pom.doc

INTRODUCTION TO MANAGEMENT
What is organization?
An organization (or Organization) is a social entity that has a collective goal and is linked to an
external environment. The word is derived from the Greek word organon, itself derived from the better-
known word ergon which means "organ" – a compartment for a particular task.
Types of organization
There are a variety of legal types of organizations, including corporations, governments, non-
governmental organizations, international organizations, armed forces, charities, not-for-profit
corporations, partnerships, cooperatives, and universities. A hybrid organization is a body that operates in
both the public sector and the private sector simultaneously, fulfilling public duties and developing
commercial market activities.
A voluntary association is an organization consisting of volunteers. Such organizations may be able
to operate without legal formalities, depending on jurisdiction, including informal clubs. Organizations may
also operate in secret and/or illegally in the case of secret societies, criminal organizations and resistance
movements.
State the Definition of management?
Management refers to the development of bureaucracy that derives its Importance from the need for
strategic planning, co-ordination, directing and controlling of large and complex decision-making process.
Essentially, therefore, management entails the acquisition of managerial competence, and effectiveness in
the following key areas: problem solving, administration, human resource management, and organizational
leadership.
Management is an art and science of getting work done through people. It is the process of giving
and controlling the various activities of the people to achieve the objectives of an organization. In simple
management is the art of getting things done by others
“Management is the art of knowing what you want to do and then seeing that it is done in the best
and cheapest way” - F.W.Taylor
“Management is the process of designing and maintaining of an environment in which individual
working together in groups, efficiently accomplish selected aims”–Koontz & Weihrich
In simple management is the art of getting things done by others.
Harold Koontz defined the management as the art of getting things done through and
formally organized groups. It is “the art of creating an environment in which people can perform as
individuals and yet cooperate towards attainment of group goals”.
If we consider the management as a process, G.R.Terry has viewed management as a process.
Management is a distinct process consisting of planning, organizing actuating and controlling, performed to
determine and accomplish stated objectives by the use of human beings and other resources.
According to McFarland, “Management is the process by which managers create, direct,
maintain and operate purposive organizations through systematic, coordinated and cooperative”.
What are the characteristics of Management?
Management is a distinct activity having the following salient features or characteristics:
Economic Resource. Management is one of the factors of production together with land, labor and
capital. As industrialization increases, the need for managers also increases. Efficient management is
the most critical input in the success of any organized group activity as it is the force, which
assembles and integrates other factors of production, namely, labor, capital and materials. Inputs of
labor, capital and materials do not by themselves ensure production; they require the catalyst of
management to produce goods and services required by the society. Thus, management is an
essential ingredient of an organization.

Goal Oriented. Management is a purposeful activity. It coordinates the efforts of workers to achieve
the goals of the organization. The success of management is measured by the extent to which the
organizational goals are achieved. It is imperative that the organizational goals must be well-defined
and properly understood by the -managers at various levels.
Distinct Process. Management is a distinct process consisting of such functions as planning,
organizing, staffing, directing and controlling. These functions are so interwoven that it is not
possible to lay down exactly the sequence of various functions or their relative significance. In
essence, the process of management involves decision-making and putting of decisions into practice.
Integrative Force. The essence of management is integration of human and other resources to
achieve the desired objectives. All these resources are made available to those who manage.
Managers apply knowledge, experience and management principles for getting the results from the
workers by the use of non-human resources. Managers also seek to harmonize the individuals’ goals
with the organizational goals.
System of Authority: Management as a team of managers represents a system of authority a
hierarchy of command and control. Managers at different levels process varying degrees of authority,
generally, as we move down in the managerial hierarchy, the degree of authority gets gradually
reduced. Authority enables the managers to perform their functions effectively.
Dynamic function: Management is a dynamic function of business organization, its functions
change from time to time depending upon the circumstance of the business, i.e., and changes in
economic, social, political, technological and human conditions. Management adjusts itself to the
changing atmosphere making suitable forecasts and changes in the policies.
Social process: Management is a social process as it primarily deals with emotional /dynamic and
sensitive human beings. The major achievement is to win their confidence and cooperation. Thus,
making it difficult to precisely define the principles of management. Management principles are
constantly influenced by social traditions, customs and regulations.
Management makes things happen: Managerial ability is distinctly different from technical ability.
Management is the art of getting things done through people. It implies that under given set of
constraints or problem boundaries how positive results can emerge, by taking well-defined actions.
Management is a multi-faceted discipline: Management has to deal with heterogeneous resources.
Their performance depends upon the proper knowledge and skill of various disciplines. Management
has grown as a body of discipline taking the help of so many social sciences like Anthropology
Sociology, Psychology' etc. Due to this, management is also known as a "Behavioral Science."
Intangible force: Managerial ability is an intangible force; it is a social skill, which cannot be seen
with the eyes but it, is evidenced by the quality and level of an organization.
Management is a science and an art: Management is a science because it has an organized body of
knowledge, which is based on facts and certain universal truths. It is an art because certain skills,
essential for good management, are unique to individuals. So many times managers act on instinct. It
is also about interactions, which cannot be laid down in black and white.
Is Management –Science or Art?
Science: An organized or systemized body of knowledge pertaining to a specific field of enquiry.
Art: It is the application of knowledge and personal skills to achieve results.

The question whether management is a science, art or profession is put to debate quite frequently.
There are arguments on both sides. It is examined in detail below:
Properties of Science
Science is a systematized body of knowledge based on certain principles, capable of general
application. This knowledge is obtained through the process of observation, experimentation and testing.
Science, thus, has four elements:
Systematic body of knowledge: Science is systematized in the sense
that it is based on the cause and effect relationship between different variables. Such a knowledge
helps in explaining past events and predicts the outcome of specific actions.
Scientific inquiry and observation: Scientific inquiry is unaffected by the personal likes and
dislikes of a scientist. When we say that the rotation of earth causes days and nights, we do not
express the opinion of just one person. This can be scientifically proved at any time.
Experimentation: The principles of science are derived after repeated observations and
experiments. The results of each experiment can be verified and outcomes predicted in a definite
way. When results get confirmed after repeated experimentation, they become principles.
Universal truths: Scientific principles represent basic truths; they are developed after a series of
experiments. They can be applied in all situations and at all times.
Management as a Science: Management is a science because it has all the characteristics of a
science, namely: Systematized body of knowledge: Management is a distinct discipline. It has a
number of principles, which can be studied and put to application. Management offers principles
that could be put to good use while solving problems.
Management is a social science: Management is a social science, as it deals with human behavior
about which little is known at present. As we all know, it is not possible to study human behavior
under controlled laboratory conditions. Human behavior is unpredictable and, therefore, defies
experimentation. As a result, the principles of management cannot be accepted as absolute truths.
They are still in a developing stage and evolutionary in nature. Management, at best, can be called
as a soft science.
Management is an inexact science: Management is not an exact science like physics, chemistry or
biology. It does not offer absolute principles. It can offer only flexible guidelines that would be of
use in solving problems. Management can never be an exact science because business is highly
dynamic and business conditions change continually.
Manager vs. scientist: A scientist can afford to wait until all the information (about a thing) is
available. He can indulge in a series of experiments till the truth emerges clearly. However, a
manager cannot afford to do like that. He must take decisions based on inadequate information,
insufficient knowledge and resources. He must make decisions today in order to survive in future.
Scientific management. When Taylor used the term 'scientific -management', he was aware of the
fact that experimentation and verification of facts is not possible in managing human resources. He
had used the term 'scientific', as an organized body of knowledge as opposed to 'traditional rules and
empirical dexterity. Over the years, the traditional hit-or-miss methods have yielded place to several
systematic methods based on principles. No wonder, management is known as a 'sophisticated
behavioral science' these days. Thus, art and science are complementary and mutually supportive.
Properties of Art:

The practical knowledge acquired in the areas of planning, decision making and motivating certainly
help managers to tackle problems in a better way. The arguments in favor of management as an art run as
below
Use of knowledge: Just as a doctor uses the science of medicine while diagnosing and treating the
patients, a manager uses the knowledge of management theory while performing the managerial
functions. He, thus, uses sound knowledge in place of hit-or-miss methods, with a view to achieve
results effectively.
Creative art: Management is creative like any other art. It combines human and non-human
resources in a useful way so as to achieve results. It tries to produce sweet music by combining the
chords in an effective manner. It makes things happen by changing the behavior of human beings.
Personalized: Like any other art, management is a personalized activity. Every manager has own
way of managing things and people, based on his knowledge and experience. There is one way of
doing things. As years roll by, managers learn the art of managing through a proc of trial and error.
Constant practice: Managers learn from mistakes. The application of managerial principle over a
period of time enables them to tackle difficult problems with confidence. In other words they
develop their skills through constant practice. Just as artistic skills can be developing through
training, so can managerial skills.
MANAGEMENT IS SCIENCE AS WELL AS ART
Management is thus, an art as well as a science. The art of management is as old as
civilization. The science of management is young and developing. Both are complementary and mutually
supporting Managers need to acquire the knowledge of management principles and practice in order to
successful. They need to sharpen this knowledge through constant practice. The theoretical knowledge in
management must be put to good use in a skilful way, while achieving results. As Ducker has pointed out,
every organization has the same resources to work with. It is the quality of management that spells the
difference between success and failure.
Managers need to acquire knowledge systematically and put the same to good use, using
intuition; judgment and experience .A successful manager is one who is able to visualize problems before
they turn into emergencies. The ability to meet the problems head-on does not come by chance. It requires
sound knowledge and constant practice. Managers, therefore, have to fruitfully combine their scientific
knowledge with artistic skills in order to emerge as the winners, in a competitive environment.
EVOLUTION OF MANAGEMENT THOUGHTS
Introduction
More than 200 years ago Adam Smith described the advantages of division and specialization.
However, the study of management as a science began recently, especially after the Industrial Revolution.
There has been a deluge of research during the last few decades of management.
Harold Koontz described the present state of management theory as a 'jungle’. According to Koontz,
Donnell and Weihrich there are eleven approaches for studying management. Way back Stogdill has
identified not less than eighteen approaches for studying management. Hutchinson has identified five
approaches. Thus, different writers have provided different categorization schemes for studying
management.
In order to facilitate easy understanding, we can identify four broad approaches namely, the classical
theory, neo-classical theory, behavioral and modern theory.
Explain the classifications of schools of management thought?
(i) Classical School: It is the oldest school of management thought. The classical theorists concentrated on
organization structure for the achievement of organizational goals and also developed certain principles of
management. Many of the classical concepts and principles hold good even to-day. The classical thought

can be studied under three streams, namely, (a) Scientific Management, (b) Administrative Management or
Management Process, and (c) Bureaucracy
(ii) Neoclassical School. The neo-classical writers tried to remove the deficiencies of the classical school
and suggested improvements for good human relations in the organization. Their propositions are based on
'human relations studies' conducted at the Hawthorne Plant of General Electrical, U.S.A. That is why, they
are also known as 'human religionists.
(iii) Behavioral Sciences School. This approach emerged as a result of the contributions of psychologists,
sociologists and anthropologists to the field of management. The, behavioral science perspective believes
that it is difficult to understand the sociology of a group separate from the psychology of the individuals
comprising it and the anthropology of the culture within which it exists. Thus, the behavioral sciences are
transactional; they are concerned with all relevant aspects of human behavior including the interactions
among all important factors.
(iv) Modern School. The modem management thinkers define organization as a system and also consider
the impact of environment on the effectiveness of the organization. As a result, two approaches have gained
prominence after 1960s, which are as follows: (a) Systems approach, and (b) Contingency approach.
Define the Classical approach? Discuss about its contributors?
The impetus for the scientific management approach came from the first industrial revolution.
Because it brought about such an extraordinary mechanization of industry, this revolution necessitated the
development of new management principles and practices. The main contributors to scientific management
include Frederick Taylor, Henry L. Gantt, Frank Gilbreth, LillianGilbreth and Harrington Emerson and
others.
1. Fredrick W. Taylor
Taylor was the first person who insisted on the introduction of methods in management and it was he
who, along with his associates, made the first systematic study of management. He launched a new
management approach in 1910 which is known as 'Scientific Management.' That is why Taylor is regarded
as the father of scientific management.
Taylor was born in 1856 in Philadelphia, U.S.A. He started his career as an apprentice in, a small
machine making shop in 1870 and rose to the position of Chief Engineer of Midvale Steel Works in 1884 at
the age of 28.
The scientific management is based on the following five principles:
Replacement of old rules of thumb method. Scientific investigation should be used for taking
managerial decisions instead of basing decisions on opinion, intuition or rule of thumb. Under
scientific management, decisions are made on the basis of facts as developed by the application of
scientific method to the problem concerned. This is in contrast with the approach followed under
traditional management according to which decisions are based on opinions, prejudices, or rule of
thumb.
Scientific selection and training of workers. The procedure for selection of workers should be
designed scientifically. The errors committed at the time of selection may prove to be very costly
later on. If we do not have right worker on the right job, the efficiency of the organization will be
reduced. Therefore, every organization should- follow a scientific system of selection. The selected
workers are to be trained to avoid wrong methods of work. Management is responsible for their
scientific education and training.
Co-operation between labor and management. There should be cooperation between the
management and the workers. This requires change of mental attitudes of the workers and the
management towards each other. Taylor called it mental revolution. When this mental revolution
takes place, workers and management turn their attention towards increasing profits. They do not
quarrel about the distribution of profits.
Maximum output. The management and the workers should try to achieve maximum output, in
place of restricted output. This will be beneficial to both the parties. Maximum output will also be in
the interest of the society.

Equal division of responsibility. There must be equal division of responsibility between the
managers and the workers. The management should assume responsibility for the work for which it
is better suited. For instance, management should decide the method of work, working conditions,
time for completion of work, etc. instead of leaving these to the discretion of workers. The
management should be responsible for planning and organizing the work, Whereas workers should
be responsible for the execution of work as per instruction of the management.
2. Henri Fayol-Theory of management
Fayol was born in 1841 and was appointed engineer of a French mining company in 1860. In 1880,
he became the managing director of the same company. When he took charge, the company was on the
verge of bankruptcy; when he retired in 1918, its financial position was very strong. Fayol attributed his
success to his system of management which he emphasized could be both taught and learnt. Unlike Taylor,
Fayol studied management from the board of directors down. Taylor's approach to management dealt with
specifics of job analysis, employees' motion and time standards while Fayol viewed management as a
teachable theory dealing with planning, organizing, commanding, coordinating and controlling.
Principles of Management
'Principles of Management' implies a list of current management practices. -Though F.W. Taylor developed
principles of management; credit goes to Henri Fayol, a French management theorist for advocating and
publishing certain principles (or laws) for the soundness and good working of the management. Henri Fayol
warned that the principles of management should be, (i) Flexible and not absolute, it must be usable
regardless of changing conditions, (ii) Used with intelligence and with a sense of proportion, etc. Henri
Fayol listed 14 principles that grew out of his experience; they are briefed as under.
Division of Work (or Labor)
Division of work means dividing the work on the principle that different workers (and different
places) are best fitted for different jobs (or things) depending upon influences arising from
geography, natural conditions, personal aptitude and skills.
Division of work leads to specialization.
Concept of division of labor can be applied to all kinds of work, managerial as well as technical.
Authority and Responsibility
Authority and Responsibility should go together, hand-in-hand and must be related.
An executive can do justice with his responsibility only when he has the proper authority.
Responsibility without Authority or vice versa is meaningless.
Discipline
Discipline is absolutely necessary for efficient functioning of all enterprises.
Discipline may be described as respect for agreements that are directed at achieving obedience,
application, and the outward marks of respect.
Unity of Command
Unity of command means, employees should receive orders and instructions from one boss (or
supervisor) only. In other words a worker should not be under the control of more than one
supervisor.
Unity of command avoids confusion, mistakes and delays in getting the work done.
Unity of Direction
It is a broader concept than the unity of command.
Unlike unity of command which concerns itself with the personnel, unity of direction deals with the
functioning of the body corporate.
Unity of direction implies that there should be one plan and one head for each group of activities
having the same objective.

Subordination of Individual to General Interest
The interests of an individual person should be permitted to supersede or prevail upon ' the general
interests of the enterprise.
This is necessary to maintain unity and to avoid friction among the employees.
Remuneration
Remuneration is the Price Paid to the employees for the services rendered by them for the enterprise.
Remuneration should (i) be fair, and (ii) bring maximum satisfaction to both employees and the
employer.
Centralization of Authority
Centralization of authority means that the authority is in the hands of center, i.e., the authority is not
dispersed among different sections.
In a business organization, authority should be centralized only to that degree or extent which is
essential for the best overall performance.
Degree of centralization is decided by keeping in view the nature, size and complexity of the
(business) enterprise.
Scalar Chain
Managers may be regarded as a chain of superiors. There should be an unbroken line of authority and
command through all levels from the highest (i.e., general manager) to the lowest ranks (employee).
The chain of superiors should be short circuited, when following it strictly will be detrimental to
performance.
Order
This promotes the idea that everything (e.g., materials) and everyone (human being) has his place in
the organization.
Materials and human beings should be arranged such that right material (things)/person is in the right
place.
Equity of Treatment
Manager should have equality of treatment for all his subordinates.
Manager should deal with his subordinates with kindness and justice.
This will make employees more loyal and devoted towards the management/enterprise.
Stability
Stable and secure work force is an asset to the enterprise, because unnecessary labor turnover is
costly.
An average employee who stays with the concern is much better than outstanding employees who
merely come and go.
Instability is the result of bad management.
Initiative
Initiative is one of the keenest satisfactions for an intelligent employee to experience.
Managers should sacrifice their personal vanity in order to permit their subordinates to exercise their
own initiative.
A manger should encourage his subordinates to take initiative.
Esprit de Corps
This principle of management emphasizes the need for teamwork (harmony, and proper
understanding) among the employees and shows the importance of communications in obtaining such
team-work.

3. Henry L. Gantt’s Contribution of Management
Gantt like Taylor, a mechanical engineer joined Taylor at the Midvale Steel Company in 1887. He
stayed with Taylor in his various assignments until 1901, when he formed his own consulting engineering
firm. Although he strongly espoused Taylor's ideas and did much consulting work on the scientific selection
of workers and the development of incentive bonus systems, he was far more cautious than Taylor in selling
and implementing his scientific management methods. Like Taylor, he emphasized the need for developing
a mutuality of interests between management and labor, a "harmonious cooperation!' In doing this, he
stressed the importance of teaching, of developing an understanding of systems on the both labor and
management, and of appreciating that "in all problems of management the human element is the most
important one."
Gantt is perhaps best known for his development of graphic methods of describing plans and making
possible better managerial control. He emphasized the importance of time, as well as cost, in planning and
controlling work. This led eventually to the famous Gantt chart, which, as we shall see in Chapter 21, is in
wide use today and was the forerunner of such modern techniques as the Program Evaluation and Review
Technique (PERT). Some social historians regard the Gantt chart as the most important social invention of
the twentieth century.
4. Frank and Lillian Gilbreth
The ideas of Taylor were also strongly supported and developed by the famous husband-and-wife
team of Frank and Lillian Gilbreth. Frank Gilbreth gave up going to the university to become a bricklayer at
the age of 17 in 1885; he rose to the position of chief superintendent of a building contracting firm 10 years
later and became a building contractor on his own shortly thereafter. During this period, and quite
independently of Taylor's work, he became interested in wasted motions in work; by reducing the number of
bricklaying motions from 18 to 5, he made possible the doubling of a bricklayer's productivity with no
greater expenditure of effort. His contracting firm work soon gave way largely to consulting on the im-
provement of human productivity. After meeting Taylor in 1907, he combined his ideas with Taylor's to put
scientific management into effect.
Define what is Bureaucracy?
A Structure with highly routine operating tasks achieved through specialization, much formalized
rules and regulations, tasks that are grouped into functional departments, centralized authority, narrow spans
of control and decision-making that follows the chain of command.
Elements of Bureaucracy are:
 Hierarchy
 Division of work
 Rules, regulations and procedures
 Records
 Impersonal Relationships
 Administrative class
What is Neo- Classical approach? Discuss about its contributors?
Theories resulted in work behavior and the researches tried to investigate the reasons for human
behavior at work. They discovered that the real cause of human behavior is somewhat more than- the
physiological variable. The neoclassical approach was developed as a reaction to the classical approach,
which attracted so many behaviorists to make further researches into the human behavior at work. ‘Mayo’
and his associates at Hawthorne Plant of the Eastern Electric Company, Chicago started this movement in
the late twenties, gained momentum and continued to dominate till the sixties. Douglas M. McGregor has
given an impressive account of thinking of human relations in his book entitled 'The Human Side of
Enterprise.'
The other contributors are Roethlisberger, Dickson, Whitehead, Lippitt and White, Coach and French Jr.,
etc.
1. HUMAN RELATIONS APPROACH
The classical writers including Weber, Taylor and Fayol neglected the human relations aspect. The
human relationists , (also known as neo-classicists) focused on the human aspect of industry. They modified

the classical theory by emphasizing the fact that organization is a social system and the human factor is the
most important element within it.' They conducted some experiments (known as Hawthorne Experiments)
and investigated informal groupings, informal relationships, patterns of communication, patterns of informal
leadership, etc. Elton Mayo is generally recognized as the father of the Human Relations School. Other
prominent contributors to this school include Roethlisberger, Dickson, Dewey, Lewin, etc.
a. Hawthorne Studies
In 1927, a group of researchers led by George Elton Mayo and Fritz J. Roethlisberger at the Harvard
Business School were invited to join in. the studies at the Hawthorne Works of Western Electric Company,
Chicago. The experiment lasted up to 1932. Earlier, from 1924 to 1927, the National Research Council made
a study in collaboration with the Western Electric Company to determine the effect of illumination and other
conditions upon workers and their productivity.
Illumination Experiment. This experiment was conducted to establish relationship between output
and illumination. The output tended to increase every time as the intensity of light was improved.
But the output again showed an upward trend when the illumination was brought down gradually
from the normal level. Thus, it was found that there is no consistent relationship between output of
workers and illumination in the factory. There were some other factors, which influenced the
productivity of workers when the intensity of light was increased or decreased.
Relay Assembly Room Experiment. In this experiment, a small homogeneous work-group of girls
was constituted. Several new elements were introduced in the work atmosphere of this group. These
included shorter working hours, rest pauses, improved physical conditions, friendly and informal
supervision, free social interaction among group members, etc. Productivity and morale increased
considerably during the period of the experiment. Morale and productivity were maintained even if
improvements in working conditions were withdrawn. The researchers concluded that socio-
psychological factors such as feeling of being important, recognition, attention, participation,
cohesive work-group, and non-directive supervision held the key for higher productivity.
Bank Wiring Observation Room Experiment. This experiment was conducted to study a group of
workers under conditions, which were as close as possible to normal. This group comprised of 14
workers. After the experiment, the production records of this group were compared with their earlier
production records. There were no significant changes in the two because of 'the maintenance of
'normal conditions'. However, the researchers observed existence of informal cliques in the group
and informal production norms.
Mass Interview Programme. The researchers interviewed a large number of workers with regard to
their opinions on work, working conditions and supervision, Initially, managers and researchers used
a direct approach whereby interviewers asked questions considered important. Later, this approach
was replaced by an indirect technique where the interviewer simply listened to what the employees
had to say. The findings confirmed the importance of social factors at work in the total work
environment.
2. BEHAVIOURAL SCIENCES APPROACH
Under behavioral science approach, the knowledge drawn from behavioral sciences, namely,
psychology, sociology and anthropology, is applied to explain and predict human behavior. It focuses on
human behavior in organizations and seeks to promote verifiable propositions for scientific understanding of
human behavior in organizations. It lays emphasis on the study of motivation, leadership, communication,
group dynamics, participative management, etc.
The essential characteristics of behavioral science approach are as under:
 Data must be objectively collected and analyzed.
 Findings must be presented so that the distinction between cause and effect, as opposed to chance
occurrences, is clear.
 Facts must be systematically related to one another within a systematic framework. Data collection
alone does not constitute a science.

 The findings of a study must always be open to further examination and question.
The proponents of behavioral science approach made the following propositions:
An organization is a socio-technical system.
Individuals differ with regard to attitudes, perceptions and value systems. As a result, they behave
differently to different stimuli under different conditions.
People working in the organization have their needs and goals, which may differ, from the
organizational goals. Attempts should be made to achieve fusion between organizational goals and
human needs.
A wide range of factors influence inter-personal and group behavior of people in organizations.
Explain social system approach?
It was Chester I. Barnard who developed the concept of social system. He viewed organization as a
social system that is composed of people who work in, cooperation. An organization comes into existence
when (a) there are a number of persons in communication with each other, and (b) they are willing to
cooperate for a common purpose. Barnard also recognized informal organization representing social
interactions, which generally do not have a consciously coordinated joint purpose. The executives should
encourage informal organizations to serve as a means of communication and group cohesiveness.
Barnard identified the following functions of an executive: (a) the maintenance of organizational
communication, (b) securing essential services from individuals in the organization, and (c) formulating and
defining the purpose. By performing these functions, the executives can achieve good human relations in the
organization.
What is systems approach to an organisation?
We may look at the organization from two different angles:
 We may consider the overall picture of the organization as a unit; or
 We may consider the relationship between its various internal components.
When we consider the overall picture of the organization, we consider all the elements internal and external
and their effects on each offer simultaneously. This approach may be called the 'goalistic view.
The systems approach focused attention on the following aspects:
It integrates all elements for the proper and smooth functioning of the organization.
The organization overall goals can be achieved successfully because it considers all the aspects of
the problems deeply and maintains a harmonious relationship between various elements so that they
work untidily to achieve goals.
The approach helps in acquisition and maintenance of various resources, i.e., man, material, money,
and machinery, etc. for pertaining the smooth functioning of the organization.
It allows adaptation to internal - requirements and environmental changes in order to survive and
grow.
Enumerate the other major contributions by leading Management Thinkers?
a) MARRY FOLLETT (1868 - 1933): M.P.Follet is a social philosopher. Important contributions of
Follett to management thought thus:
 Constructive conflict
 Law of the situation
 Group ethic important
 Leadership
 Authority and responsibility
 Coordination principles
b.) RENSIS LIKERT (1903 - 1972): Rensis Likert, Director of the Institute of Social Research,
University of Michigan, According to Likert, the traditional job centered supervision is mainly
responsible for low productivity and poor morale of employees He, therefore, advocated the
employee centered approach where maximum participation would be given to operatives while

setting goals and making decisions. Likert is best known for his classifications of management styles
into four categories:
System 1 (exploitative autocratic): Leaders have no confidence or trust in subordinates,
Subordinates are deprived of participation in decision making.
System 2 (benevolent autocratic): Management has condescending confidence in subordinates just
as a master has towards a servant.
System 3 (participative): Leaders have substantial but not total confidence in subordinates
Participation is meaningful and employees are permitted to participate in decisions their lives.
System 4 (democratic): Participation is meaningful, as leaders have complete confidence trust in
subordinates.
3. PETER F. DRUCKER: Peter F. Drucker had revolutionalised management thinking in early 50's
with his path breaking books, presentations. He came into prominence with the publication of "The
New Society". Drucker is often hailed as a genius who had pioneered several modern management
concepts in the fields of innovation, creativity, Problem solving, organization design, MBO etc.
Discuss the functions of management?
 Planning: Planning is a mental process requiring the use of intellectual faculties, foresight and sound
judgment. It is the determination of a course of action to achieve the desired result. "It is the
selecting and relating of facts and the making and using of assumptions regarding the future in the
visualization and formation of proposed activities believed necessary to achieve desired results."
 Organizing: Organizing is an important managerial activity by which management brings together
the manpower and material resources for the achievement of pre-determined objectives.
Organization is the process of establishing relationships among the members of the enterprise. The
relationships are created in terms of authority and responsibility. Each member in the organization
is assigned a specific responsibility or duty to perform and is granted the corresponding authority to
perform his duty.
 Staffing: The staffing function of management pertains to recruitment, selection, training,
development and appraisal of personnel. There is a controversy whether staffing is a function of
every manager in the organization as there is personnel department in every organization. Since
every manager is concerned with management of human resources, he must perform the ion. In fact,
every manager is associated with the employment, training and appraisal of human resources.
 Directing: The term ‘directing’ or 'direction' is generally used in every walk of life. It has got a wide
interpretation these days. It is no more restricted to ‘commanding’ as viewed by Henri Fayol. In the
words of Marshall, "Directing determining the course, giving orders and instructions and providing
dynamic leadership."" It relates to those activities, which deal directly with influencing, guiding,
supervising and motivating subordinates in their jobs.
 Controlling: The function of controlling deals with the measurement and correction of the
performance of persons against the pre-determined standards. E.F.L. Brech defined control as the
process of checking actual performance against to ensuring satisfactory performance, Fayol viewed
control as verifying whether everything occurs in conformity with the plan adopted, the instructions
issued and principles established. Controlling leads to taking corrective action if the results do not
conform to plans.
What are the skills required for a manager?
The job of a manager demands a mixture of many types of skills, whether he belongs to business
organization, an educational institution, a hospital or a club. A Manager is successful when he is able to
make a smooth functioning team of people working under him. For this, he must use the various skills in
appropriate degrees.
Conceptual Skills

Conceptual skill is the ability to see the organization as a whole, to recognize inter-relationships
among different functions of the business and external forces and to guide effectively the organizational
efforts. Conceptual skills are used for abstract thinking, and for the concept development involved in
planning and strategy formulation. Conceptual skills involve the ability to understand how the parts of an
organization depend on each other. A manager needs conceptual skills to recognize the interrelationships of
various situational factors and, therefore, make decisions that will be in the best interests of the
organization.
Human Skills
Human skills are the abilities needed to resolve conflicts, motivate, lead and communicate
effectively with others. Because all work is done when people work together, human relations skills are
equally important at all levels of management.
Technical Skills
Technical skills refer to specialized knowledge and proficiency in handling methods, processes and
techniques of specific jobs. These skills are most important at lower levels of management and much less
important at upper levels. A production supervisor in a manufacturing plant, for example, must know the
processes used and be able to physically perform the tasks he supervises. A word processing supervisor
must have specialized knowledge about computer software used in, the process. In most cases, technical
skills are important at this level because supervisory managers must train their subordinates in the proper
use of work related tools, machines and equipment.
What are the levels of management?
Management/Industrial Management has got the following activity levels.
1. Top Management: it is the function of top management to watch, interpret, exploit of where necessary,
and counter external influences with appropriate decisions and plans and to initiate the appropriate
adjustment in the functional authority and status structures of the organization. It is the top
management’s duty to protect the integrity of the organization, so that it can survive for its own
employee’s, the shareholder’s, supplier’s and customer’s interests and for the general good of the social
and economic system within which it operates.
Top Management Functions are setting basic goals and objectives, Expanding or contracting
activities, Establishing policies, Monitoring performance, Designing/Redesigning organization and
system, and Shouldering financial responsibilities, etc. Top Management includes Board of Directors,
Managing Directors, Chief Executives, General Managers, Owners, and Shareholders and financiers.
2. Middle Management: The middle management level generally consists of divisional and departmental
heads such as plant manager, production manager, marketing manager, personal directors etc. their job
is to interpret policies and directions set by the top level management into specific plans and guidelines
for action. Their responsibility is to coordinate the working of their departments so that the set
objectives can be achieved.
3. Lower Management: this level of management consists of supervisors, superintendents, unit heads,
foremen, chief clerks etc, their primary concern is with the mechanics of the job and they are
responsible for coordinating the work of their employees. They must possess technical skills so that
they can assist their subordinates when necessary. They plan day to day operations, assign personnel to
specific job, oversee their activities, evaluate their performances, and become a link between the
workers and the middle level management.
ROLES OF MANAGERS
Explain the Roles of Managers?
In1973, Henry Mintzberg conducted one of the first comprehensive studies of the nature of
managerial work and gives us a complete picture of what a manager actually does. Based on his study of
the activities of five practicing chief executives, Mintzberg generalized his description of the nature of

managerial work in actual practice. He identified ten basic roles performed by managers and classified
them under three heads. (i) Interpersonal, (ii) informational, and (iii) decisional. These roles organized sets
of behaviors belonging to a position describe what managers actually do, whereas functions of managers
had historically described what managers should do?
Ten Managerial Roles identified by Mintzberg
Interpersonal Roles
 Figurehead role
The manager performs certain functions such as receiving important visitors and signing documents.
 Leader
The manager motivates and encourages subordinates.
 Liaison role
The manager establishes and maintains a network of relationships with outside persons to bring
information and favors to the organization.
Informational Roles
 Monitor
Seeks and receives information to obtain thorough understanding of organization and environment.
 Disseminator role
The manager must transmit much of the information received from outsiders or insiders to other
organization members.
 Spokes person
Information about the organization must be transmitted to outsiders.
Decisional Roles
 Entrepreneurial role
The manager acts as an initiator and designer of controlled change in the organization.
 Disturbance handler role
This role equips the manager to take corrective actions needed to resolve important and unexpected
disturbances. He must seek solutions of various unanticipated problems like strike, natural disasters,
accidents etc. Routine problems must also be dealt with simultaneously.
 Resource allocator role
The manager allocates the monetary and non-monetary resources of the organization. Specific
activities include developing and monitoring budgets, forecasting future resource Needs and
problems in acquiring them.
 Negotiator role
The manager frequently must negotiate with outsiders in matters affecting the organization.
MANAGINGING GLOBALLY
How to manage the Global Environment?
Management fundamentals may be applicable in different countries. However the practice of carrying out
the managerial function of planning, organizing, staffing, leading and controlling differs considerably in
domestic and international enterprises.
Planning
Planning requires setting objectives and then selecting strategies, policies, programs and procedures
for achieving them. A critically important activity for the MNC is the assessment of opportunities and
threats in the external environment. This is a complex task even for a domestic enterprise, but it becomes
much more intricate when many different, ever-changing world markets must be scanned.
External threats and opportunities must be matched with the internal strengths and weaknesses of the
firm. For example, a poor educational system makes it difficult to find qualified personnel. Similarly,
cultural orientation toward time will affect planning. Finally, political and economic instability in a country
makes it difficult to forecast and will discourage long-term commitment of resources. Each big MNC

difficult to face the competency in the world wide market. so they are grouping in to form global strategic
partnerships.
Organizing
Objective of the organization is to achieve the corporate goals. One can choose the best among the
variety of structure for their suit. For example vice president at corporate headquarters may responsible for
the international division. Another alternative may be to organize according to geographic areas. For
example managers may be put in charge of regions such North America, Latin America, Europe, Africa and
the Far East. Still another way of grouping organizational activities is according to product lines. For
instance at corporate headquarters, managers may be put in charge of product line which is marketed
worldwide.
The truly MNC may integrate domestic and international business into a global structure which gives
similar importance to domestic and foreign business activities. Each structure has advantages and
limitations, as we have in the domestic management structure international organization structure may be of
any one type or may be of mixed depends on the environmental and task demand
Staffing
Staffing involves identifying the vacancy positions and filling up by the qualified persons.
Managers of the MNC can be classified in three ways. First managers may be nationals selected from
the country in which the headquarters is located .these expatriates are chosen to represent and manage the
enterprise abroad. These managers because of their experience are usually familiar with the parent
company’s policies and operations.
Second managers are one who is nationals of the host country. These managers are familiar with the
country’s environment, its education system its culture it’s legal and political processes and its economic
environment. They usually also know local customers, suppliers, government officials, behavioral
characteristics of employees and the public in general.
Third source of managerial personnel consists of third county nationals. These managers who have a
nationality that is different from the parent company or the host country. Such managers may have gained
experience by working at the company head quarters as well as in different countries. Thus, they would
have developed behavioral flexibility that eases their adaptation to different cultures. These managers may
by truly transcultural.
Each of the three sources for managers has advantages and disadvantages and a firm may use a
variety of combinations. A few factors that influence the trend in staffing MNCs are worth nothing. First,
the cost of sending U.S. dollar in the 1970s and in 1986. Second people in the host countries are now better
prepared to assume responsible managerial positions.
Motivating and leading demand an understanding of employees and their culture environment for
instance participative management may work will in one country but may cause confusion among
employees in another country with tradition of autocratic rule.
Communication is often a problem in multinational firms with subsidiaries and affiliates in
countries where different languages are spoken. Even a firm with operations in a country where English is
the primary language may encounter communication problems because of the distance between
headquarters and subsidiary. But new communications technology has greatly improved the transmission of
information. Still, a telephone call is not quite the same as a visit and a person to person discussion.
CONTROLLING IN THE MULTINATIONAL CORPORATION CONTROLLING
The measurement and correction of performance to ensure that events conform to plans is an
essential managerial function that is influenced by several environment factors unique to international
enterprises.
First, revenues, costs and profits are measured in different currencies.
Second, the ratios between currencies are subject to considerable fluctuations.
Third, accounting practices and financial reporting often differ from country to country. For
example, accounting procedures may have to satisfy the demands of tax authorities of the
host country as well as the government of the parent firm.

The procedures must also satisfy stockholders in various countries, agencies in charge of regulating
securities and banks. Procedures must also be suitable to meet the internal requirements of the firm.
Developing a procedure that meets all these demands at the same time is extremely difficult.
Finally, and partly due to the complex nature of measurement of performance which may delay
detecting deviations from standard and initiating corrective action. Computers, however, have done much
to speed up the process. In all, then, these few examples indicate that controlling the international
corporation is considerably more difficult than monitoring a domestic operation.
ORGANIZATION AND ENVIRONMENTAL FACTORS
While establishing a business the most important task is to select a proper form of organisation. This
is because the conduct of business, its control, acquisition of capital, extent of risk, distribution of profit,
legal formalities, etc. all depends on the form of organisation.
What are the forms of business organizations?
The most important forms of business organisation are as follows:
• Sole Proprietorship
• Joint Hindu Family Business
• Partnership
• Joint Stock Company
• Co-operative Society
1. SOLE PROPRIETORSHIP
When the ownership and management of business are in control of one individual, it is known as sole
proprietorship or sole trader ship. It is seen everywhere, in every country, every state, every locality. The
shops or stores which you seeing your locality — the grocery store, the vegetable store, the sweets shop,
the chemist shop, the paanwala, the stationery store, the STD/ISD telephone booths etc. come under sole
proprietorship.
It is not that a sole trader ship business must be a small one. The volume of activities of such a
business unit may be quite large. However, since it is owned and managed by one single individual, often
the size of business remains small.
2. JOINT HINDU FAMILY BUSINESS
The Joint Hindu Family (JHF) business is a form of business organization found only in India. In this
form of business, all the members of a Hindu undivided family own the business jointly. The affairs of
business are managed by the head of the family, who is known as the “KARTA”.
A Joint Hindu Family business comes into existence as per the Hindu Inheritance Laws of India. In a
joint Hindu family business only the male members get ashore in the business by virtue of their being part
of the family. The membership is limited up to three successive generations.
Thus, an individual, his sons(s), and his grandson(s) become the members of a Joint Hindu Family
by birth. They are also called “Co-larceners”. The term co-larcener simply states that such an individual has
got the right to ask for a partition of the Joint Hindu Family business and to have his separate share. A
daughter has no right to ask for a partition and is, therefore, not a co-larcener.
3. PARTNERSHIP
A partnership form of organisations is one where two or more persons are associated to run a
business with a view to earn profit. Persons from similar background or persons of different ability and
skills may join together to carryon a business. Each member of such a group is individually known as

‘partner’ and collectively the members are known as a ‘partnership firm’. These firms are governed by the
Indian Partnership Act, 1932.
4. JOINT STOCK COMPANY
A Joint Stock Company form of business organizations is a voluntary association of persons to carry
on business. Normally, it is given a legal status and is subject to certain legal regulations. It is an
association of persons who generally contribute money for some common purpose. The money so
contributed is the capital of the company.
The persons who contribute capital are its members. The proportion of capital to which each
member is entitled is called his share, therefore members of a joint stock company are known as
shareholders and the capital of the company is known as share capital. The total share capital is divided into
number of units known as ‘shares’.
We have heard of the names of joint stock companies like Tata Iron & Steel Co. Limited,
Hindustan Lever Limited, Reliance Industries Limited, Steel Authority of India Limited, Ponds India
Limited etc. The companies are governed by the Indian Companies Act, 1956. The Act defines a company
as an artificial person created by law, having separate entity, with perpetual succession and a common seal.
5. CO-OPERATIVE SOCIETY
Any ten persons can form a co-operative society. It functions under the Cooperative Societies Act,
1912 and other State Co-operative Societies Acts. A co-operative society is entirely different from all other
forms of organization discussed above in terms of its objective. The co-operatives are formed primarily to
render services to its members.
Generally it also provides some service to the society. The main objectives of co-operative society
are: (a) rendering service rather than earning profit, (b) mutual help instead of competition, and (c) self help
in place of dependence.
On the basis of objectives, various types of co-operatives are formed:
Consumer co-operatives
These are formed to protect the interests of ordinary consumers of society by making
consumer goods available at reasonable prices. Kendriya Bhandar in Delhi, Alaka in Bhubaneswar
and similar others are all examples of consumer co-operatives.
Producers co-operatives
These societies are set up to benefit small producers who face problems in collecting inputs
and marketing their products. The Weavers co-operative society, the Handloom owners cooperative
society are examples of such co-operatives.
Marketing co-operatives
These are formed by producers and manufactures to eliminate exploitation by the middlemen
while marketing their product. Kashmir Arts Emporium, J&K Handicrafts, Utkalika etc.are
examples of marketing co-operatives.

Housing Co-operatives
These are formed to provide housing facilities’to its members. They are called co-operative
group housing societies.
Credit Co-operatives
These societies are formed to provide financial help to its members. The rural credit societies,
the credit and thrift societies, the urban co-operative banks etc. come under this category.
Forming Co-operatives
These are formed by small farmers to carry on work jointly and thereby share the benefits of
large scale farming. Besides these types, other co-operatives can be formed with the objective of
providing different benefits to its members, like the construction co-operatives, transport co-
operatives, co-operatives to provide education etc.
What are the Environmental factors that have influence on a business?
On the basis of the extent of intimacy with the firm, the environmental factors may be classified into different types.
They are:
1. MACRO ENVIRONMENT
a. Political
These refer to government policy such as the degree of intervention in the economy. What
goods and services does a government want to provide? To what extent does it believe in
subsidizing firms? What are its priorities in terms of business support? Political decisions can
impact on many vital areas for business such as the education of the workforce, the health of the
nation and the quality of the infrastructure of the economy such as the road and rail system.
b. Economic
These include interest rates, taxation changes, economic growth, inflation and exchange rates.
For example: higher interest rates may deter investment because it costs more to borrow, a strong
currency may make exporting more difficult because it may raise the price in terms of foreign
currency, inflation may provoke higher wage demands from employees and raise costs, higher
national income growth may boost demand for a firm's products etc.

c. Social
Changes in social trends can impact on the demand for a firm's products and the availability
and willingness of individuals to work. In the UK, for example, the population has been ageing.
This has increased the costs for firms who are committed to pension payments for their
employees because their staff are living longer. It also means some firms such as Asda have
started to recruit older employees to tap into this growing labour pool. The ageing
population also has impact on demand: For example, demand for sheltered accommodation and
medicines have increased whereas demand for toys is falling.
d. Technological
New technologies create new products and new processes. MP3 players, computer games,
online gambling and high definition TVs are all new markets created by technological advances.
Online shopping, bar coding and computer aided design are all improvements to the way we do
business as a result of better technology. Technology can reduce costs, improve quality and lead
to innovation. These developments can benefit consumers as well as the organisations providing
the products.
1. MICRO ENVIRONMENT
a. Employees
Employees exert an influence on your small business’s quality, operations and profitability
through their activities. Major quality and production models, including Lean, Six Sigma and total
quality management, or TQM, encourage employee leadership over mere management. An example
of employee commitment is the self-directed employee task group. These groups encourage their
members to learn more and perform to a higher standard. The members of these groups can be
motivated by external forces, such as company incentive programs, or internal forces, such as the
pride and satisfaction in work done well.
b. Suppliers
Your suppliers provide products or services you need to add value to your own products or
services. Those parts or services must be delivered on time and must meet your specifications for
quality. If these requirements aren't met, either your production falls off or your quality suffers. In
extreme cases, such as Toyota's recall of cars built from 2009 to 2011 for a faulty accelerator,
suppliers can cause you problems with the public perception of your products or services. In that
instance, the stringent Toyota Production System, Toyota's version of Henry Ford's TQM program,
was called into question, because Toyota relied on a single supplier for accelerators used in its
vehicles.
c. Media
Media can mean printed, televised or online media. When Toyota had problems with its
accelerators, two things happened. First, it highlighted a quality problem that was inherent in the
Toyota Production System: TPS relied on a single supplier for the part. The supplier's errors affected
the overall quality of the vehicle. Second, a media firestorm ensued when the quality errors caused
consumer deaths. In the end, the buck stopped with Toyota. The lesson every small business should
take from this is that poor quality, even if it originates with those who supply your small business
with parts, can become your problem.
d. Partners or Investors
One way you can improve your financial position is through selling a partial interest of your
company to outsiders. These sales may be shares, if you are a corporation, or equity partnership,
where the investors become your business partners. Both shareholders and equity partners are
stakeholders in your business. Your profitability can influence their activities, and they can influence
your management practices through their vote. Although shareholders represent a short-term

financial gain for a company, their demand for profits and increasing control can affect your
company’s employees, practices and products or services.
e. Competitors
Your competitors affect your business's profits by trying to take business away from you, just
as you try to take away their business. Your competitors are a goad to you, just as you are to them.
Their activities affect your profits, but if you provide better products for a lower cost -- and possibly
faster -- than your competition, you can compete with them in ways they may not be able to match.
Therein lies your advantage: You're driven to provide a product that delivers more added value for
your customers than that of your competitor.
f. Customers
The least controllable of the microenvironments affecting your small business is the one
where customers live. Long-term customers may ask questions if you end up in the media for a
problem as serious as Toyota's faulty accelerator, but their previous experience with your products or
services means they're more likely to turn to you after the problem is resolved. New customers may
be affected by any aspect of your business. It's up to you to attract new customers through your
quality and ability to fulfill their needs.
2. INTERNAL ENVIRONMENT
a. Resources
An economic or productive factor required to accomplish an activity, or as means to
undertake an enterprise and achieve desired outcome. Three most basic resources are land, labor,
and capital other resourcesinclude energy, entrepreneurship, information, expertise, management,
and time. The unavailability or scarcity of any of these resources affects the business.
b. Capabilities
A business capability is WHAT a company needs to be able to do to execute its business
strategy (e.g., Enable ePayments, tailor solutions at point of sale, demonstrate product concepts
with customers, combine elastic and non-elastic materials side by side, etc.). Business capability
is the expression or the articulation of the capacity, materials and expertise an organization needs
in order to perform core functions. Enterprise architects use business capabilities to illustrate the
over-arching needs of the business in order to better strategize IT solutions that meet those
business needs.
c. Culture
Organizational culture is the behavior of humans who are part of an organization and the
meanings that the people attach to their actions. Culture includes the organization values, visions,
norms, working language, systems, symbols, beliefs and habits. It is also the pattern of such
collective behaviors and assumptions that are taught to new organizational members as a way of
perceiving, and even thinking and feeling. Organizational culture affects the way people and
groups interact with each other, with clients, and with stakeholders.
STRATEGIES FOR INTERNATIONAL BUSINESS
Explain the strategies for international business?
International business strategy refers to the plans that guide commercial transactions taking place
between entities in different countries. Typically, international business strategy refers to the plans and
actions of private companies rather than Governments, as such the goal is increased profit.
Most companies of any appreciable size deal with at least one international partner at some point in
their supply chain, and in most well established fields competition is international, Because methods of
doing business vary appreciably in different countries, an understanding of the cultural and linguistic

barriers, political and legal systems, and the many complexities of international trade is essential to
commercial success.
The three most prevalent philosophies of international business strategies are:
Industry based: which argues that conditions within a particular industry determine strategy;
Resource based: firm specific differences determine strategies;
Institution based: which argues that the industry and resource based views need to be supplemented
by accounting for relevant societal differences.
International business strategies are a normal part of doing business no matter where your business
is located in the world. Global businesses will compete with you, do business with you, and even
put you out of business if you aren’t careful. You no longer have a choice to do or not to do global
business. Businesses, large and small, must formulate international business strategies to function in
the global economy, global business activity is just as normal today as doing business in your local
community was 50 years ago.
Doing business globally has a number of appealing factors:
 Build a broader customer base.
 Prevent adverse effects of seasonal business swings in your domestic market.
 Utilize excess manufacturing capacity sitting idle at home,
 Lower production costs by using lower priced labor abroad.
Figuring out where to global is easy. The time is now. Even local businesses such as barber shops,
health clubs, and tax preparation services need to be aware of what is happening globally in their respective
fields. New ways of doing business and newly created products can affect the way local businesses do their
work.
What are the four basic things in formulating your international business strategies?
 Who will use the product or service?
 How do those consumers define value
 How will you keep up with market trends there?
 How can you increase your product’s market share?
What are the factors to be considered before going global?
Political stability
Currency stability and value
Cultural values and ethics
Language familiarity
Receptiveness to foreign intervention in foreign local markets.
Trade restrictions and tariffs
Legal barriers
Standard of living
Ease of travel to foreign locations, and
Infrastructure of foreign communities.
Reference:
Principles of management by R.K.Sharma & Shashi.K.Gupta
--------------------------------------------------------------------------------------------------------------------------------
PLANNING
Planning is deciding in advance what is to be done. It involves the selection of objectives, functions
of management policies, procedures and programmes from among alternatives. A plan is a predetermined

course of action to achieve a specifies goal. It is a statement of objectives to be achieved by certain means in
the future. In short, it is a blueprint for action.
According to Louis A Allen – “Management planning involves the development of forecasts,
objectives, policies, programmes, schedules and budgets”.
According to Theo Haimann – “ Planning deciding in advance what is to be done. When a manager
plans, he projects a course of action, for the future, attempting to achieve a consistent, coordinated structure
of operations aimed at the desired results”.
According to Koonz O’Donnel- “ planning is an intellectual process, the conscious determination of
courses of action, the basis for decision on purpose, acts and considered estimates”.
What is the nature of planning?
a. Planningisgoal-oriented:Everyplanmustcontribute insome positive way towards the accomplishment of
group objectives. Planning has no meaning without being related to goals.
b. Primacy of Planning: Planning is the first of the managerial functions. It precedes all other management
functions.
c. Pervasiveness of Planning: Planning is found at all levels of management. Top management looks after
strategicplanning.Middle management is in charge of administrative planning. Lower management has to
concentrate on operational planning.
d. Efficiency, Economy and Accuracy: Efficiency of plan is measured by its contribution to the objectives as
economically as possible. Planning also focuses on accurate forecasts.
e. Co-ordination: Planning co-ordinates the what, who, how, where and why of planning. Without co-
ordination of all activities, we cannot have united efforts.
f. LimitingFactors:A plannermustrecognise the limitingfactors(money,manpower etc) and formulate plans
in the light of these critical factors.
g. Flexibility: The process of planning should be adaptable to changing environmental conditions.
h. Planningisan intellectual process: The quality of planning will vary according to the quality of the mind of
the manager.
What is the purpose of Planning?
To manage by objectives: All the activities of an organisation are designed to achieve certain specified
objectives. However, planning makes the objectives more concrete by focusing attention on them.
To offset uncertaintyand change: Future isalwaysfull of uncertainties and changes. Planning foresees the
future and makes the necessary provisions for it.
To secure economy in operation: Planning involves, the selection of most profitable course of action that
would lead to the best result at the minimum costs.
To help in co-ordination:Co-ordinationis,indeed, the essence of management, the planning is the base of
it. Without planning it is not possible to co-ordinate the different activities of an organisation.
To make control effective: The controllingfunctionof managementrelatestothe comparisonof the planned
performance withthe actual performance.Inthe absence of plans,amanagementwill have nostandardsfor
controlling other's performance.

To increase organisational effectiveness: Mere efficiencyinthe organisationis notimportant; it should also
lead to productivity and effectiveness. Planning enables the manager to measure the organisational
effectiveness in the context of the stated objectives and take further actions in this direction
Explain the planning process?
The planning process involves the following steps:
1. AnalysisofExternal Environment: The external environmentcoversuncontrollableandunpredictable factors
such as technology, market, socio-economic climate, political conditions etc., within which our plans will
have to operate.
2. Analysis of Internal Environment: The internal environment covers relatively controllable factors such as
personnel resources, finance, facilities etc., at the disposal of the firm. Such an analysis will give an exact
idea about the strengths and weakness of the enterprise.
3. Determination of Mission: The "mission" should describe the fundamental reason for the existence of an
organisation. It will give firm direction and make out activities meaningful and interesting.
4. Determination of Objectives: The organisational objectives must be spelled out in key areas of operations
and should be divided according to various departments and sections. The objectives must be clearly
specified and measurable as far as possible. Every member of the organisation should be familiar with its
objectives.
5. Forecasting: Forecasting is a systematic attempt to probe into the future by inference from known facts
relatingtothe past and the present.Intelligentforecastingisessential forplanning.The managementshould
have no stone unturned Functions of Management in reducing the element of guesswork in preparing
forecasts by collecting relevant data using the scientific techniques of analysis and inference.
6. Determining Alternative course of Action: It is a common experience of all thinkers that an action can be
performedinseveral ways,butthere isaparticular waywhichis the most suitable for the organisation. The
management should try to find out these alternatives and examine them carefully in the light of planning
premises.
7. EvaluatingAlternativeCourses: Havingsoughtout alternative coursesand examined their strong and weak
points, the next step is to evaluate them by weighing the various factors.
8. Selectingthe Best: The nextstep - selectingthe course of action is the point at which the plan is adopted. It
is the real point of decision-making.
9. Establishingthesequence of activities: After the best programme is decided upon, the next task is to work
out its details and formulate the steps in full sequences.
10. Formulation of Action Programmes: There are three important constituents of an action plan:
a. The time-limit of performance.
b. The allocation of tasks to individual employees.
c. The time-table or schedule of work so that the functional objectives are achieved within the
predetermined period.
11. Reviewing the planning process: Through feedback mechanism, an attempt is made to secure that
which was originally planned. To do this we have to compare the actual performance with the plan
and then we have to take necessary corrective action to ensure that actual performance is as per the
plan

What are the advantages of Planning?
All effortsare directedtowardsdesiredobjectivesorresults.Unproductive work and waste of resources can
be minimized.
Planning enables a company to remain competitive with other rivals in the industry.
Through careful planning, crisis can be anticipated and mistakes or delays avoided.
Planning can point out the need for future change and the enterprise can manage the change effectively.
Planningenablesthe systematicandthoroughinvestigationof alternative methods or alternative solutions
to a problem. Thus we can select the best alternative to solve any business problem.
Planning maximizes the utilization of available resources and ensures optimum productivity and profits.
Planning provides the ground work for laying down control standards.
Planning enables management to relate the whole enterprise to its complex environment profitably.
What are the disadvantages of Planning?
Environmental factors are uncontrollable and unpredictable to a large extent. Therefore planning
cannot give perfect insurance against uncertainty.
Planning is many times very costly.
Tendency towards inflexibility to change is another limitation of planning.
Planning delays action.
Planning encourages a false sense of security against risk or uncertainty.
What are the various kinds of planning?
Planning can be classified on different bases, which are discussed below:
1. Strategic and Functional Planning
In strategic or corporate planning, the top management determines the general objectives of the
enterprise and the steps necessary to accomplish them in the light of resources currently available and likely
to be available in the future. Functional planning, on the other hand, is planning that covers functional areas
like production, marketing, finance and purchasing.
2. Long-range and Short-range Planning
Long-range planning sets long-term goals for the enterprise and then proceeds to formulate specific
plans for attaining these goals. It involves an attempt to anticipate, analyze and make decisions about basic
problems and issues which have significance reaching well beyond the present operating horizon of the
enterprise. Short-range planning, on the other hand, is concerned with the determination of short-term
activities to accomplish long term objectives. Short-range planning relates to a relatively short period and
has to be consistent with the long-range plans. Operational plans are generally related to short periods.
3. Ad hoc and Standing Planning
Ad hoc planning committees may be constituted for certain specific matters, as for instance, for
project planning. But standing plans are designed to be used over and over again. They include
organizational structure, standard procedures, standard methods, etc.
4. Administrative and Operational Planning

Administrative planning is done by the middle level management, which provides the foundation for
operative plans. The lower level managers to put the administrative plans into action, on the other hand, do
operative planning.
5. Physical Planning
It is concerned with the physical location and arrangement of building and equipment. City planning
and regional planning are the illustrations of physical planning.
6. Formal and Informal Planning
Various types of planning discussed above are of formal nature. The management carries them on
systematically. They specify in black and white the specific goals and the steps to achieve them. They also
facilitate the installation of internal control systems. Informal planning, on the other hand, is mere thinking
by some individuals, which may become the basis of formal planning in future.
What are the levels of planning?
In management theory, it is usual to consider that there are three basic levels of planning, though in
practice there may be more than three levels of management and to an extent there will be some overlapping
of planning operations. The three levels of planning are discussed below,
Top Level Planning: Also known as overall or strategic planning, top the top management, i.e., board of
directors or governing body, does level planning. It encompasses the long-range objectives and policies
of organization and is concerned with corporate results rather than sectional objectives. Top level
planning is entirely long-range and is inextricably linked with long-term objectives. It might be called
the 'what 'of planning.
Second Level Panning: Also known as tactical planning, it is done by middle level managers or
departmental heads. It is concerned with 'how' of planning. It deals with deployment of resources to the
best advantage. It is concerned mainly, but not exclusively, with long-range planning, but its nature is
such that the time spans are usually shorter than those of strategic planning. This is because its attentions
are usually devoted to the step-by-step attainment of the organization’s main objectives. It is, in fact,
oriented to functions and departments rather than to the organization as a whole.
Third Level Planning: Also known as operational. or activity planning, it is the concern of
departmental managers and supervisors. It is confined to putting into effect the tactical or departmental
plans. It is usually for a short term and may be revised quite often to be in tune with the tactical
planning.
Corporate Planning: Corporate planning is a new concept, which has gained popularity these days. It
may be defined as a systematic and comprehensive process of long range planning taking account of the
resources and capability of the organization and the environment within which it has to operate, and
viewing the organization as a total, corporate unit.
What are the types of plans?
Plans can be described by their breadth, time frame, specificity, and frequency of use
1. On the basis of Breadth plans can be
a. Strategic: Strategic plans (long-term plans) are plans that apply to the entire organization,
establish the organization’s overall goals, and seek to position the organization in terms of its
environment.
b. Operational plans are plans that specify the details of how the overall goals are to be achieved.
2. On the basis of Time frame plans can be
a. Short-term: Short term plans are plans that cover one year or less.

b. Long-term: plans are plans with a time frame beyond three years.
3. On the basis of Specificity plans can be
a. Specific plans are plans that are clearly defined and leave no room for interpretation.
b. Directional plans are flexible plans that set out general guidelines.
4. On the basis of Frequency of use plans can be
a. Single-use plan is a one-time plan specifically designed to meet the needs of a unique situation.
b. Standing plans are ongoing plans that provide guidance for activities performed repeatedly
These plans can be further classified in the following way:
Purpose or Mission
The purpose identifies the basic function or task of an enterprise. Every organization has or
should have a purpose so that its working becomes meaningful. The organization’s mission indicates
exactly what activities the organization intends to engage in now and in future. The basic questions
to be answered by an organization are:
Objectives
Objectives or goals are the ends towards which every activity is aimed. They are the results to
be achieved. No planning is possible without setting up of objectives. It is the prerequisite for
planning.
Policies
Policies are general statements or understandings which provide guidance in decision making
to various managers. Policies are define boundaries within which decisions can be made and
decisions are directed towards the achievement of objectives.
Strategies
A strategy is a comprehensive and integrated plan designed to assure that business objectives
are accomplished. Strategies do not attempt to outline the programmes for achieving objectives but
they furnish a framework for guiding, thinking and action.
Rules
A rule is a plan that lays down a required course of action with regard to a situation. A rule is
in the nature of a decision made by management regarding what is to be done and what is not to be
1. Purpose or Mission
2. Objectives
3. Policies
4. Strategies
5. Rules
6. Procedures
7. Programmes
8. Budgets
9. Projects
TYPES
OF
PLANS

done in a particular situation. A rule is definite and rigid and allows no deviation or discretion to the
subordinates.
Procedures
Procedures are the details of action or the guidelines for the achievement of business
objectives. Procedures give details of how things are to be done. These should help in
implementation of policies. Procedures should be distinguished from policies. A procedure is a guide
to action whereas a policy is a guide to thinking.
Programmes
A programme is a sequence of activities designed to implement policies and accomplish
objectives. it is devised to meet a particular situation. Programme may be taken as a combination of
policies, procedures, rules, budgets, and task assignments etc., developed for the specific purpose of
carrying out a particular course of action.
Budgets
A budget is the monetary or / and quantitative expression of business plans and policies to be
pursued in the future period of time. The term budgeting is used for preparing budgets and other
procedures for planning, co-ordination and control of business enterprise.
Projects
A project may be defined as a complex cluster of related activities with a distinct objective
and a definite completion time period. In some cases, major plans can be decomposed into a number
of projects each with a clear cut set of objectives.
Such projects can be isolated and taken up for completion as a package; a project may
involve the introduction of large automatic plant, building of a dam or a building, or the introduction
of a new product. The task of executing the project is put under the charge of a Project Manager.
OBJECTIVES
What are objectives?
Objectives may be defined as the goals which an organisation tries to achieve. Objectives are
described as the end- points of planning.
According to Koontz and O'Donnell, "an objective is a term commonly used to indicate the end point
of a management programme." Objectives constitute the purpose of the enterprise and without them no
intelligent planning can take place. Objectives are, therefore, the ends towards which the activities of the
enterprise are aimed.
They are present not only the end-point of planning but also the end towards which organizing,
directing and controlling are aimed. Objectives provide direction to various activities. They also serve as the
benchmark of measuring the efficiency and effectiveness of the enterprise. Objectives make every human
activity purposeful. Planning has no meaning if it is not related to certain objectives.
What are the features of Objectives?
The objectives must be predetermined.
A clearly defined objective provides the clear direction for managerial effort.
Objectives must be realistic.
Objectives must be measurable.
Objectives must have social sanction.
All objectives are interconnected and mutually supportive.
Objectives may be short-range, medium-range and long-range.
Objectives may be constructed into a hierarchy.
What are the advantages of Objectives?

Clear definition of objectives encourages unified planning.
Objectives provide motivation to people in the organization.
When the work is goal-oriented, unproductive tasks can be avoided.
Objectives provide standards which aid in the control of human efforts in an organization.
Objectives serve to identify the organization and to link it to the groups upon which its existence
depends.
Objectives act as a sound basis for developing administrative controls.
Objectives contribute to the management process: they influence the purpose of the organization,
policies, personnel, leadership as well as managerial control.
Explain the process of Setting Objectives?
Objectives are the keystone of management planning. It is the most important task of management.
Objectives are required to be set in every area which directly and vitally effects the survival and prosperity
of the business. In the setting of objectives, the following points should be borne in mind.
 Objectives are required to be set by management in every area which directly and vitally affects the
survival and prosperity of the business.
 The objectives to be set in various areas have to be identified.
 While setting the objectives, the past performance must be reviewed, since past performance
indicates what the organization will be able to accomplish in future.
 The objectives should be set in realistic terms i.e., the objectives to be set should be reasonable and
capable of attainment.
 Objectives must be consistent with one and other.
 Objectives must be set in clear-cut terms.
 For the successful accomplishment of the objectives, there should be effective communication.
MANAGEMENT BY OBJECIVES
Management by objectives (MBO), also known as management by results (MBR), is a process of
defining objectives within an organization so that management and employees agree to the objectives and
understand what they need to do in the organization in order to achieve them. The term "management by
objectives" was first popularized by Peter Drucker in his 1954 book The Practice of Management.
The essence of MBO is participative goal setting, choosing course of actions and decision making.
An important part of the MBO is the measurement and the comparison of the employee’s actual
performance with the standards set. Ideally, when employees themselves have been involved with the goal
setting and choosing the course of action to be followed by them, they are more likely to fulfill their
responsibilities.
According to George S. Odiorne, the system of management by objectives can be described as a
process whereby the superior and subordinate jointly identify its common goals, define each individual's
major areas of responsibility in terms of the results expected of him, and use these measures as guides for
operating the unit and assessing the contribution of each of its members.
PROCESS OF MBO

State the important features and advantages of MBO?
Motivation – Involving employees in the whole process of goal setting and increasing employee
empowerment. This increases employee job satisfaction and commitment.
Better communication and coordination – Frequent reviews and interactions between superiors and
subordinates helps to maintain harmonious relationships within the organization and also to solve
many problems.
Clarity of goals
Subordinates tend to have a higher commitment to objectives they set for themselves than those
imposed on them by another person.
Managers can ensure that objectives of the subordinates are linked to the organization's objectives.
Everybody will be having a common goal for whole organization. That means, it is a directive
principle of management.
Objectives can be set in all domains of activities (production, marketing, services, sales, R&D, human
resources, finance, information systems etc.). Some objectives are collective, for a whole department or the
whole company, others can be individualized.
STRATEGIES
What is a strategy?
The term 'Strategy' has been adapted from war and is being increasingly used in business to reflect
broad overall objectives and policies of an enterprise. Literally speaking, the term 'Strategy' stands for the
war-art of the military general, compelling the enemy to fight as per out chosen terms and conditions.
A strategy is a special kind of plan formulated in order to meet the challenge of the policies of
competitors. This type of plan uses the competitors' plan as the background. It may also be shaped by the
general forces operating in an industry and the economy.
Edmund P Learned has defined strategies as "the pattern of objectives, purposes or goals and major
policies and plans for achieving these goals, stated in such a way as to define what business the company is
in or is to be and the kind of company it is or is to be".
Haynes and Massier have defined strategy as “the planning for unpredictable contingencies
about which fragmentary information is available”.

According to David I Cleland and William R King, "Strategy is the complex plans for bringing the
organisation from a given posture to a desired position in a further period of time".
According to Koontz and O' Donnell , "Strategies must often denote a general programme of action
and deployment of emphasis and resources to attain comprehensive objectives".
Strategies are plans made in the light of the plans of the competitors because a modern business
institution operates in a competitive environment. They are a useful framework for guiding enterprise
thinking and action. A perfect strategy can be built only on perfect knowledge of the plans of others in the
industry. This may be done by the management of a firm putting itself in the place of a rival firm and trying
to estimate their plans.
State the characteristics of Strategy?
a. It is the right combination of different factors.
b. It relates the business organization to the environment.
c. It is an action to meet a particular challenge, to solve particular problems or to attain desired
objectives.
d. Strategy is a means to an end and not an end in itself.
e. It is formulated at the top management level.
f. It involves assumption of certain calculated risks.
Strategic management is what managers do to develop the organization’s strategies. Strategic
management involves all four of the basic management functions—planning, organizing, leading, and
controlling.
Strategic management is important for organizations as it has a significant impact on how well an
organization performs. In today’s business world, organizations of all types and sizes must manage
constantly changing situations.
Today’s companies are composed of diverse divisions, units, functions, and work activities that must
be coordinated. Strategic management is involved in many of the decisions that managers make.
What are the types of strategies?
The strategies generally adopted in an organization are as follows:
Stability strategy
Stability strategy implies continuing the current activities of the firm without any significant
change in direction. If the environment is unstable and the firm is doing well, then it may believe that
it is better to make no changes. A firm is said to be following a stability strategy if it is satisfied with
the same consumer groups and maintaining the same market share, satisfied with incremental
improvements of functional performance and the management does not want to take any risks that
might be associated with expansion or growth.
Stability strategy is most likely to be pursued by small businesses or firms in a mature stage
of development. Stability strategies are implemented by ‘steady as it goes’ approaches to decisions.
No major functional changes are made in the product line, markets or functions. However, stability
strategy is not a ‘do nothing’ approach nor does it mean that goals such as profit growth are
abandoned. The stability strategy can be designed to increase profits through such approaches as
improving efficiency in current operations.
Growth strategy
Growth strategy is the means through which an organization plans to achieve its objective to
grow in turnover and volume. There are four broad growth strategies which include; product
development, diversification, market development and market penetration. It is a style that seeks
stock with future investment rates of return being great than the stocks. strategy aimed at winning
larger market share, even at the expense of short-term earnings. Four broad
growth strategies are diversification, product development, market penetration, and market
development.

Retrenchment or retreat strategy
A strategy used by corporations to reduce the diversity or the overall size of the operations of
the company. This strategy is often used in order to cut expenses with the goal of becoming a
more financial stable business. Typically the strategy involves withdrawing from certain markets or
the discontinuation of selling certain products or service in order to make a beneficial turnaround.
Combination strategy
A combination strategy is a resource used by corporations or businesses to further their
identified business goals at the same time. Usually, businesses pursue goals like growth,
consolidation or other interests that include stability, with the aim of improving their overall
performance. Some strategies that may be combined include differentiation, cost and the system by
which a company focuses on an identified market niche. All of these strategies are geared toward
increasing or improving the competitive advantage of a business.
What are policies?
A policy is a standing plan. Policies are directives providing continuous framework for executive
actions on recurrent managerial problems. A policy assists decision-making but deviations may be needed,
as exceptions and under some extraordinary circumstances. Policy-making is an important part of the
process of planning.
Policies may be described as plans which are meant to serve as broad guides to decision making in a
firm. Policies exist at various levels of the enterprise—Corporate level, divisional level and departmental
level. Policies are valuable because they allow lower levels of management to handle problems without
going to top management for a decision each time.
What are the essentials of Policy Formulation?
The essentials of policy formation may be listed as below:
A policy should be definite, positive and clear. It should be understood by everyone in the
organization.
A policy should be translatable into the practices.
A policy should be flexible and at the same time have a high degree of permanency.
A policy should be formulated to cover all reasonable anticipatable conditions.
A policy should be founded upon facts and sound judgment.
A policy should conform to economic principles, statutes and regulations.
A policy should be a general statement of the established rule.
State the importance of Policies?
Policies are useful for the following reasons:
1. They provide guides to thinking and action and provide support to the subordinates.
2. They delimit the area within which a decision is to be made.
3. They save time and effort by pre-deciding problems and
4. They permit delegation of authority to mangers at the lower levels.
What is Decision Making?
The word decision has been derived from the Latin word "decidere" which means "cutting off".
Thus, decision involves cutting off of alternatives between those that are desirable and those that are not
desirable. Decision is a kind of choice of a desirable alternative.
A few definitions of decision making are given below:
In the words of Ray A Killian, "A decision in its simplest form is a selection of alternatives". Dr. T.
G Glover defines decision "as a choice of calculated alternatives based on judgement".
In the words of George R. Terry, "Decision-making is the selection based on some criteria from two
or more possible alternatives".

Felix M. Lopez says that "A decision represents a judgement; a final resolution of a Functions of
Management conflict of needs, means or goals; and a commitment to action made in face of uncertainty,
complexity and even irrationally".
According to Rustom S. Davar, "Decision-making may be defined as the selection based on some
criteria of one behaviour alternative from two or more possible alternatives. To decide means to cut off or in
practical content to come to a conclusion".
Fremont A. Shull Andrew L Delbecq and Larry L Cummings define decision making as "a conscious
human process involving both individual and social phenomenon based upon factual and value premises
which concludes with a choice of one behavioural activity from among one or more alternatives with the
intention of moving toward some desired state of affairs".
State the distinguishing characteristics of Decision Making?
Decision making implies that there are various alternatives and the most desirable alternative is
chosen to solve the problem or to arrive at expected results.
The decision-maker has freedom to choose an alternative.
Decision-making may not be completely rational but may be judgemental and emotional.
Decision-making is goal-oriented.
Decision-making is a mental or intellectual process because the final decision is made by the
decision maker.
A decision may be expressed in words or may be implied from behaviour.
Choosing from among the alternative courses of operation implies uncertainty about the final result
of each possible course of operation.
Decision making is rational. It is taken only after a thorough analysis and reasoning and weighing the
consequences of the various alternatives.
Explain the types of Decisions?
1. Programmed and Non-Programmed Decisions: Herbert Simon has grouped organizational
decisions into two categories based on the procedure followed. They are:
a. Programmed decisions: Programmed decisions are routine and repetitive and are made within
the framework of organizational policies and rules. These policies and rules are established well
in advance to solve recurring problems in the organization. Programmed decisions have short-run
impact. They are, generally, taken at the lower level of management.
b. Non-Programmed Decisions: Non-programmed decisions are decisions taken to meet non-
repetitive problems. Non-programmed decisions are relevant for solving unique/ unusual
problems in which various alternatives cannot be decided in advance. A common feature of non-
programmed decisions is that they are novel and non-recurring and therefore, readymade
solutions are not available. Since these decisions are of high importance and have long-term
consequences, they are made by top level management.
2. Strategic and Tactical Decisions: Organizational decisions may also be classified as strategic or
tactical.
a. Strategic Decisions: Basic decisions or strategic decisions are decisions which are of crucial
importance. Strategic decisions a major choice of actions concerning allocation of resources
and contribution to the achievement of organizational objectives. Decisions like plant location,
product diversification, entering into new markets, selection of channels of distribution, capital
expenditure etc are examples of basic or strategic decisions.

b. Tactical Decisions: Routine decisions or tactical decisions are decisions which are routine and
repetitive. They are derived out of strategic decisions. The various features of a tactical
decision are as follows:
Tactical decision relates to day-to-day operation of the organization and has to be taken very
frequently.
Tactical decision is mostly a programmed one. Therefore, the decision can be made within
the context of these variables.
The outcome of tactical decision is of short-term nature and affects a narrow part of the
organization.
The authority for making tactical decisions can be delegated to lower level managers
because : first, the impact of tactical decision is narrow and of short-term nature and Second,
by delegating authority for such decisions to lower-level managers, higher level managers
are free to devote more time on strategic decisions.
Depict the Decision Making Process?
The decision making process is presented in the figure below:
1. Specific Objective:
The need for decision making arises in order to achieve certain specific objectives. The
starting point in any analysis of decision making involves the determination of whether a decision
needs to be made.
2. Problem Identification:
A problem is a felt need, a question which needs a solution. In the words of Joseph L Massie
"A good decision is dependent upon the recognition of the right problem". The objective of problem
identification is that if the problem is precisely and specifically identifies, it will provide a clue in
finding a possible solution. A problem can be identified clearly, if managers go through diagnosis
and analysis of the problem.
Diagnosis:
Diagnosis is the process of identifying a problem from its signs and symptoms. A
symptom is a condition or set of conditions that indicates the existence of a problem.
Diagnosing the real problem implies knowing the gap between what is and what ought to be,
identifying the reasons for the gap and understanding the problem in relation to higher
objectives of the organization.
Analysis:
Diagnosis gives rise to analysis. Analysis of a problem requires:
 Who would make decision?
 What information would be needed?
 From where the information is available?
3. Search for Alternatives:
A problem can be solved in several ways; however, all the ways cannot be equally satisfying.
Therefore, the decision maker must try to find out the various alternatives available in order to get
the most satisfactory result of a decision. A decision maker can use several sources for identifying
alternatives:
a. His own past experiences
b. Practices followed by others and
c. Using creative techniques.
4. Evaluation of Alternatives:
After the various alternatives are identified, the next step is to evaluate them and select the
one that will meet the choice criteria. /the decision maker must check proposed alternatives against
limits, and if an alternative does not meet them, he can discard it. Having narrowed down the
alternatives which require serious consideration, the decision maker will go for evaluating how each
alternative may contribute towards the objective supposed to be achieved by implementing the
decision.
5. Choice of Alternative:

The evaluation of various alternatives presents a clear picture as to how each one of them
contribute to the objectives under question. A comparison is made among the likely outcomes of
various alternatives and the best one is chosen.
6. Action:
Once the alternative is selected, it is put into action. The actual process of decision making
ends with the choice of an alternative through which the objectives can be achieved.
7. Results:
When the decision is put into action, it brings certain results. These results must correspond
with objectives, the starting point of decision process, if good decision has been made and
implemented properly. Thus, results provide indication whether decision making and its
implementation is proper.
RATIONAL DECISION MAKING
Every step in the decision-making process is important and needs proper consideration by managers.
This facilitates accurate decision-making. Even quantitative techniques such as CPM, PERT/OR, linear
programming, etc. are useful for accurate decision-making. Decision-making is important as it facilitates
entire management process. Management activities are just not possible without decision-making as it is an
integral aspect of management process itself. However, the quality of decision-making should be always
superior as faulty/irrational decisions are always dangerous.
Various advantages of decision-making (already explained) are easily 'available when the entire
decision-making process is followed properly. Decisions are frequently needed in the management process.
However, such decisions should be appropriate, timely and rational. Faulty and hasty decisions are wrong
and even dangerous. This clearly suggests that various advantages of decision-making are available only
when scientific decisions are taken by following the procedure of decision-making in an appropriate manner.
What is Rational Decision Making?
Rational decisions are the best decisions under the available circumstances. All decisions should be
rational as such decisions facilitate expansion of business and give more profit, goodwill and prosperity to a
business unit. Rationality and decision-making are closely related concepts. Rationality principle is
applicable to all types of decisions. All decisions (business, economic, social etc.) should be fair and
rational. They should serve as examples over a long period. For such decisions, rational/scientific/balanced
approach is essential while making decisions.
In the absence of such approach, decisions are likely to be faulty and dangerous to the Organisation
and also to all concerned parties. Rationality in decision-making is possible through human brain which has
the ability to learn, think, analyze and relate complex facts and variables while arriving at a decision. A
manager has to introduce rationality in his decision-making by using his skills, experience, knowledge and
mental abilities.
On some occasions, such rational and right decisions are not taken due to variety of possible reasons.
It is also possible that the decision taken may be rational when taken but is treated as wrong/irrational/faulty
Specific Objectives Identification of Problems Search for alternatives
Evaluation of
alternatives
Choice of alternatives
Action
Results

because' the results available from the decision taken are not as expected/positive/encouraging. Rational
decisions may not be possible when the approach of the decision-maker is casual and superficial.
He may not be alert, careful and cautious while taking the decisions or he might not have followed
the decision-making process in a scientific manner. In brief, all business decisions should be rational as far
as possible as such rational decisions offer many benefits/advantages. However, rational decisions may not
be taken on certain occasions. According to Herbert A. Simon, human beings are not always rational in the
decisional process.
What is the relationship between Planning and Decision-making?
There is close relationship between planning and decision-making. Decision-making has priority
over planning function. It is the starting point of the whole management process. In fact, decision-making is
a particular type of planning. A decision is a type of plan involving commitment to resources for achieving
specific objective.
According to Peter Drucker, it is the top management which is responsible for all strategic decisions
such as the objectives of the business, capital expenditure decisions as well as operating decisions such as
training of manpower and so on. Without management decisions, no action can take place and naturally the
resources would remain idle and unproductive. The managerial decisions should be correct to the maximum
extent possible. For this, scientific decision-making is essential.
Explain Rational Decision making process?
The Rational Decision Making Model is a model which emerges from Organizational
Behavior. The process is one that is logical and follows the orderly path from problem identification through
solution. It provides a structured and sequenced approach to decision making. Using such an approach can
help to ensure discipline and consistency is built into your decision making process.
The Six-Step Rational Decision-Making Model
Defining the problem: This is the initial step of the rational decision making process. First the problem is
identified and then defined to get a clear view of the situation.
Identify decision criteria: Once a decision maker has defined the problem, he or she needs to identify the
decision criteria that will be important in solving the problem. In this step, the decision maker is determining
what’s relevant in making the decision. This step brings the decision maker’s interests, values, and personal
preferences into the process. Identifying criteria is important because what one person thinks is relevant,
another may not. Also keep in mind that any factors not identified in this step are considered as irrelevant to
the decision maker.
Weight the criteria: The decision-maker weights the previously identified criteria in order to give them
correct priority in the decision.
Generate alternatives: The decision maker generates possible alternatives that could succeed in resolving
the problem. No attempt is made in this step to appraise these alternatives, only to list them.
Rate each alternative on each criterion: The decision maker must critically analyze and evaluate each one.
The strengths and weakness of each alternative become evident as they compared with the criteria and
weights established in second and third steps.
Compute the optimal decision: Evaluating each alternative against the weighted criteria and selecting the
alternative with the highest total score.
DECISION MAKING UNDER DIFFERENT CONDITIONS

The conditions for making decisions can be divided into three types. Namely a) Certainty, b)
Uncertainty and c) Risk virtually all decisions are made in an environment to at least some uncertainty
However; the degree will vary from relative certainty to great uncertainty. There are certain risks involved in
making decisions.
Certainty:
In a situation involving certainty, people are reasonably sure about what will happen when they make
a decision. The information is available and is considered to be reliable, and the cause and effect
relationships are known.
Uncertainty
In a situation of uncertainty, on the other hand, people have only a meager database, they do not
know whether or not the data are reliable, and they are very unsure about whether or not the situation may
change. Moreover, they cannot evaluate the interactions of the different variables. For example, a
corporation that decides to expand its Operation to an unfamiliar country may know little about the country,
culture, laws, economic environment, and politics. The political situation may be volatile that even experts
cannot predict a possible change in government.
Risk
In a situationwithrisks,factual information may exist, but it may be incomplete. Improve decision
making one may estimate the objective probability of an outcome by using, for example, mathematical
models On the other hand, subjective probability, based on judgment and experience may be used. All
intelligentdecisionmakersdealingwithuncertainty like to know the degree and nature of the risk they are
taking in choosing a course of action.
One of the deficiencies in using the traditional approaches of operations research for problem
solvingisthatmany of the data used in model are merely estimates and others are based on probabilities.
The ordinary practice is to have staff specialists conic up with best estimates.
References:
1. Principles of management by R.K.Sharma & Shashi. K.Gupta
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
ORGANISING
What do you mean by “Organising”
Organizing refers to the process of bringing together physical, financial and human resources and establishing productive
relations among them for the achievement of the specific goals.
According to Ralph C. Davis, "Organisation is a group of people who cooperate under the direction of leaderships, for
accomplishment of a common end".
According to Koontz and O'Donnell, "It is the grouping of activities necessary to attain enterprise objectives and
assignment of each grouping to a manner with necessary to supervise it".
According to G. R. Terry, "Establishing the effective authority relationships among selected works, persons and w
places in order for the group to work together effectively".
According to A. P Strong, "Organising is the process of integrating into a coordinated structure of activities required achieve the
objectives of an enterprise; staffing this structure with qualified, competent personnel and supplying them with physical factors
necessary to performtheir functions"
Organising is the process of arranging people and other resources to work together to accomplish a goal. As one of the
basic functions of management, it involves both creating a division of labour for-tasks to be performed and then coordinating
results to achieve a common purpose. Once plans are created, the manager's task is to see to it that they are carried out Giv en a
clear mission, core values, objectives, and strategy, organising begins the process of implementation by clarify-jobs and working
relationships.
Explain the nature of Organising?

Social System: An organisation is a social system. Its activities are governed by social and psychological laws. People
working in an organisation are influenced in their actions and behaviour by their social and psychological needs. All
parts of the organisational system are inter-dependent. Each part influences and is influenced by any other part and also
in turn by the system as a whole. There are two aspects of an organisational social system - the formal or official, and the
informal or unofficial. The organisation social system is dynamic, in the sense that inter-personal and group relationships
within it keep on changing, and are not static.
Objectives: Any organisation structure is bound together by the pursuit of specific and well-defined objectives. In fact,
just as objectives cannot be accomplished without an organisation, similarly an organisation cannot exist for long withou t
objectives and goals. .
Cooperative Relationship: An organisation creates co-operative relationship among various members of the group. It
cannot be constituted by one person. It requires atleast two or more persons. Organisation is a system which help s in
creating meaningful relationship among persons both vertical and horizontal.
Well-Defined Hierarchy: An organisation consists of various positions arranged in a hierarchy with well defined
authority and responsibility. The hierarchy of positions defines the lines of communication and pattern of relationships.
Communication: Every organisation has its own channels and methods of communication. For success in management,
effective communication is vital. This is because management is concerned with working with others, and unless there is
proper understanding between people, it cannot be effective. The channels of communication may be formal, informal,
downward, upward or horizontal.
What is the purpose of Organising?
Helps to achieve organisational goal: Organisation is employed to achieve the overall objectives of business firms.
Organisation focuses attention of individual's objectives towards overall objectives.
Optimum use of resources: To make optimum use of resources such as men, material, money, machine, and
method, it is necessary to design an organisation properly. Work should be divided and right people should be given
right jobs to reduce the wastage of resources in an organisation.
To perform managerial function: Planning, organising, staffing, directing and controlling cannot be
implemented without proper organisation.
Facilitates growth and diversification: A good organisation structure is essential for expanding business
activity. Organisation structure determines the input resources needed for expansion of a business activity similarly
organisation is essential for product diversification such as establishing a new product line.
Human Treatment of Employees: Organisation has to operate for the betterment of employees and must not encourage
monotony of work due to higher degree of specialisation. Now, organisation has adapted the modern concept of systems
approach based on human relations and it discards the traditional productivity and specialisation approach.
Help Management: Organisation helps management to have better control over business functions and which helps in
smooth functioning within the organisation.
To Increase Production: Duties are assigned by following the principle of division of labour which helps in increasing
the production of the organisation thereby helps in increasing the profit also.
Removing Clutters: Organising is very important in every aspect of life - especially business. It is the process of
arranging elements following a set of rules. A business should always be in an organised and standardised state.
Organising in business help-out in removing the clutter and unimportant things and aid to focusing on only the
important matters.
Discuss the process of Organising?
The process of organising may be described as the managerial function of organising. It consists in making a ration
division of work into groups of activities and trying together the position representing grouping of activities so as to achieve
rational, well-coordinated and orderly structure for the accomplishment of work. Important steps involved in this process are:
Determination of Objectives: It is the first step in building up an organisation. It will assist in deciding as to why the
proposed organisation is to be set up and therefore, what will be nature of the work to be accomplished through the
organisation.
Enumeration of Activities: Then the total job is sub-divided into essential activities, e.g., the work of an industrial
concern may be divided into the following major functions:
i) Purchasing, ii) Production,
iii) Financing, iv) Personnel,
v) Sales, vi) Export promotion, etc.
Grouping Activities: Then closely related and similar activities are grouped into divisions and sub-dividing the activities
into groups. Functions like sales, production, finance, etc., are made the basis of primary grouping. Secondary grouping

is made on the basis of geographical areas, types of customers, equipments used, processes adopted or constituent parts
of major enterprise function.
Allocation of Fixed Responsibility to Definite Persons: Here specific job assignments are made to different
subordinates for ensuring a certainty of work performance.
Delegation of Authority: Authority without responsibility is a dangerous thing and similarly responsibility without
Authority is an empty vessel. Hence, corresponding to the responsibility authority is delegated to the subordinates for
enabling them to show work performance.
Coordination: This is necessary for optimum performance. It is an integrating function. The performance of
departments and sections are to be integrated to achieve objectives. departments and the departmental activities are
further divided into sections. Different bases are adopted for the purpose of dividing
ORGANISATION STRUCTURE
What is an organisational structure?
An organization structure shows the authority and responsibility relationships between the various
positions in the organization by showing who reports to whom. It is a set of planned relationships between
groups of related functions and between physical factors and personnel required for the achievement of
organizational goals.
Organization involves establishing an appropriate structure for the goal seeking activities. The
structure of an organization is generally shown on an organization chart or a job- task pyramid. It shows the
authority and responsibility relationships between various positions in the organization. It is significant to
note that the organization structure is directly related to the attainment of the organization objectives. For
instance, if an undertaking is in production line, the, dominant element in its organization chart, would be
manufacturing and assembling. A good organization structure should not be static but dynamic. It should be
subject to change from time to time in the light o f the changes in the business environment. While designing
the organization structure, due attention should be given to the principles of sound organization.
What are the various types of Organization?
According to Talcott Parson Scheme, organizations can be classified primarily into four categories
based on functions:
Economic Organizations: Economic organizations are primarily concerned with producing
something of value to the society. They are wedded to a philosophy of generating surplus/ profit.
Industrial, commercial and, trading concerns are included in this category.
Political, organizations: Political organizations survive on the basis of service to society. They help
in achieving the basic values cherished by the society. They, collect resources from the society.
Employ them judiciously, and help in maintaining peace and stability in the society. All
governmental agencies are included in this category.
Integrative organizations: Integrative organization tried with social, control and maintenance.
Police departments and other protective organizations (courts etc.) are included in this category.
Pattern maintenance organizations: Pattern maintenance organizations, like, educational
institutions, research institutions, religious organizations, clubs etc. are primarily concerned with,
long-term interests bf society, culture, knowledge values, etc.,
According to Blau and Scott an organization survives on the basis of the services tendered to the
society. Its success depends, on how best it is able to serve the interests of its members, owners or
managers, clients and the socities.
Mutual benefits associations:
Mutual benefit association like trade unions, political parties professional, bodies etc., crop
up to serve the interests of member, It is not always possible for these associations, to achieve, the
seemingly easy objective because of two problems membership, apathy and oligarchical control.
Membership in mutual benefit associations may be exciting initially but after a time it becomes a

monotonous feature. Members lose interest and develop apathy toward the associations’ activities.
Consequently, control passes into hands of a selected few; oligarchial control replaces the internal
democratic character of the association
Business organizations:
Owners are the primary, beneficiaries in, business organization. They are mainly concerned
with maintaining, operational efficiency-achieving maximum gain at minimum cost. It is true that
other groups like employees,'' customers, society etc. receive benefits simultaneously from business
organizations but in the final analysis, the survival of such institutions depends on how effectively
the owners are rewarded for the risks undertaken.
Service organizations:
In service organizations like hospitals, educational institutions, social welfare agencies etc.
primary beneficiaries. In order to tender effective service to the clients, the professionals looking
after these organizations must emphasize two things service, is more important than observing
procedures and the nature of service is to be decided
According to Samuel Deep’s Classification Scheme
For, profit organizations:
These organizations provide goods and services at a profit. Companies, partnership firms,
sole, proprietorship - firm are organised, along these lines and they generate profit for survival and
continuance, in the market.
Government organizations:
These organizations satisfy the public need, for, order and, provide a means for people to
exercise some measure of control over their environment.
Protective organizations:
They shield citizens from danger, Police, and military services etc.
Service organizations:
They act in the interest of, the general public without always receiving payments in full for
services rendered
Political organizations:
They seek to influence legislation by electing a member of their group to public office
(political parties, groups and associations).
Religious organizations:
They provide for the spiritual needs of members and try to enlist nonbelievers into their fold
(churches, sects, orders etc.).
Social organizations:
They satisfy the needs of persons to make friendships and to have contact, with, others-who
have contact with others who have compatible interests (clubs, teams, fraternities).
What are the types of Organisation Structure?
1. Line Organisation/Military Organisation: A line organisation is one in which all managers have direct authority over
their respective subordinates, through the chain of command. Authority flows directly from top to bottom through
various managerial positions. Each employee knows exactly who their superiors are and who has authority to issue order.
2. Line and Staff Organisation: Line and staff organisation is a modification of line organisation and it is more complex
than line organisation. According to this administrative organisation, specialized and supportive activities are attached
the line of command by appointing staff supervisors and staff specialists who are attached to the line authority, power of
command always remains with the line executives and staff supervisors guide, advice and counsel the " executives.
Personal Secretary to the Managing Director is a staff official.
3. Functional Organisation: The term functional organisation is defined as an organisation in which line authority, staff
authority and a third type of authority known as functional authority exist together. It is a limited form of line authority
given to functional experts over certain specialized activities under the norm supervision of managers belonging to

other departments. Managers who are given functional authority have the right to issue directives on matters over which
they do not have direct line authority otherwise.
4. Divisional Structure: The next basic structural form employed by organizations is the divisional structure, growth
through expansion of same line of business forces a small organisation to organize on functional basis, and growth
through geographic and product diversification necessitates the adoption of divisional structure. In India, many
companies have diversified into unrelated businesses and have found functional structure quite unsuitable for them.
For example, companies like DCM Limited, Voltas Limited, Century Spinning Mills, Gwalior Rayon, etc.,
adopt divisional structure. Divisional structure, also called profit decentralization, which is built around business units. In
this form, the organisation divided into several fairly autonomous units. Each unit is relatively self-contained in that it
has the resources to operate independently of other divisions.
5. Project Organisation: A project organisational structure is of a recent origin, having been conceived after World War II.
It is set up with the object of overcoming the major weaknesses of the functional organisation, namely, absence of unity
of command, delay in decision making, and lack of coordination. A project organisation is composed of a core of
functional departments; through its main units are specific programs or projects . The organisation is designed with
specific objectives in view, and there is also a provision to disband it after the programor project has been accomplished.
A project organisation somewhat resembles the matrix organisation though there is a material d ifference
between the two. A project organisation is suitable in the case of accomplishment of a small number of large projects
while the matrix organisation is advisable in case a large number of small projects have to be accomplished.
6. Matrix Organisation: Matrix design is one of the latest types of organisational designs which have been developed to
establish flexible structure to achieve a series of project objectives. Matrix organisation, also known as grid, has been
evolved as an answer to the growing size and complexity of undertakings which require an organisational structure more
flexible and technically oriented than the traditional line and staff or functional structure.
FORMAL AND INFORMAL ORGANISATION
What are the types of Organization Based on Authority, Responsibility and Accountability?
Formal Organization
Chester 1. Barnard defined formal organization as "a system of consciously coordinated activities or
forces of two or more persons", A formal organization is deliberately designed to achieve some particular
objectives. It refers to the structure of well-defined jobs, each bearing a definite measure of authority,
responsibility and accountability.
The structure is consciously designed to enable the organizational members to work together for
accomplishing common objectives. The individual must adjust to the formal organization. It tells him to do
certain things in a specified manner, to obey orders from designated individuals and to cooperate with
others. Co-ordination also proceeds according to a prescribed pattern in the formal organization structure.
The formal organization is built around four key pillars; namely, (i) division of labor, (ii) scalar and
functional processes, (iii) structure, and (iv) span of control. These may also be called the principles of
formal organization. Division of labor and specialization, is, the basic principle of formal organization. The
whole work is divided into a number of small operations and a different person performs each operation so
that there is maximum specialization.
The scalar and functional processes imply the growth of the organization both vertically and
horizontally. The, structure of the organization refers to the overall arrangement in the organization which,
ensures proper balance between different parts of the organization and secures the execution of all
operations and the achievement of organizational objectives. The span of control refers to the number of
subordinates directly reporting and accountable to one superior.
Informal Organization
Informal organization refers to the relationship between people in the organization based on personal
attitudes, emotions, prejudices, likes, dislikes, etc. These relations are not developed according to procedures
and regulations laid down in the formal organization structure; generally, large formal groups give rise to
small informal or social groups. These groups may be based on same taste, language, culture or some other
factor. These groups are not preplanned, but they develop automatically within the organization according to
its environment.
Generally, large formal groups give rise to small informal or social groups. These- groups may be
based on common taste, language, culture or some other factor. These groups are not pre-planned. They

develop automatically within the organization according to the environment in the organization. The salient
features of informal organization are as follows:
Informal relations are unplanned. They arise spontaneously.
Formation of informal organizations is a natural process.
Informal organization reflects human relationships.
Informal organizations are based on common taste, problem, language, religion, culture, etc.
The membership of informal organizations is voluntary. At the same time, a person may be a
member of a number of informal groups. Thus, there can be overlapping in these groups.
Differentiate Formal and Informal Organization?
The formal and informal organizations differ from each other in the following respects
Origin. The reasons and circumstances of origin of both formal and informal organizations are
totally different. Formal organizations are created by conscious managerial decisions. But informal
organizations arise naturally within the formal organization because of the tendency of the
individuals to associate and interact. Management has no hand either in emergence or in abolition of
informal groups.
Purpose. Formal organizations are created for realizing certain well-defined objectives. But informal
groups are created by organizational members for their social and psychological satisfaction,' There
may be a conflict between the goals of the formal organization and those of the informal groups.
Activities. Activities in case of formal organization are differentiated and integrated around the
objectives of the enterprise and are formalized into work units or departments on a horizontal basis.
Individuals are fitted into jobs and positions and work groups as a result of managerial decisions. In
case of informal organization, there are no specific activities. They arise from time to time as a result
of interactions and sentiments of the individuals. Informal groups may be based on common taste,
language, culture or some other factor.
Structure. Formal organization is hierarchical, pyramid shaped and bureaucratic in structure with
well-defined positions, rigid delineation of roles and. superior-subordinate relationships on
impersonal basis, enforcement of organizational order through a set of policies, procedures, and
rules, conscious emphasis on status, differential based on authority, narrow and downward oriented
communication system, etc. On the other hand, informal organization is uncharitable; it looks like a
complicated and common social network of interpersonal relationships. Informal organization is
loosely structured, with only unwritten norms of behavior enforced by consent. Communication is
informal and multi-directional. There are no rigid status differentials.
Membership. In a formal organization, every individual belongs to one work group only and works
under one superior. But in case of informal organization, one person can be a member of more than
one group, according to his choice. He may be - a leader in one group and follower in another. There
is no rigidity about group membership.
Orientation. In case of formal organization, values, goals and tasks are dominantly economic and
technical and they concern productivity, profitability, efficiency, survival and growth. But in case of
informal organization, values, goals ' and tasks are dominantly psycho-social, setting around indi-
vidual and group satisfaction, affiliation, cohesiveness and friendship.
Norms of Behavior. In a formal organization, individuals are required to behave in the prescribed
manner in their work situations. They are expected to behave in a rational manner. Deviations from
the standard norms are dealt with according to the processes of organizational law and order. There
is also a system of rewards and punishments. But in case of informal organization, individual
behavior and group behavior influence each other. Behavior is more natural and social. Interactions
cut across formally established positions and relationships and there is free exchange of feelings and
ideas. An informal organization develops its own norms of behavior and a system of rewards and
punishments to ensure adherence of group norms.

LINE AND STAFF AUTHORITY
What do you mean by Line and Staff Authority?
Line and staff are the most widely-used concepts in organising, and most of the structures have line-staff structures.
Large and complex organizations’ operating in increasingly dynamic environment need a variety of special abilities, knowledge ,
and skills for supporting the effective and efficient performance of their major functions of production and marketing. They,
therefore, employ a variety of experts including industrial experts, quality control managers, industrial relation directors, legal
advisors, cost accountants, market researchers, research and development scientists, and so forth.
These specialists perform the staff functions of rendering expert advice and service to line managers in the performance
of their functions. Line and staff managers are in an interactional and interdependent relationship with one another. Inte ractions
are involved in their day-to-day relationships of staff advice, guidance and services to the line. The line managers are dependent
on staff specialists for achieving their goals.
A production manager cannot function effectively, if, e.g., the materials manager does not provide him supplies, tools,
spare parts, raw materials, etc., the maintenance manager does not provide himrepairing and maintenance services, quality co ntrol
managers does not cooperate with him by providing guidance about quality specifications, and so forth. Similarly, staff managers
will find themselves superfluous if line people do not need or reject their advice and services.
What is the nature of Line-Staff Authority?
Following characteristics of line-staff authority also create conflicts:
 Different Backgrounds: Line and staff people often have different backgrounds and individual characteristics. So
people, in contrast to line, are generally younger, better educated, more poised in social interaction, more articulated and
individualistic. As a result, they often look down on the less educated line people, who must have worked the way up
through the organisation. These differences create an atmosphere of mistrust than of congeniality and coordinativeness.
 Lack of Demarcation between Line and Staff: Though in theory, the line and staff authority is clear, often in practice
demarcation between line and staffs is rarely clear. Many jobs in line and staff defy description and relationship between
them and are not clarified. In such cases, there is a possibility for overlap and gap in authority and responsibility which
can aggravate personal relationships.
 Lack of Proper Understanding of Authority: Even if line and staff authority is made clear in the organisation, people
may fail to understand the exact nature of line and staff authority in practice which may be a source of conflict.
What are the various types of Staff authority?

Personal Staff: Personal staff means a person who assists another person in the performance of a work effectively.
Under such circumstances the work of line officers could not be delegated to others. This type of a person is appointed at
the top level of organisation. The personal staff officers do not supervise the subordinates of line officers.
Specialized Staff: The specialised staff officers render service to the line officers at all levels of the organisation. The
specialised staff officers offer advice with some limited provisions. These provisions are imposed by the management.
General Staff Assistant: General staff assistants are a group of persons who are rendering service as advisors to top
management in specialised matters. The primary feature of the general staff is that they give advice regarding overall
plans and policies of the organisation. But they are not specialised in any area.
What are the merits and demerits of Line and Staff authority?
Merits:
This form of organisation came to existence as an improvement over the line organisation. Line and
staff organisation has removed serious drawbacks of the line organisation.
Specialisation—It is based on planned specialization, line managers get the benefit of specialized
knowledge of staff specialists at various levels.
Encouragement to research and development programmes—The growth of an enterprise
depends largely on various research and development programmes. The staff provides this service to
the line departments.
Balanced decisions—Line managers may not have specialised knowledge in all areas and due to
this line managers may sometimes give wrong orders or pass wrong judgment. The suggestions and
advice given by staff manager help them in making rational judgment and balanced decisions.
Less burden on line managers—Staff managers relieve the line managers from the botheration
of concentrating on the specialised functions like accounting, selection and training of employees,
public relations etc. Thus there is a less burden on line managers. Many problems that are ignored or
poorly handled in the line organisation, can be properly covered. It is more flexible.
Demerits:
Confusion—It is very difficult to clearly establish the authority and responsibility relationship
between line and staff executives. This creates confusion among them.
Ineffectiveness of the staff—The role of the staff is purely advisory. Since they do not have the
power to get their recommendations implemented, the staff services may prove to be ineffective.
Conflict between line and staff—There is generally a conflict between line and staff executives,
line authorities feel that staff executives do not always give right type of advice and therefore reject
even some very good schemes. Line authorities do not want to give an impression to the
management that they are in any way inferior to staff. Thus there is conflict between line and staff.
DEPARTMENTATION BY DIFFERENT STRATEGIES
What do you mean by “DEPARTMENTATION”?
Departmentation refers to the process of grouping activities into departments. Departmentation is the
process of grouping of work activities into departments, divisions, and other homogenous units. Key Factors
in Departmentation
It should facilitate control.
It should ensure proper coordination.
It should take into consideration the benefits of specialization.
It should not result in excess cost.
What are the types of Departmentation?
It should give due consideration to Human Aspects. Departmentation takes place in various patterns
like Departmentation by functions, products, customers, geographic location, process, and its combinations.
 FUNCTIONAL DEPARTMENTATION

Functional Departmentation is the process of grouping activities by functions performed. Activities
can be grouped according to function (work being done) to pursue economies of scale by placing employees
with shared skills and knowledge into departments for example human resources, finance, production, and
marketing. Functional Departmentation can be used in all types of organizations.
Advantages:
Advantage of specialization
Easy control over functions
Pinpointing training needs of manager
It is very simple process of grouping activities.
Disadvantages
Lack of responsibility for the end result
Overspecialization or lack of general management
It leads to increase conflicts and coordination problems among departments
 PRODUCT DEPARTMENTATION
Product Departmentation is the process of grouping activities by product line. Tasks can also be
grouped according to a specific product or service, thus placing all activities related to the product or the
service under one manager. Each major product area in the corporation is under the authority of a senior
manager who is specialist in, and is responsible for, everything related to the product line. Dabur India
Limited is the India’s largest Ayurvedic medicine manufacturer is an example of company that uses product
Departmentation. Its structure is based on its varied product lines which include Home care, Health care,
Personal care and Foods.
Advantages
It ensures better customer service
Unprofitable products may be easily determined
It assists in development of all around managerial talent
Makes control effective
It is flexible and new product line can be added easily.
Disadvantages
It is expensive as duplication of service functions occurs in various product divisions
Customers and dealers have to deal with different persons for complaint and information of different
products.
 CUSTOMER DEPARTMENTATION

Customer Departmentation is the process of grouping activities on the basis of common customers or
types of customers. Jobs may be grouped according to the type of customer served by the organization. The
assumption is that customers in each department have a common set of problems and needs that can best be
met by specialists. UCO is the one of the largest commercial banks of India is an example of company that
uses customer departmentation. Its structure is based on various services which includes Home loans,
Business loans, Vehicle loans and Educational loans.
Advantages
It focused on customers who are ultimate suppliers of money
Better service to customer having different needs and tastes
Development in general managerial skills
Disadvantages
Salesbeingthe exclusivefieldof its application, co-ordination may appear difficult between sales function
and other enterprise functions.
Specialized sales staff may become idle with the downward movement of sales to any specified group of
customers.
 GEOGRAPHIC DEPARTMENTATION
Geographic Departmentation is the process of grouping activities on the basis of territory. If an
organization's customers are geographically dispersed, it can group jobs based on geography. For example,
the organization structure of Coca-Cola Ltd has reflected the company’s operation in various geographic
areas such as Central North American group, Western North American group, Eastern North American
group and European group
Advantages
Help to cater to the needs of local people more satisfactorily.
It facilitates effective control
Assists in development of all-round managerial skills
Disadvantages
Communicationproblembetweenheadoffice andregional office due tolack of means of communication at
some location
Coordination between various divisions may become difficult.
Distance between policy framers and executors
It leads to duplication of activities which may cost higher.
 PROCESS DEPARTMENTATION
Geographic Departmentation is the process of grouping activities on the basis of product or service
or customer flow. Because each process requires different skills, process departmentation allows

homogenous activities to be categorized. For example, Bowater Thunder Bay, a Canadian company that
harvests trees and processes wood into newsprint and pulp. Bowater has three divisions namely tree cutting,
chemical processing, and finishing (which makes newsprint).
Advantages
Oriented towards end result.
Professional identification is maintained.
Pinpoints product-profit responsibility.
Disadvantages
Conflict in organization authority exists.
Possibility of disunity of command.
Requires managers effective in human relation
 MARTIX DEPARTMENTATION
In actual practice, no single pattern of grouping activities is applied in the organization structure with
all its levels. Different bases are used in different segments of the enterprise. Composite or hybrid method
forms the common basis for classifying activities rather than one particular method,..
One of the mixed forms of organization is referred to as matrix or grid organization’s According to
the situations, the patterns of Organizing varies from case to case. The form of structure must reflect the
tasks, goals and technology if the originations the type of people employed and the environmental conditions
that it faces.
It is not unusual to see firms that utilize the function and project organization combination. The same
is true for process and project as well as other combinations. For instance, a large hospital could have an
accounting department, surgery department, marketing department, and a satellite center project team that
make up its organizational structure.
Advantages
Efficiently manage large, complex tasks
Effectively carry out large, complex tasks
Disadvantages
Requires high levels of coordination

Conflict between bosses
Requires high levels of management skills
Management is most accountable. Being accountable means being innovative as the person will think
beyond his scope of job. Accountability in short, means being answerable for the end result. Accountability
can’t be escaped. It arises from responsibility.
SPAN OF CONTROL
Span of Control means the number of subordinates that can be managed efficiently and effectively
by a superior in an organization. It suggests how the relations are designed between a superior and a
subordinate in an organization.
What are the factors Affecting Span of control?
 Capacity of Superior: Different ability and capacity of leadership, communication affect management
of subordinates.
 Capacity of Subordinates: Efficient and trained subordinates affect the degree of span of management.
 Nature of Work: Different types of work require different patterns of management.
 Degree of Centralizationor Decentralization:Degree of centralizationordecentralizationaffectsthe spanof
management by affecting the degree of involvement of the superior in decision making.
 Degree of Planning:Planswhichcan provide rules,proceduresindoingthe workhigherwouldbe the degree
of span of management.
 CommunicationTechniques:Patternof communication,its means, and media affect the time requirement
in managing subordinates and consequently span of management.
 Use of Staff Assistance: Use of Staff assistance in reducing the work load of managers enables them to
manage more number of subordinates.
 Supervisionof others: If subordinate receives supervision form several other personnel besides his direct
supervisor.Insucha case,the work loadof directsuperiorisreduced and he can supervise more number of
persons.
What are the types of Span of Control?
Narrow span of control:
Narrow Span of control means a single manager or supervisor oversees few subordinates. This gives
rise to a tall organizational structure.
Advantages:
Close supervision
Close control of subordinates
Fast communication
Disadvantages:
Too much control
Many levels of management
High costs
Excessive distance between lowest level and highest level
Wide span of control:
Wide span of control means a single manager or supervisor oversees a large number of subordinates.
This gives rise to a flat organizational structure.
Advantages:
More Delegation of Authority
Development of Managers
Clear policies
Disadvantages:
Overloaded supervisors
Danger of superiors loss of control
Requirement of highly trained managerial personnel

Block in decision making.
CENTRALIZATION AND DECENTRALIZATION
What do you mean by “CENTRALIZATION”?
It is the process of transferring and assigning decision-making authority to higher levels of an
organizational hierarchy. The span of control of top managers is relatively broad, and there are relatively
many tiers in the organization.
State the Characteristics of Centralization?
Philosophy / emphasis on: top-down control, leadership, vision, strategy.
Decision-making: strong, authoritarian, visionary, charismatic
Organizational change: shaped by top, vision of leader.
Execution: decisive, fast, coordinated. Able to respond quickly to major issues and changes.
Uniformity: Low risk of dissent or conflicts between parts of the organization.
State the Advantages and Disadvantages of Centralization?
 Advantages of Centralization
Provide Power and prestige for manager
Promote uniformity of policies, practices and decisions
Minimal extensive controlling procedures and practices
Minimize duplication of function
 Disadvantages of Centralization
Neglected functions for mid. Level and less motivated beside personnel.
Nursing supervisor functions as a link officer between nursing director and first-line management.
What is “DECENTRALIZATION”?
It is the process of transferring and assigning decision-making authority to lower levels of an
organizational hierarchy. The span of control of top managers is relatively small, and thereare relatively few
tears in the organization, because there is more autonomy in the lower ranks.
WIDE SPAN OF
CONTROL
NARROW SPAN OF CONTROL

State the Characteristics of Decentralization?
Philosophy / emphasis on: bottom-up, political, cultural and learning dynamics.
Decision-making: democratic, participative, and detailed.
Organizational change: emerging from interactions, organizational dynamics.
Execution: evolutionary, emergent. Flexible to adapt to minor issues and changes.
Participation, accountability: Low risk of not-invented-here behavior.
What are the three Forms of decentralization?
De-concentration
The weakest form of decentralization. Decision making authority is redistributed to lower or regional
levels of the same central organization.
Delegation
A more extensive form of decentralization. Through delegation the responsibility for decision-
making are transferred to semi-autonomous organizations not wholly controlled by the central organization,
but ultimately accountable to it.
Devolution
A third type of decentralization is devolution. The authority for decision-making is transferred
completely too autonomous organizational units.
State the Advantages and Disadvantages of Decentralization?
Advantages of Decentralization
Raise morale and promote interpersonal relationships
Relieve from the daily administration
Bring decision-making close to action
Develop Second-line managers
Promote employee’s enthusiasm and coordination
Facilitate actions by lower-level managers
Disadvantages of Decentralization
Top-level administration may feel it would decrease their status
Managers may not permit full and maximum utilization of highly qualified personnel
Increased costs. It requires more managers and large staff
It may lead to overlapping and duplication of effort Centralization and Decentralization are two opposite
ways to transfer decision-making power and to change the organizational structure of organizations
accordingly.
There must be a good balance between centralization and decentralization of authority and power.
Extreme centralization and decentralization must be avoided.
DELEGATION OF AUTHORITY
What is meant by Delegation?
A manager alone cannot perform all the tasks assigned to him. In order to meet the targets, the
manager should delegate authority. Delegation of Authority means division of authority and powers
downwards to the subordinate.
Delegation is about entrusting someone else to do parts of your job. Delegation of authority can be
defined as subdivision and sub-allocation of powers to the subordinates in order to achieve effective results.
State the Elements of Delegation?
Authority
In context of a business organization, 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
organizational objectives. Authority must be well- defined. All people who have the authority should know
what is the scope of their authority is and they shouldn’t misutilize it.

Authority is the right to give commands, orders and get the things done. The top level management
has greatest authority. Authority always flows from top to bottom. It explains how a superior gets work done
from his subordinate by clearly explaining what is expected of him and how he should go about it. Authority
should be accompanied with an equal amount of responsibility. Delegating the authority to someone else
doesn’t imply escaping from accountability. Accountability still rest with the person having the utmost
authority.
Responsibility
It is the duty of the person to complete the task assigned to him. A person who is given the
responsibility should ensure that he accomplishes the tasks assigned to him. If the tasks for which he was
held responsible are not completed, then he should not give explanations or excuses. Responsibility without
adequate authority leads to discontent and dissatisfaction among the person. Responsibility flows from
bottom to top.
The middle level and lower level management holds more responsibility. The person held
responsible for a job is answerable for it. If he performs the tasks assigned as expected, he is bound
for praises. While if he doesn’t accomplish tasks assigned as expected, then also he is answerable for that.
Accountability
It means giving explanations for any variance in the actual performance from the expectations set.
Accountabilitycannotbe delegated.Forexample,if ’A’isgivenataskwithsufficientauthority,and’A’delegates this
task to B and askshimto ensure that task is done well, responsibility rest with ’B’, but accountability still rest with
’A’. The top level
Explain the Delegation Process?
The steps involved in delegation are given below
Allocation of duties
The delegator first tries to define the task and duties to the subordinate. He also has to define the
result expected from the subordinates. Clarity of duty as well as result expected has to be the first step in
delegation.
Granting of authority

Subdivision of authority takes place when a superior divides and shares his authority with the
subordinate. It is for this reason; every subordinate should be given enough independence to carry the task
given to him by his superiors. The managers at all levels delegate authority and power which is attached to
their job positions. The subdivision of powers is very important to get effective results.3.
Assigning of Responsibility and Accountability –
The delegation process does not end once powers are granted to the subordinates. They at the same
time have to be obligatory towards the duties assigned to them. Responsibility is said to be the factor
or obligation of an individual to carry out his duties in best of his ability as per the directions of superior.
Therefore, it is that which gives effectiveness to authority. At the same time, responsibility is
absolute and cannot be shifted.
Creation of accountability
Accountability, on the others hand, is the obligation of the individual to carry out his duties as per the
standards of performance. Therefore, it is said that authority is delegated, responsibility is created and
accountability is imposed. Accountability arises out of responsibility and responsibility arises out of
authority. Therefore, it becomes important that with every authority position an equal and opposite
responsibility should be attached.
Therefore every manager, i.e., the delegator has to follow a system to finish up the delegation
process. Equally important is the delegate’s role which means his responsibility and accountability is
attached with the authority over to here.
STAFFING
What do you mean by Staffing?
The selection and training of individuals for specific job functions, and charging them with
the associated responsibilities. The term staffing in management consists of:
1. Selecting the right person for the right post.
2. Training and development.
3. Giving proper remuneration and motivation.
4. Performance appraisal of employees.
5. Proper promotions, transfers, etc.
Depict the Staffing Process?
Staffing involves filling the positions needed in the organization structure by appointing competent and qualified persons
for the job. The staffing process encompasses man power planning, recruitment, selection, and training.

1
Manpower Planning:
Manpower Planning which is also called as Human Resource Planning consists of putting right number of people,
right kind of people at the right place, right time, doing the right things for which they are suited for the achievement of goals
of the organization. The primary function of man power planning is to analyze and evaluate the human resources available in
the organization, and to determine how to obtain the kinds of personnel needed to staff positions ranging fromassembly line
workers to chief executives.
Recruitment:
Recruitment is the process of finding and attempting to attract job candidates who are capable of effectively filling
job vacancies. Job descriptions and job specifications are important in the recruiting process because they specify the nature
of the job and the qualifications required of job candidates.
Selection:
Selecting a suitable candidate can be the biggest challenge for any organization. The success of an organization
largely depends on its staff. Selection of the right candidate builds the foundation of any organization's success and helps in
reducing turnovers.
Training and Development:
Training and Development is a planned effort to facilitate employee learning of job-related behaviors in order to
improve employee performance. Experts sometimes distinguish between the terms "training" and "development"; "training"
denotes efforts to increase employee skills on present jobs, while "development" refers to efforts oriented toward
improvements relevant to future jobs. In practice, though, the distinction is often blurred (mainly because upgrading skills in
present jobs usually improves performance in future jobs).
RECRUITMENT
What is Recruitment?
Recruitment is the process of finding and attempting to attract job candidates who are capable of effectively filling job
vacancies. Recruitment refers to the process of attracting, screening, selecting, and on boarding a qualified
person for a job. At the strategic level it may involve the development of an employer brand which includes
an 'employee offering'.
Depending on the size and culture of the organization recruitment may be undertaken in-house by
managers, human resource generalists and / or recruitment specialists. Alternatively parts of all of the
process might be undertaken by either public sector employment agencies, or commercial recruitment
agencies, or specialist search consultancies.
Explain the recruitment process?
The recruitment process consists of the following steps
• Identification of vacancy
• Preparation of job description and job specification
• Selection of sources
• Advertising the vacancy
• Managing the response
a) Identification of vacancy:
The recruitment process begins with the human resource department receiving requisitions for recru itment from any
department of the company. These contain:
• Posts to be filled
• Number of persons
• Duties to be performed
• Qualifications required
b) Preparation of job description and job specification:
A job description is a list of the general tasks, or functions, and responsibilities of a position. It may often include to
whom the position reports, specifications such as the qualifications or skills needed by the person in the job, or a salary range. A
job specification describes the knowledge, skills, education, experience, and abilities you believe are essential to performing a
particular job.

2
c) Selection of sources:
Every organization has the option of choosing the candidates for its recruitment processes from two kinds of sources:
internal and external sources. The sources within the organization itself (like transfer of employees from one department to other,
promotions) to fill a position are known as the internal sources of recruitment. Recruitment candidates from all the other so urces
(like outsourcing agencies etc.) are known as the external sources of the recruitment.
d) Advertising the vacancy:
After choosing the appropriate sources,the vacancy is communicated to the candidates by means of a suitable media such
as television, radio, newspaper, internet, direct mail etc.
e) Managing the response:
After receiving an adequate number of responses from job seekers, the sieving process of the resumes begins. This is a
very essential step of the recruitment selection process, because selecting the correct resumes that match the job profile, is very
important.
Naturally, it has to be done rather competently by a person who understands all the responsibilities associated with the
designation in its entirety. Candidates with the given skill set are then chosen and further called for interview. Also, the
applications of candidates that do not match the present nature of the position but may be considered for future requirements are
filed separately and preserved.
The recruitment process is immediately followed by the selection process.
JOB ANALYSIS
Job Analysis is the process of describing and recording aspects of jobs and specifying the skills and other
requirements necessary to performthe job. The outputs of job analysis are
a) Job description
b) Job specification
What is Job Description?

3
A job description (JD) is a written statement of what the job holder does, how it is done, under what conditions it is done
and why it is done. It describes what the job is all about, throwing light on job content, environment and conditions of
employment. It is descriptive in nature and defines the purpose and scope of a job. The main purpose of writing a job descrip tion
is to differentiate the job from other jobs and state its outer limits.
Contents
A job description usually covers the following information:
■ Job title: Tells about the job title, code number and the department where it is done.
■ Job summary: A brief write-up about what the job is all about.
■ Job activities: A description of the tasks done, facilities used, extent of supervisory help, etc.
■ Working conditions: The physical environment of job in terms of heat, light, noise and other hazards.
■ Social environment: Size of work group and interpersonal interactions required to do the job.
What is Job Specification?
Job specification summarizes the human characteristics needed for satisfactory job completion. It tries to describe the key
qualifications someone needs to perform the job successfully. It spells out the important attributes of a person in terms of
education, experience, skills, knowledge and abilities (SKAs) to perform a particular job. The job specification is a logical
outgrowth of a job description. For each job description, it is desirable to have a job specification. This helps the organization to
find what kinds of persons are needed to take up specific jobs.
Contents
A job specification usually covers the following information:
• Education
• Experience
• Skill, Knowledge, Abilities
• Work Orientation Factors
• Age
SELECTION PROCESS
Depict the Selection Process?
Selecting a suitable candidate can be the biggest challenge for any organisation. The success of an organization largely
depends on its staff. Selection of the right candidate builds the foundation of any organization's success and helps in reducing
turnovers. Though there is no fool proof selection procedure that will ensure low turnover and high profits, the following st eps
generally make up the selection process.
Initial Screening
This is generally the starting point of any employee selection process. Initial Screening eliminates unqualified
applicants and helps save time. Applications received from various sources are scrutinized and irrelevant ones are
discarded.
Preliminary Interview
It is used to eliminate those candidates who do not meet the minimum eligibility criteria laid down by the
organization. The skills, academic and family background, competencies and interests of the candidate are examined
during preliminary interview.
Preliminary interviews are less formalized and planned than the final interviews. The candidates are given a
brief up about the company and the job profile; and it is also examined how much the candidate knows about the
company. Preliminary interviews are also called screening interviews.
Filling Application Form

4
A candidate who passes the preliminary interview and is found to be eligible for the job is asked to fill in a
formal application form. Such a form is designed in a way that it records the personal as well professional details of the
candidates such as age, qualifications, reason for leaving previous job, experience, etc.
Personal Interview
Most employers believe that the personal interview is very important. It helps them in obtaining more
information about the prospective employee. It also helps them in interacting with the candidate and judging his
communication abilities, his ease of handling pressure etc. In some Companies, the selection process comprises only of
the Interview.
References check
Most application forms include a section that requires prospective candidates to put down names of a few
references. References can be classified into - former employer, former customers, business references, reputable
persons. Such references are contacted to get a feedback on the person in question including his behavior, skills, conduct
etc.
Background Verification
A background check is a review of a person's commercial, criminal and (occasionally) financial records.
Employers often perform background checks on employers or candidates for employment to confirm information given
in a job application, verify a person's identity, or ensure that the individual does not have a history of criminal activity,
etc., that could be an issue upon employment.
Final Interview
Final interview is a process in which a potential employee is evaluated by an employer for prospective
employment in their organization. During this process, the employer hopes to determine whether or not the applicant is
suitable for the job. Different types of tests are conducted to evaluate the capabilities of an applicant, his behavior,
special qualities etc. Separate tests are conducted for various types of jobs.
Physical Examination
If all goes well, then at this stage, a physical examination is conducted to make sure that the candidate has sound
health and does not suffer fromany serious ailment.
Job Offer
A candidate who clears all the steps is finally considered right for a particular job and is presented with the job
offer. An applicant can be dropped at any given stage if considered unfit for the job.
EMPLOYEE INDUCTION / ORIENTATION
Orientation or induction is the process of introducing new employees to an organization, to their specific jobs &
departments, and in some instances, to their community. An orientation program principally conveys 3 types of information,
namely:
 General information about the daily work routine to be followed
 A review of the organization's history, founders, objectives, operations & products or services, as well as how the employee's
job contributes to the organization's needs.
A detailed presentation of the organization's policies, work rules & employee benefits.
What are the Purposes of Orientation?
Orientation is used for the following purposes:
1. To Reduce Startup-Costs:
Proper orientation can help the employee get "up to speed" much more quickly, thereby reducing the costs associated
with learning the job.
2. To Reduce Anxiety:
Any employee, when put into a new, strange situation, will experience anxiety that can impede his or her ability to learn
to do the job. Proper orientation helps to reduce anxiety that results from entering into an unknown situation, and helps pro vide
guidelines for behavior and conduct, so the employee doesn't have to experience the stress of guessing.
3. To Reduce Employee Turnover:
Employee turnover increases as employees feel they are not valued, or are put in positions where they can't possibly do
their jobs. Orientation shows that the organization values the employee, and helps provide tools necessary for succeeding in the
job.
4. To Save Time for Supervisor & Co-Workers:
Simply put, the better the initial orientation, the less likely supervisors and co-workers will have to spend time teaching the
employee.
5. To Develop Realistic Job Expectations, Positive Attitudes and Job Satisfaction:

5
It is important that employees learn early on what is expected of them, and what to expect from others, in addition to
learning about the values and attitudes of the organization. While people can learn from experience, they will make many
mistakes that are unnecessary and potentially damaging.
What are the kinds of Orientation?
There are two related kinds of orientation. The first we will call Overview Orientation, and deals with the basic
information an employee will need to understand the broader systemhe or she works in.
Overview Orientation includes helping employees understand:
• Management in general
• Department and the branch
• Important policies
• General procedures (non-job specific)
• Information about compensation
• Accident prevention measures
• Employee and union issues (rights, responsibilities)
• Physical facilities
Often, Overview Orientation can be conducted by the personnel department with a little help from the branch manager or
immediate supervisor, since much of the content is generic in nature.
The second kind of orientation is called Job-Specific Orientation, and is the process that is used to help employees understand:
• Function of the organization,
• Responsibilities,
• Expectations,
• Duties
• Policies, procedures, rules and regulations
• Layout of workplace
• Introduction to co-workers and other people in the broader organization.
Job specific orientation is best conducted by the immediate supervisor, and/or manager, since much of the content will be
specific to the individual. Often the orientation process will be ongoing, with supervisors and co-workers supplying coaching.
CARRER DEVELOPMENT
Explain the Concept of Career?
Douglas T. Hall defines career as a sequence of work related activities that provides continuity, order and
meaning in a person's life. There is also a subjective element in the concept of career. A career consists of the changes
in values, attitudes and motivation that occur as a person progresses in his professional life.
A career can mean:
• Advancement
• Profession
• Stability over time
Career development not only improves job performance but also brings about the growth of the personality.
Individuals not only mature regarding their potential capacities but also become better individuals. Purpose of development
Management development attempts to improve managerial performance by imparting
• Knowledge
• Changing attitudes
• Increasing skills
The major objective of development is managerial effectiveness through a planned and a deliberate process of learning. This
provides for a planned growth of managers to meet the future organizational needs.
Explain the Career Development Process?

6
The development process consists of the following steps
Setting Development Objectives:
It develops a framework from which executive need can be determined.
Ascertaining Development Needs:
It aims at organizational planning & forecast the present and future growth.
Determining Development Needs:
This consists of
Appraisal of present management talent
Management Manpower Inventory
The above two processes will determine the skill deficiencies that are relative to the future needs of the
organization.
Conducting Development Programs:
It is carried out on the basis of needs of different individuals, differences in their attitudes and behavior, also
their physical, intellectual and emotional qualities. Thus a comprehensive and well conceived program is prepared
depending on the organizational needs and the time & cost involved.
Program Evaluation:
It is an attempt to assess the value of training in order to achieve organizational objectives.
How does Career Development create value for the organization?
Ensures needed talent will be available
Changing staff requirements over the intermediate and long term should be identified when the
company sets long term goals and objectives. Working with individual employees to help them align their
needs and aspirations with those of the organization will increase the probability that the right people will be
available to meet the organization's changing staff requirements.
Improves the organization's ability to attract and retain talented managers
Importantly career planning appears to be a natural response to the rising concern by employees for
the quality of work life and personal life planning. Social values have changed that more members of the work
force no longer look at their work in isolation. Their work must be compatible with personal, family interests
and commitments. Career development should result in a better individual-organizational match for
employees and result in fewer turnovers.
Ensures that minorities and women get opportunities for growth and development
Equal employee legislation and affirmative programs have demanded that minority groups and
women receive opportunities for growth and development that will prepare them for greater responsibilities
within the organization.
Reduces employee frustration
When organizations cut costs by downsizing, career paths, career tracks and career ladders often collapse.
Career counseling can result in more realistic rather than raised employee expectations.
Enhances cultural diversity
Attracting and retaining the people from different cultures, enhances cultural diversity.
Promotes Organizational Goodwill
When employees think their organizations are concerned about their long-term wellbeing, they respond in
projecting positive images of the organization outside wherever they go and hence people may view it in a
greater perspective.
How does Career Development create value for the individual?
The process of career planning helps the individual to have the knowledge of various career opportunities, his
priorities.

7
This Knowledge helps him select the career, which is suitable to his personality, lifestyles, preferences, family
environment and which has scope for self-development etc.
It improves the efficiency and performance of the individuals.
Increases job satisfaction and enhanced employee commitment.
It satisfies employees esteem needs.
Discuss in detail about the Career stages?
A career, as mentioned before, includes many positions, stages and transitions just as a person's life does. It
can be easily understood if we think of a career consisting of several stages. Most of us have gone or would go
through the five stages.
Exploratory stage
As the term itself denotes it is a stage in which a person explores, possible career options for oneself and it
happens usually in mid-twenties when one makes transition from education to earn i.e., work. Experiences suggest
that several factors like the careers of the parents, their interest, and their aspirations for their children, and their
financial resources shape the children's future career options. Since this stage occurs prior to employment, it has least
relevance for the organization.
Exploration Establishment Mid-Career Late Career Decline
25 35 50 60 70
Stages in Career Development
Establishment stage
This stage begins with choosing a job, or say, career, for oneself. This stage is marked by the first experiences
on the job, acceptance and evaluation by peer groups. In this stage, one tries to make his/her mark and in the process
commits mistakes, learns from mistakes, and gradually assumes increased responsibilities. However, one does not
reach the summit or peak productivity at this stage. Putting it differently, this stage is like going uphill making lot of
efforts, spending lot of time and energy all the while.
Mid-Career Stage
This is a stage marked by improved performance, level off or starting deterioration. This is the stage when one
is no longer seen as a learner. Hence, mistakes committed are viewed seriously and invite serious penalties. At this
stage, some managers may feel platitude. Plateauing is a condition of stagnating in one's current job. In one case, an
executive at the age of 40 moved to journalism and was quite successful. Several such cases of career movement
abound in the society.
Late Career Stage
This stage is usually a pleasant stage for those who continued to grow during the midcareer stage. Based on
one's good performance during the earlier stage, one now enjoys playing the part of the elder statesman and command

8
respect from younger employees. During this stage, the people do not have to learn but to suggest and teach others
how Togo about with their jobs. But for those who have either stagnated or deteriorated during the mid-career stage,
the late career stage brings the reality for them that they are no longer required in the organization and therefore, it is
better for them to direct themselves to retire.
Decline Stage
This is the final stage in one's career to retire from one's job or career. Impending retirement scares everyone
but more to those who have sparkling career earlier. This is so because these persons have to step out of the limelight
and give up a major component of their identity. On the contrary, decline stage is less painful for modest performers
or failures. Their frustration associated with work is left behind.
TRAINING
Training is a process of learning a sequence of programmed behavior. It improves the employee's performance on the
current job and prepares them for an intended job.
Explain the Training Process?
Steps in Training Process:
Identifying Training needs: A training program is designed to assist in providing solutions for specific operational
problems or to improve performance of a trainee.
Organizational determination and Analysis: Allocation of resources that relate to organizational goal.
Operational Analysis: Determination of a specific employee behavior required for a particular task.
Man Analysis: Knowledge, attitude and skill one must possess for attainment of organizational objectives
Getting ready for the job: The trainer has to be prepared for the job. And also who needs to
be trained - the newcomer or the existing employee or the supervisory staff.
Preparation of the learner: Putting the learner at ease, Stating the importance and ingredients of the job, Creating
interest, Placing the learner as close to his normal working position, Familiarizing him with the equipment, materials and
trade terms
Presentation of Operation and Knowledge: The trainer should clearly tell, show, illustrate and question in order to
convey the new knowledge and operations.The trainee should be encouraged to ask questions in order to indicate that he
really knows and understands the job.
Performance Try out: The trainee is asked to go through the job several times. This gradually builds up his skill, speed
and confidence.
Follow-up: This evaluates the effectiveness of the entire training effort
What is the purpose of Training?
 To improve Productivity: Training leads to increased operational productivity and increased company profit.
 To improve Quality: Better trained workers are less likely to make operational mistakes.
 To improve Organizational Climate: Training leads to improved production and product quality which enhances financial
incentives. This in turn increases the overall morale of the organization.
 To increase Health and Safety: Proper training prevents industrial accidents.

9
 Personal Growth: Training gives employees a wider awareness, an enlarged skill base and that leads to enhanced
personal growth.
Discuss about the Training Methods?
Training methods can be broadly classified as on-the-job training and off-the-job training
a) On-the-job training
On the job training occurs when workers pick up skills whilst working along side experienced workers at their place of
work. For example this could be the actual assembly line or offices where the employee works. New workers may simply
"shadow" or observe fellow employees to begin with and are often given instruction manuals or interactive training
programmes to work through.
b)Off-the-job training
This occurs when workers are taken away from their place of work to be trained. This may take place at
training agency or Local College, although many larger firms also have their own training centers. Training can take the form of
lectures or self-study and can be used to develop more general skills and knowledge that can be used in a variety of situations.The
various types of off-the-job training are
 Instructor presentation: The trainer orally presents new information to the trainees, usually through lecture. Instructor
presentation may include classroom lecture, seminar, workshop, and the like.
 Group discussion: The trainer leads the group of trainees in discussing a topic.
 Demonstration: The trainer shows the correct steps for completing a task, or shows an
example of a correctly completed task.
 Assigned reading: The trainer gives the trainees reading assignments that provide new
information.
 Exercise: The trainer assigns problems to be solved either on paper or in real situations
related to the topic of the training activity.
 Case study: The trainer gives the trainees information about a situation and directs them to
come to a decision or solve a problem concerning the situation.
 Role play: Trainees act out a real-life situation in an instructional setting.
 Field visit and study tour: Trainees are given the opportunity to observe and interact with
the problem being solved or skill being learned.
PERFORMANCE APPRAISAL
Performance appraisal is the process of obtaining, analyzing and recording information about the relative worth of an
employee. The focus of the performance appraisal is measuring and improving the actual performance of the emplo yee and also
the future potential of the employee. Its aim is to measure what an employee does.
By means of human resource development activities, the manager develops the technical, managerial,
behavioral knowledge, skill ability and values, which are necessary to perform present and future role. The process of
performance appraisals helps the manager and management to know the actual performance level of manager when
compared to standard level. Performance appraisal is the basis of HRD based on which promotions demotion, salary
fixing etc. can be decided. It is the basis for the individual development.
State the objectives of Performance Appraisal?
Objectives of Performance appraisal:
• To review the performance of the employees over a given period of time.
• To judge the gap between the actual and the desired performance.
• To help the management in exercising organizational control.
• Helps to strengthen the relationship and communication between superior - subordinates and management - employees.
• To diagnose the strengths and weaknesses ofthe individuals so as to identify the training and development needs of the
future.
• To provide feedback to the employees regarding their past performance.
• Provide information to assist in the other personal decisions in the organization.
• Provide clarity of the expectations and responsibilities of the functions to be performed by the employees.
• To judge the effectiveness of the other human resource functions of the organization such as recruitment, selection,
training and development.
• To reduce the grievances of the employees.
Explain the Performance Appraisal Process?
Performance appraisal is planned, developed and implemented through a series of steps as shown in
the figure below:

10
Performance Appraisal Process
 Job analysis, Job Description and Job specification:
Performance appraisal is a process not to be taken in isolation of various human resources
functions. It begins with job analysis, job description and job specification. These help in establishing the
standard performance.
 Establishing standards of Performance
Appraisal systems require performance standards, which serve as benchmarks against which
performance is measured. These standards should with the supervisors to ensure that all the relevant
factors have been included. Where the output can be measured, the personal characteristics, which
contribute to employee performance, should be measured.
 Communicating Performance standards to employees
The performance standard specified above are to be communicated and explained to the
employees (both the appraiser and appraise) so that they come to know what is expected of them.
 Measuring actual performance
After the standards are communicated, the performance has to be measured. This can be done
through personal observation and written or oral reports from supervisors. The performance of different
employees should be so measured that it is comparable. Performance measures must be easy to use, be
reliable and report on the critical behaviors that determine performance.
 Comparing Actual with Standard performance
Once the performances have been measured, they have to be compared with the actual
performance standardssetpreviously. Actual performance may be better than expected and sometimes it
may go off track. Therefore,deviationsif anyhave tobe correctedwith stipulated and corrective measures.
 Initiating corrective actions, If necessary
The last step in the process is to initiate corrective action essential to improve the
performance of employees. The reasons for low performance should be probed, take the employee
into confidence and motivate him for better performance. Training, coaching, counseling are
examples of corrective measures that help to improve performance.
What are the Performance appraisal methods?
With the evolution and development of the appraisal system a number of methods or techniques of performance
appraisal have been developed. They can be classified as,
Traditional method

11
Modern method
Traditional method
1. Graphic rating scales
Individual performance is compared with the absolute standard. The judgment about the performance is
recorded on the scale. It is an oldest and frequently used method. The appraisers are supplied with printed forms one
for each. These forms contain a number of objectives, behavior taint and characters. These forms contain rating scales.
Points are given to each item and they are added up to find the overall performance. Managers are ranked
based on the total points they obtain and these are plotted in the graph.
2. Ranking method
The managers are ranked from best to worst based on some characteristics. The rater first finds the manager
with highest performance and the manager with lowest performance. Rates the former as the best and the later as poor.
Thus all the employees in a group are given ranks.
Ranking can be easy and inexpensive, but its reliability and validity may be open to doubt. It is possible that
low ranker in one group may turn to be superstar in another group. The limitation of the ranking method is that the
size of the difference between individual being ranked is not well defined.
3. Paired Comparison Method
This method is simple. Under this method the appraiser ranks the manager based on his performance in
comparing with all the others in the group one at a time. It will be effective if the numbers of managers are less. The
total number of comparison is given by the below formula:
N (N-1)/2
The limitation is that managers are simply compared with each other on the total performance rather than
specific job criteria.
4. Forced Distribution Method
It develops to prevent the rater from rating too high or too low. Under this method the rater after assigning the
points to the performance of each manager has to distribute the rating in a pattern to confirm frequency distribution. It
eliminates central tendency and leniency biases. This method is based on the rather questionable assumption that all
group of manager will have the same distribution of excellent, average and poor.
5. Check List Method
The checklist is a simple rating technique in which the supervisor is given a list of statements and is asked to
check if the statements represent the characteristics and performance of each manager. There are three types of
checklist
• Simple checklist
It consists of large number of statements and words. The raters are asked to mar positive or negative check. The
negative checks are neglected and the positive checks are counted. The limitation is that the raters may interpret the
statement and the word differently.
• Forced checklist
In this there are large numbers of statements in groups. Each group consists of 4 statements.2 are favorable and 2
are unfavorable, sometime 5 statements are given one is neutral. The rater has to select one from the favorable and one
from unfavorable. The weight-age for the statement is not shown to the rater. There is a mixture of the positive and
negative statements. Based upon the score they are ranked.
• Weighted checklist
The weighted checklist method involves weighting different items in the checklist, having a series of
statements about an individual, to indicate that some are more important than others. The rate is expected to look into
the questions relating to the employee's behavior and tick those traits that closely describe the employee behavior. In
this method, the performance ratings of the employee are multiplied by the weights of weighted performance score of
the employee. Weighted performance score is compared with the overall assessment standards in order to find out the
overall performance of the employee.
6. Critical Incident Method

12
The critical incidents method of employee assessment has generated a lot of interest these days. The approach
focuses on certain critical behaviors of an employee that make all the difference between effective and non-effective
performance of a job. The incidents are recorded as and when they occur.
7. Essay Appraisal Form
In this, the rate is asked to write an essay about the manager's strength and weakness. Based upon that they are
ranked. The major drawback of this method is that it is time consuming and subjective.
Modern Methods
1. BARS (Behaviorally Anchored Rating Scales)
The bars method combines elements of the traditional rating scales and critical incident method _ effective
and ineffective behaviors are described more objectively. The method employs individuals who are familiar with a
particular job to identify its major components. They then rank and validate specific behavior for each of the
components. The various steps involved in constructing BARS
Collect critical incidents
Identify performance dimensions
Reclassification of incidents.
Assigning scale values to the incidents
Producing the final instrument.
2. Assessment center
This method of appraising was first applied in German army in 1930.this is not a technique of performance by
itself. It uses procedures that incorporate group and individual exercises. These exercises are designed to simulate the
type of work, which the candidate will be expected to do. They participate in in-basket exercises, work groups,
computer simulations, role-playing and other similar activities. Their performance in the situational exercises is
observed and evaluated by a team of trained assessors.
3. Management by Objective
MBO requires the management to set specific, tangible and measurable goals with each manager and then
periodically discuss the latter's progress towards these goals. This technique emphasizes participative management
viz. goals that are agreed upon both by the managers and their superiors. It is a kind of goal setting and appraisal
program involving six steps,
Set Organizational goals
Set Departmental Goals
Discuss departmental goals
Define expected results
Performance reviews
Provide feedback
4. Psychological Appraisal
It is conducted to assess the employee's behavioral and psychological aspect. It consists of in-depth
interviews, psychological tests and discussion reviews. It is useful for decision making with regard to placement,
career planning and training of managers.
5. 360-Degree Feedback
Where multiple raters are involved in evaluating performance, the technique is called 360-degree appraisal.
The 360-degree technique is understood as systematic collection of performance data on an individual or group,
derived from a number of stakeholders. The stakeholders are the immediate supervisors, team members, customers,
peers, and self.
DIRECTING
Define Directing?
"Directing deals with the steps a manager takes to get sub-ordinates and others to carry out plans" - Newman and
Warren.

13
Directing concerns the total manner in which a manager influences the actions of subordinates. It is the final action of a
manager in getting others to act after all preparations have been completed. A
basic management function thatincludes building an effective work climate andcreating opportunity for moti
vation, supervising, scheduling, and disciplining.
MANAGING PEOPLE
Discuss on “Managing People”?
The world of work is changing. Outsourcing, International mobility, Talent shortages, New labour
laws, Globalization, Shifting demographics. An ageing workforce. Where, how, and for whom, people work
is, in turn, transforming company structures and cultures. Over the next decade, the convergence of
dominant business, demographic, and social trends will only accelerate the changes sweeping through
today’s workplace.
The human resource (HR) function is also changing and HR leaders are under more pressure than
ever to demonstrate results from their workforce practices and policies. Business leaders recognize the link
between business performance and the people within their organization. And they understand that people-
related issues need to be at the heart of the boardroom agenda. As a consequence, HR managers are being
encouraged to implement people strategies that support the organization’s business objectives and increase
accountability and transparency around people management and reporting.
The bottom line: HR is increasingly seen as a strategic linchpin—one that needs to work closely
with operations, finance, and other corporate departments to help drive business strategy and success. Every
day, managers meet a wide range of HR challenges, including:
 Attracting, motivating, and retaining employees
 HR benchmarking and measurement
 Employee benefits and compensation programs including pensions
 Executive compensation and HR governance
 Global work force mobility and expatriate planning
 Transaction-related human resource issues
 HR function effectiveness and service delivery
What is the scope of Directing?
Initiates action
Ensures coordination
Improves efficiency
Facilitates change
Assists stability and growth
State the elements of Directing?
The three elements of directing are
Motivation
Leadership
Communication
COMMUNICATION
Define Communication?
Communication is the exchange of messages between people for the purpose of achieving common meanings. Unless
common meanings are shared, managers find it extremely difficult to influence others. Whenever group of people interact,

14
communication takes place. Communication is the exchange of information using a shared set of symbols. It is the process that
links group members and enables themto coordinate their activities.
Therefore, when managers foster effective communication, they strengthen the connections between employees and build
cooperation. Communication also functions to build and reinforce interdependence between various parts of the organization. A s a
linking mechanism among the different organizational subsystems, communication is a central feature of the structure of groups
and organizations. It helps to coordinate tasks and activities within and between organizations.
According to Koontz and O'Donnell, "Communication, is an intercourse by words, letters symbols or messages, and is a
way that the organization members shares meaning and understanding with another".
Depict the Communication Process?
Communication is important in building and sustaining human relationships at work. Communication can be thought of
as a process or flow. Before communication can take place, a purpose, expressed as a message to be conveyed is needed. It passes
between the sender and the receiver. The result is transference of meaning from one person to another. The figure below depic ts
the communication process. This model is made up of seven parts: (1) Source, (2) Encoding, (3) Message, (4) Channel, (5)
Decoding, (6) Receiver, and (7) Feedback.
Communication Process
Source:
The source initiates a message. This is the origin of the communication and can be an individual, group or inanimate
object. The effectiveness of a communication depends to a considerable degree on the characteristics of the source. The perso n
who initiates the communication process is known as sender, source or communicator. In an organization, the sender will be a
person who has a need or desire to send a message to others. The sender has some information which he wants to communicate to
some other person to achieve some purpose. By initiating the message, the sender attempts to achieve und erstanding and change
in the behaviour of the receiver.
Encoding:
Once the source has decided what message to communicate, the content of the message must be put in a form the
receiver can understand. As the background for encoding information, the sender uses his or her own frame of reference. It
includes the individual's view of the organization or situation as a function of personal education, interpersonal relationsh ips,
attitudes, knowledge and experience. Three conditions are necessary for successful encoding the message.
Skill: Successful communicating depends on the skill you posses. Without the requisite skills, the message of the
communicator will not reach the requisite skills; the message of the communicator will not reach the receiver in the
desired form. One's total communicative success includes speaking, reading, listening and reasoning skills.
Attitudes: Our attitudes influence our behaviour. We hold predisposed ideas on a number of topics and our
communications are affected by these attitudes.
Knowledge: We cannot communicate what we don't know. The amount of knowledge the source holds about his or
her subject will affect the message he or she seeks to transfer.
The Message:

15
The message is the actual physical product from the source encoding. The message contains the thoughts and feelings
that the communicator intends to evoke in the receiver. The message has two primary components:-
• The Content: The thought or conceptual component of the message is contained in the words, ideas, symbols and
concepts chosen to relay the message.
• The Affect: The feeling or emotional component of the message is contained in the intensity, force, demeanour
(conduct or behaviour), and sometimes the gestures of the communicator.
The Channel:
The actual means by which the message is transmitted to the receiver (Visual, auditory, written or some combination of
these three) is called the channel. The channel is the medium through which the message travels. The channel is the observable
carrier of the message. Communication in which the sender's voice is used as the channel is called oral communication.
When the channel involves written language, the sender is using written communication. The sender's choice of a
channel conveys additional information beyond that contained in the message itself. For example, documenting an employee's
poor performance in writing conveys that the manager has taken the problemseriously.
Decoding:
Decoding means interpreting what the message means. The extent to which the decoding by the receiver depends heavily
on the individual characteristics of the sender and receiver. The greater the similarity in the background or status factors of the
communicators, the greater the probability that a message will be perceived accurately. Most messages can be decoded in more
than one way. Receiving and decoding a message are a type of perception. The decoding process is therefore subject to the
perception biases.
The Receiver:
The receiver is the object to whom the message is directed. Receiving the message means one or more of the receiver's
senses register the message - for example, hearing the sound of a supplier's voice over the telephone or seeing the boss give a
thumbs-up signal. Like the sender, the receiver is subject to many influences that can affect the understanding of the message.
Most important, the receiver will perceive a communication in a manner that is consistent with previous experiences.
Communications that are not consistent with expectations is likely to be rejected.
h) Feedback:
The final link in the communication process is a feedback loop. Feedback, in effect, is communication travelling in the
opposite direction. If the sender pays attention to the feedback and interprets it accurately, the feedback can help the send er learn
whether the original communication was decoded accurately. Without feedback, one-way communication occurs between
managers and their employees. Faced with differences in their power, lack of time, and a desire to save face by not passing o n
negative information, employees may be discouraged from providing the necessary feedback to their managers.
What are the guidelines for effective Communication?
Senders of message must clarify in their minds what they want to communicate. Purpose of the message an d making a
plan to achieve the intended end must be clarified.
Encoding and decoding be done with symbols that are familiar to the sender and the
receiver of the message.
For the planning of the communication, other people should be consulted and encouraged
to participate.
It is important to consider the needs of the receivers of the information. Whenever
appropriate, one should communicate something that is of value to them, in the short run as
well as in the more distant future.
In communication, tone of voice, the choice of language and the congruency between what
is said and how it is said influence the reactions of the receiver of the message.
Communication is complete only when the message is understood by the receiver. And one
never knows whether communication is understood unless the sender gets a feedback.
The function of communication is more than transmitting the information. It also deals with emotions that are very
important in interpersonal relationships between superiors, subordinates and colleagues in an organization.
Effective communicating is the responsibility not only of the sender but also of the receiver of the information.
HURDLES / BARRIERS TO EFFECTIVE COMMUNICATION
Barriers to communication are factors that block or significantly distort successful communication. Effective managerial
communication skills helps overcome some, but not all, barriers to communication in organizations. The more prominent barriers
to effective communication which every manager should be aware of is given below:
a) Filtering:
Filtering refers to a sender manipulating information so it will be seen more favorably by the receiver. The major
determinant of filtering is the number of levels in an organization's structure. The more vertical levels in the organizat ion's
hierarchy, the more opportunities for filtering.

16
Sometimes the information is filtered by the sender himself. If the sender is hiding some meaning and disclosing in such
a fashion as appealing to the receiver, then he is "filtering" the message deliberately. A manager in the process of altering
communication in his favor is attempting to filter the information.
b) Selective Perception:
Selective perception means seeing what one wants to see. The receiver, in the communication process, generally reso rts
to selective perception i.e., he selectively perceives the message based on the organizational requirements, the needs and
characteristics, background of the employees etc. Perceptual distortion is one of the distressing barriers to the effective
communication. People interpret what they see and call it a reality. In our regular activities, we tend to see those things that p lease
us and to reject or ignore unpleasant things.
Selective perception allows us to keep out dissonance (the existence of conflicting elements in our perceptual set) at a
tolerable level. If we encounter something that does not fit out current image of reality, we structure the situation to minimize our
dissonance. Thus, we manage to overlook many stimuli from the environment that do not fit into out current perception of the
world. This process has significant implications for managerial activities. For example, the employment interviewer who expec ts a
female job applicant to put her family ahead of her career is likely to see that in female applicants, regardless of whether the
applicants feel that way or not.
c) Emotions:
How the receiver feels at the time of receipt of information influences effectively how he interprets the information. For
example, if the receiver feels that the communicator is in a jovial mood, he interprets that the information being sent by the
communicator to be good and interesting. Extreme emotions and jubilation or depression are quite likely to hinder the
effectiveness of communication.
A person's ability to encode a message can become impaired when the person is feeling strong emotions. For example,
when you are angry, it is harder to consider the other person's viewpoint and to choose words carefully. The angrier you are, the
harder this task becomes. Extreme emotions - such as jubilation or depression - are most likely to hinder effective communication.
In such instances, we are most prone to disregard our rational and objective thinking processes and substitute emotional
judgments.
d) Language:
Communicated message must be understandable to the receiver. Words mean different things to different people.
Language reflects not only the personality of the individual but also the culture of society in which the individual is livin g. In
organizations, people from different regions, different backgrounds, and speak different languages. People will have different
academic backgrounds, different intellectual facilities, and hence the jargon they use varies.
Often, communication gap arises because the language the sender is using may be incomprehensible, vague and
indigestible. Language is a central element in communication. It may pose a barrier if its use obscures meaning and distorts intent.
Words mean different things to different people. Age, education and cultural background are three of the more obvious variables
that influence the language a person uses and the definitions he or she gives to words. Therefore, use simple, direct, declarative
language.
Speak in brief sentences and use terms or words you have heard from you audience. As much as possible, speak in the
language of the listener. Do not use jargon or technical language except with those who clearly understand it.
e) Stereotyping:
Stereotyping is the application of selective perception. When we have preconceived ideas about other people and refuse
to discriminate between individual behaviors, we are applying selective perception to our relationship with other people.
Stereotyping is a barrier to communications because those who stereotype others use selective perception in their communication
and tend to hear only those things that confirmtheir stereotyped images. Consequently, stereotypes become more deeply ingrained
as we find more "evidence" to confirm our original opinion. Stereotyping has a convenience function in our interpersonal
relations. Since people are all different, ideally we should react and interact with each person differently. To do this, however,
requires considerable psychological effort. It is much easier to categorize (stereotype) people so that we can interact with themas
members of a particular category. Since the number of categories is small, we end up treating many people the same even thoug h
they are quite different. Our communications, then, may be directed at an individual as a member of a category at the sacrifice of
the more effective communication on a personal level.
f) Status Difference:
The organizational hierarchy pose another barrier to communication within organization, especially when the
communication is between employee and manager. This is so because the employee is dependent on the manager as the primary
link to the organization and hence more likely to distort upward communication than either horizontal or downward
communication.
Effective supervisory skills make the supervisor more approachable and help reduce the risk of problems related to
status differences. In addition, when employees feel secure, they are more likely to be straightforward in upward communication.
g)Use of Conflicting Signals:
A sender is using conflicting signals when he or she sends inconsistent messages. A vertical message might conflict with
a nonverbal one. For example, if a manager says to his employees, "If you have a problem, just come to me. My door is always
open", but he looks annoyed whenever an employee knocks on his door". Then we say the manager is sending conflicting
messages. When signals conflict, the receivers of the message have to decide which, if any, to believe.

17
h) Reluctance to Communicate:
For a variety of reasons, managers are sometimes reluctant to transmit messages. The reasons could be:-
• They may doubt their ability to do so.
• They may dislike or be weary of writing or talking to others.
• They may hesitate to deliver bad news because they do not want to face a negative reaction.
When someone gives in to these feelings, they become a barrier to effective communications.
i) Projection:
Projection has two meanings:
 Projecting one's own motives into others behavior. For example, managers who are motivated by money may assume
their subordinates are also motivated by it. If the subordinate's prime motive is something other than money, serious
problems may arise.
 The use of defense mechanism to avoid placing blame on oneself. As a defense mechanism, the projection phenomenon
operates to protect the ego from unpleasant communications. Frequently, individuals who have a particular fault will see
the same fault in others, making their own fault seem not so serious.
j) The "Halo Effect":
The term "halo effect" refers to the process of forming opinions based on one element from a group of elements and
generalizing that perception to all other elements. For example, in an organization, a good attendance record may cause posit ive
judgments about productivity, attitude, or quality of work. In performance evaluation system, the halo effect refers to the practice
of singling out one trait of an employee (either good or bad) and using this as a basis for judgments of the total employee.
What are the Channels of Communication?
a) Formal Communication
Formal communication follows the route formally laid down in the organization structure. There are three directions in
which communications flow: downward, upward and laterally (horizontal).
Downward Communication
Downward communication involves a message travelling to one or more receivers at the lower level in the hierarchy. The
message frequently involves directions or performance feedback. The downward flow of communication generally corresponds to
the formal organizational communications system, which is usually synonymous with the chain of command or line of authority.
This system has received a great deal of attention fromboth managers and behavioral scientists since it is crucial to organizational
functioning.
Upward Communication
In upward communication, the message is directed toward a higher level in the hierarchy. It is often takes the form of
progress reports or information about successes and failures of the individuals or work groups reporting to the receiver of t he
message. Sometimes employees also send suggestions or complaints upward through the organization's hierarchy. The upward
flow of communication involves two distinct manager-subordinate activities in addition to feedback:
• The participation by employees in formal organizational decisions.
• Employee appeal is a result against formal organization decisions. The employee appeal is a result of the industrial
democracy concept that provides for two-way communication in areas of disagreement.
Horizontal Communication
When takes place among members of the same work group, among members of work groups at the same level, among
managers at the same level or among any horizontally equivalent personnel, we describe it as lateral communications. In lateral
communication, the sender and receiver(s) are at the same level in the hierarchy. Formal communications that travel laterally
involve employees engaged in carrying out the same or related tasks. The messages might concern advice, problem solving, or
coordination of activities.
b) Informal Communication or Grapevine
Informal communication, generally associated with interpersonal communication, was primarily seen as a potential
hindrance to effective organizational performance. This is no longer the case. Informal communication has become more
important to ensuring the effective conduct of work in modern organizations.
Probably the most common term used for the informal communication in the workplace is "grapevine" and this
communication that is sent through the organizational grapevine is often considered gossip or rumor. While grapevine
communication can spread information quickly and can easily cross established organizational boundaries, the information it
carries can be changed through the deletion or exaggeration crucial details thus causing the information inaccurate - even if it's
based on truth.
The use of the organizational grapevine as an informal communication channel often results when employees feel
threatened, vulnerable, or when the organization is experiencing change and when communication from management is restricted
and not forthcoming.

18
ORGANIZATIONAL CULTURE
What is Organizational Culture?
Organizational culture is an idea in the field of organizational studies and management which describes the
psychology, attitudes, experiences, beliefs and values (personal and cultural values) of an organization. It has been defined as "the
specific collection of values and norms that are shared by people and groups in an organization and that control the way they
interact with each other and with stakeholders outside the organization."
ELEMENTS OF ORGANIZATIONAL CULTURE
State the Elements of Organizational Culture?
Johnson and Scholes described a cultural web, identifying a number of elements that can be used to describe or influence
Organizational Culture:
The six elements are:
Stories: The past events and people talked about inside and outside the company. Who and what the company
chooses to immortalize says a great deal about what it values, and perceives as great behavior.
Rituals and Routines: The daily behavior and actions of people that signal acceptable behavior. This
determines what is expected to happen in given situations, and what is valued by management.
Symbols: The visual representations of the company including logos, how plush the offices are, and the formal
or informal dress codes.
Organizational Structure: This includes both the structure defined by the organization chart, and the unwritten
lines of power and influence that indicate whose contributions are most valued.
Control Systems: The ways that the organization is controlled. These include financial systems, quality
systems, and rewards (including the way they are measured and distributed within the organization.)
Power Structures: The pockets of real power in the company. This may involve one or two key senior
executives, a whole group of executives, or even a department. The key is that these people have the greatest
amount of influence on decisions, operations, and strategic direction.
Explain the Types of Organizational Culture?
Deal and Kennedy argue organizational culture is based on based on two elements:
 Feedback Speed: How quickly are feedback and rewards provided (through which the people are told they are doing a
good or a bad job).
 Degree of Risk: The level of risk taking (degree of uncertainty).
The combination of these two elements results in four types of corporate cultures:
Tough-Guy Culture or Macho Culture (Fast feedback and reward, high risk):
• Stress results from the high risk and the high potential decrease or increase of the reward.
• Focus on now, individualism prevails over teamwork.
• Typical examples: advertising, brokerage, sports.
The most important aspect of this kind of culture is big rewards and quick feedback. This kind of culture is mostly
associated with quick financial activities like brokerage and currency trading. It can also be related with activities, like a sports

19
team or branding of an athlete, and also the police team. This kind of culture is considered to carry along, a high amount of stress,
and people working within the organization are expected to possess a strong mentality, for survival in the organization.
Work Hard/Play Hard (Fast feedback and reward, low risk):
• Stress results from quantity of work rather than uncertainty.
• Focus on high-speed action, high levels of energy.
• Typical examples: sales, restaurants, software companies.
This type of organization does not involve much risk, as the organizations already consist of a firm base along with a
strong client relationship. This kind of culture is mostly opted by large organizations which have strong customer service. The
organization with this kind of culture is equipped with specialized jargons and is qualified with multiple team meetings.
Bet Your Company Culture (Slow feedback and reward, high risk):
• Stress results from high risk and delay before knowing if actions have paid off.
• Focus on long-term, preparation and planning.
• Typical examples: pharmaceutical companies, aircraft manufacturers, oil prospecting companies.
In this kind of culture, the company makes big and important decisions over high stakes endeavors. It takes time to see
the consequence of these decisions. Companies that postulate experimental projects and researches as their core business, ado pt
this kind of culture. This kind of culture can be adopted by a company designing experimental military weapons for example.
Process Culture (Slow feedback and reward, low risk):
• Stress is generally low, but may come from internal politics and stupidity of the system.
• Focus on details and process excellence.
• Typical examples: bureaucracies, banks, insurance companies, public services.
This type of culture does not include the process of feedback. In this kind of culture, the organization is extremely
cautious about the adherence to laws and prefer to abide by them. This culture provides consistency to the organization and is
good for public services. One of the most difficult tasks to undertake in an organization, is to change its work culture.
An organizational culture change requires an organization to make amendments to its policies, its workplace ethics and
its management system. It needs to start right from its base functions which includes support functions, operations and the
production floor, which finally affects the overall output of the organization. It requires a complete overhaul of the entire system,
and not many organizations prefer it as the process is a long and tedious one, which requires patience and endurance. However,
when an organization succeeds in making a change on such a massive level, the results are almost always positive and fruitful.
The different types of organizational cultures mentioned above must have surely helped you to understand them. You can also
adopt one of themfor your own organization, however, persistence and patience is ultimately of the essence.
MANAGING CULTURAL DIVERSITY
How to manage Cultural Diversity?
Experts indicate that business owners and managers who hope to create and manage an effective, harmonious
multicultural work force should remember the importance of the following:
• Setting a good example—This basic tool can be particularly valuable for small business owners who hope to establish a
healthy environment for people of different cultural backgrounds, since they are generally able to wield significant control
over the business's basic outlook and atmosphere.
• Communicate in writing—Company policies that explicitly forbid prejudice and discriminatory behavior should be included
in employee manuals, mission statements, and other written communications. Jorgensen referred to this and other similar
practices as "internal broadcasting of the diversity message in order to create a common language for all members of the
organization."
• Training programs—Training programs designed to engender appreciation and knowledge of the characteristics and benefits
of multicultural work forces have become ubiquitous in recent years. "Two types of training are most popular: awareness and
skill-building," wrote Cox. "The former introduces the topic of managing diversity and generally includes information on
work force demographics, the meaning of diversity, and exercises to get participants thinking about relevant issues and raising
their own self-awareness.
The skill-building training provides more specific information on cultural norms of different groups and how they may
affect work behavior." New employee orientation programs are also ideal for introducing workers to the company's
expectations regarding treatment of fellow workers, whatever their cultural or ethnic background.
• Recognize individual differences—Writing in The Complete MBA Companion, contributor Rob Goffee stated that "there
are various dimensions around which differences in human relationships may be understood. These include such factors as

20
orientation towards authority; acceptance of power inequalities; desire for orderliness and structure; the need to belong to a
wider social group and so on. Around these dimensions researchers have demonstrated systematic differences between
national, ethnic, and religious groups."
Yet Goffee also cautioned business owners, managers, and executives to recognize that differences between individuals
can not always be traced back to easily understood differences in cultural background: "Do not assume differences are always
'cultural.' There are several sources of difference. Some relate to factors such as personality, aptitude, or competence. It is a
mistake to assume that all perceived differences are cultural in origin. Too many managers tend to fall back on the easy
'explanation' that individual behavior or performance can be attributed to the fact that someone is 'Italian' or 'a Catholic' or 'a
woman.' Such conclusions are more likely to reflect intellectually lazy rather than culturally sensitive managers."
• Actively seek input from minority groups—Soliciting the opinions and involvement of minority groups on important work
committees, etc., is beneficial not only because of the contributions that they can make, but also because such overtures
confirm that they are valued by the company. Serving on relevant committees and task forces can increase their feelings of
belonging to the organization. Conversely, relegating minority members to superfluous committees or projects can trigger a
downward spiral in relations between different cultural groups.
• Revamp reward systems—An organization's performance appraisal and reward systems should reinforce the importance of
effective diversity management, according to Cox. This includes assuring that minorities are provided with adequate
opportunities for career development.
• Make room for social events—Company sponsored social events—picnics, softball games, volleyball leagues, bowling
leagues, Christmas parties, etc.—can be tremendously useful in getting members of different ethnic and cultural backgrounds
together and providing themwith opportunities to learn about one another.
• Flexible work environment—Cox indicated that flexible work environments—which he characterized as a positive
development for all workers—could have particularly "beneficial to people from nontraditional cultural backgrounds because
their approaches to problems are more likely to be different from past norms."
• Don't assume similar values and opinions—Goffee noted that "in the absence of reliable information there is a well-
documented tendency for individuals to assume that others are 'like them.' In any setting this is likely to be an inappropriate
assumption; for those who manage diverse work forces this tendency towards 'cultural assimilation' can prove particularly
damaging."
• Continuous monitoring—Experts recommend that business owners and managers establish and maintain systems that can
continually monitor the organization's policies and practices to ensure that it continues to be a good environment for all
employees.
"The multicultural organization is characterized by pluralism, full integration of minority-culture members both formally and
informally, an absence of prejudice and discrimination, and low levels of inter-group conflict.... The organization that achieves
these conditions will create an environment in which all members can contribute to their maximum potential, and in which the
'value in diversity ' can be fully realized."
References:
1. Management by Harold Koontz, Cyril O'Donnell and Heinz Weihrich
2. Principles of management by R. K. Sharma & Shashi.K. Gupta
----------------------------------------------------------------------------------------------------------------------------------

pom.doc

More Related Content

Similar to pom.doc (20)

More from jeebala (7)

Recently uploaded (20)

pom.doc