Hi , today I want to give notes obout POM or Management Notes...
UNIT-1
Nature of Management:
Meaning, Definition, nature & purpose, importance & Functions, Management as Art, Science & Profession-Management as social System Concepts of Management-Administration-Organization, Management Skills, Levels of Management.
Management:
“Management is the art of getting things done through and with the people in formally organized group to attain future goal”.
“Management is distinct process consisting of Planning, Organizing, actuating and Controlling performance to determine and accomplish the objectives by the use of people and resources”.
Management is the process of deciding and doing. The person who performs these function is called Managers and, as a body they are called management.
Management has the following 3 characteristics:
1. It is a process or series of continuing and related activities.
2. It involves and concentrates on reaching organizational goals.
3. It reaches these goals by working with and through people and other organizational resources.
MANAGEMENT FUNCTIONS:
The 4 basic management functions that make up the management process are described in the following sections:
1. PLANNING
2. ORGANIZING
3. INFLUENCING
4. CONTROLLING.
PLANNING: Planning involves choosing tasks that must be performed to attain organizational goals, outlining how the tasks must be performed, and indicating when they should be performed.
Planning activity focuses on attaining goals. Managers outline exactly what organizations should do to be successful. Planning is concerned with the success of the organization in the short term as well as in the long term.
ORGANIZING:
Organizing can be thought of as assigning the tasks developed in the planning stages, to various individuals or groups within the organization. Organizing is to create a mechanism to put plans into action.
People within the organization are given work assignments that contribute to the company’s goals. Tasks are organized so that the output of each individual contributes to the success of departments, which, in turn, contributes to the success of divisions, which ultimately contributes to the success of the organization.
INFLUENCING (DIRECTING):
Influencing is also referred to as motivating, leading or directing. Influencing can be defined as guiding the activities of organization members in the direction that helps the organization move towards the fulfillment of the goals.
The purpose of influencing is to increase productivity. Human-oriented work situations usually generate higher levels of production over the long term than do task oriented work situations because people find the latter type distasteful.
CONTROLLING:
Controlling is the following roles played by the manager:
1. Gather information that measures performance
2. Compare present performance to pre-established performance norms.
3. Determine the next action plan and modifications for meeting the desired performance parameters.
Controlling is an ongoing process.
NATURE OF MANAGEMENT:
Universal process: Wherever there is human activity, there is management. Without efficient management, objectives of the company2 cannot be achieved.
Factor of production: Qualified and efficient managers are essential to utilization of labor and capital.1
Goal oriented: The most important goal of all management activity is to accomplish the objectives of an enterprise. The goals should be realistic and attainable.
Supreme in thought and action: Managers set realizable objectives and then mastermind action on all fronts to accomplish them. For this, they require full support form middle and lower levels of management.
Group activity: All human and physical resources should be efficiently coordinated to attain maximum levels of combined productivity. Without coordination, no work would accomplish and there would be chaos and retention.
Dynamic function: Management should be equipped to face the changes in business environment brought about by economic, social, political, technological or human factors. They must be adequate training so that can enable them to perform well even in critical situations.
Social science: All individuals that a manager deals with, have different levels of sensitivity, understanding and dynamism.
Important organ of society: Society influences managerial action and managerial actions influence society. Its managers responsibility that they should also contribute towards the society by organizing charity functions, sports competition, donation to NGO’s etc.
System of authority: Well-defined lines of command, delegation of suitable authority and responsibility at all levels of decision-making. This is necessary so that each individual should what is expected from him and to whom he need to report to.
Profession: Managers need to possess managerial knowledge and training, and have to conform to a recognized code of conduct and remain conscious of their social and human obligations.
Process: The management process comprises a series of actions or operations conducted towards an end.
PURPOSE OR OBJECTIVES OF MANAGEMENT:
1. Optimum utilization of resources:
The most important objectives of the management are to use various resources of the enterprise in a most economical way.
The proper use of men, materials, machines, and money will help a business to earn sufficient profits to satisfy various interests i.e. proprietor, customers, employees and others. All these interests will be served well only when physical resources of the business are properly utilised.
2. Growth and development of business:
By proper planning, organization and direction etc., management leads a business to growth and development on sound footing. It helps in profitable expansion of the business. It provides a sense of security among the employers and employees.
3. Better quality goods:
The aim of the sound management has always been to produce the better quality products at minimum cost. Thus, it tries to remove all types of wastages in the business.
4. Ensuring regular supply of goods:
Another objective of management is to ensure the regular supply of goods to the people. It checks the artificial scarcity of goods in the market. Hence, it keeps the prices of goods within permissible limits.
5. Discipline and morale:
The management maintains the discipline and boosts the morale of the individuals by applying the principles of decentralisation and delegation of authority. It motivates the employees through monetary and non¬monetary incentives. It helps in creating and maintaining better work culture.
6. Mobilizing best talent:
The employment of experts in various fields will help in enhancing the efficiency of various factors of production. There should be a proper environment which should encourage good persons to join the enterprise. The better pay scales, proper amenities, future growth potentialities will attract more people in joining a concern.
7. Promotion of research and development:
Management undertakes the research and development to take lead over its competitors and meet the uncertainties of the future. Thus, it provides the benefits of latest research and technology to the society.
8. Minimize the element of risk:
Management involves the function of forecasting. Though the exact future can never be predicted yet on the basis of previous experience and existing circumstances, management can minimise the element of risk. Management always keeps its ears and eyes to the changing circumstances.
9. Improving performance:
Management should aim at improving the performance of each and every factor of production. The environment should be so congenial that workers are able to contribute their maximum to the enterprise. The fixing of objectives of various factors of production will help them in improving their performance.
10. Planning for future:
Another important purpose of management is to prepare a prospective plan. No management should feel satisfied with today’s work. Future plans should take into consideration what is to be done next. Future performance will depend upon present planning. So, planning for future is essential to every organization.
IMPORATNCE/SIGNIFICANCE OF MANAGEMENT:
(i) Management helps in achieving group goals: Management is required not for itself but for achieving the goals of the organisation. The task of a manager is to give a common direction to the individual effort in achieving the overall goal of the organisation.
(ii) Management increases efficiency: The aim of a manager is to reduce costs and increase productivity through better planning, organising, directing, staffing and controlling the activities of the organisation. (iii) Management creates a dynamic organisation: All organisations have to function in an environment which is constantly changing. It is generally seen that individuals in an organisation resist change.
(iii) Management creates a dynamic organization: it often means moving from a familiar, secure environment into a newer and more challenging one. Management helps people adapt to these changes so that the organisation is able to maintain its competitive edge.
(iv) Management helps in achieving personal objectives: A manager motivates and leads his team in such a manner that individual members are able to achieve personal goals while contributing to the overall organisational objective. Through motivation and leadership, the management helps individuals to develop team spirit, cooperation and commitment to group success.
(v) Management helps in the development of society: An organisation has multiple objectives to serve the purpose of the different groups that constitute it. In the process of fulfilling all these, management helps in the development of the organisation and through that it helps in the development of society. It helps to provide good quality products and services, creates employment opportunities, adopts new technology for the greater good of the people and leads the path towards growth and development.
(vi) Reduces Cost: Towards securing efficiency of operations, management is concerned with reducing cost of production and increasing the output.
(vii) Meet the challenge of cut throat competition:
MANAGEMENT AS ART, SCIENCE AND PROFESSION
Science ant Art
Management is Science because of several reasons like - it has universally accepted principles, it has cause and effect relationship etc, and at the same time it is art because it requires perfection through practice, practical knowledge, creativity, personal skills etc.
Management is both an art and a science. Management combines features of both science as well as art. It is considered as a science because it has an organized body of knowledge which contains certain universal truth. It is called an art because managing requires certain skills which are personal possessions of managers. Science provides the knowledge & art deals with the application of knowledge and skills.
A manager to be successful in his profession must acquire the knowledge of science & the art of applying it. Therefore, management is a judicious blend of science as well as an art because it proves the principles and the way these principles are applied is a matter of art. Science teaches to ‘know’ and art teaches to ‘do’. E.g. A person cannot become a good singer unless he has knowledge about various ragas & he also applies his personal skill in the art of singing. Same way it is not sufficient for manager to first know the principles but he must also apply them in solving various managerial problems that is why, science and art are not mutually exclusive but they are complementary to each other (like tea and biscuit, bread and butter etc.).
Management as Profession
A profession may be defined as an occupation that requires specialized knowledge and intensive academic preparations to which entry is regulated by a representative body. The essentials of a profession are:
1. Specialized Knowledge - A profession must have a systematic body of knowledge that can be used for development of professionals. Every professional must make deliberate efforts to acquire expertise in the principles and techniques. Similarly, a manager must have devotion and involvement to acquire expertise in the science of management.
2. Formal Education & Training - There are no. of institutes and universities to impart education & training for a profession. No one can practice a profession without going through a prescribed course. Many institutes of management have been set up for imparting education and training. For example, a CA cannot audit the A/C’s unless he has acquired a degree or diploma for the same but no minimum qualifications and a course of study has been prescribed for managers by law. For example, MBA may be preferred but not necessary.
3. Social Obligations - Profession is a source of livelihood but professionals are primarily motivated by the desire to serve the society. Their actions are influenced by social norms and values. Similarly a manager is responsible not only to its owners but also to the society and therefore he is expected to provide quality goods at reasonable prices to the society.
4. Code of Conduct - Members of a profession have to abide by a code of conduct which contains certain rules and regulations, norms of honesty, integrity and special ethics. A code of conduct is enforced by a representative association to ensure self-discipline among its members. Any member violating the code of conduct can be punished and his membership can be withdrawn. The AIMA has prescribed a code of conduct for managers but it has no right to take legal action against any manager who violates it.
5. Representative Association - For the regulation of profession, existence of a representative body is a must. For example, an institute of Charted Accountants of India establishes and administers standards of competence for the auditors but the AIMA however does not have any statuary powers to regulate the activities of managers.
MANAGEMENT, ADMINISTRATION, ORGNIZATION
Administration:
Any enterprise whether it is run for profit or not need be controlled.
The control of the enterprise is effected through Administration and Management.
Administration consists of deciding determination of the goals and policies of the enterprise.
Administration is concerned mainly with decision making, policy making and making necessary adjustments.
The three main elements of administrations are:
(i) The formulation of goals,
(ii) The choice of ways and means, and
(iii) The direction of the people in some group purpose.
An Administrator:
(a) Organises his own work and that of his subordinates;
(b) Delegates responsibility and authority; and
(c) Measures, evaluates and controls position activities.
Organisation:
Organisation is the frame work of management. Organisation is the function of putting together the different parts of an enterprise into working order.
Organisation is a system,
It is a group of persons,
It is a structure of relationships among the individuals working together for a common goal.
Organization is concerned with the building, developing and maintaining of a structure of working relationships in order to accomplish the objectives of the enterprise.
Organisation means the determination and assignment of duties to individuals and also the establishment and the maintenance of authority relationships among the grouped activities.
Organising is the determining, grouping and arranging of the various activities deemed necessary for the attainment of the objectives:
(i) The assigning of people to those activities,
(ii) The providing of suitable physical factors of environment, and
(iii) The indicating of the relative authority delegated to each individual charged with the execution of each respective activities.
MANAGEMENT SKILL
Robert Katz identifies three types of skills that are essential for a successful management process:
• Technical skills,
• Conceptual skills and
• Human or interpersonal management skills.
Technical Skill:
they give the manager’s knowledge and ability to use different techniques to achieve what they want to achieve. Technical skills are not related only for machines, production tools or other equipment, but also they are skills that will be required to increase sales, design different types of products and services, market the products and services, etc.
For example, let’s take an individual who works in the sales department and has highly developed sales skills achieved through education and experience in his department or the same departments in different organizations. Because of these skills that he possesses, this person can be a perfect solution to become a sales manager. This is the best solution because he has excellent technical skills related to the sales department.
Conceptual Skill:
Conceptual skills present knowledge or ability of a manager for more abstract thinking. That means he can easily see the whole through analysis and diagnosis of different states. In such a way they can predict the future of the business or department as a whole.
Conceptual skills are vital for top managers, less critical for mid-level managers, and not required for first-level managers. As we go from a bottom of the managerial hierarchy to the top, the importance of these skills will rise.
Human Skill or Interpersonal Skill
Human or interpersonal management skills present a manager’s knowledge and ability to work with people. One of the most critical management tasks is to work with people. Without people, there will not be a need for the existence of management and managers.
These skills will enable managers to become leaders and motivate employees for better accomplishments. Also, they will help them to make more effective use of human potential in the company. Simply, they are the essential skills for managers.
Interpersonal management skills are essential for all hierarchical levels in the company.
LEVELS OF MANAGEMENT:
The level of management determines a chain of command, the amount of authority & status enjoyed by any managerial position. The levels of management can be classified in three broad categories:
1. Top level / Administrative level
2. Middle level / Executory
3. Low level / Supervisory / Operative / First-line managers
Top Level of Management
It consists of board of directors, chief executive or managing director. The top management is the ultimate source of authority and it manages goals and policies for an enterprise. It devotes more time on planning and coordinating functions.
The role of the top management can be summarized as follows -
a. Top management lays down the objectives and broad policies of the enterprise.
b. It issues necessary instructions for preparation of department budgets, procedures, schedules etc.
c. It prepares strategic plans & policies for the enterprise.
d. It appoints the executive for middle level i.e. departmental managers.
e. It controls & coordinates the activities of all the departments.
f. It is also responsible for maintaining a contact with the outside world.
g. It provides guidance and direction.
h. The top management is also responsible towards the shareholders for the performance of the enterprise
Middle Level of Management
The branch managers and departmental managers constitute middle level. They are responsible to the top management for the functioning of their department. They devote more time to organizational and directional functions. In small organization, there is only one layer of middle level of management but in big enterprises, there may be senior and junior middle level management. Their role can be emphasized as -
a. They execute the plans of the organization in accordance with the policies and directives of the top management.
b. They make plans for the sub-units of the organization.
c. They participate in employment & training of lower level management.
d. They interpret and explain policies from top level management to lower level.
e. They are responsible for coordinating the activities within the division or department.
f. It also sends important reports and other important data to top level management.
g. They evaluate performance of junior managers.
h. They are also responsible for inspiring lower level managers towards better performan
Lower Level of Management
Lower level is also known as supervisory / operative level of management. It consists of supervisors, foreman, section officers, superintendent etc. According to R.C. Davis, “Supervisory management refers to those executives whose work has to be largely with personal oversight and direction of operative employees”. In other words, they are concerned with direction and controlling function of management. Their activities include -
a. Assigning of jobs and tasks to various workers.
b. They guide and instruct workers for day to day activities.
c. They are responsible for the quality as well as quantity of production.
d. They are also entrusted with the responsibility of maintaining good relation in the organization.
e. They communicate workers problems, suggestions, and recommendatory appeals etc to the higher level and higher level goals and objectives to the workers.
f. They help to solve the grievances of the workers.
g. They supervise & guide the sub-ordinates.
h. They are responsible for providing training to the workers.
i. They arrange necessary materials, machines, tools etc for getting the things done.
j. They prepare periodical reports about the performance of the workers.
UNIT-II
Evolution of Management Thought:
Contribution of F.W.Taylor, Henri Fayol, Elton Mayo, Chester Barhard & Peter Drucker to the management
thought. Business Ethics & Social Responsibility: Concept, Shift to Ethics, Tools of Ethics.
F.W TAYLOR THEORY:
F.W. Taylor (1856-1915) was an American, who joined Midvale Steelworks, Philadelphia (U.S.A.) as a machinist; and gradually rose to the position of the Chief Engineer-through hard work and progress. F.W. Taylor conducted his experiments in three companies viz., Midvale Steel Works, Simonds Rolling Machine and Bethlehem Steel Works.
Taylor’s Scientific Managements was, in fact, a movement known as the ‘Scientific Management Movement’ pioneered by Taylor and carried on by his followers. The important publications of Taylor are all combined into one book titled ‘Scientific Management’.
Principles of Scientific Management:
The fundamental principles, which would support the concept and practice of scientific management, are the following:
(i) Science, not the rule of the thumb.
(ii) Harmony, not discord.
(iii) Co-operation, not individualism.
(iv) Maximum production, in place of restricted production.
(v) Development of each person to the greatest of his capabilities.
(vi) A more equal division of responsibility between management and workers.
(vii) Mental revolution on the part of management and workers.
Following is a brief comment on each of the above principles of scientific management.
(i) Science, not the rule of thumb:
The basic principle of scientific management is the adoption of a scientific approach to managerial decision making; and a complete discard of all unscientific approaches, hitherto practiced by managements.
(ii) Harmony, not discord:
Harmony refers to the unity of action; while discord refers to differences in approach.
(iii) Co-operation, not individualism:
Co-operation refers to working, on the part of people, towards the attainment of group objectives; while regarding their individual objectives-as subordinate to the general interest.
(iv) Maximum production, in place of restricted production:
In Taylor’s view the most dangerous evil of the industrial system was a deliberate restriction of output. As a means of promoting the prosperity of workers, management and society, this principle of scientific management emphasizes on maximising production and not deliberately restricting it.
(v) Development of each person to the greatest of his capabilities:
Management must endeavor to develop people to the greatest of their capabilities to ensure maximum prosperity for both-employees and employers.
(vi) A more equal division of responsibility between management and workers:
The principle of scientific management recommends a separation of planning from execution. According to this principle, management must be concerned with the planning of work; and workers with the execution of plans.
(vii) Mental revolution on the part of management and workers:
According to Taylor, scientific management, in its essence, involves a complete mental revolution on the part of both sides to industry viz. workers and management (representing employers).
In fact, this principle of scientific management is the most fundamental one ensuring success of it. It is like the foundation on which the building of scientific management must be erected.
HENRY FAYOL THEORY:
Henri Fayol's management theory is a simple model of how management interacts with personnel. Fayol's management theory covers concepts in a broad way, so almost any business can apply his theory of management. Today the business community considers Fayol's classical management theory as a relevant guide to productively managing staff.
The management theory of Henri Fayol includes 14 principles of management. From these principles, Fayol concluded that management should interact with personnel in five basic ways in order to control and plan production.
1. Planning. According to Fayol's theory, management must plan and schedule every part of industrial processes.
2. Organizing. Henri Fayol argued that in addition to planning a manufacturing process, management must also make certain all of the necessary resources (raw materials, personnel, etc.) came together at the appropriate time of production.
3. Commanding. Henri Fayol's management theory states that management must encourage and direct personnel activity.
4. Coordinating. According to the management theory of Henri Fayol, management must make certain that personnel works together in a cooperative fashion.
5. Controlling. The final management activity, according to Henri Fayol, is for the manager to evaluate and ensure that personnel follow management's commands.
ELTON MAYO THEORY:
Elton mayo is widely recognized as the father of human relations theory. He explained the role of human behaviour in production and also highlighted the importance of communication between the workers and the management.
HOWTHORNE STUDIES
Mayo’s studies at the Western Electricity Company, Chicago is popularly known as Hawthorne Studies. It was a research programme of National Research Council of the National Academy of Science at the Hawthorne Plant of Western Electricity Company.
In the early 20th century, it was realized that –
• There was a clear-cut cause and effect relationship between the physical work, environment, the well-being and productivity of the worker.
• Also, there was relationship between production and given condition of ventilation, temperature, lighting and other physical working conditions and wage incentives.
• It had been believed that – improper job design, fatigue and other conditions of work mainly block efficiency.
So to establish the relationship between man and the structure of formal organization, Hawthorne Studies conducted.
The studies were conducted in the following four phases.
1. Illumination Experiment (1924-27)
2. Relay Assembly Test Room Experiment (1927)
3. Mass Interviewing Programme (1928-31)
4. Bank Wiring Experiment (1931-32)
His main contributions are discussed as follows:
1. Human Relations Approach:
Mayo is rightly called the father of human relations movement. His ideas were a milestone and a turning point in human relations approach of the management. He recognised the importance of human beings in management. He said that human beings are complex and influential input into organisational performance. The social and psychological needs of human beings cannot be ignored, if management wants to enhance productivity.
2. Non-Economic Awards:
The earlier assumption was that workers will work more if they are offered more monetary incentives. Taylor was the main proponent of this approach. Elton Mayo said that the techniques of economic incentives were not only inadequate but also unrealistic.He was able to show that humane and respectful treatment, sense of participation and belonging, recognition, morale, human pride and social interaction are sometimes more important than pure monetary rewards.
3. Social Man:
Mayo developed a concept of ‘social man’. He said that man is basically motivated by social needs and obtains his sense of identity through relationships with others. He is more responsive to the social forces of the informal group rather than managerial incentives and controls. He also related productivity to a social phenomenon.
4. Organization as a Social System:
Mayo was of the view that informal relationships in the organisation are more effective than formal relationships. People form informal groups to give a bent to their feelings and seek guidance for action from such groups.
CHESTER BERHARD THEORY:
Chester Barnard’s contribution to management is important. His book ‘The Functions of the Executive’ is the most influential book on the management during the pre-modern management era. He analyzed management as a social system. His analysis of the executives based on the major tasks in the system in which they operate. He also stated the co-operative social system. He also found non-logical factors influencing human behaviour in the organization.
The major contributions of Chester Barnard is as follows:
1. Concept of Organization: According to Barnard, an organization exists when the following three conditions are fulfilled. a) there are persons able to communicate with each other b) they are willing to contribute to the action and c) they are willing to accomplish a common purpose.
2. Formal and informal organizations: There can be two types of organizations. They are formal and informal. In the formal organization there are co-ordinated interaction, which are deliberate and have common object. On the other hand the informal organization refers to those social interactions, which do not have deliberate joint object. Informal organizations overcome the problems of formal organization. Both the formal and informal organizations depend on each other and there is continuous interaction between the two.
3. Elements of Organization: Barnard had suggested four elements of a formal organization. They are a) a system of fictionalization (specialization) b) a system of effective and efficient incentives c) a system of power to accept the decision of the executives d) a system of logical decision-making.
4. Authority: in the classical view authority comes from the top. Bernard has given a new concept of authority, which is called ‘Acceptance Theory of Authority’ or ‘Bottom-up authority’.
In his opinion person should obey an order not because it has given by the superior but he will take it as a communication. This is possible only when
i. he can understand the communication
ii. he believes that it is not contradictory with the organizational purpose
iii. it is compatible with his personal interest as a whole and
iv. he is mentally and physically able to obey with it.
5. Functions of the executives: According to Barnard there are three types of functions, which an executive performs. They are a) maintenance of organization communication through a system of organization b) the securing of essential services from individuals in the organizations to achieve organizational purpose c) the formulation and definition of organizational purpose.
6. Motivation: Apart from financial incentives Barnard has suggested a number of non-financial techniques for motivating people. They are opportunity of power and distinction, pride of workmanship, pleasant organization participation, mutual supporting personal attitudes, feeling of belongings, etc.
7. Executive Effectiveness: Responsible leadership is required to make the executive effective. Leadership is the most strategic factor in securing co-operation from the people. Executive leadership demands high caliber, technological competence and social skills. It should be above personal preference and prejudices.
8. Organizational Equilibrium: This means the matching of the individual efforts and organizational efforts to satisfy individuals. The organization must afford satisfaction to individuals. This requires the equilibrium in the organization.
PETER DRUCKER’S THEORY
Peter Drucker, also known as the Father of Modern Management Theory, coined leadership terms and strategies that are still used today. He advocated for a more flexible, collaborative workplace, and the delegation of power across the board.
According to Drucker, "management is doing things right; leadership is doing the right things." Unlike many early management theorists, Drucker thought that subordinates should have the opportunity to take risks, learn and grow in the workplace.
Drucker's management theory embodies many modern concepts, including:
Decentralization
Drucker was focused on decentralizing management in the workplace. He wanted all employees to feel valued and empowered, like their work and voice mattered. He believed in assigning tasks that inspire workers, and bringing supervisors and their subordinates together to achieve common, company goals.
Knowledge work
Knowledge workers are those whose jobs require handling or using information, such as engineers or analysts. Drucker placed high value on workers who solved problems and thought creatively. He wanted to cultivate a culture of employees who could provide insight and ideas.
Drucker also correctly forecasted a decrease in blue-collar workers: Today, there is an increasing number of knowledge workers in the business world.
Management by objectives
Drucker conceptualized "Management by Objectives" (MBO), a process that encourages employees of all levels to work together. Each worker has an equal say, sharing their own insight and opinions to reach common ground. From there, teams establish shared goals and delegate tasks according to skillsets and interests.
There are five steps of MBO:
1. Review goals
2. Set objectives
3. Monitor progress
4. Evaluate performance
5. Reward employees
S.M.A.R.T.
In his MBO practice, Drucker used S.M.A.R.T., a process coined by George T. Doran, that increases efficiency in work-related tasks. The acronym calls for each objective to be:
• Specific
• Measurable
• Achievable
• Relevant
• Time-Oriented
BUSINESS ETHICS AND SOCIAL RESPONSIBILITY:
Business ethics is the study of proper business policies and practices regarding potentially controversial issues such as corporate governance, insider trading, bribery, discrimination, corporate social responsibility and fiduciary responsibilities. Law often guides business ethics, while other times business ethics provide a basic framework that businesses may follow to gain public acceptance.
ETHICS PRINCIPLES
1. HONESTY. Ethical executives are honest and truthful in all their dealings and they do not deliberately mislead or deceive others by misrepresentations, overstatements, partial truths, selective omissions, or any other means.
2. INTEGRITY. Ethical executives demonstrate personal integrity and the courage of their convictions by doing what they think is right even when there is great pressure to do otherwise; they are principled, honorable and upright; they will fight for their beliefs. They will not sacrifice principle for expediency, be hypocritical, or unscrupulous.
3. PROMISE-KEEPING & TRUSTWORTHINESS. Ethical executives are worthy of trust. They are candid and forthcoming in supplying relevant information and correcting misapprehensions of fact, and they make every reasonable effort to fulfill the letter and spirit of their promises and commitments. They do not interpret agreements in an unreasonably technical or legalistic manner in order to rationalize non-compliance or create justifications for escaping their commitments.
4. LOYALTY. Ethical executives are worthy of trust, demonstrate fidelity and loyalty to persons and institutions by friendship in adversity, support and devotion to duty; they do not use or disclose information learned in confidence for personal advantage. They safeguard the ability to make independent professional judgments by scrupulously avoiding undue influences and conflicts of interest. They are loyal to their companies and colleagues and if they decide to accept other employment, they provide reasonable notice, respect the proprietary information of their former employer, and refuse to engage in any activities that take undue advantage of their previous positions.
5. FAIRNESS. Ethical executives and fair and just in all dealings; they do not exercise power arbitrarily, and do not use overreaching nor indecent means to gain or maintain any advantage nor take undue advantage of another’s mistakes or difficulties. Fair persons manifest a commitment to justice, the equal treatment of individuals, tolerance for and acceptance of diversity, the they are open-minded; they are willing to admit they are wrong and, where appropriate, change their positions and beliefs.
6. CONCERN FOR OTHERS. Ethical executives are caring, compassionate, benevolent and kind; they like the Golden Rule, help those in need, and seek to accomplish their business objectives in a manner that causes the least harm and the greatest positive good.
7. RESPECT FOR OTHERS. Ethical executives demonstrate respect for the human dignity, autonomy, privacy, rights, and interests of all those who have a stake in their decisions; they are courteous and treat all people with equal respect and dignity regardless of sex, race or national origin.
8. LAW ABIDING. Ethical executives abide by laws, rules and regulations relating to their business activities.
9. COMMITMENT TO EXCELLENCE. Ethical executives pursue excellence in performing their duties, are well informed and prepared, and constantly endeavor to increase their proficiency in all areas of responsibility.
10. LEADERSHIP. Ethical executives are conscious of the responsibilities and opportunities of their position of leadership and seek to be positive ethical role models by their own conduct and by helping to create an environment in which principled reasoning and ethical decision making are highly prized.
11. REPUTATION AND MORALE. Ethical executives seek to protect and build the company’s good reputation and the morale of its employees by engaging in no conduct that might undermine respect and by taking whatever actions are necessary to correct or prevent inappropriate conduct of others.
12. ACCOUNTABILITY. Ethical executives acknowledge and accept personal accountability for the ethical quality of their decisions and omissions to themselves, their colleagues, their companies, and their communities.
BUSINESS ETHICS ANDSOCIAL RESPONSIBILITY
Business leaders and organizations can examine how their decisions relate to social responsibility, which is a general concept that can include social as well as cultural, economic and environmental issues. By integrating business ethics and principles of social responsibility, organizations can make a difference in the world and enhance their reputation.
Some companies have adopted the social entrepreneurship model of business that focuses on applying practical, innovative and sustainable approaches to benefit society. The shoe retailer TOMS is one of the most popular examples of the social entrepreneurship model. For every pair of shoes sold, the company provides a new pair of shoes to children in developing countries.
Another example of combining business ethics and social responsibility is by focusing on benefiting the environment. Forbes notes some of the reasons why Seventh Generation, a Burlington, Vermont-based company that produces and distributes green products, was recognized as the best company for the environment.
• Selling products such as biodegradable, vegetable-based cleaning products, chlorine-free tampons and paper towels and natural lotion baby wipes.
• Developing an employee bonus program that awards workers who figure out how to make the company’s goods even more sustainable.
• Having an LEED-certified building where more than a quarter of the company’s fleet is comprised of low-emissions cars and more than a quarter of the energy burned in manufacturing its products comes from renewable energy.
UNIT-III
Functions of Management: Part-I
Planning – Meaning- Need & Importance, types, Process of Planning, Barriers to Effective Planning, levels –advantages & limitations. Forecasting- Need & Techniques Decision Making-Types - Process of rational decision making & techniques of decision making, organizing – Elements of organizing & processes: Types of organizations, Delegation of authority – Need, difficulties, Delegation – Decentralization Staffing – Meaning & Importance
Direction – Nature – Principles Communication – Types & Importance
PLANNING:
Planning can be defined as “thinking in advance what is to be done, when it is to be done, how it is to be done and by whom it should be done”. In simple words we can say, planning bridges the gap between where we are standing today and where we want to reach.
Planning involves setting objectives and deciding in advance the appropriate course of action to achieve these objectives so we can also define planning as setting up of objectives and targets and formulating an action plan to achieve them.
Another important ingredient of planning is time. Plans are always developed for a fixed time period as no business can go on planning endlessly.
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Keeping in mind the time dimension we can define planning as “Setting objectives for a given time period, formulating various courses of action to achieve them and then selecting the best possible alternative from the different courses of actions”.
Features/Nature/Characteristic of Planning:
1. Planning contributes to Objectives:
Planning starts with the determination of objectives. We cannot think of planning in absence of objective. After setting up of the objectives, planning decides the methods, procedures and steps to be taken for achievement of set objectives. Planners also help and bring changes in the plan if things are not moving in the direction of objectives.
For example, if an organisation has the objective of manufacturing 1500 washing machines and in one month only 80 washing machines are manufactured, then changes are made in the plan to achieve the final objective.
2. Planning is Primary function of management:
Planning is the primary or first function to be performed by every manager. No other function can be executed by the manager without performing planning function because objectives are set up in planning and other functions depend on the objectives only.
For example, in organizing function, managers assign authority and responsibility to the employees and level of authority and responsibility depends upon objectives of the company. Similarly, in staffing the employees are appointed. The number and type of employees again depends on the objectives of the company. So planning always proceeds and remains at no. 1 as compared to other functions.
3. Pervasive:
Planning is required at all levels of the management. It is not a function restricted to top level managers only but planning is done by managers at every level. Formation of major plan and framing of overall policies is the task of top level managers whereas departmental managers form plan for their respective departments. And lower level managers make plans to support the overall objectives and to carry on day to day activities.
4. Planning is futuristic/Forward looking:
Planning always means looking ahead or planning is a futuristic function. Planning is never done for the past. All the managers try to make predictions and assumptions for future and these predictions are made on the basis of past experiences of the manager and with the regular and intelligent scanning of the general environment.
5. Planning is continuous:
Planning is a never ending or continuous process because after making plans also one has to be in touch with the changes in changing environment and in the selection of one best way.
So, after making plans also planners keep making changes in the plans according to the requirement of the company. For example, if the plan is made during the boom period and during its execution there is depression period then planners have to make changes according to the conditions prevailing.
6. Planning involves decision making:
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The planning function is needed only when different alternatives are available and we have to select most suitable alternative. We cannot imagine planning in absence of choice because in planning function managers evaluate various alternatives and select the most appropriate. But if there is one alternative available then there is no requirement of planning.
For example, to import the technology if the licence is only with STC (State Trading Co-operation) then companies have no choice but to import the technology through STC only. But if there is 4-5 import agencies included in this task then the planners have to evaluate terms and conditions of all the agencies and select the most suitable from the company’s point of view.
7. Planning is a mental exercise:
It is mental exercise. Planning is a mental process which requires higher thinking that is why it is kept separate from operational activities by Taylor. In planning assumptions and predictions regarding future are made by scanning the environment properly. This activity requires higher level of intelligence. Secondly, in planning various alternatives are evaluated and the most suitable is selected which again requires higher level of intelligence. So, it is right to call planning an intellectual process.
Importance/Significance of Planning:
1. Planning provides Direction:
Planning is concerned with predetermined course of action. It provides the directions to the efforts of employees. Planning makes clear what employees have to do, how to do, etc. By stating in advance how work has to be done, planning provides direction for action. Employees know in advance in which direction they have to work. This leads to Unity of Direction also. If there were no planning, employees would be working in different directions and organisation would not be able to achieve its desired goal.
2. Planning Reduces the risk of uncertainties:
Organisations have to face many uncertainties and unexpected situations every day. Planning helps the manager to face the uncertainty because planners try to foresee the future by making some assumptions regarding future keeping in mind their past experiences and scanning of business environments. The plans are made to overcome such uncertainties. The plans also include unexpected risks such as fire or some other calamities in the organisation. The resources are kept aside in the plan to meet such uncertainties.
3. Planning reduces over lapping and wasteful activities:
The organisational plans are made keeping in mind the requirements of all the departments. The departmental plans are derived from main organisational plan. As a result there will be co-ordination in different departments. On the other hand, if the managers, non-managers and all the employees are following course of action according to plan then there will be integration in the activities. Plans ensure clarity of thoughts and action and work can be carried out smoothly.
4. Planning Promotes innovative ideas:
Planning requires high thinking and it is an intellectual process. So, there is a great scope of finding better ideas, better methods and procedures to perform a particular job. Planning process forces managers to think differently and assume the future conditions. So, it makes the managers innovative and creative.
5. Planning Facilitates Decision Making:
Planning helps the managers to take various decisions. As in planning goals are set in advance and predictions are made for future. These predictions and goals help the manager to take fast decisions.
6. Planning establishes standard for controlling:
Controlling means comparison between planned and actual output and if there is variation between both then find out the reasons for such deviations and taking measures to match the actual output with the planned. But in case there is no planned output then controlling manager will have no base to compare whether the actual output is adequate or not.
For example, if the planned output for a week is 100 units and actual output produced by employee is 80 units then the controlling manager must take measures to bring the 80 unit production upto 100 units but if the planned output, i.e., 100 units is not given by the planners then finding out whether 80 unit production is sufficient or not will be difficult to know. So, the base for comparison in controlling is given by planning function only.
7. Focuses attention on objectives of the company:
Planning function begins with the setting up of the objectives, policies, procedures, methods and rules, etc. which are made in planning to achieve these objectives only. When employees follow the plan they are leading towards the achievement of objectives. Through planning, efforts of all the employees are directed towards the achievement of organisational goals and objectives.
Limitations of Planning:
1. Planning leads to rigidity:
Once plans are made to decide the future course of action the manager may not be in a position to change them. Following predefined plan when circumstances are changed may not bring positive results for organisation. This kind of rigidity in plan may create difficulty.
2. Planning may not work in dynamic environment:
Business environment is very dynamic as there are continuously changes taking place in economic, political and legal environment. It becomes very difficult to forecast these future changes. Plans may fail if the changes are very frequent.
The environment consists of number of segments and it becomes very difficult for a manager to assess future changes in the environment. For example there may be change in economic policy, change in fashion and trend or change in competitor’s policy. A manager cannot foresee these changes accurately and plan may fail if many such changes take place in environment.
3. It reduces creativity:
With the planning the managers of the organisation start working rigidly and they become the blind followers of the plan only. The managers do not take any initiative to make changes in the plan according to the changes prevailing in the business environment. They stop giving suggestions and new ideas to bring improvement in working because the guidelines for working are given in planning only.
4. Planning involves huge Cost:
Planning process involves lot of cost because it is an intellectual process and companies need to hire the professional experts to carry on this process. Along with the salary of these experts the company has to spend lot of time and money to collect accurate facts and figures. So, it is a cost-consuming process. If the benefits of planning are not more than its cost then it should not be carried on.
5. It is a time consuming process:
Planning process is a time-consuming process because it takes long time to evaluate the alternatives and select the best one. Lot of time is needed in developing planning premises. So, because of this, the action gets delayed. And whenever there is a need for prompt and immediate decision then we have to avoid planning.
6. Planning does not guarantee success:
Sometimes managers have false sense of security that plans have worked successfully in past so these will be working in future also. There is a tendency in managers to rely on pretested plans.
It is not true that if a plan has worked successfully in past, it will bring success in future also as there are so many unknown factors which may lead to failure of plan in future. Planning only provides a base for analysing future. It is not a solution for future course of action.
7. Lack of accuracy:
In planning we are always thinking in advance and planning is concerned with future only and future is always uncertain. In planning many assumptions are made to decide about future course of action. But these assumptions are not 100% accurate and if these assumptions do not hold true in present situation or in future condition then whole planning will fail.
For example, if in the plan it is assumed that there will be 5% inflation rate and in future condition the inflation rate becomes 10% then the whole plan will fail and many adjustments will be required to be made.
Planning Process:
1. Setting up of the objectives:
In planning function manager begins with setting up of objectives because all the policies, procedures and methods are framed for achieving objectives only. The managers set up very clearly the objectives of the company keeping in mind the goals of the company and the physical and financial resources of the company. Managers prefer to set up goals which can be achieved quickly and in specific limit of time. After setting up the goals, the clearly defined goals are communicated to all the employees.
2. Developing premises:
Premises refer to making assumptions regarding future. Premises are the base on which plans are made. It is a kind of forecast made keeping in view existing plans and any past information about various policies. There should be total agreement on all the assumptions. The assumptions are made on the basis of forecasting. Forecast is the technique of gathering information. Common forecast are made to find out the demand for a product, change in government or competitor policy, tax rate, etc.
3. Listing the various alternatives for achieving the objectives:
After setting up of objectives the managers make a list of alternatives through which the organisation can achieve its objectives as there can be many ways to achieve the objective and managers must know all the ways to reach the objectives.
For example, if the objective is to increase in sale by 10% then the sale can be increased:
(a) By adding more line of products;
(b) By offering discount;
(c) By increasing expenditure on advertisements;
(d) By increasing the share in the market;
(e) By appointing salesmen for door-to-door sale etc.
So, managers list out all the alternatives.
4. Evaluation of different alternatives:
After making the list of various alternatives along with the assumptions supporting them, the manager starts evaluating each and every alternative and notes down the positive and negative aspects of every alternative. After this the manager starts eliminating the alternatives with more of negative aspect and the one with the maximum positive aspect and with most feasible assumption is selected as best alternative. Alternatives are evaluated in the light of their feasibility.
5. Selecting an alternative:
The best alternative is selected but as such there is no mathematical formula to select the best alternative. Sometimes instead of selecting one alternative, a combination of different alternatives can also be selected. The most ideal plan is most feasible, profitable and with least negative consequences.
After preparing the main plan, the organisation has to make number of small plans to support the main plan. These plans are related to performance of routine jobs in the organisation. These are derived from the major plan. So, they are also known as derivative plans. These plans are must for accomplishing the objective of main plan. The common supportive plans are plans to buy equipment, plan for recruitment and selection of employees, plan to buy raw material, etc.
6. Implement the plan:
The managers prepare or draft the main and supportive plans on paper but there is no use of these plans unless and until these are put in action. For implementing the plans or putting the plans into action, the managers start communicating the plans to all the employees very clearly because the employees actually have to carry on the activities according to specification of plans. After communicating the plan to employees and taking their support the managers start allocating the resources according to the specification of the plans. For example, if the plan is to increase in sale by increasing the expenditure on advertisement, then to put it into action, the managers must allot more funds to advertisement department, select better media, hire advertising agency, etc.
7. Follow-up:
Planning is a continuous process so the manager’s job does not get over simply by putting the plan into action. The managers monitor the plan carefully while it is implemented. The monitoring of plan is very important because it helps to verify whether the conditions and predictions assumed in plan are holding true in present situation or not. If these are not coming true then immediately changes are made in the plan.
During follow up many adjustments are made in the plan. For example, if the expenditure planning is done keeping in mind 5% inflation rate but in present situation if the inflation rate rises to 10% then during follow up the managers make changes in the plans according to 10% inflation rate.
BARRIERS TO EFFECTIVE PLANNING:
• Inability to plan or inadequate planning. Managers are not born with the ability to plan. Some managers are not successful planners because they lack the background, education, and/or ability. Others may have never been taught how to plan. When these two types of managers take the time to plan, they may not know how to conduct planning as a process.
• Lack of commitment to the planning process. The development of of a plan is hard work; it is much easier for a manager to claim that he or she doesn't have the time to work through the required planning process than to actually devote the time to developing a plan. (The latter, of course, would save them more time in the long run!) Another possible reason for lack of commitment can be fear of failure. As a result, managers may choose to do little or nothing to help in the planning process.
• Inferior information. Facts that are out‐of‐date, of poor quality, or of insufficient quantity can be major barriers to planning. No matter how well managers plan, if they are basing their planning on inferior information, their plans will probably fail.
• Focusing on the present at the expense of the future. Failure to consider the long‐term effects of a plan because of emphasis on short‐term problems may lead to trouble in preparing for the future. Managers should try to keep the big picture — their long‐term goals — in mind when developing their plans.
• Too much reliance on the organization's planning department.Many companies have a planning department or a planning and development team. These departments conduct studies, do research, build models, and project probable results, but they do not implement plans. Planning department results are aids in planning and should be used only as such. Formulating the plan is still the manager's responsibility.
• Concentrating on controllable variables. Managers can find themselves concentrating on the things and events that they can control, such as new product development, but then fail to consider outside factors, such as a poor economy. One reason may be that managers demonstrate a decided preference for the known and an aversion to the unknown.
The good news about these barriers is that they can all be overcome. To plan successfully, managers need to use effective communication, acquire quality information, and solicit the involvement of others.
LEVELS OF PLANNING:
In management theory, it is usual to consider that there are three basic levels of planning, though in practice there may be more than three levels of management and to an extent, there will be some overlapping of planning operations. The three levels of planning are discussed below:
1. Top level planning: also known as overall or strategic planning, top level planning is done by the top management, i.e., board of directors or governing body. It encompasses the long-range objectives and policies or organisation and is concerned with corporate results rather than sectional objectives. Top level planning is entirely long-range and inextricably linked with long-term objectives. It might be called the ‘what’ of planning.
2. Second level planning: also known as tactical planning, it is done by middle level managers or departmental heads. It is concerned with ‘how’ of planning. It deals with development of resources to the best advantage. It is concerned mainly, not exclusively, with long-range planning, but its nature is such that the time spans are usually shorter than those of strategic planning. This is because its attentions are usually devoted to the step-by-step attainment of the organisation’s main objective. It is, in fact, oriented to functions and departments rather than to the organisation as a whole.
3. Third level planning: also known as operational or activity planning, it is the concern of departmental managers and supervisors. It is confined to putting into effect the tactical or departmental plans. It is usually for a short-term and may be revised quite often to be in tune with the tactical planning.
TECHNIQUES OF DECISION MAKING
• Decision Matrix: using the matrix, create a table with all of the options in the first column and all of the factors that affect the decision in the first row. Users then score each option and weigh which factors are of more importance. A final score is then tallied to reveal which option is the best.
• T-Chart: This chart is used when weighing the plusses and minuses of the options. It ensures that all the positives and negatives are taken into consideration when making a decision.
• Decision tree: This is a graph or model that involves contemplating each option and the outcomes of each. Statistical analysis is also conducted with this technique.
• Motivating: This is used when multiple people are involved in making a decision. It helps whittle down a large list options to a smaller one to the eventual final decision.
• Pareto analysis: This is a technique used when a large number of decisions need to be made. This helps in prioritizing which ones should be made first by determining which decisions will have the greatest overall impact.
• Cost-benefit analysis: This technique is used when weighing the financial ramifications of each possible alternative as a way to come to a final decision that makes the most sense from an economic perspective.
• Conjoint analysis: This is a method used by business leaders to determine consumer preferences when making decisions.
• SWOT Analysis: SWOT stands for strengths, weaknesses, opportunities and threats, which is exactly what this planning tool assesses.
• PEST Analysis: An acronym for political, economic, social and technological, PEST can improve decision-making and timing by analyzing external factors. This method considers present trends to help predict the future ones.
NEEDS AND IMPORTNCE OF DECISION MAKING
• Proper utilization of resources: Organization has various resources like man, money, method, material, machine, market and information. All these resources are properly utilized without any leakage and wastage with the help of right decision at right time. As a result, an organization can operate at a minimum cost.
• Selecting the best alternative: As we know that the problem has multiple solutions. Decision making is important to select the best alternative among various alternatives by analyzing them one by one using various financial, statistical, and accounting tools/ technique.
• Evaluation of the managerial performance: Decision making is not only important to select the best alternative but also essential for evaluating the performance of a manager. The quality/success of manager largely depends upon the number of right decision that he/she can take for the organizational success. Therefore, decision making is important to judge the performance of top level of management.
• Employees motivation: Decision making is important to motivate the employees within an organization. It provides an overall framework of operation and guideline to the operating level of staffs. It also provides different types of facilities and benefit on time. As a result, employees are motivated to their job or work as per the organizational requirement.
• Indispensable element/ component: Decision making is indispensable element/ component for the organizational success because without taking the right decision at right time, nothing can be performed as per the plan.
• Achievement of goal/ objectives: Decision making is important to achieve the organizational goals/objectives within given time and budget. It searches the best alternative, utilize the resources properly and satisfy the employees at the workplace. As a result, organizational goal or objectives can be achieved as per the desired result.
• Pervasive function: Decision-making is a pervasive function of managers aimed at achieving organizational goals. Decisions are to be taken in all managerial functions such as planning, organizing, motivating, directing and controlling and in all functional areas such as production, marketing, finance, personnel and research and development. It indicates that the decision-making is spread over many areas of the organization.
RATIONAL DECISION MAKING
A method for systematically selecting among possible choices that is based on reason and facts. In a rational decision making process, a business manager will often employ a series of analytical steps to review relevant facts, observations and possible outcomes before choosing a particular course of action.
CHARACTERSTICS OF RATIONAL DECISION MAKING
Choosing rationally is often characterized by the following:
• Decision making will follow a process or orderly path from problem to solution.
• There is a single best or optimal outcome. Rational decisions seek to optimize or maximize utility.
• The chosen solution will be in agreement with the preferences and beliefs of the decision maker.
• The rational choice will satisfy conditions of logical consistency and deductive completeness.
• Decision making will be objective, unbiased and based on facts.
• Information is gathered for analysis during the decision making process.
• Future consequences are considered for each decision alternative.
• Structured questions are used to promote a broad and deep analysis of the situation or problem requiring a solution.
• Risk and uncertainty are addressed with mathematically sound approaches.
In the ideal case, all rational decision makers would come to the same conclusion when presented with the same set of sufficient information for the decision being made. This would suggest that collaborative decision making will often employ a rational decision making process.
RATIONAL DECISION MAKING PROCESS
Violet Jones is a manager at the Intestinal Distress Tacos fast food restaurant. She is under enormous pressure from headquarters to increase her monthly profits. Violet is not sure what the solution is for her financial dilemma. She has to decide to use the rational decision-making model to determine the best path for a solution. To do this, Violet must follow these six steps:
1. Define the problem.
2. Identify the decision criteria.
3. Allocate weights to the criteria.
4. Develop the alternatives.
5. Evaluate the alternatives.
6. Select the best alternative.
ORGANIZING
Organizing is a systematic process of structuring, integrating, coordinating task goals, and activities to resources in order to attain objectives.
ELEMENTS OF ORGANIZING
1. Designing jobs,
2. Departmentalization or Grouping Jobs,
3. Establishing reporting relationships between jobs,
4. Distributing authority among jobs,
5. Coordinating activities among jobs, and
6. Differentiating among positions.
Understanding the nature of these building blocks and the different ways in which they can be configured is most important as they shape the structure and routine the organization is going to work. The logical starting point is the first building block—designing jobs.
In this post we will know about the 6 elements of organizing;
Designing Jobs
Job design is the first building block of organization Structure; it means-defining an individual’s responsibilities at work.
Job design involves defining areas of decision-making responsibility, identifying goals and expectations, and establishing appropriate indicators of success. There many tools available to a manager for designing jobs;
Job Specialization
Job specialization is the first and the most important tool of all. Job specialization is similar to the concept of ‘division of labor’.Job specialization means; breaking down the entire job or task into smaller parts and divide them accordingly.
Job characteristics model (JCM)
Job characteristics model (JCM) is also an effective tool for designing job; where job-design is conducted considering both the employees’ preference and required work system. The approach suggests that job design should be done by considering five core dimensions; skill variety, task identity, task significance, autonomy, and feedback.
Work Teams
Work teams are very useful for doing comprehensive and difficult jobs which require expertise from various departments or faculty or the organization.
Job Rotation
As the name suggests; job rotation is systematically moving employees from one task to another. However, in practice; job rotation created more problems than solving them, like; employees’ satisfaction and motivation diminishes. It is now used as a training system.
Job Enlargement
Job enlargement involves increasing the total number of tasks workers assigned and performs. It also gives employees motivation as it gives them bigger chance to participate in organization’s operations. It has some shortcomings too; more tasks mean more salary payments so more cost, overdoing it could lead to employees’ dissatisfaction.
Job Enrichment
It is similar to job enlargement but a more comprehensive approach. Job enrichment includes increasing the number of tasks and the portion of control over these tasks. Here managers have to give authority along with the responsibility of the jobs.
PROCESS OF ORGANIZING
1.Review plans and objectives.
Objectives are the specific activities that must be completed to achieve goals. Plans shape the activities needed to reach those goals. Managers must examine plans initially and continue to do so as plans change and new goals are developed.
2.Determine the work activities necessary to accomplish objectives.
Although this task may seem overwhelming to some managers, it doesn't need to be. Managers simply list and analyze all the tasks that need to be accomplished in order to reach organizational goals.
3.Classify and group the necessary work activities into manageable units.
A manager can group activities based on four models of departmentalization: functional, geographical, product, and customer.
4.Assign activities and delegate authority.
Managers assign the defined work activities to specific individuals. Also, they give each individual the authority (right) to carry out the assigned tasks.
5.Design a hierarchy of relationships.
A manager should determine the vertical (decision‐making) and horizontal (coordinating) relationships of the organization as a whole. Next, using the organizational chart, a manager should diagram the relationships.
TYPES OF ORGANIZATION
Functional Organization
Also referred to as a bureaucratic structure, a functional organization is one that divides a firm’s operations based on specialties. Ideally, there’s an individual in charge of a particular function. It’s like any typical business that consists of a sales department, human relations, and marketing department. It means that every employee receives tasks and is accountable to a particular specialist.
A functional organization confers several benefits. For one, there’s a total specialization of work meaning that every employee gets professional guidance from a specialist. Secondly, work is performed more efficiently since each manager is responsible for a single function. The only drawback to adopting a functional organization is the fact that there’s delay in decision-making. All the functional managers must be consulted when making major decisions, which can take time.
Divisional Organization
A divisional organization structures its activities around a market, product, or specific group of consumers. For instance, a firm can operate in the United States or Europe or sell products focused on a specific group of customers. Gap Inc. is the perfect case in point. It runs three different retailers – Banana Republic, Gap and Old Navy. Although each one operates as a separate entity that caters to different consumer segments, they are all under the company Gap Inc. brand.
General Electric is another ideal example; it owns numerous firms, brands, and assets across different industries. Although GE is the umbrella corporation, each division works as an individual firm. The diagram below will give you an idea of what a divisional organization looks like.
Matrix Organization
A matrix organizational structure is a bit more complex in that there’s more than one line of reporting managers. It simply means that the employees are accountable to more than one boss. Most firms that take on this organizational structure often have two chains of command – functional and project managers. However, this organization works best for companies with large-scale projects.
A matrix organization offers several benefits. They include a clear articulation of the company’s mission and objectives, effective use of limited resources, and retention of professionals throughout the life of a company. Additionally, a matrix structure provides a practical way of integrating the firm’s objectives with operations.
DELEGATION OF AUTHORITY
Delegation of authority can be defined as subdivision and sub-allocation of powers to the subordinates in order to achieve effective results.
1. arises from responsibility.
For achieving delegation, a manager has to work in a system and has to perform following steps : -
1. Assignment of tasks and duties
2. Granting of authority
3. Creating responsibility and accountability
Delegation of authority is the base of superior-subordinate relationship, it involves following steps:-
1. Assignment of Duties - The delegator first tries to define the task and duties to the subordinate. He also has to define the result expected from the subordinates. Clarity of duty as well as result expected has to be the first step in delegation.
2. Granting of authority - Subdivision of authority takes place when a superior divides and shares his authority with the subordinate. It is for this reason, every subordinate should be given enough independence to carry the task given to him by his superiors. The managers at all levels delegate authority and power which is attached to their job positions. The subdivision of powers is very important to get effective results.
3. Creating Responsibility and Accountability - The delegation process does not end once powers are granted to the subordinates. They at the same time have to be obligatory towards the duties assigned to them. Responsibility is said to be the factor or obligation of an individual to carry out his duties in best of his ability as per the directions of superior. Responsibility is very important. Therefore, it is that which gives effectiveness to authority. At the same time, responsibility is absolute and cannot be shifted. Accountability, on the others hand, is the obligation of the individual to carry out his duties as per the standards of performance. Therefore, it is said that authority is delegated, responsibility is created and accountability is imposed. Accountability arises out of responsibility and responsibility arises out of authority. Therefore, it becomes important that with every authority position an equal and opposite responsibility should be attached.
Therefore every manager,i.e.,the delegator has to follow a system to finish up the delegation process. Equally important is the delegatee’s role which means his responsibility and accountability is attached with the authority over to here.
Differences between Authority and Responsibility
Authority Responsibility
It is the legal right of a person or a superior to command his subordinates. It is the obligation of subordinate to perform the work assigned to him.
Authority is attached to the position of a superior in concern. Responsibility arises out of superior-subordinate relationship in which subordinate agrees to carry out duty given to him.
Authority can be delegated by a superior to a subordinate Responsibility cannot be shifted and is absolute
It flows from top to bottom. It flows from bottom to top.
DIFFICULTIES IN DELEGATION
There may be certain defects in organisational structure which hamper proper delegation of authority. Some of the difficulties involved in delegation are as such:may be certain defects in organisational structure which hamper proper delegation of authority. Some of the difficulties involved in delegation are as such:
1. Over Confidence of Superior: The feeling in a superior that only he can do certain work effectively than others is the main difficulty in delegation. When a manager is of the opinion that his subordinates will not be able to make proper decisions then he will concentrate all powers with him and will not like to delegate his authority.
2. Lack of Confidence in Subordinates: The superior may be of the view that subordinates are not competent to carry out certain things of their own. He may lack confidence in his subordinates. Under these circumstances superior will hesitate to delegate authority.
3. Lack of Ability in Superior: A superior may lack the ability to delegate authority to subordinates. The manager may not be able to identify the areas where delegation is required. Lack of Proper Controls: There may not be proper controls in the organisation which help the manager to keep in touch with performance of subordinates.
4. Lack of Proper Temperament of Superior: The chief executive may be over-cautious or conservative by nature. An element of risk cannot altogether be ruled out but certain risk will have to be taken.
5. Inability of Subordinates: The fear of committing mistakes or lack of confidence on the part of subordinates may also act as a barrier in delegation of authority.
NEED FOR DELEGATION
1. Through delegation, a manager is able to divide the work and allocate it to the subordinates. This helps in reducing his work load so that he can work on important areas such as - planning, business analysis etc.
2. With the reduction of load on superior, he can concentrate his energy on important and critical issues of concern. This way he is able to bring effectiveness in his work as well in the work unit. This effectivity helps a manager to prove his ability and skills in the best manner.
3. Delegation of authority is the ground on which the superior-subordinate relationship stands. An organization functions as the authority flows from top level to bottom. This in fact shows that through delegation, the superior-subordinate relationship become meaningful. The flow of authority is from top to bottom which is a way of achieving results.
4. Delegation of authority in a way gives enough room and space to the subordinates to flourish their abilities and skill. Through delegating powers, the subordinates get a feeling of importance. They get motivated to work and this motivation provides appropriate results to a concern. Job satisfaction is an important criterion to bring stability and soundness in the relationship between superior and subordinates. Delegation also helps in breaking the monotony of the subordinates so that they can be more creative and efficient.
Delegation of authority is not only helpful to the subordinates but it also helps the managers to develop their talents and skills. Since the manager get enough time through delegation to concentrate on important issues, their decision-making gets strong and in a way they can flourish the talents which are required in a manager. Through granting powers and getting the work done, helps the manager to attain communication skills, supervision and guidance, effective motivation and the leadership traits are flourished. Therefore it is only through delegation, a manager can be tested on his traits.
5. Delegation of authority is help to both superior and subordinates. This, in a way, gives stability to a concern’s working. With effective results, a concern can think of creating more departments and divisions flow working. This will require creation of more managers which can be fulfilled by shifting the experienced, skilled managers to these positions. This helps in both virtual as well as horizontal growth which is very important for a concern’s stability.
DECENTRALIZATION
The term "decentralization" embraces a variety of concepts which must be carefully analyzed in any particular country before determining if projects or programs should support reorganization of financial, administrative, or service delivery systems. Decentralization—the transfer of authority and responsibility for public functions from the central government to subordinate or quasi-independent government organizations and/or the private sector—is a complex multifaceted concept. Different types of decentralization should be distinguished because they have different characteristics, policy implications, and conditions for success.
STAFFING
Staffing is the process of hiring eligible candidates in the organization or company for specific positions. In management, the meaning of staffing is an operation of recruiting the employees by evaluating their skills, knowledge and then offering them specific job roles accordingly. Let us find out more about what is Staffing and what it entails along with its functions and characteristics.
Staffing can be defined as one of the most important functions of management. It involves the process of filling the vacant position of the right personnel at the right job, at right time. Hence, everything will occur in the right manner.
FUNCTIONS OF STAFFING
1. The first and foremost function of staffing is to obtain qualified personnel for different jobs position in the organization.
2. In staffing, the right person is recruited for the right jobs, therefore it leads to maximum productivity and higher performance.
3. It helps in promoting the optimum utilization of human resource through various aspects.
4. Job satisfaction and morale of the workers increases through the recruitment of the right person.
5. Staffing helps to ensure better utilization of human resources.
6. It ensures the continuity and growth of the organization, through development managers.
IMPORTANCE OF STAFFING
Efficient Performance of Other Functions
For the efficient performance of other functions of management, staffing is its key. Since, if an organization does not have the competent personnel, then it cannot perform the functions of management like planning, organizing and control functions properly.
Effective Use of Technology and Other Resources
What is staffing and technology’s connection? Well, it is the human factor that is instrumental in the effective utilization of the latest technology, capital, material, etc. the management can ensure the right kinds of personnel by performing the staffing function.
Optimum Utilization of Human Resources
The wage bill of big concerns is quite high. Also, a huge amount is spent on recruitment, selection, training, and development of employees. To get the optimum output, the staffing function should be performed in an efficient manner.
Development of Human Capital
Another function of staffing is concerned with human capital requirements. Since the management is required to determine in advance the manpower requirements. Therefore, it has also to train and develop the existing personnel for career advancement. This will meet the requirements of the company in the future.
The Motivation of Human Resources
In an organization, the behaviour of individuals is influenced by various factors which are involved such as education level, needs, socio-cultural factors, etc. Therefore, the human aspects of the organization have become very important and so that the workers can also be motivated by financial and non-financial incentives in order to perform their functions properly in achieving the objectives.
Building Higher Morale
The right type of climate should be created for the workers to contribute to the achievement of the organizational objectives. Therefore, by performing the staffing function effectively and efficiently, the management is able to describe the significance and importance which it attaches to the personnel working in the enterprise.
DIRECTION
DIRECTING is said to be a process in which the managers instruct, guide and oversee the performance of the workers to achieve predetermined goals. Directing is said to be the heart of management process. Planning, organizing, staffing have got no importance if direction function does not take place.
Direction has got following characteristics/nature
1. Pervasive Function - Directing is required at all levels of organization. Every manager provides guidance and inspiration to his subordinates.
2. Continuous Activity - Direction is a continuous activity as it continuous throughout the life of organization.
3. Human Factor - Directing function is related to subordinates and therefore it is related to human factor. Since human factor is complex and behaviour is unpredictable, direction function becomes important.
4. Creative Activity - Direction function helps in converting plans into performance. Without this function, people become inactive and physical resources are meaningless.
5. Executive Function - Direction function is carried out by all managers and executives at all levels throughout the working of an enterprise, a subordinate receives instructions from his superior only.
6. Delegate Function - Direction is supposed to be a function dealing with human beings. Human behaviour is unpredictable by nature and conditioning the people’s behaviour towards the goals of the enterprise is what the executive does in this function. Therefore, it is termed as having delicacy in it to tackle human behaviour.
PRINCIPLES OF DIRECTON
1. Maximum Individual Contribution
One of the main principles of directing is the contribution of individuals. Management should adopt such directing policies that motivate the employees to contribute their maximum potential for the attainment of organizational goals.
2. Harmony of Objectives
Sometimes there is a conflict between the organizational objectives and individual objectives. For example, the organization wants profits to increase and to retain its major share, whereas, the employees may perceive that they should get a major share as a bonus as they have worked really hard for it.
Here, directing has an important role to play in establishing harmony and coordination between the objectives of both the parties.
3. Unity of Command
This principle states that a subordinate should receive instructions from only one superior at a time. If he receives instructions from more than one superiors at the same time, it will create confusion, conflict, and disorder in the organization and also he will not be able to prioritize his work.
4. Appropriate Direction Technique
Among the principles of directing, this one states that appropriate direction techniques should be used to supervise, lead, communicate and motivate the employees based on their needs, capabilities, attitudes and other situational variables.
5. Managerial Communication
According to this principle, it should be seen that the instructions are clearly conveyed to the employees and it should be ensured that they have understood the same meaning as was intended to be communicated.
6. Use of Informal Organization
Within every formal organization, there exists an informal group or organization. The manager should identify those groups and use them to communicate information. There should be a free flow of information among the seniors and the subordinates as an effective exchange of information are really important for the growth of an organization.
7. Leadership
Managers should possess a good leadership quality to influence the subordinates and make them work according to their wish. It is one of the important principles of directing.
8. Follow Through
As per this principle, managers are required to monitor the extent to which the policies, procedures, and instructions are followed by the subordinates. If there is any problem in implementation, then the suitable modifications can be made.
COMMUNICATION: NOTE: GO TROUGH THE NOTES GIVEN IN BUSINESS COMMUNICATION
UNIT-IV
Functions of Management: Part-II
Motivation – Importance – theories
Leadership – Meaning –styles, qualities & function of leader
Controlling - Need, Nature, importance, Process & Techniques, Total Quality Management
Coordination – Need – Importance
MOTIVATION
Motivation is the word derived from the word ’motive’ which means needs, desires, wants or drives within the individuals. It is the process of stimulating people to actions to accomplish the goals. In the work goal context the psychological factors stimulating the people’s behaviour can be -
• desire for money
• success
• recognition
• job-satisfaction
• team work, etc
MASLOW’S HIERARCHY OF NEEDS THEORY
Abraham Maslow is well renowned for proposing the Hierarchy of Needs Theory in 1943. This theory is a classical depiction of human motivation. This theory is based on the assumption that there is a hierarchy of five needs within each individual. The urgency of these needs varies. These five needs are as follows-
1. Physiological needs- These are the basic needs of air, water, food, clothing and shelter. In other words, physiological needs are the needs for basic amenities of life.
2. Safety needs- Safety needs include physical, environmental and emotional safety and protection. For instance- Job security, financial security, protection from animals, family security, health security, etc.
3. Social needs- Social needs include the need for love, affection, care, belongingness, and friendship.
4. Esteem needs- Esteem needs are of two types: internal esteem needs (self- respect, confidence, competence, achievement and freedom) and external esteem needs (recognition, power, status, attention and admiration).
5. Self-actualization need- This include the urge to become what you are capable of becoming / what you have the potential to become. It includes the need for growth and self-contentment. It also includes desire for gaining more knowledge, social- service, creativity and being aesthetic. The self- actualization needs are never fully satiable. As an individual grows psychologically, opportunities keep cropping up to continue growing.
According to Maslow, individuals are motivated by unsatisfied needs. As each of these needs is significantly satisfied, it drives and forces the next need to emerge. Maslow grouped the five needs into two categories - Higher-order needs and Lower-order needs. The physiological and the safety needs constituted the lower-order needs. These lower-order needs are mainly satisfied externally. The social, esteem, and self-actualization needs constituted the higher-order needs. These higher-order needs are generally satisfied internally, i.e., within an individual. Thus, we can conclude that during boom period, the employees lower-order needs are significantly met.
HERZBERG’S TWO-FACTOR THEORY OF MOTIVATION
In 1959, Frederick Herzberg, a behavioural scientist proposed a two-factor theory or the motivator-hygiene theory. According to Herzberg, there are some job factors that result in satisfaction while there are other job factors that prevent dissatisfaction. According to Herzberg, the opposite of “Satisfaction” is “No satisfaction” and the opposite of “Dissatisfaction” is “No Dissatisfaction”.
FIGURE: Herzberg’s view of satisfaction and dissatisfaction
Herzberg classified these job factors into two categories-
a. Hygiene factors- Hygiene factors are those job factors which are essential for existence of motivation at workplace. These do not lead to positive satisfaction for long-term. But if these factors are absent / if these factors are non-existant at workplace, then they lead to dissatisfaction. In other words, hygiene factors are those factors which when adequate/reasonable in a job, pacify the employees and do not make them dissatisfied. These factors are extrinsic to work. Hygiene factors are also called as dissatisfiers or maintenance factors as they are required to avoid dissatisfaction. These factors describe the job environment/scenario. The hygiene factors symbolized the physiological needs which the individuals wanted and expected to be fulfilled. Hygiene factors include:
• Pay - The pay or salary structure should be appropriate and reasonable. It must be equal and competitive to those in the same industry in the same domain.
• Company Policies and administrative policies - The company policies should not be too rigid. They should be fair and clear. It should include flexible working hours, dress code, breaks, vacation, etc.
• Fringe benefits - The employees should be offered health care plans (mediclaim), benefits for the family members, employee help programmes, etc.
• Physical Working conditions - The working conditions should be safe, clean and hygienic. The work equipments should be updated and well-maintained.
• Status - The employees’ status within the organization should be familiar and retained.
• Interpersonal relations - The relationship of the employees with his peers, superiors and subordinates should be appropriate and acceptable. There should be no conflict or humiliation element present.
• Job Security - The organization must provide job security to the employees
b. Motivational factors- According to Herzberg, the hygiene factors cannot be regarded as motivators. The motivational factors yield positive satisfaction. These factors are inherent to work. These factors motivate the employees for a superior performance. These factors are called satisfiers. These are factors involved in performing the job. Employees find these factors intrinsically rewarding. The motivators symbolized the psychological needs that were perceived as an additional benefit. Motivational factors include:
• Recognition - The employees should be praised and recognized for their accomplishments by the managers.
• Sense of achievement - The employees must have a sense of achievement. This depends on the job. There must be a fruit of some sort in the job.
• Growth and promotional opportunities - There must be growth and advancement opportunities in an organization to motivate the employees to perform well.
• Responsibility - The employees must hold themselves responsible for the work. The managers should give them ownership of the work. They should minimize control but retain accountability.
• Meaningfulness of the work - The work itself should be meaningful, interesting and challenging for the employee to perform and to get motivated.
Limitations of Two-Factor Theory
The two factor theory is not free from limitations:
1. The two-factor theory overlooks situational variables.
2. Herzberg assumed a correlation between satisfaction and productivity. But the research conducted by Herzberg stressed upon satisfaction and ignored productivity.
3. The theory’s reliability is uncertain. Analysis has to be made by the raters. The raters may spoil the findings by analyzing same response in different manner.
4. No comprehensive measure of satisfaction was used. An employee may find his job acceptable despite the fact that he may hate/object part of his job.
5. The two factor theory is not free from bias as it is based on the natural reaction of employees when they are enquired the sources of satisfaction and dissatisfaction at work. They will blame dissatisfaction on the external factors such as salary structure, company policies and peer relationship. Also, the employees will give credit to themselves for the satisfaction factor at work.
6. The theory ignores blue-collar workers. Despite these limitations, Herzberg’s Two-Factor theory is acceptable broadly.
THEORY X AND Y
In 1960, Douglas McGregor formulated Theory X and Theory Y suggesting two aspects of human behaviour at work, or in other words, two different views of individuals (employees): one of which is negative, called as Theory X and the other is positive, so called as Theory Y. According to McGregor, the perception of managers on the nature of individuals is based on various assumptions.
Assumptions of Theory X
• An average employee intrinsically does not like work and tries to escape it whenever possible.
• Since the employee does not want to work, he must be persuaded, compelled, or warned with punishment so as to achieve organizational goals. A close supervision is required on part of managers. The managers adopt a more dictatorial style.
• Many employees rank job security on top, and they have little or no aspiration/ ambition.
• Employees generally dislike responsibilities.
• Employees resist change.
• An average employee needs formal direction.
Assumptions of Theory Y
• Employees can perceive their job as relaxing and normal. They exercise their physical and mental efforts in an inherent manner in their jobs.
• Employees may not require only threat, external control and coercion to work, but they can use self-direction and self-control if they are dedicated and sincere to achieve the organizational objectives.
• If the job is rewarding and satisfying, then it will result in employees’ loyalty and commitment to organization.
• An average employee can learn to admit and recognize the responsibility. In fact, he can even learn to obtain responsibility.
• The employees have skills and capabilities. Their logical capabilities should be fully utilized. In other words, the creativity, resourcefulness and innovative potentiality of the employees can be utilized to solve organizational problems.
Thus, we can say that Theory X presents a pessimistic view of employees’ nature and behaviour at work, while Theory Y presents an optimistic view of the employees’ nature and behaviour at work. If correlate it with Maslow’s theory, we can say that Theory X is based on the assumption that the employees emphasize on the physiological needs and the safety needs; while Theory X is based on the assumption that the social needs, esteem needs and the self-actualization needs dominate the employees.
McGregor views Theory Y to be more valid and reasonable than Theory X. Thus, he encouraged cordial team relations, responsible and stimulating jobs, and participation of all in decision-making process.
Implications of Theory X and Theory Y
Quite a few organizations use Theory X today. Theory X encourages use of tight control and supervision. It implies that employees are reluctant to organizational changes. Thus, it does not encourage innovation.
Many organizations are using Theory Y techniques. Theory Y implies that the managers should create and encourage a work environment which provides opportunities to employees to take initiative and self-direction. Employees should be given opportunities to contribute to organizational well-being. Theory Y encourages decentralization of authority, teamwork and participative decision making in an organization. Theory Y searches and discovers the ways in which an employee can make significant contributions in an organization. It harmonizes and matches employees’ needs and aspirations with organizational needs and aspirations.
IMPORTANCE OF MOTIVATION
(1) Improves Performance Level:
The ability to do work and willingness to do work both affect the efficiency of a person. The ability to do work is obtained with the help of education and training and willingness to do work is obtained with the help of motivation.
(2) Helps to Change Negative or Indifferent Attitudes of Employees:
Some employees of an organisation have a negative attitude. They always think that doing more work will not bring any credit. A manager uses various techniques to change this attitude.
For example, if the financial situation of such an employee is weak, he gives him a raise in his remuneration and if his financial condition is satisfactory he motivates him by praising his work.
(3) Reduction in Employee Turnover:
The reputation of an organisation is affected by the employee turnover. This creates a lot of problems for the managers. A lot of time and money go waste in repeatedly recruiting employees and giving them education and training.
Only motivation can save an organisation from such wastage. Motivated people work for a longer time in the organisation and there is a decline in the rate of turnove
(4) Helps to Reduce Absenteeism in the Organisation:
In some of the organisations, the rate of absenteeism is high. There are many causes for this-poor work conditions, poor relations with colleagues and superiors, no recognition in the organisation, insufficient reward, etc. A manager removes all such deficiencies and motivates the employees. Motivated employees do not remain absent from work as the workplace becomes a source of joy for them.
(5) Reduction in Resistance to Change:
New changes continue taking place in the organisation. Normally workers are not prepared to accept any changes in their normal routine. Whereas it becomes essential to bring in some changes because of the demands of time.
Employees can be made to accept such changes easily with the help of motivation. Motivated people accept these changes enthusiastically and improve their work performance.
LEADERSHIP
Leadership is a process by which an executive can direct, guide and influence the behavior and work of others towards accomplishment of specific goals in a given situation. Leadership is the ability of a manager to induce the subordinates to work with confidence and zeal.
Leadership is the potential to influence behaviour of others. It is also defined as the capacity to influence a group towards the realization of a goal. Leaders are required to develop future visions, and to motivate the organizational members to want to achieve the visions.
Characteristics of Leadership
1. It is a inter-personal process in which a manager is into influencing and guiding workers towards attainment of goals.
2. It denotes a few qualities to be present in a person which includes intelligence, maturity and personality.
3. It is a group process. It involves two or more people interacting with each other.
4. A leader is involved in shaping and moulding the behaviour of the group towards accomplishment of organizational goals.
5. Leadership is situation bound. There is no best style of leadership. It all depends upon tackling with the situations.
LEADERSHIP TYPES /STYLES
Autocratic leadership style: In this style of leadership, a leader has complete command and hold over their employees/team. The team cannot put forward their views even if they are best for the team’s or organizational interests. They cannot criticize or question the leader’s way of getting things done. The leader himself gets the things done. The advantage of this style is that it leads to speedy decision-making and greater productivity under leader’s supervision. Drawbacks of this leadership style are that it leads to greater employee absenteeism and turnover. This leadership style works only when the leader is the best in performing or when the job is monotonous, unskilled and routine in nature or where the project is short-term and risky.
The Laissez Faire Leadership Style: Here, the leader totally trusts their employees/team to perform the job themselves. He just concentrates on the intellectual/rational aspect of his work and does not focus on the management aspect of his work. The team/employees are welcomed to share their views and provide suggestions which are best for organizational interests. This leadership style works only when the employees are skilled, loyal, experienced and intellectual.
Democrative/Participative leadership style: The leaders invite and encourage the team members to play an important role in decision-making process, though the ultimate decision-making power rests with the leader. The leader guides the employees on what to perform and how to perform, while the employees communicate to the leader their experience and the suggestions if any. The advantages of this leadership style are that it leads to satisfied, motivated and more skilled employees. It leads to an optimistic work environment and also encourages creativity. This leadership style has the only drawback that it is time-consuming.
Bureaucratic leadership: Here the leaders strictly adhere to the organizational rules and policies. Also, they make sure that the employees/team also strictly follows the rules and procedures. Promotions take place on the basis of employees’ ability to adhere to organizational rules. This leadership style gradually develops over time. This leadership style is more suitable when safe work conditions and quality are required. But this leadership style discourages creativity and does not make employees self-contented.
ROLES/FUNCTION OF LEADER
Following are the main roles of a leader in an organization :
1. Required at all levels- Leadership is a function which is important at all levels of management. In the top level, it is important for getting co-operation in formulation of plans and policies. In the middle and lower level, it is required for interpretation and execution of plans and programmes framed by the top management. Leadership can be exercised through guidance and counseling of the subordinates at the time of execution of plans.
2. Representative of the organization- A leader, i.e., a manager is said to be the representative of the enterprise. He has to represent the concern at seminars, conferences, general meetings, etc. His role is to communicate the rationale of the enterprise to outside public. He is also representative of the own department which he leads.
3. Integrates and reconciles the personal goals with organizational goals- A leader through leadership traits helps in reconciling/ integrating the personal goals of the employees with the organizational goals. He is trying to co-ordinate the efforts of people towards a common purpose and thereby achieves objectives. This can be done only if he can influence and get willing co-operation and urge to accomplish the objectives.
4. He solicits support- A leader is a manager and besides that he is a person who entertains and invites support and co-operation of subordinates. This he can do by his personality, intelligence, maturity and experience which can provide him positive result. In this regard, a leader has to invite suggestions and if possible implement them into plans and programmes of enterprise. This way, he can solicit full support of employees which results in willingness to work and thereby effectiveness in running of a concern.
5. As a friend, philosopher and guide- A leader must possess the three dimensional traits in him. He can be a friend by sharing the feelings, opinions and desires with the employees. He can be a philosopher by utilizing his intelligence and experience and thereby guiding the employees as and when time requires. He can be a guide by supervising and communicating the employees the plans and policies of top management and secure their co-operation to achieve the goals of a concern. At times he can also play the role of a counselor by counseling and a problem-solving approach. He can listen to the problems of the employees and try to solve them.
QUALITIES OF A LEADER
A leader has got multidimensional traits in him which makes him appealing and effective in behavior. The following are the requisites to be present in a good leader:
1. Physical appearance- A leader must have a pleasing appearance. Physique and health are very important for a good leader.
2. Vision and foresight- A leader cannot maintain influence unless he exhibits that he is forward looking. He has to visualize situations and thereby has to frame logical programmes.
3. Intelligence- A leader should be intelligent enough to examine problems and difficult situations. He should be analytical who weighs pros and cons and then summarizes the situation. Therefore, a positive bent of mind and mature outlook is very important.
4. Communicative skills- A leader must be able to communicate the policies and procedures clearly, precisely and effectively. This can be helpful in persuasion and stimulation.
5. Objective- A leader has to be having a fair outlook which is free from bias and which does not reflects his willingness towards a particular individual. He should develop his own opinion and should base his judgement on facts and logic.
6. Knowledge of work- A leader should be very precisely knowing the nature of work of his subordinates because it is then he can win the trust and confidence of his subordinates.
7. Sense of responsibility- Responsibility and accountability towards an individual’s work is very important to bring a sense of influence. A leader must have a sense of responsibility towards organizational goals because only then he can get maximum of capabilities exploited in a real sense. For this, he has to motivate himself and arouse and urge to give best of his abilities. Only then he can motivate the subordinates to the best.
8. Self-confidence and will-power- Confidence in himself is important to earn the confidence of the subordinates. He should be trustworthy and should handle the situations with full will power. (You can read more about Self-Confidence at : Self Confidence - Tips to be Confident and Eliminate Your Apprehensions).
9. Humanist-This trait to be present in a leader is essential because he deals with human beings and is in personal contact with them. He has to handle the personal problems of his subordinates with great care and attention. Therefore, treating the human beings on humanitarian grounds is essential for building a congenial environment.
10. Empathy- It is an old adage “Stepping into the shoes of others”. This is very important because fair judgement and objectivity comes only then. A leader should understand the problems and complaints of employees and should also have a complete view of the needs and aspirations of the employees. This helps in improving human relations and personal contacts with the employees.
CONTROLLING
According to Brech, “Controlling is a systematic exercise which is called as a process of checking actual performance against the standards or plans with a view to ensure adequate progress and also recording such experience as is gained as a contribution to possible future needs.”
According to Donnell, “Just as a navigator continually takes reading to ensure whether he is relative to a planned action, so should a business manager continually take reading to assure himself that his enterprise is on right course.”
Controlling has got two basic purposes
1. It facilitates co-ordination
2. It helps in planning
Features of Controlling Function
Following are the characteristics of controlling function of management-
1. Controlling is an end function- A function which comes once the performances are made in confirmities with plans.
2. Controlling is a pervasive function- which means it is performed by managers at all levels and in all type of concerns.
3. Controlling is forward looking- because effective control is not possible without past being controlled. Controlling always look to future so that follow-up can be made whenever required.
4. Controlling is a dynamic process- since controlling requires taking reviewal methods, changes have to be made wherever possible.
5. Controlling is related with planning- Planning and Controlling are two inseperable functions of management. Without planning, controlling is a meaningless exercise and without controlling, planning is useless. Planning presupposes controlling and controlling succeeds planning.
PROCESS OF CONTROLLING
The control process involves carefully collecting information about a system, process, person, or group of people in order to make necessary decisions about each. Managers set up control systems that consist of four key steps:
1. Establish standards to measure performance.Within an organization's overall strategic plan, managers define goals for organizational departments in specific, operational terms that include standards of performance to compare with organizational activities.
2. Measure actual performance. Most organizations prepare formal reports of performance measurements that managers review regularly. These measurements should be related to the standards set in the first step of the control process. For example, if sales growth is a target, the organization should have a means of gathering and reporting sales data.
3. Compare performance with the standards. This step compares actual activities to performance standards. When managers read computer reports or walk through their plants, they identify whether actual performance meets, exceeds, or falls short of standards. Typically, performance reports simplify such comparison by placing the performance standards for the reporting period alongside the actual performance for the same period and by computing the variance—that is, the difference between each actual amount and the associated standard.
4. Take corrective actions. When performance deviates from standards, managers must determine what changes, if any, are necessary and how to apply them. In the productivity and quality‐centered environment, workers and managers are often empowered to evaluate their own work. After the evaluator determines the cause or causes of deviation, he or she can take the fourth step—corrective action. The most effective course may be prescribed by policies or may be best left up to employees' judgment and initiative.
These steps must be repeated periodically until the organizational goal is achieved.
TECHNIQUES OF CONTROLLING
• Direct Supervision and Observation. 'Direct Supervision and Observation' is the oldest technique of controlling. ...
• Financial Statements. ...
• Budgetary Control. ...
• Break Even Analysis. ...
• Return on Investment (ROI) ...
• Management by Objectives (MBO) ...
• Management Audit. ...
• Management Information System (MIS)
TOTAL QUALITY MANAGEMENT (TQM)
Total Quality Management (TQM) describes a management approach to long-term success through customer satisfaction. In a TQM effort, all members of an organization participate in improving processes, products, services, and the culture in which they work.
Total Quality Management Principles: The 8 Primary Elements of TQM
Total quality management can be summarized as a management system for a customer-focused organization that involves all employees in continual improvement. It uses strategy, data, and effective communications to integrate the quality discipline into the culture and activities of the organization. Many of these concepts are present in modern Quality Management Systems, the successor to TQM. Here are the 8 principles of total quality management:
1. Customer-focused
The customer ultimately determines the level of quality. No matter what an organization does to foster quality improvement—training employees, integrating quality into the design process, upgrading computers or software, or buying new measuring tools—the customer determines whether the efforts were worthwhile.
2. Total employee involvement
All employees participate in working toward common goals. Total employee commitment can only be obtained after fear has been driven from the workplace, when empowerment has occurred, and management has provided the proper environment. High-performance work systems integrate continuous improvement efforts with normal business operations. Self-managed work teams are one form of empowerment.
3. Process-centered
A fundamental part of TQM is a focus on process thinking. A process is a series of steps that take inputs from suppliers (internal or external) and transforms them into outputs that are delivered to customers (again, either internal or external). The steps required to carry out the process are defined, and performance measures are continuously monitored in order to detect unexpected variation.
4. Integrated system
Although an organization may consist of many different functional specialties often organized into vertically structured departments, it is the horizontal processes interconnecting these functions that are the focus of TQM.
• Micro-processes add up to larger processes, and all processes aggregate into the business processes required for defining and implementing strategy. Everyone must understand the vision, mission, and guiding principles as well as the quality policies, objectives, and critical processes of the organization. Business performance must be monitored and communicated continuously.
• An integrated business system may be modeled after the Baldrige National Quality Program criteria and/or incorporate the ISO 9000 standards. Every organization has a unique work culture, and it is virtually impossible to achieve excellence in its products and services unless a good quality culture has been fostered. Thus, an integrated system connects business improvement elements in an attempt to continually improve and exceed the expectations of customers, employees, and other stakeholders.
5. Strategic and systematic approach
A critical part of the management of quality is the strategic and systematic approach to achieving an organization’s vision, mission, and goals. This process, called strategic planning or strategic management, includes the formulation of a strategic plan that integrates quality as a core component.
6. Continual improvement
A major thrust of TQM is continual process improvement. Continual improvement drives an organization to be both analytical and creative in finding ways to become more competitive and more effective at meeting stakeholder expectations.
7. Fact-based decision making
In order to know how well an organization is performing, data on performance measures are necessary. TQM requires that an organization continually collect and analyze data in order to improve decision making accuracy, achieve consensus, and allow prediction based on past history.
8. Communications
During times of organizational change, as well as part of day-to-day operation, effective communications plays a large part in maintaining morale and in motivating employees at all levels. Communications involve strategies, method, and timeliness.
COORDINATION
Coordination is “integration of the activities of individuals and units into a concerted effort that works towards a common aim.” — Pearce and Robinson
Co-ordination maintains unity of action amongst individuals and departments. Absence of co-ordination will result in sub-optimal attainment of goals. In extreme situations, it may result in losses and liquidation of companies.
NEED AND IMPORTANCE OF COORDINATION
Importance/Need for Coordination:
The need for coordination arises because individuals and departments have different goals. They depend on each other for resources and information. Managers continuously coordinate their activities to ensure that all individuals and departments use organisational resources and information for successful attainment of organisational goals.
Coordination results in the following benefits:
1. Non-routine jobs:
Non-routine jobs need constant flow of information, both vertical and horizontal. Unless there is proper coordination amongst these jobs, they cannot be performed efficiently. Coordination, thus, helps in effectively carrying out non-routine jobs.
2. Dynamic activities:
Organisations operate in the dynamic environment. Environmental changes have to be adopted by organisations for their survival and growth. Coordination helps in integrating activities which constantly change according to changes in the environment.
3. Standards of performance:
When standards of performance against which actual performance is to be measured are too high, managers coordinate the various business activities to ensure that high performance standards are achieved.
4. Interdependence of activities:
When different units of the organisation are dependent on each other for resources or information, there is great need for coordination amongst them. Greater the interdependence, greater is the need for coordination. According to Thompson, there are three types of interdependence: pooled, sequential and reciprocal interdependence.
5. Specialisation:
Specialisation leads to concentration on very narrow areas of job activity. Individuals tend to overlook overall perspective of the job. This requires coordination to direct all the activities towards a common goal.
6. Growing organisation:
In growing organisations, number of people and divisions become so large that it becomes difficult for top managers to coordinate the activities performed by all of them. Various techniques of coordination (rules, procedures, plans, goals, slack resources etc.) help in unifying diverse and multiple organisational/departmental activities towards the common goal.
7. Promote group effort:
In the absence of coordination, each individual and department will carry out their objectives in a manner that they perceive as the best. People tend to maximise their individual goals. This may, however, not be the best for the organisation as a whole.
Coordination helps in promoting group effort rather than individual effort for optimally achieving the organisational goals. It harmonizes individuals goals with organisational goals and satisfies individual goals through satisfaction of organisational goals.
8. Unity of action:
Organisations have diverse work force, thoughts, resources, goals, activities and skills. Coordination helps to unify these diverse set of actions towards a single goal and, thus, maximise their use.
9. Synergy:
Coordination facilitates the sum total of output of group to increase by more than the sum total of their individual output. It integrates work of different units and produces synergistic effects by increasing the overall organisational output.
UNIT-V
Management of Change: Models for Change, Force for Change, Need for Change, Alternative Change
Techniques, New Trends in Organization Change, Stress Management.
CHANGE MANAGEMENT
Change management is a systematic approach to dealing with the transition or transformation of an organization's goals, processes or technologies. The purpose of change management is to implement strategies for effecting change, controlling change and helping people to adapt to change. Such strategies include having a structured procedure for requesting a change, as well as mechanisms for responding to requests and following them up.
FACTORS/FORCES FOR CHANGE
External Forces of Organizational Change
The external forces of change stem up from the external environment. These forces have been described below:
Political Forces: With the rapidly changing global political scenario and the upheavals in the global politics, the worldwide economy is equally undergoing a quick change and presenting several challenges before the organization in the form of changes in regulations, policies and also the economic framework in the form of globalization and liberalization.
Economic Forces: The economic forces influence organization’s change management strategy by either presenting opportunities or challenges in the form of economic uncertainties or growing competitive pressures.
Technological Forces: Technological advancements and innovations in communication and computer technology, have revolutionized the organizational functioning by facilitating newer ways of working and added in newer range of products/services thus creating a need for developing a framework for managing change effectively and proactively responding to the challenges as a result of these changes due to the technological forces.
Governmental Forces: Governmental regulations and also the extent of intervention may influence the need for change. The following governmental forces have been described below which determine the need for organizational change:
1. Deregulation: Deregulation is associated with decentralization of power or economic interventions at the state level or lessening of the governmental intervention in the economy. For example, as an outcome of deregulation few sectors/industries like insurance, banking, petroleum and many others which were previously under the direct control of the government, are now being handed over to the private players or companies.
2. Foreign Exchange: Foreign exchange rates directly affect the international trade, as the variations in the exchange rates influence the currency payment structure. Issues or constraints with the foreign exchange rate may compel the government in moving ahead with the imposition of import restrictions on selected items or deregulating the economies for attracting the foreign exchange for investment purposes.
3. Anti-Trust Laws: Anti-Trust laws are enforced by most of the governments for restricting/curbing unfair trade practices. For example, these restrictions have been enforced in India by enacting an act called Monopolies and Restrictive Trade Practices (MRTP), 1971.
4. Suspension Agreements: Suspension agreements are the agreements which are finalized between the governments to waive off anti-dumping duties.
5. Protectionism: Due to the growing competitive pressures, most of the governments try to enforce certain regulations or intervene for safeguarding their threatened industries. For example, by enforcing certain trade barriers, the Indian government protects the local industries such as Handicrafts and Textiles. These trade barriers may take the form of either anti-dumping laws, levy of tariffs or import duties, quantity quotas, and various government subsidies.
Competitive Pressures: The increase in the global competition and the challenges enforced due to the competitive pressures, force the organizations in changing their strategies for ensuring their global presence. Japanese majors like Nissan, Toyota and Mitsubishi, have been continuously relocating their manufacturing as well as their assembling operations to South East Asian countries for achieving a competitive advantage in the form of reduced cost of labour and economies of scale.
Changes in the Needs and Preferences of Customers: Changes in the needs of the customers are compelling the organizations to adapt and innovate their product offerings constantly for meeting the changing demands of the customers.
Internal Forces of Organizational Change
Systemic Forces: An organization is made up of a system and several subsystems which are interconnected, just like the way in which a human system functions. The subsystems of an organization are in direct interaction and influence the organizational behaviour as well. A change in any subsystem, result in a change in the existing organizational processes and the complete alignment as well as the relationship.
Inadequate Existing Administrative Processes: Each organization function by following a particular set of procedures, rules, and regulations. With the changing times, an organization needs to change it’s rules and existing administrative processes, failing which the administrative inadequacy might result in organizational ineffectiveness.
Individual/Group Speculations: In anthropological terms, it is understood that man is a social animal whose desires and requirements keep changing with the changing times, which result in differences in individual as well as group expectations. Various factors on the positive front such as how ambitious an individual is, achievement drive, career growth, personal and professional competencies and negative factors such as one’s own fears, complexes and insecurities are some of the inter-individual as well as inter group factors which influence an organizational functioning on a day to day basis and also its overall performance.
Structural Changes: These changes alter the existing organizational structure as well as its overall design. Structural changes can be regarded as a strategic move on the part of the organization’s to improve profitability and for achieving a cost advantage. These changes may take the form of downsizing, job redesign, decentralization, etc. For example, IBM for introducing reforms in its existing system and procedures and for achieving cost effectiveness has enforced downsizing strategy.
Changes in the Technology: Within an organization, the technological changes may take the shape of changes in the work processes, equipment, level/degree of automation, sequence of work, etc.
People Focused Change: In this context, the major focus is laid on people and their existing competencies, human resource planning strategies, structural changes and employee reorientation and replacement of an employee which mean shifting an employee to a different work arena where his/her skills are best suited. It may also be involving establishing new recruitment policies and procedures in line with the changes in the technology.
Issues with the Profitability: This can also be one of the primary causes which compel an organization to restructure (downsize or resize) or to reengineer themselves. The organization may have profitability issues either due to a loss in revenue, low productivity or a loss in the market share.
NEED FOR CHANGE
Organizations change for a number of different reasons, so they can either react to these reasons or be ahead of them. These reasons include:
1. Crisis: Obviously September 11 is the most dramatic example of a crisis which caused countless organizations, and even industries such as airlines and travel, to change. The recent financial crisis obviously created many changes in the financial services industry as organizations attempted to survive.
2. Performance Gaps: The organization's goals and objectives are not being met or other organizational needs are not being satisfied. Changes are required to close these gaps.
3. New Technology: Identification of new technology and more efficient and economical methods to perform work.
4. Identification of Opportunities: Opportunities are identified in the market place that the organization needs to pursue in order to increase its competitiveness.
5. Reaction to Internal & External Pressure: Management and employees, particularly those in organized unions often exert pressure for change. External pressures come from many areas, including customers, competition, changing government regulations, shareholders, financial markets, and other factors in the organization's external environment.
6. Mergers & Acquisitions: Mergers and acquisitions create change in a number of areas often negatively impacting employees when two organizations are merged and employees in duel functions are made redundant.
7. Change for the Sake of Change: Often times an organization will appoint a new CEO. In order to prove to the board he is doing something, he will make changes just for their own sake.
8. Sounds Good: Another reason organizations may institute certain changes is that other organizations are doing so (such as the old quality circles and re-engineering fads). It sounds good, so the organization tries it.
9. Planned Abandonment: Changes as a result of abandoning declining products, markets, or subsidiaries and allocating resources to innovation and new opportunities.
TECHNIQUES OF CHANGE
(i) By transformational leaderships:
Transformational leaders are managers who initiate bold strategic changes to position the organisation for its future. They articulate a vision and sell it vigorously. They stimulate employees to action and charismatically model the desired behaviours. They attempt to create learning individuals and learning organisations that will be better prepared for the unknown future challenges.
ii) By use of group forces:
The group is an instrument for bringing strong pressures on its members to change. Since behaviour is firmly grounded in the groups to which a person belongs, any changes in group forces will encourage changes in the individual behaviour. The idea is to help the group join with management to encourage desired change
(iii) By providing a rationale for change:
Capable leaderships reinforce a climate of psychological support for change. The effective leader presents change on the basis of the impersonal requirements of the situation, rather than on personal grounds. Change is more likely to be successful if the leaders introducing it have high expectations of success. Managerial and employee expectations of change may be as important as the technology of change.
(iv) By participation:
Participation encourages employees to discuss, to communicate, to make suggestions and to become interested in change. Participation encourages commitment rather than mere compliance with change. Commitment implies motivation to support a change and to work to ensure that the change is effective.
Employees need to participate in a change before it occurs, not after. When they are involved in the planned change, right from the beginning, they feel committed to the implementation of such change.
(v) By sharing rewards:
By ensuring that there are enough rewards for employees in the changed situation, managers can build employee support for change. Rewards also give employees a sense that progress accompanies a change. Both economic and psychic rewards are useful.
(vi) By ensuring employee security:
Along with shared rewards, existing employee benefits need to be protected. Security during a change is essential in the form of protection from reduced earnings when new technology and methods are introduced. Seniority rights, opportunities for advancement etc., are to be safeguarded when a change is made.
(vii) By communication and education:
Support for change can be gained by communication and education. All individuals or groups that will be affected by change must be informed about the change in order to make them feel secure and to maintain group cooperation.
(viii) By stimulating employee readiness:
Employers should be helped to become aware of the need for a change. Change is more likely to be accepted if the people affected by it recognise a need for it before it occurs.
It is also essential for managers to take a broader, systems-oriented perspective on change to identify the complex relationships involved. Organisational development can be a useful method for achieving this objective.
STRESS MANAGEMENT
Stress management is a wide spectrum of techniques and psychotherapies aimed at controlling a person's level of stress, especially chronic stress, usually for the purpose of improving everyday functioning. In this context, the term 'stress' refers only to a stress with significant negative consequences, or distress in the terminology advocated by Hans Selye, rather than what he calls eustress, a stress whose consequences are helpful or otherwise.
What Is Stress?
Stress is your body’s response to changes in your life. Because life involves constant change (ranging from changing locations from home to work each morning to adapting to major life changes like marriage, divorce, or death of a loved one), there is no avoiding stress.
This is why your goal shouldn't be to eliminate all stress, but to eliminate unnecessary stress and effectively manage the rest. There are some common causes of stress that many people experience, but each person is different.
Causes of Stress
Stress can come from many sources, which are known as "stressors." Because our experience of what is considered "stressful" is created by our unique perceptions of what we encounter in life (based on our own mix of personality traits, available resources, habitual thought patterns and more), a situation may be perceived as "stressful" by one person and merely "challenging" by someone else.
TECHNIQUES FOR STRESS MANAGEMENT
There are many positive and 'functional' methods of coping with stress:
• Relaxation/Meditation - Cultivating interior stillness and calmness through meditation and relaxation techniques such as massage therapy, and progressive muscle relaxation.
• Exercise - Regular physical exertion of any intensity (a gentle 30 minute walk, a Yoga or Pilates class, an hour long strenuous free-weight workout, etc.) helps discharge muscle tension and build strength, resilience and energy.
• Healthy Diet - Eating healthy whole foods and avoiding sugary and fattening treats helps keep the body's internal rhythms more balanced.
• Socialization And Supportive Conversation - Many people are able to relax and to feel part of something larger than themselves by sharing their concerns with trusted others. This can take the form of talking with friends and family, psychotherapy or counseling, or prayer.
• Assertive Communication - Some stress is caused by not getting what you want from other people. Asking for what you want in a direct but polite way is the best method for getting what you want, and thereby reducing stress.
• Time Management - Some stress is caused by poor organization. Learning how to manage appointments, to say 'no' to requests you can't get done, to organize records, and to use memory enhancement tools (like alarm clocks and 'palm pilots') can make a big difference.
• Asking For Assistance - Whatever it is that you are dealing with right now, other people have dealt with it before. Seeking out their counsel when you don't know what to do is often a good way to avoid reinventing the wheel.
The big problem with healthy coping strategies is that they often don't make one feel better immediately; they only really work after one makes a commitment to practicing them repeatedly over time
UNIT-VI
Strategic Management
Definition, Classes of Decisions, Levels of Decision, Strategy, Role of different Strategist, Relevance of
Strategic Management and its Benefits, Strategic Management in India
STRATEGIC MANAGEMENT
Strategic management is the continuous planning, monitoring, analysis and assessment of all that is necessary for an organization to meet its goals and objectives. Fast-paced innovation, emerging technologies and customer expectations force organizations to think and make decisions strategically to remain successful.
CLASSES OF DECISION
1. Programmed and non-programmed decisions:
Programmed decisions are concerned with the problems of repetitive nature or routine type matters.
A standard procedure is followed for tackling such problems. These decisions are taken generally by lower level managers. Decisions of this type may pertain to e.g. purchase of raw material, granting leave to an employee and supply of goods and implements to the employees, etc. Non-programmed decisions relate to difficult situations for which there is no easy solution.
2. Routine and strategic decisions:
Routine decisions are related to the general functioning of the organisation. They do not require much evaluation and analysis and can be taken quickly. Ample powers are delegated to lower ranks to take these decisions within the broad policy structure of the organisation.
3. Tactical (Policy) and operational decisions:
Decisions pertaining to various policy matters of the organisation are policy decisions. These are taken by the top management and have long term impact on the functioning of the concern. For example, decisions regarding location of plant, volume of production and channels of distribution (Tactical) policies, etc. are policy decisions. Operating decisions relate to day-to-day functioning or operations of business. Middle and lower level managers take these decisions.
4. Organisational and personal decisions:
When an individual takes decision as an executive in the official capacity, it is known as organisational decision. If decision is taken by the executive in the personal capacity (thereby affecting his personal life), it is known as personal decision.
5. Major and minor decisions:
Another classification of decisions is major and minor. Decision pertaining to purchase of new factory premises is a major decision. Major decisions are taken by top management. Purchase of office stationery is a minor decision which can be taken by office superintendent.
6. Individual and group decisions:
When the decision is taken by a single individual, it is known as individual decision. Usually routine type decisions are taken by individuals within the broad policy framework of the organisation.
LEVELS OF DECISION
Decisions are made at different levels in an organisation's hierarchy:
• Strategic decisions are long-term in their impact. They affect and shape the direction of the whole business. They are generally made by senior managers. The managers of the bakery need to take a strategic decision about whether to remain in the cafe business. Long-term forecasts of business turnover set against likely market conditions will help to determine if it should close the cafe business.
• Tactical decisions help to implement the strategy. They are usually made by middle management. For the cafe, a tactical decision would be whether to open earlier in the morning or on Saturday to attract new customers. Managers would want research data on likely customer numbers to help them decide if opening hours should be extended.
• Operational decisions relate to the day-to-day running of the business. They are mainly routine and may be taken by middle or junior managers. For example, a simple operational decision for the cafe would be whether to order more coffee for next week. Stock and sales data will show when it needs to order more supplies.
As these examples show, decisions at all levels need data. A business creates a trail of data. This includes data on sales, employee costs and payments. In a large company, such as Tesco, millions of data items are created every day against thousands of cost and sales headings. This data can provide a picture of trends, which the business can use in its forward planning.
STRATEGY
A strategy is a plan of action designed to achieve a specific goal or series of goals within an organizational framework.
ROLES OF STRATEGIST
There are various kinds of strategists like managers, board of directors, chief executive officers, entrepreneurs, senior management, SBU-level executives, corporate planning staff, consultants, middle level managers, executive assistants.
• Board of directors are the owners of an organization such as shareholders, controlling agencies, government, financial institutions, etc. They are responsible for governance of an organization, technology collaboration, new product development and senior management appointments. They guide the senior management in setting and accomplishing objectives, review and evaluate organization performance.
• The chief executive officer is answerable for all aspects of strategic management from the formulation to the evaluation of strategy. They play a major role in strategic decision making and provide the direction for the organization so that it can achieve its purpose. They assist in setting the mission of the organization. They are responsible for deciding the objectives, formulating and implementing the strategy.
• Entrepreneurs are strategist who starts a new business, initiator, searches for change, respond to it and exploits its as an opportunity. By their nature, entrepreneurs play a proactive role. They are implementers and evaluators of strategies.
• Senior management or top management consists of managers at highest level managerial hierarchy. They look after renovation, technology up progression, diversification and expansion and also focus on new product development. They assist the board and chief executives in formulating, implementing and evaluating the strategy.
• SBU level executives are profit center heads or divisional heads. They manage a diversified company as a portfolio of businesses, each business having a clearly defined product-market segment and an unique strategy. SBU executives maintain harmonization with other SBUs in the organizing, formulating and implementing the SBU level strategy.
• Corporate planning staff plays a supporting role. They put in order and communicate the strategic plans. They make available administrative support and fulfill the function of assisting the introduction, working and maintenance of strategic management system.
• Consultants may be individuals, academicians or consultancy companies who are specialized in strategic management activities. They will advise and assist managers to improve the performance and effectiveness of an organization. They provide services of corporate strategy and planning.
• Middle level managers look after operational matters, so they rarely play an active role in strategic management. They are the implementers of decision taken by top level and followers of policy guidelines. They contribute to generation of ideas and in development of strategic alternative. They also help in setting objectives at departmental level.
• An executive assistant will assist the chief executive in the performance of his duties in various ways. They assist the chief executive in data collection, analysis and in suggesting alternatives. Coordinating activities with internal staff and outsiders and acting as a filter for information are also performed by the executive assistant.
BENEFITS OF STRATEGIC MANAGEMENT
Here are the top 5 benefits of strategic planning:
1. It allows organizations to be proactive rather than reactive
A strategic plan allows organizations to foresee their future and to prepare accordingly. Through strategic planning, companies can anticipate certain unfavourable scenarios before they happen and take necessary precautions to avoid them. With a strong strategic plan, organizations can be proactive rather than merely reacting to situations as they arise. Being proactive allows organizations to keep up with the ever-changing trends in the market and always stay one step ahead of the competition.
2. It sets up a sense of direction
A strategic plan helps to define the direction in which an organization must travel, and aids in establishing realistic objectives and goals that are in line with the vision and mission charted out for it. A strategic plan offers a much-needed foundation from which an organization can grow, evaluate its success, compensate its employees and establish boundaries for efficient decision-making.
3. It increases operational efficiency
A strategic plan provides management the roadmap to align the organization’s functional activities to achieve set goals. It guides management discussions and decision making in determining resource and budget requirements to accomplish set objectives -- thus increasing operational efficiency.
4. It helps to increase market share and profitability
Through a dedicated strategic plan, organizations can get valuable insights on market trends, consumer segments, as well as product and service offerings which may affect their success. An approach that is targeted and well-strategized to turn all sales and marketing efforts into the best possible outcomes can help to increase profitability and market share.
5. It can make a business more durable
Business is a tumultuous concept. A business may be booming one year and in debt the next. With constantly changing industries and world markets, organizations that lack a strong foundation, focus and foresight will have trouble riding the next wave. According to reports, one of every three companies that are leaders in their industry might not be there in the next five years... but the odds are in favour of those that have a strong strategic plan!
STRATEGY MANAGEMENT IN INDIA
1. Strategic management is helping Indian corporates in giving their businesses a direction
India’s booming economy is home to a variety of start-ups. These start-ups are new and need to stay focused. A good strategy allows them to keep their eyes on the goal. It helps them set clear goals on what business they want to be in and what kind of customers they want to serve. With the plethora of market segments available in a vibrant economy, it is easy to get confused. A clear-cut strategy helps organizations stay out of the confused state.
2. Strategic management allows situational analysis through management tools
One of the management styles in strategic management is called situational analysis. It helps a business evaluate itself in its current market. By doing this they can define where they want to be, their future course of action and the time frame that they want to define for reaching their goals. They can clearly fine tune their working to achieve their goals by knowing how far they need to go from where they currently are. It helps them know how much resources they need to direct to achieve the desired result in the stipulated time frame.
3. Strategic management helps look around for strategic alliances
Once a company has a set of goals and a time frame to achieve those goals, they can find out means that can help them speed up their process of achievement of the decided goals. One of those means is a strategic alliance. A strategic alliance can happen between two organizations which have similar or complementing strategic objectives. They can have a partnership, or a bigger firm can acquire a smaller one. This provides both the sides access to each other’s resources and customer base. They can place each other’s products in their stores. In this manner, by tying the growth of the organization with the strategic alliances, one can fasten the goal completion.
4. Strategic management encourages innovation
Innovation is one of the key criteria for keeping a business relevant in the eyes of the customers. It keeps the company on its toes and encourages employees to create new products and processes which are better than the previous ones.
However, a recent study by the IBM institute for Business Value and Oxford Economics claims that 90% of Indian start-ups fail due to lack of innovation. 77% of the venture capitalists who were interviewed for this study said that Indian start-ups lacked new technologies and fresh business models. In 2016, Asian Paints was the only Indian company in Forbes magazine’s list of 25 most innovative companies. Most Indian start-ups in fact are known to emulate western business models. Lack of innovation is evident in the way they fail to sustain themselves. Since 2015, more than 1500 Indian start-ups have closed down in India.
UNIT-1
Nature of Management:
Meaning, Definition, nature & purpose, importance & Functions, Management as Art, Science & Profession-Management as social System Concepts of Management-Administration-Organization, Management Skills, Levels of Management.
Management:
“Management is the art of getting things done through and with the people in formally organized group to attain future goal”.
“Management is distinct process consisting of Planning, Organizing, actuating and Controlling performance to determine and accomplish the objectives by the use of people and resources”.
Management is the process of deciding and doing. The person who performs these function is called Managers and, as a body they are called management.
Management has the following 3 characteristics:
1. It is a process or series of continuing and related activities.
2. It involves and concentrates on reaching organizational goals.
3. It reaches these goals by working with and through people and other organizational resources.
MANAGEMENT FUNCTIONS:
The 4 basic management functions that make up the management process are described in the following sections:
1. PLANNING
2. ORGANIZING
3. INFLUENCING
4. CONTROLLING.
PLANNING: Planning involves choosing tasks that must be performed to attain organizational goals, outlining how the tasks must be performed, and indicating when they should be performed.
Planning activity focuses on attaining goals. Managers outline exactly what organizations should do to be successful. Planning is concerned with the success of the organization in the short term as well as in the long term.
ORGANIZING:
Organizing can be thought of as assigning the tasks developed in the planning stages, to various individuals or groups within the organization. Organizing is to create a mechanism to put plans into action.
People within the organization are given work assignments that contribute to the company’s goals. Tasks are organized so that the output of each individual contributes to the success of departments, which, in turn, contributes to the success of divisions, which ultimately contributes to the success of the organization.
INFLUENCING (DIRECTING):
Influencing is also referred to as motivating, leading or directing. Influencing can be defined as guiding the activities of organization members in the direction that helps the organization move towards the fulfillment of the goals.
The purpose of influencing is to increase productivity. Human-oriented work situations usually generate higher levels of production over the long term than do task oriented work situations because people find the latter type distasteful.
CONTROLLING:
Controlling is the following roles played by the manager:
1. Gather information that measures performance
2. Compare present performance to pre-established performance norms.
3. Determine the next action plan and modifications for meeting the desired performance parameters.
Controlling is an ongoing process.
NATURE OF MANAGEMENT:
Universal process: Wherever there is human activity, there is management. Without efficient management, objectives of the company2 cannot be achieved.
Factor of production: Qualified and efficient managers are essential to utilization of labor and capital.1
Goal oriented: The most important goal of all management activity is to accomplish the objectives of an enterprise. The goals should be realistic and attainable.
Supreme in thought and action: Managers set realizable objectives and then mastermind action on all fronts to accomplish them. For this, they require full support form middle and lower levels of management.
Group activity: All human and physical resources should be efficiently coordinated to attain maximum levels of combined productivity. Without coordination, no work would accomplish and there would be chaos and retention.
Dynamic function: Management should be equipped to face the changes in business environment brought about by economic, social, political, technological or human factors. They must be adequate training so that can enable them to perform well even in critical situations.
Social science: All individuals that a manager deals with, have different levels of sensitivity, understanding and dynamism.
Important organ of society: Society influences managerial action and managerial actions influence society. Its managers responsibility that they should also contribute towards the society by organizing charity functions, sports competition, donation to NGO’s etc.
System of authority: Well-defined lines of command, delegation of suitable authority and responsibility at all levels of decision-making. This is necessary so that each individual should what is expected from him and to whom he need to report to.
Profession: Managers need to possess managerial knowledge and training, and have to conform to a recognized code of conduct and remain conscious of their social and human obligations.
Process: The management process comprises a series of actions or operations conducted towards an end.
PURPOSE OR OBJECTIVES OF MANAGEMENT:
1. Optimum utilization of resources:
The most important objectives of the management are to use various resources of the enterprise in a most economical way.
The proper use of men, materials, machines, and money will help a business to earn sufficient profits to satisfy various interests i.e. proprietor, customers, employees and others. All these interests will be served well only when physical resources of the business are properly utilised.
2. Growth and development of business:
By proper planning, organization and direction etc., management leads a business to growth and development on sound footing. It helps in profitable expansion of the business. It provides a sense of security among the employers and employees.
3. Better quality goods:
The aim of the sound management has always been to produce the better quality products at minimum cost. Thus, it tries to remove all types of wastages in the business.
4. Ensuring regular supply of goods:
Another objective of management is to ensure the regular supply of goods to the people. It checks the artificial scarcity of goods in the market. Hence, it keeps the prices of goods within permissible limits.
5. Discipline and morale:
The management maintains the discipline and boosts the morale of the individuals by applying the principles of decentralisation and delegation of authority. It motivates the employees through monetary and non¬monetary incentives. It helps in creating and maintaining better work culture.
6. Mobilizing best talent:
The employment of experts in various fields will help in enhancing the efficiency of various factors of production. There should be a proper environment which should encourage good persons to join the enterprise. The better pay scales, proper amenities, future growth potentialities will attract more people in joining a concern.
7. Promotion of research and development:
Management undertakes the research and development to take lead over its competitors and meet the uncertainties of the future. Thus, it provides the benefits of latest research and technology to the society.
8. Minimize the element of risk:
Management involves the function of forecasting. Though the exact future can never be predicted yet on the basis of previous experience and existing circumstances, management can minimise the element of risk. Management always keeps its ears and eyes to the changing circumstances.
9. Improving performance:
Management should aim at improving the performance of each and every factor of production. The environment should be so congenial that workers are able to contribute their maximum to the enterprise. The fixing of objectives of various factors of production will help them in improving their performance.
10. Planning for future:
Another important purpose of management is to prepare a prospective plan. No management should feel satisfied with today’s work. Future plans should take into consideration what is to be done next. Future performance will depend upon present planning. So, planning for future is essential to every organization.
IMPORATNCE/SIGNIFICANCE OF MANAGEMENT:
(i) Management helps in achieving group goals: Management is required not for itself but for achieving the goals of the organisation. The task of a manager is to give a common direction to the individual effort in achieving the overall goal of the organisation.
(ii) Management increases efficiency: The aim of a manager is to reduce costs and increase productivity through better planning, organising, directing, staffing and controlling the activities of the organisation. (iii) Management creates a dynamic organisation: All organisations have to function in an environment which is constantly changing. It is generally seen that individuals in an organisation resist change.
(iii) Management creates a dynamic organization: it often means moving from a familiar, secure environment into a newer and more challenging one. Management helps people adapt to these changes so that the organisation is able to maintain its competitive edge.
(iv) Management helps in achieving personal objectives: A manager motivates and leads his team in such a manner that individual members are able to achieve personal goals while contributing to the overall organisational objective. Through motivation and leadership, the management helps individuals to develop team spirit, cooperation and commitment to group success.
(v) Management helps in the development of society: An organisation has multiple objectives to serve the purpose of the different groups that constitute it. In the process of fulfilling all these, management helps in the development of the organisation and through that it helps in the development of society. It helps to provide good quality products and services, creates employment opportunities, adopts new technology for the greater good of the people and leads the path towards growth and development.
(vi) Reduces Cost: Towards securing efficiency of operations, management is concerned with reducing cost of production and increasing the output.
(vii) Meet the challenge of cut throat competition:
MANAGEMENT AS ART, SCIENCE AND PROFESSION
Science ant Art
Management is Science because of several reasons like - it has universally accepted principles, it has cause and effect relationship etc, and at the same time it is art because it requires perfection through practice, practical knowledge, creativity, personal skills etc.
Management is both an art and a science. Management combines features of both science as well as art. It is considered as a science because it has an organized body of knowledge which contains certain universal truth. It is called an art because managing requires certain skills which are personal possessions of managers. Science provides the knowledge & art deals with the application of knowledge and skills.
A manager to be successful in his profession must acquire the knowledge of science & the art of applying it. Therefore, management is a judicious blend of science as well as an art because it proves the principles and the way these principles are applied is a matter of art. Science teaches to ‘know’ and art teaches to ‘do’. E.g. A person cannot become a good singer unless he has knowledge about various ragas & he also applies his personal skill in the art of singing. Same way it is not sufficient for manager to first know the principles but he must also apply them in solving various managerial problems that is why, science and art are not mutually exclusive but they are complementary to each other (like tea and biscuit, bread and butter etc.).
Management as Profession
A profession may be defined as an occupation that requires specialized knowledge and intensive academic preparations to which entry is regulated by a representative body. The essentials of a profession are:
1. Specialized Knowledge - A profession must have a systematic body of knowledge that can be used for development of professionals. Every professional must make deliberate efforts to acquire expertise in the principles and techniques. Similarly, a manager must have devotion and involvement to acquire expertise in the science of management.
2. Formal Education & Training - There are no. of institutes and universities to impart education & training for a profession. No one can practice a profession without going through a prescribed course. Many institutes of management have been set up for imparting education and training. For example, a CA cannot audit the A/C’s unless he has acquired a degree or diploma for the same but no minimum qualifications and a course of study has been prescribed for managers by law. For example, MBA may be preferred but not necessary.
3. Social Obligations - Profession is a source of livelihood but professionals are primarily motivated by the desire to serve the society. Their actions are influenced by social norms and values. Similarly a manager is responsible not only to its owners but also to the society and therefore he is expected to provide quality goods at reasonable prices to the society.
4. Code of Conduct - Members of a profession have to abide by a code of conduct which contains certain rules and regulations, norms of honesty, integrity and special ethics. A code of conduct is enforced by a representative association to ensure self-discipline among its members. Any member violating the code of conduct can be punished and his membership can be withdrawn. The AIMA has prescribed a code of conduct for managers but it has no right to take legal action against any manager who violates it.
5. Representative Association - For the regulation of profession, existence of a representative body is a must. For example, an institute of Charted Accountants of India establishes and administers standards of competence for the auditors but the AIMA however does not have any statuary powers to regulate the activities of managers.
MANAGEMENT, ADMINISTRATION, ORGNIZATION
Administration:
Any enterprise whether it is run for profit or not need be controlled.
The control of the enterprise is effected through Administration and Management.
Administration consists of deciding determination of the goals and policies of the enterprise.
Administration is concerned mainly with decision making, policy making and making necessary adjustments.
The three main elements of administrations are:
(i) The formulation of goals,
(ii) The choice of ways and means, and
(iii) The direction of the people in some group purpose.
An Administrator:
(a) Organises his own work and that of his subordinates;
(b) Delegates responsibility and authority; and
(c) Measures, evaluates and controls position activities.
Organisation:
Organisation is the frame work of management. Organisation is the function of putting together the different parts of an enterprise into working order.
Organisation is a system,
It is a group of persons,
It is a structure of relationships among the individuals working together for a common goal.
Organization is concerned with the building, developing and maintaining of a structure of working relationships in order to accomplish the objectives of the enterprise.
Organisation means the determination and assignment of duties to individuals and also the establishment and the maintenance of authority relationships among the grouped activities.
Organising is the determining, grouping and arranging of the various activities deemed necessary for the attainment of the objectives:
(i) The assigning of people to those activities,
(ii) The providing of suitable physical factors of environment, and
(iii) The indicating of the relative authority delegated to each individual charged with the execution of each respective activities.
MANAGEMENT SKILL
Robert Katz identifies three types of skills that are essential for a successful management process:
• Technical skills,
• Conceptual skills and
• Human or interpersonal management skills.
Technical Skill:
they give the manager’s knowledge and ability to use different techniques to achieve what they want to achieve. Technical skills are not related only for machines, production tools or other equipment, but also they are skills that will be required to increase sales, design different types of products and services, market the products and services, etc.
For example, let’s take an individual who works in the sales department and has highly developed sales skills achieved through education and experience in his department or the same departments in different organizations. Because of these skills that he possesses, this person can be a perfect solution to become a sales manager. This is the best solution because he has excellent technical skills related to the sales department.
Conceptual Skill:
Conceptual skills present knowledge or ability of a manager for more abstract thinking. That means he can easily see the whole through analysis and diagnosis of different states. In such a way they can predict the future of the business or department as a whole.
Conceptual skills are vital for top managers, less critical for mid-level managers, and not required for first-level managers. As we go from a bottom of the managerial hierarchy to the top, the importance of these skills will rise.
Human Skill or Interpersonal Skill
Human or interpersonal management skills present a manager’s knowledge and ability to work with people. One of the most critical management tasks is to work with people. Without people, there will not be a need for the existence of management and managers.
These skills will enable managers to become leaders and motivate employees for better accomplishments. Also, they will help them to make more effective use of human potential in the company. Simply, they are the essential skills for managers.
Interpersonal management skills are essential for all hierarchical levels in the company.
LEVELS OF MANAGEMENT:
The level of management determines a chain of command, the amount of authority & status enjoyed by any managerial position. The levels of management can be classified in three broad categories:
1. Top level / Administrative level
2. Middle level / Executory
3. Low level / Supervisory / Operative / First-line managers
Top Level of Management
It consists of board of directors, chief executive or managing director. The top management is the ultimate source of authority and it manages goals and policies for an enterprise. It devotes more time on planning and coordinating functions.
The role of the top management can be summarized as follows -
a. Top management lays down the objectives and broad policies of the enterprise.
b. It issues necessary instructions for preparation of department budgets, procedures, schedules etc.
c. It prepares strategic plans & policies for the enterprise.
d. It appoints the executive for middle level i.e. departmental managers.
e. It controls & coordinates the activities of all the departments.
f. It is also responsible for maintaining a contact with the outside world.
g. It provides guidance and direction.
h. The top management is also responsible towards the shareholders for the performance of the enterprise
Middle Level of Management
The branch managers and departmental managers constitute middle level. They are responsible to the top management for the functioning of their department. They devote more time to organizational and directional functions. In small organization, there is only one layer of middle level of management but in big enterprises, there may be senior and junior middle level management. Their role can be emphasized as -
a. They execute the plans of the organization in accordance with the policies and directives of the top management.
b. They make plans for the sub-units of the organization.
c. They participate in employment & training of lower level management.
d. They interpret and explain policies from top level management to lower level.
e. They are responsible for coordinating the activities within the division or department.
f. It also sends important reports and other important data to top level management.
g. They evaluate performance of junior managers.
h. They are also responsible for inspiring lower level managers towards better performan
Lower Level of Management
Lower level is also known as supervisory / operative level of management. It consists of supervisors, foreman, section officers, superintendent etc. According to R.C. Davis, “Supervisory management refers to those executives whose work has to be largely with personal oversight and direction of operative employees”. In other words, they are concerned with direction and controlling function of management. Their activities include -
a. Assigning of jobs and tasks to various workers.
b. They guide and instruct workers for day to day activities.
c. They are responsible for the quality as well as quantity of production.
d. They are also entrusted with the responsibility of maintaining good relation in the organization.
e. They communicate workers problems, suggestions, and recommendatory appeals etc to the higher level and higher level goals and objectives to the workers.
f. They help to solve the grievances of the workers.
g. They supervise & guide the sub-ordinates.
h. They are responsible for providing training to the workers.
i. They arrange necessary materials, machines, tools etc for getting the things done.
j. They prepare periodical reports about the performance of the workers.
UNIT-II
Evolution of Management Thought:
Contribution of F.W.Taylor, Henri Fayol, Elton Mayo, Chester Barhard & Peter Drucker to the management
thought. Business Ethics & Social Responsibility: Concept, Shift to Ethics, Tools of Ethics.
F.W TAYLOR THEORY:
F.W. Taylor (1856-1915) was an American, who joined Midvale Steelworks, Philadelphia (U.S.A.) as a machinist; and gradually rose to the position of the Chief Engineer-through hard work and progress. F.W. Taylor conducted his experiments in three companies viz., Midvale Steel Works, Simonds Rolling Machine and Bethlehem Steel Works.
Taylor’s Scientific Managements was, in fact, a movement known as the ‘Scientific Management Movement’ pioneered by Taylor and carried on by his followers. The important publications of Taylor are all combined into one book titled ‘Scientific Management’.
Principles of Scientific Management:
The fundamental principles, which would support the concept and practice of scientific management, are the following:
(i) Science, not the rule of the thumb.
(ii) Harmony, not discord.
(iii) Co-operation, not individualism.
(iv) Maximum production, in place of restricted production.
(v) Development of each person to the greatest of his capabilities.
(vi) A more equal division of responsibility between management and workers.
(vii) Mental revolution on the part of management and workers.
Following is a brief comment on each of the above principles of scientific management.
(i) Science, not the rule of thumb:
The basic principle of scientific management is the adoption of a scientific approach to managerial decision making; and a complete discard of all unscientific approaches, hitherto practiced by managements.
(ii) Harmony, not discord:
Harmony refers to the unity of action; while discord refers to differences in approach.
(iii) Co-operation, not individualism:
Co-operation refers to working, on the part of people, towards the attainment of group objectives; while regarding their individual objectives-as subordinate to the general interest.
(iv) Maximum production, in place of restricted production:
In Taylor’s view the most dangerous evil of the industrial system was a deliberate restriction of output. As a means of promoting the prosperity of workers, management and society, this principle of scientific management emphasizes on maximising production and not deliberately restricting it.
(v) Development of each person to the greatest of his capabilities:
Management must endeavor to develop people to the greatest of their capabilities to ensure maximum prosperity for both-employees and employers.
(vi) A more equal division of responsibility between management and workers:
The principle of scientific management recommends a separation of planning from execution. According to this principle, management must be concerned with the planning of work; and workers with the execution of plans.
(vii) Mental revolution on the part of management and workers:
According to Taylor, scientific management, in its essence, involves a complete mental revolution on the part of both sides to industry viz. workers and management (representing employers).
In fact, this principle of scientific management is the most fundamental one ensuring success of it. It is like the foundation on which the building of scientific management must be erected.
HENRY FAYOL THEORY:
Henri Fayol's management theory is a simple model of how management interacts with personnel. Fayol's management theory covers concepts in a broad way, so almost any business can apply his theory of management. Today the business community considers Fayol's classical management theory as a relevant guide to productively managing staff.
The management theory of Henri Fayol includes 14 principles of management. From these principles, Fayol concluded that management should interact with personnel in five basic ways in order to control and plan production.
1. Planning. According to Fayol's theory, management must plan and schedule every part of industrial processes.
2. Organizing. Henri Fayol argued that in addition to planning a manufacturing process, management must also make certain all of the necessary resources (raw materials, personnel, etc.) came together at the appropriate time of production.
3. Commanding. Henri Fayol's management theory states that management must encourage and direct personnel activity.
4. Coordinating. According to the management theory of Henri Fayol, management must make certain that personnel works together in a cooperative fashion.
5. Controlling. The final management activity, according to Henri Fayol, is for the manager to evaluate and ensure that personnel follow management's commands.
ELTON MAYO THEORY:
Elton mayo is widely recognized as the father of human relations theory. He explained the role of human behaviour in production and also highlighted the importance of communication between the workers and the management.
HOWTHORNE STUDIES
Mayo’s studies at the Western Electricity Company, Chicago is popularly known as Hawthorne Studies. It was a research programme of National Research Council of the National Academy of Science at the Hawthorne Plant of Western Electricity Company.
In the early 20th century, it was realized that –
• There was a clear-cut cause and effect relationship between the physical work, environment, the well-being and productivity of the worker.
• Also, there was relationship between production and given condition of ventilation, temperature, lighting and other physical working conditions and wage incentives.
• It had been believed that – improper job design, fatigue and other conditions of work mainly block efficiency.
So to establish the relationship between man and the structure of formal organization, Hawthorne Studies conducted.
The studies were conducted in the following four phases.
1. Illumination Experiment (1924-27)
2. Relay Assembly Test Room Experiment (1927)
3. Mass Interviewing Programme (1928-31)
4. Bank Wiring Experiment (1931-32)
His main contributions are discussed as follows:
1. Human Relations Approach:
Mayo is rightly called the father of human relations movement. His ideas were a milestone and a turning point in human relations approach of the management. He recognised the importance of human beings in management. He said that human beings are complex and influential input into organisational performance. The social and psychological needs of human beings cannot be ignored, if management wants to enhance productivity.
2. Non-Economic Awards:
The earlier assumption was that workers will work more if they are offered more monetary incentives. Taylor was the main proponent of this approach. Elton Mayo said that the techniques of economic incentives were not only inadequate but also unrealistic.He was able to show that humane and respectful treatment, sense of participation and belonging, recognition, morale, human pride and social interaction are sometimes more important than pure monetary rewards.
3. Social Man:
Mayo developed a concept of ‘social man’. He said that man is basically motivated by social needs and obtains his sense of identity through relationships with others. He is more responsive to the social forces of the informal group rather than managerial incentives and controls. He also related productivity to a social phenomenon.
4. Organization as a Social System:
Mayo was of the view that informal relationships in the organisation are more effective than formal relationships. People form informal groups to give a bent to their feelings and seek guidance for action from such groups.
CHESTER BERHARD THEORY:
Chester Barnard’s contribution to management is important. His book ‘The Functions of the Executive’ is the most influential book on the management during the pre-modern management era. He analyzed management as a social system. His analysis of the executives based on the major tasks in the system in which they operate. He also stated the co-operative social system. He also found non-logical factors influencing human behaviour in the organization.
The major contributions of Chester Barnard is as follows:
1. Concept of Organization: According to Barnard, an organization exists when the following three conditions are fulfilled. a) there are persons able to communicate with each other b) they are willing to contribute to the action and c) they are willing to accomplish a common purpose.
2. Formal and informal organizations: There can be two types of organizations. They are formal and informal. In the formal organization there are co-ordinated interaction, which are deliberate and have common object. On the other hand the informal organization refers to those social interactions, which do not have deliberate joint object. Informal organizations overcome the problems of formal organization. Both the formal and informal organizations depend on each other and there is continuous interaction between the two.
3. Elements of Organization: Barnard had suggested four elements of a formal organization. They are a) a system of fictionalization (specialization) b) a system of effective and efficient incentives c) a system of power to accept the decision of the executives d) a system of logical decision-making.
4. Authority: in the classical view authority comes from the top. Bernard has given a new concept of authority, which is called ‘Acceptance Theory of Authority’ or ‘Bottom-up authority’.
In his opinion person should obey an order not because it has given by the superior but he will take it as a communication. This is possible only when
i. he can understand the communication
ii. he believes that it is not contradictory with the organizational purpose
iii. it is compatible with his personal interest as a whole and
iv. he is mentally and physically able to obey with it.
5. Functions of the executives: According to Barnard there are three types of functions, which an executive performs. They are a) maintenance of organization communication through a system of organization b) the securing of essential services from individuals in the organizations to achieve organizational purpose c) the formulation and definition of organizational purpose.
6. Motivation: Apart from financial incentives Barnard has suggested a number of non-financial techniques for motivating people. They are opportunity of power and distinction, pride of workmanship, pleasant organization participation, mutual supporting personal attitudes, feeling of belongings, etc.
7. Executive Effectiveness: Responsible leadership is required to make the executive effective. Leadership is the most strategic factor in securing co-operation from the people. Executive leadership demands high caliber, technological competence and social skills. It should be above personal preference and prejudices.
8. Organizational Equilibrium: This means the matching of the individual efforts and organizational efforts to satisfy individuals. The organization must afford satisfaction to individuals. This requires the equilibrium in the organization.
PETER DRUCKER’S THEORY
Peter Drucker, also known as the Father of Modern Management Theory, coined leadership terms and strategies that are still used today. He advocated for a more flexible, collaborative workplace, and the delegation of power across the board.
According to Drucker, "management is doing things right; leadership is doing the right things." Unlike many early management theorists, Drucker thought that subordinates should have the opportunity to take risks, learn and grow in the workplace.
Drucker's management theory embodies many modern concepts, including:
Decentralization
Drucker was focused on decentralizing management in the workplace. He wanted all employees to feel valued and empowered, like their work and voice mattered. He believed in assigning tasks that inspire workers, and bringing supervisors and their subordinates together to achieve common, company goals.
Knowledge work
Knowledge workers are those whose jobs require handling or using information, such as engineers or analysts. Drucker placed high value on workers who solved problems and thought creatively. He wanted to cultivate a culture of employees who could provide insight and ideas.
Drucker also correctly forecasted a decrease in blue-collar workers: Today, there is an increasing number of knowledge workers in the business world.
Management by objectives
Drucker conceptualized "Management by Objectives" (MBO), a process that encourages employees of all levels to work together. Each worker has an equal say, sharing their own insight and opinions to reach common ground. From there, teams establish shared goals and delegate tasks according to skillsets and interests.
There are five steps of MBO:
1. Review goals
2. Set objectives
3. Monitor progress
4. Evaluate performance
5. Reward employees
S.M.A.R.T.
In his MBO practice, Drucker used S.M.A.R.T., a process coined by George T. Doran, that increases efficiency in work-related tasks. The acronym calls for each objective to be:
• Specific
• Measurable
• Achievable
• Relevant
• Time-Oriented
BUSINESS ETHICS AND SOCIAL RESPONSIBILITY:
Business ethics is the study of proper business policies and practices regarding potentially controversial issues such as corporate governance, insider trading, bribery, discrimination, corporate social responsibility and fiduciary responsibilities. Law often guides business ethics, while other times business ethics provide a basic framework that businesses may follow to gain public acceptance.
ETHICS PRINCIPLES
1. HONESTY. Ethical executives are honest and truthful in all their dealings and they do not deliberately mislead or deceive others by misrepresentations, overstatements, partial truths, selective omissions, or any other means.
2. INTEGRITY. Ethical executives demonstrate personal integrity and the courage of their convictions by doing what they think is right even when there is great pressure to do otherwise; they are principled, honorable and upright; they will fight for their beliefs. They will not sacrifice principle for expediency, be hypocritical, or unscrupulous.
3. PROMISE-KEEPING & TRUSTWORTHINESS. Ethical executives are worthy of trust. They are candid and forthcoming in supplying relevant information and correcting misapprehensions of fact, and they make every reasonable effort to fulfill the letter and spirit of their promises and commitments. They do not interpret agreements in an unreasonably technical or legalistic manner in order to rationalize non-compliance or create justifications for escaping their commitments.
4. LOYALTY. Ethical executives are worthy of trust, demonstrate fidelity and loyalty to persons and institutions by friendship in adversity, support and devotion to duty; they do not use or disclose information learned in confidence for personal advantage. They safeguard the ability to make independent professional judgments by scrupulously avoiding undue influences and conflicts of interest. They are loyal to their companies and colleagues and if they decide to accept other employment, they provide reasonable notice, respect the proprietary information of their former employer, and refuse to engage in any activities that take undue advantage of their previous positions.
5. FAIRNESS. Ethical executives and fair and just in all dealings; they do not exercise power arbitrarily, and do not use overreaching nor indecent means to gain or maintain any advantage nor take undue advantage of another’s mistakes or difficulties. Fair persons manifest a commitment to justice, the equal treatment of individuals, tolerance for and acceptance of diversity, the they are open-minded; they are willing to admit they are wrong and, where appropriate, change their positions and beliefs.
6. CONCERN FOR OTHERS. Ethical executives are caring, compassionate, benevolent and kind; they like the Golden Rule, help those in need, and seek to accomplish their business objectives in a manner that causes the least harm and the greatest positive good.
7. RESPECT FOR OTHERS. Ethical executives demonstrate respect for the human dignity, autonomy, privacy, rights, and interests of all those who have a stake in their decisions; they are courteous and treat all people with equal respect and dignity regardless of sex, race or national origin.
8. LAW ABIDING. Ethical executives abide by laws, rules and regulations relating to their business activities.
9. COMMITMENT TO EXCELLENCE. Ethical executives pursue excellence in performing their duties, are well informed and prepared, and constantly endeavor to increase their proficiency in all areas of responsibility.
10. LEADERSHIP. Ethical executives are conscious of the responsibilities and opportunities of their position of leadership and seek to be positive ethical role models by their own conduct and by helping to create an environment in which principled reasoning and ethical decision making are highly prized.
11. REPUTATION AND MORALE. Ethical executives seek to protect and build the company’s good reputation and the morale of its employees by engaging in no conduct that might undermine respect and by taking whatever actions are necessary to correct or prevent inappropriate conduct of others.
12. ACCOUNTABILITY. Ethical executives acknowledge and accept personal accountability for the ethical quality of their decisions and omissions to themselves, their colleagues, their companies, and their communities.
BUSINESS ETHICS ANDSOCIAL RESPONSIBILITY
Business leaders and organizations can examine how their decisions relate to social responsibility, which is a general concept that can include social as well as cultural, economic and environmental issues. By integrating business ethics and principles of social responsibility, organizations can make a difference in the world and enhance their reputation.
Some companies have adopted the social entrepreneurship model of business that focuses on applying practical, innovative and sustainable approaches to benefit society. The shoe retailer TOMS is one of the most popular examples of the social entrepreneurship model. For every pair of shoes sold, the company provides a new pair of shoes to children in developing countries.
Another example of combining business ethics and social responsibility is by focusing on benefiting the environment. Forbes notes some of the reasons why Seventh Generation, a Burlington, Vermont-based company that produces and distributes green products, was recognized as the best company for the environment.
• Selling products such as biodegradable, vegetable-based cleaning products, chlorine-free tampons and paper towels and natural lotion baby wipes.
• Developing an employee bonus program that awards workers who figure out how to make the company’s goods even more sustainable.
• Having an LEED-certified building where more than a quarter of the company’s fleet is comprised of low-emissions cars and more than a quarter of the energy burned in manufacturing its products comes from renewable energy.
UNIT-III
Functions of Management: Part-I
Planning – Meaning- Need & Importance, types, Process of Planning, Barriers to Effective Planning, levels –advantages & limitations. Forecasting- Need & Techniques Decision Making-Types - Process of rational decision making & techniques of decision making, organizing – Elements of organizing & processes: Types of organizations, Delegation of authority – Need, difficulties, Delegation – Decentralization Staffing – Meaning & Importance
Direction – Nature – Principles Communication – Types & Importance
PLANNING:
Planning can be defined as “thinking in advance what is to be done, when it is to be done, how it is to be done and by whom it should be done”. In simple words we can say, planning bridges the gap between where we are standing today and where we want to reach.
Planning involves setting objectives and deciding in advance the appropriate course of action to achieve these objectives so we can also define planning as setting up of objectives and targets and formulating an action plan to achieve them.
Another important ingredient of planning is time. Plans are always developed for a fixed time period as no business can go on planning endlessly.
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Keeping in mind the time dimension we can define planning as “Setting objectives for a given time period, formulating various courses of action to achieve them and then selecting the best possible alternative from the different courses of actions”.
Features/Nature/Characteristic of Planning:
1. Planning contributes to Objectives:
Planning starts with the determination of objectives. We cannot think of planning in absence of objective. After setting up of the objectives, planning decides the methods, procedures and steps to be taken for achievement of set objectives. Planners also help and bring changes in the plan if things are not moving in the direction of objectives.
For example, if an organisation has the objective of manufacturing 1500 washing machines and in one month only 80 washing machines are manufactured, then changes are made in the plan to achieve the final objective.
2. Planning is Primary function of management:
Planning is the primary or first function to be performed by every manager. No other function can be executed by the manager without performing planning function because objectives are set up in planning and other functions depend on the objectives only.
For example, in organizing function, managers assign authority and responsibility to the employees and level of authority and responsibility depends upon objectives of the company. Similarly, in staffing the employees are appointed. The number and type of employees again depends on the objectives of the company. So planning always proceeds and remains at no. 1 as compared to other functions.
3. Pervasive:
Planning is required at all levels of the management. It is not a function restricted to top level managers only but planning is done by managers at every level. Formation of major plan and framing of overall policies is the task of top level managers whereas departmental managers form plan for their respective departments. And lower level managers make plans to support the overall objectives and to carry on day to day activities.
4. Planning is futuristic/Forward looking:
Planning always means looking ahead or planning is a futuristic function. Planning is never done for the past. All the managers try to make predictions and assumptions for future and these predictions are made on the basis of past experiences of the manager and with the regular and intelligent scanning of the general environment.
5. Planning is continuous:
Planning is a never ending or continuous process because after making plans also one has to be in touch with the changes in changing environment and in the selection of one best way.
So, after making plans also planners keep making changes in the plans according to the requirement of the company. For example, if the plan is made during the boom period and during its execution there is depression period then planners have to make changes according to the conditions prevailing.
6. Planning involves decision making:
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The planning function is needed only when different alternatives are available and we have to select most suitable alternative. We cannot imagine planning in absence of choice because in planning function managers evaluate various alternatives and select the most appropriate. But if there is one alternative available then there is no requirement of planning.
For example, to import the technology if the licence is only with STC (State Trading Co-operation) then companies have no choice but to import the technology through STC only. But if there is 4-5 import agencies included in this task then the planners have to evaluate terms and conditions of all the agencies and select the most suitable from the company’s point of view.
7. Planning is a mental exercise:
It is mental exercise. Planning is a mental process which requires higher thinking that is why it is kept separate from operational activities by Taylor. In planning assumptions and predictions regarding future are made by scanning the environment properly. This activity requires higher level of intelligence. Secondly, in planning various alternatives are evaluated and the most suitable is selected which again requires higher level of intelligence. So, it is right to call planning an intellectual process.
Importance/Significance of Planning:
1. Planning provides Direction:
Planning is concerned with predetermined course of action. It provides the directions to the efforts of employees. Planning makes clear what employees have to do, how to do, etc. By stating in advance how work has to be done, planning provides direction for action. Employees know in advance in which direction they have to work. This leads to Unity of Direction also. If there were no planning, employees would be working in different directions and organisation would not be able to achieve its desired goal.
2. Planning Reduces the risk of uncertainties:
Organisations have to face many uncertainties and unexpected situations every day. Planning helps the manager to face the uncertainty because planners try to foresee the future by making some assumptions regarding future keeping in mind their past experiences and scanning of business environments. The plans are made to overcome such uncertainties. The plans also include unexpected risks such as fire or some other calamities in the organisation. The resources are kept aside in the plan to meet such uncertainties.
3. Planning reduces over lapping and wasteful activities:
The organisational plans are made keeping in mind the requirements of all the departments. The departmental plans are derived from main organisational plan. As a result there will be co-ordination in different departments. On the other hand, if the managers, non-managers and all the employees are following course of action according to plan then there will be integration in the activities. Plans ensure clarity of thoughts and action and work can be carried out smoothly.
4. Planning Promotes innovative ideas:
Planning requires high thinking and it is an intellectual process. So, there is a great scope of finding better ideas, better methods and procedures to perform a particular job. Planning process forces managers to think differently and assume the future conditions. So, it makes the managers innovative and creative.
5. Planning Facilitates Decision Making:
Planning helps the managers to take various decisions. As in planning goals are set in advance and predictions are made for future. These predictions and goals help the manager to take fast decisions.
6. Planning establishes standard for controlling:
Controlling means comparison between planned and actual output and if there is variation between both then find out the reasons for such deviations and taking measures to match the actual output with the planned. But in case there is no planned output then controlling manager will have no base to compare whether the actual output is adequate or not.
For example, if the planned output for a week is 100 units and actual output produced by employee is 80 units then the controlling manager must take measures to bring the 80 unit production upto 100 units but if the planned output, i.e., 100 units is not given by the planners then finding out whether 80 unit production is sufficient or not will be difficult to know. So, the base for comparison in controlling is given by planning function only.
7. Focuses attention on objectives of the company:
Planning function begins with the setting up of the objectives, policies, procedures, methods and rules, etc. which are made in planning to achieve these objectives only. When employees follow the plan they are leading towards the achievement of objectives. Through planning, efforts of all the employees are directed towards the achievement of organisational goals and objectives.
Limitations of Planning:
1. Planning leads to rigidity:
Once plans are made to decide the future course of action the manager may not be in a position to change them. Following predefined plan when circumstances are changed may not bring positive results for organisation. This kind of rigidity in plan may create difficulty.
2. Planning may not work in dynamic environment:
Business environment is very dynamic as there are continuously changes taking place in economic, political and legal environment. It becomes very difficult to forecast these future changes. Plans may fail if the changes are very frequent.
The environment consists of number of segments and it becomes very difficult for a manager to assess future changes in the environment. For example there may be change in economic policy, change in fashion and trend or change in competitor’s policy. A manager cannot foresee these changes accurately and plan may fail if many such changes take place in environment.
3. It reduces creativity:
With the planning the managers of the organisation start working rigidly and they become the blind followers of the plan only. The managers do not take any initiative to make changes in the plan according to the changes prevailing in the business environment. They stop giving suggestions and new ideas to bring improvement in working because the guidelines for working are given in planning only.
4. Planning involves huge Cost:
Planning process involves lot of cost because it is an intellectual process and companies need to hire the professional experts to carry on this process. Along with the salary of these experts the company has to spend lot of time and money to collect accurate facts and figures. So, it is a cost-consuming process. If the benefits of planning are not more than its cost then it should not be carried on.
5. It is a time consuming process:
Planning process is a time-consuming process because it takes long time to evaluate the alternatives and select the best one. Lot of time is needed in developing planning premises. So, because of this, the action gets delayed. And whenever there is a need for prompt and immediate decision then we have to avoid planning.
6. Planning does not guarantee success:
Sometimes managers have false sense of security that plans have worked successfully in past so these will be working in future also. There is a tendency in managers to rely on pretested plans.
It is not true that if a plan has worked successfully in past, it will bring success in future also as there are so many unknown factors which may lead to failure of plan in future. Planning only provides a base for analysing future. It is not a solution for future course of action.
7. Lack of accuracy:
In planning we are always thinking in advance and planning is concerned with future only and future is always uncertain. In planning many assumptions are made to decide about future course of action. But these assumptions are not 100% accurate and if these assumptions do not hold true in present situation or in future condition then whole planning will fail.
For example, if in the plan it is assumed that there will be 5% inflation rate and in future condition the inflation rate becomes 10% then the whole plan will fail and many adjustments will be required to be made.
Planning Process:
1. Setting up of the objectives:
In planning function manager begins with setting up of objectives because all the policies, procedures and methods are framed for achieving objectives only. The managers set up very clearly the objectives of the company keeping in mind the goals of the company and the physical and financial resources of the company. Managers prefer to set up goals which can be achieved quickly and in specific limit of time. After setting up the goals, the clearly defined goals are communicated to all the employees.
2. Developing premises:
Premises refer to making assumptions regarding future. Premises are the base on which plans are made. It is a kind of forecast made keeping in view existing plans and any past information about various policies. There should be total agreement on all the assumptions. The assumptions are made on the basis of forecasting. Forecast is the technique of gathering information. Common forecast are made to find out the demand for a product, change in government or competitor policy, tax rate, etc.
3. Listing the various alternatives for achieving the objectives:
After setting up of objectives the managers make a list of alternatives through which the organisation can achieve its objectives as there can be many ways to achieve the objective and managers must know all the ways to reach the objectives.
For example, if the objective is to increase in sale by 10% then the sale can be increased:
(a) By adding more line of products;
(b) By offering discount;
(c) By increasing expenditure on advertisements;
(d) By increasing the share in the market;
(e) By appointing salesmen for door-to-door sale etc.
So, managers list out all the alternatives.
4. Evaluation of different alternatives:
After making the list of various alternatives along with the assumptions supporting them, the manager starts evaluating each and every alternative and notes down the positive and negative aspects of every alternative. After this the manager starts eliminating the alternatives with more of negative aspect and the one with the maximum positive aspect and with most feasible assumption is selected as best alternative. Alternatives are evaluated in the light of their feasibility.
5. Selecting an alternative:
The best alternative is selected but as such there is no mathematical formula to select the best alternative. Sometimes instead of selecting one alternative, a combination of different alternatives can also be selected. The most ideal plan is most feasible, profitable and with least negative consequences.
After preparing the main plan, the organisation has to make number of small plans to support the main plan. These plans are related to performance of routine jobs in the organisation. These are derived from the major plan. So, they are also known as derivative plans. These plans are must for accomplishing the objective of main plan. The common supportive plans are plans to buy equipment, plan for recruitment and selection of employees, plan to buy raw material, etc.
6. Implement the plan:
The managers prepare or draft the main and supportive plans on paper but there is no use of these plans unless and until these are put in action. For implementing the plans or putting the plans into action, the managers start communicating the plans to all the employees very clearly because the employees actually have to carry on the activities according to specification of plans. After communicating the plan to employees and taking their support the managers start allocating the resources according to the specification of the plans. For example, if the plan is to increase in sale by increasing the expenditure on advertisement, then to put it into action, the managers must allot more funds to advertisement department, select better media, hire advertising agency, etc.
7. Follow-up:
Planning is a continuous process so the manager’s job does not get over simply by putting the plan into action. The managers monitor the plan carefully while it is implemented. The monitoring of plan is very important because it helps to verify whether the conditions and predictions assumed in plan are holding true in present situation or not. If these are not coming true then immediately changes are made in the plan.
During follow up many adjustments are made in the plan. For example, if the expenditure planning is done keeping in mind 5% inflation rate but in present situation if the inflation rate rises to 10% then during follow up the managers make changes in the plans according to 10% inflation rate.
BARRIERS TO EFFECTIVE PLANNING:
• Inability to plan or inadequate planning. Managers are not born with the ability to plan. Some managers are not successful planners because they lack the background, education, and/or ability. Others may have never been taught how to plan. When these two types of managers take the time to plan, they may not know how to conduct planning as a process.
• Lack of commitment to the planning process. The development of of a plan is hard work; it is much easier for a manager to claim that he or she doesn't have the time to work through the required planning process than to actually devote the time to developing a plan. (The latter, of course, would save them more time in the long run!) Another possible reason for lack of commitment can be fear of failure. As a result, managers may choose to do little or nothing to help in the planning process.
• Inferior information. Facts that are out‐of‐date, of poor quality, or of insufficient quantity can be major barriers to planning. No matter how well managers plan, if they are basing their planning on inferior information, their plans will probably fail.
• Focusing on the present at the expense of the future. Failure to consider the long‐term effects of a plan because of emphasis on short‐term problems may lead to trouble in preparing for the future. Managers should try to keep the big picture — their long‐term goals — in mind when developing their plans.
• Too much reliance on the organization's planning department.Many companies have a planning department or a planning and development team. These departments conduct studies, do research, build models, and project probable results, but they do not implement plans. Planning department results are aids in planning and should be used only as such. Formulating the plan is still the manager's responsibility.
• Concentrating on controllable variables. Managers can find themselves concentrating on the things and events that they can control, such as new product development, but then fail to consider outside factors, such as a poor economy. One reason may be that managers demonstrate a decided preference for the known and an aversion to the unknown.
The good news about these barriers is that they can all be overcome. To plan successfully, managers need to use effective communication, acquire quality information, and solicit the involvement of others.
LEVELS OF PLANNING:
In management theory, it is usual to consider that there are three basic levels of planning, though in practice there may be more than three levels of management and to an extent, there will be some overlapping of planning operations. The three levels of planning are discussed below:
1. Top level planning: also known as overall or strategic planning, top level planning is done by the top management, i.e., board of directors or governing body. It encompasses the long-range objectives and policies or organisation and is concerned with corporate results rather than sectional objectives. Top level planning is entirely long-range and inextricably linked with long-term objectives. It might be called the ‘what’ of planning.
2. Second level planning: also known as tactical planning, it is done by middle level managers or departmental heads. It is concerned with ‘how’ of planning. It deals with development of resources to the best advantage. It is concerned mainly, not exclusively, with long-range planning, but its nature is such that the time spans are usually shorter than those of strategic planning. This is because its attentions are usually devoted to the step-by-step attainment of the organisation’s main objective. It is, in fact, oriented to functions and departments rather than to the organisation as a whole.
3. Third level planning: also known as operational or activity planning, it is the concern of departmental managers and supervisors. It is confined to putting into effect the tactical or departmental plans. It is usually for a short-term and may be revised quite often to be in tune with the tactical planning.
TECHNIQUES OF DECISION MAKING
• Decision Matrix: using the matrix, create a table with all of the options in the first column and all of the factors that affect the decision in the first row. Users then score each option and weigh which factors are of more importance. A final score is then tallied to reveal which option is the best.
• T-Chart: This chart is used when weighing the plusses and minuses of the options. It ensures that all the positives and negatives are taken into consideration when making a decision.
• Decision tree: This is a graph or model that involves contemplating each option and the outcomes of each. Statistical analysis is also conducted with this technique.
• Motivating: This is used when multiple people are involved in making a decision. It helps whittle down a large list options to a smaller one to the eventual final decision.
• Pareto analysis: This is a technique used when a large number of decisions need to be made. This helps in prioritizing which ones should be made first by determining which decisions will have the greatest overall impact.
• Cost-benefit analysis: This technique is used when weighing the financial ramifications of each possible alternative as a way to come to a final decision that makes the most sense from an economic perspective.
• Conjoint analysis: This is a method used by business leaders to determine consumer preferences when making decisions.
• SWOT Analysis: SWOT stands for strengths, weaknesses, opportunities and threats, which is exactly what this planning tool assesses.
• PEST Analysis: An acronym for political, economic, social and technological, PEST can improve decision-making and timing by analyzing external factors. This method considers present trends to help predict the future ones.
NEEDS AND IMPORTNCE OF DECISION MAKING
• Proper utilization of resources: Organization has various resources like man, money, method, material, machine, market and information. All these resources are properly utilized without any leakage and wastage with the help of right decision at right time. As a result, an organization can operate at a minimum cost.
• Selecting the best alternative: As we know that the problem has multiple solutions. Decision making is important to select the best alternative among various alternatives by analyzing them one by one using various financial, statistical, and accounting tools/ technique.
• Evaluation of the managerial performance: Decision making is not only important to select the best alternative but also essential for evaluating the performance of a manager. The quality/success of manager largely depends upon the number of right decision that he/she can take for the organizational success. Therefore, decision making is important to judge the performance of top level of management.
• Employees motivation: Decision making is important to motivate the employees within an organization. It provides an overall framework of operation and guideline to the operating level of staffs. It also provides different types of facilities and benefit on time. As a result, employees are motivated to their job or work as per the organizational requirement.
• Indispensable element/ component: Decision making is indispensable element/ component for the organizational success because without taking the right decision at right time, nothing can be performed as per the plan.
• Achievement of goal/ objectives: Decision making is important to achieve the organizational goals/objectives within given time and budget. It searches the best alternative, utilize the resources properly and satisfy the employees at the workplace. As a result, organizational goal or objectives can be achieved as per the desired result.
• Pervasive function: Decision-making is a pervasive function of managers aimed at achieving organizational goals. Decisions are to be taken in all managerial functions such as planning, organizing, motivating, directing and controlling and in all functional areas such as production, marketing, finance, personnel and research and development. It indicates that the decision-making is spread over many areas of the organization.
RATIONAL DECISION MAKING
A method for systematically selecting among possible choices that is based on reason and facts. In a rational decision making process, a business manager will often employ a series of analytical steps to review relevant facts, observations and possible outcomes before choosing a particular course of action.
CHARACTERSTICS OF RATIONAL DECISION MAKING
Choosing rationally is often characterized by the following:
• Decision making will follow a process or orderly path from problem to solution.
• There is a single best or optimal outcome. Rational decisions seek to optimize or maximize utility.
• The chosen solution will be in agreement with the preferences and beliefs of the decision maker.
• The rational choice will satisfy conditions of logical consistency and deductive completeness.
• Decision making will be objective, unbiased and based on facts.
• Information is gathered for analysis during the decision making process.
• Future consequences are considered for each decision alternative.
• Structured questions are used to promote a broad and deep analysis of the situation or problem requiring a solution.
• Risk and uncertainty are addressed with mathematically sound approaches.
In the ideal case, all rational decision makers would come to the same conclusion when presented with the same set of sufficient information for the decision being made. This would suggest that collaborative decision making will often employ a rational decision making process.
RATIONAL DECISION MAKING PROCESS
Violet Jones is a manager at the Intestinal Distress Tacos fast food restaurant. She is under enormous pressure from headquarters to increase her monthly profits. Violet is not sure what the solution is for her financial dilemma. She has to decide to use the rational decision-making model to determine the best path for a solution. To do this, Violet must follow these six steps:
1. Define the problem.
2. Identify the decision criteria.
3. Allocate weights to the criteria.
4. Develop the alternatives.
5. Evaluate the alternatives.
6. Select the best alternative.
ORGANIZING
Organizing is a systematic process of structuring, integrating, coordinating task goals, and activities to resources in order to attain objectives.
ELEMENTS OF ORGANIZING
1. Designing jobs,
2. Departmentalization or Grouping Jobs,
3. Establishing reporting relationships between jobs,
4. Distributing authority among jobs,
5. Coordinating activities among jobs, and
6. Differentiating among positions.
Understanding the nature of these building blocks and the different ways in which they can be configured is most important as they shape the structure and routine the organization is going to work. The logical starting point is the first building block—designing jobs.
In this post we will know about the 6 elements of organizing;
Designing Jobs
Job design is the first building block of organization Structure; it means-defining an individual’s responsibilities at work.
Job design involves defining areas of decision-making responsibility, identifying goals and expectations, and establishing appropriate indicators of success. There many tools available to a manager for designing jobs;
Job Specialization
Job specialization is the first and the most important tool of all. Job specialization is similar to the concept of ‘division of labor’.Job specialization means; breaking down the entire job or task into smaller parts and divide them accordingly.
Job characteristics model (JCM)
Job characteristics model (JCM) is also an effective tool for designing job; where job-design is conducted considering both the employees’ preference and required work system. The approach suggests that job design should be done by considering five core dimensions; skill variety, task identity, task significance, autonomy, and feedback.
Work Teams
Work teams are very useful for doing comprehensive and difficult jobs which require expertise from various departments or faculty or the organization.
Job Rotation
As the name suggests; job rotation is systematically moving employees from one task to another. However, in practice; job rotation created more problems than solving them, like; employees’ satisfaction and motivation diminishes. It is now used as a training system.
Job Enlargement
Job enlargement involves increasing the total number of tasks workers assigned and performs. It also gives employees motivation as it gives them bigger chance to participate in organization’s operations. It has some shortcomings too; more tasks mean more salary payments so more cost, overdoing it could lead to employees’ dissatisfaction.
Job Enrichment
It is similar to job enlargement but a more comprehensive approach. Job enrichment includes increasing the number of tasks and the portion of control over these tasks. Here managers have to give authority along with the responsibility of the jobs.
PROCESS OF ORGANIZING
1.Review plans and objectives.
Objectives are the specific activities that must be completed to achieve goals. Plans shape the activities needed to reach those goals. Managers must examine plans initially and continue to do so as plans change and new goals are developed.
2.Determine the work activities necessary to accomplish objectives.
Although this task may seem overwhelming to some managers, it doesn't need to be. Managers simply list and analyze all the tasks that need to be accomplished in order to reach organizational goals.
3.Classify and group the necessary work activities into manageable units.
A manager can group activities based on four models of departmentalization: functional, geographical, product, and customer.
4.Assign activities and delegate authority.
Managers assign the defined work activities to specific individuals. Also, they give each individual the authority (right) to carry out the assigned tasks.
5.Design a hierarchy of relationships.
A manager should determine the vertical (decision‐making) and horizontal (coordinating) relationships of the organization as a whole. Next, using the organizational chart, a manager should diagram the relationships.
TYPES OF ORGANIZATION
Functional Organization
Also referred to as a bureaucratic structure, a functional organization is one that divides a firm’s operations based on specialties. Ideally, there’s an individual in charge of a particular function. It’s like any typical business that consists of a sales department, human relations, and marketing department. It means that every employee receives tasks and is accountable to a particular specialist.
A functional organization confers several benefits. For one, there’s a total specialization of work meaning that every employee gets professional guidance from a specialist. Secondly, work is performed more efficiently since each manager is responsible for a single function. The only drawback to adopting a functional organization is the fact that there’s delay in decision-making. All the functional managers must be consulted when making major decisions, which can take time.
Divisional Organization
A divisional organization structures its activities around a market, product, or specific group of consumers. For instance, a firm can operate in the United States or Europe or sell products focused on a specific group of customers. Gap Inc. is the perfect case in point. It runs three different retailers – Banana Republic, Gap and Old Navy. Although each one operates as a separate entity that caters to different consumer segments, they are all under the company Gap Inc. brand.
General Electric is another ideal example; it owns numerous firms, brands, and assets across different industries. Although GE is the umbrella corporation, each division works as an individual firm. The diagram below will give you an idea of what a divisional organization looks like.
Matrix Organization
A matrix organizational structure is a bit more complex in that there’s more than one line of reporting managers. It simply means that the employees are accountable to more than one boss. Most firms that take on this organizational structure often have two chains of command – functional and project managers. However, this organization works best for companies with large-scale projects.
A matrix organization offers several benefits. They include a clear articulation of the company’s mission and objectives, effective use of limited resources, and retention of professionals throughout the life of a company. Additionally, a matrix structure provides a practical way of integrating the firm’s objectives with operations.
DELEGATION OF AUTHORITY
Delegation of authority can be defined as subdivision and sub-allocation of powers to the subordinates in order to achieve effective results.
1. arises from responsibility.
For achieving delegation, a manager has to work in a system and has to perform following steps : -
1. Assignment of tasks and duties
2. Granting of authority
3. Creating responsibility and accountability
Delegation of authority is the base of superior-subordinate relationship, it involves following steps:-
1. Assignment of Duties - The delegator first tries to define the task and duties to the subordinate. He also has to define the result expected from the subordinates. Clarity of duty as well as result expected has to be the first step in delegation.
2. Granting of authority - Subdivision of authority takes place when a superior divides and shares his authority with the subordinate. It is for this reason, every subordinate should be given enough independence to carry the task given to him by his superiors. The managers at all levels delegate authority and power which is attached to their job positions. The subdivision of powers is very important to get effective results.
3. Creating Responsibility and Accountability - The delegation process does not end once powers are granted to the subordinates. They at the same time have to be obligatory towards the duties assigned to them. Responsibility is said to be the factor or obligation of an individual to carry out his duties in best of his ability as per the directions of superior. Responsibility is very important. Therefore, it is that which gives effectiveness to authority. At the same time, responsibility is absolute and cannot be shifted. Accountability, on the others hand, is the obligation of the individual to carry out his duties as per the standards of performance. Therefore, it is said that authority is delegated, responsibility is created and accountability is imposed. Accountability arises out of responsibility and responsibility arises out of authority. Therefore, it becomes important that with every authority position an equal and opposite responsibility should be attached.
Therefore every manager,i.e.,the delegator has to follow a system to finish up the delegation process. Equally important is the delegatee’s role which means his responsibility and accountability is attached with the authority over to here.
Differences between Authority and Responsibility
Authority Responsibility
It is the legal right of a person or a superior to command his subordinates. It is the obligation of subordinate to perform the work assigned to him.
Authority is attached to the position of a superior in concern. Responsibility arises out of superior-subordinate relationship in which subordinate agrees to carry out duty given to him.
Authority can be delegated by a superior to a subordinate Responsibility cannot be shifted and is absolute
It flows from top to bottom. It flows from bottom to top.
DIFFICULTIES IN DELEGATION
There may be certain defects in organisational structure which hamper proper delegation of authority. Some of the difficulties involved in delegation are as such:may be certain defects in organisational structure which hamper proper delegation of authority. Some of the difficulties involved in delegation are as such:
1. Over Confidence of Superior: The feeling in a superior that only he can do certain work effectively than others is the main difficulty in delegation. When a manager is of the opinion that his subordinates will not be able to make proper decisions then he will concentrate all powers with him and will not like to delegate his authority.
2. Lack of Confidence in Subordinates: The superior may be of the view that subordinates are not competent to carry out certain things of their own. He may lack confidence in his subordinates. Under these circumstances superior will hesitate to delegate authority.
3. Lack of Ability in Superior: A superior may lack the ability to delegate authority to subordinates. The manager may not be able to identify the areas where delegation is required. Lack of Proper Controls: There may not be proper controls in the organisation which help the manager to keep in touch with performance of subordinates.
4. Lack of Proper Temperament of Superior: The chief executive may be over-cautious or conservative by nature. An element of risk cannot altogether be ruled out but certain risk will have to be taken.
5. Inability of Subordinates: The fear of committing mistakes or lack of confidence on the part of subordinates may also act as a barrier in delegation of authority.
NEED FOR DELEGATION
1. Through delegation, a manager is able to divide the work and allocate it to the subordinates. This helps in reducing his work load so that he can work on important areas such as - planning, business analysis etc.
2. With the reduction of load on superior, he can concentrate his energy on important and critical issues of concern. This way he is able to bring effectiveness in his work as well in the work unit. This effectivity helps a manager to prove his ability and skills in the best manner.
3. Delegation of authority is the ground on which the superior-subordinate relationship stands. An organization functions as the authority flows from top level to bottom. This in fact shows that through delegation, the superior-subordinate relationship become meaningful. The flow of authority is from top to bottom which is a way of achieving results.
4. Delegation of authority in a way gives enough room and space to the subordinates to flourish their abilities and skill. Through delegating powers, the subordinates get a feeling of importance. They get motivated to work and this motivation provides appropriate results to a concern. Job satisfaction is an important criterion to bring stability and soundness in the relationship between superior and subordinates. Delegation also helps in breaking the monotony of the subordinates so that they can be more creative and efficient.
Delegation of authority is not only helpful to the subordinates but it also helps the managers to develop their talents and skills. Since the manager get enough time through delegation to concentrate on important issues, their decision-making gets strong and in a way they can flourish the talents which are required in a manager. Through granting powers and getting the work done, helps the manager to attain communication skills, supervision and guidance, effective motivation and the leadership traits are flourished. Therefore it is only through delegation, a manager can be tested on his traits.
5. Delegation of authority is help to both superior and subordinates. This, in a way, gives stability to a concern’s working. With effective results, a concern can think of creating more departments and divisions flow working. This will require creation of more managers which can be fulfilled by shifting the experienced, skilled managers to these positions. This helps in both virtual as well as horizontal growth which is very important for a concern’s stability.
DECENTRALIZATION
The term "decentralization" embraces a variety of concepts which must be carefully analyzed in any particular country before determining if projects or programs should support reorganization of financial, administrative, or service delivery systems. Decentralization—the transfer of authority and responsibility for public functions from the central government to subordinate or quasi-independent government organizations and/or the private sector—is a complex multifaceted concept. Different types of decentralization should be distinguished because they have different characteristics, policy implications, and conditions for success.
STAFFING
Staffing is the process of hiring eligible candidates in the organization or company for specific positions. In management, the meaning of staffing is an operation of recruiting the employees by evaluating their skills, knowledge and then offering them specific job roles accordingly. Let us find out more about what is Staffing and what it entails along with its functions and characteristics.
Staffing can be defined as one of the most important functions of management. It involves the process of filling the vacant position of the right personnel at the right job, at right time. Hence, everything will occur in the right manner.
FUNCTIONS OF STAFFING
1. The first and foremost function of staffing is to obtain qualified personnel for different jobs position in the organization.
2. In staffing, the right person is recruited for the right jobs, therefore it leads to maximum productivity and higher performance.
3. It helps in promoting the optimum utilization of human resource through various aspects.
4. Job satisfaction and morale of the workers increases through the recruitment of the right person.
5. Staffing helps to ensure better utilization of human resources.
6. It ensures the continuity and growth of the organization, through development managers.
IMPORTANCE OF STAFFING
Efficient Performance of Other Functions
For the efficient performance of other functions of management, staffing is its key. Since, if an organization does not have the competent personnel, then it cannot perform the functions of management like planning, organizing and control functions properly.
Effective Use of Technology and Other Resources
What is staffing and technology’s connection? Well, it is the human factor that is instrumental in the effective utilization of the latest technology, capital, material, etc. the management can ensure the right kinds of personnel by performing the staffing function.
Optimum Utilization of Human Resources
The wage bill of big concerns is quite high. Also, a huge amount is spent on recruitment, selection, training, and development of employees. To get the optimum output, the staffing function should be performed in an efficient manner.
Development of Human Capital
Another function of staffing is concerned with human capital requirements. Since the management is required to determine in advance the manpower requirements. Therefore, it has also to train and develop the existing personnel for career advancement. This will meet the requirements of the company in the future.
The Motivation of Human Resources
In an organization, the behaviour of individuals is influenced by various factors which are involved such as education level, needs, socio-cultural factors, etc. Therefore, the human aspects of the organization have become very important and so that the workers can also be motivated by financial and non-financial incentives in order to perform their functions properly in achieving the objectives.
Building Higher Morale
The right type of climate should be created for the workers to contribute to the achievement of the organizational objectives. Therefore, by performing the staffing function effectively and efficiently, the management is able to describe the significance and importance which it attaches to the personnel working in the enterprise.
DIRECTION
DIRECTING is said to be a process in which the managers instruct, guide and oversee the performance of the workers to achieve predetermined goals. Directing is said to be the heart of management process. Planning, organizing, staffing have got no importance if direction function does not take place.
Direction has got following characteristics/nature
1. Pervasive Function - Directing is required at all levels of organization. Every manager provides guidance and inspiration to his subordinates.
2. Continuous Activity - Direction is a continuous activity as it continuous throughout the life of organization.
3. Human Factor - Directing function is related to subordinates and therefore it is related to human factor. Since human factor is complex and behaviour is unpredictable, direction function becomes important.
4. Creative Activity - Direction function helps in converting plans into performance. Without this function, people become inactive and physical resources are meaningless.
5. Executive Function - Direction function is carried out by all managers and executives at all levels throughout the working of an enterprise, a subordinate receives instructions from his superior only.
6. Delegate Function - Direction is supposed to be a function dealing with human beings. Human behaviour is unpredictable by nature and conditioning the people’s behaviour towards the goals of the enterprise is what the executive does in this function. Therefore, it is termed as having delicacy in it to tackle human behaviour.
PRINCIPLES OF DIRECTON
1. Maximum Individual Contribution
One of the main principles of directing is the contribution of individuals. Management should adopt such directing policies that motivate the employees to contribute their maximum potential for the attainment of organizational goals.
2. Harmony of Objectives
Sometimes there is a conflict between the organizational objectives and individual objectives. For example, the organization wants profits to increase and to retain its major share, whereas, the employees may perceive that they should get a major share as a bonus as they have worked really hard for it.
Here, directing has an important role to play in establishing harmony and coordination between the objectives of both the parties.
3. Unity of Command
This principle states that a subordinate should receive instructions from only one superior at a time. If he receives instructions from more than one superiors at the same time, it will create confusion, conflict, and disorder in the organization and also he will not be able to prioritize his work.
4. Appropriate Direction Technique
Among the principles of directing, this one states that appropriate direction techniques should be used to supervise, lead, communicate and motivate the employees based on their needs, capabilities, attitudes and other situational variables.
5. Managerial Communication
According to this principle, it should be seen that the instructions are clearly conveyed to the employees and it should be ensured that they have understood the same meaning as was intended to be communicated.
6. Use of Informal Organization
Within every formal organization, there exists an informal group or organization. The manager should identify those groups and use them to communicate information. There should be a free flow of information among the seniors and the subordinates as an effective exchange of information are really important for the growth of an organization.
7. Leadership
Managers should possess a good leadership quality to influence the subordinates and make them work according to their wish. It is one of the important principles of directing.
8. Follow Through
As per this principle, managers are required to monitor the extent to which the policies, procedures, and instructions are followed by the subordinates. If there is any problem in implementation, then the suitable modifications can be made.
COMMUNICATION: NOTE: GO TROUGH THE NOTES GIVEN IN BUSINESS COMMUNICATION
UNIT-IV
Functions of Management: Part-II
Motivation – Importance – theories
Leadership – Meaning –styles, qualities & function of leader
Controlling - Need, Nature, importance, Process & Techniques, Total Quality Management
Coordination – Need – Importance
MOTIVATION
Motivation is the word derived from the word ’motive’ which means needs, desires, wants or drives within the individuals. It is the process of stimulating people to actions to accomplish the goals. In the work goal context the psychological factors stimulating the people’s behaviour can be -
• desire for money
• success
• recognition
• job-satisfaction
• team work, etc
MASLOW’S HIERARCHY OF NEEDS THEORY
Abraham Maslow is well renowned for proposing the Hierarchy of Needs Theory in 1943. This theory is a classical depiction of human motivation. This theory is based on the assumption that there is a hierarchy of five needs within each individual. The urgency of these needs varies. These five needs are as follows-
1. Physiological needs- These are the basic needs of air, water, food, clothing and shelter. In other words, physiological needs are the needs for basic amenities of life.
2. Safety needs- Safety needs include physical, environmental and emotional safety and protection. For instance- Job security, financial security, protection from animals, family security, health security, etc.
3. Social needs- Social needs include the need for love, affection, care, belongingness, and friendship.
4. Esteem needs- Esteem needs are of two types: internal esteem needs (self- respect, confidence, competence, achievement and freedom) and external esteem needs (recognition, power, status, attention and admiration).
5. Self-actualization need- This include the urge to become what you are capable of becoming / what you have the potential to become. It includes the need for growth and self-contentment. It also includes desire for gaining more knowledge, social- service, creativity and being aesthetic. The self- actualization needs are never fully satiable. As an individual grows psychologically, opportunities keep cropping up to continue growing.
According to Maslow, individuals are motivated by unsatisfied needs. As each of these needs is significantly satisfied, it drives and forces the next need to emerge. Maslow grouped the five needs into two categories - Higher-order needs and Lower-order needs. The physiological and the safety needs constituted the lower-order needs. These lower-order needs are mainly satisfied externally. The social, esteem, and self-actualization needs constituted the higher-order needs. These higher-order needs are generally satisfied internally, i.e., within an individual. Thus, we can conclude that during boom period, the employees lower-order needs are significantly met.
HERZBERG’S TWO-FACTOR THEORY OF MOTIVATION
In 1959, Frederick Herzberg, a behavioural scientist proposed a two-factor theory or the motivator-hygiene theory. According to Herzberg, there are some job factors that result in satisfaction while there are other job factors that prevent dissatisfaction. According to Herzberg, the opposite of “Satisfaction” is “No satisfaction” and the opposite of “Dissatisfaction” is “No Dissatisfaction”.
FIGURE: Herzberg’s view of satisfaction and dissatisfaction
Herzberg classified these job factors into two categories-
a. Hygiene factors- Hygiene factors are those job factors which are essential for existence of motivation at workplace. These do not lead to positive satisfaction for long-term. But if these factors are absent / if these factors are non-existant at workplace, then they lead to dissatisfaction. In other words, hygiene factors are those factors which when adequate/reasonable in a job, pacify the employees and do not make them dissatisfied. These factors are extrinsic to work. Hygiene factors are also called as dissatisfiers or maintenance factors as they are required to avoid dissatisfaction. These factors describe the job environment/scenario. The hygiene factors symbolized the physiological needs which the individuals wanted and expected to be fulfilled. Hygiene factors include:
• Pay - The pay or salary structure should be appropriate and reasonable. It must be equal and competitive to those in the same industry in the same domain.
• Company Policies and administrative policies - The company policies should not be too rigid. They should be fair and clear. It should include flexible working hours, dress code, breaks, vacation, etc.
• Fringe benefits - The employees should be offered health care plans (mediclaim), benefits for the family members, employee help programmes, etc.
• Physical Working conditions - The working conditions should be safe, clean and hygienic. The work equipments should be updated and well-maintained.
• Status - The employees’ status within the organization should be familiar and retained.
• Interpersonal relations - The relationship of the employees with his peers, superiors and subordinates should be appropriate and acceptable. There should be no conflict or humiliation element present.
• Job Security - The organization must provide job security to the employees
b. Motivational factors- According to Herzberg, the hygiene factors cannot be regarded as motivators. The motivational factors yield positive satisfaction. These factors are inherent to work. These factors motivate the employees for a superior performance. These factors are called satisfiers. These are factors involved in performing the job. Employees find these factors intrinsically rewarding. The motivators symbolized the psychological needs that were perceived as an additional benefit. Motivational factors include:
• Recognition - The employees should be praised and recognized for their accomplishments by the managers.
• Sense of achievement - The employees must have a sense of achievement. This depends on the job. There must be a fruit of some sort in the job.
• Growth and promotional opportunities - There must be growth and advancement opportunities in an organization to motivate the employees to perform well.
• Responsibility - The employees must hold themselves responsible for the work. The managers should give them ownership of the work. They should minimize control but retain accountability.
• Meaningfulness of the work - The work itself should be meaningful, interesting and challenging for the employee to perform and to get motivated.
Limitations of Two-Factor Theory
The two factor theory is not free from limitations:
1. The two-factor theory overlooks situational variables.
2. Herzberg assumed a correlation between satisfaction and productivity. But the research conducted by Herzberg stressed upon satisfaction and ignored productivity.
3. The theory’s reliability is uncertain. Analysis has to be made by the raters. The raters may spoil the findings by analyzing same response in different manner.
4. No comprehensive measure of satisfaction was used. An employee may find his job acceptable despite the fact that he may hate/object part of his job.
5. The two factor theory is not free from bias as it is based on the natural reaction of employees when they are enquired the sources of satisfaction and dissatisfaction at work. They will blame dissatisfaction on the external factors such as salary structure, company policies and peer relationship. Also, the employees will give credit to themselves for the satisfaction factor at work.
6. The theory ignores blue-collar workers. Despite these limitations, Herzberg’s Two-Factor theory is acceptable broadly.
THEORY X AND Y
In 1960, Douglas McGregor formulated Theory X and Theory Y suggesting two aspects of human behaviour at work, or in other words, two different views of individuals (employees): one of which is negative, called as Theory X and the other is positive, so called as Theory Y. According to McGregor, the perception of managers on the nature of individuals is based on various assumptions.
Assumptions of Theory X
• An average employee intrinsically does not like work and tries to escape it whenever possible.
• Since the employee does not want to work, he must be persuaded, compelled, or warned with punishment so as to achieve organizational goals. A close supervision is required on part of managers. The managers adopt a more dictatorial style.
• Many employees rank job security on top, and they have little or no aspiration/ ambition.
• Employees generally dislike responsibilities.
• Employees resist change.
• An average employee needs formal direction.
Assumptions of Theory Y
• Employees can perceive their job as relaxing and normal. They exercise their physical and mental efforts in an inherent manner in their jobs.
• Employees may not require only threat, external control and coercion to work, but they can use self-direction and self-control if they are dedicated and sincere to achieve the organizational objectives.
• If the job is rewarding and satisfying, then it will result in employees’ loyalty and commitment to organization.
• An average employee can learn to admit and recognize the responsibility. In fact, he can even learn to obtain responsibility.
• The employees have skills and capabilities. Their logical capabilities should be fully utilized. In other words, the creativity, resourcefulness and innovative potentiality of the employees can be utilized to solve organizational problems.
Thus, we can say that Theory X presents a pessimistic view of employees’ nature and behaviour at work, while Theory Y presents an optimistic view of the employees’ nature and behaviour at work. If correlate it with Maslow’s theory, we can say that Theory X is based on the assumption that the employees emphasize on the physiological needs and the safety needs; while Theory X is based on the assumption that the social needs, esteem needs and the self-actualization needs dominate the employees.
McGregor views Theory Y to be more valid and reasonable than Theory X. Thus, he encouraged cordial team relations, responsible and stimulating jobs, and participation of all in decision-making process.
Implications of Theory X and Theory Y
Quite a few organizations use Theory X today. Theory X encourages use of tight control and supervision. It implies that employees are reluctant to organizational changes. Thus, it does not encourage innovation.
Many organizations are using Theory Y techniques. Theory Y implies that the managers should create and encourage a work environment which provides opportunities to employees to take initiative and self-direction. Employees should be given opportunities to contribute to organizational well-being. Theory Y encourages decentralization of authority, teamwork and participative decision making in an organization. Theory Y searches and discovers the ways in which an employee can make significant contributions in an organization. It harmonizes and matches employees’ needs and aspirations with organizational needs and aspirations.
IMPORTANCE OF MOTIVATION
(1) Improves Performance Level:
The ability to do work and willingness to do work both affect the efficiency of a person. The ability to do work is obtained with the help of education and training and willingness to do work is obtained with the help of motivation.
(2) Helps to Change Negative or Indifferent Attitudes of Employees:
Some employees of an organisation have a negative attitude. They always think that doing more work will not bring any credit. A manager uses various techniques to change this attitude.
For example, if the financial situation of such an employee is weak, he gives him a raise in his remuneration and if his financial condition is satisfactory he motivates him by praising his work.
(3) Reduction in Employee Turnover:
The reputation of an organisation is affected by the employee turnover. This creates a lot of problems for the managers. A lot of time and money go waste in repeatedly recruiting employees and giving them education and training.
Only motivation can save an organisation from such wastage. Motivated people work for a longer time in the organisation and there is a decline in the rate of turnove
(4) Helps to Reduce Absenteeism in the Organisation:
In some of the organisations, the rate of absenteeism is high. There are many causes for this-poor work conditions, poor relations with colleagues and superiors, no recognition in the organisation, insufficient reward, etc. A manager removes all such deficiencies and motivates the employees. Motivated employees do not remain absent from work as the workplace becomes a source of joy for them.
(5) Reduction in Resistance to Change:
New changes continue taking place in the organisation. Normally workers are not prepared to accept any changes in their normal routine. Whereas it becomes essential to bring in some changes because of the demands of time.
Employees can be made to accept such changes easily with the help of motivation. Motivated people accept these changes enthusiastically and improve their work performance.
LEADERSHIP
Leadership is a process by which an executive can direct, guide and influence the behavior and work of others towards accomplishment of specific goals in a given situation. Leadership is the ability of a manager to induce the subordinates to work with confidence and zeal.
Leadership is the potential to influence behaviour of others. It is also defined as the capacity to influence a group towards the realization of a goal. Leaders are required to develop future visions, and to motivate the organizational members to want to achieve the visions.
Characteristics of Leadership
1. It is a inter-personal process in which a manager is into influencing and guiding workers towards attainment of goals.
2. It denotes a few qualities to be present in a person which includes intelligence, maturity and personality.
3. It is a group process. It involves two or more people interacting with each other.
4. A leader is involved in shaping and moulding the behaviour of the group towards accomplishment of organizational goals.
5. Leadership is situation bound. There is no best style of leadership. It all depends upon tackling with the situations.
LEADERSHIP TYPES /STYLES
Autocratic leadership style: In this style of leadership, a leader has complete command and hold over their employees/team. The team cannot put forward their views even if they are best for the team’s or organizational interests. They cannot criticize or question the leader’s way of getting things done. The leader himself gets the things done. The advantage of this style is that it leads to speedy decision-making and greater productivity under leader’s supervision. Drawbacks of this leadership style are that it leads to greater employee absenteeism and turnover. This leadership style works only when the leader is the best in performing or when the job is monotonous, unskilled and routine in nature or where the project is short-term and risky.
The Laissez Faire Leadership Style: Here, the leader totally trusts their employees/team to perform the job themselves. He just concentrates on the intellectual/rational aspect of his work and does not focus on the management aspect of his work. The team/employees are welcomed to share their views and provide suggestions which are best for organizational interests. This leadership style works only when the employees are skilled, loyal, experienced and intellectual.
Democrative/Participative leadership style: The leaders invite and encourage the team members to play an important role in decision-making process, though the ultimate decision-making power rests with the leader. The leader guides the employees on what to perform and how to perform, while the employees communicate to the leader their experience and the suggestions if any. The advantages of this leadership style are that it leads to satisfied, motivated and more skilled employees. It leads to an optimistic work environment and also encourages creativity. This leadership style has the only drawback that it is time-consuming.
Bureaucratic leadership: Here the leaders strictly adhere to the organizational rules and policies. Also, they make sure that the employees/team also strictly follows the rules and procedures. Promotions take place on the basis of employees’ ability to adhere to organizational rules. This leadership style gradually develops over time. This leadership style is more suitable when safe work conditions and quality are required. But this leadership style discourages creativity and does not make employees self-contented.
ROLES/FUNCTION OF LEADER
Following are the main roles of a leader in an organization :
1. Required at all levels- Leadership is a function which is important at all levels of management. In the top level, it is important for getting co-operation in formulation of plans and policies. In the middle and lower level, it is required for interpretation and execution of plans and programmes framed by the top management. Leadership can be exercised through guidance and counseling of the subordinates at the time of execution of plans.
2. Representative of the organization- A leader, i.e., a manager is said to be the representative of the enterprise. He has to represent the concern at seminars, conferences, general meetings, etc. His role is to communicate the rationale of the enterprise to outside public. He is also representative of the own department which he leads.
3. Integrates and reconciles the personal goals with organizational goals- A leader through leadership traits helps in reconciling/ integrating the personal goals of the employees with the organizational goals. He is trying to co-ordinate the efforts of people towards a common purpose and thereby achieves objectives. This can be done only if he can influence and get willing co-operation and urge to accomplish the objectives.
4. He solicits support- A leader is a manager and besides that he is a person who entertains and invites support and co-operation of subordinates. This he can do by his personality, intelligence, maturity and experience which can provide him positive result. In this regard, a leader has to invite suggestions and if possible implement them into plans and programmes of enterprise. This way, he can solicit full support of employees which results in willingness to work and thereby effectiveness in running of a concern.
5. As a friend, philosopher and guide- A leader must possess the three dimensional traits in him. He can be a friend by sharing the feelings, opinions and desires with the employees. He can be a philosopher by utilizing his intelligence and experience and thereby guiding the employees as and when time requires. He can be a guide by supervising and communicating the employees the plans and policies of top management and secure their co-operation to achieve the goals of a concern. At times he can also play the role of a counselor by counseling and a problem-solving approach. He can listen to the problems of the employees and try to solve them.
QUALITIES OF A LEADER
A leader has got multidimensional traits in him which makes him appealing and effective in behavior. The following are the requisites to be present in a good leader:
1. Physical appearance- A leader must have a pleasing appearance. Physique and health are very important for a good leader.
2. Vision and foresight- A leader cannot maintain influence unless he exhibits that he is forward looking. He has to visualize situations and thereby has to frame logical programmes.
3. Intelligence- A leader should be intelligent enough to examine problems and difficult situations. He should be analytical who weighs pros and cons and then summarizes the situation. Therefore, a positive bent of mind and mature outlook is very important.
4. Communicative skills- A leader must be able to communicate the policies and procedures clearly, precisely and effectively. This can be helpful in persuasion and stimulation.
5. Objective- A leader has to be having a fair outlook which is free from bias and which does not reflects his willingness towards a particular individual. He should develop his own opinion and should base his judgement on facts and logic.
6. Knowledge of work- A leader should be very precisely knowing the nature of work of his subordinates because it is then he can win the trust and confidence of his subordinates.
7. Sense of responsibility- Responsibility and accountability towards an individual’s work is very important to bring a sense of influence. A leader must have a sense of responsibility towards organizational goals because only then he can get maximum of capabilities exploited in a real sense. For this, he has to motivate himself and arouse and urge to give best of his abilities. Only then he can motivate the subordinates to the best.
8. Self-confidence and will-power- Confidence in himself is important to earn the confidence of the subordinates. He should be trustworthy and should handle the situations with full will power. (You can read more about Self-Confidence at : Self Confidence - Tips to be Confident and Eliminate Your Apprehensions).
9. Humanist-This trait to be present in a leader is essential because he deals with human beings and is in personal contact with them. He has to handle the personal problems of his subordinates with great care and attention. Therefore, treating the human beings on humanitarian grounds is essential for building a congenial environment.
10. Empathy- It is an old adage “Stepping into the shoes of others”. This is very important because fair judgement and objectivity comes only then. A leader should understand the problems and complaints of employees and should also have a complete view of the needs and aspirations of the employees. This helps in improving human relations and personal contacts with the employees.
CONTROLLING
According to Brech, “Controlling is a systematic exercise which is called as a process of checking actual performance against the standards or plans with a view to ensure adequate progress and also recording such experience as is gained as a contribution to possible future needs.”
According to Donnell, “Just as a navigator continually takes reading to ensure whether he is relative to a planned action, so should a business manager continually take reading to assure himself that his enterprise is on right course.”
Controlling has got two basic purposes
1. It facilitates co-ordination
2. It helps in planning
Features of Controlling Function
Following are the characteristics of controlling function of management-
1. Controlling is an end function- A function which comes once the performances are made in confirmities with plans.
2. Controlling is a pervasive function- which means it is performed by managers at all levels and in all type of concerns.
3. Controlling is forward looking- because effective control is not possible without past being controlled. Controlling always look to future so that follow-up can be made whenever required.
4. Controlling is a dynamic process- since controlling requires taking reviewal methods, changes have to be made wherever possible.
5. Controlling is related with planning- Planning and Controlling are two inseperable functions of management. Without planning, controlling is a meaningless exercise and without controlling, planning is useless. Planning presupposes controlling and controlling succeeds planning.
PROCESS OF CONTROLLING
The control process involves carefully collecting information about a system, process, person, or group of people in order to make necessary decisions about each. Managers set up control systems that consist of four key steps:
1. Establish standards to measure performance.Within an organization's overall strategic plan, managers define goals for organizational departments in specific, operational terms that include standards of performance to compare with organizational activities.
2. Measure actual performance. Most organizations prepare formal reports of performance measurements that managers review regularly. These measurements should be related to the standards set in the first step of the control process. For example, if sales growth is a target, the organization should have a means of gathering and reporting sales data.
3. Compare performance with the standards. This step compares actual activities to performance standards. When managers read computer reports or walk through their plants, they identify whether actual performance meets, exceeds, or falls short of standards. Typically, performance reports simplify such comparison by placing the performance standards for the reporting period alongside the actual performance for the same period and by computing the variance—that is, the difference between each actual amount and the associated standard.
4. Take corrective actions. When performance deviates from standards, managers must determine what changes, if any, are necessary and how to apply them. In the productivity and quality‐centered environment, workers and managers are often empowered to evaluate their own work. After the evaluator determines the cause or causes of deviation, he or she can take the fourth step—corrective action. The most effective course may be prescribed by policies or may be best left up to employees' judgment and initiative.
These steps must be repeated periodically until the organizational goal is achieved.
TECHNIQUES OF CONTROLLING
• Direct Supervision and Observation. 'Direct Supervision and Observation' is the oldest technique of controlling. ...
• Financial Statements. ...
• Budgetary Control. ...
• Break Even Analysis. ...
• Return on Investment (ROI) ...
• Management by Objectives (MBO) ...
• Management Audit. ...
• Management Information System (MIS)
TOTAL QUALITY MANAGEMENT (TQM)
Total Quality Management (TQM) describes a management approach to long-term success through customer satisfaction. In a TQM effort, all members of an organization participate in improving processes, products, services, and the culture in which they work.
Total Quality Management Principles: The 8 Primary Elements of TQM
Total quality management can be summarized as a management system for a customer-focused organization that involves all employees in continual improvement. It uses strategy, data, and effective communications to integrate the quality discipline into the culture and activities of the organization. Many of these concepts are present in modern Quality Management Systems, the successor to TQM. Here are the 8 principles of total quality management:
1. Customer-focused
The customer ultimately determines the level of quality. No matter what an organization does to foster quality improvement—training employees, integrating quality into the design process, upgrading computers or software, or buying new measuring tools—the customer determines whether the efforts were worthwhile.
2. Total employee involvement
All employees participate in working toward common goals. Total employee commitment can only be obtained after fear has been driven from the workplace, when empowerment has occurred, and management has provided the proper environment. High-performance work systems integrate continuous improvement efforts with normal business operations. Self-managed work teams are one form of empowerment.
3. Process-centered
A fundamental part of TQM is a focus on process thinking. A process is a series of steps that take inputs from suppliers (internal or external) and transforms them into outputs that are delivered to customers (again, either internal or external). The steps required to carry out the process are defined, and performance measures are continuously monitored in order to detect unexpected variation.
4. Integrated system
Although an organization may consist of many different functional specialties often organized into vertically structured departments, it is the horizontal processes interconnecting these functions that are the focus of TQM.
• Micro-processes add up to larger processes, and all processes aggregate into the business processes required for defining and implementing strategy. Everyone must understand the vision, mission, and guiding principles as well as the quality policies, objectives, and critical processes of the organization. Business performance must be monitored and communicated continuously.
• An integrated business system may be modeled after the Baldrige National Quality Program criteria and/or incorporate the ISO 9000 standards. Every organization has a unique work culture, and it is virtually impossible to achieve excellence in its products and services unless a good quality culture has been fostered. Thus, an integrated system connects business improvement elements in an attempt to continually improve and exceed the expectations of customers, employees, and other stakeholders.
5. Strategic and systematic approach
A critical part of the management of quality is the strategic and systematic approach to achieving an organization’s vision, mission, and goals. This process, called strategic planning or strategic management, includes the formulation of a strategic plan that integrates quality as a core component.
6. Continual improvement
A major thrust of TQM is continual process improvement. Continual improvement drives an organization to be both analytical and creative in finding ways to become more competitive and more effective at meeting stakeholder expectations.
7. Fact-based decision making
In order to know how well an organization is performing, data on performance measures are necessary. TQM requires that an organization continually collect and analyze data in order to improve decision making accuracy, achieve consensus, and allow prediction based on past history.
8. Communications
During times of organizational change, as well as part of day-to-day operation, effective communications plays a large part in maintaining morale and in motivating employees at all levels. Communications involve strategies, method, and timeliness.
COORDINATION
Coordination is “integration of the activities of individuals and units into a concerted effort that works towards a common aim.” — Pearce and Robinson
Co-ordination maintains unity of action amongst individuals and departments. Absence of co-ordination will result in sub-optimal attainment of goals. In extreme situations, it may result in losses and liquidation of companies.
NEED AND IMPORTANCE OF COORDINATION
Importance/Need for Coordination:
The need for coordination arises because individuals and departments have different goals. They depend on each other for resources and information. Managers continuously coordinate their activities to ensure that all individuals and departments use organisational resources and information for successful attainment of organisational goals.
Coordination results in the following benefits:
1. Non-routine jobs:
Non-routine jobs need constant flow of information, both vertical and horizontal. Unless there is proper coordination amongst these jobs, they cannot be performed efficiently. Coordination, thus, helps in effectively carrying out non-routine jobs.
2. Dynamic activities:
Organisations operate in the dynamic environment. Environmental changes have to be adopted by organisations for their survival and growth. Coordination helps in integrating activities which constantly change according to changes in the environment.
3. Standards of performance:
When standards of performance against which actual performance is to be measured are too high, managers coordinate the various business activities to ensure that high performance standards are achieved.
4. Interdependence of activities:
When different units of the organisation are dependent on each other for resources or information, there is great need for coordination amongst them. Greater the interdependence, greater is the need for coordination. According to Thompson, there are three types of interdependence: pooled, sequential and reciprocal interdependence.
5. Specialisation:
Specialisation leads to concentration on very narrow areas of job activity. Individuals tend to overlook overall perspective of the job. This requires coordination to direct all the activities towards a common goal.
6. Growing organisation:
In growing organisations, number of people and divisions become so large that it becomes difficult for top managers to coordinate the activities performed by all of them. Various techniques of coordination (rules, procedures, plans, goals, slack resources etc.) help in unifying diverse and multiple organisational/departmental activities towards the common goal.
7. Promote group effort:
In the absence of coordination, each individual and department will carry out their objectives in a manner that they perceive as the best. People tend to maximise their individual goals. This may, however, not be the best for the organisation as a whole.
Coordination helps in promoting group effort rather than individual effort for optimally achieving the organisational goals. It harmonizes individuals goals with organisational goals and satisfies individual goals through satisfaction of organisational goals.
8. Unity of action:
Organisations have diverse work force, thoughts, resources, goals, activities and skills. Coordination helps to unify these diverse set of actions towards a single goal and, thus, maximise their use.
9. Synergy:
Coordination facilitates the sum total of output of group to increase by more than the sum total of their individual output. It integrates work of different units and produces synergistic effects by increasing the overall organisational output.
UNIT-V
Management of Change: Models for Change, Force for Change, Need for Change, Alternative Change
Techniques, New Trends in Organization Change, Stress Management.
CHANGE MANAGEMENT
Change management is a systematic approach to dealing with the transition or transformation of an organization's goals, processes or technologies. The purpose of change management is to implement strategies for effecting change, controlling change and helping people to adapt to change. Such strategies include having a structured procedure for requesting a change, as well as mechanisms for responding to requests and following them up.
FACTORS/FORCES FOR CHANGE
External Forces of Organizational Change
The external forces of change stem up from the external environment. These forces have been described below:
Political Forces: With the rapidly changing global political scenario and the upheavals in the global politics, the worldwide economy is equally undergoing a quick change and presenting several challenges before the organization in the form of changes in regulations, policies and also the economic framework in the form of globalization and liberalization.
Economic Forces: The economic forces influence organization’s change management strategy by either presenting opportunities or challenges in the form of economic uncertainties or growing competitive pressures.
Technological Forces: Technological advancements and innovations in communication and computer technology, have revolutionized the organizational functioning by facilitating newer ways of working and added in newer range of products/services thus creating a need for developing a framework for managing change effectively and proactively responding to the challenges as a result of these changes due to the technological forces.
Governmental Forces: Governmental regulations and also the extent of intervention may influence the need for change. The following governmental forces have been described below which determine the need for organizational change:
1. Deregulation: Deregulation is associated with decentralization of power or economic interventions at the state level or lessening of the governmental intervention in the economy. For example, as an outcome of deregulation few sectors/industries like insurance, banking, petroleum and many others which were previously under the direct control of the government, are now being handed over to the private players or companies.
2. Foreign Exchange: Foreign exchange rates directly affect the international trade, as the variations in the exchange rates influence the currency payment structure. Issues or constraints with the foreign exchange rate may compel the government in moving ahead with the imposition of import restrictions on selected items or deregulating the economies for attracting the foreign exchange for investment purposes.
3. Anti-Trust Laws: Anti-Trust laws are enforced by most of the governments for restricting/curbing unfair trade practices. For example, these restrictions have been enforced in India by enacting an act called Monopolies and Restrictive Trade Practices (MRTP), 1971.
4. Suspension Agreements: Suspension agreements are the agreements which are finalized between the governments to waive off anti-dumping duties.
5. Protectionism: Due to the growing competitive pressures, most of the governments try to enforce certain regulations or intervene for safeguarding their threatened industries. For example, by enforcing certain trade barriers, the Indian government protects the local industries such as Handicrafts and Textiles. These trade barriers may take the form of either anti-dumping laws, levy of tariffs or import duties, quantity quotas, and various government subsidies.
Competitive Pressures: The increase in the global competition and the challenges enforced due to the competitive pressures, force the organizations in changing their strategies for ensuring their global presence. Japanese majors like Nissan, Toyota and Mitsubishi, have been continuously relocating their manufacturing as well as their assembling operations to South East Asian countries for achieving a competitive advantage in the form of reduced cost of labour and economies of scale.
Changes in the Needs and Preferences of Customers: Changes in the needs of the customers are compelling the organizations to adapt and innovate their product offerings constantly for meeting the changing demands of the customers.
Internal Forces of Organizational Change
Systemic Forces: An organization is made up of a system and several subsystems which are interconnected, just like the way in which a human system functions. The subsystems of an organization are in direct interaction and influence the organizational behaviour as well. A change in any subsystem, result in a change in the existing organizational processes and the complete alignment as well as the relationship.
Inadequate Existing Administrative Processes: Each organization function by following a particular set of procedures, rules, and regulations. With the changing times, an organization needs to change it’s rules and existing administrative processes, failing which the administrative inadequacy might result in organizational ineffectiveness.
Individual/Group Speculations: In anthropological terms, it is understood that man is a social animal whose desires and requirements keep changing with the changing times, which result in differences in individual as well as group expectations. Various factors on the positive front such as how ambitious an individual is, achievement drive, career growth, personal and professional competencies and negative factors such as one’s own fears, complexes and insecurities are some of the inter-individual as well as inter group factors which influence an organizational functioning on a day to day basis and also its overall performance.
Structural Changes: These changes alter the existing organizational structure as well as its overall design. Structural changes can be regarded as a strategic move on the part of the organization’s to improve profitability and for achieving a cost advantage. These changes may take the form of downsizing, job redesign, decentralization, etc. For example, IBM for introducing reforms in its existing system and procedures and for achieving cost effectiveness has enforced downsizing strategy.
Changes in the Technology: Within an organization, the technological changes may take the shape of changes in the work processes, equipment, level/degree of automation, sequence of work, etc.
People Focused Change: In this context, the major focus is laid on people and their existing competencies, human resource planning strategies, structural changes and employee reorientation and replacement of an employee which mean shifting an employee to a different work arena where his/her skills are best suited. It may also be involving establishing new recruitment policies and procedures in line with the changes in the technology.
Issues with the Profitability: This can also be one of the primary causes which compel an organization to restructure (downsize or resize) or to reengineer themselves. The organization may have profitability issues either due to a loss in revenue, low productivity or a loss in the market share.
NEED FOR CHANGE
Organizations change for a number of different reasons, so they can either react to these reasons or be ahead of them. These reasons include:
1. Crisis: Obviously September 11 is the most dramatic example of a crisis which caused countless organizations, and even industries such as airlines and travel, to change. The recent financial crisis obviously created many changes in the financial services industry as organizations attempted to survive.
2. Performance Gaps: The organization's goals and objectives are not being met or other organizational needs are not being satisfied. Changes are required to close these gaps.
3. New Technology: Identification of new technology and more efficient and economical methods to perform work.
4. Identification of Opportunities: Opportunities are identified in the market place that the organization needs to pursue in order to increase its competitiveness.
5. Reaction to Internal & External Pressure: Management and employees, particularly those in organized unions often exert pressure for change. External pressures come from many areas, including customers, competition, changing government regulations, shareholders, financial markets, and other factors in the organization's external environment.
6. Mergers & Acquisitions: Mergers and acquisitions create change in a number of areas often negatively impacting employees when two organizations are merged and employees in duel functions are made redundant.
7. Change for the Sake of Change: Often times an organization will appoint a new CEO. In order to prove to the board he is doing something, he will make changes just for their own sake.
8. Sounds Good: Another reason organizations may institute certain changes is that other organizations are doing so (such as the old quality circles and re-engineering fads). It sounds good, so the organization tries it.
9. Planned Abandonment: Changes as a result of abandoning declining products, markets, or subsidiaries and allocating resources to innovation and new opportunities.
TECHNIQUES OF CHANGE
(i) By transformational leaderships:
Transformational leaders are managers who initiate bold strategic changes to position the organisation for its future. They articulate a vision and sell it vigorously. They stimulate employees to action and charismatically model the desired behaviours. They attempt to create learning individuals and learning organisations that will be better prepared for the unknown future challenges.
ii) By use of group forces:
The group is an instrument for bringing strong pressures on its members to change. Since behaviour is firmly grounded in the groups to which a person belongs, any changes in group forces will encourage changes in the individual behaviour. The idea is to help the group join with management to encourage desired change
(iii) By providing a rationale for change:
Capable leaderships reinforce a climate of psychological support for change. The effective leader presents change on the basis of the impersonal requirements of the situation, rather than on personal grounds. Change is more likely to be successful if the leaders introducing it have high expectations of success. Managerial and employee expectations of change may be as important as the technology of change.
(iv) By participation:
Participation encourages employees to discuss, to communicate, to make suggestions and to become interested in change. Participation encourages commitment rather than mere compliance with change. Commitment implies motivation to support a change and to work to ensure that the change is effective.
Employees need to participate in a change before it occurs, not after. When they are involved in the planned change, right from the beginning, they feel committed to the implementation of such change.
(v) By sharing rewards:
By ensuring that there are enough rewards for employees in the changed situation, managers can build employee support for change. Rewards also give employees a sense that progress accompanies a change. Both economic and psychic rewards are useful.
(vi) By ensuring employee security:
Along with shared rewards, existing employee benefits need to be protected. Security during a change is essential in the form of protection from reduced earnings when new technology and methods are introduced. Seniority rights, opportunities for advancement etc., are to be safeguarded when a change is made.
(vii) By communication and education:
Support for change can be gained by communication and education. All individuals or groups that will be affected by change must be informed about the change in order to make them feel secure and to maintain group cooperation.
(viii) By stimulating employee readiness:
Employers should be helped to become aware of the need for a change. Change is more likely to be accepted if the people affected by it recognise a need for it before it occurs.
It is also essential for managers to take a broader, systems-oriented perspective on change to identify the complex relationships involved. Organisational development can be a useful method for achieving this objective.
STRESS MANAGEMENT
Stress management is a wide spectrum of techniques and psychotherapies aimed at controlling a person's level of stress, especially chronic stress, usually for the purpose of improving everyday functioning. In this context, the term 'stress' refers only to a stress with significant negative consequences, or distress in the terminology advocated by Hans Selye, rather than what he calls eustress, a stress whose consequences are helpful or otherwise.
What Is Stress?
Stress is your body’s response to changes in your life. Because life involves constant change (ranging from changing locations from home to work each morning to adapting to major life changes like marriage, divorce, or death of a loved one), there is no avoiding stress.
This is why your goal shouldn't be to eliminate all stress, but to eliminate unnecessary stress and effectively manage the rest. There are some common causes of stress that many people experience, but each person is different.
Causes of Stress
Stress can come from many sources, which are known as "stressors." Because our experience of what is considered "stressful" is created by our unique perceptions of what we encounter in life (based on our own mix of personality traits, available resources, habitual thought patterns and more), a situation may be perceived as "stressful" by one person and merely "challenging" by someone else.
TECHNIQUES FOR STRESS MANAGEMENT
There are many positive and 'functional' methods of coping with stress:
• Relaxation/Meditation - Cultivating interior stillness and calmness through meditation and relaxation techniques such as massage therapy, and progressive muscle relaxation.
• Exercise - Regular physical exertion of any intensity (a gentle 30 minute walk, a Yoga or Pilates class, an hour long strenuous free-weight workout, etc.) helps discharge muscle tension and build strength, resilience and energy.
• Healthy Diet - Eating healthy whole foods and avoiding sugary and fattening treats helps keep the body's internal rhythms more balanced.
• Socialization And Supportive Conversation - Many people are able to relax and to feel part of something larger than themselves by sharing their concerns with trusted others. This can take the form of talking with friends and family, psychotherapy or counseling, or prayer.
• Assertive Communication - Some stress is caused by not getting what you want from other people. Asking for what you want in a direct but polite way is the best method for getting what you want, and thereby reducing stress.
• Time Management - Some stress is caused by poor organization. Learning how to manage appointments, to say 'no' to requests you can't get done, to organize records, and to use memory enhancement tools (like alarm clocks and 'palm pilots') can make a big difference.
• Asking For Assistance - Whatever it is that you are dealing with right now, other people have dealt with it before. Seeking out their counsel when you don't know what to do is often a good way to avoid reinventing the wheel.
The big problem with healthy coping strategies is that they often don't make one feel better immediately; they only really work after one makes a commitment to practicing them repeatedly over time
UNIT-VI
Strategic Management
Definition, Classes of Decisions, Levels of Decision, Strategy, Role of different Strategist, Relevance of
Strategic Management and its Benefits, Strategic Management in India
STRATEGIC MANAGEMENT
Strategic management is the continuous planning, monitoring, analysis and assessment of all that is necessary for an organization to meet its goals and objectives. Fast-paced innovation, emerging technologies and customer expectations force organizations to think and make decisions strategically to remain successful.
CLASSES OF DECISION
1. Programmed and non-programmed decisions:
Programmed decisions are concerned with the problems of repetitive nature or routine type matters.
A standard procedure is followed for tackling such problems. These decisions are taken generally by lower level managers. Decisions of this type may pertain to e.g. purchase of raw material, granting leave to an employee and supply of goods and implements to the employees, etc. Non-programmed decisions relate to difficult situations for which there is no easy solution.
2. Routine and strategic decisions:
Routine decisions are related to the general functioning of the organisation. They do not require much evaluation and analysis and can be taken quickly. Ample powers are delegated to lower ranks to take these decisions within the broad policy structure of the organisation.
3. Tactical (Policy) and operational decisions:
Decisions pertaining to various policy matters of the organisation are policy decisions. These are taken by the top management and have long term impact on the functioning of the concern. For example, decisions regarding location of plant, volume of production and channels of distribution (Tactical) policies, etc. are policy decisions. Operating decisions relate to day-to-day functioning or operations of business. Middle and lower level managers take these decisions.
4. Organisational and personal decisions:
When an individual takes decision as an executive in the official capacity, it is known as organisational decision. If decision is taken by the executive in the personal capacity (thereby affecting his personal life), it is known as personal decision.
5. Major and minor decisions:
Another classification of decisions is major and minor. Decision pertaining to purchase of new factory premises is a major decision. Major decisions are taken by top management. Purchase of office stationery is a minor decision which can be taken by office superintendent.
6. Individual and group decisions:
When the decision is taken by a single individual, it is known as individual decision. Usually routine type decisions are taken by individuals within the broad policy framework of the organisation.
LEVELS OF DECISION
Decisions are made at different levels in an organisation's hierarchy:
• Strategic decisions are long-term in their impact. They affect and shape the direction of the whole business. They are generally made by senior managers. The managers of the bakery need to take a strategic decision about whether to remain in the cafe business. Long-term forecasts of business turnover set against likely market conditions will help to determine if it should close the cafe business.
• Tactical decisions help to implement the strategy. They are usually made by middle management. For the cafe, a tactical decision would be whether to open earlier in the morning or on Saturday to attract new customers. Managers would want research data on likely customer numbers to help them decide if opening hours should be extended.
• Operational decisions relate to the day-to-day running of the business. They are mainly routine and may be taken by middle or junior managers. For example, a simple operational decision for the cafe would be whether to order more coffee for next week. Stock and sales data will show when it needs to order more supplies.
As these examples show, decisions at all levels need data. A business creates a trail of data. This includes data on sales, employee costs and payments. In a large company, such as Tesco, millions of data items are created every day against thousands of cost and sales headings. This data can provide a picture of trends, which the business can use in its forward planning.
STRATEGY
A strategy is a plan of action designed to achieve a specific goal or series of goals within an organizational framework.
ROLES OF STRATEGIST
There are various kinds of strategists like managers, board of directors, chief executive officers, entrepreneurs, senior management, SBU-level executives, corporate planning staff, consultants, middle level managers, executive assistants.
• Board of directors are the owners of an organization such as shareholders, controlling agencies, government, financial institutions, etc. They are responsible for governance of an organization, technology collaboration, new product development and senior management appointments. They guide the senior management in setting and accomplishing objectives, review and evaluate organization performance.
• The chief executive officer is answerable for all aspects of strategic management from the formulation to the evaluation of strategy. They play a major role in strategic decision making and provide the direction for the organization so that it can achieve its purpose. They assist in setting the mission of the organization. They are responsible for deciding the objectives, formulating and implementing the strategy.
• Entrepreneurs are strategist who starts a new business, initiator, searches for change, respond to it and exploits its as an opportunity. By their nature, entrepreneurs play a proactive role. They are implementers and evaluators of strategies.
• Senior management or top management consists of managers at highest level managerial hierarchy. They look after renovation, technology up progression, diversification and expansion and also focus on new product development. They assist the board and chief executives in formulating, implementing and evaluating the strategy.
• SBU level executives are profit center heads or divisional heads. They manage a diversified company as a portfolio of businesses, each business having a clearly defined product-market segment and an unique strategy. SBU executives maintain harmonization with other SBUs in the organizing, formulating and implementing the SBU level strategy.
• Corporate planning staff plays a supporting role. They put in order and communicate the strategic plans. They make available administrative support and fulfill the function of assisting the introduction, working and maintenance of strategic management system.
• Consultants may be individuals, academicians or consultancy companies who are specialized in strategic management activities. They will advise and assist managers to improve the performance and effectiveness of an organization. They provide services of corporate strategy and planning.
• Middle level managers look after operational matters, so they rarely play an active role in strategic management. They are the implementers of decision taken by top level and followers of policy guidelines. They contribute to generation of ideas and in development of strategic alternative. They also help in setting objectives at departmental level.
• An executive assistant will assist the chief executive in the performance of his duties in various ways. They assist the chief executive in data collection, analysis and in suggesting alternatives. Coordinating activities with internal staff and outsiders and acting as a filter for information are also performed by the executive assistant.
BENEFITS OF STRATEGIC MANAGEMENT
Here are the top 5 benefits of strategic planning:
1. It allows organizations to be proactive rather than reactive
A strategic plan allows organizations to foresee their future and to prepare accordingly. Through strategic planning, companies can anticipate certain unfavourable scenarios before they happen and take necessary precautions to avoid them. With a strong strategic plan, organizations can be proactive rather than merely reacting to situations as they arise. Being proactive allows organizations to keep up with the ever-changing trends in the market and always stay one step ahead of the competition.
2. It sets up a sense of direction
A strategic plan helps to define the direction in which an organization must travel, and aids in establishing realistic objectives and goals that are in line with the vision and mission charted out for it. A strategic plan offers a much-needed foundation from which an organization can grow, evaluate its success, compensate its employees and establish boundaries for efficient decision-making.
3. It increases operational efficiency
A strategic plan provides management the roadmap to align the organization’s functional activities to achieve set goals. It guides management discussions and decision making in determining resource and budget requirements to accomplish set objectives -- thus increasing operational efficiency.
4. It helps to increase market share and profitability
Through a dedicated strategic plan, organizations can get valuable insights on market trends, consumer segments, as well as product and service offerings which may affect their success. An approach that is targeted and well-strategized to turn all sales and marketing efforts into the best possible outcomes can help to increase profitability and market share.
5. It can make a business more durable
Business is a tumultuous concept. A business may be booming one year and in debt the next. With constantly changing industries and world markets, organizations that lack a strong foundation, focus and foresight will have trouble riding the next wave. According to reports, one of every three companies that are leaders in their industry might not be there in the next five years... but the odds are in favour of those that have a strong strategic plan!
STRATEGY MANAGEMENT IN INDIA
1. Strategic management is helping Indian corporates in giving their businesses a direction
India’s booming economy is home to a variety of start-ups. These start-ups are new and need to stay focused. A good strategy allows them to keep their eyes on the goal. It helps them set clear goals on what business they want to be in and what kind of customers they want to serve. With the plethora of market segments available in a vibrant economy, it is easy to get confused. A clear-cut strategy helps organizations stay out of the confused state.
2. Strategic management allows situational analysis through management tools
One of the management styles in strategic management is called situational analysis. It helps a business evaluate itself in its current market. By doing this they can define where they want to be, their future course of action and the time frame that they want to define for reaching their goals. They can clearly fine tune their working to achieve their goals by knowing how far they need to go from where they currently are. It helps them know how much resources they need to direct to achieve the desired result in the stipulated time frame.
3. Strategic management helps look around for strategic alliances
Once a company has a set of goals and a time frame to achieve those goals, they can find out means that can help them speed up their process of achievement of the decided goals. One of those means is a strategic alliance. A strategic alliance can happen between two organizations which have similar or complementing strategic objectives. They can have a partnership, or a bigger firm can acquire a smaller one. This provides both the sides access to each other’s resources and customer base. They can place each other’s products in their stores. In this manner, by tying the growth of the organization with the strategic alliances, one can fasten the goal completion.
4. Strategic management encourages innovation
Innovation is one of the key criteria for keeping a business relevant in the eyes of the customers. It keeps the company on its toes and encourages employees to create new products and processes which are better than the previous ones.
However, a recent study by the IBM institute for Business Value and Oxford Economics claims that 90% of Indian start-ups fail due to lack of innovation. 77% of the venture capitalists who were interviewed for this study said that Indian start-ups lacked new technologies and fresh business models. In 2016, Asian Paints was the only Indian company in Forbes magazine’s list of 25 most innovative companies. Most Indian start-ups in fact are known to emulate western business models. Lack of innovation is evident in the way they fail to sustain themselves. Since 2015, more than 1500 Indian start-ups have closed down in India.
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