CHAPTER

PRINCIPLES OF MANAGEMENT

1.1. MANAGEMENT-INTRODUCTION ~~~ INSIDE THIS CHAPTER

■ Management may be labelled as the art of getting work 1.1. Management-Introduction

1.2. Characteristics of Management
done through people, with satisfaction for employer,
1.3. Importance of Management
employees and the public. 1.4. Principles of Management
■ For getting the work done (of an enterprise) through 1.5. Functions of Management
the efforts of other people, it is necessary to guide, 1.6. Management by Objectives (M.8.O.)
direct, coordinate and control human efforts towards 1.7. Development of Industrial Mana-
the fulfillment of the goals of the enterprise. gement
1.8. Industrial Organisation
■ The goals of the enterprise are fulfilled through the
1.9. Necessity of Industrial Organi-
use of resources like men, money, materials and sation
machines. 1.10. Requisities of a Good Industrial
■ Management may be called an Art as well as Science. Organisation
1.11. Organisation Chart
(a) Management has scientific basis because management
1.12. Types and Structure of Industrial
tec;hniques are susceptible to measurement and Organisation
factual determination. 1.13. Authority and Responsibility
(b) Management is an Art because management means 1.14. Departmentation
coordinating and getting work done through 1.15. Relationship between Individual
Departments
others.
■ Management is an executive function which actively
direct human efforts towards common goals.
■ The main characteristics of the management is to integrate and apply the knowledge and
analytical approaches developed by numerous other disciplines.
■ Management does not frame policies, it only implements/executes the policies laid down by
administration.
■ The functions of management are executive and largely governing.
■ Man_agement is the servant of administration; it gets salary or a part of profit in lieu of its
services.

1
 G
A TEXT BOO K OF INDU STR IAL MANAGEM

---
ENT
■ Man aoem ent requ ires tech nica l abili ty to func
0 tion prop erly .
■ Man aoem ent uses oroa nisa tion for achi evin .
0 0 g the goal s of an ente rpris e.
■ Man agem ent is productive in char
acte r.
■ Plan ning , orga nisin g, staff ing, mot ivati on dire
cting , coor dina tion ar\d cont rol are all function
of Man agem ent.
■ The re are diffe rent leve ls in man agem ent
i.e., top leve l and mid dle leve l and lowe r leve
man agem ent. l of

1.2 . CHARACTERISTICS OF MA NAG EME

NT
1. To main tain disc iplin e and to keep cont
rol over the emp loye es.
2. To distr ibut e wor k and mac hine s amo ng
the wor kers in such a way as to secu re the max
outp ut. imum
3. To keep co-o rdin ation amo ng the staff
at vari ous leve ls.
4. To imp rove effic ienc y, man agem ent keep
s suff icien t watc h and stric t insp ectio n.
5. To sugg est new idea s and impr ovem ents
.
6. To arra nge for the effic ient stor ing and reco
rdin g.
7 . To mak e the arra ngem ent of paym ents
and their reco rds etc.
8 . To prov ide good train ing to staff for attai
ning high skill in all field s.
9. To imp art the instr uctio n time ly and to prov
ide cons isten t guid ance .
l 0. By adhe ring to high stan dard s of perf
orm ance it mus t be able to prov ide facil ities
wag es to the wor kers and redu ce the pric es. and

1.3 . IMP ORT ANC E OF MA NAG EME NT

A scie ntifi c man agem ent is mos t f'-;sential
as it fulfi lls the follo wing nece ssiti es :
1. It main tain s disc iplin e by keep ing prop er
cont rol over the emp loye es of vari ous departme
2 . It distr ibut es the wor k and mac hine s amo nts.
ng the wor kers in such a way so as to secure
max imu m outp ut. the
3. It keep s co-o rdin atio n amo ng the staff
at vari ous leve ls.
4. It imp rove s effic ienc ies, as it keep s suff
icien t watc h and stric t insp ectio n.
5 . It sugg ests new idea s and imp rove men
ts.
6. It arra nges for the effic ient stor ing and reco
rdin g.
7. It mak es arra ngem ent for paym ent on
scie ntifi c basi s and to keep their reco rds prop
8 . It deve lops mea ns of mar keti ng and publ erly.
icity .
9. It give s due imp orta nce to labo ur grie vanc f
es and stud y their psyc holo gy for the purpose 0

I
main tain ing the good hum an relat ions and
for achi evin g the goal s.
Is Man age men t an Art or a Scie nce
?
, The ques tion whe ther man agem ent is an art . . the past
or a scie nce has been grea tly deba ted 10
amo ng the expe rts of man agem ent. The grea as
. b . t auth or Luth er Gul lick has rega rde d man a g emen 1
a scie nce ecau se 1t repr esen ts a bod y of . . all
well teste d prin cipl es wh1. c h can b e appl. ied ,n
situ atio ns. Opp osit e to it the othe r emi nent an art
expe rt Mar y Park er Foll et has desc ribe d it
as
PRINCIPLES OF MAN AGE MEN T
d of
ent rela tes to pra ctic al app lica tion of kno wle dge and skil l as per the nee
bec a~s e m~ nag ~m a scie nce
Situ atw n. To set the mat ter stra igh t, let us firs t see the dist inct ion between
the gi ven
and an art.
elop s by kno wle dge acq uire d thro ugh obs erva tion and exp erim enta tion whe reas
( I ) Scie nce dev
art dev elops by prac tice .
but through the
een vari able s are exp lain ed by scie nce
(2) The cau se-e ffec t rela tion ship s betw a
the cau se-e ffec t rela tion ship s can not alw ays by seen . It is sub ject ive bas ed on
eye of art,
tatio n.
per son 's own und erst and ing and inte rpre
ns and for art
es, which will rem ain valid in all situ atio
(3) Sci enc e lays dow n univ ersa l prin cipl
one situ atio n to another.
the vali dity of prin cipl es will diff er from
whe reas art
enc e pre dict s on the bas is of kno wle dge of rela tion ship s betw een variables
( 4) Sci
sub ject ive und erst and ing of realities.
mer ely mak es a gue ss on the bas is of
crip tive .
(5) Sci enc e is def init ive but art is des
nce
t of the abo ve dist inct ions let us ana lyse the facts now. Ma nag eme nt is a scie
In the ligh
bec ause :
n.
(a) It reli es on scie ntif ic enq uiry
and eva luat ion of all asp ects of a situatio
(b) It is def init ive ,md exa ct 'kno
w-h ow' and 'sho w-h ow' of cioing thi~gs.
ures .
(c) It foll ows rigo rou s con trol pro ced icte d by
se-e ffec t rela tion ship betw een vari ous fact ors can be con trol led and pred
(d) The cau
man age men t scie nce .
(e) It can be univ ersa lly app lied
.

!vfanagement is an art bec aus e:

(a) It is crea tive , rely ing on trials
and erro rs app roac h.
(b) It is a des crip tive for 'kno w-h
ow' and 'sho w-h ow ' of things.
(c) It dep end s on com mon
sen se and hum an und erst and ing.
vari ous factors.
It can not pre dict or con trol cau se-e ffec t rela tion ship betw een
(d) situ atio n and it can not
The art of man age men t has to adju st and ada pt to real itie s of a giv en
(e)
be univ ersa lly app lied . \

and scie nce with out art is kno wle dge was ted" goe s 'an age old
"Ar t with out scie nce has no gui de
wle dge abo ut
exa mpl e a per son can not be a goo d arch itec t unle ss he has a sou nd kno
adage. For ing of a beautiful
ding eng inee ring and the prac tica l skil l of app lyin g that kno wle dge in the mak
buil t and also sho uld
mus t kno w the prin cipl e of man age men
house. Sim ilar ly a suc ces sful man age r eren t
to app ly the skil l of thos e prin cipl e for solv ing man age rial pro blem s in diff
have the abil ity
situations.
t is bot h a scie nce (the ory ) and an art (pra ctic e). Scie nce bec aus e it has an
Thus man age men invo lves
y of kno wle dge con sist ing of cert ain uni vers al trut hs and art bec ause it
organised bod l.
tion s of kno wle dge , exp erti se and skil
creating results thro ugh prac tica l app lica

Is Ma nag em ent a Pro fes sio n ?

elop men ts in the size of bus ines s and the con sequenti al separation of ~wn ersh ip
The progress ive dev erp nse s have
age men t in the eme rge nce of man age men t in the cor por ate form s of ent
from man
a A TE XT BO OK OF
IN DU ST RI AL MAN
AGEMEtil
contributed to the.em
-
·
of a pr of ess1on, it · ·
er ge nc e of m an ag em t s a di st in ct pr of es si on or as a
m the present century. Alth0 ug h m an ag em en
.
en a
t as ye
t do es no t in cl ud e al
l th e es se nt ia l charac
---
ne w so ci al institutio
teristi· n
is d bt m ov m g to wa ·d ro fe ss io n. O f th e
rofession, it includes no ou . 1 s a P us ua l ch ar ac te ris tic s ofcs
p . . (a ) an or ga ni ze d an . b dy of kn ow le dg e, (b ) a fo rm al m
ethod af
d st em at ic O .
ac qm nn o0 su e h know 1e d ge an d k'ill th ro ug hsyes . .
the formation of m an
. s ta bl is he d in st itu tio ns of bu si ne •
o
. t' ss management, (c)
and (e ) a orowino em ag em en t associa ions , (d ) th e gr ow th of pr of es s1. on a1 m an
ph as is on th e ethical ag em en t consultants
pr of essio
0 0 co nd uc t m an ag em en .
t pe ke ot ?e r recognised,
.
ns , m an ag em en t doe t ca ll foi· rs on ne l. B ut _
h
people into manager s no th
. e lic en si ng of m an ag
ial jo bs , with a specia . er s no r do es 1t re st nc t the
m an ag em en t ha s be en l ac ad em ic degr~e . Be . entry of
.
identified ho w ev er as i_n ~ so rt of a fu ll- fle dg ~d pr
hu m an behaviour. a cr uc ia l so ci al ac tiv ofe~s1on,
ity by m an y a n tl va
ne d studies of
C on ce pt of O rg an
is at io n, M an ag em
en t . an d A dm in is
We sh al l first explai tr at io n
n th e m ea ni ng of th
Organisation. It sta es e te rm s.
nd s fo r tw o co m m on
or fu nc tio na l group m ea ni ng s. Th e fir st
such as a business , a m ea ni ng si gn ifi es an
Th e se co nd m ea ni ng go ve rn m en t agency, a ba nk institution
si gn ifi es th e pr oc es , a ho sp ita l or a foot
or ga ni sa tio n so th at s of or ga ni si ng th e ball team .
th e goals of th e or ga w or k am on g th e m
pr oc es s of detailing ni sa tio n ca n be ef fi ci em be rs of the
all the w or k th at m en tly ac hi ev ed . Org
lo ad in to ac tiv iti es us t be do ne to at ta anising is a ,
th at ca n lo gi ca lly in th e go al , di vi di ng
se tt in g up a m ec ha an d co m fo rt ab ly be th e total work
ni sm to co or di na te pe rf or m ed by on e
ha rm on io us whole. th e w or k of or ga ni person; and
sa ti on m em be rs in
to a unified
M an ag em en t. It is
th e pr oc es s of pl an ni
of or ga ni za tio n m em ng , or ga ni si ng , le ad
be rs an d the us e of in g an d co nt ro lli ng
ce rt ai n go al s. ot he r or ga ni za tio na the efforts
l re so ur ce s in or de
r to achieve
A dm in is tr at io n. It
refers to an ov er al l
w ith th e de te rm in at control of an en te rp
io n of ov er al l co rp ri se w hi ch is m ai nl
co nc en tr at es on th e or at e objectives: po y concerned
co or di na tio n of fin )ic ie s an d m as te r strate
of ad m in is tr at io n ar an ce , pr od uc tio n, di gies and it
e le gi sl at iv e an d la rg st ri bu tio n an d sa le
st ru ct ur e. el y de te rm in at iv e an s. T he function
d it fr am es organiza
tion~l climate
D iff er en ce an d R
el at io ns hi p am on
g M an ag em en t,
A dm in is tr at io n
■ Ad m in is tr at io n de an d Organization
te rm in es th e ob je ct iv
ou t th es e po lic ies to es an d po lic ie s of th
ac hi ev e ob je ct iv es of e en te rp ris e, M an ag
th e en te rp ris e. em ent carries
■ Fo r Ad m in is tr at io n
and M an ag em
· e an d h' · k en t to fu nc tio ns ef fe ct iv el y, th er e m us t
o f t h e en te rp ns
t 1s 1s no w n as O be pr op er structuring
te rm ed th e ke ys to ne rg an iz at io n (s tr uc tu
on w hi ch th e en tir e re ). Orgam·zat1·0n has been
■ Ad m in is tr at io n gi ve s pr st ru ct ur e of an y en te rp ris e is ba se d.
op er direction~ it is
ex ec ut es ~ it is an ex a di re ct in g fu nc tio
ec ut io n fu nc tio n an n. M an ag em en t _Pro
ac co m pl is hi ng co m pa d O rg an iz at io n is pe;~
ny ob je ct iv es in a te an ef fe ct iv e machinery
In b . f . am sp iri t.
ne it may be ·
fr am ew or k of an or sa id th at M an ag em en t ca rr ie s ou t th
ga ni za tio n. e po lic ie s of· Adm10 · ·
1stratio·
n th1·ough the
PRINCIPLES OF MANAGEMENT

We give below the main di fferences between Management and Administration :

Point of Difference Administration Management

Type of work Laying down of objec tives a nd policies Implementation of policies
Level of authority Top level of manage ment Executive fun ction
Decision-making Administrative decisions influenced by Executive decision influenced by values,
public opinion and government policies opinions and beliefs of managers
State of per fo rmers Administrati ve group consists of owners Executive group consists of paid employees
Use Where economic pe rformance is NOT the Used in business organi z ation s where
main goal as in government, educational , economic gain is one of the main motives
religious, military and other social
organisations

- 1.4. PRINCIPLES OF MANAGEMENT

Large efforts have been made in the later nineteenth and in the twentieth century to establish
universal generalised principles of management. Examples of these principles are "no man should
work under two bosses". Henry Foyal a French industrialist, has large contribution to this school of
thought. Some of the important concepts developed by Foyal in this school are mentioned below in
brief :

1. Division of Work
It promotes efficiency, because it permits the work to be executed in limited space of area.
Division or work permits all the work to be performed more effectively.

2. Authority and Responsibility

Authority and responsibility always go together. The right and power to give any work a good
performance.

3. Discipline
It means obedience, application, energy and respect. There are many examples that poor
performance is due to the Jack of these four mentioned factors or say discipline.

4. Unity of Common
. A subordinate should take orders from only the superior. If not, then according to Foy al "authority
is undermined, discipline is in jeopardy, order disturbed and stability threatened."

S. Unity of Direction
According to Foyal "each manageme nt objective should have only one head and one plan."
6
· Subordination of Individual Interest to General Interest
Means th at the interest of the organisati.on is much before the interest of individual.
7
· Remuneration of Personnel
Payment to
wor kers should be fair
•
and some proper method should be ad op te d ·
 A TEXTBO OK OF INDUST RIAL MANAG EMENT

8. Centra lizatio n
. . . •
Accordmg to this pnnc1p le, there should be one cen t1·al point in the organis ation which have
power to control overall work.
9. Scalar Chain
Managers may· be regarded as a ch.am.
· of · rs w h. h should be an unbrok en line of authority
superw tc
and comma nd through all levels.
10. Order means
"A place for everyone and everyone in his place."
11. Equity
Kindliness and justice on the part of manage ment create loyalty and devotio n among
employ ees.
12. Stabil ity
Efficiency can be achieved by having stable workfo rce.
13. Initiat ive
To have success, plans should be well made before starting the actual work.

14. Esprit de Corps {Team Spirit)

It is the concep t of "Union is Strengt h".

1.5. FUNC TIONS OF MANA GEME NT

Various functio n s of manage ment are:
1. Foreca sting 2. Plannin g
3. Organi sing 4. Directi ng
5. Motiva ting 6. Co-ord inating
7 . Contro lling 8. Comm unicati on
9. Leader ship l 0. Decisi on-mak ing

1. Forec asting
As soon as an idea comes in the mind for manufa cturing , an attemp t is made to
assess possible
quantit ies, prices etc. Foreca sting is concer ned with the estima tion of quantit ies,
the sales forecast
(i s same as produc tion forecas t), cost, finance proble ms , capital expend iture,
profit or loss etc.
The n an alterna tive course of action is a lso consid ered. After selecti ng the most
profita ble course of
action, plannin g is started .

2. Plann ing
Plannin g means "thinki ng before doing" . Before actual work is started , it is
.1s to
· b e produc decided that what
ed, how much 1s · to be produc
ed, how to be produc ed, when to be pro d. uc~d and whO of
are to produc e it etc. The plannin g should aim at elimin ation of wastag e of
matena l, idle_ness d
m e n , machin ery and capital . In pla nning, policie s a nd objecti ves, progra mme 1
of produc tion ai
method s of produc tion e tc ., are decide d before hand.
PRINCIPLES OF MANAGEMENT g
3. Organising
When complete planning is done the next step is to arrange the material, money and man, for
actual execution or manufacture. This function consists of material organisation and human
organisation.

4. Directing
It means the system of directing the plan into operation. Only giving orders is not directing.
The person, who directs must have dynamic leadership and must guide the subordinates. The
instructions must be simple, clear, complete and reasonable and as far as possible in writing. The staff
should be made conversant with the standard operating procedures.

5. Motivating
Suppose a person is highly capable, physically strong and technically well qualified, but if he is
not willing to work hard, his output will be much less. So the function of motivating is to find out
the motives of work in a man and then he should be encouraged to do work by keeping his moral
high. Motivation is the skill of manager and linked with coordination or co·- operation.

6. Co-ordination
In an enterprise, there may be large number of workers, all engaged with the object of producing
a particular product. This ·is the task of co-ordination to integrate and harmonise them to achieve a
common objective. This is achieved by the skill of manager or supervisor etc.

7. Controlling
This function of the management is to see that other functions are being performed perfectly
alright. So the controlling means to match actual performance with the plans and to point out
defective work, to rectify them and to prevent recurrence. For the measurement of performance
some standards must be laid down. Some of the controls are-Quality control, Cost control, Material
control and Production control etc.

8. Communication
This function transmits the informations and instructions to the concerned parties, i.e., employees,
customers, suppliers, shareholders and to general public. Without this there are chances of mistrust,
fear etc. , and therefore, management must stress on better communication system.
The co.m munication must include the acceptance of good ideas coming from the persons who
are directly in touch with practical use. Therefore, for sound communication, joint consultations
and works committees must be formed for free exchange of views.

9. Leadership

All the managers are supposed to have the quality of leadership, as they are the leaders of the
concern. In this reference, much have been dealt in Chapter 5 of the book.

lO. Decision-making
Much stress is now being given to this aspect. This is the most important function of the
management · As · . .
managers are required to take dec1s1ons very frequently, and the e ffi1c1·ency o f the
concern, loss prof1t ff . . . d t be
.d . ' etc. , are a ected by these decisions, great amount of attent10n 1s require o
pa1 to this function.
 II A TEXTBOOK OF INDUSTRIAL MANAGEMENT

1.6. MANAGEMENT BY OBJECTIVES (M.B.0.)

Manao0 ement by objectives is a style of managing ·
an 10 ° ·oanisation which emphasises the
.f. .
achievements of result expressed m terms of ob'Jecll· ves. The obJ. ectives must be spec1 1c, time
.

· · · tive
· .
bound, reahst1 c, and qualita or measurable. Th.1s concep t- 1· s ~a
o 1·nino importance smce last two
o
decades as a style of management to improve business results.

Advantages of Management by Objectives

(i) M.B.O . keeps a constant watch over company objectives/tar
get.
( ii) It is easy to understand by the persons who are to perform
the task.
(iii) It motivates the people because they work on the objectives
decided with their own consent.
(iv) It provides a better co-ordination among various departments of the
organisation.
(v) It identifies the point where more emphasis is to be given.
(vi) It leads to a better understanding between the superiors and the subord
inates.
Reviews

j) At the end of each quarter or any other period mutually decided upon, a review
held between the job holder and his boss to assess the performance toward
mutually. Thus the manager reviews his own performance alongwith his boss
towards the results . The meeting helps (i) in ascertaining the areas where
meeting is to be
s the targets agreed
to measure the progress
boss should provide
additional facilities or helps him in solving his problems, and (ii) to analyse
the causes which had
been responsible for managers not achieving the target and remedial actions
to be taken.
Annual review meetings are held to consider overall performance of the manag
er and to prepare
the objectives for next year. The reviews thus provide the opportunity to judge
manager's strength
and weakness and also his potential for further progress, thus the training
and development needs
are worked out.

Problems in the Approach of Management by Objectives

Although it is an integral approach for the fulfillment of the overall objecti
ves, but there are
many difficulties in formulating and implementing management by object
ives. Some of these
problem s are listed below :
1. Mis-direction by the Boss. The whole process of management
by objectives is based on
pleasing the boss, therefore, sometimes the interest of the enterprise and the
self-interest of
the boss pull in opposite directions.
2. Different angle of vision. Some business is seen from different angles of
vision by various
levels of management. Each discipline of management (production, fi nance,
marketing,
personnel etc.) will view the business in the perspective of its own activiti
es.
3. Decentralisation of decision making powers and delegation of author
ity. Management
by objectives necess itates decentralisation of decision making powers and
delegation of
authority so as to fulfil the objectives. Too much decentra-lisation is also
problematic.
4. Professional specialisation. More and more specialisation is leading
towards more and
more departm entalisation, and creates problems of integration of various
efforts. Hence
functional manager measures his performance by his own professional criteria
, instead of
measuring his contribution to the enterpr ise.
 PRINCIPLES OF MANAG EMENT g
are not allowed for
5. Lack of financial benefi~s. If the reward , promo tion or increments
ance cannot be
go~d p_erfonnance then with the passag e of time consist ent good perform
marnta rned.
ves, manager
6. Self-cont~ol through management. In the system of manag ement by objecti
that is prescribed.
contr~ls_ hrs o~'. n perform ance. This self-co ntrol, means desire to do the best
ations in distorted
But difficu lty 1s that the manag ers may put up the datas and other inform
the enterpr ise by
way to show good perform ance on papers only. This abuse may harm
managers.
demor alising manag ement and by serious ly lowerin g the effecti veness of

1. 7. DEVELOPMENT OF INDUSTRIAL MANAGEMENT

it is found that the
By lookin g into the histori cal backgr ound of the industr ial manag ement,
old. The worksh op type
relationship of the worker s and manag ement is just more than one century
revolu tion. Slowly and
of industry was conver ted into moder n factory system by the industr ial
ement on scienti fic
slowly the indust ry was organi sed into large group requiri ng the manag
concep t of owner ship of
lines. The growth of Joint Stock Compa ny brough t a big change in the
numbe r of share holder s
the industr y. Owner ship spread on an ever-in creasin g base and the
n in manag ement . One
increas ed. The burden of the respon sibiliti es has caused specia lisatio
ing, financ ing, operat ing
person cannot be topmo st expert in all the indust rial functio ns like design
re, is being shared by
plants , purcha sing, selling , accoun ting and so on. Manag ement, therefo
based on economy of the
technic al and non- techni cal men. D ecision s of the management must be
industry.
Taylor. Mr Taylor did
The develo pment of J.M. was also done by industr ial engine er F.W.
ments of indust rial
many experi ments and brough t the J.M. on the scienti fic lines . The require
manag ement are given below :
(i) On the basis of time and motion study it was sugges ted that the
time taken to do given job
should be calcula ted. This will standa rdise the output of each worker.
other and to be done by
(ii) The execut ion and planni ng works should be separa ted from each
differe nt person s.
(iii) The workers should be taught about the best ways of doing a work.
(iv) Suitab le incenti ves should be given to the worker s for increa3
ing the output s.

(v) A good wage system should be adopte d for increas ing the efficie
ncy of worker s.

( vi) A system atic use should be made of the record ed experi ence
of the manag ement.

(vii) There should be proper selecti on and trainin g of the worker

s for differe nt jobs.

ed the manag ement into follow in g

Anoth er indust rial engin eer analys ed and c lassifi
catego ries :
( 1) Technical Functi ons
(2 ) Financial Functi ons
(3 ) Commercial Functi ons
(4 ) Security Functi ons
(S) Accounting Functi ons
( 6 ) Manageri al Functi ons.
_j
 1

A TEXTBOO K OF INDUSTR IAL MANAGE MENT

Manag ement of Men, Materi als and Machin es

The success of an organisa tion depends upon co-ordin ating the factors of producti on, viz., men,
s
material s and machine s. In fact, a good organiza tion differs from the sick one in that it co-relate
the factors of producti on efficient ly and effective ly.
The main aim of proper managem ent of men, material s and machine s is to control the cost of
product in order to be able to face market competi tion and earn suitable profit.
1. Manage ment of Men: Men constitu te the main factor in an industria l activity. No managem ent
It is,
can achieve its aims and objectiv es without hard working , sincere and dynamic workers .
tion.
therefor e, very essential that workers must be properly handled and motivate d in an organisa
The proper managem ent of men ensures the economi cal availabi lity and utilizati on of right
at
type of men (of proper qualific ation, experien ce and suitable behavio ur), in right number,
them for
appropr iate or right time and place, for different jobs and maintain s a proper record about
etc.
future referenc es and promotio ns. It also provides healthy, working conditio ns and incentiv es,
is to
for better producti vity and a better job satisfact ion. The main aim of the manage ment of men
control the labour cost element of the cost of producti on.
The followin g points should be kept in view to keep the workers satisfied :
(i) The selection of the workers should be made by employi ng scientifi c methods .
(ii) Better working conditio ns should be created.
(iii) Scientifi c methods of producti on should be introduc ed. This will increase producti on and
reduce fatigue .
(iv) The workers should be ensured the security of job.
s
(v) Financia l (wages, bonus) and non-fina ncial (medica l, educatio n facilities etc.) incentive
should be provided .
(vi) Good chances of promoti on should be provided .
(vii) Effectiv e safety measure s _should be adopted to avoid accident s.
(viii) Good human relations should be maintain ed with the workers .
2. Manage ment of Materia ls. The manage ment of material s is an importa nt factor in the
industri al output. The proper selection and handling of material s helps the manage ment to achieve
the desired goal.
g
The proper manage ment of material s ensures the economi cal availabi lity of material (by purchasin
of
at the proper season and market) of right quality (through proper inspecti on and quality control
much more than
incomin g material s at every stage) in right quality (neither purchasi ng less or nor
use
requirem ent and allowanc es), at appropr iate time (by effecting the purchas e well in time before
of
and from a reliable supplier ) and place for econom ical utilizati on (by controll ing the causes
wastes, rejection s, thefts and pilfirag e, etc.) for differen t jobs. It also gets maintain ed proper
record about, their purchas e, receipt, issue, finished goods, wastage s, rejection s etc. for future
referenc e and control. ·
The followin g points should be kept in view in the managem ent of material s :
(i) The selection of the material should be scientifi c and rational.
(ii) The material s should be properly stored.
(iii) Proper methods should be adopted to avoid the wastage of material s.
(iv) The purchas e of material s should be on scientifi c lines.
(v) Continu ous availabi lity of material s to the industria l unit should be ensured.
-
PRINCIPLES OF MANAGEMENT

3. Management of Machines : This is an age of machine. Machines have tremendously increased

the rate of production, saving time and labour. The quality of product mainly depends upon the
type of machines being used. It is, therefore, very essential to manage the machines properly to face
competition and affect economy.
The proper management of machines ensures the economical availability (by purchase, hiring
or sparing from within the factory by proper scheduling, etc.) and economical utilization (with
proper speeds, feeds, etc.) of right type of tools and machinery (of proper rigidity, accuracy, etc.) in
•
right quantity, at the appropriate time and place for different jobs. It also maintains proper record
about their use, performance, breakdowns, repairs and maintenance etc. for future reference and
control. It also ensures safety measures by providing guards on machines, precautions against theft,
etc., and proper training and education to the men in these regards.
The following points should be kept in view in the management of machines :
(i) The proper selection of machines should be made.
(ii) Idle and obsolete machines should be dispensed with.
(iii) The machines should be provided will protective devices.
(iv) Due consideration to various factors (such as cost of product) should be given while replacing
an old machine by the new modern one.
(v) Frequent checks on the performance of the machines should be made.

1..8. INDUSTRIAL ORGANISATION

Organisation is the machinery which establishes the co-ordination between administration and
management.
Organisation combines the various people working together in a factory. It brings the various
factors of production into the most effective co-operation.

1..9. NECESSITY OF INDUSTRIAL OR-GANISATION

The industri al activity demands that each and every function should be performed in a systematic
and organi sed method. Efficiency of the plant depends upon the organisation structure.
The necessity for a good industrial organisation is due to the following reasons.

(i) Allotment of Work

. . ~rganisation establishes the pattern of relationship by giving duties and responsibilities to an
md~vidual or group. Work should be distributed carefully among the employees on the basis of
th eir abi lity and experience. By fixing the responsibility,
speed of work and discipline increases.

(ii) Communication
Ord
~rs are to be passes from top to bottom. A good organisation devises the system which
commumcates the or ders, messages, comp lamts
· ·
etc., between various levels of management.
{iii) Co-ordination
Good ind · . .
achieve com US tnal orgamsatton co-ordinates and controls the activities of individuals or groups to
mon goals of the industry.
-
m A TEXTBOOK OF INDUSTRIAL MAN
AGEMENT
liv) Complexity of Industry
Modern industries have grown quite
bid in size and a large number of wor
For this a large number of departments k are to be performed.
are required which can be governed
good industrial organisation. and utilised only by a

lv) Competition in the Market

Tough competition is to be faced in
the market by the industry. Industry
control the activities in such a manner organisation should
that goods produced should be of goo
d quality and low priced.
lvi) Industrial Peace
Various categories of workers are wor
king in an industry and peaceful rela
among them and between workers tion must exist
and management. Good organisation
problems of workers and remove other wil l solv e quickly the
causes which can spoil industrial peace.
is a must for more production . Peaceful atmosphere

(vii) Economical Necessity

Good organisation will remove all the
unwanted and wasteful expenditures
Economical methods of production are of the industry.
to be adopted, cheaper raw materials
overhead costs are to be minimised. to be purchased and

(viii) Maximum Production

Good industrial organisation must util
ise all the resources to the maximum.
men etc. should be utilised in such a Plants, machinery,
manner that maximum production is
good organisation should be able to avo ach ieved. In general a
id wastage of materials money and men
the labour problems, increase produc . It should minimise
tion and improve quality of production
.
1.1 0. REQUISITIES OF A GOOD
INDUSTRIAL ORGANISATION
The following are the requirements of
a good industrial organisation.
(i) The structure of organisation
should be easily understood by all the
(ii) Each and every employee
employees.
must know his duties and responsibilities
should be allowed to evade his respons in the factory . No body
ibility.
(iii) It should help in solving
the labour problems and help in promot
(iv) It should maintain discipli
ing the industrial peace.
ne.
( v) It should have a quick com
munication system from top to bottom
( vi) It should devise the means
and vice versa.
and methods for achieving the ecunom
( vii ) It should have a clear, effe
y.
ctive and practicable span of control.
(vii i) Jt should be able to co-
ordinate the activities of various departm
(ix ) It should be able to decreas
ents of the industry.
e the friction between staff members and
different departments.
1.1 0.1 . Industrial Situation and
itsNaturf>
The main object of a factory is to turn
the raw materials into finished product.
acti vity, the various factors like men, In this industrial
materials, machines and management
order to achieve the best results, thes play the pivotal role. In
e factors must be well coordin ated .
 PRINCIPLES OF MANAGEMENT

Thl' fo llowing typL's of peopk lll'L' gl'nl'rall y l'nund working in an industry :

m
(i) Unskilled workers : Such worh' rs do thl' 11wnu11 I work 111' cleanin g, sweeping etc. where
no skill is required.
(ii) Semi-skilled workers : They do such jobs when· hi gh sk ill is not required, <'.~ .. handling
machines.
(iii) Skilled workers : They have a specialised training and handle conventional and compl ex
machinery.
(i1·) Qualified personnel : They have spec ialised training or higher order and possess technical
competency. They can design and develop the machinery. Such persons are competent lo
supervise the work of skilled and semi-skilled workers.
( r ) Managerial Personnel : They have spec ialised tra in ing or manage ment and hold top
positions in an organisation. They arc ex perts in particulm· fi eld o r management (e .g .,
production, personnel. finance etc.) and are concerned with directing, planning and control.

1 .11. ORGANISATION CHART

It is the result of organiration design. It shows the following :
(i) The position and interrelation of deptts. of the industry.
(ii) The lines of contro l i. e., authority and responsibi lity of employees.
(iii) The names of the managers and the number of persons they supervise.
(iv) It can serve as a training device and as a guide for further expansion.

The following organisation chart shows the departments and function. The chart has been shown
in Fig. I. l.

MANAG ING DIRECTOR

EXECUTIVE
COMM ITTEE

I
SECRETARIAL
MARKETING MANUFAC-
AND LEGAL PERSONNEL
TUR ING
I
OFFICIAL
RECORDS SALES PURCHASING RECRUITMENT
I
CREDIT AND
COLLECTION SERVIC E CONTROL TRAINING
I
INSURANCE ADVERTISE- LABOUR
~ ND TAXES MENT ENGIN EERING RELATIONS

Fig. 1.1. Organisation chart.

 GEMENT
OF IND US TR IAL MANA PR
A rexr so OK

NISATION of
RE Of INDUSTRIAL ORGA ustrial
' . . t'on The structure of ind g1
RU CT U
1. 12 . TYPES AND ST . f industnal organ1 sa I .
manufactured an d the natur
e of w
enl typ ~s o d t be ing
Dif/erent induslries have.·-drffer of organisation, pro uc
tc
e
organisarion dep end s upon srz . are as i:i ollows •. . A
.sation
problellls being facedf. . d I.· I oroanr . S I r oro an isa tion) organisat10n.
Co111rnon 1ypes o rn us , ,a
o' . .
1
ry typ e org anrsatwn 01 ca a o
(A) Line, (or Milita
(B) Functional organisation. 5
.
(C ) Line and siaff organisation
e
1.1 2.1 . Line Orga nisation of ind ustria l org an isa tio n. It is also called Military typ
It is the earliest and the sim
plest type ental orgamsat10n.
· · ·1 r to tha t So me tim es it is also called departm
· · b · tes
11 a . , ly control over the subordina
oro0a11 that type of org1sanis111
1sa t10n eca use 1t
sat ion in wh ich superior employees direct tho nty
"It is pe no rs. Th e au
ly respo nsi ble for the ir per for mance to the commandrng su
who become entire
ttom" .
directly flows from top to bo
rity and responsibility. ups i.e., pro du cti on , distri
bution
There are direct lines of autho ide d ma inly into thr ee gro
div
All the industrial activities are sev era l sec tio ns an·d deptts. Ea ch de pa
rtm en t is
ther div ided int o
and finance. Each group is fur rtm en tal hea d. The head has full au tho rit y
in selection
nd ently by de pa
controlled and managed indepe mu lat e his own
terials and too ls, pro du cti on schemes etc. he will for for
of employees, purchase of ma of pro du cti on an d sal es. Head is fully res po ns ibl e
control, quali ty
standards of supervision and
department. tak es disciplinary
everything performed in his to the sub ord ina tes, assigns the duties an d
es ord er
. The i~mediate boss giv ·
act10n agamst them.
GENERAL
MAN GER

SALES
PRODUCTION SUPDT MANAGER
CHIEF
WORKS MANAGER
OFFICER

SALES
OFF/CE STAFF
STAFF

SHOP MANAGERS

FOREMAN FOREMAN

WORKERS WORKERS
WORKERS WORKERS
PRINCIPLES OF MANA GEME NT
He is controlling the various heads
The General Mana ger is the overall in-ch arge of the factory.
ger controls the shop managers and
of the departments. As shown in the chart (Fig. 1.2) works mana
en by shop managers for getting the
gives them orders for produ ction . Duties are assigned to forem
ers. Thus the authority flows from
work done. The foreman gets the work done from suitable work
m to top.
top to bottom and responsibility and accountability from botto

Adva ntag es

1. Co-o rdin ation with in the depa rtme nt

since they work unde r the direc t
Empl oyees of one depar tmen t co-op erate with each other
er efficiency and smoo th runni ng of
supervision of the head of the department. This results in great
the work in the department.
2. Quic k deci sion s
ions are taken very quick ly and
The planning and policies are framed by individuals so the decis
time is not wasted.
3. Quic k com mun icati ons
confusion. The decis ions of the
There exists a clear chann el of comm unica tion witho ut any
possible time. The orders, instructions,
high command are conveyed to the lower level in the minimum
suggestions and complaints are passed quickly.
4. Indu stria l peac e and disc iplin e
resulting in highe r· produ ction .
Line organisation is very stron g in main tainin g the discipline
the duties and respo nsibil ities of each
Good discipline is maintained withi n the depar tmen t since
employee are defined clearly.
5. Simp le and flexi ble
flexib le i.e., easy to expan d and
It is simpl e and easily under stood by the empl oyees . It is
be incre ased or decre ased.
contract which means the numb er of posts at any level can
6. Misc ellan eous
the empl oyees and indus try can be
It encourages speed y action. The faults and short comi ngs of
nality and abilit ies of the executives at
easily known. It is capab le of devel oping the all-ro und perso
the higher levels of authority.

Disadvantages
1 · Personal limit ation s
of qualities. But a single individual
The Head s have to posse ss all round know ledge and a numb er nd
of produ ction s, quali ty contr ol a
can~o~ be exper t simu ltane ously of desig ning, in meth ods
alised knowledge in every field. But
admmi stration . All the mode rn indus tries requi re topm ost speci
th efficiency. So this organisation is not
~ departmental heads can not do ·all the duties with utmo st
suitable for large scale and mode rn industries.
2
· Lacks spec ialis ation
- · - d k nowledge there is
·
It neglects th e use of know ledge of specialists. Due to lack of specih.a11seh Iibre in the absence
more wasta ge 0 f materials and manh ours. It requi res super vision of very 1g ca
of s . .
pec1ahsts.
 m
l
iEL_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
___ ....::A::.....:.T=E:.:XT-=-B=-O~O_K_O_F_I_N_D_
--,
U_S_T_R_IA_L_M_A_N_A
_G~E.;.:.M:.:.::__Et-4l
3. Ov er bu rd en in g of
ex ec ut iv es
It ov erl oa ds the ex ec uti
ve s as the y are alw ay s
an d tak ing all so rts of de bu sy wi th pla nn ing , sch
cis ion s. Th e los s ca us ed eduli_ng, purchasi_ng etc
by an y of th em is gr ea tly .
fe lt m the org an isa tio n,
4. Le ss ch an ce s of
re se ar ch an d im pr ov
em en t
Th e ma na ge rs do no t fin
d tim e fo r res ea rch an d
for pr og res s an d ec on om im pr ov em en t. Re se ar ch
y. Th e ma rk et ca n be co an d an aly si~ is a must
mp ete d on ly wi th ne w
mo de ls an d de sig ns .
5. La ck of co -o rd in
at io n be tw ee n de pa
rtm en ts
Th ere ma y be lac k of co
or din ati on be tw ee n dif fer
wa sta ge an d ine ffi cie nc y. en t de pa rtm en ts of th e
Th e jea lou sly an d no n- co in du str y res ult ing to
ca us e a gr ea t los s. op era tio n am on g the He
ad s of de pa rtm en ts can
6. M is ce lla ne ou s
(a ) It is no t su ita ble
fo r lar ge sc ale ind us tri es
(b ) It en co ur ag es dic .
tat
or ial wa y of wo rk ing .
(c) It is no t so ea sy to
fin d the rep lac em en t of
(d ) Ge ne ral ly the re are top ex ec uti ve s.
no pr ov isi on s fo r tra ini ng
(e) It ha s no me an s an d im pr ov em en t of the
of rew ard ing the go od wo em plo ye es .
rk ers .
Ap pl ica tio ns
Li ne or ga nis ati on is su ita
ble fo r the fo llo wi ng ind
(i) Fo r sm all ind us tri us tri es :
es wh ere su bo rd ina tes an
(ii ) Fo r co nti nu ou s an d op era tio na l sta ff are lim
d au tom ati c ind us tri es su ite d.
(ii i) W he re lab ou r pr ch as pa pe r, su ga r, tex til
ob lem s are ea sy to be so es , an d oil ref ini ng .
lve d.
1. 12 .2 . Fu nc tio na l
Or ga ni sa tio n
Th e ma jor dr aw ba ck of
lin e or ga nis ati on is to
ma na ge me nt lev el. Th e fin d all ro un d pe rso ns
He ad s of the de pa rtm en qu ali fie d to wo rk at
pr od uc tio n, ma ter ial ha nd ts ca nn ot pe rfo rm all the fu nc
lin g, co ntr ol of lab ou r, tio ns lik e co ntr ol of
F.W. Ta ylo r su gg es ted the su pe rv isi on , ins pe cti on
arid sa les etc .
fun cti on al or ga nis ati on in
to the fu nc tio n pe rfo rm wh ich the du tie s are to be
ed . Ea ch fu nc tio n is to as sig ne d according
field. In ste ad of ha vin g be co ntr oll ed by on e sp
on e su pe rio r as in lin e or ec ial ist of the co nc ern ed
of sp ec ial ist s to co ntr ol ga nis ati on it wa s su gg es
the wo rk ers in va rio us ted by Ta ylo r fo r a group
cle ric al an d of fic e wo rk ac tiv iti es of the ind us try
fro m the pr od uc tio n wo . Ta yl or se pa rat ed the
rk .
Th e pr inc ipl e of sp ec ial
isa tio n is us ed an d ea ch
ex pe rt in his fie ld. ex ec uti ve of his fu nc tio
n be co me s topmo st
Th us on e ex ec uti ve ma y
be in- ch arg e of pr od uc tio
the thi rd of sa les an d fo ns , an oth er of rep air s an
ur th ma y be of fin an ce s d ma int en an ce while
It sh ou ld be no ted fro m etc .
the ch art tha t ea ch wo rk
ea ch fo rem an is res po ns er is res po ns ibl e to ea ch
ibl e to each of the ex ec for em an . Similarly
Th e sp ec ial ist of on e fu uti ve .
nc tio n be ars no res po ns
(sp ec ial ist ) ca n loo k aft ibi lit y fo r oth er fun cti on
er wi th gr ea ter ab ili ty, co s. Th e fun cti on al head
lin e or ga ni sa tio n. nf ide nc e an d sk ill tha n the
de pa rtm en t he ad in the
 PRINCIPLES OF MANAGEMENT IQ
GENERAL MANAGER

FOREMAN FOREMAN FOREMAN FOREMAN

WORKERS

Fig. 1.3. Functional organisation.

Advantage s
1. Specialisa tion
The services of specialists are utilized. Specialists are experts in their own fi eld. Since every
work of industry is under the guidance of experts so the efficiency increases. The experts control
the fun ctions with great confidence.
2. Quick training of workers
It conveys specific knowledge and guidance to each workman through experts, so the workers
are quickly trained.
3. Scope for research and growth of Industry
Research and development is continuously required in the industry. The specialists and experts
can invent and improve the existing product.
4. Expert guidance reduces the accidents and wastages of materials etc.
5. Since each foreman is responsible for one function, he can perform his duty in a better way.
6. It fully utilizes the principle of di vision ·of Jabour by keeping down to a minimum the work, that
each man has to perform.
Disadvanta ges
1 · Lack of co-ordinat ion
th
. Co-ordination of the efforts of the various foremen is difficult. Similarly it can lack e co-
ordmation of the van•ous departments. This .
. effects the product10n.
2 · Lack of discipline
. . 1·me b ecause each worker 1s
. . d1sc1p
It is difficult to mamtam . respons1'ble to each foreman. There
.
are a number of executives. f • · and c lashes of authonty
of equal rank so there are chances of n ct10n
among them · This creates m- . 1·me and t h e team spm
. d'1sc1p . 1ost.
. .t 1s
m A TEX TBO OK OF IND UST RIA
L MANAGEMEtft
3. Ch anc es of esc ap ing res
po ns ibi lity
It is difficult to fix the responsibility
to any one for em an, if som eth ing
goe s wro ng.
---
4. Co nfu sio n
The workers are always under confus
ion abo ut the authority and act ivit y
makes industrial relationship more com of eac h for em an ..This
plex.
5. Mis cel lan eo us
The workers cannot utilize their init
iative and tale nt bec aus e the y are
In the executives, the all-round capabi not giv en opportunity.
lities cannot be dev elo ped .
Due to these disadvantages, this organi
sation is not use d in the se day s. Bu
used in the modern industries. t its mo dif ied form is

1.1 2.3 . Line and Sta ff Org ani

sat ion
SHARE HOLDERS

BOARD OF DIRECTOR

~A NA GI NG DIR ECT OR
M. D.
CHIEF ACCOUNT
OFFICER

COMPANY SEC RET ARY

SALES MANAGER GE AL MAN AGE R

ENG INEE R
PERSONNEL
MANAGER
PRO DUC TION
COST ACCOUNTANT ENG INEE R .

ESTIMATOR
PURCHASE

INSTIMATOR
WORKER
TRA NSP ORT MANAGER

RATE FIXE R
STORE KEEPER

MAN INTE NAN CE

FOR EMA N

WOR KER S
Fig . 1.4 . Lin e and staf f organisati WO RKE RS
on.
PRINCIPLES OF MANAGEMENT

This is the combination of Line Organisation and Functional Organisation. As shown in the
chart. Line is the middle portion in which authority flows from top to bottom directly. It executes
the policies and concentrates on manufacturing work. The staff which consists of specialists and
experts are added at various levels of lines. The staff is responsible for all the design work, planning
and policy making.
The line executives like works manager, shop manager, keep the supervisory authority and
control over the work of their subordinates. They maintain the discipline in the industry and complete
the production targets. The staff executives do the specialised work and give the advice to the line
executi ves.
The general manager who holds the key position is helped by a committee of experts (Staff)
who possess wide knowledge both the theoretical and practical. The advice of the staff is given top
most importance by the executives.

Advantages

1. Combination of good points

This organisation combines the good points offered by line organisation as wel_l as functional
organisation.
2. Growth of industry
There are good chances for growth and control of industry. Because the work of the industry
are divided systematically, the departmental managers have enough time to organise, control and
supervise the productive activities.
3. Discipline and control
Discipline is a must for production. This organisation maintains more discipline than functional
organi sation.

4. Specialised knowledge
Advice from specialist staff executives is fully utilized.
5. Miscellaneou s
There is less wastage of material, manhours, and machine hours. The quality of product is
improved. There is no confusion, as exists in the functional organisation.

~isadvantages

1 · Chances of confusion

Line and staff members may get confusions in case functions are not clear. Friction and jealousies
between Ii d .
ne an staff members are harmful for the mdustry.
2. Limitation of experts
·
The valuabl e suggestions ·
• s of the staff may be ignoredb Y th e 1·me executives.
and recommendat10n
3. Increase ·,n
cost
Product co t . . .
s Will increase because of high salaries of staff executives.
 AGE MENT
STR IA L M A N PRI~
O F IN D U
A TE XTBOOK
The
a k in g lakes e tc
e c is io n m
m c e ll a n eous 1h e v a ri o us m e m b e
rs o f 1hc c
om m il'lec . D
pre
4 . M is ; ng
he friction 1111 0
T h e re 11111y lin e o rg a n
isa tion .
is in
f/wn w h at a n is ation
m o re li m e a n is a ti on m p e ti ti o n th e o rg
O rg si n g c o ation
e r n In d u s tr ia l o n . D u e lo in c re a s h o w s th e o rg a nis
o d rg a nis a ti ig . 1.5 w ith
1 .1 2 .4 . M f L in c an d st a ff o b es ! re s ult s . T h e F u ti v es m ay change f,
d form o e xe c
II is mo d if ie r g e llin g th u m be r o f e
so u n d fooling fo lo b e n o lc d lh a l n
p la c e d is
n is a ti o n . It
0 11
11111st b e o de rn o rg a
p ic a l m
char! o f a
ty a ti o n .
d si z e or th e o rg a n is S
an IRECTOR
th e n a tu re BOARD D

G
MANAG IN
R
DIRE CTO
NT
F ACCOU
- - - - , C H IE FICER
-. .- 1 G
ENERAL ,- O F
M M IT TE E ON 1 -- M A N AGER ._
C O ►,_ ~
PO LI CIES
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C O M M IT T
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TURING
MANUFAC
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METHOD

anisation.
o d e r n indus tria
l org
r, F a c to ry Manager and
Fig . 1 .5 . A m
Engin ee
S ale s M an age Chief r,
te sti n g . C hief Accounts
hief g and
M a n a g e r c ontrols the C re sp o n sib le for designin fa c to ry suptd, purchase
The General e r. T h e Chief Engin
eer is
a y. T h e works en
gineer,
nts O ffic tes th e p
Chief Accou a c c o u n ts and distribu id ed . B e lo
ry
w the fa cto e.
f f ir P. r ke
eps the ::i ctory mana
ger.
Pxnerts are
prov
,-., f functio
nal typ
m A TEXT BOOK OF INDU STRIA L MANA GEME Nl'

4. Misc ella neo us

Ther e may be fricti on amon g the vario us mem bers
of the comm ittee . Deci sion maki ng takes
---
more time than what is in line organ isatio n.

1.12 .4. Mod ern Indu stria l Org anis atio n

It is modi fied form of Line and staff organ isatio n. Due
to incre asing comp etitio n the organ isatio n
must be place d on soun d footi ng for getti ng the best
resul ts. The Fig. 1.5 show s the organ isatio n
chart of a typic al mode rn organ isatio n. It is to be noted
that numb er of exec utive s may chan ge with
the natur e and size of the organ isatio n.

BOAR D DIREC TORS

MANA GING
DIREC TOR

COMM ITTEE ON
GENE RAL POLIC IES
----...i
►,_
ENER
ANAG
t------ -l CHIEF ACCO UNT
OFFIC ER

ACCO UNTIN G

POWER PLANT

STORE
COMM ITTEE
ON
MANU FACTU RING
METH ODS !PACK ING! !TRAN SPOR T!

Fig. 1.5. A mode rn indus trial organ isatio n.

_The Gene ral M~n ager cont~ ols the_Chie~ Sales M~na
ger, Chie f Engi neer, Facto ry Manager and
Chie f Acco unts Offic er. The Chie f Engi neer 1s respo
nsibl e for desig ning and testin g. Chie f Acco unts
Offic er keep s the acco unts and distri butes the pay.
The works engin eer, facto ry suptd , purchase
depa rtme nt work unde r the facto ry mana ger.
The basic chara cteri stic of this is that a numb er
of expe rts are provi ded. Belo w the factorY
supe rinte nden t the organ isatio n is more of line type
wher eas abov e it, it is more of funct ional type-
PRINCIPLES OF MANA GEME NT
fD
ds, labour welfare
~~~re can be numb er of comm ittees like on general policies, manufacturing metho
effort and increasing the
Thi~ type of organ isatio n is quite effect ive in utilizi ng the human
production to the utmost.

1.13 . AUTHORITY AND RESPONSIBILITY

are explained as below :
These terms are extens ively used in the Industrial management which
Auth ority

It is the right (powe r) given to someb ody for directing and guidin
g the actions of the subordinate
for getting the work done from them.
ers to work in a desired
In other words it is right to comm and which compe ls the junior memb
way. The autho rity flows from top officer to subordinates.
In the Indus trial organ isatio n, the variou s contro lling office
rs are given the authority. The
his shop and the foreman in tum
works manag er orders the forem an to do the produ ction of job in
manag er and manag er both use
directs a worke r or group of worke rs to produ ce the same. Works
their autho rity for gettin g the work done.

Resp onsib ility

It is the accou ntabil ity for the perfor mance of assign ed duties
. In the industry, every body is
ered a respon sible worker. Thus
given some duty. If a worke r doing his duty well he will be consid
of duties.
every body is accou ntable to his super ior boss for the perfor mance

1.14 . DEPARTMENTATION

Introd uctio n
yees (persons) also increa ses.
(i) When the size of an enterp rise grows , the numb er of emplo
manag e directly. This
There is a limita tion on the numb er of perso ns an enterp rise can
not opt for the devic e of
limita tion restric ts the size of enterp rise if the enterp rise does
Depar tment ation (i. e., horizo ntal differ entiat ion).
(ii ) Depar tmentalizat ion is the proce ss of break ing down an
enterp rise into various depar tment s.
(iii ) Hence , depar tment ation or group ing of activi ties into
depar tment s is very essential becau se
by a manager; it would
it limits the numb er of subor dinate s (man power ) to be superv ised
er of subor dinate s by a
have otherw ise been very diffic ult to mana ge a team of large numb
be very limited.
single superi or and thus the size of the busin ess enterp rise would
l basis so that a team of person s
(iv) Identi fying and group ing of simila r activi ties on some logica
rise may be called
can be organ ized in order to attain the objec tives of the enterp
depar tment ation.
(v) A depar tment is a work group comb ined togeth er for perfor
ming certain fu_nctions of similar
parts 1s bro_a ~ly c~lled
nature. The proce ss of di vision of the enterp rise into differ ent
se of admm1strat1on.
depar tment ation or Depar tmentalizat ion and it is done for the purpo

Aims of Depa rtmen tation

(i) To group activi ties and perso nnel to make manag eable units.
 A TEXT BOO K OF INDU STRI AL
m MANAGEMENT
(ii) To brin g specialisation in the
perf orma nce of vario us-a ctivi ties.
(iii) To fix responsibility of the head
s of various depa rtme nts for the achi evem
ent of organisation
goals.
Adv anta ges of Dep artm enta tion
(i) Sinc e everyone knows precisely
his duties and authority, the effic ienc
increases y of the enterprise
.
(ii) As jobs are well-defined and
responsibilities well clarified, it is easy
for the resul to fix accountability
ts.
(iii) The departmental managers are
given opportunity to take initi ative and
skills. learn new managerial
(iv) Departmentation provides a basis
on which, top man agem ent can coor dina
of different departments. te the activities

Met hod s of Dep artm enta tion

Dep artm enta tion is the proc ess whic
h is used to grou p the activ ities of
various divisions for the purpose of effic the ente rpris e into
ient management.

BOARD OF DIRECTORS
I
GENERAL MANAGER

800 cc
CAR DIVISION 1000 cc
CAR DIVISION

PRODUCTION I ACCOUNTS
DEPARTMENT DEPARTMENT PRODUCTION I ACCOUNTS
DEPARTMENT DEPARTMENT
SALES PERSONNEL
DEPARTMENT DEPARTMENT SALES PERSONNEL
DEPARTMENT DEPARTMENT
Fig. 1.6. Departmentalization by prod
uct.
(a) Adv anta ge of Dep artm enta
lizat ion by Product
(i) Each prod uct divi sion coul d
be cons ider ed as a viab le prof it cent
purp oses . It is easie r to evaluate the perfo re for acco unta bilit y
rmance of each prod uct line. Unr,:ofit
lines may be dropped. Moreover, prop able prod uct
er attention can be given to each prod
(ii) The prob lem of coor dina tion uct.
as pres ent in depa rtme ntali zatio n by
here . func tion is remo ved
(iii) Clas sific ation by prod uct perm
its to make a maximum use of spec
skill , man ager ial know ledg e and capi ialization in technical
tal equipments.
(b) Defe ct of Dep artm enta liza
tion l;>y Product
It incr ease s man agem ent cost ; dupl
icate serv ice func tions are requ ired
oper ating leve ls of man agem ent. High both at the top and
cost of operation prevents the small and
from adop ting this basi s of class ifica medium-sized concerns
tion, particularly for creating majo r
units.

_...
PRINCIPLES OF MANAGEME NT

(c) Departme ntalization by Customers or Markets

m
(i) Sales is the exclusive field of its application.
(ii) To give individual attention to the diverse groups of buyers in the market, sales activities
are often split into several parts.
(iii) When the products are offered to an extensive market through numerous channels
and
outlets , it has the special merit of supplying goods according to the peculiar needs of
customers.

(d) Departme ntalization by Territory

(i) Market area is broken up into sales territories and a responsible executive is put in charge
of each territory.
(ii) The salesmen of each territory report to their regional or territorial manager who in tum
is
in communication with the sales manager.
Different methods of creating departments in an enterprise are discussed below :
(a) By Function
(i) Departmentalization by function is shown in Fig. 1.7, wherein the activities of the organisatio
n
are divided into the primary functions to be performed - manufactu ring, marketing ,
engineering, research and development, employee relations and finance.

BOARD OF DIRECTORS
I
GENERAL MANAGER

MANUFACTURING MARKETING ENGINEERING FINANCE R&D EMPLOYEE

DEPARTMENT DEPARTMENT DEPARTMENT DEPARTMENT DEPARTMENT RELATIONS
DEPARTMENT
Fig. 1.7. Departmentalisation of-function.
(ii) This arrangeme nt has the advantage of the specializat ion and concentrat ion of similar
activities within a departmental unit. It is the most prevalent form of department alization
and is seen not only in business enterprises but in hospitals, governmen t agencies and many
other kinds of organisations. ·
( iii) The major problem associated with this form is the coordinatio n of the specialised
activities.
(b) By Product
(i ) Product departmen talization has become increasing ly important, especially for large
,
complex organisations.
(ii ) Under this category, large organisatio ns, have major product divisions with substantial
autonomy.
( iii) In department alization by product, product lines are segregated and each product
line has
its own manager, its own manufactur ing, selling etc.
(iv) An automobile industry, for example, may department alise its activities as follows
:
(c) Departme ntalizatio n by Process
(i) The manufactu ring activities may be sub-divide d on the basis their process of production
.
Similar machines such as all lathes, all drilling machines, all shapers etc . are grouped
 A TEX TBO OK OF IND UST
RIA L MANAGEMl:.t-rt
.,
m .
into sepa rate sect ions , eac h k t at one plac e and use d for a dist inct ope rati on
ep on the -
job.
( ii\ Thi s arra nge men t wor k l . ht for J. ob ord er wor k and is uns uita ble for
, san g mas s prod ucti on
. . l
In actual practice, no smg e
th d of grou pino acti viti es is app .
O O
. .
stru ctur e with all its levels. In me lied thro ugh out the organisa tion
reality, a sing le orga niza tion may 11 Of h b
dep artm enta liza tion all the sam emp loy one or a t e ases of
e or vari ous hier arch ial leve ls.
1..1.5. RELATIONSHIP BETWE
EN INDIVIDUAL DEPARTMENT
All
S
the effo rts and resources help in
dete rmi ne the sco pe and sele ctio
pro duc t for whi ch various dep artm n of man ufac ture of some
ents of the orga nisa tion s are invo
to be dec ided i.e., wha t are to lved . The goa ls and targ ets are
be prod uced , wha t proc esses are
to be foll owe d, how thes e are
man ufac ture d, wha t role the stor
es deptt. will play, how the insp to be
ecti on and qua lity con trol to
imp lem ente d and how muc h mon
thly or year ly sale s targ et will be
be ? Onc e the goa ls are deci ded
the ene rgie s are dire cted tow ards
this . The func tion s of vari ous , all
dep tts. (e.g ., Pla nni ng Producti
Sto res, Insp ecti on and Sale s etc.
) are to be prop erly coo rdin ated on,
whi ch will help in the bes t utili
of reso urce s like men , mac hine
s and mat eria ls etc. The nec essa zation
ry con trol mea sure s are to be adop
to ens ure that all the func tion
s in various invo lved dep artm ents ted
are bein g pro perl y perf orm ed
the pro duc tion and sale s of the
prod ucts . Def icie ncy and defe cts over
are to be rem ove d and the work
to be pus hed thro ugh the diff eren
t dep artm ents . Rel atio nsh ip amo is
ng the vari ous dep artm ents shou
be mai ntai ned in suc h a way so
that the who le syst em sho uld wor ld
k like a wel l-oi led mac hine to
utm ost util izat ion of all the reso
urce s of the orga nisa tion in the the
bes t inte rest of it.

( DESCRIPTIVE QU ES TIO NS
j
1. Def ine Man agem ent and
write down the characteristics
of man agem ent. tS.B .T.E . Pb.
2. Wh at is meant by a prin
ciple of management ? Wh at is 1997] :
its prac tica l valu e ? Discuss.
3. Wh at the basic function s
of man agement ? tW.B . Board 1991]
4. In you r opin ion, is anyone lU.P . Board 1994]
of the fund amental function s
Why or why not ? of man age men t mos t important
?
5. Des crib e brie fly the con
cept of management by obje ctiv
6. Wh ich type of indu stria l es . llGNOU 1993]
organisation is suit able for mas
just ific atio n and discu ss mer s man ufac turi ng concern ? Give
its and demerits of that orga nisa
7. Giv e the di stin guis hing feat tion .
ures of diff erent types of indu
stria l orga nisa tion s.
8. Dra w an org ~nis · atto
· n c h art f tW.B . Board 1991l
or . a f acto ry prod ucin· g lath
es and emp loyi ng 15 00 person-
Di scu ss func tion s of each dep
artment.
9. Def ine Indu stria l orga nisa tS.B.T.E. WB 19961
tion . Give its types . Exp lain
tO. Def ine indu stria l man age each with thei r suitability.
men t and exp lain its dev elop
l 1. Exp lain the prin cipl es of men t.
functional orga nisa tion by cha
12 . Wh at are requ isite s of a good indu stria l rt, disc uss its merits and derneri1 5·
orga nisa tion ? [S.B .T.E . Biha r 1s9ll
l3. Exp lain with cha rt the \in~
and staf f ~rganisation . Disc uss
14 _ Dra w any Mo dern lndu stna \ orga nisa tion cha its merits .
rt and exp lain it.
15. Exp lain the diff eren ce
bet~e_en :
(a) Aut hor ity and respons1b1h
ty.
(b) Adm inis trat ion and Man
age men t.