(Course code: BUS 310)

Course Lecturer: Francis Sylvanus UDOH, Ph.D.

Unit 1

Evolution of Management Theory

Introduction

Management is as old as man. There are several theories and principles under which the
discipline operates. The principles guiding operations of managers have evolved over time.
The evolutionary or development of management is spread over several periods. Therefore, in
this unit, we shall be studying the evolutionary process of management as a discipline.

Pre-Industrial Period

In the pre-industrial period, management was practiced by various parts of the world
including Africa. The well-known kingdom of Ghana, Mali and Songhai are known to have
had a wonderful administrative system. Ghana’s judicial system, for example, was well
organised and managed and had both a lower court and a court of appeal. The army was very
efficient and well-disciplined that the King of Ghana can put up 200,000 warriors in the field
within a short notice.

The importance attached to commerce and craftsmanship was evidenced by the lucrative
trade between Ghana and other countries such as Spain, Morocco, and all North African
countries. The shops of the local craftsmen dotted the market places. Cloth weavers, potters
and shoemakers were abundant, and some employed more than two scores of men and
apprentices. What is said of Ghana can be said of Mali. Taxes were very efficiently collected
from businessmen and craftsmen, wood carvers, silversmiths, goldsmiths, copper smiths,
weavers, tanners and dyers. The King’s affairs were so well organised and so efficiently and
effectively run that it was devoid of bureaucracy. The Kings planned, organised, and
coordinated the international trade that existed between their kingdoms / countries and
foreign countries.

Another well documented, properly organised management system was that of the Egyptians
who carried out organised activities such as the construction of pyramids, irrigation projects

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and the building of canals. The Pharaohs and their viziers were the managers who planned,
organised and directed and controlled the work of the subordinates. Management of
enterprises was also practiced by the Babylonians, the Romans and the Greeks who were
engaged in commerce.

Industrial Revolution

This was the period of intellectual awakening when the scientific and technological
discoveries of Galileo, Watt, Gilbert and Harvey, and other prominent geniuses gave rise to
the industrial revolution. One of the major advantages of the industrial revolution is that it
gave birth to accelerated rate of resources accumulation and the growth of large scale
enterprises. It brought under one roof- hundreds of employees working together.

This created its own management problems for the entrepreneurs. It made the division of
labour, specialisation and delegation of responsibilities necessary as the owner-manager
could no longer supervise all his operations alone. The entrepreneur was forced by
competition to engage in crude performance of managerial functions. He still regarded his
employees as part of his “tools”. Employees resented the factory conditions and the meager
wages while employers fought back with “blacklist”, dismissal and threats. There were series
of pools, mergers and trusts as a way of adapting to the environment.

With this, emerged different concepts and principles on how to manage a business
effectively. These are conveniently divided here into four groups as listed below.

. (a) The scientific management movement;

. (b) The human relations school;

. (c) The administrative school, and

. (d) The modern approaches to management

The Scientific Management Movement

The scientific management school placed special emphasis upon production. Their main pre-
occupation was what to do in order to increase employee productivity so that the entrepreneur
could realise enough revenue. Scientific management was intended to bring about “a
complete mental revolution”, which must occur in the minds of the workmen and

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management.

1. Frederick Winston Taylor

Frederick W. Taylor is often referred to as the father of scientific management. According to

Taylor:

Scientific management is not any efficient device, nor a device of any kind for securing
efficiency; it is not a new system of figuring cost; it is not a new scheme of paying men, it is
not a piece work system, it is not a bonus system; it is not a premium system, it is not a
scheme for paying men; it is not holding a stopwatch on a man writing things down on him.

According to Taylor, the essence of scientific management is to:

(a) increase the output of the average employee, and

(b) improve the efficiency of management.

He opines that each worker is motivated by financial need and that his tendency for
restricting output is fear of replacement. To solve this, he advocates complete education of
employees to the fact that their need for more money and job security can only be met by
increased output at a low cost. He advocates placing workers on a piece work in order to
encourage them to earn more.

Taylor’s Principles of Management

Taylor’s principles of management can be summarized thus:

(a) the gathering, analysis and codification of all “rule of thumb” and data existing in
business;

(b) careful selection of employees and development of employees to enable them attain their
optimum potential;

(c) educating men on scientific method that has been tested and proved to be effective;

(d) management should reorganize these in order to carry out their duties properly.

Thus, Taylor insists that management should not rely on tradition or intuition, but rather
should subject every job to a critical analysis, inventive experiments and a thorough objective

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evaluation which he applied in the machine shop in order to attain best results. Taylor was
criticized for his lack of humanitarian concept.

2. Charles Babbage

One of the fore-runners of Frederick Taylor was Babbage who spent his life working on the
“Difference Engine”, a project considered to be a fore-runner of our modern data processing
equipment. His major contributions to the field of management include the underlisted.

(a) Division of labour and specialisation- he stressed the need for dividing and assigning
labour on the basis of skill. He used pin production to illustrate the benefits of division of
labour pointing out the savings in time and the acquisition of skill within a relatively short
time as a person concentrates on only one operation.

(b) Automatic operation- he stressed the need for replacing manual operations by automatic
machinery.

3. Frank Gilbreth

Gilbreth is known for his work on time and motion studies. His book Cheaper by the Dozen,
made him very popular. Gilbreth believed that there was one best way which was believed to
be the way that required the least motion.

He identified seventeen basic elements (listed below) in on-the-job motions which he called
“Therblings” (Gilbreth spelt backwards).

(1) Search

(2) Find

(3) Select

(4) Grasp

(5) Position

(6) Assemble

(7) Use

(8) Disassemble

(9) Inspect

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(10) Transport loaded, moving hand or body with a load

(11) Pre-position

(12) Release load

(13) Transport empty

(14) Wait-unavoidable

(15) Wait-avoidable

(16) Rest-necessary for overcoming fatigue, and

(17) Plan.

His other contribution was the development of a flow chart which highlighted the need for
breaking an operation into units and steps for different employees to perform.

Henri Fayol’s Emphasis on Administration

The first principles of management were advocated by a French engineer and geologist-
Henri Fayol. He isolated a set of principles that have been taught to other managers and
students of management over the years. The fourteen (14) principles of management cover all
aspects of management – human relations, scientific management as advocated by Babbage
and Taylor. Fayol’s principles of management are as listed below.

(1) Division of labour

(2) Authority

(3) Discipline

(4) Unity of command

(5) Unity of direction

(6) Subordination of the individual interest to the general interest

(7) Remuneration

(8) Centralisation

(9) Scalar chain (line authority)

(10) Order

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(11) Equity

(12) Stability of tenure of personnel

(13) Initiative

(14) Esprit de corps.

In the development of management concept over the years, no nation appears to have a
monopoly. Charles Babbage and Frederick W. Taylor are from the United States of America;
Robert Owen is Scottish, while George Elton Mayo is from Australia. They worked to find
the best way of increasing the productivity of workers and improving their economic, social
and psychological well-being.

3.3 Modern Approaches to Management

After a scholarly review of management concept over the years, Harold Koontz in his article
“The Management Theory Jungle” has classified the major “schools” of management into six
broad areas as shown below.

(1) The Management process

(2) Empirical school

(3) Human relations school

(4) Decision theory school

(5) Mathematical school

Unit 2

Management Functions and Behaviour

Introduction

There is no human endeavour that does not require proper management to make room for
proper functioning. All types of organisations (whether profit making or non-profit making),
government establishments, business enterprises, hospitals, cooperatives, churches, require
good management to function effectively.

Management is one of the most important human activities that permeate all organisations.
Whenever people work together for the attainment of a predetermined objective, there is a

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need for management that is charged with the responsibility of ensuring that the aims and
objectives of the organisation are realised. It is the manager's responsibility to ensure that
every member of the group contributes his/her best. To get people to put in their best, the
manager has to understand people, their emotional, physical and intellectual needs. He has to
appreciate that each member of the group has his own personal needs and aspirations and that
these are influenced by such factors as ethnic, social, political, economic and the
technological environment which he is part of.

Managers are people who are primarily responsible for the achievement of organisational
goals. Any organisation that fails to realize its objective often blames it on management. In
those enterprises that the stock-holders feel that they do not attain their objectives, there is a
tendency to blame it. on those responsible for piloting the affairs of the organisation
management. Thus, management is often accused of lack of initiative; ineptitude, misconduct
or are said to be unqualified and are called upon to resign. The manager is the individual to
provide the dynamic force or direction. He is the person in charge or expected to attain
results.

The manager does not spend all his time managing. He is like a football coach. He does not
play the game but directs the players on how to play. Like a vice-chancellor of a university,
he does not have to teach in the classroom but must plan admission, develop committees,
represent the university, have budgets and reports prepared and ensure that students are
properly housed.

Meaning of Management

Management is defined as "planning, organizing, leading and controlling". It can be more

scientifically defined as the co-ordination of all the resources of an organisation through the
process of planning, organising, directing, and controlling in order to attain organisational
objectives. Management is the guidance or direction of people towards organisational goals
or objectives. It can also be seen as the supervising, controlling and co- coordinating of
activity to attain optimum results with organisational resources.

Management as Art

According to C.C. Nwachukwu (1992:4):

Art is the imposition of a pattern, a vision of a whole, on many disparate parts so as to create

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a representation of that vision; art is an imposition of order on chaos. The artist has to have
not only the vision that he or she wants to communicate, but also skills or craft with which to
present the vision. This process entails choosing the correct art form, the correct techniques.
In good art, the result is a blending of vision and craft that involves the viewer, reader, or
listener without requiring that he separates the parts, in order to appreciate the whole.

Art requires technical skill, and conceptual ability. An artist must possess the know-how in
order to create a desired object. To be a successful or creative artist, one has to understand the
fundamental principles governing it. In the same manner, to be a successful manager, or top-
flight executive, one has to master the art of managing. When one sees management as an art,
one thinks of creative ability and special aptitude to design or effect a desired result.

There are special areas of management that are not subject to the rigours of science. The
manager, as a result, has to depend on past experience and judgement instead of depending
on any testable technical knowledge as is the case in engineering, physics or survey. In
special areas, as human behaviour, instances abound where the manager will rely on
experience collected over the years through practical experience. The application of this
knowledge to individual situation is seen as an art- for the acquisition is not subject to the
rigours of science.

Management as Science

Frederick W. Taylor is known as the father of scientific management. This title he earned by
his pioneering efforts in taking exception to the traditional approach to management that
tends to depend on intuition; past experiences or hunches. Scientific management uses the
methods of science in making decisions and evaluating its consequences. Science attempts
through systematic procedure to establish the relationships between variables and the
underlying principles. Management is science, when it employs systematic procedure or
scientific methods to obtain complete information about a problem under consideration; and
the solution is subjected to rigorous control procedures to ensure the correctness and establish
validity.

It must be observed that the two are not mutually exclusive, but complementary. A good
manager must know the concepts and principles of management (management science) and
also how to apply them in unique situations. A successful manager blends experience with
science in order to achieve a desired result. One decision could involve both science and art

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in order to attain total result desired. The ability to use both judiciously makes for a
successful manager.

Management as a System

The system approach to management encourages management to perceive the internal and
external environmental factors as an integrated whole. As a result of this system’s concept,
the manager views the physical, human, environmental and psychological facets of the
job as linking to form an integrated whole. An example of a system is the motor car. The
parts are assembled in a manner to produce a unified whole. Every system is made up of
subsystems. For the system to function effectively, the subsystems must function effectively.
In a general sense, the human being is a complex system made up of sub- systems such as the
circulatory system, the auditory system and so on. These sub-systems are inter-dependent.
When any of them fails to function effectively, the entire system experiences a severe
setback.

The system’s concept is often used in business to highlight the interrelationship between the
functional areas of management. These functional areas such as production, marketing,
finance, procurement and personnel could be seen as the subsystems. These functions must
be properly coordinated for the enterprise to attain its desired objectives. The function of the
manager has to do with managing the system. He is to create and define the objective of each
sub-system and integrate the subsystems. The success of a manager goes beyond the
"effective" management of any of the functional areas – (finance, marketing, or production).
He must not only strive to achieve the objectives of each of the functional areas, but also
attain integrated balanced company objectives. Failure to recognise this fact can make each
system pull in the opposite direction and a common objective may not be attained.

The interrelationship in a system can be demonstrated by a simple illustration. For the sales
department to meet delivery dates promised to customers, it has to rely on the production
target, the purchases department must order enough raw materials. For the purchases
department to order enough raw materials, the accounts department must make enough
money available- in time for the order to be placed and received on schedule.

The success of any system depends on the relationship between the system and its sub-
systems. In a business organisation, factors such as goal clarity authority relationships and the
structuring of the sub- systems could affect the performance of the entire system. The

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systems approach to management recognises that management system is a complex formal
system organised to functional effectively and efficiently to achieve a desired goal. Where the
system does not function as expected as a result of poor communication, personality clashes,
poor or lack of goal congruency, the entire organisation suffers.

Organizational Goals/Objectives

All organisations are purposive. They are established to accomplish an objective. Individuals
in an organisation work in order to help accomplish these objectives. These individuals wish
to accomplish their own goals through the organisation. When the goals of the individual and
the goals of the organisations are the same, we have goal congruency. An organisation’s goal
can be implicit and require explicit formulation before they can be realised. Goals can be
differentiated between official and operative goals. Official goals are mainly for “public
consumption”, while operative goals are those that are, in fact, pursued by the organisation
and this influences its operation. It could be the official goal of the Nigerian National
Petroleum Corporation to protect the environment while the company dumps pollutants into
rivers, streams and lakes. Here the official goal reflects societal expectations from it. In some
instances, the official goal and operative goals could be the same and only differ by the
degree of specificity.

Characteristics of Good Goals

Certain basic characteristics distinguish good goals from "wishes". Good goals must possess
the following qualities.

(a) They must be specific and clearly stated.

(b) Their achievement must be measurable or verifiable.

(c) They must be realistic.

(d) They must specify period of achievement.

(e) They must include intermediate targets or goals that will facilitate the attainment of the
major objectives.

(f) Objective must be modern and up to date.

(g) They must be ranked according to relative importance.

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Thus, a good objective is measurable, specific, verifiable and attainable.

Advantages of Organizational Objectives

The importance of organisational objective in a developing country can hardly be over

emphasised. As pointed out earlier, management personnel in developing countries are
young, inexperienced and often have a shallow concept of organisational principle. It is not
unusual for the owner not to have clearly stated objectives except "to maximise profit". In
public corporations, for example, their objectives are general- at best. Often one hears such
phrases as "make profit", "be self supporting" etc., and these objectives move from profit
making to social welfare redistribution. In civil service, the situation is worst. There are no
targets, no deadlines or definite expectations from management. It is important to highlight
the need for goals.

(i) Organisational goals help the organisation to orient itself to its environment. A
typical environment presents management with risks and opportunities. A good goal makes
the organisation while helping to exploit the opportunities to minimise the impact of risks.

(ii) Good organisational goals help in policy formulation and administration. All policy
issues such as marketing policy, production and purchasing policy, personnel policy and
financial policy are influenced by company objectives. If a pharmaceutical company wishes
to be a leader in rheumatic, muscular and neuralgic pain tablets and research, the personnel
policies and practices must provide for the recruitment of quality scientists for its research
work. As well, production policies must be highly imaginative and flexible to adapt to the
attainment of the objectives; and the financial policy must allow for adequate funds for
creative research and liberal remuneration to attract seasoned researchers and salesmen.

(iii) Clearly stated objectives help all sub-systems to pull in the same direction, thus
making for easy co-ordination of activities. Sales department and production department will
complement each other. Production will insist on quality products to reduce rejects and
returns; and, the sales department will not promise unrealistic delivery dates, or insist on
allowing discounts on high quality items. Advertising will stress quality and service- and not
price.

(iv) Clear objectives make for consistency and unity of purpose and direction. It prevents
management from stressing short-run gains at the expense of long-run company objectives.

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Objectives serve as motivators and provide a definite direction.

Unit 3

Decision-Making in Business

Introduction

In business, there are absolutely no right or wrong decisions but intelligent choices. What one
considers a right decision in a particular time frame may turn out to be an unintelligent
decision if the circumstances change. This is particularly true in developing countries where
most of the variables required for intelligent decision are lacking. In some industries, the total
production is unknown, the consumption pattern is not clear, the total population is a guess
work, supply of raw materials is influenced by political consideration and the lead time for
the supply of raw material is most unpredictable.

Decision-making is one of the most crucial activities of management. The necessity to decide
is the everyday preoccupation of management in all types of organisations, whether small
enterprises or multi-national corporations. The decisions that management has to take are
sometimes simple and in other instances, complex and overwhelming. A decision to increase
production in a particular industry can necessitate the employment of more labour, increase in
plant capacity, acquisition of more equipment, borrowing of money and the mastering of new
technological know-how.

Definition: A decision is the selection of alternative course of action from available

alternatives in order to achieve a given objective. The decision process is influenced by the
unique environment of the decision maker, his organisational position, available knowledge
and experience in decision- making. A decision is a choice aimed at achieving optimum
result in a given situation.

Decisions are made when a person finds himself in a situation where he must act and he is not
quite sure of the choice that will give the best result. A decision can be seen as a mental
process that forces us to analyse the situation in order to master it, or increase our knowledge
of the area in which decision is to be made. An intelligent decision is one which yields the
best intelligent response to a situation. Decisions aim at making things happen – in order to
achieve an objective. Absence of decision is a decision.

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Nature of Decision-Making

As pointed out earlier, decision-making presupposes the existence of alternatives. From these
alternatives, the decision maker selects the one that will yield the desired result. This entails
the existence of some criteria for measuring or comparing the desirability of the alternatives
in relation to the purpose.

Classification of Decision

Decision-making can be classified into three major groups:

- decision-making under certainty

- decision-making under risk

- decision-making under uncertainty.

(a) Decision-making under certainty

Certainty – it is assumed that there is a single-space, complete and accurate knowledge of the
consequence of each event.

A decision made with full knowledge of the occurrence of an event is said to be decision
under certainty. In this situation, the decision maker knows what the stated value of the pay-
off is expected to be. If, for instance, the value is N1.00, in making the decision one has to
select the alternative that gives the expected pay-off of N1.00. Assuming that a service
organisation wishes to determine the cheapest way of handling its security services and finds
out that:

(a) if it subcontracts security service, it would cost N7,000 per annum;

(b) if it handles its own security by hiring 4 security-men, it would cost N10,000 per annum;

(c) if it installs burglary proof and other security measures it would cost N12,000 per annum.

In this situation, it is easy to select plan (a), since it entails the lowest cost.

(b) Decision-making under risk

Uncertainty – the consequence of each choice cannot be defined by a correspondence

relationship even within a probabilistic framework.

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(c) Decision-making under uncertainty

Risk – it is assumed that accurate knowledge about the probability distribution of the
consequence of each alternative exists.

Stages in Decision-Making

Every decision-making process has some basic elements in order to be effective. They
include:

- the formulation of goal or goals

- mental process to acquire knowledge on the situation

- analysis to determine alternative course of action

- choice procedure

- implementation.

(a) Formulation of goals

For one to make a decision, one must have goals that one expects to achieve. The goals to be
achieved may be determined by the organisation and could aim at minimising cost or
maximising profit. In the case of the production manager, the decision at that level could be
to reduce rejects by 20 percent or increase average output by 10 percent.

(b) Acquire knowledge

A rational decision requires the decision maker to acquire a thorough understanding of the
problem in order to make an intelligent choice. This demands that the decision maker
saturates himself with facts about the situation. At this stage, he seeks information from
employees who have expert knowledge about the situation understudy. When vital decisions
are to be made, “brainstorming” is encouraged in order to avoid costly, hasty decisions. It is
advisable to hear both from those who are interested in the problem and those who are
opposed to it. The step is likened to a situation where a “car will not start” in the morning.
Why? What is the cause of the problem?

(c) Analysis to determine alternatives

The essence of analysis at this stage is to determine possible courses of action – the search
for alternatives. The number of alternative ways of solving the problem that could be thought
out depends on the effort expended by the decision maker in the search for alternatives. This

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is one of the crucial steps in rational decision-making. It involves the utilisation of the vital
information gathered through the process of defining the problem. The decision maker can
gain insight from experts and engage in creative logical reasoning. This will help to achieve
the objective with cost effectiveness in mind.

(d) Decision

Decision is the selection of the course of action believed by the decision maker to yield the
best result under the circumstances. The final selection is influenced by the decision maker’s
past experience, his value judgement, and the logical process that has been established and
followed in the previous steps (a) – (c) above.

It has to be pointed out that the selected solution may not necessarily be the most satisfactory
solution, but the most intelligent decision under the circumstance. This has often been called
satisficing. An entrepreneur may decide- in the circumstance, to select the alternative that
“minimises his risk or involves “minimum regret” or gives him optimum result in the short-
run. There is a tendency for Nigerian entrepreneurs to seek short-run instead of long-run
growth.

It is important at this stage to ask four vital questions:

(a) did I consider all possible alternatives that bear on the question?

(b) does the selected alternative contribute to the realisation of the intended objective?

(c) will the decision lead to the attainment of the preferred solution?

(d) is this alternative capable of implementation?

(e) Implementation

A decision-making process is not completed until it is implemented. The essence of any

decision is to secure action. If this stage is not properly carried out, the entire process is a
waste of time and resources. For some important decision to be implemented effectively, the
decision-maker has to seek and obtain the willingness of operation of all involved. He has to
“sell” the decision to the workforce. Factors involved in securing acceptance include effective
communication, motivating the employees into accepting the decision and pointing out the
advantages to be achieved, effective control of the process for the implementation of the

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decision and, promote timing of events to aid coordination.

Group Decision-Making

An organisation is not better than the people that make it up. The success or failure of an
organisation depends on the creativity of its human resources. Efficient and effective
utilisation of these people to make use of their intellectual abilities, in part, helps the growth
of the organisation. There is a popular saying that “two heads are better than one, even if they
are coconut heads. This illustrates the importance of participative decision-making.

One of the major problems encountered in retaining young university graduates in many
indigenous enterprises is the absence of participative decision-making. The entrepreneur is
reluctant to involve the young graduates in areas they believe they can contribute their best in
the organisation; whereas, employees like to be involved in decisions that affect the
organisation, especially those that affect them directly.

Decisions are expected to be made in a social environment. It is a situation in which each

participant contributes his ideas towards the realisation of a predetermined goal. No idea is
useless, no matter how stupid it sounds. In many instances, what some people call “stupid” or
“crazy” ideas are those that disagree with their own. There is a popular saying that “where the
people always agree, only one person is doing the thinking”. Group decision calls for varied
views- some optimistic and some pessimistic.

Unit 4

Planning

Introduction

Planning has been defined as one of the five major functions of management. However, since
planning is a bridge between the present and the future, it has been called the primary
management function. Planning is particularly important because of scarce resources and
uncertain environment with a fierce competition for these resources.

Planning is a decision-making activity requiring the process of ascertaining objectives and

deciding on activities to attain these objectives. It is also a process of preparing for change
and coping with uncertainty by formulating future courses of action. The basic purpose of
planning is to reduce the risk of uncertainties, and to initiate a coordinated effort within the
organisation for the purpose of organisational success. In this unit, you will be taken through

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the rudiments of planning so as to be able to understand what the topic is all about.

Planning Defined

The planning process has three characteristics (Boone, 1981). These are as listed below.

. Planning is anticipatory in nature. A decision must be made now as to what to do and

how, before it is actually done.

. Planning is a system of decisions. It involves a process of making decisions which will

define what is to be achieved in the future and the formulation of action plans for
achievement of goals.

. It is focused on desired future results. Planning is a means of ensuring that the important
organisational objectives are accomplished as and when desired.

The most comprehensive definition of planning is given by Cyril L. Hudson (1970), who
states that:

To plan is to produce a scheme for future action; to bring about ...... a deliberate attempt to
influence, exploit, bring about and control the nature, direction, extent, speed, and effects of
change. It may even attempt deliberately to create change, remembering always that change
(like decision) in any one sector will, some way, affect other sectors.

The Six P’s of Planning

They are as follows.

1. Purpose: An effective planning system requires a clear understanding of the organisation’

s purpose. What are the reasons for the organisation’ s existence? Is it to increase profit or
increase market share or generate more employment or introduce more products, and so on?
This purpose must be clear and elaborate.

2. Philosophy: Philosophy incorporates the fundamental beliefs as to how the organisation’s

purpose is to be achieved. For long-term survival and growth, a philosophy of ethical conduct
must be adopted. For example, General Motor’s philosophy is based upon profitability
through quality, service and ethical behaviour. IBM’s philosophy was to elevate the level of
the salesman to an executive, etc.

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3. Premise; This involves the strengths and weaknesses of the organisation and its
knowledge and assumptions about its environment. By forecasting and other methods, the
management can make some conclusions about the trends of the environment and by
knowing its own strengths and weaknesses it can deal with the changing environment in a
more intelligent way.

4. Policies: Policies are general guidelines or constraints that aid managerial thinking and
action. In a typical organisation, there are production policies, financial policies, accounting
policies, marketing policies, personnel policies; and these forms the basis for planning and
necessary operational actions.

5. Plans: Plans represent specific objectives and action statements. Objectives are the goals
to be met and the action statements are the means to achieve these ends. These plans guide us
step by step as to how to reach the objectives and also at what stage the progress is at a given
time.

6. Priorities: A particular organisational goal must be given a particular priority. Limited

resources of time, finances, materials etc., must be proportionally allotted to goals of priority.
The priorities will determine an appropriate allocation of resources. Prioritising goals will
determine what is relatively more important. A goal that is given higher priority will receive
more attention and more resources. For example, a research-oriented organisation will get
different priorities and resources than a profit-oriented organisation. Setting priorities for
goals will be established on the basis of philosophy and premises of the organisation as well
as social, political, and economic measures and value conflicts. In any case, such priorities
will affect the planning process.

Characteristics of Good Planning

A good plan can be identified by certain characteristics. Some of these characteristics are
given below.

. A good plan is based upon clear, well-defined and easily understood objectives. General
objectives like improving morale or increasing profits are ambiguous in nature and do
not leave enough room for specific steps and plans. If possible, objectives must be
quantified for the sake of simplicity.

. A good plan must be simple and comprehensive. It should be simple so that all employees

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 can grasp its significance and it can be easily put into operation. It should be detailed
enough so that it covers all aspects of the operations that are necessary to achieve
objectives.

. It should be well-balanced, but flexible. A good plan should be well-balanced so that the
existing resources are properly utilised for all functions; and that short-term gains are
not at the cost of long-term gains and vice-versa. Similarly, it should be flexible
enough to incorporate any changes in these resources, if necessary. Additionally, it
should be responsive to changed conditions so that if future events do not follow the
anticipation, the same plan can be modified.

. Every plan should be time-bound. Even though planning is an attempt to anticipate the
future, the time period allowed for achieving goals should be reasonable. Long-range
planning has more uncertainties built into it due to difficulty in correctly anticipating
events for a longer period of time. Hence, the period covered should be reasonable
and reasonably stable.

. Planning should be participatory- involving subordinates. Planning should not be an

exclusive responsibility of top management. Subordinates will not be responsible if a
plan is imposed upon them. Also, participation of subordinates generally ensures
sincere and serious effort on their part to make the plan successful.

. Planning is initiated by different managers of different divisions at different times. It is

necessary that a good plan should incorporate all these departments, maintaining
consistency, and unity of purpose at all times and focusing on the overall objective.

A good plan strives for optimal utility of physical as well as human resources in unison and
harmony. According to David W. Ewing (1967):

“planning is a two-sided affair. Planners may think only of the formal, economic, physical
and technical resources side when they develop a program. But if the human side is not
attended to properly, then chances are that the planning will not be successful”.

Benefits of Planning

The benefits of planning are as stated below.

19
. Planning gives managers a sense of purpose and direction. planning is future oriented, it
forces managers to look beyond the present. Also, it creates a unity of purpose, since
the objectives are formally expressed and the methods and procedures to obtain these
objectives clearly defined.

. Proper planning enhances motivation. If plans are properly communicated to all levels of
the organisation, then everyone can feel involved in carrying them out. When people
get involved, their sense of belonging increases, and thus, they are highly motivated.

. Planning provides a framework for decision-making. Knowing the organisational

objectives and the methods to achieve these objectives eliminates ambiguity in the
decision-making process. Also planning provides for feedback, periodic evaluation of
programs and indication for any deviation so that corrective action can be taken.
Hence, the decision-making process is made a little easier. Also, systematic planning
requires an understanding and evaluation of many variables that influence events;
hence, it is highly unlikely that an important variable would be overlooked which
could adversely affect either the decision process or the operation.

. Proper planning results in proper and effective utilisation of resources. Since planning
involves the identification of such resources for optimum utility, wastage is reduced
to the barest minimum. This will also reduce unproductive work, idle time for
workers, and downtime for machines, which would logically result in minimum cost
of operations.

. Since accurate forecasting of future events is an integral part of effective planning, it

reduces the elements of risk and uncertainty. Also, since planning is done in advance,
it prevents hasty judgements and haphazard decisions and results in disciplined
thinking.

. It improves the competitive strength of the company in two ways. First, since operations
are planned in advance, the company is able to take its time in shopping around for
best and competitive rates for raw materials, equipment and parts and for human
resources. Secondly, proper planning gives the company an advantage if it decides to
make changes in its line of products, or expansion in plant capacity or changes in

20
 methodology (McFarland) etc. Studies have shown that companies with formal
planning system have performed significantly better in the overall, than those with
informal planning or no planning (Krager, 1973).

. Formal planning forces managers to examine all areas of the organisation from all angles
and efficiently coordinate the activities of all these areas. Without this process, these
managers may ignore or overlook some critical aspect due to pressure of time
constraints or other factors, thus affecting the outcome of the efforts negatively
(Camilius, 1975).

Planning provides performance standards and standards for measuring the progress of the
organisation. Well-developed plans can aid the controlling process. By establishing advanced
warning of possible plan deviation, remedial action can be taken if these deviations occur.
Performance standards and performance appraisal methods assist in the development of
human potential and an equitable reward system. Thus, it can be a good training ground for
future managers and career-oriented executives.

Unit 5

Control

Introduction

Control is very important in any organisation. Control is one of the most important functions
of management- second perhaps, only to the function of decision-making. There is more to
control than mere measurement and reporting of activities. It is a dynamic process, requiring
deliberate and purposeful actions in order to ensure compliance with the plans and policies
previously developed.

When things go smoothly and as planned, they are under control. Self- control is a word we
are all very familiar with- which simply means that we discipline ourselves in such a manner
that we strictly adhere to our plans for our lives and do not deviate from it. Diet control
means controlling our input of food to a prescribed level in order to achieve a goal of
physical fitness. Any deviation would make the process to be out of control, thus affecting
the achievement of pre-determined goal.

Managerial Control

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The best-known definition of management control is given by Anthony (1965) who avers
that:

“It is the process by which managers assure that resources are obtained and used effectively
and efficiently in the accomplishment of the organisation’s objectives”.

Basically, the definition stresses that the function of control is to accomplish organisational
goals by implementing previously determined strategies and policies; so that whatever needs
to be done, is done properly. In other words, control maintains equilibrium between means
and ends or between efforts and output. It makes sure that the actual performance is in
conformity with the intended and planned performance leading towards achievement of
objectives. The process of controlling ensures that right things happen at the right time in the
right way and by the right people. The importance of control cannot be overemphasised. Its
significance is heightened specially because of the following factors which are common to all
organisational situations.

1. Size of business- as organisations grow in size and diversity, they become increasingly
complex to manage and hence the need for an efficient system of control which is required to
coordinate activities and accomplish integration.

2. Uncertainty- control forms a basis for future action. Today’s world of rapid and sometimes
unpredictable changes makes the future very uncertain. This makes planning very difficult.
Hence, control points are necessary to check the progress of activities and plans and make the
necessary and constructive adjustments so as to accommodate any environmental changes.

3. Decentralisation trends- the current trends in decentralisation have brought the decision-
making authority to lower level management while accountability for results remains with top
management cader. Controls serve the purpose of monitoring and ensuring achievement of
results while delegating authority to subordinates.

4. Control is vital for morale- workers are happier when things are under control. People
make mistakes. Intuitive decisions can result in errors of judgement, especially when there
are so many variables involved. Such wrong decisions can result in lowering of morale.
Control techniques reduce the chances of errors in judgement; thus, making the
organisational environment more stable- which is morale-boosting.

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Requirements and Characteristics for an Effective Control System

Effective controls have certain common characteristics. Some of these requirements and
characteristics are discussed below.

. Controls must provide useful and understandable information. Misunderstood controls will
not be applied properly. The control system format must be simple, clear, and
unambiguous, so that irrelevant information is excluded and only useful and necessary
data is utilised. This will make it easier for the people who are responsible for
monitoring operations. Furthermore, information must be accurate in order for control
systems to work properly. Additionally, information should cover all aspects of
business so that no aspect that needs to be controlled is overlooked.

. Controls should report deviations quickly so as to minimise the ill effects of these
deviations. A well-designed control system should be capable of identifying potential
problem areas before they arise, so that corrective action can be taken before the
problem becomes serious and unmanageable. The system should be sufficiently
efficient, so that any deviations or control information is relayed to the management
immediately after any significant event occurs, so that decisions on this information
can be taken without delay.

. Controls must be designed so that the right people monitor the activities of their own fields.
The sales manager, for example, should be concerned with only sales activities
including output of sales representatives, product sales by territories, any price
changes that will affect sales and any new products introduced. Similarly, the
production manager must control the output as well as the quality of the output etc.
However, the total control system of the organisation must be delicately balanced.
The control program must be set up by individuals who have a total view of the
organisation, so that the program does not reflect the biases of one group over the
other. For example, financial reports may be excellent, but the company may be
facing a strike because the feedback about personnel satisfaction is inadequate.

. The focus should be on strategic control points. The control system must reflect and
support the organisation’s established overall priorities; so that the activities of
strategic significance (where deviations will lead to greatest harm), can receive

23
 immediate corrective action and minor activities can get lower priority for control
purposes.

. Control should focus on results. The ultimate aim of the control process is to attain
objectives. Gathering information, setting standards, identifying problems, measuring
deviations and reports are simply means to the end. The controls must not fail to
work. Whether it is the fault of measuring mechaniFMS or the authority structure, it
must be modified and corrected.

. Controls should be economically realistic. A control system must be worth the expense.
The cost of implementing the control system must be less than the benefits derivable
from the control system. A control is not desirable, if an increment in improvement
involves a disproportionate increase in cost and effort. For example, checking every
unit in mass produced items will be costly and ineffective. A small percentage of
these units can be taken at random, inspected and decisions made about the entire lot
of that item. On the other hand, each part that goes into a space capsule must be
thoroughly examined and tested.

. Controls should be flexible enough to absorb change. Since most organisations operate
under dynamic and changing environment, a rigid set of controls would not be
appropriate. Flexible controls can adjust for the uncertainties of the situation. The
value of flexible control can be readily seen in the use of flexible budgets which
expand or contract on the basis of volume of business.

. Controls should not only indicate deviations, but should also lead to corrective action.
Simply uncovering and measuring deviations is not enough, so the control system
must lead to corrective action quickly. The system must also disclose where the
problem areas are and what factors are responsible for them so that the management
can take immediate action.

. Controls should be simple, but difficult to manipulate. Simple controls absorb less effort
and are more economical. Excessive complexity leads to confusion. It must be
designed in accordance with the needs and the abilities of the people who implement
it; but it should not be subject to misrepresentation or distortions which can be

24
 manipulated to suit somebody’s purpose, or to sabotage the operations.

. Controls should be acceptable to organisation’s members. Too rigid controls may cause
resentment resulting in lower morale and inefficient performance. Effective controls
require the following,

(a) Support of top management.

(b) Participation of all managers in setting up the control system.

(c) Acceptance and understanding of the control process by all workers.

(d) Information and feedback on actual performance must be timely and accurate.

(e) The control system must be well communicated.

. Control system must have outside support. The system should facilitate the organisation’s
dealings with its customers and suppliers. It will be helpful to acquire commitment and
support from the people who deal with the organisation.

. Control system should be designed by a mix of individuals with specialisation in various

and diversified fields of accounting, organisational analysis, strategic planning, management
information systems and other related areas. This will ensure balance and eliminate over-
domination by any one area.

. The exception principle- a good system of control should work on the exception principle,
so that only important deviations are brought to the attention of management. In other words,
management does not have to bother with activities that are running smoothly. This will
ensure that the managerial attention is directed towards error and not towards conformity.
This will eliminate unnecessary and uneconomical supervision, reporting and a waste of
managerial time.

The Control Process

Control is a process that measures current performance on a continuous basis and ensures that
the performance leads to some pre-determined goal. The desired results are established
through the planning process and the performance is measured by established standards. The

25
elements of the control system are universal in nature. These elements, basically, fall under
four distinct steps as listed below.

(a) Pre-determined goals, (b) Measuring performance, (c) Comparing actual performance
with expected performance, and (d) Taking corrective action.

(a) Predetermined goals

This is a part of the planning process and involves setting a standard of expected
performance. The goal must be clearly specified and understood without ambiguity. General
goals like “better education” or “high profits” are difficult to interpret and hence lead to
confusion and conflict. Goals should be specific as well as meaningful. For example, the goal
of a real estate broker may be to sell four houses per month. He can then plan the month and
monitor his performance. A vice-president in charge of production may have a goal of
keeping production costs within assigned budget over a period of time. He will be able to
monitor the costs and take corrective action whenever it is necessary. Similarly, a college
professor may have the goal of covering ten chapters from a book over a period of one
semester. He will plan his schedule of teaching accordingly to meet that goal.

The goals and objectives should be defined in measurable terms, wherever possible. These
should be expressed in quantitative terms, such as physical units produced per period of time,
profit to be made per unit etc. Where it is not possible to quantify goals such as in the case of
high morale, community relations, discipline or creativity, all efforts should be made to fully
understand these qualitative goals and design control mechani FMS that will be useful in
measuring performance in these situations. Most of these control mechani FMS will be
subjective in nature and the decisions will be made on the basis of personal judgments.

Quantitative standards- some of the quantitative standards against

which performance can be measured are as listed below.

. Time standards- the goal will be set on the basis of time lapse in performing a particular
task. It could be units produced per hour, number of pages typed per hour or number
of telephone calls made per day.

. Cost standards- these indicate the financial expenditures involved per unit of activity.
These could be material cost per unit, cost per person, cost of distribution per unit etc.

26
. Income standards- these relate to financial rewards received due to a particular activity.
Examples will be sales volume per month or sales generated by a salesperson per year
etc.

. Market share standard- this goal will be oriented towards the percentage of the total market
that a company wants to retain or further acquire. A company may want to increase its
share of the market by 4 percent next year.

. Productivity- productivity goals are the key to operational efficiency and should be set on
the basis of past performance, degree of mechanisation, employee skills and training
required, and motivation of employees. The productivity can be measured on the basis
of units produced per man hour etc.

. Profitability- profitability can be expressed as a ratio of net profits to sales. These goals
will be set with the consideration of cost per unit, market share, volume of business
etc.

. Return on Investment (ROI)- return on investment is a much more comprehensive and

useful standard as it involves all facets of the business such as turnover, sales,
working capital, invested capital, inventory levels at given times, production costs,
marketing cost, transportation costs etc. It is a ratio of net income to invested capital.
It is superior to market share as standard because a large share of market does not
necessarily mean higher profits.

. Quantitative personnel standards- staff morale and dedication can be measured to some
degree by some quantitative standards. The standards may be the extent of employee
turnover, number of work related accidents, absenteeism, number of grievances and
quality of work.

(b) Measuring performance

Once the standards and goals have been established, the second step in the control process is
to monitor and measure the actual performance. Monitoring and measurement is a continuous

27
activity and involves collection of the data that represents the actual performance of the
activity so that a comparison can be made between what is accomplished and what was
intended to be accomplished. The measurement of actual performance must be in the units
similar to those of predetermined criterion. The unit or the yardstick thus chosen should be
clear, well defined and easily identified and should be uniform and homogenous throughout
the measurement process. The choice of the unit will also depend upon the speed with which
the control information is required; otherwise delay in measurement will delay the corrective
action.

What to Evaluate? According to Suchman (1967), there are five types of evaluations. These
are as follows.

(i) Effort- effort reveals the extent of input; and the idea is to measure input to see if it is
adequate in meeting objectives. For example, the number of courses offered in the business
division at the college will indicate the extent of the business program. Similarly, the number
of beds in a hospital will be a measure of input for providing health care. A salesman’s
performance may be measured by the number of calls he makes per day. Blau (1956) gives an
example of an employment agency where performance was evaluated by the number of
applicants interviewed and counseled. However, the measurement of input is a poor indicator
of results, since simply counseling applicants does not mean that they all get jobs. Similarly,
the number of beds in a hospital does not translate to quality health care which is the ultimate.

(ii) Effectiveness- as we have seen above, the evaluation of input elements does not
adequately convey the degree of effectiveness and results. This problem can be eliminated by
measuring outputs, such as the number of clients placed in jobs, in the case of the
employment agency. However, the degree of effectiveness is relative in nature, since there is
no definite value attached to effectiveness. For example, any number of clients placed in jobs
could be considered as output.

(iii) Adequacy- adequacy is the ratio of output to need and is a useful measure if the need
and the output can be clearly identified and related. If the needs are satisfied then the
performance is adequate. However, defining specific needs is a difficult job.

(c) Comparing actual performance with expected performance

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This comparison is the active principle of the process. The previous two – setting the goals
and the measurement format – are the preparatory parts of the process. It is the responsibility
of management to compare actual performance against the standards established. This
comparison is less complicated if the measurement units for the standards set and the
performance measured are same and quantified. The comparison becomes more difficult
when these require subjective evaluations.

This comparison tells us if anything has gone wrong, if there is any deviation; negative or
positive, and what must be done as a restorative process for correcting the deviation. Also,
this comparison not only results in the correction of the lapses, but also ensures the
application of the preventive steps guiding the conduct in the future.

Evaluation of deviation- before a deviation is corrected, a thorough investigation should be

undertaken as to the reasons of such deviations, for not only the symptoms but also the roots
of the problem are to be examined. Were these deviations due to unrealistic standards set, or
were these due to lack of efficient performance? There are many instances where projects
went over budget and over time. These projects should be examined in their entirety and from
all angles.

(a) Negative deviation- negative deviations are those that have negative repercussions and
may be in the form of cost overruns or the project being behind schedule or the quality or the
quantity being below the expected levels. This underperformance must be evaluated to
determine whether goals should be changed or any other corrective action is needed. For
example, if there has been a delay in completing the project, the reason may be the morale of
the workers which may be evident by excessive absenteeism, resignations or inefficient
performances. Or it could be due to untrained personnel. A cost overrun can be price increase
initiated by outside vendors, or excessive machinery breakdown. These deviations must be
detected and evaluated.

(b) Positive deviations- positive deviations indicate that the performance was better than
expected and the goals achieved were either sooner than anticipated or less costly than
planned. These deviations should also be fully investigated as to why underestimations were
made and new revised estimations should be made.

(d) Taking corrective action

29
Once deviations have been established and presented, decisions must be taken as to what
corrective actions are needed or necessary to remedy the situation and to force events to
prescribed or pre-arranged plans. However, these corrective actions must be taken within the
constraints of acceptable tolerance levels, external environmental constraints (such as those
imposed by custom, organisational guidelines, labour unions, political and economic
considerations) and internal constraints of costs and personnel. Since the actual results do not
always conform to the desired results, some deviations may be expected and provided for and
hence no corrective action may be needed. However, when the deviations are of sufficiently
serious considerations, the following guidelines may be adopted and looked into:

(i) Management must deal with the roots of the problems and not the symptoms.

(ii) Any corrective action should be taken promptly in order to make it most effective.

(iii) Whenever and wherever possible, corrective action should be built into the existing
plans and these controls should be automatic and self-monitoring like a thermostat in
controlling the heat (this field is known as cybernetics).

(iv) It must be understood that the goal itself is not a static phenomenon, but it is a function
of the dynamic environment. Hence, a look into the need for altering the target itself caused
by shifts in the environments may be necessary.

Module 2

Unit 1: Organizing

Meaning of Organization

An organisation can be seen as an entity. This is true of all business enterprises, churches,
hospitals, or clubs. It can be seen as a process of coordinating individuals’ efforts to
accomplish a common objective. An organisation is a group of people bound together to
provide unity of action for the achievement of a predetermined objective. All management
theorists – Fayol, Follet etc., recognise this important management function. Organisation is
very fundamental to human nature. Man is a social animal and shares relationship with his
neighbours. The subject of organisation is central to sociology, psychology and even
anthropology.

Kinds of Organization: It can be classified into two broad headings-(a) formal and (b)

30
informal organizations.

a. Formal organisation

Formal organisation can be seen as a direct opposite of informal organisation. It is a planned

pattern of group behaviour designed to achieve an objective. Most relationships found in
many business enterprises are formal. The main reasons for formal organisations are:

. to establish logical patterns of inter-relationships among members of the group;

. to secure advantages of specialisation or division of labour whereby the optimum

utilisation of talents can be realised;

. to coordinate activities of the component parts in order to facilitate the realisation of the
goals of the organization

In Nigeria, the problem of formal organisation is not so acute because of the nature of
Nigerian businesses. As an organisation grows, the component parts become more complex,
the technology changes and requires special expertise and consequently, more attention.
Small enterprises do not require the same magnitude of tasks as large ones, and are therefore
easier to design.

b. Informal Organization

Informal organisation can be described as the human interaction that occurs simultaneously
and naturally without overt influence.

Organizational Charts: An organisational chart is a visual device that shows the various
departments and how they relate to one another. The chart helps the employees, the board of
directors and stockholders to see- at a glance, the division of responsibility and lines of
authority. One of the major advantages of an organisational chart is that it helps in studying
how to modify or improve the relationships and areas of responsibilities within the
organisational structure. An organisation can operate without a formal, organisational chart,
but the presence of the chart gives evidence of a thoughtful, planned structure. The chart does
in no way indicate the existence of certain positions identified by boxes and line of authority
shown by solid straight lines connection.

Organisational Structure: Sound organisational structure involves dividing activities into

31
departments, divisions, units and sub-units, defining relationships between the heads and
members that make up the units. A good structure:

. (a) identifies the operating departments (sales department, production department and
finance department).

. (b) isolates the service department (personnel, research).

. (c) places emphasis on balancing the structure.

. (d) shows the role of committees in the organisation.

One of the major problems confronting management is to decide the organisational structure
to be adopted. Important questions relating to duties and role of each department and line
executive have to be clearly defined. A decision has to be made if the organisation is to be
decentralised or centralised and the number of staff required for each task has to be
determined. As experts succinctly summarize it, the important features of an organisation to
be designed include division into sections and units, number of levels, locations of decision-
making authority, distribution of and access to information, physical layout of building, type
of people recruited, what behaviours are rewarded and so on.

Types of Organisation

Organisational structure can be subdivided into two, namely- line organisation and staff
organisation. This is described further below.

Line Organization: In a typical line organisation, authority is divested downward in a

straight line from the Board of Directors to the Managing Director and to lower management
levels. Every line executive has assigned responsibilities and authority assigned to him and
has its supporting staff to execute the functions. A manager with line authority is answerable
for the performance of his subordinates. The employees with line function are responsible for
the immediate attainment of the organisation’s objective. The flow of authority and
responsibility is usually straight or direct, and accountability is established. There are three
basic advantages-as listed below.

. (1) This structure is simple and easily understandable by all, accountability is easily
established. Conflict of authority is reduced to a minimum.

. (2) It lends itself to quick decision-making. Decision-making is vested in one person who
is in charge of the department.

32
. (3) Expenses related to overhead are reduced to a minimum as the role of executive
specialists is eliminated.

Line and staff Organization: This form of structure resembles the line structure, only that
specialists are included in the organisational arrangements. Decisions are made by line
executives with the advice of staff executives. Staff executives are experts in their fields –
(accountants, lawyers, personnel specialists, engineers etc.) they advise the line executives
who are directly responsible for the immediate attainment of the organisational goals.

Authority Relationships

This is further divided into three, namely-line authority, staff authority and functional
authority.

a. Line authority

As pointed out, line authority connotes “command” relationship. This is the authority that
makes one to expect obedience from subordinates. Line authority has been described as the
chain of command as it flows from the stockholders to the Board of Directors, to the
Managing Director all the way to the employees. As Fox observes, “line positions in an
organisation are those concerned directly with the creation and distribution of utilities or with
the management of such activity.

b. Staff authority

This position is advisory in nature. Generally, a staff executive is a specialist who study a
problem, identify the alternatives and make recommendations to the chief executive for
decision. He advises, and to advise is not to decide – only the line executive is vested with
that authority, unless this power is delegated to him.

c. Functional authority

This process allows a staff executive (engineers, lawyers, accountants, and advertising
managers) to make decisions and implement them within clearly defined guidelines. This
process reduces the workload of line executive by taking advantage of the expertise of the
staff executive. The staff authority aims at supplementing the activities of line authority. This
process helps to reduce the usual conflict between line and staff executives.

Unit 2: Communication

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Communication is defined as the process of passing information from one person to another.
It means transmitting and sharing of ideas, opinions, facts and information in a manner that is
perceived and understood by the receiver of the communication. It is a meaningful interaction
among people where the thoughts are transferred from one person to another in a manner
such that the meaning and value of such thoughts is same in the minds of both the sender as
well as the receiver of the communication.

Effective communication is very essential for management to successfully perform its

functions. It is an essential ingredient in management-employee relations. According to W.R.
Spriegal:

“most of the conflicts in business are not basic but are caused by misunderstood motives and
ignorance of facts. Proper communications between interested parties reduce the points of
friction and minimise those that inevitably arise.”

It was largely the work of Chester Barnard in the late 1930s which highlighted
communication as a dynamic force in shaping organisational behaviour. He considered it as
one of the three important elements of an organisation, along with common purpose and
willingness to serve. He also linked communication with his concept of authority. Authority
flows down through the channel of communication; authority can lose its meaning if the
channels of communication are blocked or if communication is misunderstood or if the
strength of communication is diluted. Accordingly, he proposes seven communication factors
which are a function of objective authority. These are listed below (as cited in Barnard,
1938).

. The channels of communication must be clearly set and be known to all.

. Every member of the organisation should be reached by some channel of communication.

. The line of communication should be as direct as possible.

. There should be no blockage in the line of communication and the complete formal line
should be used.

. The communicator should be highly skilled in the art of communication.

. The line of communication should be constantly kept open.

34
. Every communication should be authenticated.

The objectives of communication, according to Mamoria (1982), are as stated below:

. to develop information and understanding among all workers.

. to foster any attitude that is necessary for motivation, cooperation and job satisfaction.

. to discourage misinformation, ambiguity and rumours.

. to prepare workers for a change in methods or environment by giving them the necessary
information in advance.

. to encourage subordinates to supply ideas and suggestions for improving upon the product
or work environment, and taking these suggestions seriously.

. to improve labour-management relations by keeping the communication channels open.

. to encourage social relations among workers by encouraging inter-communication.

Communication Process Model

A simple communication model which reflects communication as a dynamic interactive

process has been proposed by David Berdo (1960). His approach is based upon the following
idea:

If we accept the concept of process, we view events and relationships as dynamic, ongoing,
ever-changing, continuous. When we label something as a process, we also mean that it does
not have a beginning, an end, a fixed sequence of events. It is not static, at rest. It is moving.
The ingredients within a process interact, each affects all the others.

This model- described as a series of steps, consists of the following components.

. Message sender- this is the source of information or the initiator of communication. This
source may want to communicate his ideas, needs, intentions or other pieces of
information.

. Encoder- this is the process inside the human mind in the form of motor skills, muscle
system or sensory skills that encode the ideas to be conveyed into a series of symbols
or gestures or some other format of expression.

35
. The message- the message is a physical form of the thought which can be experienced and
understood by one or more senses of the receiver. It can be in the form of hearing,
reading or other physical gestures.

. Channel of Communication- it is a vehicle used for the transmission of the message. It is a

medium carrier and bridges the gap between the sender and the receiver. It may be a
face-to- face conversation, telephone conversation, in written form or through any
form of gesture

. Perception of the message- the message is received by the person for whom it was meant
and he becomes the receiver of the message.

. Decoding process- decoding is also done in the same manner as encoding by motor skills,
muscle system or sensory skills and the receiver decodes the message for the purpose
of interpreting and understanding the meaning of the message. The more the
receiver’s intended message the more effective the communication is.

. Action- this is a response from the receiver who has received and accepted the
communication. This may be compliance with an instruction or simply storing the
message for future references.

. Feedback- a feedback determines whether the message is clearly understood and the
required action taken. The feedback to the sender completes the process of
communication.

Unit 3: Directing and Leading Function

Directing is concerned with channeling human efforts towards the achievement of

organisational goal. The success of these directional efforts is going to determine the
satisfactory or unsatisfactory performance within the organisation. Accordingly, the directing
function is the action function that tests the managerial capability in running the organisation.

Directing and leading comprise the managerial function of guiding, overseeing and leading
people. The primary element in this function is the human element and ideals of personal
relationships. This area is primarily geared towards leadership, motivation, and
communication. Since human element is the central element in the art and science of

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managing, the study of human relations has been of major interest to management.

Leadership: Leadership is an integral part of management and plays a vital role in

managerial operations. If there is any single factor that differentiates between successful and
unsuccessful organisations, it has to do with dynamic and effective leadership.

Leadership is not an attribute of business alone. In the military, in the government, in the
academia, in hospitals and in places where people work in groups, the leadership function
emerges. There must be somebody to guide that group. Leadership may be defined as the art
of influencing and inspiring subordinates to perform their duties willingly, competently and
enthusiastically for the achievement of group objectives.

Traits of Leadership; A leader has certain inherent qualities and traits which assist him in
playing a directing role and wielding commanding influence over others. Some of these traits,
according to Jago (1982), are as follows.

. Energy- drive

. Appearance- presentability

. A sense of cooperativeness

. Enthusiasm

. Personality – height and weight

. Initiative

. Intelligence

. Judgement

. Self-confidence

. Sociability

. Tact and diplomacy

. Moral courage and integrity

. Willpower and flexibility

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. Emotional stability

. Knowledge of human relations.

These traits are not universal in nature. Not all leaders have these traits. Not all of these traits
work at all times. While some of these traits differentiate successful managers and leaders
from unsuccessful ones, it is the behaviour of leaders, either as a result of these traits or
otherwise, which is more tangible and obvious and less abstract than traits.

Unit 4: Staffing Function

There are a number of factors that contribute towards the success of an enterprise. These
factors include capital, equipment, manpower, etc. While all these factors are important, the
human factor is the most significant one, since it is the people who have to use all other
resources. Without the productive efforts of workers, the materials and resources will be of
no use. Also, if the people who are in charge of these resources are not sufficiently qualified,
then the utilisation of these resources will not be at the optimum.

Staffing is the traditional management function of attraction and selection of the best people
and putting them on jobs where their talents and skills can best be utilised, and retention of
these people through incentives, job training and job enrichment programs in order to achieve
both individual and organisational objectives. This emphasises managing human and not
material or financial resources. This function is becoming extremely specialised due to
unique importance and complexity of human nature and ever-changing psychology,
behaviour and attitudes.

The staffing function is generally handled by the personnel department where personnel
management is concerned with “planning, organising, directing and controlling the
development, compensation and integration of people into the system for the purpose of
contributing to organisational, individual and social goals”. The Personnel Management is a
continuous phenomenon and requires a constant alertness and awareness of the organisational
needs and the personnel policies should be such that there is a continuous monitoring of the
system, since the unanticipated shortages or excess of qualified people in any organisation
signal a defect in the planning system. Also, personnel policies and decisions are constantly
changing due to the following considerations.

. Social and legal pressure is high to increase the proportion of minority workers. This may

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 sometimes results in less than optimal compatibility of job and the worker.

. Affirmative action- some organisations are obliged to give special considerations to

minorities including women workers in order to compensate for past discriminations
against them. This has been a result of special upheaval against a male-dominated
society and businesses where women and minorities were not treated at equal level.
This affirmative action may require more pre-assigned jobs for minorities and women,
faster promotions for them and lowering of performance appraisal standards for them.
In India, for example, the scheduled caste people have been allotted some reserved
places in most medical colleges and other professional universities and in many
government jobs to compensate for the discrimination that these minorities have
suffered over many years.

. Workers are shifting their idea of success-where success always meant a job with good
pay, now it is more and more measured by the degree of challenge on the job, new
opportunities and job enrichment and self-fulfillment.

. The number of people who prefer to work on a part-time basis is increasing. Even full-time
workers are trying to get fewer work week hours so that they can have more leisure
time.

. Education level of the total workforce is rising. This also applies to blue collar job workers
due to compulsory education to a certain age as well as social awareness about the
benefits of a good education.

. There is a shift towards more skilled jobs. Due to advent of mechanisation and
specialisation and technological innovations, the number of unskilled jobs have been
steadily decreasing giving rise to more skilled jobs requiring training and adaptation.

. Labour unions are becoming stronger and highly protective of the workforce. The
objectives of the unions are to protect their workers from discriminatory treatment,
increase their pay and fringe benefits, improve their working conditions and help all
employees in general. Accordingly, Personnel Management policies are affected by
union’s objectives and goals.

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. There are continuous social and technological changes. Social values are constantly
changing due to amalgamation of many cultures and ideologies and emphasis on
rationalisation and objective thinking rather than adherence to traditional social
values. Similarly, automation and computerisation of industries have changed the
requirements of jobs and employees requiring continuous monitoring of job
descriptions and policies about personnel requirements.

Since a number of factors affect the formulation and execution of personnel policies, it is
important that these policies be based upon sound principles which will ensure that equity
and justice are accorded to all employees, “a fair day’s pay for a fair day’s work” is adopted
and opportunities are offered to all employees for job satisfaction and job enrichment. Some
of the essential characteristics of a sound personnel policy programme are given below.

(1) The policy statement should be clear and easily understood so that what it proposes to
achieve is evident.

(2) It should be formulated after careful consideration, discussion and review and preserved
in writing in order to provide a definitive meaning to policies and procedures.

(3) It should be reasonably stable and should be continuously monitored and periodically
reviewed and revised so as to adjust to changing social, legal and technical environment and
changing constitution of the workforce.

(4) It must be consistent with the missions and general goals of the organisation without
violating the individual goals and objectives so that due regard is given to all concerned
parties – the employers, the employees, the government and the community.

(5) The policies should have the full support of all employees and be preferably evolved after
full consultations with the trade unions so that the interests of the union members are
inherently protected.

(6) It should provide for two-way communications so that the employees are continuously
informed of any developments in the organisation and the management gets necessary
feedback.

(7) It must make a measurable impact on the process of recruitment, retention and retirement
which can be evaluated and qualified.

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Unit 5: Recruitment and Selection

Recruitment is the process of attracting qualified personnel, matching them with specific and
suitable jobs, and assigning them to these jobs. Its aim is to develop and maintain adequate
manpower resources upon which an organisation can depend, when it needs additional
employees.

There are basically two sources of supply from where potential employees can be drawn,
both at managerial as well as operative levels. These are: 1. internal sources and 2. external
sources.

The extent to which internal sources or the external sources will be used will depend upon the
specific environment of the organisation as well as its philosophy of operations. Some
companies prefer to promote from within- for key positions, because these personnel know
the company well. Others prefer to hire from outside, because these personnel do not know
the company at all so that they can bring some new and fresh ideas into the company. Both of
these sources are explained below.

i. Internal sources

Internal sources are the most obvious sources and are primarily within the organisation itself,
and include its present working force. Most organisations have procedures for announcing
vacancies, which may be through bulletin, notice boards, newsletters or word of mouth or
personal recommendations. Some promotions may be built in the hierarchical structure and
take place automatically on the basis of seniority or when a position at the upper level
becomes available. Whenever a vacancy occurs, someone from within the organisation is
upgraded, promoted or transferred to another department or location.

Occasionally, a person may be demoted to fill a job. The internal recruitment process can be
very encouraging and motivating to employees; since they are assured that they will be
preferred over outsiders when the opportunities occur. This reinforces a sense of loyalty
among employees, for it provides them an opportunity for advancement. This also helps
management to be assured of the quality of performance of employees since the organisation
generally keeps a record of the employees’ performance and progress.

Also, internal recruitment is economical in terms of time and money, since all the energies
expended in the process of hiring new candidates from outside are avoided. Additionally,

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new employees from outside always have to go through a period of orientation during which
the contribution of the employee to the organisation is highlighted. This problem can be
avoided through internal recruitment.

One of the drawbacks of the internal source of recruitment is that promotions may be biased
in nature and may be based on seniority rather than merit, resulting, sometimes, in
unqualified personnel taking up more responsible jobs. Also, it discourages “new blood”-
which may be more innovative and creative from entering the organisation.

ii. External sources

The external sources are varied and many. Most organisations cannot fill their manpower
needs from sources within and hence they must look for outside sources, especially for lower
entry jobs, for expansion and for positions whose specific requirements cannot be met by
people within the organisation. This outside pool of potential candidates includes:

i. New entrants to the workforce - these may be college student who has just finished
studies and are entering the job market.
ii. The employed - these are the people who may be temporarily out of a job. These may
be people with skills and abilities. These may be people who are currently at jobs
that are unsuitable to them and who may be looking for better opportunities.

iii. Retired experienced persons - these may be accountants, mechanics, security guards
etc. They have the necessary experience and may be hired as consultants or
supervisors.

Some of the sources of external recruitment include the following.

(1) Active files of potential candidates kept at the organization - these are the resumes of
the candidates who had earlier applied but not selected. Similarly, unsolicited applications
may constitute a much-used source of personnel. Such records can prove to be a good source
if they are kept up to date.

(2) Walk-ins and gate hiring - these are potential candidates, generally for lower level jobs
who simply walk into the office and ask for a job. This method is especially useful for mass
hiring of unskilled and semi-skilled workers.

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(3) Employment agencies - these employment agencies may be public or private. The
public employment agencies are subsidised by the local governments and may provide a
variety of services. These services include:

(i) placement services;

(ii) employment counseling on occupational choices;

(iii) services to special groups, such as war veterans, handicapped personnel, released
criminals in order to rehabilitate them etc.

These agencies are a major source of hourly blue-collar job workers. The major reason for
this is that unemployed people are generally required to register with these agencies and be
available for work, in order to collect the unemployment insurance.

Selection Process

Selection is a process of choosing the right candidate from a pool of applicants. This process
is established to achieve a good match between the job requirements and the candidate’s
skills and motives. A good match result in increased productivity and quality performance. A
bad match is extremely costly to the company due to cost of training the candidates, the cost
of mistakes made by the candidate and the cost of replacement.

The first step for the management is to be thoroughly familiar with the requirements of the
job as well as the qualifications and expectations of the candidate. This will include any
leadership qualities or decision-making authority inherent in the job. After looking at the
resumes of the candidates, those candidates whose qualifications do not adequately match the
requirements of the job are rejected out-rightly. This leaves a pool of more suitable
candidates.

The second step is to conduct a preliminary screening interview, before a more

comprehensive interview is conducted, to have an initial assessment of the candidate’s
abilities and motives. This interview will generally establish a candidate’s goals and
aspirations and general attitudes towards the organisation

The third step is the completion of a formal application form which summarily lists a
person’s background, education, experience and any special abilities. The data submitted in

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the application form determines the suitability of the candidate, as well as predicting his
chances of success at the job. The information requested and provided should be relevant to
the selection, factual, legal and not unduly sensitive or personal.

The fourth step is to check the candidate’s references and seek opinion from his previous
employers or instructors- if he is fresh out of college. This should be done prior to the
comprehensive interview so as to have a better idea about the candidate, especially in the area
of those characteristics that do not show up on application forms. These characteristics
include leadership qualities, ability to act assertively and decisively, ability to communicate
well and attitude towards subordinates as well as superiors.

The fifth step is to give certain tests to the candidate- if necessary, to make judgements about
certain specific aspects of the candidate. These tests may be classified in many ways and the
type of test will depend upon the type of job required to be filled.

The sixth step is the in-depth interview which is conducted to evaluate the applicant’s
acceptability in terms of his ability to fit into the company’s culture and his “motives” in
joining the company. An interview can be structured in which well designed questions are
asked that are pertinent to the job and their answers analysed, or it could be unstructured as a
free thought flowing two-way communication. In order to make the best of an interview, it is
essential that both the candidate and the interviewer be fully present. Good grooming, a
choice of clothing, a firm handshake, the manner of sitting and general enthusiasm will give
good initial impression. It is also important for the candidate to know about the company- as
much as possible, and be prepared to answer questions thoroughly and precisely.

The seventh step is to establish the applicant’s physical health. This can be checked from his
medical records as well as a thorough physical examination conducted by the company
physician. This will ensure that the candidate is physically fit and capable to exercise his
responsibilities.

The final step is the process of hiring itself. In some responsible executive positions,
management may want to get socially acquainted before the final decision is made.

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