Detailed Course on HRM

Unit I- Functions of Management

NTA UGC NET/JRF 2021
Industrial Relations and Labour welfare/HRM
CODE 55
Paper 2

Presented by
Lakshmi Kushwaha
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 Introduction - Management
1. Management is the art of getting things done through others in systematic
and effective manner.
2. Management is the process of getting things done through others with the
help of some basic activities like planning ,organizing ,directing ,
coordinating and controlling
3. It is also referred to as a body of knowledge, a practice and discipline.
4. It is also described as the technique of leadership, decision making and a
mean of co-ordinating.
 Definition : (A) Art of Getting Things Done
Mary Parker Follett
• Management is the art of getting things done
through others.” Follett describes management as
an art of directing the activities of other persons
for reaching enterprise goals. It also suggests that
a manager carries only a directing function.
Harold Koontz
• Management is the art of getting things done through
and with people in formally organized groups.”

J.D. Mooney and A.C. Railey

• Management is the art of directing and inspiring people.”
• Management not only directs but motivates people in
the organization for getting their best for obtaining
objectives.
 Definition : (B) Management as a Process
Henry Fayol
• To manage is to forecast and plan, to organize,
to command, to co-ordinate, and to control.”
• Fayol described management as a process of
five functions such as planning, organizing,
commanding, coordinating and controlling.
George R. Terry
• Management is a distinct process consisting of activities of planning,
organizing, actuating and controlling, performed to determine and
accomplish stated objectives with the use of human beings and other
resources.”
James L. Lundy
• Management is principally the task of planning, coordinating, motivating
and controlling the efforts of others towards a specific objective.”

Louis Allen
• Management is what a manager does.
Definition : Art and Science of Decision-Making
and Leadership
Donald J. Clough
• “Management is the art and science of decision-making and
leadership.”
Rose Moore
• Management means decision-making.”
• Decision-making cannot be the only function of management
even though it is very important.
F.W. Taylor
•Management is the art of knowing what you
want to do in the best and cheapest way.
Keith and Gubellini
•Management is the force that factors integrates
men and physical plant into an effective
operating unit.”
 Management Art of Getting Things Art and Science of Decision-Making
Management as a Process
Done and Leadership
• Mary Parker Follett : • Henry Fayol :To manage is to • Donald J. Clough :“Management
Management is the art of getting forecast and plan, to organize, to is the art and science of decision-
things done through others.” command, to co-ordinate, and to making and leadership.”
• Harold Koontz : Management is control.” • Rose Moore : Management
the art of getting things done • George R. Terry :Management is a means decision-making.”
through others.” distinct process consisting of • F.W. Taylor :Management is the
• J.D. Mooney and A.C. Railey : activities of planning, organizing, art of knowing what you want to
Management is the art of getting actuating and controlling, do in the best and cheapest way.
things done through others.” performed to determine and • Keith and Gubellini :Management
motivates people in the accomplish stated objectives with is the force that factors integrates
organization for getting their best the use of human beings and men and physical plant into an
for obtaining objectives. other resources effective operating unit.”
• James L. Lundy :Management is
principally the task of planning,
coordinating, motivating and
controlling the efforts of others
towards a specific objective
• Louis Allen :Management is what
a manager does.
6 M’s of Management
 Features of Management
1. Management is goal oriented process 2.Management is Pervasive

• Management always aims at achieving • Management is a universal

the organisational objectives. phenomenon.
• Each and every organisation is • Whether it is a commercial
established to achieve certain goals. organisation or non commercial, big or
Every business enterprise has different small, all require management to
set of goals depending upon the manage their operations.
nature of organization • The activities in management are
• The efforts and the functions of the applicable to every type of
manager’s viz., planning, organising, organisation whether economic, social,
directing, staffing and controlling help charitable, religious or political
in achieving these goals.
 3.Management is 4. Management is a 5. Management is a Group
Multidimensional Continuous Process Activity
• Management does not • Management is a • The management consists of
mean one single activity but continuous process a number of persons who
it includes three main consisting of a series of work as a group.
activities: functions like planning, • Efforts of all the members of
• (a) Management of work, organising, directing, group are directed towards
• (b) Management of people staffing, and controlling. All achievement of common
and the managers perform these organisational goals.
functions regularly. • Members of any
• (c) Management of
operations. • There is an ongoing series of organisation may have
functions in which a different purpose for joining
manager is involved. the organisation but as its
members they have to
initiate, communicate,
coordinate and join their
hands for the achievement
of organisational goals.
Hence, it is a group activity
 9. Balancing
6. Management is 7. Management is an
8. Composite process effectiveness and
Dynamic Function Intangible Force
efficiency
• The environment in • Management • Management • Effectiveness means
which a business function cannot be consists of series of achieving targets and
exists keeps on physically seen but functions which must objectives on time.
changing. its presence can be be performed in a Efficiency refers to
• Thus, in order to be felt. proper sequence. optimum or best
successful, • The presence of • These functions are utilisation of
management must management can be not independent of resources. Managem
change its goals, felt by seeing the each other ents always try to
plans and policies orderliness and • All the functions balance both and get
according to the coordination in the inter-dependent on the work done
needs of its working each other that is successfully. Only
environment. environment. why management is effectiveness and
• It is easier to feel the considered as a only efficiency is not
presence of composite process of enough for an
mismanagement as it all these functions. organisation: a
leads to chaos and balance must be
confusion in the created in both.
organisation.
 Objectives of Management

Objectives

1.
2. Social 3. Personal
Organizational
Objectives Objectives
Objectives
 1. Organizational Objectives
Management is responsible for setting and achieving objectives for the organisation.
The main objective of any organization should be to utilise human and material resources to
the maximum possible advantage, i.e., to fulfill the economic objectives of a business
Survival Profit Growth

• The basic objective of any • Management has to ensure • To remain in the industry,
business is survival. that the organization makes a management must exploit
• In order to survive, an profit. fully the growth potential of
organization must earn • Profit provides a vital the organization.
enough revenues to cover incentive for the continued • There are many indicators of
costs. successful operation of the growth such as sales volume,
enterprise. increase in the of employee
count, the number of
products or the increase in
capital investment
 2. Social Objectives
1. As a part of society, every organisation whether it is business or non-business, has a social
obligation to fulfill which is to consistently create economic value for various constituents
of society. This includes: Environmental friendly methods of production, Giving
employment opportunities to the disadvantaged sections of society, Providing basic
amenities like schools and crèches to employees

3. Personal Objectives
1. Organization consists of different types of individual who joins it to satisfy their diverse needs. The
individual may seek to satisfy needs such as: Competitive salaries and perks, Peer recognition, personal
growth and development
2. Management has to reconcile personal goals with organisational objectives for harmony in the
organisation.

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 Level of Management
1. The term “Levels of Management’ refers to a line of demarcation between
various managerial positions in an organization.
2. The number of levels in management increases when the size of the business and
work force increases and vice versa.
3. The level of management determines a chain of command, the amount of
authority & status enjoyed by any managerial position. The levels of management
can be classified in three broad categories:
Top level / Administrative level
Middle level / Executory
Low level / Supervisory / Operative / First-line managers
 Top Level Management
Top Level Management Functions

• Top-Level Management is also • is accountable to the shareholders

referred to as the administrative for the performance of the
level. organization
• They coordinate services and are • To lay down the policies and
keen on planning. objective of the organization
• The top-level management is made • Strategizing the plans of the
up of the Board of Directors, the enterprise and aligning competent
Chief Executive Officer (CEO), the managers to the departments or
Chief Financial Officer (CFO) and the middle level to carry them out.
Chief Operating Officer (COO) or the • Keeping the communication
President and the Vice President. between the enterprise and the
outside world.
 Middle Level Management
Middle Level Management Functions
• Middle-level Management is also referred to • To carry out the plans of the organization
as the executory level, they are subordinates according to policies and directives laid
of the top-level management and are down by the top-level management.
responsible for the organization and • To organize the division or departmental
direction of the low-level management. activities.
• They account for the top-level management • To be an inspiration or create motivation for
for the activities of their departments junior managers to improve their efficiency.
• The middle-level managers are semi- • Employment and training of lower levels
executives and are made up of the
departmental managers and branch
manager.
• They could be divided into senior and junior
middle-level management if the organization
is big.
 Lower Level Management
Lower Level Management Functions
• The lower level Management is also referred to • To allocate tasks and responsibilities to the
as the supervisory or the operative level of operative employees.
managers. • To ensure quality and be responsible for the
• They oversee and direct the operative production quantity.
employees. • To communicate the goals and objective of the
• They spend most of their time addressing the firm laid down by the higher level
functions of the firm, as instructed by the • managers to the employees and also the
managers above them. suggestions, recommendations, appeals, and
• are the first line of managers as they feature at information concerning employee problems to
the base of operations, so they are essential the higher-level managers.
personnel that communicates the fundamental • To give instruction and guided direction to
problems of the firm to the higher levels. workers on their day to day jobs.
• This management level is made up of the • To give periodic reports of the workers to the
foreman, the line boss, the shift boss, the higher-level managers.
section chief, the head nurse, superintendents,
and sergeants.
 Line Managers
Line Managers Functions
• Line manager is a person who deals with • It has direct control over the staff employee
direct managerial responsibility for a • Line manger involves day to day operations
particular employee. of the organization
• Line manager manages employees and • It works towards organizational goal.
operations of a business while reporting to • It works superior in the management chain;
the higher authority. the person who take care of you and
• Line manager is an in charge of essential responsibility.
activities like operations and authorized to • It is a term often used interchangeably with
issue orders to subordinates down the chain “direct manger”.
of command.
• It plays important role in the overall
• Line managers are critical mechanism in organizational performance.
ensuring that new programs and strategies
are implemented in timely effective manner
after identifying problems.
 Staff Managers
Staff Managers Functions
• Staff manager is an in charge person who • It doesn’t have direct control over the line
consumes revenue, advice and guide to the employee
line manager. • It involves assisting line personal and aid top
• Staff manger doesn’t make decision but he management in various business activities
helps to take decision. • It works toward guide and support line
• Staff managers are not part of the chain of manager
command related to direct production of • It take care of line management and top
products or services, they do have authority management
over personnel • It works for advice, guideline and
knowledge to the individual of chain of
command
• It plays important role in the solving
technical problems, guidance and decision
Kinds of managers
1. Top managers
2. Middle managers
3. First-line managers
4. Team leader
5. General Managers
 First Line Managers Middle managers Top Manager

• At the lowest level of • Middle managers manage • At the upper levels of the
management, first-line the work of first-line organization are the top
managers manage the work managers and can be found managers, who are
of nonmanagerial between the lowest and responsible for making
employees who typically top levels of the organization-wide decisions
are involved with producing organization. and establishing the plans
the organization’s products • They may have titles such and goals that affect the
or servicing the as regional manager, entire organization.
organization’s customers. project leader, store • These individuals typically
• First-line managers may be manager, or division have titles such as
called supervisors or even manager executive vice president,
shift managers, district president, managing
managers, department director, chief operating
managers, or office officer, or chief executive
managers officer

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 Team leaders General Manager

• managers responsible for • A manager who is

facilitating team activities responsible for serval
toward goal organizational activities.
accomplishment (CEO, EVP)
• Help team members plan
and schedule work, learn to
solve problems, and work
effectively with each other
• Manage internal and
external relationships
Roles in Context of OB (Henry Mintzberg, 1960)
Role of
Manager

Interpersonal Informational
Decision Role
Role Roles
 Roles of Manager

Interpersonal Role(L3) Informational Role Decision Role

Inherent in managers Job Manger is source of information Make decision for critical situation

Figurehead Role Monitor Role Entrepreneur Role

Information
Leadership Role Conflict Role
Disseminator Role

Liaison Role Spokesperson Resource Allocation

Negotiator
 1. Interpersonal Role

a) Figure Head Role b) Leadership Role c) Liaison Role

• he stands as a symbol of legal • Manager in a leader role hires, • Manager interacts with many
authority, performing certain trains, and motivates his people outside the immediate
ceremonial duties personnel chain of command, those who
• Examples: greeting visiting • Responsibility for the work of are neither subordinates nor
dignitaries, attending an subordinates, motivating and superiors.
employee’s wedding, taking an encouraging employees, • including peers in other
important customer to lunch. exercising their formal companies or departments,
authority. and government and trade
organization representatives.
• Holding good network
 2. Informational Role
b) Information
a) Monitor Role c) Spokesperson
Disseminator Role
• Monitor & scans the • managers distribute • The manager
environment for new information to transmits information
information to collect. subordinates daily. to individuals outside
• the manager is a • Passing on privileged the organization.
receiver and collector information directly to • Represent his unit or
of information. subordinates. organisation, company
• Information is • Through phone, brand.
acquired through notice, individual • Example: a speech to a
meetings, meeting, magazine lobby or suggesting
conversations, or product modifications
documentation. to suppliers.
 3. Decision Role

b)Conflict
a) Entrepreneur Handling/Disturbance c) Resource Allocator d) Negotiator
Handler

• Managers actively • manager handles • Decides who gets what. • Negotiate deals,
design and initiate difficult problems and • Decides how resources agreement
changes within the non-routine situations are distributed, and with • Managers negotiate with
organization such as strikes, energy whom he will work most suppliers, customers,
• It involves some shortages etc closely unions, individual
improvements. • Responds involuntarily • Budget allocation employees, the
• Introduce challenges, R to pressures too severe government, and other
& D, Employee to be ignored. groups.
suggestion, creativity
skills, brainstorming
Mintzberg’s Five Configurations of Strategic Management
The famous management expert, Henry Mintzberg, proposed a five configurations approach to
strategic management wherein any organization can be broken down into five core elements or
parts. The first dimension is The key part of the organization, that is, the part of the organization
that plays the major role in determining its success or failure
1. Operating Core
2. Strategic Apex
3. Middle Level Managers
4. Technostructure
5. Support Staff

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1. The Operating Core which consists of those doing the basic work and whose output can be directly linked to the
goods and services that the organization makes and sells. According to Mintzberg, this part is common to all
organizations since the core work must be done and hence, the operating element has to be put in place.

2. The Strategic Apex, which is composed of senior management and the senior leadership, which provides the
vision, mission, and sense of purpose to the organization. Indeed, it can be said that this part consists of those
men and women who shape and control the destinies of the organization.

3. The Middle Level Managers who are the “sandwich” layer between the apex and the operating core. This
element is peopled by those who take orders from above and pass them as work to the operating core and
supervise them. In other words, they perform the essential function of acting as a buffer between the senior
management and the rank and file employees.

4. The fourth element is the Technostructure that is composed of planners, analysts, and trainers who perform the
intellectual work. This element provides the advice for the other parts and it is to be noted that they do not do
any work but function in an advisory capacity.

5. The final element is the Support Staff who perform supporting roles for the other units and exist as specialized
functions that are responsible for the peripheral services in the organization.

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The second basic dimension of an organization is its prime coordinating mechanism. This includes the
following
1. Direct supervision means that one individual is responsible of the work of others.This concept refers
to the unity of command and scalar principles.
2. Standardization of work process exists when the content of work is specified or programmed
3. Standardization of skills exists when the kind of training necessary to do the work is specified.
4. Standardization of output exists when the results of the work are specified.
5. Mutual adjustment exists when work is coordinated through informal communication.
6. Mutual adjustment or coordination is the major thrust of Likert’s (1987) “linking-pin”concept

The third basic dimension of an organization is the type of decentralization it employs.

The three types of decentralization are the following:

1. Vertical decentralization is the distribution of power down the chain of command, or shared
authority between superordinates and subordinates in any organization.
2. Horizontal decentralization is the extent to which non administrators (including staff) make
decisions, or shared authority between line and staff.
3. Selective decentralization is the extent to which decision-making power is delegated to different
units within the organization

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Mintzberg’s Five Organizational Structures
1. Simple Structure : The simple structure has as its key part the strategic apex, uses direct
supervision, and employs vertical and horizontal centralization. Examples of simple structures
are relatively small corporations, new government departments, medium-sized retail stores, and
small elementary school districts. The organization consists of the top manager and a few
workers in the operative core. There is no technostructure, and the support staff is small;
workers perform overlapping task.
2. Machine Bureaucracy : Machine bureaucracy has the technostructure as its key part, uses
standardization of work processes as its prime coordinating mechanism, and employs limited
horizontal decentralization. Machine bureaucracy has many of the characteristics of Weber’s
(1947) ideal bureaucracy and resembles Hage’s (1965) mechanistic organization. It has a high
degree of formalization and work specialization. Decisions are centralized. The span of
management is narrow, and the organization is tall

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3. Professional Bureaucracy : Professional bureaucracy has the operating core as its
key part, uses standardization of skills as its prime coordinating mechanism, and
employs vertical and horizontal decentralization. The organization is relatively
formalized but decentralized to provide autonomy to professionals.

4. Divisionalized Form : The divisionalized form has the middle line as its key part,
uses standardization of output as it prime coordinating mechanism, and employs
limited vertical decentralization. Decision making is decentralized at the divisional
level. There is little coordination among the separate divisions. Corporate-level
personnel provide some coordination. Thus, each division itself is relatively
centralized and tends to resemble a machine bureaucracy

5 . Adhocracy : The adhocracy has the support staff as its key part, uses mutual
adjustment as a means of coordination, and maintains selective patterns of
decentralization. The structure tends to be low in formalization and decentralization

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 Mintzberg’s Modes of Strategic Decision-Making
Henry Mintzberg has given three most typical approaches of strategic decision making which
include:

1. Entrepreneurial mode : Strategy is made by one powerful individual who has entrepreneurial
competencies like innovation and risk taking. The focus is on opportunities. Problems are secondary.
Generally the founder is the entrepreneur and the strategy is guided by his or her own vision of
direction and is exemplified by bold decisions.
2. Adaptive mode : Sometimes referred to as “muddling through,” this decision-making mode is
characterized by reactive solutions to existing problems, rather than a proactive search for new
opportunities. Much bargaining goes on concerning priorities of objectives. Strategy is fragmented
and is developed to move the corporation forward incrementally. This mode is typical of most
universities, many large hospitals and a large number of governmental agencies.
3. Planning mode : This decision making mode involves the systematic gathering of appropriate
information for situation analysis, the generation of feasible alternative strategies, and the rational
selection of the most appropriate strategy. It includes both the proactive search for new
opportunities and the reactive solution of existing problems.

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A fourth mode of ‘logical incrementalism’ was later added by
Quinn.

Logical Incrementalism

In this mode, top management first develops reasonably clear idea

of the corportion’s mission and objectives. Then, in its
development of strategies, it chooses to use “an interactive process
in which the organization probes the future, experiments and
learns from a series of partial (incremental) commitments rather
than through global formulations of total strategies”. Thus the
strategy is allowed to emerge out of debate, discussion, and
experimentation. This approach appears to be useful when

1. The environment is changing rapidly,

2. It is important to build consensus, and

3. Needed resources are to be developed before committing the

en-tire corporation to a specific strategy.

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Henry Mintzberg’s 10 Schools of Strategy

The Design School:

According to Mintzberg, Lampel and Ahlstrand (1998,p.23) the design school is aconcept, where Mintzberg suggests that, strategy
should be formulated using tools and techniques such asSWOT analysis

The Planning School:

According to Mintzberg, Lampel and Ahlstrand (1998,p.47) the planning school of thought recommends analysis of the current
business situation and focuses more on implementation of the strategies.

The Positioning School:

According to Mintzberg, Lampel and Ahlstrand (1998,p.81) this conceptrecommends the focus on the current position of the
company in the industry and development of strategies that would change the position of the company

Descriptive schools:
These are the concepts that suggest how strategies are actually made. In other words,these concepts talk about how organisations
actually formulate their strategies

The Entrepreneurial School:

According to Mintzberg, Lampel and Ahlstrand (1998,p.123)theentrepreneurial school suggests that organisations following this
concept have a visionary leader whoformulates a strategy for it and the organization follows that strategy throughout the existence
of theorganisation, making changes according to the contemporary environment.

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The Learning School:
According to Mintzberg, Lampel and Ahlstrand (1998,p.175) this concept suggeststhat organisations following this concept formulate their
strategies by learning from their mistakes. The strategy formulation in this particular concept is very slow as managers learn and slowly
formulate a strategy. This concept is influenced by Education

The Power School:

According to Mintzberg, Lampel and Ahlstrand (1998,p.223) this concept suggeststhat organizations following this concept formulate their
strategies based on their power, which may be acompetitive advantage. The power of a company may be used to formulate a strategy, which
may be brand image, or huge amount of capital. The strategy usually exerts some power over the customers

The Environmental School:

According to Mintzberg, Lampel and Ahlstrand (1998,p.285) this conceptsuggests that organisations following this concept focus on the external
environmental factors and crafts astrategy based on those factors. The organisations check all the political, social, economical andtechnological
factors and devises up a strategy in order to tackle the predicaments they are facing

The Configuration School:

According to Mintzberg, Lampel and Ahlstrand (1998, p.301) this conceptsuggests that organisations following this concept focus on change
keep on changing their decisionmaking patterns in order to formulate a strategy. It is influenced by context. This concept is theoreticallyvery
innovative as it keeps up with change and hence the strategy is supposed to be compound, however itis not practical as establishing this kind of
strategic formulation process would require a very flexibleorganizational structure and flexible employees who will be able to adjust with
change very rapidly

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Edger Schain
3 dimensions to organizational role
1. Inclusionary : a social dimension (e.g. outsider, probationary, status, permanent status)
2. Functional : a task dimension (e.g. sales, engineering, plant operations)
3. Hierarchical : a rank dimension (e.g. line, employee, supervisor, middle manager, officer)

Schein's three levels of importance of activities

1. Pivotal: behaviors essential to organizational membership
2. Relevant: behaviors that are desirable but not essential
3. Peripheral: unimportant behaviors
- Orgs. more likely to focus on pivotal and relevant and less on peripheral

Edgar Schein's Levels of Culture

(1) artifacts
(2) values
(3) underlying assumptions

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 Management Skills (Robert L. Katz)
Technical Skills Human Skills Conceptual Skills

• job specific knowledge and • the ability to work well with • the ability to think and
techniques needed to other people, both individually conceptualize about abstract and
proficiently perform work tasks and with a group complex situations
• the skills necessary to accomplish • the ability to communicate with, • the manager's ability to think in
or understand the specific kind of understand, and motivate both the abstract; understanding the
work being done; important for individuals and groups overall workings of the
first-line managers organization and its environment
ex: Mark Zuckerberg cultivated
ex: making your way into various strong relationships with key allows to see the "big picture"
positions including store advertisers and brought confuted
manager, district manager, growth and stability to Facebook
regional mangers, regional VP,
senior VP, executive VP, and
president of Retail
The Universality of Management
The reality that management is needed in all types and sizes of organizations, at all
organizational levels, in all organizational areas, and in organizations no matter where located

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Elements of Organizational Structure
The six basic elements of organizational structure are:
departmentalization,
1. chain of command,
2. span of control,
3. centralization or decentralization,
4. work specialization and
5. the degree of formalization.
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1. Work specialization : The degree to which tasks in an organization are subdivided into
separate jobs.

2. Departmentalization: The basis by which jobs in an organization are grouped together

3. Chain of command : The unbroken line of authority that extends from the top of the
organization to the lowest echelon and clarifies who reports to whom.

4. Unity of command: The idea that a subordinate should have only one superior to whom he or
she is directly responsible

5. Span of control: The number of subordinates a manager can efficiently and effectively direct.

6. Centralization: The degree to which decision making is concentrated at a single point in an

organization.

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 Important Terms
Organizational design
• Organizational design is the process in which managers change or develop an organization's structure.
• Process by which managers assess the tasks, functions, and goals of the business, allowing them to
make decisions about how to group people together to best and most efficiently achieve the objective

Organizational chart
• Displays the structure of the organizations and also shows the relationships between organizational
members and the ranks of all positions in the organization
Organizational Structure
• The formal arrangement of jobs within an organization
• Type of framework a company uses to distinguish power and authority, roles, responsibilities, and the
manner in which information flows through the organizatio
Types of organizational structures
1. Hierarchical org structure
2. Functional org structure
3. Horizontal or flat org structure
4. Divisional org structures (market-based, product-based,
geographic)
5. Matrix org structure
6. Team-based org structure
7. Network org structure
 Hierarchical org structure
Hierarchical org structure Pros Cons

• The pyramid-shaped • Better defines levels of • Can slow down innovation

organizational chart we authority and responsibility or important changes due to
referred to earlier is known • Shows who each person increased bureaucracy
as a hierarchical org chart. reports to or who to talk to • Can cause employees to act
• It’s the most common type about specific projects in interest of the
of organizational structure– • Motivates employees with department instead of the
–the chain of command clear career paths and company as a whole
goes from the top (e.g., the chances for promotion • Can make lower-level
CEO or manager) down • Gives each employee a employees feel like they
(e.g., entry-level and low- specialty have less ownership and
level employees) and each can’t express their ideas for
• Creates camaraderie
employee has a supervisor. the company
between employees within
the same department
 Functional org structure
Functional org structure Pros Cons

• Similar to a hierarchical • Allows employees to focus on • Can create silos within an

organizational structure, a their role organization
functional org structure starts • Encourages specialization • Hampers interdepartmental
with positions with the • Help teams and departments communication
highest levels of responsibility feel self-determined • Obscures processes and
at the top and goes down strategies for different
• Is easily scalable in any sized
from there. markets or products in a
company
• Primarily, though, employees company
are organized according to
their specific skills and their
corresponding function in the
company.
• Each separate department is
managed independently.
 Horizontal or flat org structure
Horizontal or flat org structure Pros Cons

• A horizontal or flat • Gives employees more • Can create confusion since

organizational structure fits responsibility employees do not have a
companies with few levels • Fosters more open clear supervisor to report to
between upper management communication • Can produce employees with
and staff-level employees. • Improves coordination and more generalized skills and
• Many start-up businesses use speed of implementing new knowledge
a horizontal org structure ideas • Can be difficult to maintain
before they grow large once the company grows
enough to build out different beyond start-up status
departments, but some
organizations maintain this
structure since it encourages
less supervision and more
involvement from all
employees.
 Divisional org structure
Divisional org structure Pros Cons

• In divisional organizational • Helps large companies stay • Can easily lead to duplicate
structures, a company’s flexible resources
divisions have control over • Allows for a quicker response • Can mean muddled or
their own resources, to industry changes or insufficient communication
essentially operating like customer needs between the headquarters
their own company within • Promotes independence, and its divisions
the larger organization. autonomy, and a customized • Can result in a company
• Each division can have its approach competing with itself
own marketing team, sales
team, IT team, etc. This
structure works well for large
companies as it empowers
the various divisions to make
decisions without everyone
having to report to just a few
executives.
 Matrix org structure
Matrix org structure Pros Cons

• A matrix organizational chart • Allows supervisors to easily • Presents a conflict between

looks like a grid, and it shows choose individuals by the department managers and
cross-functional teams that needs of a project project managers
form for special projects. • Gives a more dynamic view of • Can change more frequently
• For example, an engineer the organization than other organizational
may regularly belong to the • Encourages employees to use chart types
engineering department (led their skills in various
by an engineering director) capacities aside from their
but work on a temporary original roles
project (led by a project
manager).
• The matrix org chart accounts
for both of these roles and
reporting relationships.
 Team-based org structure
Team-based org structure Pros Cons

• A team organizational • Increases productivity, • Goes against many

structure is meant to disrupt performance, and companies’ natural inclination
the traditional hierarchy, transparency by breaking of a purely hierarchical
focusing more on problem down silos structure
solving, cooperation, and • Promotes a growth mindset • Might make promotional
giving employees more • Changes the traditional career paths less clear for employees
control. models by getting people to
move laterally
• Values experience rather than
seniority
• Requires minimal
management
• Fits well with agile companies
with scrum or tiger teams
 Network org structure
Network org structure Pros Cons

• A network organizational • Visualizes the complex web of • Can quickly become overly
structure makes sense of the onsite and offsite relationships complex when dealing with lots
spread of resources. in companies of offsite processes
• It can also describe an internal • Allows companies to be more • Can make it more difficult for
structure that focuses more on flexible and agile employees to know who has
open communication and • Give more power to all final say
relationships rather than employees to collaborate, take
hierarchy. initiative, and make decisions
• shamrock organizations" "pizza • Helps employees and
structures" "spider webs" stakeholders understand
"starbursts" "virtual" "modular" workflows and processes
"cellular corporations" "cluster
organizations"
Line Organization
1. Line organization is the most oldest and simplest method of administrative
organization.
2. According to this type of organization, the authority flows from top to bottom
in a concern.
3. Specialized and supportive services do not take place in these organization.
4. Unified control by the line officers can be maintained since they can
independently take decisions in their areas and spheres.
5. This kind of organization always helps in bringing efficiency in communication
and bringing stability to a concern
 Merits of Line Organization
1. Simplest- It is the most simple and oldest method of administration.
2. Unity of Command- In these organizations, superior-subordinate relationship is maintained and scalar
chain of command flows from top to bottom.
3. Better discipline- The control is unified and concentrates on one person and therefore, he can
independently make decisions of his own. Unified control ensures better discipline.
4. Fixed responsibility- In this type of organization, every line executive has got fixed authority, power and
fixed responsibility attached to every authority.
5. Flexibility- There is a co-ordination between the top most authority and bottom line authority. Since the
authority relationships are clear, line officials are independent and can flexibly take the decision. This
flexibility gives satisfaction of line executives.
6. Prompt decision- Due to the factors of fixed responsibility and unity of command, the officials can take
prompt decision.
Demerits of Line Organization
1. Over reliance- The line executive’s decisions are implemented to the bottom. This results in over-
relying on the line officials.
2. Lack of specialization- A line organization flows in a scalar chain from top to bottom and there is
no scope for specialized functions. For example, expert advices whatever decisions are taken by
line managers are implemented in the same way.
3. Inadequate communication- The policies and strategies which are framed by the top authority
are carried out in the same way. This leaves no scope for communication from the other end. The
complaints and suggestions of lower authority are not communicated back to the top authority.
So there is one way communication.
4. Lack of Co-ordination- Whatever decisions are taken by the line officials, in certain situations
wrong decisions, are carried down and implemented in the same way. Therefore, the degree of
effective co-ordination is less.
5. Authority leadership- The line officials have tendency to misuse their authority positions. This
leads to autocratic leadership and monopoly in the concern.
 The Spaghetti Organisations
1. The spaghetti organisation was a response to this problem. The term was coined by Kolind to describe the
extremely flexible organisational structure he introduced in 1991 at Oticon.
2. In the early 1990s, Oticon developed a radical organisation model with no formal hierarchical reporting
relationships, a resource allocation system built around self-organised project teams, and an entirely open-
plan physical layout.
3. Spaghetti Organization refers to a flat, loosely coupled, project based organization characterized by
ambiguous job boundaries and extensive delegation of task and project responsibilities to autonomous
teams.
4. It is a type of boundary-less organisation which seeks to eliminate the chain of command having limitless
span of control and replaces departments with empowered teams•
5. Advantages – Faster communication facilitating quick decision making – Motivates employees and develops
their abilities – Job rotation: development in all functional areas.
Team Organizational Design
• Groups of employees are formed from various functional areas for the purpose
of solving problems and exploring possibilities
*breakdown functional barriers among departments

Lean Organizational Structure

• Is a structure that is designed to create more customer value using fewer
resources than a traditional organizational structure

Outplacement Strategy
• Which is the process of assisting former employees in finding new employment
and training and re-skilling the remaining workers into their new jobs
 Organic Structure Mechanistic Structure(bureaucratic)

• An organic structure is set up like a network; • A mechanistic structure is primarily hierarchical;

interactions and communications are horizontal, interactions and communications typically are
knowledge resides wherever it is most useful to the vertical, instructions come from the boss,
organization, and membership requires a knowledge is concentrated at the top, and loyalty
commitment to the organization’s tasks and obedience are required to sustain membership
• Low degree of formalization and extensive • Formal and centralized network and work best for
departmentalization and provide little opportunity companies that work in stable and certain
for decision making by low level members of the environment
organization • Ex.:
• typically horizontal designs, like team, network) Healthcare
• Lateral communication University
• Highly integrated and dependent functional areas Government Structure
• Do not rely on standardized processes and • Well-defined hierarchy
procedures • Top-level managers make the majority of decisions
• Multiple tasks are differentiated to one person • Individualized job specialization
Customer-Centric Structure Product-Centric Structure

• focuses on the best • focuses on the best

solution for the customer, product for the customer,
front-back organizations, new products new
excel at putting customers features, new product
needs first and at the top processes, product teams
of the agenda (many
ecommerce and globalized
orgs have this structure)-
customer relationships
Boundary-less Organization
• Is an organization that seeks to remove vertical, horizontal and external barriers so that
employees, managers, customers and suppliers can work together, share ideas and identify
the best course for the organization

Vertical Boundary
• Create barriers between the different levels of management that are part of the structure of
an organization

Horizontal Boundary
• Impede communication and interaction between organizational members who work at
different functional departments within the organization

Geographic Boundary
• Act as barriers between members of the same organization who are physically separated
67
Organisational Meaning
Structure
Simple Structure Non-elaborate structure; has little formalizaion; has a centralized authority.

Functional Structure Expansion of functional departmentalization; groups employees with similar and related occupational
specialties; used as a framework for an entire company.

Divisional Structure groups people together based on the product which they are working, their physical locations and the
customers they have in common

Benefits: focused experts, better communication, increase accountability, easier to grow and shrink based
on conditions
Matrix structure an organizational structure in which people are grouped simultaneously by function and by division, usually
an employee reports to two managers

hybrid structure a combination of different organizational structures

Cross Functional Teams bring together members of different functional teams

Team-based Structure Consists entirely of work groups and teams which perfom an organization's work; allows team members to
have authority to make the decisions which will affect them; has no chain-of-command.

Mechanistic organization an organization that is characterized by specialized jobs and responsibilities; precisely defined, unchanging
roles; and a rigid chain of command based on centralized authority and vertical communication.
Organisational Meaning
Structure
Boundaryless Organization Not defined of limited by boundaries or categories imposed by a traditional structure; blurs boundaries surrounding an
organization by increasing its interdependence with its enviroment.
Network Structure Uses information technology to link organizations with networks of outside suppliers and contractors

(Dream Works) access to experts, grow and shrink depending on market conditions, lower costs due to fewer full time
employees

Geographical Structure groups people and jobs based on geographic locations

-interests and tastes of a particicular region
Product Structure groups people and jobs based on a similar product or service
customer structure customer structure
Centralised structure Involves keeping all the major responsibilities at the centre of the organisation
Decentralised structure Involves giving decision making power to individual branches of an organisation
- Head office sets targets but individual branches decides how to meet them
Tall structure Simplest form of organization
- Have a long chain of command
Employees can be closely supervised
- Good promotion prospects
- Clear management structure

Flat structure - Fewer layers in them

- Common in small businesses with less staff required
- Better communication
- Decision making is easier
- Reduces labour costs

Learning Organizations Have developed a capacity to continuously adapt and change because members take an active role in identifying and resolving
work-place issues; employees must collaborate on work activities throughout the organization and have a team oriented work
ethic.
1.Supervisor is another name for which of the following?
A) team leader
B) middle manager
C) first-line manager
D) top manager

2. Managers with titles such as regional manager, project leader, or division

manager are ________.
A) first-line managers
B) top managers
C) production managers
D) middle managers
3.________ are responsible for making organization-wide decisions and establishing
the plans and goals that affect the entire organization.
A) First-line managers
B) Top managers
C) Production managers
D) Research managers

4. According to Mintzberg's managerial roles, the ________ roles are ones that involve
people and other duties that are ceremonial and symbolic in nature.
A) informational
B) interpersonal
C) technical
D) decisional
5.The ________ roles involve collecting, receiving, and disseminating
information, according to Mintzberg's managerial roles.
A) interpersonal
B) informational
C) technical
D) decisional

6.Which of the following is NOT an example of an interpersonal role according

to Mintzberg?
A) figurehead
B) leader
C) liaison
D) spokesperson
7.Which of the following is an example of a decisional role
according to Mintzberg?
A) monitor
B) entrepreneur
C) figurehead
D) disseminator

8. Robert L. Katz proposed ________.

A) three critical managing skills
B) ten critical managing roles
C) five traditional management functions
D) six traditional management styles
9 .Katz proposed that managers need ________ skills.
A) technical, human, and financial
B) human, empirical, and mechanical
C) technical, interpersonal, and legal
D) technical, human, and conceptual

10 .Technical skills include ________.

A) experience gained by experiments that are used in performing managerial tasks
B) job specific knowledge needed to proficiently perform work tasks
C) the ability to work well with individuals and groups
D) skills managers use to think and to conceptualize about abstract and complex
situations
11. Which of the following skills tend to be more important for first-line
managers since they manage employees who produce the organization's
product?
A) human
B) technical
C) conceptual
D) empirical

12. Which of the following skills involves the ability to work well with other
people, both individually and in a group?
A) technical skills
B) assessment skills
C) planning skills
D) human skills
13. Conceptual skills involve ________.
A) managing employees who use tools to produce
the organization's products
B) communicating with customers
C) thinking about abstract and complex situations
D) inspiring enthusiasm and trust among employees
The Management Process School
The management process school views management as a process of getting things done with
people working in organized groups.
Fathered by Henri Fayol, this school views management theory as a way of organizing
experience for practice, research and teaching. It begins by defining the functions of
management.
Those subscribing to this school are of the view that management principles are of universal
application. This approach is also designated as the traditional approach, the universal
approach, or the classical approach.
The contributors and thinkers who belong to this school are William Newman, Summers,
McFarland, Henry, J.D. Mooney, A.C. Railey, Lyndell Urwick, and Harold Koontz.
 Functions of Management
1. Henry Fayol gave the management theory in (1916) which was based on his
experiences in a mining company. This management theory was compiled in
a book named “The General and Industrial Management”.
2. He classified the elements of management into five categories as
mentioned below: POC3 : • Planning • Organising • Commanding • Co-
ordination • Control
3. Knootz O Donnel: POSDC(Planning ,Organizing, Staffing, Directing,
Controlling)
4. Luther Gulick and Urwick : POSDCORB (Planning, Organizing, Staffing,
Directing, Co-coordinating, Reporting, Budgeting)
5. George R. Terry : POAC (Planning ,Organizing, Actuating, Controlling)

78
78
Planning-organizing-leading-controlling (P-O-L-C)
framework.

79
 Planning
1. According to Koontz and O’Donnel, “Planning is deciding in advance what to do,
how to do it, when to do it and who is to do it. It bridges the gap from where we are
to where we want to go.”
2. According to George R. Terry, “Planning is the selecting and relating of facts and the
making and using of assumptions regarding the future in the visualization and
formulation of proposed activities believed necessary to achieve desired results.
3. Henry Fayol defined planning as “Planning is deciding the best alternatives among
others to perform different managerial operations in order to achieve the pre-
determined goals
4. Stephen Robbins : Involves defining the organization’s goals, establishing strategies
for achieving those goals, and developing plans to integrate and coordinate work
activities. It’s concerned with both ends (what) and means (how).

80 80
Plans, Goals and Objectives
Planning is often called the primary management function because it establishes
the basis for all the other things managers do as they organize, lead, and control.
It involves two important aspects: goals and plans.
Goals are the desired outcomes of the business's activities. Objectives tend to
be precise, measured actions, with time for completion.
Obtaining a goal will require completion or accomplishment of various
objectives.
As such, objectives can be thought of as pieces of a goal. While goals are often
repeated over time, objectives tend to be specific and carried out during a single
period - rather than repeated

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 Functions of goals and Objectives in the organization
Goals serve the following functions:
1. Provide Guidance and Direction - Goals demonstrate to all parties involved where the company is going.
2. Coordinate Planning and Actions - These individuals can see holistically why the individual objective being
undertaken are important in accomplishing the companys mission.
3. Motivate Employees - Employees are motivated by understanding the purpose of their actions. Also, goals can be
tied to specific rewards for accomplishment.
4. Facilitates Process Control - Goals allow companies to measure progress. Also, managers can evaluate the
effectiveness of employees in accomplishing goals.

Generally, objectives serve the following functions:

1. Further the overarching goals;
2. Allow individuals to work specifically on one aspect of goal accomplishment;
3. Allow managers to align the efforts of individuals and groups;
4. Provide a timeline for accomplishment or completion;
5. Identify specific desired results,
6. Makes specific individuals are groups accountable for specific tasks, and
7. Allow managers and employees to measure results.

82
 Categories or types of goals
1. Strategic Goals : Strategic goals are generally developed by higher-level managers.
For example, in a corporation, the board of directors is generally tasked with crafting
the organization's strategy.

2. Tactical Goals : Tactical goals are generally developed or carried out by middle
managers. That is, tactical goals are increasingly present in middle tiers of the
organizational structure. These goals break down the strategic goals in to more
actionable elements based upon the function or division of the sub-unit tasked with
relevant responsibilities.
3. Operational Goals : Operational goals are specific, measured goals that are further
broken down into specific objectives to be accomplished. These goals and objectives
are the domain of the functional employees who go about delivering the company's
value proposition customers or clients.

83
1. Real Goal - A real goal is the one adopted and actively pursued by the organization.
2. Stated Goal - A stated goal is one that is communicated to stakeholders but is not actually
pursued by the organization. Stated goals serve more to affect the image or perception of
the organization by third-parties. These types of goals do little to motivate or guide the
activities of employees. Eg. organization’s charter, annual report, public relations
announcements, or in public statements made by manager
3. Short term Goal - Short-term goals tend to be simple, highly-specific, and non-repetitive.
Long-term goals tend to be higher-level, less specific, and continuous in nature. For example,
a short-term goal may be to get new equipment set up and operational.
4. Long-Term Goal - A long-term goal may include continuous improvement in the quality of
customer service evaluations.

84
Characteristics of Planning
1. Planning is goal-oriented.
2. Planning is looking ahead.
3. Planning is a mental exercise involving creative thinking
4. Planning essentially involves choice among various alternatives
5. Planning is the primary function of management / Primacy of Planning.
6. Planning is a Continuous Process
7. Planning is all Pervasive
8. Planning is designed for efficiency
9. Planning is Flexible
Operational plans can be a single-use plan or an
ongoing plan
a. Single-use plans apply to activities that do not recur or repeat. A one-time
occurrence, such as a special sales program, is a single-use plan because it deals
with the who, what, where, how, and how much of an activity. A budget is also a
single-use plan because it predicts sources and amounts of income and how
much they are used for a specific project.
b. Continuing or ongoing plans are usually made once and retain their value
over a period of years while undergoing periodic revisions and updates. The
following are examples of ongoing plans: policy, procedure, rule

86
Types of Plans
Operational Planning Strategic Planning

• Operational plans are about how things • strategic plans are plans that apply to the
need to happen entire organization and establish the
• Plans that encompass a particular organization’s overall goals
operational area of the organization are • Strategic planning involves analyzing
called operational plans competitive opportunities and threats, as
• describes the day-to-day running well as the strengths and weaknesses of
• described as single use plans or ongoing the organization, and then determining
plans. how to position the organization to
compete effectively in their environment
• Single use plans are created for events
and activities with a single occurrence • two years to the next 10 years
• Ongoing plans include policies, rules,
procedure
87
87
 Tactical Planning Contingency Planning

• Tactical plans are about what • Contingency plans are made

is going to happen when something unexpected
• Tactical planning is happens or when something
intermediate-range (one to needs to be changed
three years) planning that is • Contingency planning involves
designed to develop relatively identifying alternative courses
concrete and specific means to of action that can be
implement the strategic plan. implemented if and when the
• Middle-level managers often original plan proves
engage in tactical planning. inadequate because of
changing circumstances

88
 Planning
Classification

Nature of Planning Duration of planning Levels of Management Use

a. Formal planning
a. Strategic planning a. Standing plans
official and recognized a. Short term planning
determining overall objectives which is designed to be used over and over again.
reduced to writing covers less than two years
conducted by the top management Objectives, policies procedures, methods, rules and strategies
considered as tactical planning
determines the direction called routine plan
immediate future
SWOT Analysis Long range
inventory planning and control,
employee training, work methods etc.
b. Informal planning
which is not in writing
number of actions is less,short b. Intermediate planning
period
time frames of about 6 months to 2
years b. Single-use plans
b. Long term planning. contemplated by middle which sets a course of action for a particular set of circumstances
period of more than five years, management, programme, budgets, projects and sche dules.
between five and fifteen years Short range
broader technological and called specific planning
competitive aspects
considered as strategic planning

c. Operational planning
deals with only current activities.

89
 Steps involved in Planning

1.Establishing objectives 2.Planning Premises 3.Determining Alternative

stated in quantitative terms conditions under which 4.Evaluation of Alternatives
merits, demerits
practical, acceptable, workable and planning activities will be analysed
achievable quantitative techniques to judge
undertaken

6.Formulating
Derivative/Supporting Plans
8.Feedback or Follow-up 7.Establishing Sequence of
sub plans or secondary plans 5.Choice of Alternative Plans
Action Activities
indicate time schedule and
sequence

90
90
Total Quality Management approach to the planning
process
It is a Total Quality Management (TQM) process, for the purpose of continuous learning and
improvement. It helps managers to assess the effect of planned action through a systematic
review.
The cycle consists of four key stages:
1. Plan—create the plan as discussed earlier in this chapter with the process
2. Do—implement the plan.
3. Check—monitor the results of the planned course of action.
4. Act—on what was learned, modify the plan, and return to the first stage.

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Meaning and Definition of Policy
1. A policy is a norm or guideline which is used to take a decision for achieving objectives in
consideration of the organisational climate.
2. A policy is a type of standing plan.
3. A policy can guide sub-ordinates in order to execute the work assigned to them. Sub-ordinates can
take decisions within the framework of the policy without reference to higher authorities.
4. A policy is a predetermined course of action established to guide the performance of work towards
the realization of accepted objectives.
5. According to Dale Yoder, “A policy is the statement or general understanding which provides
guidelines in decision-making to members of an organisation in respect to any course of action.”
6. Eduin B. Flippo defines policy as “A policy is a man-made rule or predetermined course of action
that is established to guide the performance of work towards the organisation. It is a type of
standing plan that serves to guide subordinates in the execution of their task.

92
 Types of Policy
1. Internal Policy: It is also known as originated policy. This type of policy is formulated by the management
executives at different levels-top, middle and lower. This policy is prepared on the basis of nature of business
and scope of the management
2. Appealed Policy: This type of policy is formulated only on the requests of the subordinates. This policy helps the
subordinates to handle some situations. If the existing policies do not give any scope to handle extraordinary
situations; appealed policy is to be formulated.
3. External Policy: It is also known as imposed policy. An outsider of an organisation may be instrumental to the
formulation of this policy.
4. General Policy: General policy is that policy which does not create an impact on the performance of the
employees. This policy may represent the philosophy of the top management executives.
5. Specific Policy: A specific policy is formulated with regard to any specific issue i.e. transfer, promotion,
compensation etc. A specific policy must confirm to the broad outlines mentioned in the general policies.
6. Written Policy: This policy is formulated and intimated in written form. Here there is no possibility of any
degree of deviation
7. .Implicit Policy: This policy is inferred from the behaviour of the superior. Such policies are more flexible than
other policies.

93
Meaning and Definition of Procedure
The procedure decides the task to be performed specifically and the persons
who will perform the work within a specified time. Procedure lays down the
process to be followed and sequences of activities for the work to be done.
According to Ernest C. Miller, “Policies are general instructions while
procedures are specific applications.”
George R. Terry defines procedure as, “A series of related tasks that make up the
chronological sequence and the established way of performing the work to be
accomplished.”
 Rule
A rule is a guide to employees who are working in an organisation like a procedure. But the rule has no
sequence of action as in the case of a procedure. A rule specifies what is to be done and what may not be
done in a given situation.
• Rules do not give any scope for decision making. For instance, “No admission without permission” is a
rule. These rules do not give any scope for discretion on the part of entrant. Rule is to be enforced rigidly
and a fine or penalty may be imposed for ignoring the rule.
• Rule is a standing plan. A rule is a part of procedure. It is more rigid than a policy.
• Rule indicates the limits of acceptable behaviour of the employees of an organisation.
• Rule helps the managers to improve the efficiency and predict the behaviour of subordinates in the given
situation.
• Rules are helpful in maintaining discipline.
• Rules should be so planned that they do not curtail initiative and creativity and at the same time help in
smooth flow of work

95
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97
98
99
Approaches to planning
(a) Top-down approach: In this approach the mission flows from the top level of management.
Authority and responsibility to the planning process is centralized in top. In most of the family owned
businesses it is followed. It is either a straight no or a very little contribution in this approach to planning
by lower level managers. In approach the success depends on the skills, knowledge and competency of
people at the top.
(b) Bottom -up approach: In this approach the lower and middle level managers are encouraged to plan.
This brings commitment to goal and resources by the employees themselves.
(c) Composite approach: Here the top management provides the guidelines for planning and set the
premises. The lower and middle level managers come up with tentative plans. It is then debated and put
in practice.
(d) Team approach: In this method the team managers are identified with specialization in various
functional areas. They do the whole exercise of planning for the organization. They draft the plan and
take approvals from the top management.

100
Business Forecasting
1. Business forecasting refers to the tools and techniques used to predict
developments in business, such as sales, expenditures, and profits.
2. The purpose of business forecasting is to develop better strategies based on
these informed predictions.
3. Past data is collected and analyzed via quantitative or qualitative models so
that patterns can be identified and can direct demand planning, financial
operations, future production, and marketing operations.
Techniques of
1.Time Series Analysis,” or Trend Analysis Method
Business Forecasting Quantitative
2.Econometric Modeling
3.Indicator Approach
4. Business Barometers/ Index Number Method
5. Extrapolation Method
6. Associative ( Causal) Models
7. Regression Analysis
8. Input and Output Analysis

1.Market Research
Qualitative
Survey and Opinion

2.Delphi Model

3. Historical Analogy Method

4.Sales Force composite

 1. Quantitative Techniques
1. Trend Analysis Method or “Time
2. Econometric Modeling:
Series Analysis
• this forecast method uses past data to • This mathematical model makes use of
predict future events, excluding outliers several multiple-regression equations to
and holding more recent data in higher test the consistency of datasets over time
regard. and the significance of the relationship
• This method is most effective when there is between datasets, and to predict significant
a large quantity of historical data showing economic shifts and the potential effect of
clear and stable trends. This is the most those shifts on the company.
common and cost-effective method. • Econometric refers to the science of
• This analysis involves trend, seasonal economic measurement. Mathematical
variations, cyclical variations and irregular models are used in economic model to
or random variations. express relationship among various
economic events simultaneously.
 3. Indicator Approach 4.Business Barometers 5.Extrapolation Method

• This approach follows the • A barometer is used to measure • Extrapolation method is based
relationship between certain the atmospheric pressure. Time series, because it believes
indicators and uses the leading • In the same way, index numbers that the behaviour of the series in
indicator data in order to are used to measure the state of the past will continue in future
estimate the performance of the an economy between two or also and on this basis future is
lagging indicators. more periods. predicted.
• Lagging indicators are a type of • These index numbers are the • This method slightly differs from
KPI that measure business device to study the trends, trend analysis method. Under it,
performance subsequently and seasonal fluctuations, cyclical effects of various components of
provide insight into the impact of movements, and irregular the time series are not separated,
business strategies on the results fluctuations. but are taken in their totality.
achieved. • These index numbers, when used • It assumes that the effect of these
in combination with one another, factors is of a constant and stable
provide indications as to the pattern and would also continue
direction in which the economy is to be so in future.
proceeding.
• Thus, with the business activity
index numbers, it becomes easy
to forecast the future course of
actio
 6.Associative ( Causal) Models 7.Regression Analysis 8.Input and Output Analysis

• assume that the variable • In this method two or more • This is also known as “End
being forecasted is related to inter-related series are used Use Technique.” The
other variables in the to disclose the relationship technique is based on the
environment between the two variables. A hypothesis of various sectors
• often economic indicators number of variables affect a of the economy industry
help predict changes in future business phenomenon which are inter-related. Such
demand (ex. employment) simultaneously in economic inter-relationship is known as
-these models create cause- and business situation. This coefficient in mathematical
and-effect relationship analysis helps in isolating the terms
between in/depend variables effects of various factors to a • a forecast of output is based
-linear regression great extent. on given input if relationship
• For example- there is a between input and output is
positive relationship between known. Similarly, input
sales expenditure and sales requirement can be forecast
profit. on the basis of final output
with a given input-output
relationship.
(Economic forecasting method) The basic aim of economic forecasting is to predict
business fluctuations. There are numerous indicators employed to measure economic
activity in a nation. Gross national product (GNP) is the most important indicator. GNP is
the value of goods and services produced in the country in a year. The following methods
are employed to forecast the future GNP

Lead and lag method: In this method, the historic behaviour of various indicators is
studied. The purpose is to find out whether the indicating factor has regularly moved in
advance of the general business trend, or has moved simultaneously with it or has
lagged behind it.

106
 1. Qualitative Techniques:
1.Market Research 2.Delphi Model

• Polls and surveys are conducted with a large • A panel of experts are polled on their opinions
number of prospective consumers regarding a regarding specific topics. Their predictions are
specific product or service in order to predict the compiled anonymously and a forecast is made.
margin by which consumption will either decrease
or increase
• Surveys can be conducted to gather information on
the intentions of the concerned people. On the
basis of such surveys, demand for various products
can be projected. Survey method is suitable for
forecasting demand—both of existing and new
products
• Opinion poll is conducted to assess the opinion of
the experienced persons and experts in the
particular field whose views carry a lot of weight.
For example, opinion polls are very popular to
predict the outcome of elections in many countries
including India
 3. Historical Analogy
4.Sales Force composite
Method
• A judgmental forecasting • qualitative sales forecasting
technique based on method based on the
identifying a sales history combined sales estimates
that is analogous to a of the firm's salespeople
present situation, such as
the sales history of a similar -may be
product, and using that optimistic/manipulated
past pattern to predict relative to saleperson's goal
future sales.
109
 Definition
Decision making is the process of choosing one best alternative from among the number
of alternatives available to the management. The success of management depends upon
the quality of decision

George R.Terry
• Decision-making is the selection based on some criteria from two or more
possible alternatives.
Trewatha & Newport
• “Decision-making involves the selection of a course of action from among
two or more possible alternatives in order to arrive at a solution for a given
problem
110
 Approaches/Types of Decision Making
Avoiding

• One decision-making option is to make no choice at all. There are several reasons
why the decision maker might do this:
• There is insufficient information to make a reasoned choice between alternatives.
• The potential negative consequences of selecting any alternative outweigh the
benefits of selecting one.
• No pressing need for a choice exists and the status quo can continue without harm.
• The person considering the alternatives does not have the authority to make a
decision.

111
 Approaches/Types of Decision Making
Problem Solving Problem Seeking

• Most decisions consists of problem-solving • the process of problem solving brings the focus
activities that end when a satisfactory solution or scope of the problem itself into question.
is reached. • It may be found to be poorly defined, of too
• In psychology, problem solving refers to the large or small a scope, or missing a key
desire to reach a definite goal from a present dimension.
condition. • Decision makers must then step back and
• Problem solving requires problem definition, reconsider the information and analysis they
information analysis and evaluation, and have brought to bear so far.
alternative selection. • We can regard this activity as problem seeking
because decision makers must return to the
starting point and respecify the issue or
problem they want to address.

112
113
8 steps in the decision-making process
•1. Identify problem
2. Identify decision criteria
3. Allocate weights to the criteria
4. Develop alternatives
5. Analyse alternatives
6. Select an alternative
7. Implement the alternative
8. Evaluate the decision effectiveness
114
Decision making model
1) The rational decision making
approach

Decision making
2)Evidence-Based Decision
Making

model 3) The behavioural Approach /The

Administrative Model

4)An Integrated Approach to

Decision Making

5) The intuitive decision-making model

115
115
THE RATIONAL APPROACH TO DECISION
MAKING
The rational decision making approach is a systematic, step-by step process for making decisions
Describes choices that are logical and consistent and maximize value
The decision maker has complete information, is able to identify all the relevant options in an
unbiased manner, and chooses the option with the highest utility

116
Bounded Rationality
Our limited information-processing capability makes it impossible to assimilate and understand
all the information necessary to optimize.
a more realistic approach to describing how managers make decisions is the concept of bounded
rationality, which says that managers make decisions rationally, but are limited (bounded) by
their ability to process information.
Bounded rationality is the idea that decision makers cannot deal with information about all the
aspects and alternatives pertaining to a problem and therefore choose to tackle some
meaningful subset of it

117
Evidence-Based Decision Making - Jeffrey
Pfeffer and Robert Sutton
Evidence based management (EBM) is defined as the commitment to identify and utilize the be
theory and data available to make decisions. Advocates of this approach encourage the use of five
basic “principles”:
1. Face the hard facts and build a culture in which people are encouraged to tell the truth, even if it’s
unpleasant.
2. Be committed to “fact-based” decision making—which means being committed to getting the best
evidence and using it to guide actions.
3. Treat your organization as an unfinished prototype—encourage experimentation and learning by
doing.
4. Look for the risks and drawbacks in what people recommend (even the best medicine has side
effects).
5. Avoid basing decisions on untested but strongly held beliefs, what you have done in the past, or
uncritical “benchmarking” of what winners do

118
THE BEHAVIORAL APPROACH TO
DECISION MAKING
the behavioral approach acknowledges the role and importance of human behavior in the
decision-making process. Herbert A. Simon was one of the first experts to recognize that
decisions are not always made with rationality and logic.
decision makers operating with bounded rationality limit the inputs to the decision-making
process and base decisions on judgment and personal biases as well as on logic.
The administrative model is characterized by (1) the use of procedures and rules of thumb, (2)
suboptimizing, and (3) satisficing
Suboptimizing is knowingly accepting less than the best possible outcome to avoid unintended
negative effects on other aspects of the organization
Satisficing is examining alternatives only until a solution that meets minimal requirements is
found

119
Which of the following statements are true about Herbert A. Simon’s decision
making process ? July 2016
a. Decision-making process involves intelligence, design and choice activities.
b. Decision-making involves choice between alternative plans of action.
c. Bounded rationality has no significance in decision-making process.
d. Satisficing model brings about a balance between individual and
organisational value judgement in decision making process.

(1) a and b are only true.

(2) a and d are only true.
(3) a, b and c are true.
(4) a, b and d are true.

120
An Integrated Approach to Decision
Making
The integrated approach to decision making combines the steps of the rational approach with
the conditions in the behavioral approach to create a more realistic approach for making
decisions in organizations.
the integrated approach suggests that rather than generating all alternatives, the decision maker
should try to go beyond rules of thumb and satisficing limitations and generate as many
alternatives as time, money, and other practicalities of the situation allow
In this synthesis of the two other approaches, the rational approach provides an analytical
framework for making decisions, whereas the behavioral approach provides a moderating
influen

121
The intuitive decision-making model
• The intuitive decision-making model has emerged as an important
decision-making model. It refers to arriving at decisions without
conscious reasoning.
• Decisions are taken by intuition or hunch without really considering
carefully all the alternatives.
• A person just decides a particular course of action because he feels
that, that course is the best one.
• Intuitive decision making can complement both rational and
bounded rational decision making.

122
123
124
125
Linear thinking style: Decision style
characterized by a person’s preference for
using external data and facts and
processing this information through
rational, logical thinking

Nonlinear thinking style: Decision style

characterized by a person’s preference for
internal sources of information and
processing this information with internal
insights, feelings, and hunches

126
127
Match the type of Managerial Decisions List – I with the examples given in List – II :
(Jan 2017)
List – I List – II
a. Judgemental Decisions i. Daily routines and scheduled activities
b. Adaptive Decisions ii. Complex production and engineering problems
c. Mechanistic Decisions iii. Marketing, investment, and personnel problems
d. Analytical Decisions iv. Research and development and long-term
corporate planning

Codes :
abcd
(1) iii i iv ii
(2) ii iv i iii
(3) iii iv i ii
(4) i ii iii iv

128
Mechanistic Decisions
A mechanistic decision is one that is routine and repetitive in nature. It usually occurs in a situation
involving a limited number of decision variables where the outcomes of each alternative are known.

Analytical Decisions
An analytical decision involves a problem with a large number of decision variables, where the
outcomes of each decision alternatives can be computed. They may be complexion, but solutions can
be found. Management science 'and operations research provide a variety of computational techniques
that can be used to find optimal solutions. These techniques include linear programming, network
analysis, depilatory reorder model, queuing theory, statistical analysis, and so forth

Judgmental Decisions
A judgmental decisions involves a problem with a limited number of decision variables, but the
outcomes of decision alternatives are unknown

Adaptive Decisions
An adaptive decision involves a problem with a large number of decision variables, where outcomes
are not predictable. Because of the complexity and uncertainty of such problems, decision makers are
not able to agree on their nature or on decision strategies. Such ill-structured problems usually require
the contributions of many people with diverse technical backgrounds. I

129
Henry Mintzberg proposed three phases of decision making in organisations. Match the
phases given in List – A, with the activities involved during these phases in List – B : Aug 2016
List – A(Phases) List – B(Activities)

a. Identification phase i. Designing a tailor made solution

b. Development phase ii. Analysis of alternatives
c. Selection iii. Bargaining with decision makers
iv. Recognition of problem
v. Diagnosis
vi. Search for existing standards
Codes :
a b c
(1) ii & iii iv & v i & vi
(2) i & ii iii & iv v & vi
(3) iv & v i & vi ii & iii
(4) i & iii ii & iv v & vi

130
 THREE PHASES IN DECISION MAKING PROCESS
Henry Mintzberg and some of his colleagues (1976) have traced the phases of some decisions actually taken in
organisations
Phase-1:: Identification: Recognition of a problem or opportunity arises and a diagnosis is made
It was found that severe immediate problems did not have a very systematic, extensive diagnosis but that milder
problems did have.
Phase-2: The development phase: Search for existing standard procedures, ready-made solutions or the design
of a new, tailor made solution.
It was found that the design process was a grouping, trial and error process in which the decision-makers had
only a vague idea of the ideal solution.
Phase-3: The Selection phase: Of the available alternatives, best choice of a solution is is made. There are three
ways of making this selection:
1.
By the judgement of the decision maker,
2. On the basis of experience or intuition rather than logical analysis
3. By analysis of the alternatives on a logical, systematic basis
4. By bargaining when the selection involves a group of decision makers. Once the decision is formally
accepted, an authorization is made.

131
131
Ethics in Decision Making?
Three Ethical Decision Criteria
The first ethical yardstick is utilitarianism, which proposes making decisions solely on the basis of
their outcomes, ideally to provide the greatest good for the greatest number. This view
dominates business decision making. It is consistent with goals such as efficiency, productivity,
and high profits
Another ethical criterion is to make decisions consistent with fundamental liberties and
privileges, as set forth in documents such as the Bill of Rights. An emphasis on rights in decision
making means respecting and protecting the basic rights of individuals, such as the right to
privacy, free speech, and due process.This criterion protects whistle-blowers when they reveal an
organization’s unethical practices to the press or government agencies, using their right to free
speech.
A third criterion is to impose and enforce rules fairly and impartially to ensure justice or an
equitable distribution of benefits and costs

132
Biases in decision Making
Heuristic
• using "rule of thumb" to simplify decision-making

Overconfidence bias
• decision makers tend to think they know more than the
do/ hold unrealistically positive views of themselves and
their performance

133
Immediate gratification bias
• choosing alternatives that offer immediate rewards and avoid immediate
costs
Anchoring effect
• decision makers fixate on initial information as a starting point and then,
once set, fail to adequately adjust for subsequent info
Selective perception bias
• selectively organize and interpret events based on their biased
perceptions; influences the information they pay attention to, the
problems they identify and the alternatives they develop

134
Confirmation bias
• decision makers who seek out information that reaffirms their past choices
and discounts info that contradicts past judgements

Framing bias
• decision makers select and highlight certain aspects of a situation while
excluding others; they distort what they see and create incorrect reference
points

Availability biases
• decision makers tend to remember events that are the most recent and
vivid in their memory; distorts their ability to recall events in an objective
manner and results in distorted judgments and probability estimates

135
Representation bias
• Decision makers assess likelihood of an event based on how closely it resembles other events or sets of
events; draw analogies and see identical situations where they don't exist
Randomness bias
• The tendency of individuals to believe that they can predict the outcome of random events

Self-serving bias
• quick to take credit for their successes and to blame failure on outside factors

Sunk Cost Error

• forgetting that current actions cant influence past events and relate only to future consequences

Hindsight Bias
• "I knew it all along"
• tendency for decision makers to falsely believe that they would have accurately predicted the outcome of
an event once that outcome is actually known

136
137
Organizing
1. Organizing is the function of management that involves developing an organizational structure
and allocating human resources to ensure the accomplishment of objectives.
2. synchronization and combination of human, physical and financial resources takes place.
3. Organizing also involves the design of individual jobs within the organization
4. Organizing at the level of the organization involves deciding how best to departmentalize
According to Mc Farland, “An identified group of people contributing their efforts towards the
attainment of goals is called an organisation.”
According to George R. Terry, “Organising is the establishing of effective behavioural relationships
among persons so that they may work together effectively and gain personal satisfaction in doing
selected tasks under given environmental conditions for the purpose of achieving some goal or
objective.”

138
Characteristics of Organisation
• Division of labour: The work is assigned to a person who is specialized in that particular work,
this will result in the increase of quality output.
• Co-ordination: Different people are assigned different tasks; all the tasks put together leads to
the objectives so there is a need of co-ordination to reach the desired goal.
• Objectives: The objectives of the organisation should be clearly defined.
• Authority-responsibility structure: The position of each executive is defined with regard to the
extent of authority and responsibility vested in him/her to discharge the duties.
• Communication: The success of the organisation depends upon the effective management
system, so every employee working in the organisation should know the techniques and
importance of communication

139
140
Elements of Organizing
1. Organizational structure is the formal arrangement of jobs within an organization.
2. organizational chart: The visual representation of an organization’s structure. . There
are four types of organisation charts as given below: • vertical chart • horizontal
chart • circular chart • master and supplementary charts
3. organizational design,: a process that involves decisions about six key elements:
work specialization, departmentalization, chain of command, span of control,
centralization and decentralization, and formalization
4. work specialization Dividing work activities into separate job tasks
5. Organisation manual is a document prepared in an organisation to furnish
information on a particular organisation. It is a small book which contains the
information regarding the organisation structure, duties and responsibilities of each
position, job, description, salaries, prevailing relationships among members
including organisation procedures and methods

141
Formation of Department (Departmentalisation)
It is a process by which similar activities of the business are grouped into units for the purpose
of facilitating smooth administration at all levels.
Reasons for forming departments
• specialisation of work
• simplification of managerial task
• limitation on the number of subordinates that can be directly controlled by superiors
Bases of Departmentation
Departmentation by Function, Departmentation by Product, Departmentation by territory/
geographic divisionalization, Departmentation by Time

142
Decentralisation
1. Decentralisation is the delegation of decision-making authority throughout
an organisation by allowing managers at various operating levels to make key
decisions relating to their area of responsibility
2. A decentralised organisation is one in which decision making is not confined
to a few top executives but rather is throughout the organisation, with
managers at various levels making key operating decisions relating to their
sphere of responsibility.
3. Decentralisation is a matter of degree, since all organisations are
decentralised to some extent out of necessity

143
 Delegation of Authority
Authority is the power to make decisions which guide the action of others. Delegation of authority can be defined
as subdivision and sub-allocation of powers to the subordinates in order to achieve effective results.
Elements of delegation
• Authority: Authority can be defined as the power and right of a person to use and allocate the resources efficiently,
to take decisions and to give orders so as to achieve the organisational objectives. It should be well- defined.
Authority should be accompanied with an equal amount of responsibility.
• Responsibility: A person who is given the responsibility should ensure that he accomplishes the tasks assigned to
him. Responsibility without adequate authority leads to discontent and dissatisfaction among the employee.
• Accountability: It is about giving explanations for any variance in the actual performance from the expectations
set. Accountability cannot be delegated. It arises from responsibility.
The process of delegation of authority includes the following steps:
• assignment of tasks and duties
• granting of authority
• creating responsibility and accountability

144
144
Process of Organising

Departmentally
Determination of Identification of
organizing the
Objectives activities
activities

Co-ordination
Classifying the
between authority
authority
and responsibility

145
145
 Principles of Organizing
2.Principle of Functional
1.Principle of Specialization
Definition
• he whole work of a concern • all the functions in a concern
should be divided amongst the should be completely and clearly
subordinates on the basis of defined to the managers and
qualifications, abilities and skills. subordinates.
• clearly defining the duties,
responsibilities,
• Clarifications in authority-
responsibility relationships helps
in achieving co-ordination
146
146
3.Principles of Span of Control/Supervision
Wide span of control Narrow span of control-

• can supervise and control effectively a large • the work and authority is divided amongst
group of persons at one time. many subordinates and a manager doesn't
• Less overhead cost of supervision supervises and control a very big group of
• Prompt response from the employees people under him.
• Better communication • Work which requires tight control and
supervision, for example, handicrafts, ivory
• Better supervision
work, etc. which requires craftsmanship,
• Better co-ordination there narrow span is more helpful.
• Suitable for repetitive jobs • Co-ordination is difficult to be achieved.
• Communication gaps can come.
• Messages can be distorted.
• Specialization work can be achieved

147

147
 4.Principle of Scalar Chain 5.Principle of Unity of Command

• Scalar chain is a chain of • It implies one subordinate-one

command or authority which superior relationship.
flows from top to bottom. • Every subordinate is answerable
• facilitates work flow in an and accountable to one boss at
organization which helps in one time. This helps in avoiding
achievement of effective communication gaps and
results. feedback and response is
• As the authority flows from top prompt
to bottom, it clarifies the
authority positions to managers
at all level and that facilitates
effective organization.
148

148
6.Principles in Developing the Structure of Organization: Every manager must delegate some task or duties to
subordinates, since management means getting work done through others. Organization becomes operational
through delegation only. Delegation is a process by which a manager assigns a portion of his total work load to
others.

a. The scalar Principle The more clear the line of authority from the ultimate authority for management in an
enterprise to every subordinate position, the more effective will be decision making and organization
communication at various levels in the organization.
b. Principle of delegation : Authority is a tool for managing to contribute to enterprise objectives. Hence
authority delegated to an individual manager should be adequate to assure his ability to accomplish results
expected of him

c. Principle of authority and responsibility : The responsibility of the subordinate to his superior for authority
received by delegation is absolute, and no superior can escape responsibility for the activities of his
subordinate to whom he in turn has delegated authority.

d. Principle of unity of command :The more completely an individual has a reporting relationship to a single
superior, the less the problem of conflict in instructions and the greater the feeling of personal responsibility.
e. Authority level Principle Maintenance of authority delegation requires that decisions within the authority
competence of an individual manager be made by him and not be referred upward in the organization.

149
Types of Organisations
Tall and Flat Organization structure:
• a tall structure results in one long chain of command similar to the military. As an organization
grows, the number of management levels increases and the structure grows taller. In a tall
structure, managers form many ranks and each has a small area of control.

• Flat structures have fewer management levels, with each level controlling a broad area or
group. Flat organizations focus on empowering employees rather than adhering to the chain of
command. By encouraging autonomy and self-direction, flat structures attempt to tap into
employees’ creative talents and to solve problems by collaboration.

150
 Matrix Organisation
Matrix organisation is defined as “Any organisation that employs a multiple command structure but
also relates support mechanisms and an organisational culture and behaviour pattern.
The entire superstructure is both product and function-based. Matrix design is used to respond to: -
Multiple external demands - Extensive information needs - The need for shared resources
Characteristics of matrix organisation
• Project manager should report to more than one of the superiors. • There should be agreement
between the managers regarding the authority of utilizing the available resources. • There should be
common willingness among the authority holders to face the conflicts with a view to resolve them
Advantages of matrix organisation • achievement of objectives • best utilisation of resources •
appropriate structure • flexibility • motivation Disadvantages of matrix organisation • complex
relationship • struggle for power • excessive emphasis on group decision-making • arising conflict
resolution • heterogeneous

151
151
Staffing
According to Koontz and O’Donnel, “The managerial function of staffing involves managing the
organisation structure through proper and effective selection, appraisal and development of
personnel to fill the roles designed into the structure.”
Staffing pertains to recruitment, selection, development and compensation of
subordinates.”
Staffing function is the most important mangerial act along with planning, organizing,
directing and controlling. The operations of these four functions depend upon the
manpower which is available through staffing function.
Staffing is concerned with manning various positions in the organisation. Staffing involves
the determination of manpower requirements of the enterprise and providing it with
adequate competent people at all its levels. Thus, manpower planning, procurement (i.e.,
selection and placement), training and development, appraisal and remuneration of workers
are included in staffing.

152
Nature of Staffing Function
Staffing is an important managerial function
• Staffing function is the most important mangerial act along with planning, organizing, directing and controlling.
The operations of these four functions depend upon the manpower which is available through staffing function.

Staffing is a pervasive activity

• As staffing function is carried out by all mangers and in all types of concerns where business activities are carried
out.

Staffing is a continuous activity-

• This is because staffing function continues throughout the life of an organization due to the transfers and
promotions that take place

The basis of staffing function is efficient management of personnels

• Human resources can be efficiently managed by a system or proper procedure, that is, recruitment, selection,
placement, training and development, providing remuneration, etc.

Staffing helps in placing right men at the right job.

Staffing is performed by all managers

153
153
Staffing Process
1.Manpower 4. Orientation
2.Recruitment- 3.Selection
requirements and Placement

8.Promotion 7.Performance 6. 5. Training and

and transfer Evaluation Remuneration- Development-

154
 Importance of Staffing Function
1.The workforce is Life Force 2) Ensures Competency and Efficiency

• The success of all these managerial • Staffing as a process is not just about
functions depends on the workforce finding a person for the job, it is
which is organized by staffing about finding the right person for
function. the job. Staffing involves identifying
• Without the requisite human competent and skilled people who
involvement working in a motivated will be able to fit directly into the
fashion for the betterment and position and perform the functions it
benefit of the business organization, entails in an efficient and successful
the business will always be far from manner
success.
155
 (4) Training and Development of
(3) Optimum Utilization of Resources
Employees
• Staffing as a process ensures that only • Staffing is also not just about finding the
the right amount of people are staffed in right person and putting him in a
the business and are functioning in it. position but is also about helping him
• This allows for clearing a huge amount through the process of training and
of money being wasted on unnecessary development to adapt to the changing
employees and also provides such needs and requirements of that
employees the opportunity to fare position.
better in other businesses or initiatives • It involves the process of improving the
that actually need their services skill of the employee to allow him to
discharge the functions now and also in
developing his overall ability to facilitate
him to discharge more complicated
functions in the future.
156
 (6) Improves Employee Satisfaction
(5) Motivation
and Morale
• By allowing for Training and • The process of staffing also
Development staffing also creates involves appraising the work done
a system of motivation. by the employees and rewarding
• The training provided by the the employees for their hard work.
business helps in boosting the • Such appreciation of the work so
confidence level of the employees performed by the employees apart
and is usually provided in order to from being an important source of
teach them efficient ways of motivation also plays huge role in
discharging their functions. satisfying them and boosting their
morale.

157
Managerial Function : Direction
Directing is said to be a process in which the managers instruct, guide and oversee the
performance of the workers to achieve predetermined goals. Directing initiates action and from
here the actual work starts. Direction is a managerial function performed by the top level
officers of management.
According to Koontz and O’Donnel, “Direction is the interpersonal aspect of managing by which
subordinates are led to understand and contribute effectively to the attainment of enterprise
objective.”
There are three techniques of direction as follows:
• Consultative direction • Free-rein direction • Autocratic direction
 Principles of Direction
Harmony of objectives: Direction should be such that the individuals can integrate their objectives with
organisational objectives.
Maximum individual contribution: Contribution of every member of an organisation matters. So management
should implement such a technique of direction which enables the maximum contribution by members.
Unit of direction or command: An employee should receive instruction through proper channel which should be
well defined otherwise it will lead to confusion.
Efficiency: Subordinates should participate in decision-making and this will increase their sense of commitment
and will ensure the implementation. It will increase the efficiency.
Direct supervision: Managers should have direct relationship with their subordinates. Face to face
communication and personal touch with subordinates will ensure successful direction.
Feedback information: Direction does not end with issuing orders, it is also necessary to take the suggestions of
the employees as well as for the development of the organisation.
Effective communication: The superior must ensure that plans, policies and responsibilities are fully understood
by the subordinates in the right direction.
Efficient control: The management should monitor the behaviour and performance of subordinates to exercise
efficient control over the employees. Efficient control ensures effective direction.
Follow through: Direction is a continuous process. Mere issuing order or an instruction is not an end itself.
Direction is necessary so, the management should watch whether the subordinates follow the orders and
whether they face difficulties in carrying out the orders or instructions.

159 159
Elements of Direction
According to William Newman the directing function of management
consists of the following elements –
(a) issuing orders and instruction to subordinates,
(b) follow-up of instruction
(c) standard practices and indoctrination,
(d) explanations,
(e) consultative direction

160
 Characteristics
Pervasive Function
• Directing is required at all levels of organization. Every manager provides guidance and
inspiration to his subordinates.
Continuous Activity
• Direction is a continuous activity as it continuous throughout the life of organization.

Human Factor
• Directing function is related to subordinates and therefore it is related to human factor.
Since human factor is complex and behaviour is unpredictable, direction function
becomes important.
161
Creative Activity
• Direction function helps in converting plans into performance. Without this function,
people become inactive and physical resources are meaningless.

Executive Function
• - Direction function is carried out by all managers and executives at all levels throughout
the working of an enterprise, a subordinate receives instructions from his superior only.
Delegate Function
• Direction is supposed to be a function dealing with human beings. Human behaviour is
unpredictable by nature and conditioning the people’s behaviour towards the goals of
the enterprise is what the executive does in this function. Therefore, it is termed as
having delicacy in it to tackle human behaviour.
162
Managerial Function : CO-ORDINATION AND
CONTROLLING
Coordination is considered as an essential element of
administration.
Co-ordination is ―the integration, synchronisation or orderly
pattern of group efforts in the institution towards the
accomplishment of common objectives, to ensure a harmonious and
smooth working of an organisation with a number of its divisions,
department or its units, the activities in all the areas are required to
be pulled together, unified and blended so as to give them a
commonness and purpose.”

163
 Definition - Co-ordination
Henry Fayol
• To co-ordinate is to harmonise all the activities of a person in order to facilitate its working and its success.

George Terry,
• “Co-ordination deals with the task of blending efforts in order to ensure successful attainment of an
objective. It is accomplished by means of planning, organising, actuating and controlling.”

Pearce and Robinson

• Coordination is “integration of the activities of individuals and units into a concerted effort that works
towards a common aim.

Newman
• “Co-ordination is a part of all phases of administration and that it is not a separate and distinct activity

164
 Essential elements of coordination:
Balancing: Timing Integration

• Efforts, jobs and activities • Timing involves • Integration refer to the

of all departments must scheduling of operations unification of all unrelated
be balanced. in a suitable order. and diverse activities in
• In other words, the entire • Time schedules for such a manner as to
work must be divided and beginning and completing accomplish the job
assigned to each the jobs must be fixed efficiently
department evenly. well in advance and
efforts should be taken to
complete them as per the
schedule.

165
 Benefits of Co-ordination
1.Co-ordination ensures unity of direction through arranging spontaneous collaboration
on the part of different departments.
2. It promotes the efficiency of the enterprise and employees.
3. It increases employee morale and provides job satisfaction and avoids conflicts
between employees.
4. It is a creative force, i.e., it creates something new out of the group which is always
greater than isolated or individual efforts.
5. It develops team spirit and ensures a favorable environment for work.
6. It avoids interruptions on operations due to omission or wrong allocation of duties.
7. It eliminates inconsistencies in the objectives and policies.
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Coordination has the following features
1. Group effort 2. Unity of action 3.. Common goal

• Coordination integrates the • Coordination ensures unity • Coordination maintains

efforts of individuals and of action amongst individual balance amongst individual,
departments to make them and departmental activities. departmental and
work as a group. It ensures that activities of organisational goals. It
• The group works to each individual, group and ensures that resources and
maximise group goals as department are headed tasks are assigned to
well as organisational goals. towards the common goal. individuals and departments
• It ensures that individuals All activities should be in a manner that working of
work as a group to promote performed within the one department promotes
their individual and framework of policies, the working of other
organisational goals. procedures etc. departments.

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 4. Continuous process: 5.Managerial responsibility: 6. Essence of management:

• Coordination is not a one- • Co-ordination is the • Coordination is not a

time attempt to integrate responsibility of every separate function of
the individual goals. manager at every level for management. It is required
• It is a continuous process every operative function for every managerial
that keeps going as long as (production, finance, function.
the organisation survives. personnel and sales). • Managers coordinate
• All managers continuously human and non-human
coordinate the efforts of resources, internal and
people of their respective external organisational
departments environment, while carrying
out the managerial
functions of planning,
organising, staffing,
directing and controlling.
Coordination is, thus, the
‘essence of management.’

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 7. Synthesis of efforts: Necessary obligation: 9. Deliberate effort

• Coordination integrates • Coordination is not • Coordination is not a

and synthesizes the something that spontaneous effort of
efforts of people of all managers may or may managers.
departments at all not strive for. • Managers make
levels towards common • All managers (also non- deliberate efforts to
organisational goals. It managers) must direct coordinate the
also synthesizes the their efforts towards a departmental activities.
organisational common goal,
resources (physical, considering this as their
human and financial) to necessary obligation. It
collectively contribute is an inevitable area of
to organisational goals. management.

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Types of Coordination
Internal External Coordination

• Coordination between the • Coordination between

activities of departments and activities of the organisation
people working within the with units outside the
organisation is known as organisation (Government,
internal coordination. customers, suppliers,
competitors etc.) is known as
external coordination.

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 Types of Coordination
Vertical Horizontal Coordination:

• Vertical coordination is achieved amongst • Horizontal coordination is achieved amongst

activities of people working at different activities of different departments working at
levels. the same level.
• It coordinates the activities of top managers • It is “the linking of activities across
with those of middle and lower level departments at similar levels.
managers. • It links the activities of four primary
• It is “the linking of activities at the top of the departments — production, finance,
organisation with those at the middle and personnel and sales”
lower levels in order to achieve • The need for horizontal coordination arises
organisational goals.” when departments depend upon each other
• Vertical coordination can be achieved for information or products.
through span of management, centralisation,
decentralisation and delegation.
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Answer 2

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Managerial Function : Controlling
1. Controlling can be defined as a managerial function to ensure that activities in an
organisation are performed according to the plans.
2. Controlling also ensures efficient and effective use of organisational resources for achieving
the goals. Hence, it is a goal oriented function.
3. Controlling and management control are considered same.
4. It is a process of comparing the actual performance with the set standards of the
company to ensure that activities are performed according to the plans and if not then
taking corrective action.

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Managerial Function : Controlling
Henri Fayol
• Control of an undertaking consists of seeing that everything is being carried out in
accordance with the plan which has been adopted, the orders which have been
given, and the principles which have been laid down. Its object is to point out
mistakes in order that they may be rectified and prevented from recurring
Harold Koontz
• Controlling is the measurement and correction of performance in order to make
sure that enterprise objectives and the plans devised to attain them are
accomplished

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3 SYSTEM OF CONTROL
Output Control
Output control zeroes in on measurable outcomes within an organization. In output control,
executives must decide the acceptable level of performance, communicate the general expectations
to the employees, track whether the performance values meet the expectations, and then make any
needed changes.
Behavioral Control
Behavioral control generally focuses on controlling the actions unlike the results in case of output
control. In particular, specific rules and processes are used to structure or to dictate behavior. For
example, firms having a rule that requires checks to be signed by two people to try to prevent
employee theft.
Clan Control
Clan control is a non-standardized type of control. It depends on shared traditions, expectations,
values, and norms. Clan control is common in industries where creativity is vital, such as many high-
tech businesses.

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 Managerial
Function

Immediate Forward
Action looking
Features
of
control

Related to Continuous
planning Activity
Process of Controlling
 Types of
Control

3. Predictive/
1.Feedback 2.Concurrent
feedforward
Control control
control
 Types of Control

3.Predictive/
1. Feedback Control 2.Concurrent control
feedforward control
• This process • It is also called real- • This type of control
involves collecting time control helps to foresee
information about a • It checks any problem ahead of
finished task problem and occurrence.
• assessing that examines it to take • action can be taken
information and action before any before such a
improvising the loss is incurred. circumstance arises.
same type of tasks • Formation of rules,
in the future. policies, procedures
 Methods of Controlling

Traditional Methods Modern Method

Cost Control Return On investment

Statistical reports MIS

Break-even Analysis MBO

Budgetary Control Management Audit

PERT & CPM

 Method of Controlling: Traditional Method
1. Cost Control 2. Statistical Reports/Data Analysis

• cost control involve the setting of • This analysis is possible by means

cost standards for various of comparison of ratios,
components of cost and making percentages, averages, trends
comparison of actual cost data with etc., of different periods with a view
standard cost to find out deviations and causes
• This process is known as standard • This method is applicable in case
costing of inventory control, production
control and quality control
• The minimum and maximum
control limits are fixed and
deviations with in these limits are
allowed.
 3. Break –Even Analysis 4. Budgetary Control

• It is the process of preparing various

• The sales volume at which there is budgeted figures for the organization
no profit, no loss is known as the for the future period and then
breakeven point comparing with the actual
• Breakeven analysis is a technique performance for finding out
used by managers to study the variances.
relationship between costs, volume & • enables management to find out
profits. deviations and take corrective
• It determines the overall picture of measures at a proper time.
probable profit & losses at different • Quantitative in nature
levels of activity while analyzing the • Ex. Sales Budget, Production
overall position. Budget, Material budget.
• Breakeven point = Fixed
Costs/Selling price per unit –
variable costs per unit
 Method of Controlling: Modern Methods
2. Management Information
1. Return On Investment system(MIS)
• control technique of measuring • emphasizes on providing timely,
both the absolute and the relative adequate and accurate
success of a company is by the information to the right person in
ratio of net earnings to the organization which in turn
investment the company has helps in making right decisions
made, known as ROI. • data from all possible sources
• ROI is satisfactory : Good are collected and properly
performance processed for using in future
• ROI= Net profit before tax and • a)Management operating system
interest/Capital employed • b) Management reporting system
 3. Management by
4. Management Audit
Objective(MBO)
• Objectives for individuals are • Management audit is a “future
jointly fixed by the superior oriented, independent and
and the subordinate systematic evaluation of the
• Periodic evaluation and activities of all levels of
regular feedback to evaluate management
individual performance • This audit reveals
• Achievement of objectives irregularities and defects in
brings rewards to individuals. the working of management
• It examines and the reviews
various policies and functions
of the management on the
bases of certain standards.
 5. PERT CPM

• Programme Evaluation & Review • Critical Path Method

Techniques • under this technique a project is
• accomplishment of an objective broken into different operations or
within stipulated time and cost. activities and their relationships are
• In this network analysis technique the determined
time can be minimized to complete • These relations are shown with the
the project and also overall project help of diagram known as network
cost can be minimized. diagram
• Management should determine • The technique is helpful in finding out
activities to be performed and their the more strategic elements of a plan
inter-relationships so that estimated for the purpose of better designing,
resources and time needed to planning, coordinating and controlling
complete these activities as per the entire project
schedule and to monitor and control
the time and cost of the project.
 Thanks!

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