PRINCIPLES OF MANAGEMENT Q3. More centralization and decentralization are not advisable-do you agree or disagree? Justify.

Suggest when and where these two conce ts effectively in cor orate. !nswer" Centralisation is the rocess by which the activities of an organisation# articularly those regarding lanning and decision-$a%ing# beco$e concentrated within a articular location and&or grou . '( %ee ing all of the i$ ortant decision$a%ing owers within head office or the center of the organisation. Advantages of Centralisation

)ffective utilisation of talents of the to $anage$ent. *t reduces co-ordination roble$s as a unifying force integrates all o erations. *t allows the develo $ent of a strong co-ordinates to $anage$ent tea$. +here is unifor$ity of olicies and lans across the organisation. ,entralisation organisations are best suited where resources and infor$ation has to $ove swiftly# es ecially in e$ergencies. -u lication of functions and facilities is $ini$ised which in turn reduces costs. -ue to the fact that all decisions are $ade at the to it $ight result in delays in decision-$a%ing and co$$unication. ,entralised ower and authority $ight be abused. -oesn.t give an o s%ills. ortunity to lower level $anagers&su ervisors to develo their $anagerial

,entralised organisation faces the roble$ of lower $otivation levels a$ong wor%force. +he success of organisation de ends on the co$ etence of to e/ecutives which $ight be 0uite ris%y.

Disadvantages of Centralisation

-ue to the fact that all decisions are $ade at the to it $ight result in delays in decision-$a%ing and co$$unication. ,entralised ower and authority $ight be abused. -oesn.t give an o s%ills. ortunity to lower level $anagers&su ervisors to develo their $anagerial

,entralised organisation faces the roble$ of lower $otivation levels a$ong wor%force. +he success of organisation de ends on the co$ etence of to e/ecutives which $ight be 0uite ris%y.

Decentralisation *n a decentralised structure# decision-$a%ing is s read out to include $ore 1unior $anagers in the hierarchy# as well as individual business units or trading locations. 2ood e/a$ les of businesses which use a decentralised structure include the $a1or su er$ar%et chains li%e 3M Morrison and +esco. )ach su er$ar%et has a store $anager who can $a%e certain decisions concerning areas li%e staffing# sales ro$otions. +he store $anager is res onsible to a regional or area $anager. 4otel chains are articularly %een on using decentralised structures so that local hotel $anagers are e$ owered to $a%e on-the-s ot decisions to handle custo$er roble$s or co$ laints. Advantages of Decentralisation

-ecentralisation reduces the wor%load of to e/ecutives. *t i$ roves 1ob satisfaction and $orale of lower level $anagers by satisfying their needs for inde endence# artici ation and status. -ecision $a%ing is 0uic%er. *t facilitates growth and diversification. !s each roduct division is given sufficient autono$y for innovation and creativity. *t gives o ortunity to subordinates to e/ercise their own 1udg$ent. +hey develo $anagerial s%ills which will be useful to the organisation in the longer run. -ecentralisation re0uires wider s an of control and fewer levels of organisation. *t s eeds u co$$unication. -ecentralisation increases the ad$inistrative e/ enses and each division or de art$ent has to be sufficient in ter$s of hysical facilities and trained ersonnel. !s each de art$ent or division en1oys substantial autono$y it $ight lead to co-ordination roble$s. +here $ight be lac% of unifor$ity and inconsistent rocedures as each de art$ent $ight have the authority to for$ulate its own olicies and rocedures.

Disadvantages of Decentralisation

-ecentralisation increases the ad$inistrative e/ enses and each division or de art$ent has to be sufficient in ter$s of hysical facilities and trained ersonnel. !s each de art$ent or division en1oys substantial autono$y it $ight lead to co-ordination roble$s. +here $ight be lac% of unifor$ity and inconsistent rocedures as each de art$ent $ight have the authority to for$ulate its own olicies and rocedures.

Centralization And Perfor ance 'ne of the core functions for ublic $anagers is the creation of a ro riate structures that can rovide syste$ stability and institutional su ort for a host of other internal organizational ele$ents# such as values and routines. +he degree to which decision-$a%ing is centralized or decentralized is a %ey

indicator of the $anner in which an organization allocates resources and deter$ines olicies and ob1ectives. *t is# $oreover# an issue that has long been recognized as a critical area of research on organizational structure. 5or organizational theorists# the relative degree of centralization within an organization is signified by the hierarchy of authority and the degree of artici ation in decision$a%ing# as these as ects of structure reflect the distribution of ower across the entire. *ndeed# a large nu$ber of studies of organizational structure in the ublic# rivate and non rofit sectors $easure the e/tent of centralization by assessing both of these di$ensions of centralization. 4ierarchy of authority refers to the e/tent to which the ower to $a%e decisions is e/ercised at the u er levels of the organizational hierarchy# while artici ation in decision-$a%ing ertains to the degree of staff involve$ent in the deter$ination of organizational olicy. ! centralized organization will ty ically have a high degree of hierarchical authority and low levels of artici ation in decisions about olicies and resources6 while a decentralized organization will be characterized by low hierarchical authority and highly artici ative decision-$a%ing. +hus# where only one or a few individuals $a%e decisions# an organizational structure $ay be described as highly centralized. 7y contrast# the least centralized organizational structure ossible is one in which all organization $e$bers are res onsible for and involved in decision-$a%ing. Decentralisation! *s decentralization good for natural resource use and $anage$ent? +heories tell us that decentralization can lead to a nu$ber of ositive outco$es 8Schults and 9agh$our# :;;<=. So$e of these ositive outco$es include de$ocratisation and artici ation# rural develo $ent# ublic service erfor$ance and overty alleviation. Most of the local benefits fro$ decentralization are believed to co$e fro$ increased o ular artici ation# which in turn# leads to increases in de$ocracy# efficiency and e0uity 8!grawal and (ibot# >??? and (ibot# :;;:=. @i%e decentralization advocates# natural rersources theorists and ractitioners also e$ hasize the need for local artici ation as a $eans for increasing $anage$ent effectiveness and e0uity 8Schults and 9agh$our# :;;<= *t is i$ ortant to note that the conce ts and theories of decentralization have also been evolving with challenges they face throughout the world. +he $odern case for decentralized govern$ent is well re resented by 3ol$an 8in 7ennet# >??;=. 3ol$an grou s his argu$ents concerning decentralization under two $ain headings" )fficiency Aalues and 2overnance Aalues. )fficiency Aalues co$ rise the ublic choice 1ustification for decentralization# where efficiency is understood as the $a/i$ization of social welfare. 2overnance Aalues co$ rise 3ol$anBs second grou ing# in which he includes" 8i= res onsiveness and accountability# 8ii= diversity# and 8iii= olitical artici ation. +he first values# res onsiveness and accountability# are the $ost i$ ortant of these and co$ rise the olitical arallel to the argu$ent about efficiency detailed above. +he three $a1or for$s of ad$inistrative decentralization -- deconcentration# delegation# and devolution -each have different characteristics. Deconcentration" -econcentration --which is often considered to be the wea%est for$ of decentralization and is used $ost fre0uently in unitary states-- redistributes decision $a%ing authority and financial and $anage$ent res onsibilities a$ong different levels of the central govern$ent. *t can $erely shift res onsibilities fro$ central govern$ent officials in the ca ital city to those wor%ing in regions# rovinces or districts# or it can create strong field ad$inistration or local ad$inistrative ca acity under the su ervision of central govern$ent $inistries.

Delegation" -elegation is a $ore e/tensive for$ of decentralization. +hrough delegation central govern$ents transfer res onsibility for decision-$a%ing and ad$inistration of ublic functions to se$iautono$ous organizations not wholly controlled by the central govern$ent# but ulti$ately accountable to it. 2overn$ents delegate res onsibilities when they create ublic enter rises or cor orations# housing authorities# trans ortation authorities# s ecial service districts# se$i-autono$ous school districts# regional develo $ent cor orations# or s ecial ro1ect i$ le$entation units. Csually these organizations have a great deal of discretion in decision-$a%ing. +hey $ay be e/e$ t fro$ constraints on regular civil service ersonnel and $ay be able to charge users directly for services. Devol#tion" ! third ty e of ad$inistrative decentralization is devolution. 3hen govern$ents devolve functions# they transfer authority for decision-$a%ing# finance# and $anage$ent to 0uasi-autono$ous units of local govern$ent with cor orate status. -evolution usually transfers res onsibilities for services to $unici alities that elect their own $ayors and councils# raise their own revenues# and have inde endent authority to $a%e invest$ent decisions. *n a devolved syste$# local govern$ents have clear and legally recognized geogra hical boundaries over which they e/ercise authority and within which they erfor$ ublic functions. *t is this ty e of ad$inistrative decentralization that underlies $ost olitical decentralization. More centralization and decentralization will either increase the burden of the $anage$ent or reduce the $onitoring source of the $anage$ent. +o e0ual distribution should be $aintained. 'rganisations should follow a well established structure so as to %ee both centralization and decentralization on trac% and a ly whenever and wherever necessary. +his will hel to $anage$ent to have a better trac% record a$ong their e$ loyees and also ensure artici ation of the $anage$ent.

Q<. M7' is a $otivating factor or controlling techni0ue. ,ritically evaluate this state$ent. ,o$ are contrast between M7' and M7). !nswer" Manage ent $% o$&ectives 8M'O=# also %nown as anage ent $% res#lts 8M'R=# is a rocess of defining ob1ectives within an organization so that $anage$ent and e$ loyees agree to the ob1ectives and understand what they need to do in the organization in order to achieve the$. +he ter$ D$anage$ent by ob1ectivesD was first o ularized by Eeter -ruc%er in his >?F< boo% The Practice of Management. +he essence of M7' is artici ative goal setting# choosing course of actions and decision $a%ing. !n i$ ortant art of the M7' is the $easure$ent and the co$ arison of the e$ loyee.s actual erfor$ance with the standards set. *deally# when e$ loyees the$selves have been involved with the goal setting and choosing the course of action to be followed by the$# they are $ore li%ely to fulfill their res onsibilities. (ni)#e feat#res and advantages of t*e M'O +rocess 7ehind the rinci le of Manage$ent by 'b1ectives 8M7'= is for e$ loyees to have a clear understanding of the roles and res onsibilities e/ ected of the$. +hen they can understand how their activities relate to the achieve$ent of the organizationBs goal. !lso laces i$ ortance on fulfilling the ersonal goals of each e$ loyee.

So$e of the i$ ortant features and advantages of M7' are" >. Motivation G *nvolving e$ loyees in the whole rocess of goal setting and increasing e$ loyee e$ ower$ent. +his increases e$ loyee 1ob satisfaction and co$$it$ent. :. 7etter co$$unication and coordination G 5re0uent reviews and interactions between su eriors and subordinates hel s to $aintain har$onious relationshi s within the organization and also to solve $any roble$s. 3. ,larity of goals <. Subordinates tend to have a higher co$$it$ent to ob1ectives they set for the$selves than those i$ osed on the$ by another erson. F. Managers can ensure that ob1ectives of the subordinates are lin%ed to the organizationBs ob1ectives. H. ,o$$on goal for whole organization $eans it is a directive rinci le of $anage$ent. Ste+s In Manage ent '% O$&ectives Planning !, >. 2oal setting" +he first hase in the M7' rocess is to define the organizational ob1ectives. +hese are deter$ined by the to $anage$ent and usually in consultation with other $anagers. 'nce these goals are established# they should be $ade %nown to all the $e$bers. *n setting ob1ectives# it is necessary to identify DIey-(esult !reasB 8I(!=. :. Manager-Subordinate involve$ent" !fter the organizational goals are defined# the subordinates wor% with the $anagers to deter$ine their individual goals. *n this way# everyone gets involved in the goal setting. 3. Matching goals and resources" Manage$ent $ust ensure that the subordinates are rovided with necessary tools and $aterials to achieve these goals. !llocation of resources should also be done in consultation with the subordinates. <. *$ le$entation of lan" !fter ob1ectives are established and resources are allocated# the subordinates can i$ le$ent the lan. *f any guidance or clarification is re0uired# they can contact their su eriors. F. (eview and a raisal of erfor$ance" +his ste involves eriodic review of rogress between $anager and the subordinates. Such reviews would deter$ine if the rogress is satisfactory or the subordinate is facing so$e roble$s. Eerfor$ance a raisal at these reviews should be conducted# based on fair and $easurable standards. 7asic rinci les of M7'" >. ,larification of organizational ob1ective. :. S ecific ob1ective to each $e$ber. 3. Eartici ative decision $a%ing. <. )/ licit ti$e eriod. F. Eerfor$ance evaluation and feedbac%.

-or./ Res+onsi$ilit% and Delegation *t $ay be difficult for you and your $anagers to let go of ortions of the decision-$a%ing ower G and es ecially so for $any owners of s$all businesses. *t is necessary to achieve a fine balance. 9ou should retain o erating control so that the business can continue to run s$oothly without your being resent. !t the sa$e ti$e# you should delegate sufficient res onsibility and concurrent authority to subordinates so that the business functions s$oothly on a day-to-day basis and subordinates feel that they are art of your business. +he roble$ of delegation re0uires consideration of several i$ ortant factors. 87ruce and (obert# :;;J= 01 It is ost i +ortant for %o# and %o#r anagers to $e a2are of t*e $#siness goals and see t*at t*e% are $eing et" +his i$ lies the necessity for develo ing controls and a syste$ to rovide accurate feedbac% of infor$ation. 5eedbac% $ust be ti$ely so that corrective action can be ta%en before a situation gets out of control. 9ou $ust orient yourself to $anage$ent by e/ce tion and to lanning and control. 8Ioontz#'B-onnell# and 3eihrich# :;;K= 31 S#fficient a#t*orit% s*o#ld $e delegated to get t*e &o$ done/ to allo2 .e% e +lo%ees to ta.e initiative/ and to .ee+ o+erations oving in %o#r a$sence" 3hen delegating res onsibility# it also is necessary to delegate sufficient authority to do the 1ob. 4ence# the li$its of authority should be clearly definedGes ecially in those areas involving e/ enditures of funds 8a roving overti$e and $a%ing urchases=. 41 5o# and %o#r anagers cannot $eco e involved in details at all levels of t*e o+eration" +here are not sufficient hours in the day. 9ou $ust s end $uch ti$e in lanning and seeing that the lans are $et. 9ou need to have de endable hel to attend to the details. 9ou $a%e sure they are acco$ lished# but let others to do the wor%. 8Mannan# :;;?= 61 T*e $est anagers are not necessaril% t*e $est teac*ers" Managing $ay so$eti$es involve instruction and coaching# but the best $anagers tell e$ loyees what to do and when to do it# not how. 2ood $anagers are good score%ee ers# but they need not be good teachers. 9ou $ust learn to %ee scoreG to see who is erfor$ing# who is $a%ing the rofits for you. 71 T*ere is no 8$est9 anage ent s%ste " 'ne style $ay wor% well for you# but not for your subordinates. 2ood $anagers do not i$ ose $anage$ent styles or 1udge erfor$ance on whether the 1ob was done the way the $anager would have done it. (esults# in ter$s of rofitable out ut# are the goals worth $easuring and rewarding. :1 C*annel %o#r energies to eet %o#r a$ilities/ $#t .ee+ score on ever% activit%" )ach of us has s ecial interests and abilities. 9ou should ca italize on these as a $anager and let your subordinates do the sa$e. 4owever# if your flair is for $ar%eting and you# therefore# elect to delegate financial duties# it is absolutely necessary for you to establish financial control syste$s that you understand co$ letely and can $onitor fre0uently. +he reverse is also true# if finance is your ri$ary interest. -elegation need not i$ ly loss of ulti$ate res onsibility. 8,arnegie# :;;H= ;1 T*ose +ersons to 2*o %o# delegate res+onsi$ilit% and a#t*orit% #st $e .no2ledgea$le and co +etent in t*e tec*nical area for 2*ic* %o# *old t*e acco#nta$le . !lso# they $ust be honestG ersons of integrity. 'ther 0ualities of i$ ortance include initiative# interest# self-$otivation# i$agination# drive# and decisiveness. ,hoose $anagers with these ri$ary 0ualities in $ind. <1 Managers #st $e anagers" So$e $anagers will avoid $a%ing decisions by bringing roble$s to you. *n fact# so$e eo le dee their 1obs by always being at the center of a crisis and thereby getting attention. 'ne way to sto this is to re0uire a $anager to rovide three feasible alternate solutions to any roble$ he or she brings to you. +his# at $ini$u$ assures you that the roble$ will be well thought out# and usually solved# before reaching you. 9ou want the eo le who wor% for you to bring you solutions# not roble$s. =1 Peo+le li.e to .no2 e>actl% 2*at is e>+ected of t*e " ,onse0uently# it is every i$ ortant for you to re are a list of 1ob duties for each erson and es ecially for $anagers# which clearly defines his or her area of control and authority. Ere aration of these osition descri tions has an added advantage of hel ing you to avoid overla s. *t will aid you in coordination of all 1ob activities and thereby increase

roductivity. +here should be no doubt as to who is res onsible for s ecific 1obs and who should ta%e corrective action if it is necessary. 85ried$ann# J.# :;;F= 0?1 A +ri ar% res+onsi$ilit% of ever% anager is to train *is or *er re+lace ent" +his rocess should start at the ti$e a $anager is laced in a osition. !t any ti$e there should be at least one erson trained to ta%e over each $anager.s osition# and that $ust include your own. +his ongoing training avoids crises and Eer$its $anagerial fle/ibility and growth. +he list of ossible re lace$ents for each 1ob should be %e t in a ersonnel file# as well as *n the 7usiness Elan Eersonnel Section# and should be u dated annually. 83eihrich# 4.# and 7uhler# -.# :;;?= 001 Good co #nication@$ot* *orizontal and vertical @ is essential to %o#r $#siness" 7oth 5acts and the thin%ing of you and your e$ loyee $ust be conveyed. 5eedbac% is essential if you are to be a good record-%ee er# and one ri$ary characteristic of a good $anager is the ability to listen. 8+aylor# S.# :;;F= -elegate while retaining o erating control. Iee score on everything. Measure rofit fre0uently. 4old your $anagers accountable for rofits. Ma%e your $anagers $anageGdon.t do their wor%. Manage ent $% E>ce+tion is a style of business $anage$ent that focuses on identifying and handling cases that deviate fro$ the nor$. Manage$ent by e/ce tion has both a general business a lication and a business intelligence a lication. 2eneral business e/ce tions are cases that deviate fro$ the nor$al behavior in a business rocess and need to be cared for in a uni0ue $anner# ty ically by hu$an intervention. +heir cause $ight include" rocess deviation# infrastructure or connectivity issues# e/ternal deviation# oor 0uality business rules# $alfor$ed data# etc. Manage$ent by e/ce tion here is the ractice of investigating# resolving and handling such occurrences by using s%illed staff and software tools. 2ood $anage$ent can contribute to efficiency of business rocesses. 'ften in these cases the rocess will be called e/ce tion $anage$ent# as e/ce tional cases are not the sole focus of the $anagerial olicy# and e/ce tion $anage$ent 8as o osed to $anage$ent by e/ce tion= denotes a $ore $oderate a lication of the rocess. Process of M'E! >. *dentify and s ecify the %ey results. :. Setting standards and outlining er$issible deviations. 3. ,o$ aring actual results with the standards. <. ,o$ uting and analyzing deviations. F. *dentifying non- er$issible# that is# critical deviation. H. Strategizing and ta%ing corrective action. Ao2 is M'E I +le entedB *f a co$ any is going to i$ le$ent M7)# they need to first set u a basic fra$ewor% which will identify ite$s that vary fro$ lan to lan. +hese are the critical things that $ust be in lace to $a%e M7) wor%" >. !n a ro riate budget to $easure erfor$ance against. +his budget $ust be well designed# so that the business will $eet its strategic ob1ectives if the lan is confor$ed with. :. ! $atri/ of e/ce tion a$ounts and who will be notified. +he degree of variance allowed in different categories needs to be defined in advance# along with the a ro riate level8s= of $anage$ent who will res ond to the variance in 0uestion. *n so$e cases# different levels of variance will be brought to the attention of different levels of $anage$ent. 5or e/a$ le# a

LF#;;; variance $ight be re orted to a de art$ent $anager# while a LF;#;;; variance is brought to the attention of the functional A.E. 3. ! ti$ely and accurate re orting syste$. *nfor$ation needs to be accurately ca tured and co$ ared to the overall budget on a regular basis. )/ce tions need to be noted so that infor$ation can be sent to the correct tea$ $e$bers. 'nce these ite$s are resent# the rocess can be rolled out to all staff. !nything that falls outside the budget by an a$ount as defined in the $atri/ of e/ce tions will be sent to the a ro riate level8s= of $anage$ent for review and action. 'therwise# staff is in charge of decision $a%ing. -*at are t*e advantages of M'EB So$e advantages of M7) would include"

+he rocess focuses $anage$ent ti$e and attention on the $ost critical variances# which should be a $ore efficient use of ti$e. +he rocess allows staff to handle daily o erations er the business lan inde endent of $anage$ent6 $anagers only ste in when variances reach the threshold. +his should give $anage$ent $ore ti$e for other functions# such as strategic lanning.

T%+es of e>ce+tions +here are two ty es of e/ce tions which are identified and $anaged through M7)" >. Eroble$s G below standard erfor$ance and results 8need to be strategized and solved in ti$e= :. ' ortunities G above standard erfor$ance and results 8need to be identified and ta ed=.