Functions of management

Function of Management
Prepared by
Prof. Jitendra Patel
Assistant Professor
Prestige Institute of
Management and Research
Indore
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Jitendra Patel, Assistant Professor, PIMR,
Indore

Module II
1. Planning Definition
1.2 Steps in Planning Function
1.3 Characteristics of Planning
1.4 Types of Plans
2. Organising
2.1 Concept or Nature of Organizing
2.2 Formal and Informal Organization
2.2.1 Advantages of Formal Organisation
2.2.2Disadvantages of Formal Organisation
2.2.3Features of informal Organisation
2.2.4 Advantages of Informal Organisation
2.2.5 Disadvantages of Informal organisation
3. Staffing
3.1 Factors Affecting Staffing
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4. Directing
4.1 Characteristics of Directing
4.2 Principles of Directing
5. Motivation
5.1 Motivation Process
5.2 Benefits of Motivation
5.3 Importance of Motivation
5.4 Types of Motivation
6. Leadership
6.1 types of leaders
6.2 leadership theory
7. Controlling
7.1 Process of Controlling
7.2 Techniques of Controlling
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Planning
• Planning
• Planning means looking ahead and chalking out future
courses of action to be followed. It is a preparatory step. It
is a systematic activity which determines when, how and
who is going to perform a specific job. Planning is a detailed
programme regarding future courses of action.
• It is rightly said “Well plan is half done”. Therefore planning
takes into consideration available & prospective human and
physical resources of the organization so as to get effective
co-ordination, contribution & perfect adjustment. It is the
basic management function which includes formulation of
one or more detailed plans to achieve optimum balance of
needs or demands with the available resources.
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• According to Urwick, “Planning is a mental
predisposition to do things in orderly way, to think
before acting and to act in the light of facts rather than
guesses”. Planning is deciding best alternative among
others to perform different managerial functions in
order to achieve predetermined goals.
• According to Koontz & O’Donell, “Planning is deciding
in advance what to do, how to do and who is to do it.
Planning bridges the gap between where we are to,
where we want to go. It makes possible things to occur
which would not otherwise occur”.
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• Steps in Planning Function
• Planning function of management involves following
steps:-
• Establishment of objectives
a. Planning requires a systematic approach.
b. Planning starts with the setting of goals and objectives to
be achieved.
c. Objectives provide a rationale for undertaking various
activities as well as indicate direction of efforts.
d. Moreover objectives focus the attention of managers on
the end results to be achieved.
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e. As a matter of fact, objectives provide nucleus to the
planning process. Therefore, objectives should be stated
in a clear, precise and unambiguous language. Otherwise
the activities undertaken are bound to be ineffective.
f. As far as possible, objectives should be stated in
quantitative terms. For example, Number of men
working, wages given, units produced, etc. But such an
objective cannot be stated in quantitative terms like
performance of quality control manager, effectiveness of
personnel manager.
g. Such goals should be specified in qualitative terms.
h. Hence objectives should be practical, acceptable,
workable and achievable.
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• Establishment of Planning Premises
– Planning premises are the assumptions about the lively shape of events in
future.
– They serve as a basis of planning.
– Establishment of planning premises is concerned with determining where one
tends to deviate from the actual plans and causes of such deviations.
– It is to find out what obstacles are there in the way of business during the
course of operations.
– Establishment of planning premises is concerned to take such steps that
avoids these obstacles to a great extent.
– Planning premises may be internal or external. Internal includes capital
investment policy, management labour relations, philosophy of management,
etc. Whereas external includes socio- economic, political and economical
changes.
– Internal premises are controllable whereas external are non- controllable.
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• Choice of alternative course of action
– When forecast are available and premises are established, a
number of alternative course of actions have to be considered.
– For this purpose, each and every alternative will be evaluated by
weighing its pros and cons in the light of resources available and
requirements of the organization.
– The merits, demerits as well as the consequences of each
alternative must be examined before the choice is being made.
– After objective and scientific evaluation, the best alternative is
chosen.
– The planners should take help of various quantitative
techniques to judge the stability of an alternative.
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• Formulation of derivative plans
– Derivative plans are the sub plans or secondary plans
which help in the achievement of main plan.
– Secondary plans will flow from the basic plan. These are
meant to support and expediate the achievement of basic
plans.
– These detail plans include policies, procedures, rules,
programmes, budgets, schedules, etc. For example, if
profit maximization is the main aim of the enterprise,
derivative plans will include sales maximization,
production maximization, and cost minimization.
– Derivative plans indicate time schedule and sequence of
accomplishing various tasks.
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• Securing Co-operation
– After the plans have been determined, it is necessary
rather advisable to take subordinates or those who
have to implement these plans into confidence.
– The purposes behind taking them into confidence are
:-
• Subordinates may feel motivated since they are involved in
decision making process.
• The organization may be able to get valuable suggestions
and improvement in formulation as well as implementation
of plans.
• Also the employees will be more interested in the execution
of these plans.
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• Follow up/Appraisal of plans
– After choosing a particular course of action, it is put into action.
– After the selected plan is implemented, it is important to
appraise its effectiveness.
– This is done on the basis of feedback or information received
from departments or persons concerned.
– This enables the management to correct deviations or modify
the plan.
– This step establishes a link between planning and controlling
function.
– The follow up must go side by side the implementation of plans
so that in the light of observations made, future plans can be
made more realistic.
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Characteristics of Planning
• Planning is goal-oriented.
– Planning is made to achieve desired objective of business.
– The goals established should general acceptance otherwise individual
efforts & energies will go misguided and misdirected.
– Planning identifies the action that would lead to desired goals quickly
& economically.
– It provides sense of direction to various activities. E.g. Maruti Udhyog
is trying to capture once again Indian Car Market by launching diesel
models.
• Planning is looking ahead.
– Planning is done for future.
– It requires peeping in future, analyzing it and predicting it.
– Thus planning is based on forecasting.
– A plan is a synthesis of forecast.
– It is a mental predisposition for things to happen in future.
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• Planning is an intellectual process.
– Planning is a mental exercise involving creative thinking, sound
judgement and imagination.
– It is not a mere guesswork but a rotational thinking.
– A manager can prepare sound plans only if he has sound judgement,
foresight and imagination.
– Planning is always based on goals, facts and considered estimates.
• Planning involves choice & decision making.
– Planning essentially involves choice among various alternatives.
– Therefore, if there is only one possible course of action, there is no
need planning because there is no choice.
– Thus, decision making is an integral part of planning.
– A manager is surrounded by no. of alternatives. He has to pick the best
depending upon requirements & resources of the enterprises.
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• Planning is the primary function of management / Primacy of Planning.
– Planning lays foundation for other functions of management.
– It serves as a guide for organizing, staffing, directing and controlling.
– All the functions of management are performed within the framework of
plans laid out.
– Therefore planning is the basic or fundamental function of management.
• Planning is a Continuous Process.
– Planning is a never ending function due to the dynamic business environment.
– Plans are also prepared for specific period f time and at the end of that period,
plans are subjected to revaluation and review in the light of new requirements
and changing conditions.
– Planning never comes into end till the enterprise exists issues, problems may
keep cropping up and they have to be tackled by planning effectively.
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• Planning is all Pervasive.
– It is required at all levels of management and in all departments of enterprise.
– Of course, the scope of planning may differ from one level to another.
– The top level may be more concerned about planning the organization as a
whole whereas the middle level may be more specific in departmental plans
and the lower level plans implementation of the same.
• Planning is designed for efficiency.
– Planning leads to accomplishment of objectives at the minimum possible cost.
– It avoids wastage of resources and ensures adequate and optimum utilization
of resources.
– A plan is worthless or useless if it does not value the cost incurred on it.
– Therefore planning must lead to saving of time, effort and money.
– Planning leads to proper utilization of men, money, materials, methods and
machines.
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• Planning is Flexible.
– Planning is done for the future.
– Since future is unpredictable, planning must
provide enough room to cope with the changes in
customer’s demand, competition, govt. policies
etc.
– Under changed circumstances, the original plan of
action must be revised and updated to make it
more practical.
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Types of Plans
• Operational plans
• The specific results expected from departments, work
groups, and individuals are the operational
goals. These goals are precise and measurable.
“Process 150 sales applications each week” or “Publish
20 books this quarter” are examples of operational
goals.
• An operational plan is one that a manager uses to
accomplish his or her job responsibilities. Supervisors,
team leaders, and facilitators develop operational plans
to support tactical plans. Operational plans can be a
single‐use plan or an ongoing plan.
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• 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.
• 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:
• A policy provides a broad guideline for managers to follow when
dealing with important areas of decision making. Policies are
general statements that explain how a manager should attempt to
handle routine management responsibilities. Typical human
resources policies, for example, address such matters as employee
hiring, terminations, performance appraisals, pay increases, and
discipline.
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• A procedure is a set of step‐by‐step directions that explains how activities
or tasks are to be carried out. Most organizations have procedures for
purchasing supplies and equipment, for example. This procedure usually
begins with a supervisor completing a purchasing requisition. The
requisition is then sent to the next level of management for approval. The
approved requisition is forwarded to the purchasing department.
Depending on the amount of the request, the purchasing department may
place an order, or they may need to secure quotations and/or bids for
several vendors before placing the order. By defining the steps to be taken
and the order in which they are to be done, procedures provide a
standardized way of responding to a repetitive problem.
• A rule is an explicit statement that tells an employee what he or she can
and cannot do. Rules are “do” and “don't” statements put into place to
promote the safety of employees and the uniform treatment and
behaviour of employees. For example, rules about tardiness and
absenteeism permit supervisors to make discipline decisions rapidly and
with a high degree of fairness.
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• Tactical plans
• A tactical plan is concerned with what the lower level units
within each division must do, how they must do it, and who
is in charge at each level. Tactics are the means needed to
activate a strategy and make it work.
• Tactical plans are concerned with shorter time frames and
narrower scopes than are strategic plans. These plans
usually span one year or less because they are considered
short‐term goals. Long‐term goals, on the other hand, can
take several years or more to accomplish. Normally, it is the
middle manager's responsibility to take the broad strategic
plan and identify specific tactical actions.
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• Strategic plan
• A strategic plan is an outline of steps designed with the goals of the
entire organization as a whole in mind, rather than with the goals of
specific divisions or departments. Strategic planning begins with an
organization's mission.
• Strategic plans look ahead over the next two, three, five, or even
more years to move the organization from where it currently is to
where it wants to be. Requiring multilevel involvement, these plans
demand harmony among all levels of management within the
organization. Top‐level management develops the directional
objectives for the entire organization, while lower levels of
management develop compatible objectives and plans to achieve
them. Top management's strategic plan for the entire organization
becomes the framework and sets dimensions for the lower level
planning.
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• Contingency plans
• Intelligent and successful management depends upon a constant pursuit
of adaptation, flexibility, and mastery of changing conditions. Strong
management requires a “keeping all options open” approach at all times
— that's where contingency planning comes in.
• Contingency planning involves identifying alternative courses of action
that can be implemented if and when the original plan proves inadequate
because of changing circumstances.
• Keep in mind that events beyond a manager's control may cause even the
most carefully prepared alternative future scenarios to go awry.
Unexpected problems and events frequently occur. When they do,
managers may need to change their plans. Anticipating change during the
planning process is best in case things don't go as expected. Management
can then develop alternatives to the existing plan and ready them for use
when and if circumstances make these alternatives appropriate.
•
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Organising
• Allen defines Organising as “ the process of identifying and grouping of the work to
be performed, defining and delegating responsibility and authority and establishing
relationships for the purpose of enabling people to work most effectively together in
accomplishing their objectives.”
• Koontz and O’Donnell defines
• as “ Organisation is the establishment of authority and relationships with provision for
coordination between them, both vertically and horizontally in the enterprise structure.-
Organising is the task of mobilizing resources-A structure involving a large number of people
engaging themselves in multiplicity of tasks, a systematic and rational relationship with
authority and responsibility between individuals and groups.
• Process of organizing
• -the manager differentiates and integrates the activities of his Organisation
• -Differentiation
• - the process of departmentalization or segmentation of activitieson the basis of some
similarity-Integration
• – Process of achieving unity of effort among the various departments
• Establishing Enterprise Objectives
• Formulating Supporting objectives, policies and Plans
• Identifying and classifying the necessary to accomplish
• Grouping the activities in the light of human and material resources available
• Delegating to the head of each group the activity necessary to perform
• Tying the groups together horizontally and vertically through authority, relationship and
information flows
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Concept or Nature of Organizing
• Organization as a Process: The concept of organizing can be considered as a
process, because a large number of events or activities are done under the process
of organizing with-a-view to accomplish the preset goals in an appropriate way. In
fact, organizing involves division of works, determination of activities, grouping of
activities, delegation of authority and the establishment of proper co-ordination
and balance among various departments of individuals towards the attainment of
predetermined goals. On the whole it is clear that the objectives of business firm
cannot be obtained by doing single activity, so organizing is set to be a process.
• Organization as a Structure of Relationship: Organization refers to a structure of
relationship due to involvement of a large number of groups. In fact, under the
process of organizing the relationship of departments to departments, groups to
groups and individuals to individuals are analyzed carefully through the process of
communication system with a view to establish proper unity and co-ordination
among them. So that everyone can take initiative for the welfare of enterprise.
Thus it is clear that Organization can be considered as a structure of relationship.
• Organization is related to its Objectives: Organization is directly concerned with
the objectives of enterprise. In the absence of objectives there is no life of
organization. If there is an organization then the objectives must be attached with
it. Hence, Organization is related with its goals.
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Formal and Informal Organization
Formal Organisation:
When the managers are carrying on organising process then as a result of organising process an
organisational structure is created to achieve systematic working and efficient utilization of
resources. This type of structure is known as formal organisational structure.
Formal organisational structure clearly spells out the job to be performed by each individual, the
authority, responsibility assigned to every individual, the superior- subordinate relationship
and the designation of every individual in the organisation. This structure is created
intentionally by the managers for achievement of organisational goal.
Features of Formal organisation:
(1). The formal organisational structure is created intentionally by the process of organising.
(2). The purpose of formal organisation structure is achievement of organisational goal.
(3). In formal organisational structure each individual is assigned a specific job.
(4). In formal organisation every individual is assigned a fixed authority or decision-making power.
(5). Formal organisational structure results in creation of superior-subordinate relations.
(6). Formal organisational structure creates a scalar chain of communication in the organisation.
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Advantages of Formal Organisation:
1. Systematic Working:
Formal organisation structure results in systematic and smooth functioning of an
organisation.
2. Achievement of Organisational Objectives:
Formal organisational structure is established to achieve organisational objectives.
3. No Overlapping of Work:
In formal organisation structure work is systematically divided among various
departments and employees. So there is no chance of duplication or overlapping
of work.
4. Co-ordination:
Formal organisational structure results in coordinating the activities of various
departments.
5. Creation of Chain of Command:
Formal organisational structure clearly defines superior subordinate relationship, i.e.,
who reports to whom.
6. More Emphasis on Work:
Formal organisational structure lays more emphasis on work than interpersonal
relations.
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Disadvantages of Formal Organisation
1. Delay in Action:
While following scalar chain and chain of
command actions get delayed in formal structure.
2. Ignores Social Needs of Employees:
Formal organisational structure does not give
importance to psychological and social need of
employees which may lead to demonization of
employees.
3. Emphasis on Work Only:
Formal organisational structure gives importance
to work only; it ignores human relations,
creativity, talents, etc.
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Informal Organisation
In the formal organisational structure individuals are assigned
various job positions. While working at those job positions, the
individuals interact with each other and develop some social and
friendly groups in the organisation. This network of social and
friendly groups forms another structure in the organisation which is
called informal organisational structure.
The informal organisational structure gets created automatically
and the main purpose of such structure is getting psychological
satisfaction. The existence of informal structure depends upon the
formal structure because people working at different job positions
interact with each other to form informal structure and the job
positions are created in formal structure. So, if there is no formal
structure, there will be no job position, there will be no people
working at job positions and there will be no informal structure.
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Features of informal organisation:
(1) Informal organisational structure gets created
automatically without any intended efforts of
managers.
(2) Informal organisational structure is formed by the
employees to get psychological satisfaction.
(3) Informal organisational structure does not follow any
fixed path of flow of authority or communication.
(4) Source of information cannot be known under
informal structure as any person can communicate
with anyone in the organisation.
(5) The existence of informal organisational structure
depends on the formal organisation structure.
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Advantages of Informal Organisation
1. Fast Communication:
Informal structure does not follow scalar chain so there can be faster spread of
communication.
2. Fulfills Social Needs:
Informal communication gives due importance to psychological and social need of
employees which motivate the employees.
3. Correct Feedback:
Through informal structure the top level managers can know the real feedback of
employees on various policies and plans.
Strategic Use of Informal Organisation. Informal organisation can be used to get
benefits in the formal organisation in the following way:
1. The knowledge of informal group can be used to gather support of employees and
improve their performance.
2. Through grapevine important information can be transmitted quickly.
3. By cooperating with the informal groups the managers can skilfully take the
advantage of both formal and informal organisations.
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Disadvantages of Informal organisation
1. Spread Rumours:
According to a survey 70% of information spread through
informal organisational structure are rumours which may
mislead the employees.
2. No Systematic Working:
Informal structure does not form a structure for smooth
working of an organisation.
3. May Bring Negative Results:
If informal organisation opposes the policies and changes of
management, then it becomes very difficult to implement
them in organisation.
4. More Emphasis to Individual Interest:
Informal structure gives more importance to satisfaction of
individual interest as compared to organisational interest.
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Factors Affecting Staffing
• Staffing is basically a dynamic process and it is affected by various external and internal factors.
• External Factors:
• There are various external factors that affect the staffing process and organization has no control over
these factors.
• Nature of competition for Human Resources: - In India there is a cut throat competition among
organization for hiring managerial talents both fresh and experienced, computer professionals etc.
Companies are making campus recruitments and students from reputed institutes like IIMs are being
placed on very high packages. Companies are amending changes to retain their good employees and
offering a good working environment and salaries.
• Legal factors: - There are various legal provisions which affect the staffing policies of an organization.
Various acts which provide restrictions to free recruitment are Child Labour Act 1986, Employment
Exchange (compulsory notification of vacancies) Act 1959and Mines Act 1952. Also some provisions
regarding compulsory employment of certain categories like OBC, SC/ST affects the staffing policies of an
organization.
• Socio-culture Factors: - Various socio-culture factors affect the staffing process due to which certain jobs
are to be given to certain categories of people like our culture prevent the women to be employed on in
manufacturing operations involving physical exertion.
• External influences:- There are various other elements which exert pressure on organization like political
pressure to employ local people or pressure from business contacts.
• Internal Factors: -
• Size of Organization: - Small organization cannot have same staffing practices which a large organization
may have; it may not be able to attract highly talented staff. Even if it tries to do so it may increase the
staffing cost.
• Organizational Business Plan: - Organizational business plan directly affect the staffing function because it
determines the type of personal that may be required in future. On the basis of business plan growing
organization may need more staff in the future and declining organization will have to shunt out its staff
and stagnating organization will work for retaining its staff. Staffing strategies may be different for these
organizations.
• Organizational Image: - organization image also affects the staffing practices. Organizational image
depends upon facilities to staff for training and development promotional policies, working conditions and
compensation incentives etc. if all these factors are positive then organization will attract more
candidates.
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DIRECTING
• DIRECTING is said to be a process in which the managers instruct,
guide and oversee the performance of the workers to achieve
predetermined goals. Directing is said to be the heart of
management process. Planning, organizing, staffing have got no
importance if direction function does not take place.
• Directing initiates action and it is from here actual work starts.
Direction is said to be consisting of human factors. In simple words,
it can be described as providing guidance to workers is doing work.
In field of management, direction is said to be all those activities
which are designed to encourage the subordinates to work
effectively and efficiently. According to Human, “Directing consists
of process or technique by which instruction can be issued and
operations can be carried out as originally planned” Therefore,
Directing is the function of guiding, inspiring, overseeing and
instructing people towards accomplishment of organizational goals.
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Characteristics of Directing
• Direction has got following 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.
• 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.
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Principles of Direction
1. Principle of harmony of objectives: every organization set the objectives and these objectives are to be
fulfilled with the help of people working in the organization. Therefore managers must try to bring
harmony between individual and organizational goals
2. Unity of command: The individual who works in the organization get direction from his/her superior. The
subordinates must get direction from only one superior to reduce conflict and confusion which is called
unity of command.
3. Direct supervision: When superior direct the subordinates with face to face communication it is known as
direct supervision. It helps to increase the morale of employees and it helps to develop quick feedback
and necessary information
4. Appropriate leadership style: proper leadership means the skill of leading that depends upon the
characteristics of leader, features of subordinates and the situation. It is the process of influencing human
behaviour in achieving organizational goals without dissatisfaction of any employees
5. Maximum individual contribution: The employees’ capacity should be used fully with effective direction by
encouragement not irritation with proper design direction style.
6. Effective communication: without effective communication, direction is not possible. Mainly,
communication may be downward or upward in an organization. Downward communication carries the
order, ideas, instruction to the subordinates and upward communication carries the order, ideas, and
instruction from the subordinates.
7. Effective control: without effective control organization can’t be operated. Effective control helps to
coordinate and supervise the activities and other mechanism.
8. Effective motivation: Motivation is the act of inspiring and encouraging the people to do work. Employees
must be motivated to achieve the goals. Without motivation , direction cannot be complete
9. Flow of information: information is most important asset in any organization. When information is blocked,
then there can be failure. On the other hand, information is useful to issue the order, ideas, and
instruction.
10. Follow- up: direction is a continuous managerial process. It involves constant and continuous supervision,
counseling, advice, instructions etc in the employees’ activities. Merely issuing orders is not sufficient but
management should find out whether the subordinate is working or not.
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Motivation
Motivation is the word derived from the word ’motive’ which means
needs, desires, wants or drives within the individuals. It is the
process of stimulating people to actions to accomplish the goals. In
the work goal context the psychological factors stimulating the
people’s behaviour can be –
i. Desire for money
ii. Success
iii. Recognition
iv. Job-satisfaction
v. Team work, etc
One of the most important functions of management is to create
willingness amongst the employees to perform in the best of their
abilities. Therefore the role of a leader is to arouse interest in
performance of employees in their jobs.
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The Motivation Process
The process of motivation consists of three stages:-
• A felt need or drive
• A stimulus in which needs have to be aroused
• When needs are satisfied, the satisfaction or
accomplishment of goals.
Therefore, we can say that motivation is a
psychological phenomenon which means needs
and wants of the individuals have to be tackled by
framing an incentive plan.
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Benefits of Motivation
Motivation is a very important for an organization because of the following benefits it provides:
Puts human resources into action
Every concern requires physical, financial and human resources to accomplish the goals. It is
through motivation that the human resources can be utilized by making full use of it. This can
be done by building willingness in employees to work. This will help the enterprise in
securing best possible utilization of resources.
Improves level of efficiency of employees
The level of a subordinate or a employee does not only depend upon his qualifications and
abilities. For getting best of his work performance, the gap between ability and willingness
has to be filled which helps in improving the level of performance of subordinates. This will
result into-
– Increase in productivity,
– Reducing cost of operations, and
– Improving overall efficiency.
Leads to achievement of organizational goals
The goals of an enterprise can be achieved only when the following factors take place :-
– There is best possible utilization of resources,
– There is a co-operative work environment,
– The employees are goal-directed and they act in a purposive manner,
– Goals can be achieved if co-ordination and co-operation takes place simultaneously
which can be effectively done through motivation.
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Benefits of Motivation
Builds friendly relationship
Motivation is an important factor which brings employees satisfaction. This can be done by
keeping into mind and framing an incentive plan for the benefit of the employees. This could
initiate the following things:
– Monetary and non-monetary incentives,
– Promotion opportunities for employees,
– Disincentives for inefficient employees.
In order to build a cordial, friendly atmosphere in a concern, the above steps should be taken by a
manager. This would help in:
– Effective co-operation which brings stability,
– Industrial dispute and unrest in employees will reduce,
– The employees will be adaptable to the changes and there will be no resistance to the
change,
– This will help in providing a smooth and sound concern in which individual interests will
coincide with the organizational interests,
– This will result in profit maximization through increased productivity.
Leads to stability of work force
Stability of workforce is very important from the point of view of reputation and goodwill of a
concern. The employees can remain loyal to the enterprise only when they have a feeling of
participation in the management. The skills and efficiency of employees will always be of
advantage to employees as well as employees. This will lead to a good public image in the
market which will attract competent and qualified people into a concern. As it is said, “Old is
gold” which suffices with the role of motivation here, the older the people, more the
experience and their adjustment into a concern which can be of benefit to the enterprise.
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Importance of Motivation
• From the above discussion, we can say that motivation is an internal
feeling which can be understood only by manager since he is in close
contact with the employees. Needs, wants and desires are inter-related
and they are the driving force to act. These needs can be understood by
the manager and he can frame motivation plans accordingly. We can say
that motivation therefore is a continuous process since motivation process
is based on needs which are unlimited. The process has to be continued
throughout.
• We can summarize by saying that motivation is important both to an
individual and a business. Motivation is important to an individual as:
i. Motivation will help him achieve his personal goals.
ii. If an individual is motivated, he will have job satisfaction.
iii. Motivation will help in self-development of individual.
iv. An individual would always gain by working with a dynamic team.
• Similarly, motivation is important to a business as:
i. The more motivated the employees are, the more empowered the team
is.
ii. The more is the team work and individual employee contribution, more
profitable and successful is the business.
iii. During period of amendments, there will be more adaptability and
creativity.
iv. Motivation will lead to an optimistic and challenging attitude at work
place.
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Motivation Types
Intrinsic Motivation
Intrinsic motivation means that the individual's motivational stimuli are
coming from within. The individual has the desire to perform a specific
task, because its results are in accordance with his belief system or fulfills
a desire and therefore importance is attached to it.
Our deep-rooted desires have the highest motivational power. Below are
some examples:
Acceptance: We all need to feel that we, as well as our decisions, are
accepted by our co-workers.
Curiosity: We all have the desire to be in the know.
Honour: We all need to respect the rules and to be ethical.
Independence: We all need to feel we are unique.
Order: We all need to be organized.
Power: We all have the desire to be able to have influence.
Social contact: We all need to have some social interactions.
Social Status: We all have the desire to feel important.
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Motivation Types
Extrinsic Motivation
Extrinsic motivation means that the individual's motivational
stimuli are coming from outside. In other words, our desires
to perform a task are controlled by an outside source. Note
that even though the stimuli are coming from outside, the
result of performing the task will still be rewarding for the
individual performing the task.
Extrinsic motivation is external in nature. The most well-known
and the most debated motivation is money. Below are some
other examples:
Employee of the month award
Benefit package
Bonuses
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Leadership
Different Types of Leadership Styles
Different types of leadership styles exist in work environments. Advantages and disadvantages exist within
each leadership style. The culture and goals of an organization determine which leadership style fits the
firm best. Some companies offer several leadership styles within the organization, dependent upon the
necessary tasks to complete and departmental needs.
Laissez-Faire
A laissez-faire leader lacks direct supervision of employees and fails to provide regular feedback to those under
his supervision. Highly experienced and trained employees requiring little supervision fall under the
laissez-faire leadership style. However, not all employees possess those characteristics. This leadership
style hinders the production of employees needing supervision. The laissez-faire style produces no
leadership or supervision efforts from managers, which can lead to poor production, lack of control and
increasing costs.
Autocratic
The autocratic leadership style allows managers to make decisions alone without the input of others. Managers
possess total authority and impose their will on employees. No one challenges the decisions of autocratic
leaders. Countries such as Cuba and North Korea operate under the autocratic leadership style. This
leadership style benefits employees who require close supervision. Creative employees who thrive in
group functions detest this leadership style.
Participative
Often called the democratic leadership style, participative leadership values the input of team members and
peers, but the responsibility of making the final decision rests with the participative leader. Participative
leadership boosts employee morale because employees make contributions to the decision-making
process. It causes them to feel as if their opinions matter. When a company needs to make changes within
the organization, the participative leadership style helps employees accept changes easily because they
play a role in the process. This style meets challenges when companies need to make a decision in a short
period.
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Leadership
Transactional
Managers using the transactional leadership style receive certain tasks to
perform and provide rewards or punishments to team members based on
performance results. Managers and team members set predetermined
goals together, and employees agree to follow the direction and
leadership of the manager to accomplish those goals. The manager
possesses power to review results and train or correct employees when
team members fail to meet goals. Employees receive rewards, such as
bonuses, when they accomplish goals.
Transformational
The transformational leadership style depends on high levels of
communication from management to meet goals. Leaders motivate
employees and enhance productivity and efficiency through
communication and high visibility. This style of leadership requires the
involvement of management to meet goals. Leaders focus on the big
picture within an organization and delegate smaller tasks to the team to
accomplish goals.
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Leadership Theories
Great Man Theory (1840s)
The Great Man theory evolved around the mid 19th century. Even though no one was able to identify with any
scientific certainty, which human characteristic or combination of, were responsible for identifying great
leaders. Everyone recognized that just as the name suggests; only a man could have the characteristic (s)
of a great leader.
The Great Man theory assumes that the traits of leadership are intrinsic. That simply means that great leaders
are born...they are not made. This theory sees great leaders as those who are destined by birth to become
a leader. Furthermore, the belief was that great leaders will rise when confronted with the appropriate
situation. The theory was popularized by Thomas Carlyle, a writer and teacher. Just like him, the Great
Man theory was inspired by the study of influential heroes. In his book "On Heroes, Hero-Worship, and the
Heroic in History", he compared a wide array of heroes.
Trait Theory (1930's - 1940's)
The trait leadership theory believes that people are either born or are made with certain qualities that will
make them excel in leadership roles. That is, certain qualities such as intelligence, sense of responsibility,
creativity and other values puts anyone in the shoes of a good leader.
The trait theory of leadership focused on analyzing mental, physical and social characteristic in order to gain
more understanding of what is the characteristic or the combination of characteristics that are common
among leaders.
Behavioural Theories (1940's - 1950's)
In reaction to the trait leadership theory, the behavioural theories are offering a new perspective, one that
focuses on the behaviours of the leaders as opposed to their mental, physical or social characteristics.
Thus, with the evolutions in psychometrics, notably the factor analysis, researchers were able to measure
the cause an effects relationship of specific human behaviours from leaders. From this point forward
anyone with the right conditioning could have access to the once before elite club of naturally gifted
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Leadership Theory
Contingency Leadership theory
The Contingency Leadership theory argues that there is no single way of
leading and that every leadership style should be based on certain
situations, which signifies that there are certain people who perform at
the maximum level in certain places; but at minimal performance when
taken out of their element.
Transactional leadership Theories (1970's)
Transactional theories, also known as exchange theories of leadership, are
characterized by a transaction made between the leader and the
followers. In fact, the theory values a positive and mutually beneficial
relationship.
For the transactional theories to be effective and as a result have
motivational value, the leader must find a means to align to adequately
reward (or punish) his follower, for performing leader-assigned task. In
other words, transactional leaders are most efficient when they develop a
mutual reinforcing environment, for which the individual and the
organizational goals are in sync.
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Controlling
George R. Terry:
“Controlling is determining what is being accomplished that is evaluating the performance and, if necessary,
applying corrected measures so that the performance takes place according to plans.” In Terry’s view,
controlling helps in proper implementing of plans. If the plans are not progressing at a proper pace than
necessary measures are taken to set the things right. Controlling is a channel through which plans may be
properly implemented.
Henry Fayol:
“In an undertaking control consists in verifying whether everything occurs in conformity with the plan adopted,
the instructions issued and principles established.” It has to point out weaknesses and errors in order to
rectify them and prevent recurrence. It operates on everything things, people, actions, etc.
Characteristics of Controlling
1. Basis for Future Action:
Control provides basis for future action. The continuous flow of information about projects keeps the long range
planning on the right track. It helps in taking corrective action in future if the performance is not up to the
mark. It also enables management to avoid repetition of past mistakes.
2. Facilitates Decision-making:
Whenever there is deviation between standard and actual performance the controls will help in deciding the
future course of action. A decision about follow up action is also facilitated.
3. Facilitates Decentralization:
Decentralization of authority is necessary in big enterprise. The management cannot delegate authority without
ensuring proper controls. The targets or goals of various departments are used as a control technique. If the
work is going on satisfactorily then top management should not worry. The ‘management by exception’
enables top management to concentrate on policy formulation. Various control techniques like budgeting,
cost control, pre action approvals allow decentralization without losing control over activities.
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Controlling
4. Facilitates Co-ordination:
Control helps in coordination of activities through unity of action. Every manager will
try to co-ordinate the activities of his subordinates in order to achieve
departmental goals. Similarly, chief executive will co-ordinate the functioning of
various departments. The controls will act as checks on the performance and
proper results will be achieved only when activities are coordinated.
5. Helps in Improving Efficiency:
The control system helps in improving organizational efficiency. Various control
devices act as motivators to managers. The performance of every person is
regularly monitored and any deficiency is corrected at the earliest.
6. Psychological Pressure:
Controls put psychological pressure on persons in the organization. Everybody knows
that his performance is regularly evaluated and he will try to improve upon his
previous work. The rewards and punishments are also linked with performance.
The employees will always be under pressure to improve upon their work. Since
performance measurement is one of the important tools of control it ensures that
every person tries to maximize his contribution.
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Process of Control:
Following are the steps involved into the process of control:
1. Establish the Standards:
Within an organization’s overall strategic plan, managers define goals for organizational departments in
specific, precise, operational terms that include standards of performance to compare with organizational
activities. However, for some of the activities the standards cannot be specific and precise.
Standards, against which actual performance will be compared, may be derived from past experience,
statistical methods and benchmarking (based upon best industry practices). As far as possible, the
standards are developed bilaterally rather than top management deciding unilaterally, keeping in view the
organization’s goals.
Standards may be tangible (clear, concrete, specific, and generally measurable) – numerical standards,
monetary, physical, and time standards; and intangible (relating to human characteristics) – desirable
attitudes, high morale, ethics, and cooperation.
2. Measure Actual Performance:
Most organizations prepare formal reports of performance measurements both quantitative and qualitative
(where quantification is not possible) that the managers review regularly. These measurements should be
related to the standards set in the first step of the control process.
For example, if sales growth is a target, the organization should have a means of gathering and reporting sales
data. Data can be collected through personal observation (through management by walking around the
place where things are happening), statistical reports (made possible by computers), oral reporting
(through conferencing, one-to-one meeting, or telephone calls), written reporting (comprehensive and
concise, accounting information – normally a combination of all. To be of use, the information flow should
be regular and timely.
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Process of Control:
3. Compare Performance with the Standards:
This step compares actual activities to performance standards. When managers read computer
reports or walk through their plants, they identify whether actual performance meets,
exceeds, or falls short of standards.
Typically, performance reports simplify such comparison by placing the performance standards
for the reporting period alongside the actual performance for the same period and by
computing the variance—that is, the difference between each actual amount and the
associated standard.
The manager must know of the standard permitted variation (both positive and negative).
Management by exception is most appropriate and practical to keep insignificant deviations
away. Timetable for the comparison depends upon many factors including importance and
complexity attached with importance and complexity.
4. Take Corrective Action and Reinforcement of Successes:
When performance deviates from standards, managers must determine what changes, if any, are
necessary and how to apply them. In the productivity and quality-centered environment,
workers and managers are often empowered to evaluate their own work. After the evaluator
determines the cause or causes of deviation, he or she can take the fourth step— corrective
action.
The corrective action may be to maintain status quo (reinforcing successes), correcting the
deviation, or changing standards. The most effective course may be prescribed by policies or
may be best left up to employees’ judgment and initiative. The corrective action may be
immediate or basic (modifying the standards themselves).
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Techniques of Controlling
1. Direct Supervision and Observation
'Direct Supervision and Observation' is the oldest technique of controlling. The
supervisor himself observes the employees and their work. This brings him in
direct contact with the workers. So, many problems are solved during supervision.
The supervisor gets first hand information, and he has better understanding with
the workers. This technique is most suitable for a small-sized business.
2. Financial Statements
All business organisations prepare Profit and Loss Account. It gives a summary of the
income and expenses for a specified period. They also prepare Balance Sheet,
which shows the financial position of the organisation at the end of the specified
period. Financial statements are used to control the organisation. The figures of
the current year can be compared with the previous year's figures. They can also
be compared with the figures of other similar organisations.
3. Budgetary Control
A budget is a planning and controlling device. Budgetary control is a technique of
managerial control through budgets. It is the essence of financial control.
Budgetary control is done for all aspects of a business such as income,
expenditure, production, capital and revenue. Budgetary control is done by the
budget committee.
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4. Break Even Analysis
Break Even Analysis or Break Even Point is the point of no profit, no loss. For e.g.
When an organisation sells 50K cars it will break even. It means that, any sale
below this point will cause losses and any sale above this point will earn profits.
The Break-even analysis acts as a control device. It helps to find out the company's
performance. So the company can take collective action to improve its
performance in the future. Break-even analysis is a simple control tool.
5. Return on Investment (ROI)
Investment consists of fixed assets and working capital used in business. Profit on the
investment is a reward for risk taking. If the ROI is high then the financial
performance of a business is good and vice-versa.
ROI is a tool to improve financial performance. It helps the business to compare its
present performance with that of previous years' performance. It helps to conduct
inter-firm comparisons. It also shows the areas where corrective actions are
needed.
6.Management Information System (MIS)
In order to control the organisation properly the management needs accurate
information. They need information about the internal working of the organisation
and also about the external environment. Information is collected continuously to
identify problems and find out solutions. MIS collects data, processes it and
provides it to the managers. MIS may be manual or computerised. With MIS,
managers can delegate authority to subordinates without losing control.
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Reference
1. Harold Koontz, O’ Donnell and Heinz
Welhrich, Essentials of Management, New
Delhi, Tata Mc Graw Hill, 2008.
2. K. Aswathapa, Essential of Business
Administration, Himalaya Publishing House,
2014.
3. Robbins, Stephen P., Fundamentals of
Management, Pearson Education, 2009.
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