subordinates. Managers can also consider the advice, feeling, and opinions of associates and subordinates, as well as of superiors, in formulating objectives. The manner need not fear the objections of others, but should boldly face the task of persuading them that the chosen objectives are sound and logical, showing them how their personal aims coincide with over-all objectives. 4

CHANGES IN OBJECTIVES
An organization is not static, and a set of objectives cannot be static if it is to succeed. Executives must be constantly alert to the need for change in the broad as well as the specific aims the organization has established. Executives seek information indicating the need for change in objectives. They observe the results of research both within and outside the organization, and set up channels of communication and contact that will provide a flow of information affecting current and planned objectives. Change in objectives often become necessary because of changes in the habits and life styles of customers.

MANAGEMENT BY OBJECTIVES
The term (MBO) has been widely used to describe organization-wide programs providing for meshing of personal and organizational objectives. It stresses the involvement of all managers in planning their own objectives in collaboration with their bosses. At supervisory and middlemanagement levels, the objectives are related primarily to operations activities. At higher levels, the objectives focus on broad, integrative problems such as budgeting, fiscal planning, or organizational development. Although MBO is best viewed as a company-wide program, individual segments of an organization can profit from its use. It consists of mutual goal planning by superior and subordinates, periodic performance appraisal by superiors, and feedback interviews in which both superiors and subordinates analyze the progress and restate the objectives for the next period. These objectives are used as standards for performances review and for guiding the further development of managers used as standards for performances review and for guiding the further development of managers. MBO stresses on results rather than personal traits, and focuses on mutual agreement on performance targets by bosses and subordinates. Problem solving rather than personality reforms is its central focus. The standards and reviews are based on results rather than opinions and generalities. The periodic discussions of goals and performance generally lead to improved superior-subordinate relations because they results in a mutual agreement as to the targets to be met, and because the reviews can then be based on objective criteria rather than values and biases of the superior alone. In MBO managers learn how to work with subordinates by cultivating a continuous helping and teaching relationship. Such programs establish systematic checkpoints for reviewing and evaluating performance. They provide a philosophy of management and a way of life for the manager at work. Each situation requires tailor-made MBO programs, which entail the learning of new skills, such as interviewing and counseling, not widely utilized by managers in conventional settings.

32

CHAPTER- 8 POLICIES
The work of planning and determining objectives become effective when it is supported by a network of appropriate policies. Decisions at all level are aided by policy. It is one of the fundamental skill of a manager to make and use policies. POLICIES DEFINED Policies are guide to actions or decisions of organization members. Policies are statements that tell the members of an organization how to meet specific situations that occur frequently and effects a substantial number of people. Potential decisions are appraised in the light of policy. TYPES OF POLICIES: Policies may be specific or general. Specific Policies : Specific policies anticipate that many problems (requiring decisions) may occur repeatedly and needed to be treated consistently. General Policies : General policies are also needed to guide decision making in situations that are non recurring but need to be made with broad long-range goals and strategies. e.g. companies marketing a product abroad face a difficult problem: how much should they decentralize to permit custom tailoring of market policies. to fit individual countries. Policies are useful instruments of planning and control. To meet inflationary troublence, many firms must carefully control product problems with respect to cash flow and return on assets. Differences Among Policies, Rules And Procedures There are significant distinctions between policies and rules, both of which are statements designed to influence the behavior of people in an organization. Policies are usually broader than rules and are stated in more general language; they imply a measure of discretionary action allowable to managers, whereas rules specifically state what must or must not be done. Rules are usually reinforced by specific, stated penalties, but policies allow a wider, more general scope for disciplinary action if needed. There are also fundamental differences between policies and procedures. Procedures reflect explicit policies, and often unstated policies as well. Moreover procedures may deviate from policy at least briefly, as in the case of a company that instructed its supervisors not to answer and employee grievances without clearing with the central personnel directors office. The company did not alter its basic policy of expecting supervisors to settle grievances whenever possible, but merely made a temporary change in procedures to permit the training of supervisors in decision making under the new labor agreement. Rule and procedures are always subordinate to policy, and policy making is a higher order of managerial responsibility. Those who establish rules and procedures must work within the framework of appropriate policy. To think of rules and procedures separate from policy invites poor coordination. POLICY MAKING Policy is a guide to action. It anticipate that many recurring decision making situations can be dealt with in advance. To influence policy thinking in an organization is one of the most important personal goals of managers. Policies are formed or changed (1) when managers become aware of a need to guide the decisions of organization members. (2) When recurring problems demand attention or (3) when strategies or operations are being implemented. The Structure of Policies Policy formation may begin at the top, middle, or lowest levels of management, but the weight of policy making is from the top. It links the levels of an organizations together. Once a policy is established at the top it becomes the guide for supporting policies at successively lower levels. Policy may also originate at or near the bottom of an organization, through pressures that are strongly influential there. The openness of upward communication and the use of participative management methods can do much to generate upward influences on the processes of policy formation. The existing policy of an organization generally conform to its hierarchical structure. Thus a number of policies exist simultaneously and are interrelated in a complex structural pattern, and each policy varies in its importance and scope of coverage; policies, therefore,( like plans and objectives,) exist in a hierarchy. The policies with maximum scope and importance are administered from top, and those with narrower, more operational and specific applications are administered lower down in the organization. Other policies range between these extremes. POLICY MAKERS 33

1 2

The right to select or approve policies confers substantial power upon executives. Many groups and individuals have interest in policies because their welfare and degree of success may depend heavily upon them. Stockholders, employees, customers, investors suppliers, and even the general public all have a vital stake in organizational policy. In companies, stockholders know that policies may affect the profitability and safety of their investment. All stakeholder groups can (to some extent) influence the organizations policies by making known their points of view. Specifically declared policies serve to inform all those who are interested in or affected by the organizations activities. 1 Owners and Policies: The control of policy decisions are in the hand of the manager, but in companies managers are the legal representatives of owners who influence and control their actions. The adequacy of policies is important to them. Owners are represented by a board of directors that guide the actions of executives who actually operate the business. As compare to formal organizations the influence of the owners on managers is much greater. The owners are scattered and only few have a substantial share of investment who becomes members of board of directors. 2 Top Management & Policies: Top management have the overall responsibility for operating the business therefore they exercise a major influence over company policy. Such managers are hired and empowered by the owners of the business. However, certain policies cannot possibly be determined by any group other than top management. e.g. whether to secure additional capital through the sale of stock or of bonds depends on the companys general financial policies. A policy of making component parts rather than purchasing them from suppliers cannot be made by production departments. Corporate policies are a reflection of the skills and abilities of top managers, who earn the right to determine significant policy issues. 3 Middle-Management and Supervisory-Level Policies: At operating levels, policy making is restricted to a narrow focus according to the nature of work. Department heads or supervisors determine policies as needed to accomplish the tasks assigned. Building relationships with subordinates entails forming policies for dealing with them and their problems. However, the managers must not only stay within prescribed limits of authority, but also must keep policies free from conflict with those at higher levels. Deviations and conflicts risk the possibility of corrective action by managers higher in the hierarchy. POLICY ADMINISTRATION OR APPLICATION OF POLICY Proper administration of policies is as important as policy making. Managers learn to use policies by thinking and acting in policy frameworks. No organization can exist without policies. In poorly managed organizations, policies are haphazard, undisciplined, unsystematic, and usually unwritten. Effective policies are not only soundly conceived; they are carefully administered. Administration of policy means that how a manager should apply policy in the operations of organization. Important points of policy administration are: (1) policy dissemination. (2) policy criteria. (3) conflicting policies. (4) changes in policies. 1- Policy Dissemination: Policies may be either stated or implied. The problem for dissemination exists for both, but in different ways. Implied policies are generally less effective than formally stated policies, and they are harder to use in a meaningful way. IMPLIED POLICY In most organizations it gets far too little attention. Implied policies are those policies which have little or no official statement or expression of approval, but that fulfill the function of guiding managerial decisions. e.g. consistent forms of managerial behavior that have not been formalized or expressed as statements of organizations intent. Implied policies can be observed only indirectly by noting the actual behavior of members of the organization in specific instances. They are difficult to perceive and must be dealt with carefully because they represent an interpretation of observed behavior. STATED POLICY It includes the policy guidelines in writing backed by authentication of top management. Though it is difficult to write policies even then the chances of misunderstandings of stated policy are fewer than the implied one. Moreover, the process of putting the policies in writing aids in sharpening the policies and in improving the policy skills of managers. Advantages of Stated Policies: They are available to all in the same form, 2. they can be referred to so that any one who wishes can check the policy; 3. misunderstanding can be referred to particular set of words; 34

4. they indicate a basic honesty and integrity in the organizations intentions 5. they can more readily be disseminated to all who are affected; 6. can be more easily taught to new employees; the process of writing forces managers to thing more sharply about the policy, thus help in achieving further clarity; and 8. they generate the confidence among people in the organization. MEDIA FOR DISSEMINATING POLICY When a policy is put into effect for the first time or an existing policy is modified it is important to pave the way of under standing the new policy. Before announcing it those who are effected or those who can contribute ideas concerning it should be consulted as early as practicable. Media for disseminating policy include written statements that appear as bulletins, letters, hand books, manuals, or news releases. It can also be disseminated by words of mouth through key peoples in the organization. Policy Criteria: The ultimate objective of any policy is to influence the performance of organization members. The critical factor in the success of a policy is the degree of its acceptance by those who are effected and those who administer it. Following administrative consideration can enhance the possibilities for the acceptance of policies. (I) Flexibility (II) Consistency (III) Fairness (IV) Judgment. (I) FLEXIBILITY is allowed by using such phrases, whenever possible, under usual conditions etc.. Flexibility serves the useful function of permitting a policy to be applied intangible to the situation that are sufficiently different but excessive flexibility may destroy a policy (ii) CONSISTENCY: Policies should be consistently applied to the same type of situations accruing at different times. Inconsistency causes uncertainty, which makes planning of future behavior exceedingly difficult. In the same way rapid and surprising policy changes in an organization are often found on close analysis to be the product of the eccentricity, or the mercurial or vacillating temperament, of a manager. (iii) FAIRNESS: It represents a value judgment of their part, one that is note necessarily based on rational and logical analysis. Most managers try to be fair, but they realize that in some cases an honest decision on their part may not be judged as fair by those affected. If a particular application adversely affects an individual, he may consider it unfair unless he can be convinced that the manager applying the policy considered the relevant facts and issues. (iv) JUDGMENT: Managers often regard judgment as one of the most necessary trait for competence. Judgment is hard to define, but it is not difficult to see in particular situations. Judgment in applying policy is demonstrated by the ultimate wisdom of the behavior it generates. We say a manager has judgment when his decisions exhibit insight, perspective, and a substantially correct analysis of relevant matters. Conflicting Policies: In the overall administration of policy matters it is important for the managers to develop a body of policy whose constituent parts fit together with as little conflict and confusion as possible. On the other hand, policies that are in conflict cause confusion by pointing in opposite directions. Changes in Policies: Policies once established , they persist. Written policies become relatively permanent, particularly when published in a handbook or manual. As situations calling for policies change, the need for altering policies gradually increases. However, mechanical difficulties, such as the expense and work involved in publishing the manual, often cause companies to wait until the need for change justifies the cost of a general revision. On way to avoid this difficulty is to maintain stated policy in loose-leaf binder systems so that changes can be made without a large-scale revision. Koontz says about strategy STRATEGY The term strategy is derived from creek letter stratego meaning general. Primarily this term was used in military to mean a grand plan in the light of, what-it is believed-an enemy might or might not do. It has been used in different ways by different writers. Some focus on both, the end point (purpose, mission, objectives etc.) and means of achieving them (policies and plans) Strategy refers to the determination of the purpose (or mission), and 2. basic long-term objectives of an enterprise, and 3. adoption of course of action, and 4. allocation of resources necessary to achieve them. 35

These all things are done in the competitive environment by keeping in view the alternatives to be adopted by the competitors. Strategic Planning Process The specific steps in formulation of strategy, vary form organization to organization. However, the process can be built around the key elements. 1 INPUTS: From external environment may include people, capital, managerial skills, technical knowledge. Various groups of people make demands on enterprise e.g., employees want high wages, consumer demands safe and reliable goods at reasonable prose. Stockholders demand high returns as well as security of their money. 2 ENTERPRISE PROFILE: Usually the starting point for determining where the company is and where it should go. Top managers determines basic purpose of the enterprise. 3 ORIENTATION OF TOP MANAGERS: Profile is shaped by top managers and their orientation is important for formulating strategy. 4 PURPOSE AND MAJOR OBJECTIVES: The purpose and major objectives are the end point to wards which the activities of the enterprise are directed. 5 EXTERNAL ENVIRONMENT: Present and future external threats and opportunities must be assessed. The evaluation focuses on economic, social, political, legal, demographic and geographic factors. In addition to it environment is scanned for technological developments and for other factors necessary in determining the competitive situation of the enterprise. 6 INTERNAL ENVIRONMENT: Similarly the firm internal environment should be evaluated in respect of its resources, its strengths and weaknesses. 7 DEVELOPMENT OF ALTERNATIVE STRATEGIES: On the basis of internal and external environment analysis strategic alternatives are developed. An organization may pursue different kinds of strategies i.e., (1) it may specialize or concentrate, (2) may diversify by expanding the operations into new and profitable market. (3) to go international and expand the operation to other countries. 8 EVALUATION AND CHOICE OF STRATEGIES: Strategic alternatives are carefully evaluated before the choice is made. Choice must be considered in light of the risks involved in a particular decision and timing e.g. a profitable opportunity may not be pressed because a failure in it could result in bankruptcy of the firm. An other critical element in choosing a strategy is the timing. Even the best product may fail if it is introduced at inappropriate time. Reaction of the competitor must also be taken into consideration. 9 MEDIUM AND SHORT-RANGE PLANNING, IMPLEMENTATION AND CONTROL: Although not a part of strategic planning, medium and short rang planning and implementation of plans must be considered during all phases of the process. Control must also be provided for monitoring performance against plans. 10 CONSISTENCY AND CONTINGENCY: The last step in strategic planning process is testing for consistency and preparing for contingency plans. Major Kinds of Strategies & Policies. The major policies and strategies that give an overall direction to operations are generally in the following areas. 1 GROWTH: Growth strategies tells about, how mush growth should occur, how fast, where and how should it occur. 2 FINANCE: Every organization must have a clear strategy for financing its operations. 3 ORGANIZATION: Strategy of the organizational pattern is whether to make centralized or decentralized, decision making authority. Kinds of departments and their patterns, staff positions etc. It furnishes the system of roles and role-relationships that helps people to accomplish objectives. 4 PERSONNEL: Strategies in the area of human resources and relationships, such as union relations compensation, selection, hiring, training and appraisal as well as special matters such as job enrichment. 5 PUBLIC RELATIONS: Strategies in this area are not independent they generally support other major strategies and efforts they must be designed on the light of companys type of business, public relations and government regulations. Effective implementation of strategies: Strategic planning must have to go beyond the allocation of resources to achieve objectives. It also consist of: (1) designing appropriate organization structure (2) developing an effective management information system, and (3) a budgeting system. FAILURES OF STRATEGIC PLANNING AND SOME RECOMMENDATIONS Following are some of the reasons for failure of strategic planning. 36

1 2 3 4

5 6

Inadequately prepared manager for strategic planning. 2. Information for planning is insufficient. 3. Organizational goals are too vague, to be of value. 4. Business units are not clearly identified. 5. Review of planes of the business units are not done effectively. 6. The link between strategic planning and control is insufficient. Strategic planning is the job of line manager especially at the top of organization, assigned by staff planners. The over all strategic plan should be supplemented by specific action plans of different functional departments e.g., research & development, engineering production, marketing, financing and personnel. Too large organizations are frequently broken down into strategic business units (SBUs) which operate as independent business. But it is important the boundaries of each (SBU) be correctly drawn otherwise strategic planning will be difficult. Plans are basis for control. Too often strategic plans and budgets are in conflict because budgets are based on last years budgets rather than on the strategic plan. Successful Implementation of Strategies: The clean and clear implementation of strategies is as important as their development. Following are the eight recommendations for effective implementation of strategies. Communicating Strategies to All Key Decision Makers: Nothing has been communicated unless it is clearly under stood by the receiver. So it should be communicated in writing. Developing & Communicating Planning Premises Ensuring that actions plans contribute to major objectives and Strategies: A good idea for major decision is that they should be reviewed by an appropriate small committee. Reviewing Strategies Regularly: Strategies may cease to be suitable if conditions change. Therefore, they should be reviewed form time to time. financial performance alone is not sufficient indicator of companies success and may be misleading. Scanning to external environment and re-evaluating internal strengths and weaknesses is necessary. Developing Contingency Strategies and Programs: Strategies for contingency should be formulated to coop with any considerable change in the environment, because no one can wait to make plans until a future environment becomes certain. Making the organization Structure Fit for Planning Needs. The organization structure should be such to help the managers in accomplishing goals and in decision making e.g. one person should be responsible to accomplish each goal and for the implementation of strategies to achieve these goals. Continuous Emphasize on planning and Implementation of Strategy: A good workable system of objectives and strategies can easily fail unless responsible managers continue to stress the nature and importance of these elements. It may seem tedious and unnecessary repetition but it is the best way to make sure that members of an organization learn about them. Creating a Company Climate that Forces Planning: People tend to allow problems & crises of today to interfere in planning for tomorrow. The only way to ensure that planning will be done is to develop strategies carefully and to take pains to implement them. PREMISING AND FORECASTING Planning premises are defined as the anticipated environment in which the plan is expected to operate. They includes assumptions or forecasts of future and knows conditions which effect to operations of plans. Distinction between (1) forecasts for planning premises and (2) forecasts translated in to future expectancies is necessary in financial terms. For example a forecast to determine future business conditions (sales volume, political environment) for planning premises on which plans will be developed. and a forecast of costs or revenues from investing in a new business or item gives future expectations. In the first case forecast is a prerequisite of planning and in the second one it is the result of planning. Environmental Forecasting: If the future could be forecasted with accuracy, planning would be relatively simple. In practice, forecasting is much more complicated. The environmental areas frequently chosen for forecasting usually includes: ECONOMIC: Economic environment includes: Capital The amount of funds require for starting business as well as keeping it running ii) the sources from which it can be available and iii) its cost.

37

Material How the material will become available and at which price. the distance to be covered be the material, is cost the availability of suppliers, and availability of alternative materials c) Labor: Availability of labor, its quality, skilled or unskilled etc. and price d) Price Level: Depending upon above forecasts the price which can be fixed and whether the market is available in which it can be sold at desired prices and the expected fluctuation in prices due to any of above reasons, or any other reason. e) Government Fiscal Policies: Though it is a part of political environment but have tremendous effect on economic environment. SOCIAL: Social environments are practically adjoined with the political and ethical environments. Conceptually it is made of Attitudes, b) Desires c) Expectations d) Degrees of intelligence, e) Degrees of education, f) Beliefs, g) Customs. POLITICAL / LEGAL: These are interrelated to the social environment. Generally laws are passed as a result of social pressure and problems. 4. TECHNOLOGICAL: It includes inventions, improvements, techniques and a vast store of organized knowledge.

38

CHAPTER - 9 COORDINATION AND CONTROL

COORDINATION DEFINED A process by which managers achieve integrated patterns of group and individual effort. To coordinate is to develop unity of action in common purposes. Orderly arrangements of group efforts are needed to achieve coordination This definition includes the following main aspects: Coordination is one of the managers leadership responsibilities. It is often confused with cooperation. Individuals of organizational units will not automatically be coordinated, no matter how much they cooperate. Although cooperation is always helpful and the lack of it can destroy the possibility of coordination, its mere presence is not enough to produce coordination. 2. Coordination is a process and not a fixed entity. Coordination is present in varying degrees in every organization. 3. It needs orderly arrangements of group effort. Coordination applies to group efforts, not individual, effort. When a number of individuals must work together integration and orderliness become significant. Undue confusion is a symptom of poor coordination. 4. In contains a concept of unity of effort. This is the heart of the coordination problem. Unity of effort means primarily that managers have so arranged the nature and timing of activities that individual efforts blend into a harmonious stream of productive action. A successful leader achieves coordination by providing a goal around which tasks are divided among group members. 5. The object of coordination is a common purpose. Unity of effort requires that participating individuals understand the goals toward which they are working as a group, and that there be no excessive and costly overlap of their methods and activities. Self-Coordination: Self coordination applies to simple situations in relatively simple organizations. A more elaborate example is provided in the case of a group attempting to move a heavy load. Self-coordination, like cooperation, is no substitute for the coordinative effort of the leader. Clearly, some self-coordination is required for an organization to run smoothly. Yet there remain the deeper conflicts of interest that only a leader can resolve. An organization increases in complexity, coordination becomes a necessary constraint upon the autonomous impulses of managers,. Such coordination is not accidental. It must be brought about deliberately through direct decisions. CONTROL DEFINED The idea of control sometimes arouses opposite to societies that value freedom, yet every organization requires a measure of control to provide for stability and predictability in the system. The work control is often preceded by a modifier to designate a specific control problem. For example, we speak of inventory control, quality control, production control, manpower control and even administrative control. Administrative or managerial control is the most comprehensive control concept. All other types may subsumed under it. Administrative control is accomplished through policies, plans, decisions, and design of systems and procedures. DEFINITION: Control is the process by which managers make sure that intended, desirable results are consistently and continuously achieved. It enables evaluation, of accomplishment of task, which was planned earlier. Therefore control and planning are closely related to each other. Koontz define controlling as, it is the measurement and correction of performace inorder to make sure that enterprise objectives and the plans (derived to attain them) are being accomplished. It is the managerial function to make sure that all other managerial functions, from planning to leading are giving the desired results. Planning and Control: Planning and control are closely related. In fact they are used interchangeably in the designation of departments that carry out production planning, scheduling and routing. Thus some companies have a production planning department; others a production control department. Control is important because of the scarcity of resources and the need for order and system in the activities of organization members. Control is thus a measure of the effectiveness of planning, organizing, and coordinating. Control is not something that is applied after all else 39

1 2 3

is done. If control is an integral part of managerial effort, the number and extent of corrective decisions can be minimized. The highly integrated nature of planning and control is reflected in research report by Robert N. Anthony, who give three related conceptual areas : (1) Strategic planning (2) management control, and (3) operational control. Strategic planning is the process of deciding on objectives or changes in objectives, on the resources used to attain objectives, and on policies that govern the accusation, use and disposition of resources. Management control is the process by which managers assure that resources are used efficiently to accomplish the organizations objectives. Operational control relates to specific controls over procedures, tasks or processes of work. Because money is a common denominator,. Anthony sees the financial system as central to management control. Control is the result of particular plans, objectives, or policies, and because it occurs within the context of a particular organization. Planning and organizing not only affect control but also are affected by it. These reciprocal relationships are illustrated in the form of a feedback in the form of a feedback cycle shown in Figure:

Planning

Organizing

Controlling

Figure of Reciprocal relations Among Planning, Organizing and Controlling Functions. SOURCES OF COORDINATION AND CONTROL PROBLEMS: Problems of coordination and control in organizations arise from the presence of constant change, weak or passive leadership, and the complexities inherent in large-scale organizations. The sources of coordination and control problems will be analyzed below according to three aspects: (1) human attributes, (2) functional differentiation, and (3) specialization. Human Attributes: The grater the number of persons involved in an organization, the more complicated the problems of coordination and control. Individuals are unique, acting to serve their own needs as well as those of the actions and relationships with others. Moreover act emotionally as well as rationally; their behavior is not always well understood or completely predictable. Problems of coordination sometimes arise due to perverseness of human beings in organizational settings. Silly or routine questions may be pushed up to higher levels than necessary, in the name of coordination. The manager plagued by needless coordinating decisions may feel contemptuous of those below, resenting their intrusions and interferences. In the absence of control people tend to allow results to stray from plans or orders. They gradually slide off standard. Control is vital to the strength and morale of an organization. Members do not like things to be out of control, for they cannot predict what will happen to them. The manager is, likely to be considered unfair, for in the absence of control they cannot be sure that everyone is treated equally. In all organizations, workers are exposed to serious temptation. Many must be trusted with large quantities of money, trade secrets, and valuable raw materials, tools, and machinery. In the absence of effective control, employees tend to yield to these temptations. Although control cannot cure habitual dishonesty, managers are irresponsible if they do not establish order and discipline among employees. Functional Differentiation: The need for coordination and control arises out of the complex functional interdependencies within organizations. The operation of one unit depends heavily on the other-one. Coordination and control are therefore, necessary to link the interdependent functions together and assure their contribution to the total result. Specialization:

40

1 2

It presents unusual problems of coordination and control. Specialization arises out of the complexities of modern technology, as well as from the diversity of tasks and persons needed to carry them out. Specialists believe that they are the best judges of the scope, nature, and kind of work they perform and that they alone are qualified to judge each other by professional criteria. ACHIEVE COORDINATION Administration is sometimes defined as the art of continuously resolving differences. It is virtually impossible to achieve a mechanically perfect system of clear-cut jurisdictions. Conflicts of jurisdiction may serve useful purposes. They provide tests of managerial thought and action, ensuring that no one function or specialist ignores the interests of others. To minimize undesirable conflict, overlapping, and disorganization, managers can focus on the following ways of achieving coordination: (1) clear delegations of authority, (2) making decisions that establish or restore coordinated efforts, and (3) setting up coordinating units in the organization structure. Delegating Authority and Responsibility: Coordination is required in both the horizontal and the vertical dimensions of an organization. Clarity of delegated authority and responsibility is important in achieving both types. Vertical coordination harmonizes the work delegated to the various levels of an organization. It is important to assure that units at each level act in accord with those at other levels and with policies and objectives. This is done through careful delegation of authority. Horizontal coordination pertains to relating the efforts of functional, divisional, or territorial units to each other. If the horizontal units, each created for special functions, are to work together in harmony, each needs to know the expected limits of its domain. Clarity of authority is not easy to achieve, however; authority needs constant interpretation in the contents of daily actions. (Selection from Koontz) Horizontal coordination: The work of an organization is departmentalized and spread in to different work groups. It is one of the most important duties of the manager to integrate the various activities. Horizontal coordination links activities across departments to achieve the organizational goals. While vertical organization facilitates the flow of information between hierarchical levels. Horizontal coordination facilitates flow of information across the lines of the departments or units. It may be of three types: (1) Pooled Interdependence, (2) Sequential Interdependence, and (3) Reciprocal Independence. POOLED INTERDEPENDENCE: When results of independently operated departments are pooled to achieve organizational goals. SEQUENTIAL INTERDEPENDENCE: It is more complex than pooled interdependence. In sequential interdependence the output of one department becomes input for another one and continuing in this sequence until all tasks have been completed. This interdependence is one way so that department that produces the out put is not usually dependent on the other department that receives the output. RECIPROCAL INTERDEPENDENCE: The type of interdependence exists when the department works in both way, i.e., provide information and also receive information from other departments. In this type of interdependence input and output flows in two directions. (End of selection) Coordination of Decisions: Good delegation alone cannot prevent all failures of coordination. Managers must observe ongoing activities and deal with coordination problems that do arise. The manager looks particularly for actions or decisions that are out of harmony with one another, for results that point conflict, an for unnecessary duplication of effort. All key decisions can be reviewed to consider their impact on coordination. Established systems and procedures help to develop coordinated effort. Managers must inevitably make some decisions for the purpose of coordination. Such cases involve dealing with conflicts and finding the reasons why the lack of coordination has developed. These are hard many forms of communication ,may take place, including checking and observation. Organizational Mechanisms: Some organizations establish units or positions that are primarily for the purposes of coordination. Some large companies coordinate all staff units, such as personnel management, legal affair, and public relations, under an administrator of staff services. 41

Committee structures are useful in the over-all analysis and problem solving that lead to better coordination. The central task of such committees is to administer policy matters at the top echelons of organization. Among the benefits of committees as coordination devices are: (1) the application of participative or consultative supervision, contributing to greater uniformity of direction in the organization; (2) coordination of long and short-term programs; (3) flexibility in emergency situations; (4) greater experience for managers and greater interchangeablity of management personnel; (5) pooling of resources for problem solving in situation having no clear-cut answers; (6) coordination of related functions where each unit has its part in a predetermined or inevitable decision; and (7) greater acceptance and better execution of decisions because those affected have been consulted in advance and allowed to participate. ACHIEVING EFFECTIVE CONTROL Effective control is achieved through two interrelated approaches: (1) Overcoming human limitations through education, training, and supervisions, and (2) appropriate administrative effort in the form of attention to the control cycle. 1 Improving the Human Factor: Education and training are valuable ways of improving the degree of control that is present in an organization. Coercion or power is not effective in meeting the human problems of control. The best alternative is an approach that; recognizes the dignity and worth of human being, and 2. allow their self-expression and participation in matters affecting them, and 3. enlists their cooperation by persuasive and educational means. One manager, for example ordered a subordinate to submit a weekly report of his work. The subordinate grumbled about the additional effort, but when the manager explained that the reports would help to justify a larger judge, and that they could be brief, the subordinate accepted the control devices. The involvement of those who are affected by necessary controls helps in winning their acceptance. Control is best aimed at results, not at people as such. The purpose of control is to assure that intended results occur, not that employees be dominated, regimented, or reformed. The purpose of time clocks, for example, is to establish the habit of punctuality , rather than to trap workers who are assumed to be cheating the company. Controls should be focused, not on worker, but rather on the need for accurate measurement. 2 Control Cycle: The control process, whether administrative or operational, is best viewed as a feedback cycle which shows the basic elements upon which the manager focuses in maintaining any system in a state of control. The control cycle functions t its most objective level for operational, or routine controls, and where concrete measurement of the standards and results is possible. Administrative controlled use the same elements, but because measurement is less precise, the functioning of the cycle is more subjective. Key elements in the control cycle are: (1) standards (2) Information about existing conditions, and (3) corrective actions. 1 STANDARDS: The first step in control is to select a standard against which to compare results. Precision is stating such standards is important. In many areas of management, great precision is possible, e.g. product specifications determined by engineers. In some areas, however, standards are less precise e.g. performance standards uses an manager in directing subordinates. Even in such situations, however, systematic procedures can do much to make the control function concrete and effective. Standards are usually stated in terms of a range (minimum to maximum) outside of which results are not acceptable. Within that range, there may be fluctuation and variation in results. The extent of the tolerance depends largely on the nature of activity, the costs of compressing the range and the uses of the end product. Standards include: the setting of examples; standing limitations standing rules, orders, and procedures; and budgets 42

The Setting of Examples: Often setting an example helps control results. The example of the leader becomes the norm of the group. A supervisor who can operate a machine at a hundred units an hour is in sounder position to demand a hundred units an hour from subordinates than one who cannot. II Standing Limitations: Where subordinates are empowered to exercise considerable latitude in decision making, it is frequently desirable to place definite limits beyond which they may not go without permission e.g. a purchasing agent may be permitted to spend up to Rs. 10,000/- but required to secure approval for contracts exceeding that amount. In this way, the higher manager prevents possible misuses by reserving an ultimate responsibility for exceptions beyond the limit. It is important, when in setting control limitations, to adapt them to the level of the manager, to the scope of his authority, and to the capabilities of individual. III Standing Orders: By establishing rules, orders, and procedures, managers control routine behavior and can develop the performance habits of subordinates. Rules generally specify prohibited forms of behavior which, if allowed, would disrupt, orderly effort or endanger people or the organization. Standing Orders tell individuals what to do under given conditions that are repetitive or that may occur at any particular time. Standing Procedures spell out correct sequences of events, or the series of activities through which work is accomplished. IV Budgets: A budget is a planning instrument while managers are creating it, and a standard for comparing progress and evaluating results after it is established. Therefor, budgets are both planning and control devices. Control through budgets comes from the fact that a budget provides limits to the activities it covers. Budget need not be, rigid and inflexible. Even though the limits imposed by a budget are not fixed, however, the budget controls decisions and programs, for it is a continuous guide. Managers who exceed their budget need good reasons for requesting additional funds, and they can be criticized for poor planning if the need could reasonably have been anticipated. Managers who do not expend available funds may be censured for poor planning, for padding their organizational requests, or for not using the resources allocated to do the job assigned. Usually managers anticipate in budgetary planning and control by submitting budget plans for their units, Higher management may modify this budget, but the process of initial planning has a controlling influence over the management, providing pressure to make accurate estimates of needs. 2 INFORMATION ABOUT EXISTING CONDITIONS A second major element of control cycle. The presence of standards implies a corresponding ability to observe and comprehend existing conditions and to ascertain the degree of control achieved. Thus the whorl pattern of information and communication is a key element in control. The information system provides two kinds of data: 1- the results of measurement and 2appraisals of non-measurable factors. These are standards with which the results are compared. The process of measurement enters into both the determination of standards and the evaluation of results, but intended results expressed in terms other that those of mathematics or of engineering standards are more difficult to utilize. The process of measurement of fundamental in comparing results against intended performance. The success of such comparisons depends, upon the quality of the measures used. The fact that measurement of results against intentions cannot always be in quantitative terms, and that there must be an element of estimation and appraisal, need not deter one from attempting to achieve adequate control. All managers must work with some non-measurable factors, judging what relative weight to give to measurable and non-measurable elements. Non measurable items include human elements such as attitudes, beliefs, moral views, human abilities, thought processes and personalities. Records and reports have considerable control value, but they can also clog the organizational machinery by becoming too numerous, too burdensome, and too timeconsuming. Many reports are not read; many records are not consulted. There is no justification for records and reports that are unused or unusable. Most organizations can save money by studding their records system and reports procedures, eliminating those what have become archaic. OBSERVATION OF SUBORDINATES: The fact that manager systematically observe the work methods and results of their subordinates results in controlling influence. The possibility of being observed, often 43

1 2

unpredictably, has an inevitable effect on workers. There is some truth in the adage the when the cats away, the mice will play. Much depends upon the skill with which a manager creates the illusion of being present even during his absence. AUDITING Personal contracts cannot do the entire job, because of the difficulty of piecing together a number of fragmentary observations so as to see the enterprise or a segment of it as a whole. To do that, a system of audit or review may be used. Auditing involves preparing a plan to assure that key facts will be observed. Many companies have instituted continuous systems of internal auditing that are not restricted to financial matters. The auditor points out defects, neglected situations, or problems, and make suggestions based on careful analysis. REVIEW is similar to auditing except that qualitative rather than quantitative factors may be emphasized. For example, policies may be revised periodically to make sure they are sound and up to date. CONTROL ACTIONS AND DECISIONS: A third major element in control is that of taking actions or making decisions that maintain the desired degree of control. In simple systems, control may be established or restored by altering one or more of a few variables. In complex systems, the processes of detecting dis-equilibrium, disharmony, or lack of control are often slow and difficult; consequently remedial decision and action may also be slow. In such complexity, the conditions for achieving control are always changing. Managers may make different interpretations of similar situations and use different methods of control. Where control can be built into a system through planning, or incorporated into computer system control becomes automatic, as in the case of information-feedback process. Disciplinary Action: It functions as a control to the extent to which it can be made preventive and corrective in nature, This is difficult to do, but deviations form orderly and effective behavior cannot be allowed to go unheeded. Fig they are the will grow worse and more numerous. The theory of disciplinary action is not well understood. The general idea is that control results from the desire of employees to avoid the penalties for undesirable behavior. Control is the net result of many factors, one of which may be the threat that disciplinary action will occur. In spite of limitations in the theory, however, practical actions often require recognition that orderly behavior cannot be obtained from every individual and that in sever cases an employee may have to be discharges. Censure or reprimand are mild forms of disciplinary action that may help in some cases; in other, more drastic measures, such as wage penalties, layoffs or discharges, are needed. Discharge, the most sever form of disciplinary action, is usually a last-resort procedure. Social Controls These are determined by the system as a whole. among these are norms, customs, conventions, unwritten laws, habits, practices, status and prestige systems, organizationally determined and disseminated values, myths, and folklore. (Selection from Koontz) THE BASIC CONTROL PROCESS: Whenever control is found and whatever is being controlled it involves three steps: (1)establishing standards, (2) measurement of performance against these standards, and (3) correcting variation from standards. ESTABLISHING STANDARDS: It is just the reflection of plan or plan goals. Standards are the measuring rods and therefore must be specific, accurate, dependable, verifiable and clear. ASSESSING PERFORMANCE: More accurate a standard the more effective assessment of performace may be possible. However in some cases it is extremely difficult to develop standards and consequently the assessment of performance will also be difficult. CORRECTING DEVIATION: There is hardly any performance that give perfect results against standards. Some discrepancy of minor or major nature are likely to be detected in assessing performace. Whenever such a discrepancy is noted the manager immediately takes steps to remove them to assure timely and satisfactory accomplishment of the goals. It may be corrected by: Drawing the plans or modifying the objectives. Re-organizing the activities through reassignment or clarification of duties, or additional staffing, or 44

 by training subordinates, or through better directing and strong leadership. CRITICAL CONTROL POINTS AND STANDARDS: In a simple business operation a manager might control through careful personal observation but in more complex operations personal observation is impossible. In such a case the manager choose points for special attention and then watch proceeding as planned. Those points are known as critical points and they are strategic in showing how the work is progressing. Questions for selecting Critical Points of Control: Selection of critical points is an art of management because sound control depends upon the managers considerations. the questions are (1) What will best reflect the goals, (2) How will I know that these goals are not being met. (3) What will tell about the responsible person for failure. (4) What standards will cost the least. Critical Standards: Performance may be measured against managerial function of planning like objectives, policies procedures. In practice, however, standards are tent to be of following types. 1 Physical Standards 2 Cost Standards, 3 Capital Standards, 4 Revenue Standards, 5 Program Standards, 6 Intangible Standards, 7 Goals as Standards, 8 Strategic point as control point for strategic control. PHYSICAL STANDARDS: To measure the physical flow of goods and services. They servers as a measuring instrument for material used labor employ and goals achievement. They help in measuring quantitative performance e.g. man hour, units of output etc. They also measure the quality, durability of the product, etc. COST STANDARDS: Standards for monetary measurement of flow of work. they are used to measure direct and indirect cost of production like material, labor, Factory overhead. CAPITAL STANDARDS, It is also a monetary standard applied to the capital expansion or capital investments. These are the standard related to balance sheet rather than the income statement. REVENUE STANDARDS: They are monitory standards attached to the values of sales, e.g. revenue per ton or gooks sold etc. PROGRAM STANDARDS: It is the installation of a variable budget program, a program for formally following the development of new production or a program for improving the quality of sales force. INTANGIBLE STANDARDS: It is a difficult standard not expressed either in physical or monetary measurement e.g. competence of employees, their moral, degree of sincerity etc. Similarly a manager cannot easily estimate whether the public relations program is successful or not. Many intangible standards exist partially. GOALS AS STANDARDS: Batter managed enterprises to establish an entire network of verifiable qualitative or quantitative goals at every level of management, the use of intangible standards, while still important, is diminishing. STRATEGIC POINT AS CONTROL POINT FOR STRATEGIC CONTROL: Strategic control comprises systematic monitoring at strategic control points as well as modifying the organizations strategy on the basis of this evaluation. Planning and controlling are closely related, therefore, strategic plans require strategic controls. Controls facilitates comparisons of intended goals with actual performance they also provide opportunities for learning which in turn is the basis for organizational change. Moreover, through the use of strategic control one gains not only insight about organizations performance but also about the ever changing environment by monitoring it. Real-Time Information and Control: An interesting advancement from the use of the computer and from the use of electronic gathering, transmission, and storage of data is the development of systems of real-time information. This is information about what is happening, while it is happening. It is technically possible through various means to obtain real-time data on many operation. For example the 45

1-

23456-

7-

8-

airlines reservation system and electronic cash registers. Now a factory manager can have a system that reports at any time the status of a production program in terms of such things as the production point reached, labor-hours accumulated, and even whether the project is late or on time in the manufacturing process. FEEDFORWARD CONTROL: The time lag in the management control process shows that control must be directed toward the future if it is to be effective. The feedback system depends on historical data which have many deficiencies, such as the historical data tells business manager in November that they lost money in October because of something that was done in July. At this late time, such information is only a distressingly interesting historical fact. Managers need, for effective control, a system that will tell them, in time to take corrective action, that problems will occur if they do not do something about them now. Feedback is little more than a postmortem, and no one has found a way to change the past. TECHNIQUES OF FUTURE-DIRECTED CONTROL: One common way many managers have practiced is using forecasts. By comparing what is desired with the forecasts, managers can introduce program changes that will make the forecasts more promising. Fore example if a company makes a sales forecast indicating that sales will be at a lower level than desirable, managers may develop new plans for advertising, sales promotion, or the introduction of new products in order to improve the sales forecasts. Likewise most businesses are engage in future-directed control when managers carefully plan the availability of cash to meet requirements of near future. Feadforward versus Feedback Systems: Feedback systems measure outputs on a process and feed into the system or the inputs of the system corrective actions to obtain desired outputs. On the other hand feedforward system monitor inputs into a process to ascertain whether the inputs are as planned; if they are not, the inputs, or perhaps the process are changed in order to obtain desired results. It may be more clear with the following figure.

Inputs

Process

Outputs

Feedforward Corrective action. Flow of work. Information flow.

Feedback

Figure: Of feedforward and feedback system of control REQUIREMENTS FOR FEEDFORWARD CONTROL Make a thorough and careful analysis of the planning and control system. 2. Develop a model of the system. 3. Keep the model up to date; review is regularly to see whether the input variables identified and their interrelationships continue to represent realities. 4. Collect data on input variables regularly, and put them into the system. 5. Regularly assess the variations of actual input data from planned-for inputs and evaluate its impact on the end results. 6. Take action to correct any deviations from standards. REQUIREMENTS FOR EFFECTIVE CONTROLS: To work properly the controls must be specially tailored. The must be tailored to plans and positions, to the individual managers and their personalities, and to the needs for efficiency and effectiveness. TAILORING CONTROLS TO PLANS AND POSITIONS:

46

5 6

PLANS: All control techniques and systems should reflect the plans they are designed to follow. Managers need the information that will tell them how the plans, for which they are responsible, are progressing. Informations needed about different plans are quite different. POSITIONS: In the same way controls should be tailored to positions. Controls for the sales department will differ from those for the finance department, and purchasing department. Controls of small business will be different from those of the large business. TAILORING CONTROLS TO INDIVIDUAL MANAGERS: Control systems are intended to help individual managers to carry out their functions of control. If they are not of a type that a manager can or will understand, they will not be useful because what individuals cannot understand they will not trust. And what they don not trust they will not use. The important thing is that people should get the information they need in a form they will understand and use. MAKING SURE THAT CONTROLS POINT UP EXCEPTIONS AT CRITICAL POINTS: To make controls efficient and effective make sure that they ere designed to point up exceptions. In order works, controls that concentrate on exceptions from planned performance allow managers to benefit from the time-honored exception principle and detect those areas that require their attention. The exception principle should be accompanied in practice by the principle of critical-point control. It is not enough just to look for exceptions; one must look for them at critical points. SEEKING OBJECTIVITY OF CONTROLS: If the controls are subjective, a managers or a subordinates personality may influence judgments of performance and make them less accurate; but people have difficulty in explaining away control of their performance, particularly if the standards and measurements are kept up to date through periodic review. This requirement may be summarized by saying that effective control requires objective, accurate and suitable standards. ENSURING FLEXIBILITY OF CONTROLS: To make the controls effective, despite failure or unexpected changes of plans, they must be flexible. FITTING THE CONTROL SYSTEM TO THE ORGANIZATIONAL CULTURE: To be most effective, any control system must fit the organizational culture. For example, in an organization where people have been given considerable freedom and participation, a tight control system may go so strongly against the grain that it will be doomed to failure. ACHIEVING ECONOMY OF CONTROLS: Controls must be worth their cost. Although their requirement is simple it is often difficult to accomplish in practice. A manager may have difficulty in ascertaining , what a particular control is worth and what are its costs. ESTABLISHING CONTROLS THAT LEAD TO CORRECTIVE ACTION: An adequate system will disclose where failures are occurring and who is responsible for them, and it will ensure that some corrective action is taken. Control is justified only if deviations from plans are corrected through appropriate planning, organizing, staffing, and leading. (End of selection from Koontz) The Statistical Aspects of Control: Whenever possible, controls are based on subjective judgment. The same is true for controls build in systems of computers or automated. Between these two extremes lies a kind of control that can be established by statistical means. Because it is impossible to inspect every unit of a product, inspection is often a statistical process. Statistical quality control procedures consists of measuring probabilities that tell the number or percentage of items to be check in order to predict with a given degree of accuracy that the remainder of the items are like those actually checked. The items are checked by sampling procedures. Automation and Control: With the concept of feedback mechanisms, with automatic machines with improved materials handling, and with assembly lines. However, automation is not a mere extension of concepts of mechanization and mass production, as much identifications might imply. Automation applies to any repetitive and large-volume process, such as billing or payrolls. It includes, but goes beyond, automatic, mechanized, or assembly-line production. Automation views production processes as an integrated system and not as a series of individual steps divided according to the most economic distribution of human skills. Within the broad concepts of automation there are four main areas: automatic machinery 2. integrated materials handling and processing equipment 47

3. control mechanisms, and 4. computers. The firs three are generally directed and controlled by some form of computerization. Computers are used top produce steel, chemical, paint, petroleum products, power, and paper at a level of efficiency beyond the reach of human operations managed by direct supervision. PERT Production control has been greatly improved by the use of PERT techniques through computerized scheduling techniques

48

KOONTZ CHAPTER 21 CONTROL TECHNIQUES AND INFORMATION TECHNOLOGY

A variety of tools and techniques have been used over the years to help managers in controlling. All these techniques are in the first instance, tools for planning. They illustrate that the fundamental task of controls is to make plans succeed; naturally, in doing so controls must reflect plans and planning must precede control. Some of these tools may be classed as traditional because they have long been used by managers. Others like PERT, represent a newer generation of planning and control tools. While there are many more of these that discussed here, the new tools generally reflect the systems techniques long used in the physical sense. Operations research is such a technique. CONTROL TECHNIQUES: A) The Budgets: It is the formulation of plans for a given future period in numerical terms. A budget is the statement of anticipated results, either in financial terms or non-financial terms or units of production. TYPES OF BUDGETS: 1 Revenue and Expense Budgets 2 Time, Space, Material and Product Budget, 3 Capital Expenditure Budget 4 Cash Budget and 5 Balance Sheet Budget. 1 Revenue and Expense Budget: Also called operating budget. It gives plans for revenues and expenses in monetary terms. It includes, sales budget, operating expenses budget, etc. 2 Time Space Material and Product Budgets: They deal with physical quantities of certain aspects of business operations and are usually translated into monetary units. Time to be consumed in given future period. The space to be used in square feet, material to be used per unit. and products to be produced per day, week or month. 3 Capital Expenditure Budgets: To ensure continued existence and growth of the concern, enterprises continues expansion of works. To control these expansion capital budgets are used. 4 Cash Budgets: Shows the cash requirements needed for the operation of the business during the budgeted period. It includes all cash receipts and disbursements forecasted during that period. 5 Balance Sheet Budgets: A forecast of expected financial status/position as on the last day of the budgeted period. DANGERS IN BUDGETING: Overburdening the managers and depriving them from needed freedom in managing their departments, by spelling out minor expenses in detail. 2. Overriding Enterprise Goals: Sometimes, due to rigidity budgetary goals become more important than enterprise goals. In the zest of keeping within budgetary limits managers forget that they owe primary loyalty to enterprise objectives. 3. Hiding Inefficiencies: Budgets have a way of growing from precedent, the fact that a certain expenditure was made in the past can become evidence of its reasonableness in the present. Managers sometimes learn that budget requests are likely to be pared down in the course of final approval, and, therefore, they ask for much more that they need. 4. Causes Inflexibility: It is the greatest danger in budgets. A difference in forecasts and actual may make a budget obsolete almost as soon as it is formulated; if managers must stay within the straitjacket of their budgets in the face of events like these, the usefulness of budgets is reduced or nullified. It is especially true when budgets are made for long periods in advance. ADVANTAGES OF BUDGETING: It helps to provide overall view point vital to management success. The executive gains a sense of promotion and awareness of the existence and importance of the many different activities. 2. Coordination is made easy as it brings together all the various activities. 3. Helps each organizational unit to achieve what is probably best for all units concerned. 4. Managers can focus their attention on those items which deviate from their established norms. 5. it helps in fixing responsibility. 6. Goals are made known to those who are responsible to achieve them. 7. Assistance in decision making is made by factual information and records. 8. Weaknesses in organizational structure, managers ability and personnel are revealed and possible means for improving them are provided. 9. Economics in operations are discovered and an emphasis is placed upon more efficient work accomplishment 10. Wastage in avoided and needless spending is minimized. Types of Budgets: 49

2 3

VARIABLE BUDGETS: Due to the danger of inflexibility in budgets variable or flexible budgets are used. It is based on the analysis of the expenses items to determine how individual costs should vary with the volume of output. Cost that vary with volume of output range from those that are completely variable to those that are slightly variable. The task of variable budgeting involves selecting some unit of measure that reflects volume and determining how these costs should vary with volume of output. Each department is given these variable cost items along with definite amount for its fixed costs. Then departmental heads are given the volume forecast for the immediate future from which the variable cost is calculated that make up a budget. ALTERNATIVE AND SUPPLEMENTARY BUDGETS It is another method of obtaining a variable budgeting. In it company develops three budgets one for the high level of operation, second for the medium level of operation, and third for a low level of operation. These budgets are prepared as a whole and for each segment of the organizational unit. Then at stated time managers will be informed as to which budget to use in their planning and control. It is a modification of variable budgets. SUPPLEMENTAL MONTHLY BUDGETS: Another form of flexible budget under it budget is prepared for outlining the framework of the companys plans coordinating them among departments and establishing department objectives. This is the basic or minimum budget. Then a supplementary-budget is prepared each month on the basis of the volume of business forecast for the month. ZERO-BASED BUDGETING; The purpose of it is same as of well operated system of variable budgeting. In this type of budget the enterprise program is divided in to packages composed of goals, activities and needed resources and then to calculate costs for each package by starting the budget of each package from the base, Zero, budget makers calculate costs afresh for each budget period and avoid the tendency in budgeting to look only at changes from a previous period. Effective Budgetary Controls: Budgetary controls are only tools and not a replacement of management. To make budgetary controls more effective the following conditions are to be fulfill: Whole-hearted support of top management. 2. Participation by top management in preparation as well as application of budgets. 3. Budget shall not be inflexible 4. Standards should be developed as a basis of expenses 5. Manager should get complete information about the actual and expected performance. TRADITIONAL NONBUDGETARY CONTROL DEVICES Some of these non budgetary controls may be related to, and used with, budgetary controls. Among the more important of them are (1) statistical data, (2) special reports and analyses, (3) the operational audit, and (4) personal observation. Statistical Data: Statistical analyses of the innumerable aspects of an operation and the clear presentation of statistical data, whether of a historical or a forecast nature, are important to control. The statistical data becomes more understandable when it is presented in chart or graphic form, because the trends and relationships are then easier to see. Moreover, if data are to be meaningful, even when-presented on charts, they should be formulated in such a way that comparisons with some standard can be made. Special Reports and Analysis: Special reports and analyses help in particular problem areas. Though routine reports furnish a good share of necessary information but often in special areas they are inadequate. Operational Audit: It is another effective tool of managerial control, previously called as internal audit. Operational auditing, is a regular and independent appraisal, by a staff of internal auditor, of the accounting, financial, and other operations of an enterprise. Although often it is limited to the auditing of accounts, in its most useful form operational auditing includes appraisal of operation in general, weighing actual results against planned results, Personal Observation: Budgets, charts, reports, rations, auditors recommendations, and other devices are essential to control. But the manager who relies wholly on these devices and sits, can hardly expect to do a through job of control. Managers, after all, have the task of seeing that enterprise objectives are accomplished by people, and that people are doing that, which has been planned, the problem of control is still one of measuring activities of human beings. It is amazing how much 50

1 2 3

1 2

3 4 5

information an experienced manager can get from personal observation, even from an occasional walk through a plant or an office. In some companies this is called,: management by walking around. PROGRAM BUDGETING: One of the widely publicized tools of planning and control used primarily in government operations but applicable to any kind of enterprise is program planning and budgeting (PPB). What Program Budgeting is: Basically it is a systematic method for allocating the resources of an enterprise in ways that will most effectively help the enterprise to meet its goals. By emphasizing goals and programs to meet them, it overcomes the ordinary weakness of all kinds of budgets. By concentrating on goals and programs in light of available resources, it stresses the desirability of assessing costs against benefits when selecting the best course towards accomplishing a program goal. PROCEDURES PLANNING AND CONTROL: Procedures present a rewarding area of planning and control to which a systems approach can be applied. They are desirable tools for efficiently getting things done in a given way or of control, although they should be designed to implement plans and to respond the change. Why Procedures Get Out of Control: Procedures often get out of control because of the specialized approach of each organization function in setting them up for its particular operation. For example accounting procedures may conflict with or overlap, purchasing procedures. They also get out of control when managers try to use procedures to solve problems instead of solving the problems through better policies, clearer delegations, or improved direction. Procedures also avade control by becoming obsolete, either because they are not kept up to date or because failure to police them permits deviations in practice. Moreover, procedures have a way of becoming customs, ingrained in departments and in individuals who have a stubborn resistance to change. And managers find it expedient to impose new procedures on the old, a haphazard practice. A major reasons is that managers often not clear as to what procedures should do, how much they cost, when they are duplicated, how to overhaul them and how to control them. And to top of all this, managers often fail to obtain the interest and support of top managers in the tedious and unromantic planning and control procedures. Guidelines for Effective Procedures: MINIMIZE PROCEDURES: Limit procedures to those situations in which they are clearly called for. Managers must weigh the potential gain in money or necessary controls against the disadvantages and costs. MAKE SURE PROCEDURES ARE PLANS Procedures must be designed to reflect and help the accomplishment of enterprise as well as departmental objectives, and policies. The managers should check, have they been planned? If they are necessary, are they designed effectively and efficiently to accomplish plans. ANALYZE PROCEDURES: They should be carefully analyzed to ensure a minimum duplication, overlapping, and conflict. For proper analysis the procedures must be visualized. RECOGNIZE PROCEDURES AS SYSTEMS Every procedure is a system, in itself, of interrelated activities normally in a network rather than a pure linear form. Therefore, groups of procedures are usually interrelated systems. ESTIMATE THE COST OF PROCEDURES: The analysis of a procedure should include an estimate of what its operation will cost. While some costs cannot be ascertained, such as the cost of possible frustration to those involved, an estimate may bring into sharper focus the answer to this question: Is this procedure worth while? POLICE THE OPERATIONS AND PROCEDURES: To be sure that procedures are needed and are doing the job intended, it is necessary to police them. This requires three steps: (1) Knowledge of procedures must be made available in manual or some other form to those who must follow them. (2) Employees must be taught how to operate under them and , ideally, why the procedures are necessary and what purpose they are designed to serve. (3) There must be machinery to ensure that people do understand and are employing up-to-date procedures and that they are doing the job intended. This requires constructive auditing. INFORMATION TECHNOLOGY: The systems model of management shows that communication is needed for carrying out the managerial functions and for linking the organization with its external environment. The management information system (MIS) provides the communication link that makes managing possible.

51

The term management information system has been defined here as a formal system of gathering, integrating, comparing, analyzing, and dispersing information internal and external to the enterprise in a timely, effective, and efficient manner. The MIS has to be tailored to specific needs and may include routine information, information that points out exceptions (specially at critical points), and information necessary to predict the future. The guidelines for designing a MIS are similar to those for designing systems and procedures and other control systems.

52

KOONTZ CHAPTER - 22 PRODUCTIVITY AND OPERATIONS MANAGEMENT

PRODUCTIVITY: Undoubtedly, at present, productivity is one of the major concerns of managers all over the world. It implies measurement, which, in turn, is essential step in the control process. Although there is general agreement about the need of improving the productivity, there is little consensus about the fundamental causes of the problem and what to do about them. Some people place blame on the greater proportion of less skilled workers with respect to the total labor force, but others disagree. Some see the cutback in research and the emphasis on immediate results as the main culprit. Another reason for the productivity dilemma is the growing affluence of people, which makes them less ambitious. Productivity is the input-output ratio within a time period with due consideration for quality PRODUCTION AND OPERATIONS MANAGEMENT In the past, production management was the term used to refer to those activities, necessary to manufacture product. However in recent years, the area has been generally expanded, now it also include, (such activities as purchasing, warehousing, transportation, and other operations,) from the procurement of raw materials through various activities until a product is available to the buyer. The term operations management refers to activities necessary to produce and deliver a service as well as a physical product. OPERATIONS RESEARCH FOR PLANNING, CONTROLLING, AND IMPROVING PRODUCTIVITY What is Operations Research: There are many definitions of operations research. For the purpose of this discussion the most acceptable definition is that operations research is the application of scientific methods to the study of alternatives in a problem situation, with a view to obtaining a quantitative basis for arriving at the best solution. Thus, in definition the emphasis is on: 1 The scientific methods, 2 The use of quantitative data 3 On the goals, and 4 On the determination of the best means of reaching the goals. In other words, operations research might be called quantitative common sense. The Essentials of Operations Research (OR): Operations researchers have supplied an element of novelty in the orderliness and completeness. They have emphasized defining the problem and goals, carefully collecting and evaluating data, developing and testing hypotheses, determining relationships among data, developing and checking predictions based on hypotheses, and devising measures to evaluate the effectiveness of a course of action. Thus the essential characteristics of OR can be summarized as follows: Emphasize on Models: A model is the logical physical representation of a reality or problem. It may be simple or complex. 2. Emphasize of Goals: In OR emphasize is on goals in a problem area and the development of measures of effectiveness in determining whether a given solution shows promise or achieving these goals. E.g. if the goal is to earn profit the measure of effectiveness will be rate or return on investment. 3. Model Contains Variables: It incorporates in the model the variables in a problem, or atleast those that appear to be important to its solution.. 4. Model in Mathematical Terms: It puts the model and its variables, constraints, and goals in mathematical terms so that they may be clearly identified, subjected to mathematical simplification, and readily utilized for calculation by substitution of quantities for symbols. 5. Quantifies the Variables: It quantifies the variables in a problem to the extent possible, since only quantifiable data can be inserted into a model to yield a measurable result. 6. Use of Probabilities: It supplements much unavailable data with such usable mathematical and statistical devices as the probabilities in a situation, thus often making the mathematical and computing problem workable within a small margin of error despite gaps in accurate quantifiable data. Operations Research Procedure: Application of OR generally involves the following six steps: FORMULATE THE PROBLEM: :Like any other planning problem, OR must analyze the goals and the system in which the solution must operate. The interrelated components in a problem area in OR is referred to as a system. Unless managers can greatly simplify the problem by applying the principle of the limiting factor, the more comprehensive the system the more complex the problem. 53

CONSTRUCT A MATHEMATICAL MODEL: The next step is to restate the problem as a system of relationships in a mathematical model. The general form of OR model for a single goal is E = f(xi,yj) Where E = measure of effectiveness of system xi = Controllable variables yj = variables beyond control. Although all models are intended to represent reality, with simulation model the users put in the model a set of factual values for the controllable variables and assume a set of values for the uncontrollable variables, one can compute various measures of effectiveness until the satisfactory one is found. DRIVE A SOLUTION FROM THE MODEL: There are two basic procedures for arriving at a solution from a model. Analytical and Numerical. In the analytical procedure, mathematical deduction is used in order to reach , as nearly as possible, a mathematical solution before quantities are inserted to get a numerical solution. This can be important contribution to complex decision making. Variables can be reduced or restated in terms of common variables. Certain variables can appear in a number of places in a model, and the user can factor some out or reduce them. In other cases the user can consolidate and simplify a series of mathematical equations. The second procedure is referred to as numerical. In this, the analyst simply tries different values for the controllable variables to see what the results will be and then develops a set of values that seems to give the best solution The numerical procedure varies from pure trial and error to complex iteration. In iteration, the analyst undertakes successive trial runs to approach an optimal solution. In some complex cases such as the iterative procedures used in linear programming, rules have been developed to help analysts more quickly undertake trial and identify the optimal solution when it is reached. TEST THE MODEL: A model is only a representation of reality and because it is seldom possible to include all the variables, model should usually be tested. This can be done by using the model to solve a problem and comparing the results with what actually happens. The tests can be carried out by using past data or by trying the model out in practice to see how it measures up to reality. PROVIDE CONTROLS FOR THE MODEL AND THE SOLUTION: A once-accurate model may cease to represent reality, because the variables that are beyond the users control may change, or because the relationships of variables may shift, provision must be made for control of the model and the solution. This is done in the same way any other control is undertaken, by providing means for feedback so that significant deviations can be detected and changes made. In many complex models, such as those used for production or distribution planning, the effect of the deviations must be weighed against the cost of feeding in the correction or against the usually greater cost of revising the entire program. As a result, the decision may sometimes be made not to correct the model or the inputs. PUT THE SOLUTION INTO EFFECT: The final step is to put the model and the inputs into operation. In anything but the simplest programs, this will involve revising and clarifying procedures so that the inputs become available in any orderly fashion, and this, in turn, often requires reorganization of an enterprises available information. Linear Programming: A technique for determining the optimum combination of limited resources to obtain a desired goal, linear programming is one of the most successful application of operations research. It is based on the assumption that a linear, or straight-line, relationship exists between variables and that the limits of variations can be determined. Inventory Planning and Control: In the history of OR , perhaps attention is given to inventory control is not given to any other practical area of operation. The economic order quantity (EOQ) approach to determine inventory levels has been used by firms for many years. It works reasonably well for finding order quantities when demand is practicable and fairly constant throughout the year. Just-In-Time Inventory: One reason for Japans high manufacturing productivity is the cost reductions it achieve through its just-in-time (JIT) inventory method. In this system the supplier delivers the components and parts to the production line just in time to be assembled. Other names of this or very similar method are zero inventory and stockless production. For the JIT method to work, a number of requirements must be fulfilled: The quality of the parts must be very high; a defective part could hold up the assembly line. 2. There must be dependable relationships and smooth cooperation with suppliers.

54

3. Ideally, the suppliers should be located near the company, with dependable transportation available. Distribution Logistics: An exciting and profit-promising way of using systems logistics in planning and control is the expansion of inventory control to include other factors. In its advanced for, it treats the entire logistics of a business ____ ranging from sales forecasting through purchasing and processing material and inventorying to shipping the finished goods ____ as a single system. By optimizing total costs in a broad area of operation, the system might show that it would be cheaper to use more expensive transportation on occasion rather than to carry high inventories. OTHER TOOLS AND TECHNIQUES FOR IMPROVING PRODUCTIVITY Besides OR there are other techniques of productivity. Bellow are discussed (1)time-event networks, (2) value engineering, (3) work simplification, (4)quality circles, (5)total quality management, (6) computer-aided design, (7)computer-aided manufacturing, and (8) manufacturing automation protocol. Time-Event Networks: Time-event network analysis is a logical extension of the famous Gantt chart. Often referred to as the Program Evaluation and Review Technique (PERT) and in its essentials as the Critical Path Method (CPM), this technique of planning and control has vied potential use in many applications. But PERT and its various refinements, like PERT/COST, have considerable potential for use in many aspects of planning and controlling operations. Value Engineering: A product can be improved and its cost can be lowered through value engineering, It consists of analyzing the operations of the product or service, estimating the value of each operation, and attempting to improve that operation by trying to keep costs low at each step or part. The following specific steps are suggested: Divide the product into parts and operations 2. Identify the costs for each part and operation. 3. Identify each parts relative contribution value to the final unit or product. 4. Find a new approach for those items which appear to have a high cost and low value. Work Simplification: Work methods can also be improved through work simplification, which is the process of obtaining the participation of workers in simplifying their work. Training sessions are conducted to teach concepts and principles of techniques such as time and motion studies, work-flow analyses, and the layout of the work situation. Quality Circles: Also called quality control circle. It is a group of people from the same organizational area who meet regularly to solve problems they experience at work. Members are trained in solving problems, in applying statistical quality control, and in working in groups. Usually a facilitator works with each group, which normally consists of six to twelve members. The QCs may meet 4 hours a month. Although QC members may receive recognition, they usually do not receive monetary rewards. Quality circles are evolved from suggestion programs. In suggestion programs the problems are usually quite specific, while in QC problems are more complex and require the involvement of several team members. The team consist of primarily rank-and-file workers and sometimes also includes supervisors, but efficiency experts are usually excluded from the team. While specific approaches to quality improvement depends on the situation, certain guidelines can be helpful: Quality improvement must not be a fad; it must be a long-term, continuous effort. 2. While top-management commitment is of vital importance, everybody in an organization must be committed to quality. 3. Most quality problems require the cooperation and coordination of functional departments. These problems must also be the concern of labor and management. 4. Ideas and suggestions for quality improvements can come from many, often unexpected, sources. Tap ideas from the most important sources; people. 5. Quality control should be done at crucial steps in the operations process. Set quality criteria for each important step. It is not enough to test the product at the end of an assembly line. 6. A quality improvement plan is not enough. Provisions must be made for its implementation. So, above all: act. Total Quality Management (TQM) This term has various meaning. In general (TQM) involves the organizations long-term commitment to the continuous improvement of quality ____throughout the organization, and with 55

the active participation of all members at all levels ____ to meet and exceed customers expectations. This top-management-driven philosophy is considered a way of organization life. It requires three considerations (1) analysis of customers need, (2) assessment of the degree to which these needs are currently met, and (3) a plan to fill the possible gap between the current and the desired situation. The success of the TQM usually requires the cooperation of suppliers and of top managers . The top managers should must proved a vision and reinforce values by (1)emphasizing quality, (2) setting quality goals, and (3) by deploying resources for the quality program. TQM demands a free flow of information vertically, horizontally, and diagonally. The quality improvement efforts need to be continuously monitored through ongoing data collection, evaluation, feedback, and improvement programs. TQM is not a one time effort; instead, it is a continual, long-term endeavor that needs to be recognized, reinforced, and rewarded. 6,7&8 Computer Aided Designing (CAD) / Computer Aided Manufacturing (CAM) and the Manufacturing Automation Protocol (MAP) In recent years the product design and manufacturing have been changing rapidly, because of the use of computer technology. CAD, CAM and MAP are some of the cornerstones of the factory of the future. CAD /CAMs help engineers in designing products much more quickly that they could with the traditional paper-and-pencil approach. This will become increasingly important, since product life cycles are getting shorter. Capturing the market quickly is crucial in the very competitive environment. Moreover, firms can respond more rapidly to the requests of customers with specific requirements. The ultimate aim of many companies is computerintegrated manufacturing.

56

KOONTZ CHAPTER - 23 Overall Control and toward the Future through Preventive Control
CONTROL OF OVERALL PERFORMANCE: Planning and control are interrelated system. Allongwith techniques for partial control, devices have been developed for measuring the overall performance of the enterprise against total goals. Following are the reasons for overall control of performance. 1) As the overall planning must apply to the enterprise so must overall controls be applied. 2) Decentralization of authority creates semi-independent units, and these must be subjected to overall controls to avoid the chaos of complete independence. 3) Overall controls permit measuring an integrated a real managers total effort, rather than parts of it. Budget Summaries and Reports: A widely used control of overall performance takes the form of a summary of budgets. A budget summary is a resume of all the individual budgets and reflects company plans about sales volume, costs, profits, utilization of capital, and return on investment and thus shows their proper relationship. In these terms it shows top management how well the company as a whole is succeeding in meeting its objectives. Profit and Loss Control: The income statement as a whole serves important control purposes, because it is useful for determining the immediate revenue or cost factors that have accounted for success or failure. Obviously, if it is first put in the form of a forecast, the income statement is an even better control device in that it gives manager a chance, before things happen, to influence revenues, expenses and, consequently, profits. NATURE AND PURPOSE OF PROFIT AND LOSS CONTROLS: Survival of a business depends on profits, and profits are definite standards against which success can be measured. Many companies use the income statement for divisional or departmental control. When it is applied to divisions or deptt. on the basis of premises, that if it is the purpose of the entire business to make a profit, each part of the enterprise should contribute to this purpose. Control Through Return on Investment: One of the most successfully used control techniques, also called simply ROI, is the ratio of earnings to investment of capital. A large number of companies have adopted it as their key measure of overall performance. This yardstick is the rate of return that a company or a division can earn on the capital allocated to it. In it goal of business is not only to optimize profits but as optimizing returns from capital devoted to business purposes. Direct Control Versus Preventive Control: In Direct Control the normal procedure is to trace the cause of an unsatisfactory result and the persons responsible for it and get them to correct their practices. The preventive Control is to develop better managers who will skillfully apply concepts, techniques, and principles and who will look at managing and managerial problems from a systems point of view, thus eliminating undesirable results caused by poor management. Direct Control: In Direct control the standards are developed to compare the actual output of goods or services, with plans. A negative deviation indicates that performance is less than good or normal or standard and that the results are not conforming the plans. CAUSES OF NEGATIVE DEVIATIONS FROM STANDARDS: The causes of negative deviations will often determine whether control measures are possible. Although an incorrect standard may cause deviations, if the standard is correct, plans may fail because of 1) Uncertainty, 2) Lack of knowledge, experience or judgment or the part of those who make the decisions or take action. QUESTIONABLE ASSUMPTIONS UNDERLYING DIRECT CONTROL: The shortcoming of direct control may be the result of questionable assumptions which hold that (1) performance can be measured, (2) personal responsibility exists, (3) the time expenditure is warranted, (4) mistakes can be discovered in time, and (5) the person responsible will take corrective steps. Performance Can be Measured: The First assumption of direct control is that the performance can be measured. Every enterprise have a maze of controls, input, output, cost etc. and quality is subject to numerous standards which may be expressed in terms of goals achievement, time weight, ratios, dollars and indexes. Close analysis will often reveal shortcomings of two types 1) measurement of ability of a manager to develop potential managers, the effectiveness of research and the amount of creativity, foresight, and judgment in decision making can seldom 57

2 3

4 5

be measured accurately. 2) is the location of the control. Managers know that critical stages exist in acquiring input factors, manipulating them to produce a finished product, and selling and delivering the product. Assumption that Personal responsibility exists: A number of times it happens that manager is not responsible for poor results, e.g. due to increase in interest rates or inflation etc. Assumption that the time expenditure is warranted: Manager have to spent time in ferreting out causes of poor results. Because time has passed, recalling facts may be quite difficult. These drawbacks may convince managers that the cost of investigation exceeds any benefit they may derive. Assumption that mistake can be discovered in time: Discovery of deviation from plans often comes too late for effective action. Assumption that the person responsible will take corrective steps: Fixing the responsibility may not lead to correction.

Principle of Preventive Control: Its base is on the idea that most of the responsibility for negative deviations from standards can be fixed by applying fundamentals of management. It draws a sharp distinction between analyzing performance reports, and determining whether managers act in accordance with established principles in carrying out their functions. Thus the principle of preventive control can be stated as: The higher the quality of managers and their subordinates, the less will be the need for direct controls. Adoption of preventive controls must await a wider understanding of managerial principles, functions, and techniques as well as management philosophy. While such understanding is not achieved easily. It can be gained through 1)university training, 2) on job training, 3) coaching by a knowledgeable superior, and 4) constant self education. ASSUMPTIONS OF THE PRINCIPLE OF PREVENTIVE CONTROL: Preventive control rests on three assumptions. 1) Qualified manager make minimum of errors, 2) managerial performance can be measured, and management concepts, principles, and techniques are useful diagnostic standards in measuring managerial performance, and 3) the application of management fundamentals can be evaluated. THE MANAGEMENT AUDIT AND THE ENTERPRISE SELF-AUDIT The Enterprise self-audit, is really an audit of an organizations operations and only indirectly an audit of its managerial system, and the management audit, on the other hand, is not nearly as broad as the enterprise self-audit in that it aims only at evaluating the quality of management and the quality of managing as a system. The management Audit: The principle of preventive control led to action in several directions. One of the most promising and effective has been the improvement of programs in recent years to apprise individual managers against standards made for achieving variable goals. A second essential aspect of this process, (still done only on a limited and experimental basis,) is the appraisal of managers in their role as managers. An other direction in which principle of preventive control has led is toward a developing interest in management audits. Its aims is not evaluating managers as individuals but rather looking at the entire system of managing an enterprise. A little progress has been made in it so far. DEVELOPING EXCELLENT MANGERS: There are many consideration in insuring the development of excellent managers, some of the more important one are discussed bellow. Surely, effective future managerial practice will depend, at least on these. `1 Instilling a Willingness to learn: Undistilled experience can lead an individual toward assuming that events or programs of the past will or will not work in a different future. Managers need more than this. They need to be willing to learn and to take advantage of new knowledge and new techniques. It demands a recognition that there is no finishing school or terminal degree for management. 2 Accelerating Management Development: 3 Planning for innovation 4 Measuring and Rewarding Management 5 Tailoring information 6 Expanding Research and Development in Tools and Techniques 7 Developing More Managerial Inventions 8 Creating Strong Intellectual Leadership: 58

CHAPTER - 10 LEADERSHIP AND SUPERVISION

Leadership is an area of managerial responsibility. It is vital to the survival and effectiveness of organizations which consequently spend substantial sums to find and train leaders. As organizations have grown and the expectations about their performance have increased, demands for leadership have multiplied. People capable of leadership are scarce relative to the need for them. Leadership ability, therefore, is a valuable skill, and those who possess it reap high rewards. This chapter contains discussion on three main topics (1) leadership theory and research, (2) modes by which organizations develop effective leaders and (3) the concept of supervision as an application of leadership theory. LEADERSHIP: THEORY AND RESEARCH Leadership is defined as the ability of an individual to influence others to work beyond ordinary levels to achieve goals. It applies particularly to leadership within organizations. Leadership is more fully defined as a complex phenomenon combining the personal traits of individuals as well as significant variables in group or organizational contexts. The earliest theories of leadership focused almost exclusively on personality traits, whereas current theory emphasizes the context or situational elements. Koontz defines leading as the process of influencing people to contribute to organizational and group goals. the managers job is not only to manipulate people but, also to recognize what motivates people. Through leading function managers help the people in seeing that they can satisfy their own needs by utilizing their potential and at the same time contribute to the aims of an enterprise. In directing managers under take a series of activities that make the work to move in the right direction. These activities (e.g. orders, instructions, communication, orientation, motivation, counseling and guidance of subordinates) are tools of managers. Planning, organizing and staffing are the work of pre-executive nature as they are the process of establishing objectives and building ground for accomplishing them. Actual accomplishment results from directing or leading. Research on leadership can be divided into three interrelated categories: (1) the early period, which focused largely on traits and which viewed leadership as one-dimensional, (2) the discovery that leadership is multidimensional, and (3) the discovery of the importance of the situational and contextual factors that produced a contingency approach to leadership. The Early Period: Divide leadership in to three categories (1) authoritarian leader (2) the urgent or natural leader, and (3) formal leaders in bureaucratic organizations and also cover the problems of training leaders. Authoritarian leaders have focused on dictatorial political leadership and have explored the meaning of power and authority in society. (2) Emergent or natural leader involves, primarily, the study of small, informal groups, with emphasis on leadership as a group role. (3) Studies of formal leaders within organizations includes observations of actual leaders to see what factors apparently lead to their positions of leadership, (4) the problems of training of leaders have encouraged the investigation of methods by which effective leaders can be discovered, developed, and helped to lead their groups more satisfactorily. TRAIT THEORY: Until the middle 1940s, leadership research center on identifying the traits or personal characteristics of individual leaders. Such traits as honesty, loyalty, ambition, aggressiveness, initiative, and drive were deemed important. The earliest theories held that traits are inherited, and that certain people are born to be leaders. Later these theories held that traits could also be developed through learning and experience. Weaknesses of trait theory: Lists of traits usually do not indicated which ones are most important and which are less. 2. Traits are often not mutually exclusive, e.g. judgment and commonsense. 3. Trait studies do not distinguish between traits that are needed for acquiring leadership and those that are necessary for maintaining it. 4. Trait studies describe, but do not analyze, behavior patterns; and 5. the trait theory is based on debatable assumptions regarding personality, which ignore the fact that a personality is not the mere summation of a collection of traits, but is a function of the total organization of the individuals. (Selection from Koontz) Prior to 1949 studies of leadership were based largely on the traits that leaders poses. Great man theory says that leaders are born and not made. This theory lost much of its acceptability 59

with the rise of the behaviorist school of psychology. Many studies of traits have been made. Ralph M. Stogdill found that various researchers have identified specific traits related to leadership ability: five physical, four intelligence and ability, sixteen personality, six task-related characteristics and nine social characteristics. More recently the following key leadership traits were identified: drive (including achievement, motivation, energy, ambition, initiative, and tenacity), leadership motivation, honesty and integrity, self confidence, cognitive ability, and an understanding of the business. In general, the study of leaders traits has not been a very fruitful approach to explaining leadership. Not all leaders possess all the traits, and many nonleaders may possess most or all of them. Dozens of studies that have been made do not agree as to which traits are leadership traits or what their relationships are. Most of these traits are really patterns of behavior. (End of selection) LEADERSHIP AS INFLUENCE Leadership was also defined as a process of influence during early period of leadership research. McGregor specifies the main variable of the leadership relationship characteristics as (1) leader; (2) the followers (3) the characteristics as the organization i.e. habits, customs, traditions, structure, and nature of tasks performed. (4) the social, economic and political milieu. The process of influence has been intensively studied in behavioral science, although much of the research has concerned propaganda analysis. However, our knowledge of leadership is greatly advance by viewing the executive as being a leader to the extent that he is able top influence others by initiating activity for them. POWER AND INFLUENCE: Influence is the result of a variety of forces that work in differing combinations for each position holder in an organization. The concept of power as the capacity to influence is central to the understanding of organizational leadership. There are five major sources of power that result in leaders ability to influence others: (1) legitimate power (2) reward power, (3) coercive power, (4) referent power, and (5) expert power. Legitimate power comes from delegated authority and is recognized by others as necessary in the performance of assigned responsibilities. 2. Reward power consists of the ability to bestow money, praise, promotions or other benefits upon subordinate 3. Coercive power is the ability to punish or to withhold rewards. 4. Referent power is based on the leaders personality and the ability to inspire and attract the support of others, as well as on the leaders alliances with other influential persons. 5. Expert power comes from the leaders special skills, abilities and knowledge. LEADER FOLLOWER RELATIONS: An authoritarian leader gets others to follow orders through actual or implied threats, the authority and prestige of an organizational position, or a hard-boiled demeanor. Authoritarians strongly insist on getting their own way, feeling little or no need for the ideals of others. The take credit for accomplishments but blames failure on followers. Yet authoritarian leadership is not necessarily uncomfortable to followers: many people feel more secure under strong leaders. Democratic leaders lead mainly by persuasion and example rather than by force, fear, status, or power. They consider the opinions and feelings of followers, make them feel important, and attempt to put group and individual goals above their own personal objectives. They encourage participation in decision making. Autocracy and democracy is a matter of degree. Few leaders are at either extreme, and most are in between. Multidimensional theories: With the decline of trait theories, researchers turned to studies of the relation of leaders behavior to desired outcomes such as job performance or employee satisfaction. These studies introduced the concept of the situation; because they also consider personality effects, at least two dimensions were needed to explain leadership. Situational and contingency theories: In the third period of theoretical development, the situational dimension become a central focus, although leadership traits have not been completely discarded. Situational approaches view leadership as a group or organizational process in which the context greatly influences relationships and defines leadership as a process of influence. (Selection from Koontz) Ingredients of Leadership: A managers leadership skills consist of following four major ingredients Ability to use power effectively and in a reasonable manner. 60

2 3 4

The ability to comprehend that human beings have different motivation forces at different times and in different situations. The ability to empire, The ability to act in a manner that will develop a climate conductive to responding and to arousing motivations. LEADER SHIP BEHAVIOR AND STYLES: There are several theories on leadership behavior and styles. Four of them are discussed here. (1) leadership based on the use of authority, (2) Likerts four systems of management (3) the managerial grid and (4)leadership involving a variety of styles, ranging from maximum to a minimum use of power and influence. Styles Based on Use of Authority: It is an earlier explanation providing, how leaders use their authority. They are of three types (a) Autocratic, (b) democratic, and (c) free-rein. a) Autocratic leaders commands and expects compliance, dogmatic and positive, and leads by the ability to withhold or give rewards and punishment. b) Democratic or Participative, leaders consults with subordinates on proposed actions and decisions and encourages participation from them. this type of leaders ranges from the person who does not take action without subordinates concurrence to the one who makes decision but consults with subordinates before doing so. c) Free-rein leader uses his power very little, giving subordinates a high degree of independence in their operations. Such leads largely depends on subordinates to set even their own goals and the means of achieving them, and they see their role as one of aiding the operations of followers by furnishing them with information and acting primarily as a contact with the groups external environment. Likerts Four Systems of Management: Professor Rensis Likert and his associates, after studying the patterns and styles of leaders for three decades, developed certain ideas and approaches important to understanding leadership behavior. he sees an effective manager as strongly oriented to subordinates, relying on communication to keep all parties working as positive attitude in which they share in one anothers common needs, values, aspirations, goals, and expectations. Since it appeals to human motivations Likerts views this approach the most effective way to lead group. He has suggested four systems of management. System-1 Management is exploitive-authoritative they are highly autocratic and have little trust in subordinates, motivate people through fear and punishment and give only occasional rewards, engage in downward communication and limit decision making to the top. System-2 Management is called , benevolent-authoritative. They have a patronizing confidence and trust in subordinates, motivate with rewards and some fear and punishment, permit some upward communication, solicit some ideas and opinions from subordinates, and allow some delegation of decision making but with close policy control. System-3 Referred to as, Consultative. Such managers have substantial but not complete confidence and trust in subordinates, with occasional punishment and some participation, engage in communication flow both down and up, make broad policy and general decisions at the top while allowing specific decision to be made at lower levels and act consultatively in other ways. System-4 Most participative of all referred to as, Participative-group they have complete trust and confidence in subordinates in all matters; they always get ideas and opinions from subordinates and constructively use them. Give economic rewards on the basis of group participation and involvement in such areas as setting goals and appraising progress toward goals. They engage in much communication down and up and with peers encourage decision making throughout the organization and operate among themselves and with their subordinates as a group. The Managerial Grid: A well know approach developed some years ago by Robert Blake and Jane Mouton. They devised a clever device to dramatize this concern. It is important for managers having concern both for production and for people. It is used throughout the world as a means of training managers and of identifying various combinations of leadership styles. The grid Dimensions: The grid have two dimensions: one have concern for people and other for production. The phrase concern for is meant to convey how managers are concerned about production or how they are concerned about people, and not such things as how much production they are concerned about getting out of a group. 61

Concern for production includes a vied variety of things, such as (1) the quality of policy decisions, (2) procedures and processes, (3) creativeness of research, (4) quality of staff services, (5) work efficiency and (6) volume of output. Concern for People is likewise interpreted in a broad way. It includes such elements as(1) degree of personal commitment toward goal achievement, (2) maintenance of the self-esteem of workers, (3) placement of responsibility on the basis of trust rather than obedience (4) provision of good working conditions, and (5) maintenance of satisfying interpersonal relations. Four Extreme Styles: the Grid give four extremes of styles, as shown in the figure given bellow. 1.1, 9.9, 9.1 and 1.9 1.1 Style (referred to as impoverished management), managers concern themselves very little with people or production and have minimum involvement in their jobs. II. They have abandoned their jobs and only mark time or act as messengers communicating information from superiors to subordinates. 9.9 At the other extreme are the 9.9 managers, who: display in their action the highest possible dedication both to people and the production. II. They are the real team managers who are able to mesh the production needs of the enterprise with the needs of individuals. 1.9 Style of Management (Called country clued management by some) it is another style in which managers have little or no concern for production but are concerned only for people. II. They promote an environment in which everyone is relaxed, friendly, and happy and no one is concerned about putting forth coordinated effort to accomplish enterprise goals. 9.1 Managers ( Some times referred to as autocratic task managers). It is an another extreme type of managers who are concerned only with developing an efficient operation, who have little or no concern for people, and who are quit autocratic in their style of leadership. By using these four extremes as points of reference, every managerial technique, or style can be placed somewhere on the grid. A managers with 5.5 grid position have medium concerned for production and for people. They obtain adequate, but not out standing morale and production. They do not set goals too high, and they are likely to have a rather benevolently autocratic attitudes toward people.

62

High 9 8 7 6 Relation with people 5 4 3 2 Low 1

1.9 Management

9.9 Management

5.5 Management

1.1 Management

9.1 Management

1 2 3 4 5 6 7 8 9 Low Production High Figure of Managerial Grids. Leadership Involving a Variety of Styles/Leader ship as a Continuum: Adoption of leadership styles has been well characterized by Robert Tannenbaum and Warren H Schmidt, developers of the leadership continuum concept. They see leadership as involving a variety of styles, ranging from highly boss-centered to one that is highly subordinate-centered. The styles vary with the degree of freedom a leader or manager grants to subordinates. Thus, instead of suggesting a choice between the two styles of leadership ___ au-thoritarian or democratic___this approach offers a range of styles, with no suggestion that one is always right and another is always wrong. This theory recognizes that which style of leadership is appropriate depends on the leader, the followers, and the situation. The most important elements that may influence a managers style can be seen among a continuum as the forces operating in the managers personality, including his value system, confidence in subordinates, inclination toward leadership styles, and feelings of security in uncertain situations; 2. the forces in subordinates (such as their willingness to assume responsibility, their knowledge and experience, and their tolerance for ambiguity) and will affect the managers behavior; and 3. the forces in the situation, such as organization values and traditions, the effectiveness of subordinates working as a unit, the nature of a problem and the feasibility of safely delegating the authority to handle it, and the pressure of time. SITUATIONAL, OR CONTINGENCY, APPROACHES TO LEADERSHIP With the disillusionment of great man and trait approaches, attention turned to the study of situations and the belief that leaders are the product of given situations. A large number of studies have been made on this premises. This approach to leadership recognizes that there exists an interaction between the group and the leader. It supports the theory that people tend to follow those whom they perceive (accurately or inaccurately) as offering them a means of accomplishing their own personal desires. The leader, than, is the person who recognizes these desires and does those things which are designed to meet them. These approaches obviously have much meaning for managerial theory and practice. Fiedlers Contingency Approach to Leadership A primary approach for analyzing leadership style is put forth by Fred E. Fiedler and his associates as a contingency theory of leadership. The theory holds that people become leaders not only because of the attributes of their personalities but also because of various situations factors and the interactions between leaders and group members. CRITICAL DIMENSIONS OF LEADERSHIP SITUATION: Fiedler described three critical dimensions of the leadership situation that help in determining, what style of leadership will be most effective. Position power: This is the degree to which the power of a position (distinguished from other sources of power, such as personality or expertise) enables a leader to get group members to comply with directions. This the power arising from organizational authority. Fiedler 63

1 2 3 4

points out, a leader with clear and considerable position power can obtain good followership more easily than one without such power. 2. Task structure: It describes the extent to which tasks can be clearly spelled out and people held responsible for them. If tasks are clear (rather than vague and unstructured), the quality of performance can be more easily controlled and group members can be held more definitely responsible for performance. 3. Leader-member relations: Fiedler regards this dimension as the most important format a leaders point of view, since position power and task structure may be largely under the control of an enterprise. It has to do with the extent of which group members like, trust, and are willing to follow a leader. LEADERSHIP STYLES: Fiedler set forth two major styles of leadership. One is primarily task-oriented; that is, the leader gains satisfaction from seeing tasks performed. The other is oriented primarily toward achieving good interpersonal relations and attaining a position of personal prominence. The path-Goal Approach to Leadership Effectiveness: In path-goal theory the main function of the leader is to clarify and set goals with subordinates, help them find the best path for achieving the goals, and remove obstacles. Proponents of this approach have studied leadership in a variety of situation. In addition to the expectancy theory variables, other factors contributing to effective leadership should be considered. (1) characteristics of subordinates, such as their needs, selfconfidence, and abilities; and (2) the work environment, including such components as the talk, the reward system and the relationship with coworkers. LEADER BEHAVIOR: is categorized into four groups: Supportive leadership behavior gives consideration to the needs of subordinates, shows a concern for their well-being, and creates a pleasant organizational climate, It has the greatest impact on subordinates performance when they are frustrated and dissatisfied. Participative leadership allows subordinates to influence the decisions of their superiors . Instrumental leadership gives subordinates rather specific guidance and clarifies what is expected of them. Achievement-oriented leadership involves setting challenging goals, seeking improvement of performance, and having confidence that subordinates will achieve high goals. (end of selection for Koontz) EFFECTIVE ORGANIZATIONAL LEADERSHIP The structure of an organization provides the technical apparatus through which leadership is made effective and operable in human activities. Every organization needs strong and able leaders at all levels, not just a strong president. Members cannot respond effectively to dull, lifeless, and unimaginative leadership. Leadership is not necessarily the same as administrative ability. A manager may be a capable administrator in the sense of doing the job at reasonable costs, yet he may offer little or no leadership. Important factors in leadership are imagination and creativity, and the willingness to innovate. When we talk about leadership, we are talking about something more than administrative behavior. Administrative leadership is important in an organization, for it initiates the formulation of ends, secures their acceptance, and guides the total effort to ward the attainment of those ends. Administrative Problems: It is important for organization to maintain an appropriate structure and climate conductive to the development of leadership. Selection and promotion policies and training and development opportunities, need to be managed with leadership requirements. Leadership Styles

CHARISMATIC LEADERSHIP Max Weber described pre-bureaucratic leadership as charismatic. The leader with charisma is one whos authority has a legitimacy based on charismatic ground i.e. heroism or exemplary character of an individual person. Furthermore, although the charismatic leader is highly influential, he strives for general goals rather than detailed ones. He does not consciously try to engineer measurable outcomes, and his leadership has a ritualistic symbolic element. Therefore, 64

charisma is less appropriate for conceptualizing leadership in organizations than are the situation-based theories we have described. Charismatic individuals are more often found leading social movements in the pursuit of larger missions or goals. THE GREAT ORGANIZERS: Leaders who exhibit a degree of charisma called great organizers i.e. men of vast ambition, talent, and energy that they devoted to the building of huge industrial empires. Such men were not entirely charismatic, yet they had style and commanded a following partly because of what they were as well as because of what they knew. Most were hard-working, astute individuals who could successfully exploit financial and industrial opportunities. They were men of action, able to command the allegiance of able followers. In their relationships with other, however, they remained dominant. SUPERVISORY LEADERSHIP All managers at whatever level, perform a supervisory function. At the top levels of an organization, however, the proportion of direct supervision in each position is similar that at lower levels. Hence we generally use the term supervision to describe the responsibilities of first line supervisors also called foreman and next higher level or two. At these levels leadership is operational rather than the strategic. It focuses on interpersonal relationships and on the dayto-day work of the group. In most cases they constitute the largest proportion of the managerial group. Most effective supervisors have substantial leadership skills, with the help of which they can move their group beyond routine, average performance. This level provides a pool of managerial talent from which to build middle and upper middle management groups.

CHAPTER-11 STAFFING
Staffing is a mutually selective process with choice made by both. Managers decide who will be offered employment. Applicants decide which available offer to accept. Though both are not equal usually an individual needs a job more than the organization needs any one person. Organizations are usually careful in selecting new employees. DEFINITION OF STAFFING Staffing is the function by which managers build an organizations through the recruitment, selection and development of individuals as capable employees. In this book we focus on the staffing of managerial positions. The staffing is more than merely hiring new employees. it include many activities assigned to personnel departments, such as transfers, discharges, resignations, retirements, training, development, and orientation of employees. Koontz says that staffing is, filling and keeping filled positions in the organization structure, it is done by --Identifying work forces requirements, --Inventorying the people available, --Recruiting, --Selecting, --Placing --Planning the careers of employees --Compensating --Providing Training and candidates and current job holders so that they can accomplish their tasks effectively and efficiently. (End of selection) The role of Personnel Department: Personnel department varies in their capabilities fro assisting managers in their staffing function. The extent to which managers draw upon the services of the personnel department depends largely on their confidence in the capabilities of the departments staff, usually based on its record of past performance. MANPOWER PLANNING Manpower planning is a more inclusive concept than staffing; the term describes: (1) Programs for replacement of individuals who vacate positions, (2) forward personnel planning by staff personnel departments, (3) manpower and employment policies in the economy as a whole, and (4) the planning development, and implementation of comprehensive programs of selection, training, and education to meet the needs of manpower forecasts. STAFFING PROCEDURES Prior to staffing action the existing structure of organization should be examined and improved if found necessary. The organizational system should be thoroughly reviewed for possible 65

redesign before all but the most routine vacancies are filled. Staffing includes following: (1) recruitment (2) selection, (3) placement, (4) orientation and (5) development. A- Recruiting: It includes (1) finding candidates for employment (2) considering outside applicants who initiate contacts with the organization and (3) finding candidates from among the existing employees. External recruiting is through advertising, work of mouth, public and private employment agencies, or the visits of recruiters to schools and colleges. Internal recruiting involves searching among current employees for those who may be promoted or transferred. EXTERNAL SOURCES: 1 Public and private employment agencies are important source they not only handle recruiting but also do a preliminary screening of candidates by collecting biographical data, conducting initial interviews, and making tentative evaluation of applicants. 2 Applicants initiation of contacts with the organization. Candidates apply on their own. In such cases their success depend on their skills of searching for openings. Such candidates need effective resumes that will get the immediate interest of potential employers. It is bothersome for manages to handle the often voluminous intake of inquiries for candidates. 3 Word of mouth is helpful in disseminating information about a vacancy and in bringing able people to the organizations attention. Relatives and friends of current employees are numerous, but assuming that screening is careful, there are no serious drawbacks to word of out as a source. 4 Advertising helps in bringing potential applicants to the attention of employers, but many replies often do not meet to sought for qualifications. The device of requesting replies to box number controls contacts with unqualified applicants. INTERNAL SOURCES: Internal sources reduce recruiting and training costs and contributes to moral of employees. It is essential that recruiting from within be systematic and carefully planned. Manpower inventories, performance appraisal records, and the recommendations of supervisors are helpful. B Selection Process: Selection procedures are usually handled by the central personnel department; but the manager should stay aware of what is being done and have opportunities to cooperate in the procedures. Selection procedures are, in effect, a screening of candidates according to a progressive series of steps designed to eliminate those who in some ways are unsuitable. The personnel specialists carry out the technical procedures, and the screening steps, they follow generally include application blanks, preliminary interviews, testing physical examinations, and interviews with potential colleagues or superiors. Where applicants are not eliminated by one of the steps in the procedure, it is important that the final decision be based on an analysis of the total information obtained, so as to avoid undue reliance on any single step, such as tests. THE APPLICANTS: Applicants are often not highly skilled in the activities necessary to land a good job. Individuals do not even become applicants until they find organizations willing to consider them. Job seekers should prepare a concise, informative resume giving their work history, skills, education, interests, and personal data. Resumes need not be elaborate, but they should be attractively prepared. During the interview the applicant should listen carefully to learn what the interviewers are seeking. The interview situation is not without tension for the applicant, but in most cases the interviews can be safely regarded as straightforward opportunities for mutual exchange of information. SKILLS OF THE MANAGER: The manager appointing a candidate should also use his personnel skills. Relying solely on personnel department is risky and amount to abdication of responsibility. The hiring managers interview is one of the art and most critical screening events in a long series of information exchanges. The manager needs well-developed interviewing skills. He should also know how to interpret the test scores and other information; otherwise he is forced to rely on the personnel departments interpretations. C Placement In placement the strengths and weaknesses of an individual are evaluated and a suitable position is found or even designed. Employment Contracts: Formal, written contracts are occasionally used for employing top-level, professional managers, and are often sought by candidates of high ability considering a position as highly risky or uncertain e.g. launching a new firm. 66

The effect of contract is to protect the new manager in the highly risky beginning years by stating certain agreements about employment e.g. length, pay, benefits, and conditions of termination etc. PROBLEMS IN STAFFING A number of important issues complicate the staffing process. Among them are (1) Problems of matching individuals and jobs, (2) mobility, and (3) promotion from within policies. Matching Individuals and Jobs: A general statement is to pot Square pegs in square holes, and round pegs in round holes. Most managerial positions are not routine in nature. The roles associated with each job may be played in many different ways by position holders. Where an organization is run as a tight ship, concrete, well-defined positions ease the burdens of staffing, but preclude flexibility and innovation. On the other hand, positions too loosely structured may be unappealing to prospective employees and hence more difficult to staff. Many organizations hire individuals, such as college graduates, mainly for their interesting or unusual capabilities even when there are no specific vacancies. Often such employees are assigned to temporary positions or to rotational plans for acquiring practical training and experience. Thus many interesting positions are those that the organization did not know it needed: they are invented by persuasive persons who know how to create their own jobs. The need for exact matching of people and jobs is often exaggerated, and under certain conditions it may be better for an organization to put a square peg in a round hole and let the two adapt to each other. Still it is wise to recognize the serious problems that mismatching can cause. Selection processes can go awry. Individuals may make wrong choices. Substantial over or under qualification for positions may bring about the risks of low moral and job dissatisfaction. Managers Mobility Change is a constant reality. The better a manager, the more likely that others will want that manager too. Also, the better managers are interested in advancement and are more likely to plan their working careers carefully and to make strategic changes. For and individual advancement in career is more important than mere advancement within an organization. Career oriented professional managers meet critical turning points in their careers that often make it desirable to move to a new organization. Though in very large organizations there is a great deal of opportunity for managers to develop and advance without leaving it. Mobility dictates that staffing is a continuous function. Managers face the inroads of attrition: deaths, resignations, transfers, and promotions create staffing problems. Many organization reward managers for their ability to develop subordinates who can replace them or move ahead. Yet the pain of separation form friend or colleagues is nonetheless real, and the prospect of going through it all again can be frustrating. It is easy for a manager to become over dependent on subordinates. But the manager who tries too hard to retain a subordinate to avoid the problem of replacement does a disservice to the individual. This strategy may have a short run success over the cost of long run. The manager who holds any one for selfish or even logical reasons will earn a bad reputation. When a good subordinate decides to move to a new organization the usual practice is to make a strong attempt to meet the conditions of the subordinates offer. But sum persons collect offers with the intention to only gain improvements in their present organizational positions. An unusual staffing problem occurs when an executive takes to a new organization a team of associates he has developed in a pervious organization. The new managers coming in at or near the top usually insist on replacing the existing staff members with individuals of their own choice. The key manage plus a team idea is built around the concept of sponsorship. Sponsorship is a technique whereby a manager informally selects a subordinate for special coaching and development. The advancement of the subordinate is tied to the advancement or influence of the superior. Promotion from Within: In most organizations, staffing begins with consideration of changes that can be made by advancing or transferring individuals already employed promotion from within. Such a policy benefits employees morale by giving an opportunity to be considered for advancement. It removes uncertainties and provide that a company has a visible record, continuous performance appraisal, and a shorter learning time in new responsibilities. 67

There are several procedures which facilitate promotions, some of them are: First a manpower inventory system keeps on record the performance and development histories of at least the key managers. It is kept by the personnel department, thereby fostering an organization-wide talent pool that can cut across departmental or other domains. Second: A systematic training and development both in formal programs and in informal methods such as coaching and sponsoring. Third: A technique of performance appraisal for handling greater responsibilities. Finally: Career counseling can be utilized to assist individuals in career planning and decisions. It is neither necessary nor desirable to guarantee that all who work for the organization will be promoted at regular intervals, but it is important to give assurance to those who are associated with the organization of a reasonable opportunity to learn. Employees favor an organization in which opportunities to advance are wisely managed. CRITIQUES OF PROMOTION FROM WITHIN: Companies that are actively recruiting use the inducements of this policy. It encourages internal mobility and adds flexibility to the work of organization planners. However, there are limits to such a policy: First: Employees may question particular promotions from within, and may not agree with the choice of the organization, and thus endanger the moral, when it seems that promotional policies are not seem to be working well. Second: Over-stressing the policy results in, inbreeding, the organization, i.e. lack of new, fresh ideas that are likely to originate with outside talent coming from other organizations. Third: Organizational structures are generally of pyramidal shape, so the number of opportunities decreases as one reaches nearer to the top. On the other hand competition for promotion becomes keener, and the need to set standards for promotion is greater. There are individuals who do not want promotions. They may have reached a point where further progress does not seem worth the struggle. Or they may be performing to the top of their capacity. Fourth Recognizing that it is impossible to get a perfect fit in the position, and peoples are promoted who happens to be available and shows no marked drawbacks. Fifth A very important difficulty is that persons with upward aspirations tend to identify with the groups to which they aspire to belong, rather than the one to which they actually belong. Thus subordinates act like and take on the values of persons above them. If they are promoted, such roles and values would stand them good. If they are not promoted their roles and value have separated them from the group in which they are destined to remain. In other ways, aspiring candidates for promotion may alienate their current group. they may make less of an investment in the group they seek to leave: they appear to have less involvement and commitment than the group would lime; to reject the present group in favor of another one. Internal promotions also effects on those who are not promoted. These individuals has to explain what happened, and in extreme cases, they may decide to leave the organization. The bypassed manager who remains could become a problem of morale and motivation. Problems can be prevented by explaining the reasons for the decision to the passed-over individual. ASSESSMENT CENTERS: Staffing is greatly facilitated by establishing assessment centers, applicable to both managerial and nonmanagerial employees but are mainly used for assessing managers. It is a new technique, usually found in large organizations. It is a systematic approach to promotion policies. They bring together in one program, all the procedures for recognizing and evaluating the capabilities of individuals available of selection. Assessment centers conduct periodic programs consisting of group exercises that simulate actual management situations. The exercises include in basket tests, leaderless group discussion, and other situational devices to appraise the individuals ability to think in action. Psychological tests, peer evaluations, depth interviews and other familiar techniques are also brought together. Assessment sessions can take from one day to tow weeks, depending on the scope and difficulty of the effort. Each group consists of six to eight employees. An observer is appointed for each two group members. Observers are both psychologists and line managers, but for middle and top-level candidates more psychologists are used. Assessment centers are costly to establish and operate. Time required for observers is usually twice that of candidates, so that they can make analysis and evaluations. The chief

68

benefits lie in the systematic and rigorous gathering and interpretation of information, the fair treatment of internal candidates. Most persons, going through assessment center procedures does not result in immediate advancement. The individuals may be retained in a talent pool or manpower inventory system, while being designated as having potential for advancement. Discharge: Too little attention is paid in most organizations to discharge as part of the staffing function. Organizations that pride themselves on a human spirit may do so at the cost of retaining obsolete, incompetent, or inadequate persons who not only remain on jobs but also compete for promotion. The accumulation of dead wood in many organizations is astounding and make them difficult to change. Discharge is probably a last-resort form of disciplinary action. It is drastic and painful, yet it is often the best action for the individual released, although he may not believe it at the time. There are humane ways of effecting a discharge, e.g. giving time to relocate job, assisting in the job search, supplying office and clerical services during the relocation period, and offering separation pay. Retaining a person who ought to be discharged affects the work of many others whose tasks are closely related. (Selection from Koontz) DETERMINATION OF AVAILABLE MANAGERIAL RESOURCES --THE MANAGEMENT INVENTORY: Commonly businesses keep inventory of raw materials and goods on hand to enable it to carry on its operations. It is far less common for enterprise to keep an inventory of available human resources particularly managers despite the fact that the competent manager is a vital requirement for success. Inventory Chart: Inventory of management, within an enterprise can be kept in the form of an inventory chart. It is also called as management replacement chart. It is a chart simply like an organization chart of managerial positions providing their name service period on the post, their age and promoteability. Chief Executive Shafiq Pa Pa

Director Finance Saleem Ali Khalid *** 45 6 Asstt. Director Saeed Ali *** 45 8

Director Marketing oo 52

Director Operations Zahoor Ahmed ** 40 1

Director Accounts Mehboob Anjum * 38 2

Director MIS Faran Ali Khan *** 35 6

Aqsa

Asstt. Director Sarfraz oo 52 6

Asstt. Director Masood ** 40 5

Asstt. Director Farukh * 38 4

Asstt. Director Ashiq *** 35 2

Qayyum oo

52 10

Shafi Ahmed ** 40 5

Faraz o

38 6

Rehmat **

35 8

Qasim ** 3

Legends *** ** * Promotable Now. Promotable in 2 years Potential for further promotion. 69

oo o 45 10

Satisfactory but not promotable To be dismissed Age No. of years holding this position.

Advantages and limitations of Inventory Chart: Advantages Gives an overview of the staffing situation of an organization 2. Managers who qualify for promotion can be easily identified. Prompt action to find a position for them in the organization reduces the chances of managers to leek employment outside the company 3. Shows future internal supply of managers indicating who is promotable in a year or more 4. To satisfactory performing are also identified 5. Managers near to retirement can be identified. 6. Chart facilitates the transfer of managers to strengthen the weak departments and to broaden the experience of the managers. Limitations: Do not show, to what position the manager is promotable. If promoted and transferred to other organizational unit will not necessarily be able to fit this position, since knowledge or skills may be required in specialized areas. 2. Date shown on the chart is not sufficient for making fair assessment of all the capabilities of individuals. 3. It takes time and effort to keep the chart up-to-date. 4. Upper level managers may be reluctant to make their charts available to other upper level managers because they may be afraid they will lose competent subordinates to other organizational units. SELECTION PROCESS TECHNIQUES AND INSTRUMENTS: For good selection, the information about the applicant should be both valid and reliable. Validity is the degree to which the data predict the candidates success as a manager and Reliability is the accuracy and consistency of the measurement. Selection Process: There are some variations of the specific steps in the selection process. For example interview of a candidate for the first level supervisory position may be relatively simple as compare to interviews for a top level executive. Following broad outline is indicative of the typical process: The selection criteria are established on the basis of job requirements. Criteria includes education, knowledge, skills, and experience. 2. The candidates are required to complete/fill up an application for 3. A screening interview is conducted to identify the more promising candidates. 4. Additional information is obtained by testing candidates qualification for the position 5. Formal interviews are conducted by the manager or his superior and other persons within the organization 6. Checking & verification of information provided by the candidate 7. A physical examination may be required 8. On the basis of the results of previous stems the candidates are either offered the job or informed that they have not been selected. Techniques and Instruments: INTERVIEWS: Every manager to be hired or promoted is interviewed by one or more people. It is considered a reliable and valid mean for selecting managers. Limitations: Interviewers often do not ask the right questions 2. they may be influenced by the interviewees general appearance which may not effect the job. 3. they also frequently make up their minds early in the interview, before they have all the information necessary to make a fair judgment. Remedies: Several techniques can be used to improve the interviewing process and overcome the above weaknesses. Interviewers should be trained so that they know what to look for. 2. Interviewers should be prepared to ask the right questions. Questions may be structured, semistructured and unstructured.

70

1 2 3 4

3. Conduct multiple interviews by different interviewers. Then compare their evaluations and precautions. However, all the managers who interview do not vote in selecting a candidate they only provide additional information for the manager who will be responsible for the final decisions. 4. Interview is just only one aspect of the selection process. Is should be supplemented by data from The application form b) Various tests and c) Information obtained from persons listed as references. TESTS: The primary aim of testing is to obtain data about the applicants to predict their probable success as managers. Some of the benefits of testing are: Finding the best person for the job 2. obtaining a high degree of job satisfaction fro the applicant. 3. Reducing turnover. The most commonly used tests are: Intelligence Tests: To measure the mental capacity and to test memory speed of thought and ability to use relationships in complex problem situations. Proficiency and Aptitude Tests: To discover interests existing skills and potential for acquiring skills. Vocational Tests: These tests are designed to show a candidates most suitable occupation Personality Tests: To reveal candidates personal characteristics and the way candidates may interact with others. Limitations: Tests have a number of limitations. Some are given bellow: Not accurate enough to be used as a sole measure of candidates characteristics but must be interpreted in the light of each individuals entire history. II. Tests user must know, what tests are and what are their limitations. III. Tests should be tried out if possible on employees currently employed in an enterprise, to see whether it is valid for employees whose managerial ability are already known. IV. Test should be administered and interpreted by experts in the field. V. Tests should be consistent with laws and government guidelines. ASSESSMENT CENTERS: A technique for selecting and promoting managers. This approach may be used in combination with training. It is used for selecting lower and middle level managers. For top level managers it is inappropriate. This technique is intended to measure, how a potential manager will act in typical managerial situations. Candidates take a part in a series of exercises, where they are observed and assessed by psychologists or experienced managers. A typical assessment center may require the candidates to do the following: Various Psychological tests. II. Engage them in management in small groups. III. Exercises in which they are asked to handle a variety of matters that they might face in managerial job. IV. Participate in a leaderless discussion on some problem. V. Give brief oral presentation on a particular topic or theme, usually recommending a course of desirable action to an expert superior. VI. Engage in various projected exercises such as preparing a written report. Evaluators also interview them from time to time. At the end each assessor summarizes his appraisals of each candidates performance; then compare their evaluations, come to conclusions about each candidates and then write a summary report on each candidate. These reports are made available to appointing manager for their guidance. Limitations of Selection Process: There is no one perfect way to select managers. Experience has shown that even carefully selection criteria are still imperfect in predicting performance. Furthermore there is a distinction between what persons can do and what will the do. Testing has limitations that seeking of certain information may be considered as invasion of privacy. In addition it is charged that some tests unfairly discriminate against women or members of minority groups. They cannot be ignored when an enterprise is selecting managers. Managers Development:

71

Managers development means greater understanding, improved knowledge and increased capabilities of management. It is a long term future oriented program, for the promotion of managers. Managerial Training: Managerial development may be possible through understanding things and acquiring knowledge. Managerial training is a way through which knowledge may be acquired. Managerial training pertains to the Programs that facilitates the learning process and mostly a short term activity to help people to do their job better. Managerial Development and Training Process: Before specific training and development Programs are choose following three kinds of needs must be considered. 1) Objectives of the enterprise, (2) Availability of managers, and (3) the turnover rate. In the process of managerial development the first focus is on the present job then on the next job in the career ladder, and finally on the long-term future needs of the organization. 1 PRESENT JOB: Managers development and training must be based on, needs and analysis derived from a comparison of actual performance and behavior with required performance and behavior. 2 NEXT JOB: Identification of the training needs for the next job. In this present competency is compared with the competency demanded by the next job. 3 FUTURE NEEDS: Progressive organizations go one step farther in their training and development approach towards the future. They forecast what new competencies will be demanded by changing technology and methods. These new demands which are created by the external environment have to be integrated into enterprise training plans that focus on the present and the future. These plans are contingent not only on the training needs but also on the various approaches to managers development that are available. Approaches to Manager Development: There are two approaches the managers development (A) on job training, and (B) internal and external training. A) On Job Training: There are many ways through which, on-job managerial training can be given. Some of them are given bellow. 1 PLANNED PROGRESSION: A technique that gives manager a clear idea of their path of development. The manager, trainee should know in advance what is expected of them, what should they do and what quality should the develop. For example a lower-level manager may have available an outline of the path from superintendent to works manager and eventually to production manager. 2. JOB ROTATION: A technique to broaden the knowledge of managers. In it trainee is assigned different functions by rotating into different positions. It may be done in any of the following ways. Non Supervisory Work:- Although managers are not supposed to do non supervisory work yet it seems important that supervisor should understand the implication and nature of work because they cannot handle these subordinates effectively unless he completely understand their work. Observation Assignments: In it trainees are required to observe the working of departmental managers by rotating them from one department to another. The purpose is to allow them to learn the technique of good management. c) Various managerial Position Training: By requiring trainee to work as manager at certain level in the organization structure. They while working as executives acquire knowledge show capabilities, and effectiveness of their own selves. d) Middle Level Assistant Position In it trainees are required to work as assistant manager with some senior executive at different times he is required to work with different managers depending upon the training program or diversified experience desired. e) Unspecified Rotation to Various Managerial Positions: A situation in which trainee manager is required to work at various positions which are not previously specified. e.g. production, sales and finance. CREATION OF ASSISTANT TO POSITION: Assistant to positions are created to give the managerial training the trainees by allowing them to work under close supervision of the senior managers. They give them guidance, advises and proper instructions to the assistants i.e. trainees. They also give them selected assignments to test their judgment. 72

there is a chance of carelessness on the part of senior managers in trainees due to preoccupation or heavy responsibilities of senior executives. 4. TEMPORARY PROMOTIONS: It is a developmental device to appoint individuals as acting managers when the permanent manager is on vacation, ill or on extended business trip or even a position is vacant. 5. COMMITTEES AND JUNIOR BOARDS: It is also known as multiple management, It refers to a group of people to whom some matters are committed for group deliberations and judgment. These gives trainees the opportunities to interact with experienced managers and to acquaint with a variety of issues concerning the whole organization. Trainees may be given the opportunity to submit reports and proposals to the committee or the board to demonstrate their analytical and conceptual abilities. 6. COACHING: It is on the job training. Coaching is the responsibility of every line manager. It must be done in the climate of confidence and trust between the superior and the trainees. Supervisor, trainer should must be able to delegate authority and praise for jobs well done. Internal & External Training:

73

CHAPTER-12 ORGANIZATIONS AND THEIR ENVIRONMENTS

Every organization is a complex socio-technical system. But it is also a part of a large system. The organization exists in political, economic, social and technological environment that greatly affects its success. To explain the relations between organizations and their environments, this chapter will discuss (1) the nature of organizations, (2) the systems view of organizations, and (3) management ecology. THE NATURE OF ORGANIZATIONS Organization is a basic concept that underlies all cooperative activities. Society needs are complex and numerous, and organizations reflect this complexity and diversity. An organization is a collectively devoted to getting work done efficiently and at feasible costs. Definition of Organization It is a structure or network of relationships among individuals and positions in a work setting, and the process is by which the structure is created, maintained, and used. This definition have two aspects Structure and Process Structure consists of a network of specified relationships among individuals, positions, and tasks. This is a static view. Process is a dynamic view and denotes a managerial function by which organizations are created and continuously adapted to changing needs. Both aspects are important. Koontz define organizing as a development of intentional structure of roles. By intentional means that no role shall be left to be unconsidered. ORGANIZATION STRUCTURE: In management we need to understand how organization structures work, and how they are created. Structure may be of two types formal and informal. Formal structure is, in general, the result of deliberate decisions. Managers organize by making structural arrangements that they believe to be best of attaining objectives. It is relatively permanent, with continuous, gradual, change with major changes occurring due to time. Although determining the basic structure is a responsibility of top management, all managers may influence the structure within their sphere of authority. One established structure, becomes a framework that can either constrain or facilitate the managers actions. ORGANIZATION PROCESS: The structural relationships in an organization can only be approximated on charts and consists of formal relationships at a given time. Organizations must also be viewed dynamically, i.e. the structure changes over time as manager do their work. Changes may be gradual or slow , or extensive and rapid. In either case we need to see organizations as dynamic systems adapting to change. The process view looks at organizations as always becoming something else, constantly being created or re-created. Improving the structure is always possible. Koontz Defines Organizing as: establishing an intentional structure of roles to be played by the people in an organization. By intentional be mean to make sure that all necessary tasks, to achieve goals, are assigned to the people who can do them best. It is a process of creating an environment for human performance. Structure and Process of Organizing: Organizing is a process in which several fundamentals are to be considered. There is no organization structure that works best in all situations. However, a structure depends upon the following situations. Structure must reflect the objectives and plans, because activities are derived from them. It must reflect authority available to the management of enterprise. Authority is a socially determined right to exercise direction. The structure must reflect its environment. While grouping activities (and authority relationships of an organization) one must take in to account peoples limitations and customs. Structure must be designed around individuals instead of around goals and accompanying activities. The logic of organizing: The process of organizing consists of following steps 74

PART-III

1 2 3 4 5

OBJECTIVES Establishing enterprise objectives, b) Formulating supporting objectives, policies and plans ACTIVITIES Identifying and classifying the activities necessary to accomplish these objectives b) Grouping these activities in the light of human and material resources available and the best way to infer the circumstances. AUTHORITY: Delegating authority necessary to perform the activities; 4. TYING the groups horizontally and vertically. Formal and Informal Organization The distinction between formal and informal organization is necessary for the purpose of organizational management. Both types are found in every organization FORMAL ORGANIZATION: It is the intentional structure of roles in a formally organized enterprise. Such organizational relations can be charted in the organization chart. By formal, however does not mean that there is anything inherently inflexible or unduly conflicting about. Formal organization must be flexible enough to allow utilization of creative talents of individuals. INFORMAL ORGANIZATION: Any joint personal activity without conscious, for joint purpose even though contributing to joint results. An other definition is, a network of personal and social relations not established (or not required) by formal organization but arising spontaneously as people associate with one an other. Thus informal organization consists the relations not appearing on organizational chart. It might include the machine shop group, the 6th floor crew and morning coffee regulars. (end of Koontz ) Functions of Organization: There are five important functions that organization structures may provide: (1) an efficient work system (2) a system of communications, (3) satisfactions to organization members, (4) organizational and individual identities. and (5) innovation to change. EFFICIENT WORK SYSTEM: Resources are scarce, challenging the organization to maximize its output of goods or services with given inputs. Disorganization work against efficiency, so there is pressure to develop and control the work system through the systematic, orderly rational, and coordinated efforts we call organization. It is a major function to facilitate appropriate decisions and actions. The hierarchy of level, the division of work in logical groups and an overlay of rule and procedures is an ideal way to achieve efficiency. SYSTEM OF COMMUNICATION The designer of organization is also establishing the pathways and requirements for formal communications. In hierarchical/bureaucratic organizations, downward communications predominate. They take the form of commands, delegations of authority, instructions, and information needed by echelons below. Upward information consists largely of reports, responses to communications from above, queries, and the referral of problems that need attention at higher levels. ORGANIZATIONS AND JOB SATISFACTIONS: Organization structure specifies the desired relations among tasks, responsibilities and people. Organization members evaluate these relationships as well as their own jobs and their relationship to the organization. ORGANIZATIONAL IDENTITY: Organizations deliberately shape their identities so that insiders and outsiders may recognize them. Most organizations maintain their identity by symbols and devices such as names, logos, products brand names, location and appearance of physical facilities, products styling advertising, and public-relations techniques. By establishing an identity the organization becomes known to customers or clients, investors or donnas, and employees or members. Thus develop a continuity of existence in dependent of particular members INNOVATION TO CHANGE: Organizations need continuity which can be achieved through adaptability and self-renewal. Hierarchies have procedures for development of their structure and organizational process. Nonhierarchical organizations accomplish it by different means. They are more open to change, to opportunities in the environment and to free and abundant communication. thus they are designed specifically to find, aspects and use new ideas. MULTIPLE EXPECTATIONS:

75

Organization and its structure serve many functions simultaneously, but these functions are often in conflict. The organization cannot serve all the functions equally over unlimited time. Designing an organization to maximize efficiency is not the same as designing one for job satisfaction and if both characteristics are wanted to some degree in the same organization design become a matter of reaching appropriate compromises. Moreover, an organizations needs at one time are not the same as those at another, hence change is inevitable. To make the necessary compromises requires continuous assessment of priorities. THE ORGANIZATION AS A SYSTEM An organization may be viewed from a system point of view. The system concept is widely applied as a way of understanding a variety of processes that occur within organizations, such as information processing, problem solving, or decision making. It is also useful to view whole organizations as systems in an environment. Elements of Systems: The numerous characteristics of systems include (1) boundaries, (2) interacting and mutually interdependent parts, (3) equilibrium, (4) feedback, and (5)the environment. BOUNDARIES: The boundaries of a system are frequently intangible, as in the case of a system of roles assigned to a small work group. The boundaries distinguishes the inside of the system from its outside. Precisely where an organization ends and its environment begins is not easy to determine. SUBSYSTEMS: The idea of system also implies the interrelationship of its components parts, or subsystems. The concept of mutual interdependence holds that a change in one part of a system leads to change in other parts. EQUILIBRIUM: A dynamic system always tries to achieve a balance among the various forces operating within and upon it. This balance is called equilibrium, or a steady state. FEEDBACK: It is a central concept in the theory of control as well as the theory of systems. Feedback is a process by which systems gather and evaluate information about how they are doing, and use it to guide, direct, and control the performance of the system. Feedback may be positive or negative. Positive feedback reports the proper functioning of a system; negative feedback reports errors or malfunctioning that call for corrections in the input of processing part of the cycle. ENVIRONMENT: The environment in which an organization exists is also an important component of the system. In the next portion we will discuss management ecology , means the impact of environment on organization and the management. MANAGEMENT ECOLOGY The concept of ecology is borrowed from the field of biology. Biology is the study of the organism in relation to its environment. In contrast to biological organisms, human organizations show a greater propensity to change and modify their environments rather than adapting to them or being subject to them. Eells explicitly identifies corporate ecology as a discipline that deals with the relations between the corporation and its environment. The Impact of Environment: An organization exists, by successfully meeting the requirements of a large system of which it is a part. Inter actions occurs between organization and various components of its environment. Following are some pertinent organizational theories that utilize a ecological concepts. EXCHANGE OF PEOPLE: People move both in and out of an organization. Organizations compete for the best available talent. Organization alter their internal environments to be attractive to outsider. Individuals often leave an organization to join an other, they may be attracted by better ones. INFORMATION FLOWS: External environment may have substantial influence on the evaluation of the use of facts and figures that an organization sees in external environment and internal operations. TASK ENVIRONMENT: Managers as a planner seeking to base his actions on information received about environmental events. He designates that part of the total environment that is potentially relevant to goal setting and goal attainment as the task environment. 76

3 4

2 3

INTERPRETING RELEVANT ENVIRONMENTAL FACTORS: Most environmental factors do not directly indicate appropriate organizational actions. The manager has to attach meanings to the information and bring it into the organization. Therefore, a major organizational function is to evaluate, interpret and combine inputs to devise appropriate tasks for organization members to perform. Tasks: Tasks thus are the organizations own statements of the goals that it wants to achieve and of the means by which it expects to achieve them. Task statements are then communicated with the authentication and sanction of the insiders who endorse and disseminate them, and who persuade or influence others to act. Coping With the Environment An organizational system derives support from clients who needs its products and from societies protection of property and other rights But the organization is subject to the constraints (1) of public regulations (2) demands for social responsibilities, and (3) the need to meet a multiplicity of demands that are often conflicting. It is the part of every managers responsibility to be alert to forces in the external environment that affect the organization and its goals. Organizations develop adaptive mechanisms and structural devices for coping with these factors, relating them to the internal processes of management.

77

CHAPTER-13 ORGANIZATION DESIGN :BUREAUCRATIC SYSTEMS

DEFINITIONS AND CONCEPTS The term organization design denotes the pattern of relationships that make up the structure of an organization. The characteristics of designee greatly effect the performance of other managerial functions and interpersonal relationships, job satisfaction, leadership styles, communications, and work processes. The process of establishing or developing an organization design is known as the organization function of the manager. Managers choose among a number of alternative patterns. Leavitt has suggested that organizations consist of four sectors : (1) tasks, (2) technology, (3) structures and (4) people. Each covers a broad category. Deciding about design requires the prior analysis and determination of goals and plans and then above four sectors. Finally the structure relation ships are established. This structural base may be relatively open or closed systems, with tight or loose structures. The closed system is referred as bureaucratic and open system as adaptive. In this chapter we will concentrate on the bureaucratic system. BUREAUCRACY This term is commonly used to express anger and frustration over inefficiency and red tape. Bureaucracy is best defined as a system of organization and management in which roles, tasks, and the relations among people are clearly defined, carefully prescribed, and controlled in accordance with formal authority. Max Weber, a German sociologist, who first time elaborated the characteristics of bureaucracy: A hierarchy of authority and levels of organization. 2. Specialization of tasks, duties, and responsibilities, 3. Positions designed as offices. 4. Planned succession to office. 5. Impersonality of officials. 6. A system of rules and standards for discipline and control. 7. Specified qualifications for individuals holding office. 8. Protection of individuals against arbitrary dismissal. STRUCTURING THE BUREAUCRATIC ORGANIZATION Managers rarely have the opportunity to create an entire structure of an organization from its inception. Mostly the need is to change an existing structure to meet the new demands. Managers can change the organization structure rapidly or slowly, as conditions warrant, so that the pace of change is adapted to the organizations aims. The special characteristics and problems of bureaucratic organization structure: (1) the hierarchy in the vertical dimension (2) departmentalization in the horizontal dimension, and (3) other basic structural patterns. The hierarchy Bureaucracies vertically tend to take the pyramid form, because at successively higher levels, there are fewer positions and managers have increasingly broad responsibilities. The hierarchy is thus composed of vertical levels of responsibility. It consists of three key elements graded into degrees of importance from top to bottom: positions consisting of tasks, duties, or responsibilities, and authority commensurate with them; 2. policies, plans, objectives, practices, and procedures at each level; and 3. roles, statuses, and authorities of position holders. Departmentalization:It refers to horizontal differentiation in an organization (divisions, branches, regional units, subsidiaries). Departments are divided according to major functions e.g. marketing, production, or personnel management. Departmentalization involves establishing units to which groups of related functions, activities, or tasks are assigned. As an organization expands, it enlarges its horizontal dimension by new units containing logical segmentation of the work to be done. Segmentation by level will occur simultaneously. Departmentalization can be made in any of the following ways: By Simple Number: Tolling of persons who are to perform same duties and putting them under the supervision of a manager. 2. By Time: Use of shifts e.g. Ist shift from 9AM to 5PM IInd Shift form 5 PM to 1AM and IIIrd shift from 1AM to 9AM. 78

3.

4 1

By Enterprise Function: Making departments according to functions e.g. finance, marketing, sales, production etc. 4. By Territory or Geography: Enterprises which operates over wide geographic areas adopt this system. In it activities in a given area or territory be grouped and assigned to a manager. 5. Customer Departmentation: Organizing in such a way that reflect a primary interest in customers. It is grouping according to unique needs of specific group of customers. 6. Process or Equipment Departmentation:- Often used by manufacturing firms to group their activities around a process or a type of equipment e.g. electroplating process. In it people and material brought together to carry out a particular operation. 7. By Product: Grouping activities according to product or product lines. 8. Project Departmentation: Grouping jobs according to the skills needed to complete a job. It makes communication difficult due to potential isolation of groups for rest of the organizational. (Selection from Koontz Chapter-10) Strategic Business Unit (SBU) A more recently used organizational device. SBU is a distinct little business units, set up, in a large company to ensure that a certain product or product line is handled as an independent business. Its aim is to receive equal attention for each product or product line, of the manager as it would; if developed by an independent company. It is used in situations when a number of products are being produced by one organization. An SBU must meet the specific criteria given bellow: Each SBU have its own mission distinct from the other SBUs. 2. Each have a definable group of competitors. 3. Prepare its own plans fairly distinct from other SBUs. 4. Managers its resources in key areas, and 5. have proper size i.e., neither too small or too large. For each SBU a manager is appointed with responsibilities for guiding and promoting the products from, research through production, market research packaging, marketing and with bottom line responsibility for its profitability. MAJOR BENEFITS: 1 It provide assurance that a product will not get lost among other products. 2 It preserve the energies and attention of managers and staff who work in that specific SBU. 3 Infect it is an excellent mean of promoting enterprenureship. CHOOSING THE PATTERN OF DEPARTMENTATION: There is no, one, best way of departmentalizing which can be applicable to all organizations and all situations. The manager should determine it by looking at the situation. However, if he knows the various departmentation patterns, their advantages and disadvantages and dangers of each pattern he shall be able to design the most suitable structure for their particular operations. THE AIM OF DEPARTMENTALIZATION: Departmentation is not an end but is simply a method of arranging activities to facilitate the achievement of objectives. Each method have advantages and disadvantages which are to be considered at the time of selection in relation to organization structure. In all cases the central question involved is the environment, the managers wishes, the design and situation being faced. MIXING TYPES OF DEPARTMENTATION A fundamental departmental manager may employ two or more basis for grouping activities on the same organizational level. It may be justified on logical grounds. The aim of departmentation is not to build a rigid structure, (balanced in levels having consistency and identical basis) but to group activities in the manager to contribute the achievement of enterprise objectives. (End of Koontz Selection) Positions and Jobs: Positions are the smallest structural units of an organization. They are dispersed both vertically an horizontally. A position consist of a formally assigned place in structure. A job consist of tasks, duties and responsibilities that are logically related or homogeneous assigned to a position holder. Thus for a given job there may be several positions e.g. Job designated as machinist but they may be many machinists holding similar positions. Basic Structural Patterns: In a bureaucratic organization structure may be of four types: (1) Line, (2) Staff, (3) Functional and (4) Committee. LINE ORGANIZATION: 79

Line structure consists of the direct relationships that connect the positions and tasks of each level with each other and with those above and below. It results in a network of superiorsubordinate relationships that is sometimes called the chain of command. These are the channels through which authority flows from its source to the level of action below. It is the basic framework of the entire organization. STAFF STRUCTURE: Staff structure is used to expand and supplement line activities by providing positions for various specialists. Staff mechanism is separate form line, but subordinate to its authority. Staff units perform functions that line managers would otherwise carry out, but they do so with the greater expertise of specialists. Staff structure occurs in two principal forms: the staff assistant an the stall specialists. Assistant usually appears on an organization chart as shown in the figure. It is a difficult relation ship and causes ambiguity as to sharing of decision making authority. He is generally not a specialist. The second type, that which incorporates the staff specialist, is the more common structure. It is the modification of line structure and exists always in combination with it. Manager Assistant to the manager
Department Head Department Head Department Head

FUNCTIONAL STRUCTURE: As with staff structure, function structure is a way of relating specialists to the line organization. Departments of production, marketing, or finance, are usually line departments, but their identity is according to function. They represent a vertical split in the allocation of line authority and can command within their allocated function. Large corporations, need a much more complicated kind of functional structure. When a company has a central corporate headquarters and branches, divisions, or plants, it must give direction to the activities of the subsidiary units. Two types of functional structures have been used to fill such needs. First a headquarters manager with given functional responsibilities, such as personnel administration, has responsibilities for the same function in the decentralized units, where there is a counterpart who reports to the general manager of each unit. G.M of the unit have the total control, subject to corporate policy and guidance from the central offices. For example the top personnel manager in the head quarter of a big company is a staff executive in the central office, and in each sub-unit, a personnel manager reports to the unit manager on a line basis(although organized on a staff basis within the unit). With staff structure, the central personnel executive could work only though branch plant managers to influence the branch personnel managers. With functional structure, however, the central personnel executive directly supervises the work of the branch personnel managers through policies, directives, and required consultation and approval. How this arrangement actually works out in practice depends on the temperament, personality, and experience of the managers. A functional relationship subjects managers to multiple supervision. i.e. in the above example of personnel manager in the branch units reports directly to the plant manager, but in personnel activities he also reports to the central corporate personnel officer. Such a duplication presumes that managers can make distinctions in their multiple roles. Those who are subject to higher dual authority may have divided loyalties, and in cases of conflict or doubt they must choose which of the two authorities to obey. Coordination is thus a difficult problem. Second: The functional structure arises from the need to preserve the integrity and coherence of specialized units through several levels of organization, without subjecting them to the command influence of the line manager at each and every level. This situation, less common than the first type, has generally emerged in organizations having numerous relatively small units that have wide geographical dispersion but require that all the functions be carefully performed in the interests of effective customer service. This type of functional structure represents the major problem of coordination of the units that have no central line command but are physically located together. coordination is generally achieved by designating the key manager from each function as a member of a district or divisional committee, which meets periodically to discuss, coordinate, and act on matters of interest to all. Many problems go all the way up to the level of the general manager for decision, 80

because no one person on the local scene has the power to command or direct all the representatives on duty there. 4 COMMITTEE STRUCTURE: Committee structure differs from ad hoc committees. Ad-hoc committees are temporary and are created for specific and often operational rather than administrative missions. committee structures assign managers work to permanent committee with authority for action and decisions in assigned areas. committee structures can exist at any level, but they are found most often at the top of large organizations. The best example are executive committees or finance committees I) Executive committees: which make decisions regarding major aims and policies and operational problems, consist of the top officers and are headed by the chief executive. These committees are subject to the authority and guidance of the board of directors. II) Finance committees: do long-range financial planning and make decisions as to such matters as resource allocation and capital outlays. The strengths and weaknesses of structural committees are similar to those of ad-hoc committees. The success of such committees depends on the leadership abilities of the executive incharge, as well as on the appointment of able members. The Shape of the Bureaucratic Structure The relationships between the horizontal and the vertical dimensions of organizational structure pose problems of balance and form. Some organizations have tall structures, with many levels; other reduce the number of levels but then must flatten the structure of increasing the number of managers at each level. Thus the flatness is achieved by broadening the span of control. SPAN OF CONTROL: is the number of subordinates that a manager supervises. The concept holds that the larger the number of subordinates the more difficult it is for a manager to supervise and coordinate them effectively. In addition to number, two other variables are critical. The first is the capability of the superior, and the second is the capabilities of those who are being supervised. The usual number specified is from four to eight is unrealistic. Spans of control numbering ten, fifteen or even forty or more executives are frequently observed. Large spans are feasible where (1) the ability of the supervising executive is high, and (2) subordinates do not need close supervision, enjoy working independently and flourish under autonomy. However, the capabilities of both superiors and subordinates are limited. (Selection from Koontz) Organization Divisions and Departments: One aspect of organizing is the establishment of departments. Department is a distinct area, division or branch of an organization over which a manager have authority for the performance of specified activities. It may be a production division, sales department or market research section. Generally in big organizations departmental terminology is applied to indirect hierarchical relationships, e.g., A division may be head by a vice president, a department by a director, a branch by a manager, and a section by chief. THE SPAN OF MANAGEMENT The purpose of organizing is to make human cooperation effective and the reason of levels in organization is to limit the span of management. This limit varies depending on situations. Choosing the Span: En every organization, it must be decided how many subordinates a superior can manage. Students of management have found that this number is usually 4 to 8 at upper levels and 8 to 15 or more at the lover levels. But in actual widely varying spans are adopted effectively which indicates that merely counting the number of subordinates in existing spans is not enough to establish what a span ought to be. The recent operational Management Theorists says that there are too many underlying variables in a management situation which effect us in specifying any particular number of subordinates. Thus the principle of the span of management states that there should the a limit on the number of subordinates which a manager can effectively supervise, but the exact number will depends on underlying factors. Factors Determining an Effective Span: 1 TRAINING OF SUBORDINATES: Better training of subordinates decreases superior subordinate relationships. Well trained subordinates require not only less of their managers time but also less contact with him. 2 CLARITY IN DELEGATION OF AUTHORITY: Poorly conceived and confused organization causes heavy time burdens on superior subordinate relationships. The most serious symptom of poor organization is inadequate or unclear authority delegation. If authority is delegated clearly to undertake a well defined task a well trained subordinate can do it with a minimum of managers time and attention.

81

3 4

7 8

CLARITY OF PLANS: Much of the subordinates job is defined by the plans. If these plans are well defined, workable and authority to undertake them has been delegated and the subordinate understand them, then a very little time of the superiors will be required. USE OF OBJECTIVE STANDARDS: A manager must find out, (either through observation or objective standards) whether subordinates are following plans or not. Good objective standards ( which easily locate any deviations from plans) enable managers to avoid many time consuming contacts and to give attention to critical points. RATE OF CHANGE: The rate of change is an important determinant of the degree to which policies can be formulated and the stability of policies maintained. Certain enterprises can go much more rapidly than others. If the rate of change is slow the span of management may be wider and vice versa. COMMUNICATION TECHNIQUE: Effectiveness of communication technique also influence the span of management. If every plan, instruction, order or direction is to be communicated by personal contact then a managers time will obviously be heavily burdened. While written recommendations by subordinates on important considerations frequently speeds decision making. An ability to communicate plans and instructions clearly and concisely also increase a managers span. AMOUNT OF PERSONAL CONTACT: In many instance face to face meetings are necessary and many situations cannot be completely handled with written reports. Amount of time spent on personal meetings can be reduced by better training and by better policy making. VARIATION BY ORGANIZATION LEVEL: Research shows that the effective span of control differs by organization levels. Degree of specialization by individuals is most important variable affecting span. Study revealed that (1) when a greater number of specialists were supervised, effective spans were narrower at lower and middle levels of organizations, but were increased at upper levels. (2) Routines of an operation appeared to have little effect at any level. (3) Size (in terms of personnel) had little effect at lower levels but a positive effect at middle levels. OTHER FACTORS: 1 Competent and Trained Manager can supervise more people than one who is not. IISimple Tasks may allow a far wider span than tasks that are complex and include a great variety of activities. III Positive attitude of subordinates to assure responsibility as well as their willingness to take reasonable risks. IV To more mature subordinates the superior may delegate, more authority thus widening the span of control. (End of Koontz selection) Organization Charts: An organization chart is a diagram showing the formal organization structure i.e. the relationships of positions and managers. It show the hierarchy of levels, the departmentalization, and interrelationships of the main units. ADVANTAGES: Provide information for outsider or for new employees 2. they provide starting points for planning organizational changes and 3. for evaluating the strengths and weaknesses of the present organization 4. it provides a ready means of visualizing the general characteristics of an organization. CHARACTERISTICS IN DRAWING CHARTS: Charts are two dimensional and because the staff and functional relationships are superimposed over the line relationships, it is difficult to depict such structures on them. Some companies do not try to depict staff and functional differences on their charts, leaving this task on the organizational manual to present the differentiation of authority. 2. Where distinction are made on the chart, broken lines may be used or heavy connecting lines can be used for the line organization and light lines to designate the staff units. 3. Some companies show by position arrangements that the staff units are regarded as different; a few insert wording along the line at various levels to indicate the staff and operating groups. This method results in simpler, clearer, and less confusing charts. 4. Typical organizational charts show horizontal and vertical dimensions. 5. Efforts to depict bureaucratic structures in non bureaucratic ways have not proved popular. A few firms tried reversing the chart by placing top management at the bottom and lower levels of managers at the top, with the purpose to reflect emphasis on participative management. These pictorial efforts did little to correct the alleged difficulties of straitforward bureaucratic relationships. DRAWBACKS: 82

Following are some of the drawbacks of charts, not all of them are inherent, some are due to misuse or poor techniques. Charts record organizational relationships at one particular time and quickly become obsolete. 2. Human relations are not susceptible to exact representation on paper, even when they are carefully defined. 3. Charts causes hard feelings among people who are sensitive about status and position. 4. Charts foster the rigidities of bureaucracy by stressing domains and private jurisdictions. 5. Charts foster buck-passing and too much formality in communication. 6. Charts tells little about actual activities or interpersonal relations. 7. The costs of preparing, disseminating, storing, updating, and studying charts are high. On the other hand there are strong grounds for dispensing with charts. Some managers are reluctant to use them, and many believe that an organization can be better managed without chart. Occasionally distrust of charts arises from an autocratic, or overbearing managers fear that his power will be weakened in subordinates have a clear understanding of the organizations working structure. The managers who wishes to dominate and control, to maneuver freely, and to manipulate subordinates must control such information. If charts are used, they should be periodically and systematically revised, and should be drawn with the utmost care based on thorough analysis. Organization Manuals: Organizational charts, cannot possibly include the detail necessary for understanding an organization. Someone inevitably has to explain the chart, giving its rational and justifying its individual peculiarities and departures from custom. This can be done in an organization manual, which elaborate auxiliary charts, more complete titles, job descriptions (indicating responsibilities and duties) , salary, wages, and the like. POSITION TITLES Different organizations uses different titles like superintendent, vice president etc. to denote the managers above the rank and file workers. Organizations are generally headed by a chief executive, president, or chairman of the board. These three titles may be used in various combinations. If the chairman is the chief executive officer, the president reports to him. If the president is the chief executive officer, the chairman is usually relatively inactive or assigned special responsibilities on the board of directors. Another frequent title, that of group vice president, is used in large corporations with substantial diversity of operations or product lines.

83

CHAPTER-13 ORGANIZATION DESIGN : ADAPTIVE SYSTEMS

DEFINITIONS The term adaptive is used here to describe the newer organizational designs. Other closely similar terms are organize model, open system model, fluid or flexible model, natural model, and free-form model. All these terms convey similar meaning. Adaptive system denotes model of organization which maintains a high degree of openness to inputs from the internal and external environments, and develops mechanisms by which it remains flexible and ready to change, innovation and development. Origins of the Adaptive Model: It is under the way since the early 1960s. It represents the extensive applications of behavioral research. DYSFUNCTIONAL CONSEQUENCES OF BUREAUCRACY The newer developments in adaptive organization designs are founded on difficulties and problems experienced in managing according to the bureaucratic model. These are called dysfunctional consequences because they pose problems that bureaucratic organization finds hard to cope with. A dysfunctional characteristic is a counter productive one, i.e. producing more drawbacks than advantages. One of the drawbacks of bureaucracy is the recognition of informal organization as a corollary of formal organization. Second, Bureaucracy center upon changed expectations as to the benefits and payoffs desired from organizational effort. Bureaucracy primarily emphasizes a single payoff i.e. efficiency. Third, the efforts of inherent or potential defects are made worse by exaggeration. Bureaucrats can (1) hide behind rules and regulations (2) they may attach undue importance to trivial procedures, (3) they often carry impersonality to an extreme,(4) they delay decisions under the protection of red tape etc. Communication Nets: Studies of communication nets show that for certain purposes patterns other than the pyramidshaped, hierarchical organization structure may be better. There are three types of communication nets as shown in figure given bellow are (1) All channel, (2) Wheel and (3) circle. The wheel and circle patterns represents the restricted communication channels the all channel net represents open or unrestricted communication.

All-Channel

Wheel

Circle

ADAPTIVE ORGANIZATION DESIGNS It is a difficult task to chart open or adaptive systems. Chart is essentially a bureaucratic device that implies a permanency, clarity, and simplicity that are far from reality. So it is very difficult to picture the relationships involved. The general characteristics of an adaptive system are the opposite of the bureaucratic ones presented by Weber. They include: A reduction of emphasis upon the hierarchy. 2. Greater ambiguity in the system of authority that ties the organization together. 3. Greater autonomy, participation, and involvement of organization members in meaningful decision making. 4. The absence of restrictions on communication patterns. 5. De-emphasis on rules and rule enforcement, and greater reliance on trust, autonomy, and self discipline. 6. Greater recognition of group methods, norms, and sanctions. 7. The use of intrinsic motivation instead of close or punitive supervision. 8. Rewards based on achievement and results. System Designs 84

System concepts have been applied to four major sectors of management First, they have been used to analyze and explain existing organizations and their management. Second, system concepts have been useful in understanding human behavior in organizations. Third, systems concepts have contributed to a better understanding of decision making, planning, controlling, and information processing as organizational and managerial functions. Finally, systems concepts are becoming more and more significant in the design of organization structures. STEPS IN THE PROCESS OF SYSTEM DESIGN: Establish criteria for management information needs 2. Develop the preliminary design 3. Evaluate the preliminary design 4. Develop a revised model of the proposed system 5. Determine system specifications. 6. Install, debug, modify and extend the system by maintenance and updating. Many open system organizations forego charting entirely. Where charts are used, they emphasize groups, rather than positions or individuals. Such illustrations generally depict the main elements of the environment, boundaries of the system and subsystems. TASK FORCES AND TEAMS A task force or team is just line a committee structure but distinct from it, it consist of managers drawn from their posts temporarily. It is similar to an ad-hoc committee in that it is usually temporary, but differs in that it has broader powers of action and decisions, as well as greater responsibilities for investigation, planning research and analysis. Task forces are usually of longer duration than committees: some, owing to the magnitude of their assignment, have lasted one ore even two years. Project designs make use of teams and task forces with members drawn form functional units. They differ from project structures in that they are likely to be of shorter duration, designed for a none-time purpose, and assigned more to planning and study that to execution or operations. Free-Form Structures: A type of structure that is compatible with open-systems theory and is also useful in designing large-scale, complex organizations is called the free-form organization structure. A free form organization design is constructed so that its major units operate flexibly and independently. It de-emphasizes charts and chains of command; it utilizes independent-profitcenter concepts and systems and teams approaches. CONGLOMERATES: Another example of free-form organization is found in some of the large conglomerate firms. A conglomerate is a company that grows by acquisition and merger rather than by internal means alone, and diversifies into a variety of unrelated industries. The free-form concepts is particularly valuable in managing conglomerates because it controls divisions or subsidiaries but allows them autonomy. Not all conglomerates are free from, of course, but many are. Multiple Leadership: The four forms of adaptive organizations just described have one feature in common: they depart from the essentially monocratic nature of bureaucracy. The advocates of bureaucracy specify unity of command as a key principle, but this concept does not hold in adaptive organizations.

85

CHAPTER-15 AUTHORITY RESPONSIBILITY AND POWER

All organizations must deal with problems of authority, influence, and power. It differs from their approaches in bureaucratic and adaptive organizational designs. The management of authority and power is more an are than a science. Each organization have a different pattern of authority. This chapter describes (1) the concepts of authority and power, (2) the chief types of authority used in designing organizations and (3) the processes of delegation, responsibility, and accountability. THE NATURE OF AUTHORITY AND POWER Authority is the right of managers to direct the activities of others and to exact from them responses that are appropriate in the attainment of organizational purpose. The rights of authority are thus not absolute. Rather, they are (1) accompanied by practical limitations such as responsibilities for decisions and their consequences, and the demands of goal attainment. (2) They are limited be the contexts in which they are exercised and by the willingness of subordinates to accept the rights as legitimate forms of direction and control. Different forms of Authority: Authority takes different forms depending on its source. The most common forms are: Positional authority, in which duties and responsibilities are associated with defined positions and delegated to the position holder. This form is a bureaucratic one. In it positions and titles are indicative of the authority of position holders compared to others in the organization. Derived Authority: It is the authority derived from knowledge. It belongs not only to professionals or technical specialists, but also, to every member of the organization. It is independent of levels or positions. Knowledge gives one a degree of authority because those who do not poses it have a risk to make a wrong decision. It is an organic type rather than the bureaucratic one. The authority of knowledge can sometimes supersede positional or higher authority, e.g., a company president ordered a product design change without knowledge of its effect on costs. He was forced to revoke the order when a production forman pointed out his mistake. Situational Authority: It is granted for particular situation. All other authorities depends on the context but situational authority is used most frequently to indicate temporary changes in the distribution of authority. An employee who founds that fire is breaking out does not seek or need a bosss permission to sound the alarm and to order the premises vacated. THE situation itself is sufficient to vindicated an action that had no positional or other formal authority to support it. It is often found evolving in small groups, where leadership roles may shift from one person to another depending on the tasks or problems being faced. Power and Authority: Authority and power are separated but closely related concepts. Fayol defined authority is the right to give orders and the power to exact obedience. He distinguished between a managers official authority of position and his personal authority, which derives from knowledge, intelligence and experience. Power is the possession of authority, control, or influence, by which a manager directs the actions of others. Power, in effect, reinforces authority, and authority is one of the major sources of power. Power Strategies: Power strategies improve the managers position in the organization in competition with colleagues or rivals. Social and organizational forces press managers to go as far up as they can. Like other types of strategy, power strategies may be positive or negative. Positive strategies favor managers goals directly by strengthening their position relative to others. Negative strategies reduce or dilute the powers or positions of others in relation to the manager. Both of the strategies may or may not be ethical. Acceptance by Subordinates: An essential element of authority is its acceptance by those who are subject to it, voluntarily. Without such acceptance, managers lose whatever power was involved in their authority, and find that their rights have become meaningless. TYPES OF AUTHORITY Authority may be (1) Line, (2) Staff, (3) Functional and (4) Committee, and various combinations thereof. These four types are found in almost every the organization. These types are essentially bureaucratic in nature, and revisionist theory view them as declining in importance. Line Authority: It is the basic authority, ultimate authority to command, act, decide, approve, or disapprove all the activities the of the organization. It is the authority to direct the work of others and to require 86

1 2

them to conform to decisions, plans, policies, systems, procedures, and goals. Line authority is the heart of the relationship between superiors and subordinated. Line authority is not merely the right to decide but also, the right to direct. FUNCTIONS OF LINE AUTHORITY: The primary purpose of the line authority is to make the organization work. It does so in numerous ways. It provides the basic decisions required for operating an enterprise. II. It makes the leadership process effective III. It serves as a mean of control by setting limits to the scope of managerial actions IV. It provides points of reference for the approval or rejection of proposals or actions. Staff Authority: The scope of staff authority is limited, by the absence of the right to direct or command, to such auxiliary and facilitating activities as planning, recommending, advising, or assisting. In addition, staff units may also have authority to perform certain regular services to the line, such as maintaining records. The need for staff authority arises as the result of problems that managers face as an organization grows larger. Line authority alone becomes inadequate for large-scale organizations, whose managers face an increasing number of details that can best be handled by staff specialists. Two kinds of staff structures were explained in chapter-13, i.e., the staff assistant and the staff specialists. We are specially concerned with staff specialist, because it is most complicated and difficult staff relationship, and is in common use. The major criterion for distinguishing line and staff functions is the degree of closeness of the function to the primary objectives of the enterprise. Basic activities, such as production, finance, or marketing, are usually line departments. Activities that consist mainly of assistance, advice, or services cutting across several units are generally set up as staff departments. This does not mean that staff authority is inferior to line authority. It is merely different. The indirect relationship of staff to primary objectives does not necessarily imply any lack of merit or importance. Pure staff authority have no right to command, except within the staff department itself. Staff advice or service may be accepted by the line authority. Staff authority is often misleadingly described as merely the authority to advise or to make recommendations to the line. Giving advice does not adequately distinguish between line and staff authority, because line manager may also advise and recommend. The primary distinguishing feature of staff authority is that it has no right to command. Functional Authority: Functional authority, like staff authority, is subordinate to line authority and is a way of putting specialists to work in the organization. The principal difference between staff authority and functional authority is that the functional authority confers upon its holder the right to command in matters pertaining to that function, e.g., that a product research department were given functional rather than staff authority; it could then require other parts of the company to follow its orders with respect to meeting consumer product preferences. The chief weakness is that it may cause the subordinates to multiple supervision. This multiplicity is not always be undesirable, but if it is undesirable, but if it is undertaken the drawbacks should be evaluated. Functional authority is of limited use. Its main advantages is to provide specialists with a limited scope of command authority, e.g., suppose that a production control department found that superiors were changing the routing and scheduling. Thus functional authority might be delegated temporarily to the production control unit until the supervisors could be trained in correct methods. (Selection from Koontz) Functional Authority is the right delegated to an individual or a department to control activities, undertaken by persons in other departments. There may be several reasons like lack of special knowledge, ability to supervise etc. It is delegated by their common supervisor to staff specialist. Functional authority may be delegated to line or staff and service departmental heads. More often it is delegated to staff and service departments because generally they are composed of specialists whose knowledge becomes the basis for functional controls. Benefits of Staff: Today staff advice is more critical than it was in the past. Now decisions require expert knowledge 9n economics technical, political, legal and social area, i.e, every field. Moreover in many instances highly specialized knowledge is required.

87

3 4

another advantage of staff is that these specialists take time to gather and analyze it while their superiors who are busy in managing operations cannot do so. Therefore, the staff not only helps the line managers to be effective but as problem grows more complex staff analysis and advice becomes a necessity. Limitations of Staff: Although the staff advice helps the line manager in solving problems yet there are many objections put forward by line executive against the use of staff. By looking into these objections deeply it is found that all are the results of misunderstanding. Following are the objections. DANGER OF UNDERMINING THE LINE AUTHORITY: While advising the line managers on different matters the staff managers try to prevail over them as whatever they suggests are accepted by line executives. This attitude of staff is nothing but encroach upon the authority of line because the line executives are responsible for making decision. They call it as undermining their authority because their freedom is reduced due to staff advice. LACK OF RESPONSIBILITY OF STAFF: Responsibility for implementing the advice does not fall on staff, therefore, they often advice carelessly. Some times these advises are impractical or difficulty to implement which damages their importance and usefulness. THINKING IN A VACUUM: Staff advisers always remain busy in searching new methods and ways for recommendation to line managers. They try to recommend ideal conditions which may not be practical and possible because of limited resources at the disposal of line manager or any other reason. MANAGEMENT COMPLICATION: The staff advisers give suggestions and later on press the line manager to accept and implement them which may put line manager into difficult situations, because before accepting these suggestions the line manager have to look upon many aspects. The pressure on the line managers to accept the views is a clear violation of the rules of staff which create problem and complications for line managers. Remedies Available to Staff: Even after seeing above limitations the importance of staff cannot be denied . As a matter of fact staff have an important relationship in the organizational structure and as such every effort is being make to make staff batter and effective by eliminating some of the defects and weaknesses. A manager can greatly help staff to discharge their duties by taking following steps. UNDERSTANDING AUTHORITY RELATIONSHIPS: Make clear the distinct roles to be played by line and staff managers and the responsibilities they have on them and what are expected of them. So far they remain confused in duties responsibilities and relationships, the best results cannot be obtained. MAKING LINE TO INFORM THE STAFF OFFICERS, THE PROBLEMS THEY FACE: Best possible recommendations can only be expected from staff when they are kept informed about the problems faced by the line managers. In many cases staff cannot give correct recommendations simply because many facts and problems are concealed from them but line managers. Consequently if we want to obtain effective and useful recommendations from staff, line manager should convey their real problems to the staff managers. MAKING LINE TO LISTEN THE STAFF: Training the line manager to listen the staff carefully and with patience. If they do not listen them with open heart they cannot work together. COMPLETED STAFF WORK: In complete recommendations fails to serve the purpose, Therefore, if we want a recommendation to be fully understood we must make it complete and full in all contents and meaning . Recommendations in piecemeal are not be understood. Requiring the staff to submit recommendations in complete form so that it is fully understood by those who come across it. STAFF WORK AS ORGANIZATIONAL WAY OF LIFE: Let us realize that it is not only the line supervisors that make the enterprise a success. It is also the staff as well that helps to a great extent in the accomplishment of desired goals. Both of them are integral part of organization structure. We should not treat staff as unimportant because of its nature of advisory or auxiliary in nature. (End of selection from Koontz) DELEGATING AUTHORITY AND RESPONSIBILITY The central idea of delegation is to provide subordinates with a scope of authority appropriate to the responsibilities they under take. 88

The manager decides the nature and scope of formal, legitimate authority of subordinates. Authority is not a fixed quantity; it changes as the superior changes the responsibilities of the subordinate. Moreover, a manager may have line, staff, and functional authority at the same time. For example, a personnel director in the corporate office may have functional authority over ht plant personnel managers in the branches, staff authority in relation to the rest of the entire organization, and line authority within the personnel department. The Nature of Delegation: Delegation is the process by which managers specify the authority of subordinates, so that subordinates share the delegates work and responsibility. In general, authority flows downward from its source at the top. However, this downward flow in not smooth and continuos. Moreover, there are upward forces influencing the allocations of authority and instances in which a lateral delegation of authority may occur. Delegation of authority in an organization does not occur automatically. It is a way for leader to make authority effective an influential. Without planned distribution of authority to subordinates, the managers won tasks become unmanageable. Accountability refers to the fact that those who are give authority and responsibility will be judged by the manager who delegates. Accountability grows out of responsibility and goes hand in hand with it By accepting authority, a person accepts responsibility. Requiring subordinates to submit their performance for review and evaluation is to hold them accountable for results. Decisions in delegation To delegate wisely, a manager must decide the following questions: What is to be delegated? II. Why are the selected responsibilities being delegated? III. To whom are to be delegated IV. What limits should be placed on the authority delegated? I WHAT TO DELEGATE: First of all the manager develop adequate self-understanding. The delegator needs a realistic view of his personal strengths, weaknesses, preferences, and attitudes. Deciding what to delegate results at the same time in decisions about what is retained. The aim is to delegate what can be done by others and retain the balance for oneself. Managers (who appear to be good delegator ) often delegate work they themselves do not want to do, and retain responsibility for matters in which they are interested or which they have been in the habit of doing. Activities they dislike or consider troublesome are delegated without precise thought about the abilities of the subordinates to whom they are assigned. One may usefully consider what to delegate from three points of view: Things that cannot be delegated at all because the delegator can do them best or, for strategic reasons, must keep them; b) Things that can be delegated to others in accordance with their availability and with judgment about their skills and talents; and c) things that should be delegated because they are so routing that it is sheer stupidity for the delegator to do them. II WHY DELEGATE: The main reason for delegating are: to reduce the burden of work the delegator would otherwise have to do; b) for developing or changing the organization structure, c) delegate adjustment and rotation of responsibilities for developing subordinates through experience. III TO WHOM SHOULD AUTHORITY BE DELEGATED? The delegator must be sure that the subordinate can carry the responsibility and effort contemplated in the assignment. IV LIMITATIONS OF AUTHORITY DELEGATED: While delegating the manager defines the limits of the subordinate within which he can act and make decisions. Delegation outlines the boundaries of what is permissible. Some actions can be classified as planning; other involve the performance of work operations; still others provide for the right of organizing, controlling, deciding, coordinating, or further delegating. The central problem of managers, therefore, is to determine the scope of authority for subordinates, and so frame their communications with them as to map the range of their expected and permitted behavior. PROBLEMS OF DELEGATION

89

Five problems must be considered with respect to delegation: (1) responsibility and accountability, (2) delegation without abdication, (3) blocks to delegation and how to overcome them, (4) the exceptions principle, and (5) clarity of authority. Responsibility and accountability: Delegations result in the creation of an obligation on the part of subordinates for there satisfactory performance of their assignments. Some refer to these obligations as responsibility; the term accountability, however, is better for this purpose, because responsibility is more accurately defined as the work or set of tasks assigned to each position holder. No matter how much authority is delegated, and no matter what degree of obligation is placed on subordinates the delegator retains ultimate responsibility and authority for what subordinates do. The delegation of duties does not free managers from personal obligations concerning them, for he must continue to guide, direct, and hold accountable subordinates to whom he has delegated authority. Delegation Without Abdication: A source of concern to managers is the extent to which they lose authority when they delegate it to others. Theoretically, it is retained even though it is delegated to another. Actually, it is quite difficult for a delegator to bestow upon another complete authority and responsibility. A reasonable approach to delegation is that the subordinates results be the objective desired. Authority, in the amount and kind sufficient to get those results, is then delegated to the subordinate. Blocks to Effective Delegation: Some executives do not delegate because they feel compelled to maintain tight control over everything. They have a passion for details, power, influence, and the enjoyment of constant interaction with subordinates. They like the busyness and security of work poled high on their desks. The failure to delegate has four serious weaknesses. It prevents the preparation of the subordinate as a replacement. 2. Self development of subordinates is stifled. They are not properly motivated to make their best contributions to the organization. 3. the dominant manager is so overburdened with details that it is impossible to work efficiently 4. The manager may not be as omniscient and infallible as his failure to delegate implies. The boss can make mistakes and forgoes help that subordinates could otherwise give. ATTITUDES TOWARDS SUBORDINATES Two particular attitudes are blocks to effective delegation: (1) fear or distrust to the subordinate, and (2) lack of confidence in him. Deficiencies in the subordinates performance are then temporary, and are ultimately the price of better performance by both superior and subordinate. The fear of a subordinates potential growth is also real. It takes two forms (1) the subordinate becomes a contender for the bosss job (2) the subordinate may win a promotion to some other part of the organization and the delegators level off and get older, they tend to guard their positions more cautiously and in subtle ways will block the growth of subordinates by not delegating more and more complex assignments. The Exceptions Concept: Delegated authority, in effect, sets limits within which the subordinate may act. When a situation calls for a decision or an action beyond these limits, the subordinate is usually instructed t refer the matter to the next higher level for an authoritative decision. This is called the exceptions principle. Clarity of Delegated Authority: Leaving doubts as to the scope of authority leads to confusion and conflict. If managers are not sure of their authority, their capacity to act is impaired, slowing up the work of the organization, causing conflicts. The best safeguard is to realize the need for constant clarification and interpretation of delegated authority. The manager cannot set down once and for all the scope of authority for subordinates. A manager who delegates authority to another creates a new relationship and will be subject to many changes throughout its existence. The delegating executive can use a number of techniques to achieve clarity of authority, given bellow: Organization charts and manuals may provide specific points of reference. 2. All delegations should be in writing. Whenever a delegation of authority remains in oral form, it is subject to distortion, misunderstanding, and forgetting. 90

3. Monitor the performance of subordinates. Through frequent and strategically timed observations of the subordinates performance, the manager can spot the erosion by which subordinates have either enlarged the scope of their authority or omitted important tasks. Authority in Adaptive Organizations: In flexible, adaptive organization structures, authority is much more ambiguous and changing. The demands for clarity, formal delegation, and close supervision and mandates of the bureaucratic model. In adaptive organization designs, authority relationships are more subtle. In general, authority in adaptive models is less obvious, and more flexible, ambiguous, and changing, more closely related to short-run needs. In adaptive organizations, there is a greater emphasis on situational authority and the authority of knowledge, and a lesser emphasis on the authority of positions or other formal delegations. DECENTRALIZATION OF AUTHORITY Decentralization of authority is defined as the degree to which an organization places authority and responsibility for decisions as far down in the organization as efficient management permits. It is done by creating a number of relatively autonomous units, and delegating appropriate authority to them. Decentralization is a necessary policy for the diversification of large corporations, such as holding companies, conglomerates, or free-form organizations. Diversified companies produce a variety of products or services, not necessarily for the same markets or with similar production processes. (Selection from Koontz) Decentralization is the tendency to disperse decision m-making authority in an organization structure. There may neither be absolute centralization of authority nor absolute decentralization. In case of absolute centralization it implies that there is only one person and no subordinate manager and, therefore, no structured organization. On the other hand if managers delegate all of their authority their status as manager would cease, their position will be eliminated and their would again be no organization. DECENTRALIZATION AS POLICY: It implies more than delegation. It requires: careful selection of different types of decisions which should be carried out near the top and which type of decisions should be pushed down in the organization. 2. specifies policy making to guide the decision making, 3. proper selection and training of people, and 4. adequate controlled. Decentralization is an essential element of a managerial system and affects all areas of management. Without it, manager could not use their discretion to handle the ever changing situations they face. DELEGATION OF AUTHORITY: Authority is said to be delegated when a superior gives a subordinate discretion to make decisions. A superior cannot delegate authority which he dont have himself. There is a limit to the number of persons managers can effectively supervise and make decisions for. When this limit has been palled authority must be delegated to subordinates who will make decisions within the area of their assigned duties. SPLINTERED AUTHORITY: Splintered authority exist when ever a problem cannot be solved or decision cannot be made without pooling the authority of two or more managers. For example the superintendent of plant, A see an opportunity to reduce costs through a minor modification in plant, B but cannot encompass the change. But if the two superintendents agree on the change by pooling their authority and make decision. Individually their authority is said to be splintered. Such a problem could be handled by referring the decision to authority to make it unilaterally. THE ART OF DELEGATION: Most failures in effective delegation occur not because managers do not understand principles of delegation but because they are unable or unwilling to apply them. Mush of the reasons lies in personal attitudes towards delegation. PERSONAL ATTITUDES TOWARDS DELEGATION: Recptiveness: is the willingness to give other peoples ideas a chance. Decision making always involves some discretion and a subordinated decision is not exactly the same one as superior would have made. The delegating manager should not only welcome the ideas but also help others. Willingness to Let Go: an authority delegating manager must be willing to release the right to make decisions to subordinates. A major fault of promoted managers is that they want to continue to make decisions for the positions they have left. 91

Willingness to Let Others to Make Mistakes: Continual checking of subordinates works so that no mistakes are ever made would make true delegation impossible. Since every one makes mistakes, a subordinate must be allowed to make some mistakes and their costs must be considered an investment in personal development. Serious or repeated mistakes can be avoided without nullifying delegation or hindering the development of a subordinate. 4 Willingness To Trust Subordinates: Superiors have to trust their subordinates because delegation implies a trustful attitudes between them. Too often bosses distrust their subordinates because they do not wish to let them go or threatened from the success of subordinates and do not delegate wisely or do not know how to set up controls to ensure proper use of the authority. 5 Willingness to Establish and Use Broad Controls: Superior cannot delegate authority unless they find means of getting feedback, i.e., assuring themselves that the authority is being used to support enterprise goals and plans. GUIDELINES FOR OVERCOMING WEAK DELEGATION: Grant sufficient authority to make possible the accomplishment of goals and assignments. 2. Select the person in the light of the job to be done. 3. Maintain open line of communication with subordinates to whom the authority is delegated to furnish the subordinate, information needed to make the decisions and to evaluate their decisions. 4. Establish proper controls, to ensure that authority is properly used. 5. Reward effective delegation and successful assumption of authority either by monetary means or by granting greater discretion and prestige or by allowing promotions to higher positions. FACTORS DETERMINING THE DEGREE OF DECENTRALIZATION OF AUTHORITY Although the temperament of individual managers influences the extent of authority delegation but other factors also effect it. Most of these factors are beyond the control of individual managers. Some of the factors are given bellow: 1 Coastlines of the Decision: As a general rule more costly the action the decision will be made at the upper levels of management. For example decisions to purchase desks may be made at the second or third positions of operation department and a decision the purchase airplane will be the top executives decision. 2 Desire of Uniformity of Policy: The desire the adopt a uniform policy is also a determinant in the decentralization of the authority. 3 Size and Character of the Organization: Larger the organization, more decisions to be made and are to be made at more places. Slow decisions are costly because mere specialist and managers are to be consulted. Cost of large enterprises may be reduced by organizing on enterprises into several units. Character also effect decentralization. Fundamental departments e.g. sales, manufacturing, or engineering cannot be independent units while such territorial departments are independent units. 4 History and Culture of Enterprise: Decentralization depends upon way the business has been built. Those enterprises which expand from within themselves or under the directions of their owners shows an extraordinary case of centralized authority on the other hand organizations resulting form mergers and consolidations are likely to show a definite tendency to retain decentralized authority. 5 Management Philosophy: To a great extent Decentralization depends upon character and philosophy of top executive. 6 Desire of Independence: Individual and groups often desire a degree of independence form bosses who are far away to avoid delay in decisions long time communication and avoiding frustration. 7 Availability of Managers: Shortage of managers limits the decentralization of authority. 8 Control Techniques: A good manager, at any level of organization cannot delegate authority without having some way of knowing whether it will be used properly. ADVANTAGES AND LIMITATIONS OF DECENTRALIZATION Relievers burden of top management. 2. Encourages decision making and assumption of authority. 3. Giver managers freedom and independence in decision making. 4. Promotes establishment and use of broad controls. 5. Make comparison of two different organizational units. 6. Facilitates setting up of profit centers 7. Facilitates product diversification 92

8. Promotes development of general managers 9. Aids in adoption of fast changing environment. LIMITATIONS OF DECENTRALIZATION: Difficulties in making uniform policy. 2. Increase in complexity of coordination. 3. Result in loss of control at upper level managers. 4. Limited by inadequate control techniques 5. Inadequate learning and control system. 6. Considerable expenses on training of managers. 7. Considerable expenses on training of managers. 8. May be limited by external forces. May not be favored by economics of scale of some operations. Some Mistakes in Organizing: Certain mistakes in organizing may cause difficulties for managers in organizing. Some of them are FAILURE TO PLAN PROPERLY: It may be of three types: Enterprise continuing with traditional organization structure long after its objectives, plans and environment have changed. Non availability of manager needed or finds a manager that have not grown with or not fit to current needs. III. Planning involves properly organizing around people or modifying the organization to take people into account. But organizing managers primarily overlook several facts. They cannot assure that all basis will be covered and all the necessary tasks have been undertaken. b) There is a danger that different people will desire to do same thing resulting in conflicts or multiple command c) People have a way to enter and leave an enterprise, e.g. through retirement, resignation, promotion or death; organizing around them is risky and when they vacate their position it is hard to describe their position accurately and to fill it adequately. All the above mistake occur when an enterprise fails to plan properly towards the future which is materially different from the past or present. FAILURE TO CLARIFY RELATIONSHIPS: It is probably more than any other mistake that count for friction and inefficiencies. Authority and responsibility for an action is critical, lack of clarity about the members to play a part on an enterprise team properly. FAILURE TO DELEGATE AUTHORITY: Managers are reluctant to push decision making down into the organization. In some business where uniformity of decision is necessary, decision making can be handled by one or a few managers. But failing to delegate authority to the proper extent a mistake which creates bottlenecks and excessive referral of small problems to upper level managers and thus over burden them. FAILURE TO BALANCE DELEGATION: Some managers in the zeal of decentralization, push decision making too far down in the organization that it reaches down to the very bottom of the structure and a system of independent organization satellites may develop. Excessive delegation may cause organization failures. Top managers must retain some authority, particularly over decisions that have company wide expect, and to review the plans and performance of subordinates. Managers should not forget that some authority they should not be delegated to maintain enough authority and to ensure that when they delegate authority to a subordinate it will be used in the way and for the purpose intended. CONFUSION OF LINES OF AUTHORITY WITH LINES OF INFORMATION: Line of information should not follow the line of authority., Information channels should be vied open unless the information is confidential. Relevant information should be available to people at all levels of the organization. Information gathering should be separated from decision making. GRANTING AUTHORITY WITHOUT EXACTING RESPONSIBILITY:

93

A significant cause of mismanagement is assigning authority without holding a person responsible. Authority Delegation is not responsibility delegation; superiors remain responsible for the proper exercise of the authority by their subordinates. 7 HOLDING PEOPLE RESPONSIBLE WHO DONT HAVE AUTHORITY: Commonly superiors hold responsible to the subordinates for results without giving them authority to accomplish them. It generally happens where the structure of rolls is unclear or confused. 8 CARELESS APPLICATION OF STAFF DEVICE: There is a danger that staff people will be used by their superiors to undermine the authority of managers to whom they are intended merely to advise. On the other hand top managers may surround themselves with the staff specialists and they exclude form their schedule the time and attention needed for their line subordinates or they may assign problems to staff that would be assigned to line managers. 9 MISUSE OF FUNCTIONAL AUTHORITY A more dangerous situation arises, which creates problems is delegating undefined and unrestricted functional authority. It is common in modern organization where it is desirable to give a service staff department, functional authority over activities in other parts of the organization. 10 MULTIPLE SUBORDINATION: Too much authority breaks down the unity of command for example: Accounting incharge prescribe accounting procedure in the entire enterprise purchase manager prescribes how and where the purchases are to be made Personnel manager prescribe how the workers shall be classified for pay and how the vacations will be scheduled. And how many hours to be worked. The general council insists that all contracts should be under his or her approval and shall be in prescribed forms. These all staff and service specialists have some line authority over other parts of organization operations managers finds themselves subject to direction from several people with functional authority in addition to their principal superiors and thus they feels frustrated. 11 MISUNDERSTANDING OF FUNCTION OF SERVICE DEPARTMENTS; Service departments are concerned with the accomplishment of major enterprise objectives just as operating departments would be. Sometimes people of line departments regard a service department as relatively unnecessary and unimportant and something to be ignored when possible. While some service department deem themselves as more important and working for objectives 12 OVER ORGANIZATION AND UNDER ORGANIZATION: Overorganization is unduly complicating the structure by creating too many levels and ignoring the fact that efficiency demands the managers supervise as many subordinates as they can. (End of Selection from Koontz)

94

CHAPTER-16 ORGANIZATION CHANGE

THE NATURE OF ORGANIZATION CHANGE It is important to note the difference between organizational change and individual change, although the two are closely related. Organizational change alters prescribed, structured relationships and roles assigned to members. Individual change is behavioral--- determined by the characteristics of members, such as their personality, needs, skills, values, and believes., Thus a focus of change can be either through the redesign of organization structure or though attempts to change people by means of training and discipline: or it can be both. SOURCES OF CHANGE There are many sources of organizational change, but their impact depends on whether or not managers notice the forces of change and evaluate them as significant. Among the chief sources of change are the following: (1) growth and decay, (2) the internal and external environments. (3) new personnel, (4) change agents, and (5) the domino effect. Although these sources are not mutually exclusive, they provide a useful framework for the sections that follow. Growth and Decay: Growth represents many problems and opportunities for change. Such change is gradual when growth occurs through internal vigor of product lines, services, or market penetration. Change is more extensive when growth occurs from mergers, acquisitions, or exceptionally rapid success in organizational activities. Growth leads to the need for more employees at all levels, more functions to be established, and old functions to be changed or eliminated. Patterns of work flow must usually change. A greater total effort must be provided for by new organizational arrangements. Decay, too, poses change problems. The decline of organizational vitality can result from failures to change in appropriate ways. It leads to defensive, restorative changes aimed at survival and the eventual resumption of growth. MERGER AND ACQUISITIONS Mergers and acquisitions represents a particular problem in organization, for structural changes and role assignments are needed to obtain efficient, coordinated operations. Mergers and acquisitions are undertaken for many reasons, such as consolidating or increasing capital, pooling managerial talent, using facilities more efficiently, increasing production and marketing capacity, and achieving vertical integration. In short, mergers and acquisitions are actions that foster growth of at least one party to the change and are often a tactic against decay on the part of the others. When two or more firms combine by merger or one acquire the other, organizational problems (including problems of structure), arise. In such cases companies usually need to consolidate and eliminate positions. Pre-merger planning can (to some extent) take in to account the probable changes, but no one can completely foresee all the impacts of change. It usually involves the major structural changes because of the need to establish an integrated, unified, total organization The process of consolidating, streamlining, and improving the organization of the newly formed company may take several years, although key changes may be made rather soon. REORGANIZATION: Any change in assigned roles or in the structure of an organization is in a sense a kind of reorganization. This term, however, is usually applied to major changes in both roles and structure. Profit-oriented organizations are reorganized when the are major changes in goals, technology, or financial requirements. Companies losing money or facing economic cutbacks frequently reorganize. Non-profit organizations typically reorganize when goals or missions change, or when budgetary requirements indicate the need. Reorganization is one defense against decay. The term reorganization may also refer to the making of basic structural changes on a unit wide basis, that is, throughout a department, plant, or company. Internal and External Environments: Organization patterns and structures changes as a result of forces from internal origins, as well as from external pressures arising in the environment. Many successful managers believe that learning to manage change in the prime requirement for success. Internal origins of change are partly self-generated, and in part represent responses to external pressures perceived by members of the organization. For example, a number of companies have set up departments designed to cope in new ways with problems of consumer complaints. 95

TECHNOLOGY AND ORGANIZATIONAL CHANGE: Technology is a major external source of change. From the standpoint of organization design, there may be a number of alternative patterns. To keep pace with technological changes in organization structure are frequently required. One major dimension of organizational change thus clearly consists of shifting from bureaucratic concepts to adaptive, open modes. Adaptive structures evolve to meet needs for which the bureaucratic model is relatively less suitable, but technology playas a significant role in determining the nature of the structures required. Technological change has become increasingly diverse and complex. Its pace is stepping up, making executives more and more concerned with the adequacy of organization structure and the development of new forms of organization to meet new needs. New Personnel Some change is inevitable, because such internal factors as position holders changes through death, retirement, transfer, promotion, discharge, or resignation, and elements in the external environment are constantly changing. No two managers have the same styles, skills, or managerial philosophies, or the same personal needs. Managerial behavior is always selective, so that a newly appointed manager may favor different organization designs, objectives, tasks, procedures, and policies than a predecessor. The new executive will not be exactly like the previous one, nor even like those already present. In matters of intelligence, personality, and temperament the new manager may be quite different and still possess the qualifications for the positions. Change Agents: Change agent is the technical term. It denotes an organization member who is assigned the role to bring about change. A change agents formal role is primarily to plan and initiate changes rather than to implement them. He serves as catalyst, interpreters, and synthesists. They often work quietly behind the scenes to promote change. The Domino Effect: One of the sources of change is change itself. There is often a domino effect in which one change touches of a sequence of related and supporting changes. For example, creating a new department may cause the creation of new managerial or nonmanagerial positions, or changes in assignments within other departments, budgetary reallocations, and office space. Other departments may need to realign their missions, structure, tasks, and staffing. It is quit common for people to fail to consider the domino effect; such an oversight lead to problems of coordination and control, and necessitates effective planning processes that limit the tendency of individual units to change only in accordance with their own needs. MANAGING ORGANIZATION CHANGE There are two ways to respond to the change (1) simply react to the change and (2) Deliberately plan to change. Organizations that learn to manage change are more likely to be successful than those that resist or ignore the forces of change. Similarly, managers who can initiate and absorb change are likely to be more successful than those who resist needed change. Change itself is neither good nor bad. It is the substantive nature of the change that reveals its importance to the organization. The problem, then, is to identify the kind of change that are beneficial to the organization. Timing is important, but so is having an awareness of the degree of change the direction of the change and the pace of change. Adaptive-Coping Cycle: Schein has described an adaptive-coping cycle that is helpful in organizational diagnosis. This cycle is the sequence of activities or processes that begins with some change in the internal or external environment and ends with a more adaptive dynamic equilibrium for dealing with the change There are six stages of the cycle: Sensing a change in the internal or external environment 2. Importing the relevant information about the change into those parts of the organization that can act on it. 3. Changing activities inside the organization according to the information obtained. 4. Stabilizing internal change while reducing or managing undesired by-products. 5. Exploring new products, services, or methods that are more in line with the originally perceived changes in the environment and the degree of integration of the internal environment. Resistance to Change:

96

2 3

Changes are always disturbing to those who are affected, and considerable resistance to change often arises. Therefore, it is not wise to engage in organization tinkering---managing for changes sake. Many managers are entranced by the ease with which organization structures can be changed on paper, and thus make changes without regard for their impact on those affected. To the manger manipulating the changes seem trivial, because people occupying positions, the proposals may be very disturbing. They see all kinds of implications apparently being disregarded by higher management. Whether change in organizational relationships arises from positive forces such as growth, or negative forces such as poor management, resistance is frequent. Research has shown that people develop vested interests, rigidities, habits, and preferences that tie them to existing arrangements. Change introduces the risks of error, and innovations are troublesome, particularly in situations whether people have feelings of insecurity. Accordingly, both the formal and informal organizations may resist changes, because it has major impacts on the people. MANAGING THE RESISTANCE TO CHANGE When managers decide that a certain change is beneficial, they are eager to get the show on the road. To minimize resistance to change, however, the manager needs careful planning, proper timing of communication adequate feedback from parts of the organization affected, and the confidence of organization members in the reasons for change. Gradual changes, or changes made by reliably progressive stages, are generally less disturbing than radical, sweeping, scattered, and un-predicted changes made by surprise decree from higher echelons in the organization. Planning for Change: In particular, changes affecting organization design require careful planning of top-management levels. Planes for organizational changes of major dimensions are often detailed and elaborate. ORGANIZATION PLANNING DEPARTMENTS: Many organizations have set up departments of organization planning, a design strategy that has the effect of identifying organization planning as a staff function. Some of such departments are subdivisions of the personnel or industrial relations departments. Others are separate units. The purposes of such departments include the following. Effective use of human resources 2. Adaptation of the organization structure to a changing environment. 3. Control of organization change. 4. the management conflict. (Selection from Koontz) TECHNIQUES FOR INITIATING CHANGE Organizations may be in equilibrium with forces pushing for change on the hand and forces resisting change by attempting to maintain the status quo- on the other hand. In initiating change the driving force is increased but it also increase resistance by strengthening the restraining forces. Another, rather more effective, approach is to reduce or eliminate the restraining forces and then move to a new level of equilibrium. In organizations a change is policy is less resisted, when those who are affected with it, participate in the change. Change Process: Change process consist of three steps (1) unfreezing (2) Moving or changing, (3) Re-freezing. UN-FREEZING:Creation of motivation for change. If people feels uncomfortable with the present situation, they may see for the change. However in some cases they deliberately create discomfort that may initiate change. MOVING OR CHANGING It may occur through assembling of new information, exposure to new concepts or development of a different perspective. RE-FREEZING Re-freezing the change is infect establizing the change. To be effective the change have to be congruent/ suitable with persons self concepts and values, otherwise there are chances that the persons will revert back to the old behavior. These reinforcement of the new behavior is essential. Why People Resist Change There are many reasons due to which people resist change some of them are as fallows. What is not known causes fear and induces resistance. A restructuring of organization can put a person in uncertainty about its effect on his job. 97

2. 3.

Not knowing the reasons for the change causes resistance Change may result in a reduction of benefits or a loss of power. (End of Selection from Koontz)

98

CHAPTER-17 ORGANIZATIONAL CONFLICT

THE NATURE OF CONFLICT Conflict is universal in human affairs, and so is to resolve the conflict. Organizations often face a turbulent, ambiguous, and even hostile environment containing forces that generate conflict. Internally, the forces of change and the close collaborations that are needed in doing work produce abundant opportunities for conflict. Conflict goes with change. Conflict is generated in the reordering of interests affected by change. The absence of conflict, if it occurs, often indicates the success of status quo interests. Yet conflict highlights the fact that a large degree of cooperation is generally present in wellmanaged organizations. Organizational conflict, represents the struggle of two or more centers of power for dominance over the others. Conflict may be purely interpersonal in nature, but it is more often associated with formal or informal organization roles. Conflict Defined: Conflict is a situation in which persons or groups disagree over means or ends, and try to establish their views in preference to others. Conflict has its base in (I) the presence of (1) competing objectives, (2) competing methods (3) competing philosophies or (4) competing missions, and has its base in (II) the desire of manager to protect (1) jurisdiction, (2) control resources, or (3) acquire power. March and Symon describe conflict as a breakdown in the standard mechanisms of decision making so that an individual or a group experiences difficulty in selecting an alternative. It seems more appropriate, to view conflict as more than a crisis in decision making. The base of organizational conflict is the self-interest of managers. CONFLICT AS STRATEGY Game theory has been used to make a conflict strategy and to cope with conflicts. STRONG AND THE WEAK: The aspects of strategy that emerge in conflict raise questions about the relative strengths and weaknesses of adversaries. Functions and Dysfunctions of Conflict: Conflict is not always bad for an organization or for an individual because they are inherently undesirable and should be replaced by (1) harmony, (2) Cooperation, and (3) stability. Conflict was thus seen as a deviation, a malfunctioning of the organization or the individual. Conflict and Leadership: Conflict often surrounds the leadership process itself, with consequent effects on the leaders success. Even members of substantial power and ability may find their leadership blunted by conflict arising from an incongruence between status and esteem. If high-status and high esteem organizational members differ in their respective goals or ideas, conflict is likely. Status without esteem, or vice versa, may generate conflict. TYPES OF CONFLICT Conflict appear in a variety of forms. Three types will be discussed here (1) structurally based conflict, (2) role conflict, and (3) institutionalized conflict. These categories are not mutually exclusive. They may overlap, occur simultaneously, or show similarities and differences. Structurally Based Conflict: As an organization grows, or a simple organization becomes complex, it becomes increasingly differentiated along horizontal and vertical dimensions. Levels, departments, divisions, and other units increase; built-in conflict, both horizontal and vertical, is inevitable. I VERTICAL CONFLICT: Such conflicts arises among different kinds and intensities of roles, missions, objectives and activities at the various levels. It occur in superior-subordinate relations and in forms that bypass some echelons. Smith found partial support for three hypotheses regarding vertical conflict: (1) from inadequate communication between echelons, (2) they stems essentially from differences of interests between position holders occupying different stations in the organizational hierarchy, and (3) that inter-organizational conflict arises from a lack of shared perceptions and attitudes among members at different echelons. In bureaucratic organization, frequently conflicts have a character i.e. a cycle of conflict between superior and subordinate occurs when a superior tries to control the behavior of a subordinate, the subordinate tends to resist causing the superior to increase the use of bureaucratic rule enforcement to gain control. But the subordinates reaction to rule 99

enforcement is further resistance, resulting in the perpetuation and intensification of the conflict. II HORIZONTAL CONFLICT: This form of conflict occurs between departments or other units, such as divisions, sections and branches. The term interdepartmental conflict is used to describe lateral conflict among all types of units or subsystems. The source of conflict between lateral units consists of pressures toward sub-optimization. The sub-units in the goal-oriented system will have different sets of goals or different preferences for the same goals. If the two sub-units having differentiated goals are functionally interdependent, conditions exist for conflict. Mutual task dependence is a key variable in interdepartmental conflicts. III LINE AND STAFF CONFLICTS Line-staff conflict, is a form of structural conflict, primarily horizontal, between staff and line managers at or near the same level. It also illustrates both interdepartmental and role conflict, for the staff department has its own identity and mission, and pits the specialists role against the roles of line manages. Line -staff conflicts is essentially a clash of domains caused by dividing expertise, authority, and roles. Role Conflict: Organizational roles consist of sets of behaviors expected of each organization members. Some are formally prescribed by job descriptions, delegations, assignments, organization manuals, and the like, and are derived from tasks, missions, procedures, or instructions. Others are created by the informal activities of organization members. In bureaucratic organizations the most important roles are those of superiors and subordinates, which are usually specifies as tasks in job descriptions. Role conflict occurs when an individual must assume roles for different situations that are inconsistent with one ore more others roles.. Institutionalized Conflict: Institutionalized conflict occurs where the social system substantially structures the conditions under which conflict may occur, regulates the conduct and severity of the conflict, and legitimizes the methods by which the conflict is resolved, prescribing appropriate roles, rituals, and ceremonies,. Labor-management relations is an example. Line-staff conflict, too, has its institutionalized aspects as the parties to it accommodate their strategies to those of their counterparts. Conflict is essential to survival for the union; lack of confidence would weaken it. There are many verities of institutionalized conflict in labor-management relations. CONFLICT RESOLUTION The ways of minimizing excessive organizational conflict are as varied as its causes sources, and contexts. Conflict cannot be entirely eliminated but conflicts that threaten the welfare of the organization or its members can be minimized. Much can be prevented. Continuous resolving of conflicts must be carried out but with an awareness of their costs as well as benefits. Parties in a conflict have several alternatives. WITHDRAWAL BY ONE: It is a kind of strategic retreat, which can be either real or simulated. Some conflicts, of course, do not permit withdrawal, a s in the case of labor-management conflict, in which bargaining is required and dispute settlement methods are often imposed. Withdrawal in not a satisfactory alternative. It may also drive the conflict underground. WIN-LOSE STRATEGY BY USE OF POWER OR PERSUASIVENESS: Each adversary tries to win and make the others lose. Long-enduring conflicts may be created in which the power are nearly equal and the balance of power shifts back and forth. This kind of conflict can be costly, for the fighting may be harder and last longer. It is painful for the loser, who loses the argument and soles face as well. THIRD-PARTY INTERVENTION: A more positive approach to conflict. In this case an outsider, neutral party, such as an arbitrator, mediator, or consultant, can intervene, find facts, and proved a decision . In arbitration, the parties agree to abide by the decision. Organizational conflict is often settled by a coordinating manager who exercises a leadership or coordinating function. The need for containing or reducing such conflict is met by various integrating and coordinating devices, such as committees, councils, boards, or (as in the case of many firms), a central corporate office. Conflict is minimized in bureaucratic organizations by emphasis on a single chain of command, a dominant line organization that clarifies authority and responsibilities and adjudicates conflicts among them.

100

Blake, Shepard, and Mouton suggest three approaches to conflict resolution, based on the possibilities for eventual agreement. First: where the parties see the possibilities for eventual agreement, and are skilled and the use of straightforward strategies well understood by both sides, peaceful coexistence can occur. In peaceful coexistence, each party is alert to the actions of the other. The contending parties are approximately equal in their power and strength, Second: Through compromise, bargaining, and splitting the difference. It is often found in conjunction with other approaches, such as intervention, arbitration, or mediation. Third: Through problem solving. It is useful in all realms of conflict, particularly in labor management relations. In this approach the problem solving is mutual between the parties, who work together to identify the problem and find alternatives. They determine goals priorities and areas of common agreement. They are then in position to determine inter-group courses of action. Approaches to Role Conflict Resolution: Another means for facilitating conflict resolution is to set up role expectations so as to minimize or reduce conflict. Organizations using participative management tent to minimize role conflict. Instead of reducing dependence and increasing the autonomy of managers, leadership theories suggest reducing conflict by using persuasion and group pressures to bring subordinates goal closer to organizational goals. The role conflict approach opens up the possibility of reducing the conflict that is faced by the manager as the man in the middle. (Selection for Koontz) SOURCES OF CONFLICTS There are many potential sources of conflicts Complex organizational relationship and high degree of interdependence in the organization courses friction 2. Incomplete goals to be attained with limited resources 3. Different values and perceptions of different issues by different peoples. 4. Conflicts of line and staff positions. 5. Superior autocratic leadership style may causes conflicts. 6. Different educational back-grounds are also a source of conflict. MANAGING CONFLICTS Conflicts can be managed according to the nature of conflict by using any of the following techniques By focusing on interpersonal relationship. 2. By structural changes. 3. By avoiding a situation that causes conflict. 4. By smoothing and emphasizing the areas of agreement and common goals and deemphasizing disagreements. 5. By forcing ones view on others. 6. A traditional way is to compromise, agreeing in part with other persons view or demand. 7. attempts should also be made to change the behavior of individuals which is a difficult task indeed. 8. By re-assigning an individual to another organizational unit. 9. To make structural changes my modifying and integrating the objectives of groups with different viewpoints. (End of selection )

101

CHAPTER-18 ORGANIZATIONAL EFFECTIVENESS

THE CONCEPT OF EFFECTIVENESS Effectiveness is not a one-dimensional concept that can be precisely measured by a single, clear-cut criterion. It describes the extent to which an organization has performed according to its capacities, potentials, and general goals. Definitions: Early writers define effectiveness straightforwardly as the degree to which purposes are achieved. Geogropolous and Tannenbaum defines organizational effectiveness as the extent to which an organization, (given certain resources and means,) achieves its objectives without placing undue strain on its members. This definition implies the concept by including as general criteria (1) productivity, (2) flexibility to adjust the internal change and successful adaptation of external change, and (3) the absence of excessive internal strain, tension, and conflict among subgroups. Mott defines organizational effectiveness as the ability of an organization to mobilize its centers of power for action (production and adaptation). CRITERIA FOR EFFECTIVENESS In measuring effectiveness the major problem is the presence of effective criteria against which to make objective comparisons. Investigations have shown that managers in a complex organization may cite as many as two hundred criteria they believe are important. The reason is that organizations have multiple purposes, which are in a state of change. It is necessary, therefore, to use multiple criteria, and to use different kinds of measures for different purposes. Measures of total effectiveness against a single criterion are difficult, and they usually do not reflect the factors that influence the degree of effectiveness measured in this way. Even productivity or output as a measure of effectiveness is limited in scope and applicability. Typologies: Mott has developed following multiple-criteria models of effectiveness which can be used to classify the relevant variables to be measured. A. Organizing centers of power for routine production (productivity) Quantity of the product 2. Quality of the product 3. Efficiency with which the product is produced. B. Organizing centers of power to change routines (adaptability) 1 Symbolic adaptation Anticipating problems in advance and developing satisfactory and timely solutions. b) Staying abreast of new technologies and methods applicable to the activities of the organization. 2 Behavioral adaptation Promote acceptance of solutions b) Prevalent acceptance of solutions C Organizing centers of power to cope with temporarily unpredictable overloads of work (flexibility) Seashore has advanced a useful typology for different kinds of criteria of effectiveness. Both ends and means are important. Some criteria are close to formal objectives, others are instrumental in achieving main goals. b) The time frame must be considered. Some criteria refer to the past; others to the present and the future. c) Long-run and short-run perspectives are needed. Performance may be stable or highly erratic in the short run, but show a different pattern in the long run. d) Some criteria are hard. others are soft. Hard criteria consist of objectives, measurable factors,, whereas others, such as the level of morale, are qualitative. Hard data are not necessarily better than soft data, but both may be needed. e) Some variables are linear in value, i.e., more is better than less; whereas others have a variable scale where some optimum is desired and more or less are both undesirable. Social Effectiveness: Among the soft criteria are those tests of effectiveness that relate to the organizations presence in the community. As corporate citizens, companies need to be aware of their social responsibilities. Instead of evaluating the success of programs solely by productivity, efficiency, 102

and profits, he proposed that programs also be evaluated on their contributions to the organizations worth to its members and to society. ACHIEVING ORGANIZATIONAL EFFECTIVENESS Structural decisions are not always made according to the need for effectiveness. In bureaucratic organizations most decisions (on organizational structure) are made according to similarities of activities and functions that are considered to be logical groupings. Knowing or appraising an organizations degree of effectiveness is a major step forward, but efforts to increase effectiveness need to be based on an adequate diagnosis of the source and nature of the causes of low effectiveness. Brown has noted seven defects that produce ineffective organizational results failure of administrators to act when they need to do so 2. delay in taking action, 3. taking the wrong action, 4. lack of sufficient effort 5. wasted effort, 6. excessive effort in relation to the need and 7. excessive quality of effort in relation to the problem After proper diagnosis, it remains to determine which of four causes pertain to given situation: (1) people, (2) organization, (3) methods of administration, or (4) external influences. The firs three are controllable. Tannenbaum constructed a set of diagnostic indices of organizational effectiveness. These elements pertain primarily to the human and organizational dimensions of organizational effectiveness. Understanding The extent to which prescribed relations are correctly perceived. 2. Normative Conformity The extent to which actual behavior conforms to prescribed behavior or to perceptions of the prescribed behavior. 3. Affective conformity The extent to which actual behavior conforms to desires and reflections. 4. Satisfaction and dissatisfaction: The extent to which prescribed perceived, or actual relations are also desired or rejected. 5. Affective atmosphere: The state of balance that exists in an organizational unit between effectively positive and effectively negative choices. 6. Centralization The extent to which choices (prescribed, actual, desired, perceived, or rejected) are concentrated in a particular person or group. Organizational Health Argyris, Bennis, and others have defines effectiveness as the systems capacity to survive, adapt, maintain itself, and grow, regardless of the particular functions it performs. He argues that a single measure of output or slice of time will not provide an indication of organizational health. Instead, he suggests three kinds of criteria: adaptability, 2. a sense of identity, and 3. the capacity to test reality. Another criteria that is widespread in the literature of organizational health is that of the integration of individual and organizational roles. Total organizational effectiveness is hard to measure and hard to achieve. What generally happens in organizations is that leaders are able to identify the less effective subgroups or individuals, and can work to improve matters at practicable levels.

103

ORGANIZATIONAL DEVELOPMENT AND MANAGERIAL BEHAVIOR

CHAPTER--19 ORGANIZATIONAL DEVELOPMENT
DEFINITION: The term organizational development (OD) is defined as planned organization change to improve the effectiveness of people, structures, and processes. As a comprehensive term, it includes not only changes in organization design but also in organizational philosophy and in the skills of individuals and groups. It recognizes that organization structure and managerial performance are mutually interdependent. It treats the organization as an interrelated whole. From a system viewpoint, organization development, called OD, is a set of concepts and techniques by which organization members learn to initiate, accept, and cope with change, to develop trust in each other, and to function effectively as members of groups and teams. The term OD is thus broadly used to describe a variety of change programs, even traditional training. Some organizations confine it to structural change; others to standard training programs; still other use it for the most sophisticated efforts for total, comprehensive change and development. This chapter treats OD in its broadest scope. Some key assumptions of organizational development are: Piecemeal approaches to structural change and the development of people are less effective that OD methods. 2. training and managerial development programs are only one part of the concept, and by themselves are inadequate for the complied needs of todays organizations. 3. The findings and techniques of behavioral science are more complex and more uncertain than older methods. Sociology, social psychology, and applied anthropology are now allied with psychology in their contributions to understanding organization behavior. 4. OD includes the effort to guide and direct change as well as to cope with or adapt to imposed change. it recognizes that goals change and the methods of attaining them are continuously changing. 5. The central focus of OD is on fostering the ongoing processes of renewal and regression so as to preserve organizational health. This chapter is divided into two main sections. Firs describes the fundamentals of organizational development, and Second gives the techniques and procedures for the training and development of managers in organizations. THE FUNDAMENTALS OF ORGANIZATION DEVELOPMENT Organization development is generally undertaken as an organization wide program, although it has been applied in some cases only to parts of an organization, such as a research and development group. It may be conducted by a special task force, an organization development department (if exists), a team of behavioral science consultants, or appropriate members of the personal department. Purposes of Organization Development The basic rational of OD programs is the recognition that traditional structures and processes, cannot achieve the orientation to development that is possible by viewing the organization as a total system. Organization development programs are largely based on open, adaptive systems concepts, such programs are a primary means for modifying bureaucratic systems, for they point to new goals guided by planned change. Although some OD programs may not signify major departures from bureaucratic structure, most imply significant change for managerial leadership styles and the eventual loosening of bureaucratic tight-ship philosophies. Another important purpose of OD programs is to foster participative management, and to develop attitudes of trusted confidence on the part of organization members. Organization Development Models: 104

PART-IV

1 2

An OD program consists of a feedback cycle, the basic stages of which are (1) diagnosis, (2) action planning, (3) action implementation, and (4) evaluation. Within the over-all OD cycle, other cycles of varying duration appear at successive levels. Top management may follow a five-year cycle, middle management yearly or quarterly cycles =, and lower management a monthly cycle. The main components of organization development are: change agents, 2. diagnosis 3. intervention strategies 4. change processes, and 5. evaluation. Change Agents: Change agents may be one ore more members of the organization, or behavioral science consultants. Outside consultants are needed for greater objectivity and for up-to-date technical knowledge. Diagnosis Diagnosis requires considerable skills of analysis and observation. In the diagnostic stage, overall goals are stated in forms useful for guiding plans and actions. Consultants increase the likelihood of objectivity in sizing up problems that have led to the interests in OD. Moreover, because problems are often expressed by organization members in general and vague terms, they need to undergo substantial transformation before decisions are made. Change agents do not make the diagnosis. Instead, they help others to refine and sharpen their own diagnoses, face their feelings, clarify their assumptions, and state their true goals. The aim of diagnosis is to identify all the main components that cause difficulty in the existing situation. The initial diagnostic focus is on organizational variables rather than on the psychology of a group or of individuals, which becomes important at later stages. Diagnosis begins with the total system, its structure and functioning. Work flows and communication processes are examined. Subsystems are observed in their relationships to each other. Diagnosis leads to locating the sources of specific problems, which activities break down or need improvement, and where casual methods can be systematized. Intervention: Intervention, the action phase of OD, follows from diagnosis; it is a form of interference, but if it is regarded as only that its purposes are defeated. Intervention is defined as a set of planned , programmatic activities and techniques by which organizations and their clients collaborate in an OD program. Change Processes and Strategies: An important question is where to begin. Some feels that structural change should come firs, whereas others believe that personal or interpersonal, group or inter-group relationships should be dealt with first. Argyris suggests that both approaches are valid under given conditions. One of the major tasks of the interventionist is to help organization members become aware of their roles in causing the problems they are attempting to overcome. Evaluation and Feedback: Evaluation and feedback are not actually separate stages in the OD mechanism. They occur at every stage. As one stage ends and other looms, an evaluation will help assess the validity of what has been done, and show whether further work in needed before going on. Evaluation proceeds by gathering and analyzing information. Feedback is the process of relaying evaluations to appropriate individuals or groups, by means of special reports or in conference sessions. ORGANIZATION DEVELOPMENT TECHNIQUES The number of OD interventions is large. They vary in the range and depth of their penetration into the behavioral system of the organization and in the nature of the purposes they serve. There is no single OD method capable of serving all the likely objectives. Typically serves related methods are used together. for example, a traditional training method. Classifications of OD Method: OD methods are difficult to classify because of their overlapping and interrelated nature. Bennis classifies interventions into nine categories according to theme or purpose. These focus on (1) discrepancies, (2) theory, (3) procedures (4) relationships, (5) experimentation. (6) dilemmas, (7) perspectives, (8) structures, and (9) cultural problems. His typology, though complex and overlapping, indicates the variety of problems that confront the OD specialist. 105

3 4

French and Bell, for example, designate twelve families of interventions: Diagnostic, 2. team building, 3. inter-group activities, 4. survey-feedback methods, 5. education and training programs, 6. techno-structural activities, 7. process consultations, 8. the Management Grid, 9. Mediation and negotiation activities, 10. coaching and counseling, 11. career planning, and 12. planning and goal setting activities. Action Research: Action research emphasizes information collection and analysis, coupled with a feedback process. It declares that the organization intends to act upon the findings, and implies that action will be based on pertinent data that describe the current situation. Action research proceeds in ways similar to that of the OD cycle described earlier. It proceeds in the same way as any research: hypothesis formulation, data collection analysis, testing of hypotheses, and evaluation. Action and feedback are the additional steps. Survey Feedback Methods: This method resemble to action research in that they include the use of data collection and feedback. They are especially helpful in planning, diagnosis, and evaluation. Whereas action research is generally oriented toward system goals and overall planning, survey feedback methods focus on drawing out the attitudes of individuals toward problems of change and improvement, with team members working on their own data to produce change. The surveys deal mainly with superior-subordinate relations in job context and analyze such problems as teamwork leadership style, organization eliminate, cooperation, and job satisfaction. Sensitivity Training: It has been used apart from OD programs, but in isolation it has not been effective in bringing about organizational change. Process Consulting: Process consulting focuses primarily on groups as the basic building blocks of organization. The groups may be permanent, to they may be temporary ones such as teams, task forces, project groups, or committees. Process consulting may deal with tasks, work flows, the processes by which the group accomplishes its task and conflicts which arise between group members. Schein and Argyris are the chief developers of the process consulting method. Confrontation Methods: Although it is not a complete approach, but they are a valuable adjunct to the problem-solving situations that inevitably arise in OD programs. Confrontation approaches aim to resolve intergroup conflict, which, if unresolved, can smolder and flare up in ways that are injurious to organizational health. Confrontation brings such conflicts into the open and attempts to find ways of reducing or eliminating their negative effects. There are several ways of confrontation on procedural strategy. (1) Groups or their representatives may agree to negotiate their difference. In it negotiation implies compromise. (2) Leaders stress on higher goals upon which agreement can be found, thus putting the conflict in a different perspective. Leaders can challenge the groups to find common grounds from which their rewards will derive. (3) Deflect attention to a common adversary, getting the groups to work together to win out. (4) Using a number of techniques of communication and understanding between the members of conflicting groups. Team Building Approaches These are designed to improve work effectiveness of various groups or teams in the organization. Team building occurs in two contexts: the permanent organizational unit such as a section or department, and temporary teams such as committees, task forces and project groups. Team building focuses on the groups internal processes and relationships and also uses procedures similar to those in other OD situations. These techniques are directed at improved diagnoses, planning of tasks and action programs, interpersonal relations, and organizational processes. A consultant usually acts in a third-party capacity, working with the groups leader and its members. Meetings of various types and for various purposes are used, for diagnosis, analysis, 106

and consensus. The group generates the data it needs, but toe consultant also provides inputs from his research and observation. Role Techniques: These techniques are useful with major OD interventions. One approach is to engage in role clarification, by having group members explain various aspects of the role behaviors they deem important, and express their expectations about the roles of others. Through group discussion techniques, an improved understanding of the various roles can be achieved. Ambiguity and conflict among roles can often be greatly reduced. Managerial Grid: It is a total organization development approach that includes six phases, beginning with the individual manager and progressing it include the entire, organization. The six phases may take from three to five years to complete. The approach was developed as an attitudinal formulation of concern for people and concern for production. The reasoning is that attitudes lead to behavior, which in turn has consequences. Behavior Modification: Also called operand conditioning and positive reinforcement. It is based on learning theory and directed toward changing individual behavior rather than that of the group or total organization. Strictly speaking it is not an OD method, but it has been increasingly applied to a variety of organizations, including business firms.

107

CHAPTER--20 ORGANIZATIONAL CLIMATE AND MORALE

Organizational climate and the morale of organization members greatly influence the behavior of people at work. ORGANIZATIONAL CLIMATE DEFINITION: Organizational climate (OC) is a relatively enduring quality of the internal environment that is experienced by its members, which influences their behavior, and can be described in terms of the values of a particular set of characteristics of the organization. Climate vary from one organization to another, each reflecting a unique combination of circumstances. Climate is a commonly experienced phenomenon, and we have many expressions for it (e.g., atmosphere, culture, environment, and milieu). Yet climate remains an abstract concept dependent upon the perceptions of people. The importance of climate is its potential for influencing such important factors as efficiency, productivity, motivation, and job satisfaction. But the nature and effects of climate are hare to measure and evaluate. Measurement of Climate: Hellriegel and Slocum have proposed a contingency model for the measurement of organizational climate, They examined 31 studies, using three classes of contingencies for comparing them:(1)type of technology, (2) type of subsystems and (3) type of environment. They then examined the use of the organizational climate construct as an independent, dependent, and intervening variable in the studies reviewed. The following tentative conclusions are summarized: Independent variables, with job performance or job satisfaction as dependent variables. a) Job satisfaction often but not always varies according to the individuals perception of the organizational climate. b) There is a significant relationship between job performance and organizational climate. c) Individuals employ different work methods under different conditions of the climate. Dependent variables, with climate dependent on organization structure, and with change possible through human relations training. a) Perceptions of organizational climate vary among employees at different levels in the hierarchy. b) The perceived degree of bureaucratization influences employees perceptions of the climate. c) Perceptions of climate vary with the employees orientation to their environment. d) There is a strong relationship between decision-making discretion and an employees perception of climate. e) Sensitivity training can be effective in changing employees perception of climate. Intervening Variable, with human relations, leadership, or managers personality needs as independent variables, and performance and satisfaction as dependent variables. a) Results of human relations program were inconclusive, and the evaluation of training requires substantial time. b) Leadership styles had a marked effect on creating different clematis and hence on performance. c) There is evidence that individual needs and climate can interact to influence performance and satisfaction. It is possible that organizations may have more than one climate. If perceptions are measured, different groups may have different perceptions. Organization climate affects the behavior of people in at least three important ways: (1) defining the stimuli that confront the individual, (2) placing constraints upon the individuals freedom of choice, and (3) providing sources of reward and punishment MORALE DEFINITION: Morale has many definitions, no one is universally acceptable. These definitions range from the purely operational to the theoretical and often abstract concepts of researchers. They also vary from one discipline to another. Druker, McGregor, and others refer it as the spirit of an organization and the managerial climate. It is fundamentally a group phenomenon, consisting of the pattern of attitudes held by organization or by group members collectively.

108

Guion provides a total situation definition of morale that emphasize the individual: Morale the extent to which and individuals needs are satisfied and the extent to which the individual is stemming from his total job situation. Blum and Gilmer states that the term Job attitude, job satisfaction and industrial morale are by no means synonymous, although they are often use interchangeably. According to him job attitude is the feeling of employees about their job and their readiness to react in certain ways to their job situation. Job satisfaction is the degree of favor-able-ness of a persons various attitudes toward job, boss, work and other people, and even toward life in general. Morale, a group concept, is the common expression of the attitudes of the various individuals in an organization. Individuals derive their personal morale out of their feeling of acceptance by the group and a sense of participation in a common enterprise. Levels of Morale: Morale is frequently described as high or low. It may differ from one sub-unit to the next. But some degree of morale is always present. High morale exists when employee attitudes are favorable toward their job, their company, and fellow workers. Low morale exists when attitudes inhibit the willingness or ability of organization members to attain objectives or to obtain satisfaction from their jobs. Morale is a long-run condition. Those who points to businesses having low morale and good results may be taking a short-run view of the total situation. Morale is a state of balance and health within an organization. The concept of morale is often confused with that of teamwork,. but the two are note the same. Teamwork is a condition in which individuals work together effectively in groups. Morale is the state of attitudes of members of the group. Teamwork may be high, yet morale may be low. Teamwork may also be absent when morale is high, as in cases where workers prefer individual effort and find satisfaction in their own performance. Reasons for Maintaining High Morale: It has been widely assumed that high morale leads to high productivity. Research indicates that the relationship between morale and productivity is not clear, direct, and simple as has be supposed. High morale is described for reasons other than productivity. For on thin, it is pleasant to work for an organization where a spirit of loyalty and good will prevails. Managers may feel proud of their ability to develop teamwork and an esprit de corps(union is strength) that is evident to others. Morale leads to a sense of unity and coordination that is apparent to outsiders. Most important, too, is the attraction of such an organization for the better employees available in the labor marked. ATTITUDES AND JOB SATISFACTION Attitudes are a central component of morale. The attitudes of employees, at all levels, have both an objective and an emotional component. The objective component is a mental set, a view or opinion based on facts and on day-to-day experience. The emotional component centers around evaluations of these experiences. In actual situations, it is not easy to separate the mental and emotional characteristics of an attitude. They go together. Unless managers are aware of both components, however, they are unlikely to deal with attitudes successfully. Unrest among people can spread quickly once it starts. Favorable attitudes can also spread quickly but slower than that typical of unrest. Once started, the spread of unrest is hard to stop. Extent of Job Dissatisfaction

Measuring Attitudes and Morale

Problems in the Use of Surveys

Guidelines for Attitudes Surveys BUILDING AND MAINTAINING MORALE

109

Participation

THE CASE OF PARTICIPATION

RESEARCH ON PARTICIPATION

LIKERTS SYSTEM-4

THE ADVANTAGES OF PARTICIPATION

CAUTIONS ABOUT PARTICIPATION

Cohesiveness:

Identification: It is a psychological concept describing an individuals reactions to the characteristics and achievements of an individual or group as through they were has own . individuals, in an organization tend to identify with their fellows (especially those close to them or on similar jobs) and managers with managers. This ability to identify with another person, group or organization is a learning experience and a device by which a person derives security and confidence from the environment. This individual morale is strengthened by realizing that there are other who have the same problems and even that they may have found at least some of the answers. Loyalty It is often a grabled concept. Weak or insecure managers often demand a blind loyalty i.e., beloyal-to-me-or- to-else attitude. True loyalty is a derived or an earned loyalty generated out of clarity of common purposes and respect for the goals, ideas, and activities, of the organization, as well as for the people in it. Loyalty poses personal and organizational pitfalls for managers. Loyalties may be in conflict with one another; loyalty may be demanded by a department in a way that runs counter to loyalties demanded by ones division, company, colleagues, profession, or even customers or other outside groups. Loyalty may also be rationalized to the point where it becomes a value over other values, such as honest and integrity. Officials found guilty of illegal price fixing or of conflict-of-interest violations on doubt feel they are acting for the good of the company..

110

CHAPTER--21 MANAGERIAL PERFORMANCE : APPRAISAL AND IMPROVEMENT

MANAGERIAL EFFECTIVENESS There are considerable differences in current definitions of managerial effectiveness. Compbell defines it as any set of managerial actions that are optimal for identifying, assimilating, and utilizing internal and external resources with the aim of sustaining the functioning of the unit for which the manager is responsible. Deddin defines the concept as the extent to which a manager achieves the output requirements of his position. Druker defines it as a habit, a complex of practices that lead to getting the right things done. All these definitions contain key elements: (1) results, (2) organizational objectives, and(3) managerial action. Efforts to measure the degree of effectiveness depend on clear and operational definitions. Not every one agrees that effectiveness can be objectively measured, but subjective evaluations are made all the time. It is clear that effectiveness does not lie entirely within the control of the manager himself, nor is it confined to a specific array of managerial traits. The environment, the organization structure, and the reward system are only a few of the factors that combine with the managers personal characteristics in determining ultimate outcomes. MANAGER APPRAISAL Appraisal is a so complicated task that managers often hesitate to devote the effort required by modern appraisal techniques. Many managers distrust formal methods and prefer to avoid direct confrontation with appraisals. Koontz says that appraisal means evaluation or assessment of capabilities of executives, essential to estimate strengths and weaknesses of managers, and to provide information about their effectiveness. It is done by executive by closely watching the performance of subordinates. Objectives of Appraisal Appraisal is not same as measurement. It is more subjective. The purpose of and systematic method of manager appraisal is to increase the objectivity and fairness in judgments of subordinates. It reduces subjectivity by the use of regular procedures for periodic appraisals, which thus provide up-to-date information for making decisions about people. Uses of Appraisal Results: Appraisals result in systematically organized information about the performance of individual managers. This information can be used for making many kinds of decisions. The main uses are: to facilitate decision about salaries and other rewards, 2. to identify promotable managers, 3. to determine the training needs of managers, and 4. to guide the growth and self-development of individuals. 1 DECISIONS ABOUT SALARIES AND OTHER REWARDS: Appraisal is often made at the time of considering periodic salary increases; individuals with favorable appraisals revive merit increases and other rewards. This recognition may help to motivate individuals. 2&3 IDENTIFY PROMOTABLE MANAGERS AND DETERMINATION OF TRAINING NEEDS: Identifying promotable and trainable executives is important, because training resources may be wasted if it occurs indiscriminately. Choices must be made as to who gets what, and these choices can be more readily justified under systematic procedures known to all. 4 SELF DEVELOPMENT: It is a key note of the newer systems of appraisal that are supplanting traditional approaches. It have its roots in psychology and learning theory; it emphasizes the need for motivation high aspiration levels, and the varying achievement drives of individuals. A Systems View of Appraisal: The nature and role of the appraisal process can best be seen by taking a systems view. There are three main subsystems: Planning and review, Work planning specifies the tasks, activities, and needs to be met, together with standards for their measurement or appraisal. 2. Formal appraisal: Appraisals are made, and adjustments may be made in the work as it progresses. Performance is the result of skills influenced by motivation. 3. Use or application of appraisal results: Appraisals are used in planning job chances or reassignments, training and development, and compensation. Now we will examine (1) the problems of performance standards, and (2) procedures for conducting the appraisal. I) PERFORMANCE STANDARDS FOR APPRAISAL OF MANAGERS: 111

The overall performance of an organization depends on the performance of individual managers. Managerial performance is appraised by each managers immediate supervisor. It is necessary to use systematic procedures to measure or apprise the results against clear standards. Setting of performance standards has been widely neglected in organizations. Partly, this neglect can be attributed to the complexity and rapid change in managerial tasks, and the ambiguity or breadth of surrounds management tasks, especially at higher levels. The determination of performance standards is difficult because human capabilities are difficult to define and understand. A valuable approach is for managers to involve their subordinates in the process of choosing and defining the standards. In management by objectives procedures used in many companies, the attainment of mutually agreed-upon objectives becomes the standard. In any case performance standards should be a matter of clear understanding between bosses and subordinates. II) APPRAISAL METHODS: Two main methodological approaches are used for systematic appraisals: (1) rating scales, sometimes called merit rating, and (2) results oriented planning. a) Rating Scales: Early programs of appraisal centered on rating scales based largely on personality traits. This was a step in the right direction because it introduced a system and regularity to the procedure. Such scales have some inherent weaknesses include The ambiguity of standards, the difficulty of defining the traits so that the rates apply them consistently, and doubt about whether there is a valid connection between the traits and the quality of performance. Rating scales are difficult to use without error and bias. b) Result Oriented Planning: This one-way appraisal process has come to be widely modified in modern organizations, because assumptions about people at work have changed. Appraisal is now widely viewed as a two-way process. The core of the new approach is the shift from personality-oriented, judgmental criticism to a focus on results together with joint planning and contributions from both superior and subordinate. The concept of performance control has changed to an emphasis on appraisal as a tool of performance planning and analysis. This new approach to performance standards and manager appraisal is utilized in MBO programs. The ultimate aim of MBO is to use the mutually selected targets as standards for evaluating the subordinates results, both superior and subordinate gain better understanding and more accurate appraisals through careful planning. The subordinate starts the planning and review cycle by choosing the performance targets, which he feels are most desirable. These are reviewed in a planning session by both superior and subordinate. The superior may accept or modify the targets, enlarging the horizon of a modest or apathetic subordinate, or restraining the overeager one who tries to tackle too much. A central element in MBO is that the focus is on performance and results rather than on the superiors opinions about the subordinates personality or general behavior. Several difficulties must be considered in MBO or other results approaches. They represents a complex set of psycho-social behaviors for the superior, and an unfamiliar role for most subordinates. A higher set of skills is required of the appraising manager, who needs well-developed interviewing and observational capacities, substantial self-awareness, and sensitivity to the needs and feelings of others. Such procedures represents a way of life for the organization. They are a total system, not a piecemeal, casual affair that can be tried out by one group or another. Results approaches have to encompass all levels, including the very top; they need full support in the policies and action of the entire management team. Result oriented approaches emphasize ends and say little about means. Unless careful attention is given to the way the process works, subordinates may get the idea that results are wanted at any cost, and that the means do not matter. How work is done may also be important. Success depends on winning the support of the participating managers, who need to feel confident in their ability to handle the complex social and psychological subtleties of the system. This confidence comes only through practice and training. Communicating the appraisal results to subordinates is the most critical step in the process. (Selection form Koontz) The appraisal methods can be subdivided in to three categories: A) Traditional Appraisal methods, B) appraisal against verifiable Objectives i.e. MBO, C)Appraising managers as managers and D) a team evaluation approach. 112

A) TRADITIONAL APPRAISAL METHODS: Traditional appraisal methods are of following types: 1 Periodic: Assessment of an executives worth and capability at the end of certain period, say one year or six months, in relation to job assignment to him. It have certain drawbacks given bellow: Unnecessary overburdening the executive at the end of the period which sometimes affect his efficiency. II. This method requires executive to recall all the performances of the executive concerned relating to that period. He may forget some facts especially of beginning period. III. A fair evaluation may not be possible because the entire activities of the executive performances remain in greater lime light. 2 Continuous: In this method, evaluation of the performance of the executive continues throughout the year by taking notes of his activities either on day to day basis or at a very short intervals say one week or fortnight. This method covers his entire performances. It requires the senior manager to include this performance appraisal in his daily routine. 3 Trait Approach to Appraisal: An old way of managers evaluation is the evaluation against the traits and the work characteristics. In this approach a few important personal characteristics are taken into consideration e.g. ability to get along with people, leadership, analytical competence, initiative, job knowledge, and ability to carry through an assignment. This approach gives emphasis on personal characteristics, and thats why it has failed to assess properly as to how far the executive has been successful in accomplishing the results. What have to be seen is his accomplishments. Therefore, it is a blunt tool of measuring the effectiveness of executives. B APPRAISAL AGAINST VERIFIABLE OBJECTIVES: A most promising tool of managerial appraisal. In it managerial performance is evaluated against setting and accomplishing the verifiable objectives. A net work of meaningful and attainable objectives is the basic to the effective managing. No one can be expected to accomplish a task effectively and efficiently unless he know what should be the end point of his efforts. Managing by objectives, has now earn wide recognition due to its emphasis on objectives rather than subjective evaluation. The basic advantage of MBO is that it makes appraisal fairly easy. MBO simply considers how competently managers set objectives and how well they have performed against them. In other words, it takes into account all the abilities of a managers right from planning to controlling. Setting of objectives evaluates the planning ability and their accomplishment assesses organizing, staffing, directing and controlling functions of an executive. While appraising managers against verifiable objectives the evaluator must take into account such considerations as whether the goals were reasonable attainable in the first place, whether intervening factors (beyond the managers control unduly helped or hindered him in accomplishing his goals and what are the reasons for accomplishment or non accomplishment. The reviewer should also note whether an individual continued to operate against obsolete goals when situations changed and a revised goals were called for. Three kinds of review are carried out: I Comprehensive Review, II) Progress or Periodic Review and Continuous monitoring. I Comprehensive Review: A formal comprehensive appraisal should be conducted at least once a year or more frequently. Their is no universally applicable suggestion about the time for the formal comprehensive review. It depends upon the nature of the task, past practice of the company and other situational factors. Once two or even three times may be appropriate for a particular organization. II Progressive or Periodic Review: Formal comprehensive reviews should be supplemented by frequent progress or periodic reviews. These reviews can be shorter and relatively informal but help to identify problems that hinder effective performance and keeps communication open between the superior and subordinates. Moreover it helps to negotiate rearrangement of objectives if warranted by the situation. Because it is not right to carry out obsolete or even unsuitable objectives. III Continuous Monitoring: In these system of MBO when performance deviates from plans one does not wait for the next periodic review to correct it the superior and subordinate should discuss the situation immediately so that the corrective actions can be taken at once to prevent a small deviation from developing in to major problem. 113

ADVANTAGES: The advantages of appraisal against verifiable objectives are almost the same as of MBO, both are the part of same process and are basic to effective managing. WEAKNESSES: Weaknesses of MBO apply also it appraisal against verifiable objectives: 1 Accomplishment of objectives greatly depends upon lack or extraordinary conditions emerging due to through external factors, for example is sales beyond expectations due to external factors and that marketing program is just ordinary. 2 It is extremely difficult to make sure how much change is due to lacking and how much due to competence. A fair estimation or appraisal may not be possible. APPRAISING MANAGERS AS MANAGERS.: The most appropriate standard for evaluating managers is to appraise them against managerial functions i.e. planning, organizing, staffing leading, and controlling. It may appraise different elements of each function For instance in organizing it may appraise the quality of job assignments, delegation of authority, balancing of authority with responsibility and coordination of activities. The standard for assessing the work may be drawn in the light of management principles. It takes into account how far the management principles governing each area of managers function have been correctly understood and practiced. This system of appraisal focuses attention on, what may be expected of a manager. ADVANTAGES By focusing on the essentials of management it gives operational meaning to what management really is. II. This system has proved to be a tool for management development by calling to the managers attention on certain basis that may have long disregarded or not understood. III. This approach has been found useful in pinpointing areas where weaknesses exists and to which attention is required. WEAKNESSES It only applies to managerial aspects of a given position and not to technical qualifications and abilities, like engineering, technology, and chemical. A TEAM EVALUATION APPROACH: A more recent approach having the criteria selected for evaluation art, partly similar to those given above i.e. managerial functions and factors, for example the selling skills. the appraisal process is consist of the following: Selection of job related criteria. II. Development of examples of observable behavior. III. Selection of 4 to 8 ratters consisting of other departments supervisors and the immediate supervisor. IV. Preparation of rating forms applicable to the job V. completion of the forms by the ratters. VI. Integration of various ratings VII. Analysis of the results and preparation of the report. ADVANTAGES High degree of accuracy as evaluation is made by several persons rather than only by the supervisor. II. This program can be used to identify the ratters biases (e.g. Consistently rating higher or low as compare to others. III. The person being evaluated considers this approach apparently quite fair, because they are involved in selecting evaluation criteria as well as the ratters. IV. It allows comparison of individuals with each other. REWARD AND STRESS MANAGING: Managers are different but they have some of the general rewards as well as stressful aspects. Rewards for Managing Managers differ widely in age, economic position and level of maturity, they want many things but these usually includes: 1 opportunity 2) Power and 3) Income. 1 Opportunity of a progressive carrier. 2 Most managers, in particular, want to feel that they have the power to make significant contributions to the aims of an enterprise and even to society. 3 They want to be rewarded for their contributions Traditionally executive performance was recognized by salaries and cash bonuses, which may cause a situation that their earnings become increasingly disproportionate to the compensation of others, thats why others criticized the managers. The say the pay of executives is increasing even in recession, when the performance of the company declines. 114

Efforts have to be made to link pay of executives to the performance and to induce them, to make decisions that are in the long term interest of the enterprise. Further more their performance is to be compared with that of competitors. For instance even though the quality may have improved, if more quality improvements have been made by a competitor, this will be held against the company managers as their quality improvement have not been sufficient. To induce managers to make long term decisions may be made by for example granting stock bonus as a reward for their achievements. This criterion include not only return on equity but also increase customer satisfaction, involvement of employees and product quality. Stress in Managing: Stress is a very complex phenomenon. There is no commonly accepted definition. A widely use one is, An adaptive response necessitated by individual differences as a psychological process in consequence of any external action or event that places excessive psychological or physical demands on a person. Hans Selye described stress as the rate of wear and tear caused by life. Physical sources of stress are: 1 Work overload 2 Irregular working hours 3 Loss of sleep 4 Loud noises 5 Bright lights 6 Insufficient light. Psychological Sources of Stress: Due to a particular situation such as 1 Boring job 2 Inability to socialize 3 Lack of autonomy 4 Responsibility for resulting without sufficient authority. 5 Unrealistic objectives 6 Role ambiguity or conflicts 7 Dual career marriage. Same type of situation effect different persons differently because people react differently to same situation. Organizations and individuals deal with stress in various ways, for example individuals try to reduce stress through 1 Batter management of their time 2 Healthful nutritious 3 Exercise 4 Career Planning 5 A change in job, 6 Promotion of Psychological health 7 Relaxation, 8 Meditation and 9 Prayer. Organizations may provide counseling or recreation facilities or may improve the job design by matching the person with the job. So managing offers reward but also involves stress. An individual manager should evaluate both the advantages and the disadvantage of managing before pursuing this career. (End of selection from Koontz) Communicating the Results of Appraisal: Results are reported to subordinates in a feedback interview, a planned meeting between a boss and each subordinate, with four objectives: giving the results, both favorable and unfavorable, to the subordinate, 2. analyzing the causes of performance problems, 3. planning constructive changes and actions to improve performance, and 4. reach a mutual agreement on objectives for the next period. The feed back interview should occur as soon after the completion of the actual appraisal as possible, for delay may cause the subordinate undue anxiety. Dealing with Poor Performance An effective appraisal system in which managers have confidence reveals those subordinates whose performance is below expectations. A decision must be made in each case whether improvement is possible, and what changes should be made. The nature of the performance problem will determine the strategies needed for its solution. The types of problems are numerous. One set of these will be discussed in the next chapter and the other set of problems is (1) obsolescence, (2) shelf-sitting, and (3) human relations problems. OBSOLESCENCE: A machine may become obsolete in its intended use and a new one can be accepted with a sense of excitement, but it is difficult to accept that a person has become obsolete, and a replacement decision often generates fear and anxiety among those remaining. Yet the obsolescence of managers may be more significant to the organization. Obsolete employees may be separated from the organization through layoff, early retirement, or some other means. The alternative to discharging the obsolete employees is 115

retaining or reassignment within organization. This common practice accounts for a large share of the training and education effort of organization. SHELF-SITTERS: Failures in work careers among managers may be caused by lack of skill or ability, a tapering off of aspiration and energy drives, or a lack of well-developed, practical career strategy. For any of these reasons, an individual may become a shelf-sitter ( a person who has topped off at his present level of activities). The shelf-sitter has gone as far as he wants to go, or can go, barring an unusual motivating force. HUMAN RELATIONS AND PERFORMANCE: An individuals performance is partly a function of knowledge, skill, or technical competence, on the other part is the ability to relate to others and to cope with ongoing changing situations. Political and social skills may also have a bearing on an individuals effectiveness. To hold a position in an organization or progress in career a managers abilities of task performance, and personality traits are important. He must also develop successful strategies by which to relate to the organization and to other individuals. These strategies consist of social and political skills that enhance the individuals relationships with others. TRAINING AND DEVELOPMENT OF MANAGERS Leaving manager development to chance or to the manager alone is simply not done in well-run organizations. All experience fundamentally involves learning (or unlearning), and the organizations problem is to encourage the sort of learning it finds important. Managers also make choices as to how and what they learn. Formal training programs therefore concentrate on those learning experiences that lead to the improvement of performance and are amenable to managerial direction. Training activities and programs are administered by a central training department whose director reports to the personnel or industrial relations manager. Programs and courses cover an enormous variety of subjects and purposes, ranging from specific skill development,(such as appraisal feedback methods,) to broad programs for higher managers. The scope of manager development programs is highly sensitive to budget and costs. Informal development is probably the least costly, but harder to plan, control, and achieve quality Formal program maintenance can be expensive. When budget cuts come, informal training continues, but formal programs are curtailed, and outside training resources are less utilized. Internal Resources for Manager Development Formal programs of internal development include courses, seminars, and conferences conducted and administered by members of the training staff. Instructors may be recruited from outside sources, but most organizations prefer inside instructors, (who are either borrowed or maintained) on full-time basis in the training department. COACHING: Coaching is defined as the developmental aim of a managers ongoing relationship with subordinates. It is a systematic, planned way of adjusting the working climate to bring out the best in both manager and subordinate. Fundamentally it is a relationship of give and take between subordinate and superior. Therefore, the basic requirement for effective coaching is the willingness of both to participate and communicate. ROTATION PLANS: Many companies use job rotation plans to assure managers a broad experience in various parts of the organizations. Rotation is less widely used in non-business organizations, where opportunities for rotation are fewer. External Resources of Executive Development: Most organizations utilize outside resources to supplement and complement their internal programs and activities. Out side resources become necessary when highly specialized subjects or methods are needed. Organizations frequently use university-based development courses, conferences, and faculty services, as well as outside consultants. Critique of Training and Development Programs: Practitioners are to much extent are dissatisfied with training and development. All training is costly, and misguided or ineffectual training is a needless waste of resources. There are few reliable measures by which the effectiveness of training can be judged. They can also be used to predict the benefits of training. Frills (locations) have no direct bearing on the quality of training, but have side benefits or increasing morale, vacation time, and so on. 2. Selection of participants should be carefully made. Such participants should be selected which has a reasonable chance of growth and learning. There should also be reasonable chance for the organization to benefit through better performance of the participant. 116

3. Selection for a given program should not mark the participant as a comer in the organization or carry such high prestige that the individual loses status by remaining on the old job afterward.. The purpose of training is not to create prima donnas, but to improve the skills, abilities, and understanding necessary for more effective management. 4. The organization should systematically and rigorously evaluate its training and development activities. 5. The organization should do only what cannot elsewhere be done better or cheaper. i.e., it should relate its training activities to available resources, and a balance should be maintained between internally and externally based programs. 6. Development programs are not cure-alls for complex problems. Serious problems have deep causes. Training may help in resolving these problems only if it is properly established and conducted. Evaluation of Training and Development: Most of the development activities are undertaken on faith. Valid evaluations are hard to make, and experimental evidence is even harder to produce. Yet useful tools and tests procedures are available. Because any training activity leads to changes occurred, and there can be before and after measurements to see, whether the change have occurred. For this purpose the main thing is to set a criteria, by which the changes can be measured. The over-all design of the evaluation effort is important; simply measuring a dimension of change is not sufficient. A more objective model,(that permits comparison of before-and-after situation) is to measure an experimental and a control group. It is necessary to have two groups relatively homogeneous, and either randomly selected. Any changes occurring in the experimental group but not in the control group can be attributed with some assurance to the program effort.

117

CHAPTER--22 MOTIVATION
THE NATURE OF MOTIVATION Motivation refers to the way in which urges, drives, desires, aspirations, strivings, or needs influence the choice of alternatives in behavior of human beings. Motives are forms of tensions occurring within individuals; their resulting behavior is aimed at reducing, eliminating, or diverting that tension. Understanding the wide variety of needs and drives and their resulting tensions helps to explain and predict human behavior. Merely knowing a motive is not sufficient for understanding the individual, for the actions that one takes to satisfy motives are also affected by the context or situation. The organization itself, its climate and the managerial leadership styles that prevail must also be observed to understand the behavior of organization members. The concept of motivation itself is mainly psychological. It relates to those forces operating within individuals that impel them to act or not to act in certain ways. Such things (as needs, wants, drives) are multiple and infinite in number. The individual assign priorities to them. The questions of where how and when are also important. Employees with similar patterns of motivates may thus behave differently depending on their beliefs, values, and environments, as well as their individual needs. Motivation and Morale Contrasted: The distinction between morale and motivation is necessary. Morale describes a state of individual or group attitudes(judgments, and feelings) about work,(job, company or supervisor).While motivation describes a propensity for particular behavior patterns to reduce or satisfy certain needs inducing tension. The Need Hierarchy: Most people are motivated to satisfy physical, emotional, socially conditioned needs. Many forces act upon individuals simultaneously, causing them to pursue many kinds of needs. MOTIVATION CYCLE: The motivational process may be described as circular, in that it begins with a tension to drive; the individual is actually conscious of unfilled needs. Next, there follows a restlessness and a search for the means of fulfilling the need. Finally, the need is to some extent fulfilled, or goals are redefined, and need satisfaction is attained. The process is completed when the individual evaluates the extent of satisfaction obtained and makes decisions about the behavior that is to follow. This process is diagrammed in Figure given bellow.

Search for Satisfaction 2

Tension Awareness of Need

Fulfillment of Needs

4 Revaluation of Situation and Discovery of New Needs 118

Koontz draw the cycle in the following way Causes Causes Need Wants Tension

Causes Action

Results in Satisfaction

Need theory, underlies nearly all widely followed theories and practical approaches to motivation in work organization. Basic need are infinite in number, some general classification are required. Needs are most frequently described in terms of hierarchy or a continuum. One way is to classify them as primary or secondary. Primary needs are the basic psychological ones required for maintenance of the body and the individuals security. They are primary because we attend them firs; other needs are satisfied after the basic ones are med. Secondary needs are psychological and sociological in nature and are strongly conditioned by culture, society, and our personality. The most widely used need classification is that set forth by A.H. Maslow, as follows. The basic physiological needs. 2. Safety from external danger. 3. Love, affection, and social activity. 4. Esteem and self-respect, 5. Self-realization and accomplishment. These five categories represent priority levels; individuals tend to satisfy the first before satisfying the second and so on. Few individuals reaches the advanced stages of self-realization, which express the fullest accomplishment and achievement of the individual. Those who come close to attaining their ideal self-image have achieved self-realization or fulfillment. It is only an approximation because the categories are not absolute. Needs in the first two categories are basic and universal. Thus they are primary needs, Needs in the remaining three categories are highly situational and greatly influenced by society, culture and individuals own characteristics. The need for self realization and accomplishment is the most difficult to satisfy. Few people actually attain adequate satisfaction of this need, but it produces a strong motivational force an individuals try to do so. Maslows need hierarchy has been criticized for its lack of rigorous research base. Maslow formulated his views from many sources, largely informal interviews and observations over many years, and many of his subjects were neurotic individuals. Nevertheless, the fact that so many theorists use his model as the foundation of their approaches is significant. It is important to remember that each need category is a general classification and not a name of specific behavior patterns. MOTIVATIONAL THEORIES Theories of motivation are important because they are the result of intensive research in organizations to find the best ways of motivating people. Here we will examine only the most notable organizational approaches, which include (1) participative theories, (2) interaction theories, (3) constraint theory, and (4) hygiene theory. There are substantial, similarities and differences in these theories; they are not mutually exclusive approaches. Participative Theories Participation demands changes in typical assumptions about the nature of people and their probable responses to a participatory climate. One of the best participative theories are put forth be Douglas McGregor, the advocate of Theory Y. Theory Y posits the following assumptions which it accepted, pave the way for better motivation through the involvement of people in work planning and decisions: The expenditure of physical and mental effort in work is as natural as in play and rest. 2. External control and the threat of punishment are not the only means for bringing about the effort toward organizational objectives. Man will exercise self-direction and selfcontrol in service of objectives to which he is committed. 3. Commitment to objective is a function of the rewards associated with their achievement. 4. The average human being learns, (under proper conditions,) not only to accept responsibility but to seek it. 5. The capacity to exercise a relatively high degree of imagination, ingenuity, and creativity in the solution of organizational problems, is widely, not narrowly, distributed in the population 6. Under the conditions of modern industrial life, the intellectual potentialities of the average human benign are only partially utilized. Interaction Theories: 119

II

The inter-actionists consider (1) organization as a social system, and (2) interaction, more or less, exist in every environment. In side the system are three classes of variables i.e., activities, interaction, and sentiments. Activities can be observed and described; Interactions (contracts and communication among the individuals) can be measured and their purposes or results noted; the sentiments, feelings, attitudes, norms, and values of individuals are hard to specify and describe, but are part of the reality of the social system. The concept of sentiments includes matters of motivation. Homans states that sentiments are part of what is called individual selfinterest. and that if we examine these motives, will shall find that for the most part they are neither individual nor selfish but that they are the product of group life and serve the ends/needs of the whole group, not just an individual. Motivational Constraints Theory It is also called Traditional or classical theory. March and Simon elaborate a theory of motivational constraints that affect (1) organizational decisions, and (2) the motivation for an individual to remain in an organization. They holds that machine model ignores the wide range of roles that individuals perform simultaneously without considering conflict and coordination among the roles. Therefore, supervision based on the machine model will motivate behavior that the organization dislikes, even though the bureaucratic theorists have devoted considerable attention to the problems of managing organisms whose motivations and learning behavior are much more complicated than those of the machine model. According to them equilibrium reflects the organizations success in arranging payments to its members adequate to motivate their continuous participation. Decisions of employees to remain in an organization differ from their decisions to produce. Managers should think about the problems of motivating the subordinates to remain in the organization. They have to estimate the company inducements and employee contributions and the check, whether balance exist between them or not. This balance is a function of (1) the perceived desirability of leaving the organization, and (2) the perceived ease of movement from the organization, or the utility of alternatives a person forgoes in order to remain. The desire to leave is a function of the individuals job satisfaction and his perception of alternatives within the organization. Leaving an organization is a function of the number of extra-organizational alternatives the employee has. The employee whose relationship or role in the organization is subject to change is free to negotiate, bargain, or argue over the nature of his participation; otherwise he must either accept or reject that role as it is. The theory of motivation to remain in the organization reinforces the importance of meeting at least minimal job satisfactions for people and leads to a concern for their attitudes towards the organization, their job, their work, and their colleagues. Achievement Theories: It focuses on human needs, particularly the need to achieve in competitive situations. The strength of basic needs forms the core of an individuals personality. McClelland and his associates developed a way of scoring the Thematic Apperception Test to measure the need for achievement. This is a generalized need to achieve success in any situation that involves comparison to a standard of excellence. (Koontz selection) Mc Clelland identified three types of basic motivating needs which different people have. (1) Need for power (n/PWR), (2) Need for Affiliation (n/AFF), and (3) need for achievement (n/ACH NEED FOR POWER Some individuals feels a high need for power. They have a great concern for exercising influence and power. They generally seek positions for leadership they are good conversationalists. Forceful, outspoken and heard headed. NEED FOR AFFILIATION: The people having high need for affiliation have following characteristics. They drive pleasure from being loved and try to avoid the pain of being rejected by social group. They like to maintain pleasant social relationships and are ready to help others in trouble.

III NEED FOR ACHIEVEMENT People having high need for achievement have an intense desire for success and an equally intense fear of failure. They want to be challenged but they set moderate difficult goals for themselves. They take a realistic approach to risk and prefer to be analyze and assess problems, assume responsibility for getting job don and like specific and prompt deed back on how are they doing. (End of Selection) 5 Expectancy Theories 120

One of the most significantly approaches to understanding motivation in organizations is based on the study of the way people behave in accordance with what they expect. (Koontz Selection) Victor H.Vroom holds that people will be motivated to do things and to reach a goal if they believe in the worth of that goal and if they can see that what they do will help them in achieving it. It is based on Martin Luther observation, made centuries ago, he said everything that is done in the world is done in hope. In expectancy theory the force of motivation is determined by the value the worker places on the out come. If their effort multiplied by the confidence they have, (that their efforts will materially aid in achieving a goal) Force = Valence X Expectancy Valance is the strength an individuals preference for an outcome and Expectancy is the probability that a particular action will lead to a desired outcome. (End of selection) Hygiene Theory This theory is essentially based on the work of Herzberg and his colleagues. It differs from expectancy and other theories, because it is a two factor theory where as other theories treat motivation as a single factor scaleable on one continuum. These two sets of factors are (1) intrinsic, (related to the meaning of the work itself) and (2) extrinsic, involving elements of the work setting or context. Extrinsic factors are hygienic (i.e., they are more significant as sources of dissatisfaction when perceived as poor than sources of positive motivation when perceived as good). The intrinsic factors are the real motivators. Herzberg found that when people said, they are satisfied with their jobs, they most frequently describes factors related to their tasks, and to events that indicated successful performance of work. Their dissatisfactions were related not to the work but to conditions that surrounded the work. These extrinsic factors are quality of supervision, physical working conditions, interpersonal relations, salary, company policies and administrative practices, employee benefits and sub security. Herzberg calls them hygienic factors or dissatisfiers. He believes that they are more dissatisfiers than motivators. When such factors deteriorate to an unacceptable level, but they are not the key factors in positive motivation. (Koontz Selection) Intrinsic factors include: (1) Status,(2) job security and (3) personal life, and extrinsic factors include, (1) Company policy and administration (2) supervision, (3) working conditions, (4) interpersonal relations, (5) salary, (6) status, (7) job security, and (8) personal life. (end of selection) PROBLEMS AND METHODS OF MOTIVATION The theories of motivation vary in their applicability to practical situations. They show similarities in that they relate back to need concepts and to current understanding of personality theory. Out of all the theories Hersbergs one has had the widest application because it provides highly visible and specific procedures that can be embodied in training programs. Motivation remains a continuous problem to leaders and managers because for most people it is not fully achieved. The general level of attainment is less than half the reasonable potentials of organization members for productive effort. There is always a goal farther out to be approached but never reached. Managers should expect only a limited degree of success in motivating most workers highly. Skilled workers can be more readily motivated than unskilled ones because for them the intrinsic factors are greater. The problem of motivating others can be seen in its full complexity by reflecting on the fact that motivation is an inner drive. The manager wishing to motivate others cannot decree that they will be motivated. Individuals must willingly motivate themselves. The manager can only try to arrange favorable conditions under which inner motivations will turn in a positive direction. To motivate others, the managers themselves must be well motivated, so that the desire for accomplishment is pervasive. Reward and Punishment Systems Every organization selects policies and procedures for motivating and controlling the behavior of its members. In addition to applying the insight of motivational theory, organization behavior, and human relations, several other tools, techniques, and procedures are available to managers. Favorable can be rewarded with higher pay, informal rewards, and other like ways. Undesirable behavior can be restrained by various forms of punishment such as reduced pay, reprimands, layoffs, discharge and other disciplinary actions. Striving to attain rewards and to avoid punishment may take many forms, ranging from honest toil to devious manipulations of people and circumstances. 121

There can be no certainty that system of reward and punishment are managed fairly. Most organizations try to achieve fairness but even so, the fact that managerial work is not easily measured makes fairness an elusive goal. There are always elements of judgment and opinion, and facts present in the environment and subject to various interpretations. An intangible quality characterized even concrete situations. To better understand the operation of reward and punishment systems in the motivation process we will now consider: (1) informal rewards and the punishment, (2) the hierarchy and its reward potentials, (3) discipline , and (4) monetary rewards. 1 INFORMAL REWARDS Some sources of reward and punishment are not within the direct control or influence of managers at all, partly because the definition of a rewards or a punishment lies within the mind of the person being rewarded or punished. The informal organization, for example, may confer high status upon the rebellious employee. Rewards and punishments may also be provided by subsidiary groups and organizational societies, and other associations may give or withhold recognition and reward, providing a forum within which persons in an organization may derive status and recognition beyond that possible from within. 2 HIERARCHY AND REWARDS: The bureaucratic model of organization builds reward and punishment systems into the hierarchical structure i.e., (1) dependence upon superiors for reward ( superior can give reward to subordinate), (2) specialization; (3) rewards for performance (the amount of reward should be proportional to the work or effort contributed); (4) contractual agreements permitting participation in the organization. 3 DISCIPLINE: Industrial discipline today is a highly complex subject about which vary little is really known. Discipline, in its true sense, refers to conditions of orderliness in which the members of the organization conduct themselves with respect for the needs of the organization, subordinating to some extent their own needs and desires. Discipline must exist to a high degree in every organization. It is not the same as morale. Morale consists of attitudes that employees display toward the situation calling for discipline. If morale is high, however, discipline tends to prevail. Discipline could, however, exist to a large degree with low morale. In such a situation, the discipline would perhaps be controlled by force or fear. We always find rule of conduct that prescribe orderly and safe behavior to protect the welfare and safety of group members and make it possible for the organization to do its work. The existence of rules is one of the key characteristics of the bureaucratic model of organization. Rules in effect, set up predetermined answers to questions that arise repeatedly as to what one should or should not do in given situation. Disciplinary action needs to be undertaken with a wisdom and with, sensitivity to the importance of just and fair treatment of employees. The constructive use of disciplinary action takes real talent, far more than its destructive use. Rules should be simple clear, and sensible. They should be explained to all employees and fairly enforced. Rules carry an implied threat of punishment. If the threat is effective, punishment is avoided. 4 MONETARY REWARDS: The organization must maintain an over-all pay and reward structure that is equitable to employees and to the organization as a whole. It must also incorporate pay into its superior-subordinate relations, and often into its relationships with labor unions, the government, and the public. Pay is often miss-constructed to be the primary motivating force, particularly for rank-andfile workers. The assumption that money is the sole or even primary motivator was shown to be in error by researchers of the human relations movement. In surveys, workers seldom place pay higher than forth or fifth in the list of things that are important to their morale. Work Restructuring and Job Design: Herzbergs motivation concepts greatly spurred this movement by emphasizing the importance of the intrinsic motivations of work itself. He called it job enrichment but much of the management literature now calls it job enlargement. JOB ENRICHMENT: The basic idea of job enrichment is to restore to jobs the elements of interest that were taken away under intensive specialization. The emphasis is on the jobs of hourly workers rather than those of managers. For example, under the principle of specialization a machine operator simply runs the machine. Repairs are made by a specialist, and so are the different production set-ups. Tools and supplies are managed by others. Under job enrichment the operator is given full responsibility for all aspects of the work, including machine set-ups, repairs, and procuring and caring for tools and supplies, thereby increasing the judgment and skills required. This is called horizontal job loading because it incorporates processes that are essentially at the same level.

122

In some plans for job enlargement, a vertical loading occurs i.e., building up a job by adding factors from higher or lower levels, e.g., a machinist may be given the responsibility of supervising a trainee or an assistant. Workers may be involved in departmental decisions, or run the department while the supervisor is on vacation. Vertical loading consists mainly of participative approaches to work systems. Both vertical and horizontal loading may be used together. Several firms have designed integrated assembly units to replace standard assembly lines. This is a form of job enrichment. Volvo uses a system of computer-controlled trolleys that move about the plant carrying automobiles. This system replaces the standard assembly line, providing a flexible production system using the team approach. Observers have noted considerable unused space in the plant which produces only thirty thousand cars per-year. The plant cost 10% more to build than other assembly plants, but the company claims that cost rose only $7.74 per car. They have found fewer flaws per car to be corrected, and fewer supervisors are required. Because team members can change job among themselves, or change to different teams, or vary the pace of their work, the workers enjoy considerable flexibility and discretion. However, there remain the pressure of methods and time measurement, and the discipline of the expected pace of output comparable to the speed of the assembly line. Many worker comforts and benefits are incorporated into the construction and management of the plant. Dramatic changes in turnover and absenteeism were not experienced, although morale has appeared to be high. The company expects more of the potential and advantages of appear over time. Job enrichment squares not only with concepts of intrinsic motivation but also with theories of participation involvement, and commitment. Nevertheless it has been widely criticized. It is not readily applicable to all situations. It presumes the capability or trainability of the individual in a wider range of work skills, and therefore has implications for selection and placement. It assumes that individuals want to greater challenges involved. Nevertheless, job enrichment has reflected the results of an increasing interest in practical methods of motivation. (Selection from Koontz) JOB ENRICHMENT: It is a process of making job challenging and meaningful. It applies equally to managers as well as to non managers. It is related to Herzbnerg theory of motivation in which factors such as challenge, achievement, recognition and responsibility are seen as the real motivators. Job Enrichment is different from job enlargement , which is an attempt to make job more varied and thus, remove dullness associated due to performance of repetitive operations. It means enlarging the scope of job by adding similar tasks without enhancing responsibility. For example a production line worker, installing bumper on a car is now also required to install the front hood with installing the bumper. In job enrichment the attempt is made to give job a higher sense of challenge and achievement. Jobs may enriched by a variety of ways but it may also be enriched by any of the following ways: By giving workers more freedom in deciding about such things as ___ (a) methods, (b) sequence and (c) pace of work or the acceptance or rejection of materials, Encouraging participation by subordinates and interacting with workers. Giving workers a feeling of personal responsibility for their tasks. Workers can see how their tasks contribute to a finished product and the welfare of the enterprise. V. Giving people feedback on their job performance preferably before their supervisor get it. VI. Involving workers in the analysis and change of physical aspects of the work environment, such as the lay out of the office plant, temperature, lighting and cleanliness. The Claims of Job Enrichment: As a result of an analysis of workers attitudes and the quality of working life, this study concluded that (1) the primary cause of dissatisfaction of workers is the nature of their work, the quality of their working life, (2) workers work hard if their jobs are enriched and expanded so as to give them greater control over their work and more freedom from their supervisor. ORGANIZATIONAL BEHAVIOR: It is the understanding, prediction and control of human behavior or the process of working with individuals, groups, and other resources to accomplish organizational goals. The focal point in the definition is human behavior,. It is the getting and understanding of people to fetch best out of them. Organizational Behavior Modification: OB Mod is an attempt to change behavior by manipulating reward and punishments. II. III. IV. 123

Organizational Culture: It can be inferred from, what people say, do, and think. It is a system of shared values and beliefs that actively influence the behavior of organization members, or motivating people by establishing a culture that favors high motivation and productivity.

124

CHAPTER--22 COMMUNICATION
Communication is a fundamental aspect of all human interaction. The ability to communicate has enabled humans to build societies, organizations, and other social groups that make for survival and better living. At the same time, many of our problems arise from the inability to communicate clearly. Managers typically spend at least 60 % of their time communicating, either orally or in writing and reading. In some cases the estimates reach 80%. The MIS includes not only oral and written forms of communication but gestures, postures, dress, and other visual signals. Koontz define communication at the transfer of information from sender to a receiver with the information being understood by the receiver. It is a mean by which people are linked together in an organization to achieve a common purpose. Indeed group activity is impossible without communication because coordination and change cannot be effected. In this chapter we will discuss how communication affects the work of managers and how they may improve organizational and personal communications. Three main topics will be analyzed (1) the general nature of the communication process, (2) management information systems, and (3) the development of effective communication. THE COMMUNICATION PROCESS Communication may be broadly defined as the process of meaningful interaction among human beings. More specifically, it is the process by which meanings are exchanged so as to produce understanding among human beings. This definition includes not only written and spoken works, but all the ways in which meaning is conveyed. Even silence may convey meaning and therefor must be considered a form of communication. In addition, gestures, facial expressions, and body postures communicate meaning to others. According to Jaques, communication is the sum total of directly and indirectly, consciously and unconsciously transmitted feelings, attitudes, and wishes . . . . This definition now be extended to include computers and related management information systems. It is important to distinguish between the systems and processes on the one hand, and interpersonal communication on the other. Computers and systems approaches are valuable as aides to greater accuracy and rapid processing of information, but it is ultimately managers who control and utilize communications. Signs and Symbols: Singes and symbols are basic elements in communication. Signs are cues, or signals, to which we learn to respond because they stand for other stimuli. Symbols are special, complex kinds of signs. The meaning of a symbol is arbitrary and is less closely associated with its cues. The flag is an example of a nonverbal symbol, but words or mathematical notations are examples of other symbols in common use. Language: Words are symbols whose meaning we learn as we grow up in a particular society. Their meaning is determined by the context of our particular society and culture. Culture differences are also illustrated by the fact that English is the language of both the United States and Great Britain, but many words have greatly different meanings as used in the two countries. Semantics Semantics is the science of meaning in language. We have all experienced the difficulty of understanding others when they use words that have several meanings. Because words are symbols, they stand for things or ideas that we learn to associate with those things. For instance, when we hear the word dog each of us has an idea of its referent, if we have experienced dogs in the past. Yet this simple word conveys different meanings to people, depending on their experiences with dogs. Semantic difficulties are compounded by our need to talk and write about ideals and values. Values express what people prize most highly. Organizations use values to motivate the desired behavior of employees. Loyalty, for example, is such a value. An example of confusion arising from semantic difficulties will be helpful in showing the it is not only works but actions, implications, and the entire situational context that produces misunderstandings. Example A superior told a worker to take that carboy of acid and put it in that tub, whereupon he did just that, i.e., carboy, acid, and all. (Selection from Koontz) The Communication Process: Communication involves (1) the sender, (2) a transmission channel, (3) receiver, (4) noise, hindering communication and (5) feed back; 125

1 2 3

The Sender of a Message: The sender of the message first encode the data in a way that can be understood by both the sender and receiver. e.g. computer language Use of a Transmission Channel to Send Message: A channel that links the sender with the receiver. The message may be written or oral. It may be transmitted through a memorandum a computer, telephone, telegram or even on television. The Receiver of the Message: The receiver has to be ready to receive and decode a message. Decoding is a process in which the receiver converts the message into thoughts. Accurate communication is possible only when the sender and receiver attach same or at least similar meanings to the symbols that compose the message. Noise Hindering Communication: Communication is affected by the noise. Noise is anything that hinders communication. For example:___ A noise or a confined environment may hinder the development of a clear thought. Encoding is made in ambiguous symbols. Transmission interruptions. In accurate reception due to inattention. Wrong decoding. giving wrong meaning to symbols. wrong decoding giving wrong meaning to symbols. Obstruction by prejudices. etc. Feed Back in Communication: Feedback is must to check the effectiveness of communication. The sender never be sure whether or not a message has been effectively encoded translated, transmitted, decoded and understood until it is confirmed be feedback. Situational and Organizational Factors in Communication: Many organizational and situational factors effect communication process, for example the geographic distance ___a direct face to face communication is different from telephonic conversation with a person on the other-side of the globe and also different from cable and letters. The time also be considered in communication. The Communication Flow in Organization: Downward: From executive to subordinates Upward : From subordinates to executive. Horizontally: Between the people on the same or similar organizational levels Diagonally: Between the people of different levels who are not in direct reporting relationship with one an other. (End of selection from Koontz) MANAGEMENT INFORMATION SYSTEMS The term management information system (MIS) has been defined in so many ways that the concept remains ambiguous. It is defined here as a planned system of collecting, storing, and distributing data in the form of information needed to carry out the functions of management. This definition implies that: (1) formal communications of great significance for effective planning, decision, and control are related in a unified system; (2) that system is a subsystem of the organization and its technology; (3) order, arrangement, and purpose guide the establishment and use of the system; and (4) data are transformed into useful information. Information Technology Computers have virtually revolutionized information processing by providing the technology that greatly increases storage, retrieval, and the speed and volume of calculations. The first application of computer in a business firm was made in 1954. Now there is hardly any organization which is not using computers. Computers are constantly being improved and their capabilities increased. This process is being made at such a speed that the old computers are rapidly becoming obsolete. Smaller, less expensive models are being developed for use in smaller organizations. Organization Structure and Communication Our earlier discussions of organization design indicated that one major purpose of structure is to provide a system of communication. It was also shown that different structures result in varying degrees of effectiveness in communication and hence in performance. Written and oral communications tie together the structural units, with great influence on the interactions of individuals and groups. Adaptive organizations are less likely to maintain rigid lines of communication. Individuals are responsible for knowing what they need to know and how to get. UPWARD AND DOWNWARD COMMUNICATION In bureaucratic organizations emphasis on downward communication. The process of delegation itself is a form of downward communication. Downward communication helps the levels together and is the means by which managers put their delegated authority to work. The role of the

5 6

126

superior is to decide what subordinates to know and to provide this information regularly, in sufficient quantities, in useful forms, and quickly enough for them to act in a timely manner. Communications going downward in bureaucracies are highly directive. Communication going upward are primarily nondirective i.e., they report results or give information, but generally do not initiate important activity by superiors. Upward communication occurs primarily to the degree that the superior encourages or permits it. Encouraging adequate upward communication is difficult in bureaucracies. Subordinates must decide how, when, and what to communicate upward. Whereas downward communication fits traditional concepts of organizational behavior, upward communication tends to run counter to them. The Lateral Dimension: Lateral or horizontal communication poses almost as much difficulty as vertical communication, but it has fewer implications of authority and status. Simpson, in a empirical study of superior-subordinate relationships, views horizontal communications as determined primarily by the state of technology, thus de-emphasizing the frequency or content of horizontal interactions. He believes that vertical communication has been overemphasized, and in his case studies he found that communications among superiors were mainly horizontal because of the mechanized nature of the work. INTER-GROUP COMMUNICATIONS: An important aspect of lateral communication is that between groups. For example, the relations among work flows, such as production or paper processing, can be computerized. Another example of inter-group communication of substantial complexity____and one in which computers are not useful ____ is labor-management relations. DEVELOPING EFFECTIVE COMMUNICATIONS Effectiveness in communications is generated by a multifaceted approach. Organizational design must be analyzed for their effects on communication. This basic approach, discussed in preceding sections, can be implemented though: (1) research on the communication process in organizations (2) communications audits, and (3) cost controls. Research on the Communications Process: Using standard research techniques, such as questionnaires, and statistical analyses, researchers can compare communications techniques in various organizations or groups. Among the principal variables measured are comparisons of modes of communication (Written versus oral; face-to-face versus telephonic); communication overloads; time required; directionality (vertical or horizontal); accuracy; filtering and distortion; and many others. While measuring such variables their impact on performance must also be examined if we are to advance from folk wisdom to scientific knowledge. Upward communication as a function of three variables (1) the subordinates trust in his superior, (2) the subordinates perception of the superiors influence over his future, and (3) the subordinates mobility aspirations. Audits: Systematic audits are used for the diagnosis, evaluation and control of organization-wide communications. Audit methods are generally based on the concept of communication network. They have the advantage of comperehensiveness, integrating the study of such problems as information flow, message sending, or perception and attitudes. Cost Controls Communication processes and activities require substantial organizational resources. Computer technology is expensive, although it has a high potential for reducing costs. The time of managers who prepare, send and receive communications is another area of cost, as are record keeping, filing, storage, and printing and mailing. Many of these costs are hidden and indirect, and hence not readily measured. The costs of computerized management information systems are generally reviewed in feasibility studies prior to establishing them. Their operations too are subject to cost analysis and control. Improving Interpersonal Communications In addition to the improvement of organization wide communications, it is vital to focus organization effort on the improvement of the communication skills of people. Day-to-day organizational activities are conducted through the continuous interaction of people who are communicating with one another. These communications are both formal (official) and informal The distinction between these two is not always clear, however, because a formal communication may be transmitted in an oblique, informal way. For example, when the boss says, Would you like to take my place at the committee meeting next Tuesday ? he is actually giving an order. 127

1 2

It improve communications among people it is necessary to explore (1) the major barriers that interfere with the process, and (2) ways of improving human skills of communication. COMMUNICATION BARRIERS The final major barrier to effective communications is the lack of authenticity and legitimacy. (Selection From Koontz) BARRIERS OF COMMUNICATION: The hurdles in smooth flow of communication are called barriers. By eliminating these barriers we can make our communication effective and efficient. These are as follows: LACK OF PLANNING: Good communication seldom happens by chance. It must be properly planned e.g. selecting the most appropriate channel, proper timing etc. SEMANTIC DISTORTION: It may be deliberate or accidental. An advertisement that states we sell for less is deliberately ambiguous; it raises this question: Less than what? Works may evoke different responses. To some people the word government may mean interference or deficit spending; to others the same work may mean help, equalization, and justice. BADLY EXPRESSED MASSAGES: Poor organization of Ideas Awkward sentences structure Inadequate vocabulary Empty words and phrases and careless omissions. make massages bad and poor. FAULTY TRANSMISSION: This happens due to carelessness of those who are responsible for communicating the message. LOSS BY TRANSMISSION AND POOR RETENTION: It generally happens in oral communication, and in a series of transmission from one person to the next, the message becomes less and less accurate. It happen due to loss of memory and poor retention. Consequently, companies often use more than one channel to communicate the same message. INATTENTION: Happens due to inattention by the receivers of the message. UNCLARIFIED ASSUMPTIONS: It happens when the receiver or sender himself makes assumptions in relation to the message communicated to him without having a clarification from the other party.

4 5

6 7

POOR LISTENING AND PREMATURE EVALUATION: There are many talkers but few listeners. People entering a discussion with comments that have no relation to the topic. Listening demands full attention ,self-discipline and requires to avoid premature evaluation of what another person has to say. A common tendency is to judge and approve or disapprove, what is being said, rather than trying to understand the speakers frame of reference. 9 IMPERSONAL COMMUNICATION: Effective communication is more than simply transmitting information to employees. Real improvement of communication often requires not expensive and sophisticated communication media but the willingness of superiors to engage in face-to-face communication. 10 INSUFFICIENT ADJUSTMENT PERIOD: An information requiring a change should allow sufficient time for adjusting it. 11 DISTRUST, THREAT, AND FEAR: They undermine communication. In a climate containing these forces. any message will be viewed with skepticism. Distrust can be the result of inconsistent behavior by the superior, or it can be due to past experiences in which the subordinate was punished for honestly reporting unfavorable, but true, information to the boss. 12 INFORMATION OVERLOAD: Unrestricted flow of information may result in too much information, causing information overload. People respond information in various ways The may disregard certain information. 2. People make processing the information. 3. They may delay the processing of information either permanently or with the intention of catching up in the future. They may filter information. It is helpful when most important information is processed first and then less important. They may respond to communication overload by simply escaping from the task of communication. In other words they may ignore information or do not communicate information because of overload. 128

Guidelines for Improving Communication: Senders must clarify in his mind what he want to communicate. 2. Encoding and decoding be done with symbols that are familiar to both the receiver and the sender. 3. Planning of communication should not be done in vacuum. 4. Consider the need of the receivers of the information. 5. Chose carefully the tone of voice, the choice of language and the congruency between what is said and how it is said influence the reactions of the receiver of the message. 6. Too often information is transmitted without communicating, since communication is complete only when the message is understood by the receiver. And one never knows whether communication is understood unless the sender gets feedback. This is accomplished by asking questions, requesting a reply to a letter, and encouraging receiver to give their reactions to the message. 7. Effective communication is the responsibility not only of the sender but also of the receiver of the information.

129

CHAPTER LAST. HUMAN BEHAVIOR AND GROUP DYNAMICS

THE CONCEPTIONAL PROCESS A process backed by clarity of concepts. It motivate persons to have a clear idea about what is to be done. A conceptual framework is prepared in the beginning and later efforts are made to guide oneself for developing a part of its implementation. This process is very important, so that it replaces management by hunch. It enables systematic and orderly arrangement of work to be undertaken in a systematic manner. The Learning Process: Learning is very important as it effects the human behavior. It may be categorized into three types;(1) direct process, (2) modeling process and (3) self control process. Direct Process. It follows the classical approach, their teaching is conducted and learning process is facilitated. Modeling Process: It is backed up by social learning theory. Self Control Process: In this respect self development is very important. Under it various principles of learning are explained below: I PRINCIPLE OF REINFORCEMENT. Motivation is an internal explanation of behavior and reinforcement of external explanation of behavior. One category of reinforcement consists of positive type and the other is of negative type. Positive reinforcement strengthen and increases behavior by termination or withdrawal of an undesirable consequence. The other type of reinforcement is of intrinsic and extrinsic nature.

1 2 3

130