Management

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Management
Authors
Mohd Sarwar Mir
Ghulam Hassan Yatoo
Abas Khan
Sunil Kumar
Scripown Publications
New Delhi
Published By: Scripown Publications
Scripown Publications
2nd Floor, 304 and 305, Pocket - 4,
Sector - 22, Rohini, North West Delhi,
Delhi, 110086, India
Authors: Mohd Sarwar Mir, Ghulam Hassan Yatoo, Abas Khan and
Sunil Kumar
The author/publisher has attempted to trace and acknowledge the materials

reproduced in this publication and apologize if permission and
acknowledgements to publish in this form have not been given. If any material
has not been acknowledged please write and let us know so that we may rectify
it.
© Scripown Publications
Edition: 1st
Publication Year: 2021
Pages: 69
ISBN: 978-93-90833-26-9
Price: ` 575/-
Dedication
To
My Parents
&
My Younger brother Er. Nasar Khan
Abas
To
My Wife Dr.Monica
&
Sarah and Nyasha
Sunil
To
My Family
&
My Students
Ghulam Hassan Yatoo
Preface
Hospitals are complex matrix organizations. The hospital area/sections

are dependent on each other. On one side, we have highly qualified and
specially trained Neurosurgeons/Cardiac surgeons while on the hand we have
almost illiterate sanitary workers but both are vital in the functioning of the
hospital. So managing hospitals is a complex affair and is totally different
from other organizations.
When a doctor assumes charge of an administrator of a hospital or a health
set up, it is a totally different world to which he is exposed. Patients, Clinics
and Operation theatres are suddenly replaced by files, hospital rounds and
meetings where he finds himself lost. Nor medical Schools teach, hospital
management nor during specialization they have any exposure which further
adds to the problem. With this in mind, a need was felt to present facts of
management in a simple way. The results of sustained efforts has lead to this
book.
The book has been divided in to eight chapters starting with introduction
to management and followed by simple description of functions of
management.
Hope you enjoy reading and give feedback both positive and negative so
that we can improve the book in next editions.
Mohd Sarwar Mir

Ghulam Hassan Yatoo
Abas Khan
Sunil Kumar
Acknowledgements
Writing a book is harder than I thought and more rewarding than

I could have ever imagined. None of this would have been possible
without my best friend and Wife Dr.Ruksana Hamid. She stood with
me during toughest of times and was there for me whenever I needed
her support. Thank you so much dear
Love to my dear daughters Hibbat and Haniya.
I’m eternally grateful to my teacher Dr.G.H Yatoo who happens
to be co-author. He taught me discipline, manners, respect, and so
much more that has helped me succeed in life.
To my family, so thankful to have you all in my life.
To all those friends who have been a part of my getting here:
Thank You.
Finally, Thanks to everyone in my publishing Team.
Mohd Sarwar Mir

Contents
Chapters Page No.
1. Introduction to Management………………………………….....01
2. Principles of Management……………………………………....07
3. Functions of Management……………………………………....16
4. Planning…………………………………………………………21
5. Organizing………………………………………………………27
6. Staffing………………………………………………………….37
7. Directing………………………………………………………...45
8. Controlling …………………………………….............63
Index …………………………………………...69
Chapter - 1
Introduction to Management
Keywords: Management, Art, Science, History

Brief History
In tracing the history of management, one comes across various schools

of thought that have outlined principles to guide management practices. These
schools of thought may be divided into 6 distinctive phases:
1. Early Perspectives.
2. Classical Management Theory.
3. Neo Classical Theory — Human Relations Approach.
4. Behavioral Science Approach — Organizational Humanism.
5. Management Science/Operational Research.
6. Modern Management.
Early Perspectives
The first known management ideas were recorded in 3000-4000 B.C. One
Pyramid built by Egyptian ruler Cheops required work to be done by 100,000
men for over twenty years in 2900 B.C. It covered 13 acres of land and
measured 481 meters in height. The stone slabs had to be moved thousands of
Page | 1
kilometers of distance. As folklore goes, even the sound of a hammer was not
heard in the villages in the vicinity of the site of these pyramids. Such
monumental work could not be completed without adherence to principles of
sound management.
Classical Management Theory
Rational economic view, scientific management, administrative
principles, and bureaucratic organization characterize this phase. While the
rational economic view assumed that people are motivated by economic gains
primarily; scientific management of F.W. Taylor and others emphasized on
best way of production etc; administrative theorists personified by Henri Fayol
etc looked at the best way to combine jobs and people into an efficient
organization; bureaucratic organization theorists led by Max Weber looked at
ways to eliminate managerial inconsistencies due to abuse of power which
contributed to ineffectiveness. This was the era of the industrial revolution and
factory system of production. Large scale production would not have been
possible without adherence to the principles governing organizing production
based on division of labor and specialization, relationship between man and
the machine, managing people and so on.
Neo Classical Theory - Human Relations Approach
This school of thought developed between 1920s to 1950s felt that
employees simply do not respond rationally to rules, chains of authority and
economic incentives alone but are also guided by social needs, drives and
attitudes. Hawthorne Studies at GEC etc., were conducted then. It was quite
natural that in the early phases of the industrial revolution, the emphasis was
on development of techniques and technology. The attention to the human
factor was the salient aspect of this school of thought. This attention was to
serve as a precursor to the development of behavioral sciences.
Behavioral Science Approach - Organizational Humanism
Organizational behaviorists like Chris Argyris; Douglas McGregor,
Abraham Maslow and Fredrick Herzberg used the knowledge of psychology,
sociology and anthropology to develop this approach. The underlying
philosophy of organizational humanism is that individuals need to use all of
their capacities and creative skills at work as well as at home.
Management Science/Operational Research
It emphasizes research on operations and use of quantitative techniques
to aid managers to take decisions.
Page | 2
Modern Management
It sees modern organizations as complex systems and underlies
contingency approach and use of modern techniques to solve organizational
and human problems.
Definition of Management
Management is the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently accomplish
selected aims.
It is also defined as the art of getting things done through and with the
people in formally organized groups.
However the basic definition needs to be expanded:
1. As manager people carry out the managerial functions of planning,
organizing, staffing, leading and controlling.
2. Management applies to all types of organizations.
3. The ultimate aim of managers is the same-to create a surplus.
4. Managing is concerned with productivity, which implies
effectiveness and efficiency.
Characteristics of Management:
 Management is a distinct process.
 Management is an organized activity
 Management aims at the accomplishment of predetermined
objectives.
 Management is both a science and an art.
 Management is a group activity
 Management principles are universal in nature
 Management integrates human and other resources.
Management as an Art
Art is the skillful and personal application of existing knowledge to
achieve desired results. It can be acquired through study, observation and
experience. Since art is concerned with personal application of knowledge
some kind of ingenuity and creativity is required to practice the basic
principles learnt.
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The basic features of an art are as follows:
(i) Existence of theoretical knowledge: Art presupposes the existence of
certain theoretical knowledge. Experts in their respective areas have
derived certain basic principles which are applicable to a particular
form of art.
(ii) Personalized application: The use of this basic knowledge varies
from individual to individual. Art, therefore, is a very personalized
concept.
(iii) Based on practice and creativity: All art is practical. Art involves the
creative practice of existing theoretical knowledge.
Management can be said to be an art since it satisfies the following criteria:
(i) A successful manager practices the art of management in the day-to-
day job of managing an enterprise based on study, observation and
experience. There is a lot of literature available in various areas of
management like marketing, finance and human resources which the
manager has to specialize in. There is existence of theoretical
knowledge.
(ii) There are various theories of management, as propounded by many
management thinkers, which prescribe certain universal principles.
A manager applies these scientific methods and body of knowledge
to a given situation, an issue or a problem, in his own unique manner.
A good manager works through a combination of practice, creativity,
imagination, initiative and innovation. A manager achieves
perfection after long practice. Students of management also apply
these principles differently depending on how creative they are.
(iii) A manager applies this acquired knowledge in a personalized and
skillful manner in the light of the realities of a given situation. He is
involved in the activities of the organization, studies critical
situations and formulates his own theories for use in a given situation.
This gives rise to different styles of management The best managers
are committed and dedicated individuals; highly trained and
educated, with personal qualities such as ambition, self motivation,
creativity and imagination, a desire for development of the self and
the organization they belong to. All management practices are based
on the same set of principles; what distinguishes a successful
manager from a less successful one is the ability to put these
principles into practice.
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Management as a Science
Science is a systematized body of knowledge that explains certain general
truths or the operation of general laws. The basic features of science are as
follows:
(i) Systematized body of knowledge: Science is a systematic body of
knowledge. Its principles are based on a cause and effect relationship,
(ii) Principles based on experimentation: Scientific principles are first
developed through observation and then tested through repeated
experimentation under controlled conditions.
(iii) Universal validity: Scientific principles have universal validity and
application.
(iv) Based on the above features, we can say that management has some
characteristics of science.
(v) Management has a systematized body of knowledge. It has its own
theory and principles that have developed over a period of time, but
it also draws on other disciplines such as Economics, Sociology,
Psychology and Mathematics. Like all other organized activity,
management has its own vocabulary of terms and concepts.
(vi) The principles of management have evolved over a period of time
based on repeated experimentation and observation in different types
of organizations. However, since management deals with human
beings and human behavior, the outcomes of these experiments are
not capable of being accurately predicted or replicated. Therefore,
management can be called an inexact science. Despite these
limitations, management scholars have been able to identify general
principles of management. For example, scientific management
principles by F.W. Taylor and Functional Management principles by
Henri Fayol which you will study in the next chapter.
(vii) Since the principles of management are not as exact as the principles
of science, their application and use is not universal. They have to be
modified according to a given situation. However, they provide
managers with certain standardized techniques that can be used in
different situations. These principles are also used for training and
development of managers.
The practice of management is an art. However, managers can work better
if their practice is based on the principles of management. These principles
constitute the science of management. Management as an art and a science are
therefore not mutually exclusive, but complement each other.
Page | 5
Bibliography
1. Principles of Management. Harold Koontz.
2. The Practice of Management. Peter F. Drucker (1954)
3. Out of the Crisis. W. Edwards Deming
4. The Human Side of Enterprise, Douglas McGregor (1960)
5. In Search of Excellence: Lessons from America's Best-Run Companies.
Thomas J. Peters.
6. Diffusion of Innovations. Everett M. Rogers, Nancy Singer Olaguera
7. The Social Psychology of Organizing. Karl E. Weick
8. Competitive Strategy: Techniques for Analyzing Industries and
Competitors. Michael E. Porter
9. Emotional Intelligence (1995). Daniel Goleman
10. The Essential Drucker (2001), by Peter Drucker
11. On Becoming a Leader (1989), by Warren Bennis
12. The One Minute Manager (1982), by Kenneth Blanchard and Spencer Johnson
13. Who Moved My Cheese? (1998), by Spencer Johnson
14. Leading Change (1996), by John P. Kotter
15. The Innovator's Dilemma (1997), by Clayton Christensen
16. The Age of Unreason (1989), by Charles Handy
Page | 6
Chapter - 2
Principles of Management
Keywords: Principles, Fayol, Taylor, Management
Principles of Management: The Concept

A managerial principle is a broad and general guideline for decision
making and behavior One may distinguish principles of management from
those of pure science. Management principles are not as rigid as principles of
pure science. They deal with human behavior and, thus, are to be applied
creatively given the demands of the situation.
In developing an understanding of the meaning of principles of
management, it is also useful to know what these are not. The principles of
management should be distinguished from techniques of management.
Techniques are procedures or methods, which involve a series of steps to be
taken to accomplish desired goals. Principles are guidelines to take decisions
or actions while practicing techniques.
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Nature of Principles of Management
By nature, is meant qualities and characteristics of anything. Principles
are general propositions, which are applicable when certain conditions are
present. These have been developed on the basis of observation and
experimentation as well as personal experiences of the managers. Depending
upon how they are derived and how effective they are in explaining and
predicting managerial behavior, they contribute towards the development of
management both as a science and as an art. Derivation of these principles
may be said to be a matter of science and their creative application may be
regarded as an art.
The following points summarize the nature of principles of management.
1. Universal applicability.
2. General guidelines.
3. Formed by practice and experimentation.
4. Flexible.
5. Mainly behavioral.
6. Cause and effect relationships Contingent.
7. Significance of Principles of Management.
8. Providing managers with useful insights into reality.
9. Optimum utilization of resources and effective administration.
10. Scientific decisions.
11. Meeting changing environment requirements.
12. Fulfilling social responsibility.
13. Management training, education and research.
Taylor’s Scientific Management Scientific management
It refers to an important stream of one of the earlier schools of thought of
management referred to as the ‘Classical’ school. The other two streams
belonging to the classical school are Fayol’s Administrative Theory and Max
Weber’s Bureaucracy. Fredrick Winslow Taylor (March 20,1856 – March 21,
1915) was an American mechanical engineer who sought to improve industrial
efficiency. In 1874, he became an apprentice mechanist, learning factory
conditions at the grass roots level. He earned a degree in mechanical
engineering. He was one of the intellectual leaders of the efficiency movement
Page | 8
and was highly influential in reshaping the factory system of production.
In the words of Taylor, “Scientific management means knowing exactly
what you want men to do and seeing that they do it in the best and cheapest
way. The Bethlehem Steel company where Taylor himself worked achieved
three-fold increase in productivity by application of scientific management
principles. Therefore, it would be in order to discuss these principles.
(i) Science not Rule of Thumb: Taylor pioneered the introduction of
the method of scientific inquiry into the domain of management
practice. We have already referred to the limitations of the rule of
thumb approach of management. As different managers would
follow their indigenous rules of thumb, it is but a statement of the
obvious that all would not be equally effective. Taylor believed that
there was only one best method to maximize efficiency. This method
can be developed through study and analysis. The method so
developed should substitute ‘Rule of Thumb’ throughout the
organization. Scientific method involved investigation of traditional
methods through work-study, unifying the best practices and
developing a standard method, which would be followed throughout
the organization. The more sophisticated the processes, greater
would be the savings. In the present context, the use of internet has
brought about dramatic improvements in internal efficiencies and
customer satisfaction.
(ii) Harmony, Not Discord: Factory system of production implied that
managers served as a link between the owners and the workers. Since
as managers they had the mandate to ‘get work done’ from the
workers, it should not be difficult for you to appreciate that there
always existed the possibility of a kind of class-conflict, the mangers
versus workers. Taylor recognized that this conflict helped none, the
workers, the managers or the factory owners. He emphasized that
there should be complete harmony between the management and
workers. Both should realize that each one is important. To achieve
this state, Taylor called for complete mental revolution on the part of
both management and workers. It means that management and
workers should transform their thinking. In such a situation even
trade unions will not think of going on strike etc. Management should
share the gains of the company, if any, with the workers. At the same
time workers should work hard and be willing to embrace change for
the good of the company. Both should be part of the family.
According to Taylor, ‘Scientific management has for its foundation
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the firm conviction that the true interests of the two are one and the
same; that prosperity for the employer cannot exist for a long time
unless it is accompanied by prosperity for the employees and vice
versa’. Japanese work culture is a classic example of such a situation.
In Japanese companies, paternalistic style of management is in
practice. There is complete openness between the management and
workers. If at all workers go to strike they wear a black badge but
work more than normal working hours to gain the sympathy of the
management.
(iii) Cooperation, Not Individualism: There should be complete
cooperation between the labor and the management instead of
individualism. This principle is an extension of principle of
‘Harmony not discord’. Competition should be replaced by
cooperation. Both should realize that they need each other. For this,
management should not close its ears to any constructive suggestions
made by the employees. They should be rewarded for their
suggestions which results in substantial reduction in costs. They
should be part of management and, if any important decisions are
taken, workers should be taken into confidence. At the same time
workers should desist from going on strike and making unreasonable
demands on the management. In fact when there will be open
communication system and goodwill there will be no need for even
a trade union. Paternalistic style of management, whereby the
employer takes care of the needs of employees, would prevail as in
the case of Japanese companies. According to Taylor, there should
be an almost equal division of work and responsibility between
workers and management. All the day long the management should
work almost side by side with the workers helping, encouraging and
smoothing the way for them.
(iv) Development of Each and Every Person to His or Her Greatest
Efficiency and Prosperity: Industrial efficiency depends to a large
extent on personnel competencies. As such, scientific management
also stood for worker development. Worker training was essential
also to learn the ‘best method’ developed as a consequence of the
scientific approach. Taylor was of the view that the concern for
efficiency could be built in right from the process of employee
selection. Each person should be scientifically selected. Then work
assigned should suit her/his physical, mental and intellectual
capabilities. To increase efficiency, they should be given the required
Page | 10
training. Efficient employees would produce more and earn more.
This will ensure their greatest efficiency and prosperity for both
company and workers. From the foregoing discussion it is clear that
Taylor was an ardent supporter of use of scientific method of
production in business.
Fayol’s Principles of Management
In the development of classical school of management thought, Fayol’s
administrative theory provides an important link. While Taylor succeeded in
revolutionizing the working of factory shop-floor in terms of devising the best
method, fair day’s work, differential piece-rate system and functional
foremanship; Henri Fayol explained what amounts to a manager’s work and
what principles should be followed in doing this work. If workers’ efficiency
mattered in the factory system, so does the managerial efficiency. Fayol’s
contribution must be interpreted in terms of the impact that his writings had
and continue to have improvement in managerial efficiencies. Henri Fayol
(1841-1925) was a French management theorist whose theories concerning
scientific organisation of labour were widely influential in the beginning of
twentieth century. He graduated from the mining academy of St. Etienne in
1860 in mining engineering.
The fourteen principles of management propounded by him were
discussed in detail in his book published in 1917, ‘Administration industrielle
et generale’. It was published in English as ‘General and Industrial
Management’ in 1949 and is widely considered a foundational work in
classical management theory. For his contribution he is also known as the
‘Father of General Management’
The fourteen principles of management given by him are:
(i) Division of Work
Work is divided into small tasks/jobs. A trained specialist who is
competent is required to perform each job. Thus, division of work leads to
specialization. According to Fayol, “The intent of division of work is to
produce more and better work for the same effort. Specialization is the most
efficient way to use human effort.” In business work can be performed more
efficiently if it is divided into specialized tasks; each performed by a specialist
or trained employee. This results in efficient and effective output. Thus, in a
company we have separate departments for finance, marketing, production
and human resource development etc. All of them have specialized persons.
Collectively they achieve production and sales targets of the company. Fayol
applies this principle of division of work to all kinds of work – technical as
Page | 11
well as managerial. You can observe this principle at work in any organisation
like hospital or even a government office.
(ii) Authority and Responsibility
According to Fayol, “Authority is the right to give orders and obtain
obedience, and responsibility is the corollary of authority. The two types of
authority are official authority, which is the authority to command, and
personal authority which is the authority of the individual manager.” Authority
is both formal and informal. Managers require authority commensurate with
their responsibility. There should be a balance between authority and
responsibility. An organisation should build safeguards against abuse of
managerial power. At the same time a manager should have necessary
authority to carry out his responsibility.
(iii) Discipline
Discipline is the obedience to organizational rules and employment
agreement which are necessary for the working of the organisation. According
to Fayol, discipline requires good superiors at all levels, clear and fair
agreements and judicious application of penalties. In return the management
has promised to increase wages of the workers when this mission is
accomplished. Here discipline when applied would mean that the workers and
management both honour their commitments without any prejudice towards
one another.
(iv) Unity of Command
According to Fayol there should be one and only one boss for every
individual employee. If an employee gets orders from two superiors at the
same time the principle of unity of command is violated. The principle of unity
of command states that each participant in a formal organisation should
receive orders from and be responsible to only one superior. Fayol gave a lot
of importance to this principle. He felt that if this principle is violated
“authority is undermined, discipline is in jeopardy, order disturbed and
stability threatened”. The principle resembles military organisation. Dual
subordination should be avoided.
(v) Unity of Direction
All the units of an organisation should be moving towards the same
objectives through coordinated and focused efforts. Each group of activities
having the same objective must have one head and one plan. This ensures unity
of action and coordination. Each division should have its own incharge, plans
and execution resources. On no account should the working of two divisions
Page | 12
overlap. Now let us differentiate between the two principles of unity of
command and unity of direction.
(vi) Subordination of Individual Interest to General Interest
The interests of an organisation should take priority over the interests of
any one individual employee according to Fayol. Every worker has some
individual interest for working in a company. The company has got its own
objectives. On the other hand, an employee may want to get maximum salary
while working the least. In another situation an individual employee may
demand some concession, which is not admissible to any other employee like
working for less time. In all the situations the interests of the group/company
will supersede the interest of any one individual. This is so because larger
interests of the workers and stakeholders are more important than the interest
of any one person. A manager can ensure this by her/his exemplary behavior.
(vii) Remuneration of Employees
The overall pay and compensation should be fair to both employees and
the organization. The employees should be paid fair wages, which should give
them at least a reasonable standard of living. At the same time it should be
within the paying capacity of the company. In other words, remuneration
should be just and equitable. This will ensure congenial atmosphere and good
relations between workers and management. Consequently, the working of the
company would be smooth.
(viii) Centralisation and Decentralisation
The concentration of decision-making authority is called centralization
whereas its dispersal among more than one person is known as
decentralization. According to Fayol, “There is a need to balance subordinate
involvement through decentralization with managers’ retention of final
authority through centralization.” The degree of centralization will depend
upon the circumstances in which the company is working. In general large
organizations have more decentralization than small organizations.
(ix) Scalar Chain
An organisation consists of superiors and subordinates. The formal lines
of authority from highest to lowest ranks are known as scalar chain. According
to Fayol, “Organizations should have a chain of authority and communication
that runs from top to bottom and should be followed by managers and the
subordinates.” According to Fayol, this chain should not be violated in the
normal course of formal communication.
(x) Order
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According to Fayol, “People and materials must be in suitable places at
appropriate time for maximum efficiency.” The principle of order states that
‘A place for everything (everyone) and everything (everyone) in its (her/his)
place’. Essentially it means orderliness. If there is a fixed place for everything
and it is present there, then there will be no hindrance in the activities of
business/ factory. This will lead to increased productivity and efficiency.
(xi) Equity
Good sense and experience are needed to ensure fairness to all employees,
who should be treated as fairly as possible,” according to Fayol. This principle
emphasizes kindliness and justice in the behavior of managers towards
workers. This will ensure loyalty and devotion. Fayol does not rule out use of
force sometimes. Rather he says that lazy personnel should be dealt with
sternly to send the message that everyone is equal in the eyes of the
management. There should be no discrimination against anyone on account of
sex, religion, language, caste, belief or nationality etc. In practice we can
observe that now a days in multinational corporations people of various
nationalities work together in a discrimination free environment.
(xii) Stability of Personnel
“Employee turnover should be minimized to maintain organizational
efficiency”, according to Fayol. Personnel should be selected and appointed
after due and rigorous procedure. But once selected they should be kept at
their post/ position for a minimum fixed tenure. They should have stability of
tenure. They should be given reasonable time to show results. Any adhocism
in this regard will create instability/insecurity among employees. They would
tend to leave the organisation. Recruitment, selection and training cost will be
high. So stability in tenure of personnel is good for the business.
(xiii) Initative
Workers should be encouraged to develop and carry out their plans for
improvements according to Fayol. Initiative means taking the first step with
self-motivation. It is thinking out and executing the plan. It is one of the traits
of an intelligent person. Initiative should be encouraged. But it does not mean
going against the established practices of the company for the sake of being
different. A good company should have an employee suggestion system
whereby initiative/ suggestions which result in substantial cost/time reduction
should be rewarded.
(xiv) Espirit De Corps:
Management should promote a team spirit of unity and harmony among
Page | 14
employees, according to Fayol. Management should promote teamwork
especially in large organizations because otherwise objectives would be
difficult to realize. It will also result in a loss of coordination. A manager
should replace ‘I’ with ‘We’ in all his conversations with workers to foster
team spirit. This will give rise to a spirit of mutual trust and belongingness
among team members. It will also minimize the need for using penalties.
From the foregoing discussion it is clear that Fayol’s fourteen principles
of management are widely applicable to managerial problems and have cast a
profound impact on management thinking today. But with the change of
environment in which business is done, the interpretation of these principles
has changed. For example, authority and responsibility meant empowering of
managers but now it means empowerment of employees because of flat
organizational structures that are gaining ground.
Bibliography
Page | 15
Chapter - 3
Functions of Management
Keywords: Planning, Organizing, Staffing, Directing, Controlling,

Management
Functions of Management
Management is described as the process of planning, organizing,
staffing directing and controlling the efforts of organizational members and
of using organizational resources to achieve specific goals.
(a) Planning
It is the function of determining in advance what is to be done and who is
to do it. This implies setting goals in advance and developing a way of
Page | 16
achieving them efficiently and effectively. Planning cannot prevent problems,
but it can predict them and prepare contingency plans to deal with them if and
when they occur.
(b) Organizing
It is the management function of assigning duties, grouping tasks,
establishing authority and allocating resources required to carry out a specific
plan. Once a specific plan has been established for the accomplishment of an
organizational goal, the organizing function examines the activities and
resources required to implement the plan. It determines what activities and
resources are required. It decides who will do a particular task, where it will
be done, and when it will be done. Organizing involves the grouping of the
required tasks into manageable departments or work units and the
establishment of authority and reporting relationships within the
organizational hierarchy. Proper organizational techniques help in the
accomplishment of work and promote both the efficiency of operations and
the effectiveness of results. Different kinds of business require different
structures according to the nature of work.
(c) Staffing
It is finding the right people for the right job. A very important aspect of
management is to make sure that the right people with the right qualifications
are available at the right places and times to accomplish the goals of the
organization. This is also known as the human resource function and it
involves activities such as recruitment, selection, placement and training of
personnel.
(d) Directing
It involves leading, influencing and motivating employees to perform the
tasks assigned to them. This requires establishing an atmosphere that
encourages employees to do their best. Motivation and leadership are two key
components of direction. Directing also involves communicating effectively
as well as supervising employees at work. Motivating workers means simply
creating an environment that makes them want to work. Leadership is
influencing others to do what the leader wants them to do. A good manager
directs through praise and criticism in such a way that it brings out the best in
the employee.
5. Controlling
It is the management function of monitoring organizational performance
towards the attainment of organizational goals. The task of controlling
involves establishing standards of performance, measuring current
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performance, comparing this with established standards and taking corrective
action where any deviation is found. Here management must determine what
activities and outputs are critical to success, how and where they can be
measured and who should have the authority to take corrective action.
The various functions of a manager are usually discussed in the order
given above, suggesting that a manager first plans, then organizes, puts staff
in position, then directs, and finally controls. In reality, managers are rarely
able to carry out these functions in isolation. The activities of a manager are
interrelated and it is often difficult to pinpoint where one ended and the other
began.
Coordination: The Essence of Management
A manager has to perform five interrelated functions in the process of
managing an organization which is a system made up of different interlinked
and interdependent subsystems. A manager has to link these diverse groups
towards the achievement of a common goal. The process by which a manager
synchronizes the activities of different departments is known as coordination.
Coordination is the force that binds all the other functions of management. It
is the common thread that runs through all activities such as purchase,
production, sales, and finance to ensure continuity in the working of the
organization. Coordination is sometimes considered a separate function of
management. It is however, the essence of management, for achieving
harmony among individual efforts towards the accomplishment of group
goals. Each managerial function is an exercise contributing individually to
coordination. Coordination is implicit and inherent in all functions of an
organization. The process of coordinating the activities of an organization
begins at the planning stage itself. Top management plans for the entire
organization. According to these plans the organizational structure is
developed and staffed. In order to ensure that these plans are executed
according to plans directing is required. Any discrepancies between actual and
realized activities are then taken care of at the stage of controlling. It is through
the process of coordination that a manager ensures the orderly arrangement of
individual and group efforts to ensure unity of action in the realization of
common objectives. Coordination therefore involves synchronization of the
different actions or efforts of the various units of an organization. This
provides the requisite amount, quality, timing and sequence of efforts which
ensures that planned objectives are achieved with a minimum of conflict.
Levels of Management
Management is a universal term used for certain functions performed by
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individuals in an enterprise who are bound together in a hierarchy of
relationships. Every individual in the hierarchy is responsible for successful
completion of a particular task. To be able to fulfill that responsibility he is
assigned a certain amount of authority or the right to take a decision. This
authority-responsibility relationship binds individuals as superiors and
subordinates and gives rise to different levels in an organisation.
Generally speaking there are three levels in the hierarchy of an
organisation.
(i) Top Management: They consist of the senior-most executives of the
organization by whatever name they are called. They are usually
referred to as the chairman, the chief executive officer, chief
operating officer, president and vice-president. Top management is a
team consisting of managers from different functional levels, heading
finance, marketing etc. Their basic task is to integrate diverse
elements and coordinate the activities of different departments
according to the overall objectives of the organization. These top
level managers are responsible for the welfare and survival of the
organization. They analyze the business environment and its
implications for the survival of the firm. They formulate overall
organizational goals and strategies for their achievement. They are
responsible for all the activities of the business and for its impact on
society. The job of the top manager is complex and stressful,
demanding long hours and commitment to the organization.
(ii) Middle Management: It is the link between top and lower level
managers. They are subordinate to top managers and superior to the
first line managers. They are usually known as division heads, for
example production manager. Middle management is responsible for
implementing and controlling plans and strategies developed by top
management. At the same time they are responsible for all the
activities of first line managers. Their main task is to carry out the
plans formulated by the top managers. For this they need to: (i)
interpret the policies framed by top management, (ii) ensure that their
department has the necessary personnel, (iii) assign necessary duties
and responsibilities to them, (iv) motivate them to achieve desired
objectives, and (v) cooperate with other departments for smooth
functioning of the organization. At the same time they are responsible
for all the activities of first line managers.
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(iii) Supervisory or Operational Management: Foremen and
supervisors comprise the lower level in the hierarchy of the
organization. Supervisors directly oversee the efforts of the
workforce. Their authority and responsibility is limited according to
the plans drawn by the top management. Supervisory management
plays a very important role in the organization since they interact
with the actual work force and pass on instructions of the middle
management to the workers. Through their efforts quality of output
is maintained, wastage of materials is minimized and safety standards
are maintained. The quality of workmanship and the quantity of
output depends on the hard work, discipline and loyalty of the
workers.
Bibliography
5. In Search of Excellence: Lessons from America's Best-Run Companies.
Thomas J. Peters.
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Chapter - 4
Planning
Keywords: Planning, Objectives, Planning cycle
Concept of Planning
Planning is deciding in advance what to do and how to do. It is one of the
basic managerial functions. Before doing something, the manager must
formulate an idea of how to work on a particular task. Thus, planning is closely
connected with creativity and innovation. But the manager would first have to
set objectives, only then will a manager know where he has to go. Planning
seeks to bridge the gap between where we are and where we want to go.
Planning is what managers at all levels do. It requires taking decisions since it
involves making a choice from alternative courses of action.
Planning, thus, involves setting objectives and developing appropriate
courses of action to achieve these objectives. Objectives provide direction for
all managerial decisions and actions. Planning provides a rational approach
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for achieving predetermined objectives. All members, therefore, need to work
towards achieving organizational goals. These goals set the targets which need
to be achieved and against which actual performance is measured. Therefore,
planning means setting objectives and targets and formulating an action plan
to achieve them. It is concerned with both ends and means i.e., what is to be
done and how it is to be done.
The plan that is developed has to have a given time frame but time is a
limited resource. It needs to be utilized judiciously. If time factor is not taken
into consideration, conditions in the environment may change and all business
plans may go waste. Planning will be a futile exercise if it is not acted upon or
implemented.
Importance of Planning
(i) Planning provides directions.
(ii) Planning reduces the risks of uncertainty.
(iii) Planning reduces overlapping and wasteful activities.
(iv) Planning promotes innovative ideas.
(v) Planning facilitates decision making.
(vi) Planning establishes standards for controlling.
Features of Planning
The planning function of the management has certain special features.
These features throw light on its nature and scope.
(i) Planning focuses on achieving objectives.
(ii) Planning is a primary function of management.
(iii) Planning is pervasive.
(iv) Planning is continuous.
(v) Planning is futuristic.
(vi) Planning is a mental exercise.
(vii) Planning involves decision making:
Limitations of Planning
(i) Planning leads to rigidity.
(ii) Planning may not work in a dynamic environment:
(iii) Planning reduces creativity
(iv) Planning involves huge costs:
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(v) Planning is a time-consuming process
(vi) Planning does not guarantee success:
Planning Process
Planning, as we all know is deciding in advance what to do and how to
do. It is a process of decision making. Since planning is an activity there are
certain logical steps for every manager to follow.
(i) Setting Objectives: The first and foremost step is setting objectives.
Every organisation must have certain objectives. Objectives may be
set for the entire organisation and each department or unit within the
organisation. Objectives or goals specify what the organisation wants
to achieve. It could mean an increase in sales by 20% which could be
objective of the entire organisation. How all departments would
contribute to the organizational goals is the plan that is to be drawn
up. Objectives should be stated clearly for all departments, units and
employees. They give direction to all departments. Departments/
units then need to set their own objectives within the broad
framework of the organization’s philosophy. Objectives have to
percolate down to each unit and employees at all levels. At the same
time, managers must contribute ideas and participate in the objective
setting process. They must also understand how their actions
contribute to achieving objectives. If the end result is clear it becomes
easier to work towards the goal.
(ii) Developing Premises: Planning is concerned with the future which
is uncertain and every planner is using conjecture about what might
happen in future. required to make certain assumptions about the
future. These assumptions are called premises. Assumptions are the
base material upon which plans are to be drawn. The base material
may be in the form of forecasts, existing plans or any past
information about policies. The premises or assumptions must be the
same for all and there should be total agreement on them. All
managers involved in planning should be familiar with and use the
same assumptions. For example, forecasting is important in
developing premises as it is a technique of gathering information.
Forecasts can be made about the demand for a particular product,
policy change, interest rates, prices of capital goods, tax rates etc.
Accurate forecasts, therefore become essential for successful plans.
(iii) Identifying alternative courses of action: Once objectives are set,
assumptions are made. Then the next step would be to act upon them.
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There may be many ways to act and achieve objectives. All the
alternative courses of action should be identified. The course of
action which may be taken could be either routine or innovative. An
innovative course may be adopted by involving more people and
sharing their ideas. If the project is important, then more alternatives
should be generated and thoroughly discussed amongst the members
of the organisation.
(iv) Evaluating alternative courses: The next step is to weigh the pros
and cons of each alternative. Each course will have many variables
which have to be weighed against each other. The positive and
negative aspects of each proposal need to be evaluated in the light of
the objective to be achieved. In financial plans, for example, the risk-
return trade-off is very common. The more risky the investment, the
higher the returns it is likely to give. To evaluate such proposals
detailed calculations of earnings, earnings per share, interest, taxes,
dividends are made and decisions taken. Accurate forecasts in
conditions of certainty/uncertainty then become vital assumptions for
these proposals. Alternatives are evaluated in the light of their
feasibility and consequences.
(v) Selecting an alternative: This is the real point of decision making.
The best plan has to be adopted and implemented. The ideal plan, of
course, would be the most feasible, profitable and with least negative
consequences. Most plans may not always be subjected to a
mathematical analysis. Sometimes, a combination of plans may be
selected instead of one best course. The manager will have to apply
permutations and combinations and select the best possible course of
action.
(vi) Implementing the plan: This is the step where other managerial
functions also come into the picture. The step is concerned with
putting the plan into action, i.e., doing what is required. For example,
if there is a plan to increase production then more labor, more
machinery will be required. This step would also involve organizing
for labor and purchase of machinery.
(vii) Follow-up action: To see whether plans are being implemented and
activities are performed according to schedule is also part of the
planning process. Monitoring the plans is equally important to ensure
that objectives are achieve
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Types of Plans
Single-use and standing plans
An organisation has to prepare a plan before making any decision related
to business operation, or undertaking any project. Plans can be classified into
several types depending on the use and the length of the planning period.
Single-use Plan: A single-use plan is developed for a one-time event or
project. Such a course of action is not likely to be repeated in future, i.e., they
are for non-recurring situations. The duration of this plan may depend upon
the type of the project. It may span a week or a month. A project may
sometimes be of only one day, such as, organizing an event or a seminar or
conference. These plans include budgets, programmes and projects. They
consist of details, including the names of employees who are responsible for
doing the work and contributing to the single-use plan.
Standing Plan: A standing plan is used for activities that occur regularly
over a period of time. It is designed to ensure that internal operations of an
organisation run smoothly. Such a plan greatly enhances efficiency in routine
decision-making. It is usually developed once but is modified from time to
time to meet business needs as required. Standing plans include policies,
procedures, methods and rules.
Important terms used in planning
Objectives: The first step in planning is setting objectives. Objectives,
therefore, can be said to be the desired future position that the management
would like to reach. Objectives are very basic to the organisation and they are
defined as ends which the management seeks to achieve by its operations
Strategy : A strategy provides the broad contours of an organization’s
business. It will also refer to future decisions defining the organizations
direction and scope in the long run.
Policy: Policies are general statements that guide thinking or channelize
energies towards a particular direction. Policies provide a basis for interpreting
strategy which is usually stated in general terms.
Method: Methods provide the prescribed ways or manner in which a task
has to be performed considering the objective. It deals with a task comprising
one step of a procedure and specifies how this step is to be performed.
Rule: Rules are specific statements that inform what is to be done. They
do not allow for any flexibility or discretion. It reflects a managerial decision
that a certain action must or must not be taken. They are usually the simplest
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type of plans because there is no compromise or change unless a policy
decision is taken.
Programme: Programmes are detailed statements about a project which
outlines the objectives, policies, procedures, rules, tasks, human and physical
resources required and the budget to implement any course of action.
Budget: A budget is a statement of expected results expressed in
numerical terms. It is a plan which quantifies future facts and figures.
Bibliography
1. Principles of management. Harold Koontz.
9. The Innovator's Dilemma (1997), by Clayton Christensen
Page | 26
Chapter - 5
Organizing
Key words: Organizing, Delegation, centralization, Decentralization

Management
Definition of Organizing
Organizing can be defined as a process that initiates implementation of
plans by clarifying jobs and working relationships and effectively deploying
resources for attainment of identified and desired results (goals).
Organizing essentially implies a process which coordinates human
efforts, assembles resources and integrates both into a unified whole to be
utilized for achieving specified objectives.
Steps in the Process of Organizing
i) Identification and division of work
ii) Departmentalization
iii) Establishing reporting relationships
iv) Assignment of duties
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Importance of Organizing
The significance of the organizing function mainly arises from the fact
that it helps in the survival and growth of an enterprise and equips it to meet
various challenges. In order for any business enterprise to perform tasks and
successfully meet goals, the organizing function must be properly performed.
The importance of Organizing is as under:
i) Benefits of specialization
ii) Clarity in working relationships
iii) Optimum utilization of resources
iv) Adaptation to change
v) Effective administration
vi) Development of personnel
vii) Expansion and growth
Organization Structure
Organisation structure is the outcome of the organizing process. An
effective structure will result in increased profitability of the enterprise. The
need for an adequate organisation structure is felt by an enterprise whenever
it grows in size or complexity.
Peter Drucker emphasizes on the importance of having an appropriate
organisation structure when he says, “organisation structure is an
indispensable means; and the wrong structure will seriously impair business
performance and even destroy it.” The organisation structure can be defined
as the framework within which managerial and operating tasks are performed.
It specifies the relationships between people, work and resources.
The span of management, to a large extent gives shape to the
organizational structure. Span of management refers to the number of
subordinates that can be effectively managed by a superior. This determines
the levels of management in the structure.
A proper organisation structure is essential to ensure a smooth flow of
communication and better control over the operations of a business enterprise.
An organisation structure provides the framework which enables the
enterprise to function as an integrated unit by regulating and coordinating the
responsibilities of individuals and departments. The type of structure adopted
by an organisation will vary with the nature and types of activities performed
by an organisation.
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The organizational structure can be classified under two categories which
are as follows: (i) Functional structure and (ii) Divisional structure
Functional Structure
Grouping of jobs of similar nature under functional and organizing these
major functions as separate departments creates a functional structure. All
departments report to a coordinating head. These departments may be further
divided into sections. Thus, a functional structure is an organizational design
that groups similar or related jobs together.
Advantages: The functional structure has many advantages to offer.
Important among them are as follows:
a) A functional structure leads to occupational specialization since
emphasis is placed on specific functions. This promotes efficiency in
utilization of manpower as employees perform similar tasks within a
department and are able to improve performance.
b) It promotes control and coordination within a department because of
similarity in the tasks being performed.
c) It helps in increasing managerial and operational efficiency and this
results in increased profit.
d) It leads to minimal duplication of effort which results in economies
of scale and this lowers cost.
e) It makes training of employees easier as the focus is only on a limited
range of skills.
f) It ensures that different functions get due attention.
Disadvantages: The functional structure has certain disadvantages which
an organisation must take into consideration before it adopts it. Some of them
are as follows:
a) A functional structure places less emphasis on overall enterprise
objectives than the objectives pursued by a functional head. Such
practices may lead to functional empires wherein the importance of
a particular function may be overemphasized. Pursuing departmental
interests at the cost of organizational interests can also hinder the
interaction between two or more departments.
b) It may lead to problems in coordination as information has to be
exchanged across functionally differentiated departments.
c) A conflict of interests may arise when the interests of two or more
Page | 29
departments are not compatible. Inter-departmental conflicts can also
arise in the absence of clear separation of responsibility.
d) It may lead to inflexibility as people with same skills and knowledge
base may develop a narrow perspective and thus, have difficulty in
appreciating any other point of view.
Suitability: It is most suitable when the size of the organisation is large,
has a diversified activities and operations require a high degree of
specialization.
Divisional Structure
In a divisional structure, the organisation structure comprises of separate
business units or divisions. Each unit has a divisional manager responsible for
performance and who has authority over the unit. Generally, manpower is
grouped on the basis of different products manufactured. Each division is
multifunctional because within each division functions like production,
marketing, finance, purchase etc, are performed together to achieve a common
goal. Each division is self-contained as it develops expertise in all functions
related to a product line. In order words, within each division, the functional
structure tends to be adopted. However, functions may vary across divisions
in accordance with a division works as a profit center where the divisional
head is responsible for the profit or loss of his division.
Advantages: The divisional structure offers many benefits. Prominent
among these are as follows:
a) Product specialization helps in the development of varied skills in a
divisional head and this prepares him for higher positions. This is
because he gains experience in all functions related to a particular
product.
b) Divisional heads are accountable for profits, as revenues and costs
related to different departments can be easily identified and assigned
to them. This provides a proper basis for performance measurement.
It also helps in fixation of responsibility in cases of poor performance
of the division and appropriate remedial action can be taken.
c) It promotes flexibility and initiative because each division functions
as an autonomous unit which leads to faster decision making.
d) It facilitates expansion and growth as new divisions can be added
without interrupting the existing operations by merely adding another
divisional head and staff for the new product line.
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Disadvantages: The divisional structure has certain disadvantages. Some
of them are as follows:
a) Conflict may arise among different divisions with reference to
allocation of funds and further a particular division may seek to
maximize its profits at the cost of other divisions.
b) It may lead to increase in costs since there may be a duplication of
activities across products. Providing each division with separate set
of similar functions increases expenditure.
c) It provides managers with the authority to supervise all activities
related to a particular division. In course of time, such a manager may
gain power and in a bid to assert his independence may ignore
organizational interests.
Suitability: Divisional structure is suitable for those business enterprises
where a large variety of products are manufactured using different productive
resources.
Formal and Informal Organization
In all organizations, employees are guided by rules and procedures. To
enable smooth functioning of the enterprise, job description and rules and
procedures related to work processes have to be laid down. This is done
through the formal organization.
Formal organization refers to the organization structure which is designed
by the management to accomplish a particular task. It specifies clearly the
boundaries of authority and responsibility and there is a systematic
coordination among the various activities to achieve organizational goals. The
structure in a formal organisation can be functional or divisional. The formal
organisation can be better understood by a study of its features which are as
follows:
a) It specifies the relationships among various job positions and the
nature of their interrelationship. This clarifies who has to report to
whom.
b) It is a means to achieve the objectives specified in the plans, as it lays
down rules and procedures essential for their achievement.
c) Efforts of various departments are coordinated, interlinked and
integrated through the formal organisation.
d) It is deliberately designed by the top management to facilitate the
smooth functioning of the organisation.
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e) It places more emphasis on work to be performed than interpersonal
relationships among the employees.
Advantages: Formal organisation offers many advantages. Some of the
important ones are:
a) It is easier to fix responsibility since mutual relationships are clearly
defined.
b) There is no ambiguity in the role that each member has to play as
duties are specified. This also helps in avoiding duplication of effort.
c) Unity of command is maintained through an established chain of
command.
d) It leads to effective accomplishment of goals by providing a
framework for the operations to be performed and ensuring that each
employee knows the role he has to play.
e) It provides stability to the organisation. This is because behavior of
employees can be fairly predicted since there are specific rules to
guide them.
Limitations: The formal organisation suffers from the following
limitations the formal communication may lead to procedural delays as the
established chain of command has to be followed which increases the time
taken for decision making. (b) Poor organisation practices may not provide
adequate recognition to creative talent, since it does not allow any deviations
from rigidly laid down polices.
(c) It is difficult to understand all human relationships in an enterprise as
it places more emphasis on structure and work. Hence, the formal organisation
does not provide a complete picture of how an organisation works.
Informal Organisation: Interaction among people at work gives rise to
a ‘network of social relationships among employees’ called the informal
organisation. Informal organisation emerges from within the formal
organisation when people interact beyond their officially defined roles. When
people have frequent contacts they cannot be forced into a rigid formal
structure. Rather, based on their interaction and friendship they tend to form
groups which show conformity in terms of interest.
Advantages: The informal organisation offers many benefits. Important
among them are given below:
a) Prescribed lines of communication are not followed. Thus, the
informal organisation leads to faster spread of information as well as
quick feedback.
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b) It helps to fulfill the social needs of the members and allows them to
find like minded people. This enhances their job satisfaction since it
gives them a sense of belongingness in the organisation.
c) It contributes towards fulfillment of organizational objectives by
compensating for inadequacies in the formal organisation.
Disadvantages: The informal organisation has certain disadvantages.
Some of them are as follows:
a) Informal organisation may become a disruptive force when it spreads
rumors. This may work against the interest of the formal
organisation.
b) The management may not be successful in implementing changes if
the informal organisation opposes them. Such resistance to change
may delay or restrict growth.
c) It pressurizes members to conform to group expectations. This can
be harmful to the organisation if the norms set by the group are
against organizational interests. Informal organisation cannot be
altogether eliminated. Thus, it would be in the best interest of the
organisation if the existence of such groups is recognized and the
roles that their members play are identified. The knowledge of such
groups can be used to gather their support and consequently lead to
improved organizational performance. Such groups can also provide
useful communication channels. Instead of confronting them, the
management should skillfully take advantage of both the formal and
informal organisation so that work continues smoothly.
Delegation
Delegation refers to the downward transfer of authority from a superior
to a subordinate. It is a pre-requisite to the efficient functioning of an
organisation because it enables a manager to use his time on high priority
activities. It also satisfies the subordinate’s need for recognition and provides
them with opportunities to develop and exercise initiative.
Elements of Delegation
i) Authority: Authority refers to the right of an individual to command
his subordinates and to take action within the scope of his position.
The concept of authority arises from the established scalar chain
which links the various job positions and levels of an organisation.
Authority also refers to the right to take decisions inherent in a
managerial position to tell people what to do and expect them to do
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it. In the formal organisation authority originates by virtue of an
individual’s position and the extent of authority is highest at the top
management levels and reduces successively as we go down the
corporate ladder. Thus, authority flows from top to bottom, i.e., the
superior has authority over the subordinate.
ii) Responsibility: Responsibility is the obligation of a subordinate to
properly perform the assigned duty. It arises from a superior–
subordinate relationship because the subordinate is bound to perform
the duty assigned to him by his superior. Thus, responsibility flows
upwards i.e., a subordinate will always be responsible to his superior.
iii) Accountability: Delegation of authority undoubtedly empowers an
employee to act for his superior but the superior would still be
accountable for the outcome: Accountability implies being
answerable for the final outcome. Once authority has been delegated
and responsibility accepted, one cannot deny accountability. It
cannot be delegated and flows upwards i.e., a subordinate will be
accountable to a superior for satisfactory performance of work. It
indicates that the manager has to ensure the proper discharge of
duties by his subordinates. It is generally enforced through regular
feedback on the extent of work accomplished. The subordinate will
be expected to explain the consequences of his actions or omissions.
In conclusion, it can be stated that while authority is delegated,
responsibility is assumed, accountability is imposed. Responsibility is derived
from authority and accountability is derived from responsibility
Importance of Delegation
Delegation ensures that the subordinates perform tasks on behalf of the
manager thereby reducing his workload and providing him with more time to
concentrate on important matters. Effective delegation leads to the following
benefits:
i) Effective management
ii) Employee development
iii) Motivation of employees
iv) Facilitation of growth
v) Basis of management hierarchy
vi) Better coordination:
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Decentralization
In many organizations the top management plays an active role in taking
all decisions while there are others in which this power is given to even the
lower levels of management. Those organizations in which decision making
authority lies with the top management are termed as centralized organizations
whereas those in which such authority is shared with lower levels are
decentralized organizations.
Decentralization explains the manner in which decision making
responsibilities are divided among hierarchical levels. Put simply,
decentralization refers to delegation of authority throughout all the levels of
the organisation. Decision making authority is shared with lower levels and is
consequently placed nearest to the points of action. In other words decision
making authority is pushed down the chain of command. When decisions
taken by the lower levels are numerous as well as important an organisation
can be regarded as greatly decentralized.
Centralization and Decentralization
Centralization and decentralization are relative terms, as seen from the
existing status of various business enterprises. An organisation is centralized
when decision-making authority is retained by higher management levels
whereas it is decentralized when such authority is delegated. Complete
centralization would imply concentration of all decision making functions at
the apex of the management hierarchy. Such a scenario would obviate the need
for a management hierarchy. On the other hand, the delegation of all decision
making functions to the lower level of the hierarchy and this would obviate
the need for higher managerial positions. Both the scenarios are unrealistic.
An organisation can never be completely centralized or decentralized. As it
grows in size and complexity , there is a tendency to move towards
decentralized decision making. This is because in large organizations those
employees who are directly and closely involved with certain operations tend
to have more knowledge about them than the top management which may only
be indirectly associated with individual operations. Hence, there is a need for
a balance between these co-existing forces. Thus, it can be said that every
organisation will be characterized by both centralization and decentralization.
Importance of Decentralization
Decentralization is much more than a mere transfer of authority to the
lower levels of management hierarchy. It is a philosophy that implies selective
dispersal of authority because it propagates the belief that people are
competent, capable and resourceful. They can assume the responsibility for
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the effective implementation of their decisions. Thus this philosophy
recognizes the decision maker’s need for autonomy. The management,
however, needs to carefully select those decisions which will be pushed down
to lower levels and those that will be retained for higher levels.
Decentralization is a fundamental step and its importance can be
understood from the following points:
i) Develops initiative among subordinates
ii) Develops managerial talent for the future
iii) Quick decision making
iv) Relief to top management
v) Facilitates growth
vi) Better control
Bibliography
6. The Age of Unreason (1989), by Charles Handy
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Chapter - 6
Staffing
Key words: Human resource, Recruitment, Selection, Performance Appraisal
Definition
Staffing has been described as the managerial function of filling and
keeping filled the positions in the organisation structure. This is achieved by,
first of all, identifying requirement of work force, followed by recruitment,
selection, placement, promotion, appraisal and development of personnel, to
fill the roles designed into the organisation structure.
After planning and selection of the organisation structure, the next step in
the management process is to fill the various posts provided in the
organisation. This is termed as the management of staffing function. In the
simplest terms, staffing is ‘putting people to jobs’. It begins with workforce
planning and includes different other function like recruitment, selection,
training, development, promotion, compensation and performance appraisal
of work force. In other words, staffing is that part of the process of
management which is concerned with obtaining, utilizing and maintaining a
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satisfactory and satisfied work force. Today, staffing may involve any
combination of employees including daily wagers, consultants and contract
employees.
Staffing recognizes the importance of every single person employed by
an organisation as it is the individual worker, who is the ultimate performer.
Staffing has been described as the managerial function of filling and keeping
filled the positions in the organisation structure. This is achieved by, first of
all, identifying requirement of work force, followed by recruitment, selection,
placement, promotion, appraisal and development of personnel, to fill the roles
designed into the organisation structure.
Importance of Staffing
In any organisation, there is a need for people to perform work. The
staffing function of management fulfills this requirement and finds the right
people for the right job. Basically, staffing fills the positions as shown in the
organisation structure.
The staffing function has assumed greater importance these days because
of rapid advancement of technology, increasing size of organisation and
complicated behaviour of human beings. Human resources are the most
important asset of an organisation. The ability of an organisation to achieve
its goal depends upon the quality of its human resources. Therefore, staffing
is a very important managerial function.
Proper staffing ensures the following benefits to the organisation:
i) Helps in discovering and obtaining competent personnel for various
jobs
ii) Makes for higher performance, by putting right person on the right
job
iii) Ensures the continuous survival and growth of the enterprise
through the succession planning for managers;
iv) helps to ensure optimum utilization of the human resources.
v) Improves job satisfaction and morale of employees through
objective assessment and fair reward for their contribution.
Staffing as part of Human Resource Management
It is a function which all managers need to perform. It is a separate and
specialized function and there are many aspects of human relations to be
considered. It is the job of managers to fill positions in their organisation and
to make sure that they remain occupied with qualified people. Staffing is
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closely linked to organizing since after the structure and positions have been
decided, people are required to work in these positions. Subsequently, they
need to be trained and motivated to work in harmony with the goals of the
organisation. Thus, staffing is seen as a generic function of management.
The staffing function deals with the human element of management.
Managing the human component of an organisation is the most important task
because the performance of an organisation depends upon how well this
function is performed. Human Resource Management includes many
specialized activities and duties which the human resource personnel must
perform. These duties are: Recruitment, i.e., search for qualified people,
analyzing jobs, collecting information about jobs to prepare job description,
developing compensation and incentive plans, training and development of
employees for efficient performance and career growth, maintaining labor
relations and union management relations, handling grievances and
complaints, providing for social security and welfare of employees and
defending the company in law suits and avoiding legal complications.
Staffing Process
It involves following steps:
1. Estimating the Manpower Requirements
2. Recruitment
3. Selection
4. Placement and Orientation
5. Training and Development
6. Performance Appraisal
7. Promotion and career planning
8. Compensation
Aspects of Staffing
There are three aspects of staffing: recruitment, selection and training.
Recruitment
Recruitment refers to the process of finding possible candidates for a job
or a function. It has been defined as the process of searching for prospective
employees and stimulating them to apply for jobs in an organisation.
Advertising is commonly part of the recruitment process, and can occur
through several means, through newspapers, using newspaper dedicated to job
advertisement, through professional publication, using advertisements placed
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in windows, through a job center, through campus interviews, etc.
Sources of Recruitment
The object of recruitment is to attract potential employees with the
necessary characteristics or qualification, in the adequate number for the jobs
available. It locates available people for the job and invites them to apply for
the job in the organisation. The process of recruitment precedes the process of
selection of a right candidate for the given positions in the organisation.
Recruitment seeks to attract suitable applicants to apply for available jobs.
The various activities involved with the process of recruitment includes
a) Identification of the different sources of labour supply,
b) Assessment of their validity
c) Choosing the most suitable source or sources,
and (d) inviting applications from the prospective candidates, for the
vacancies.
The requisite positions may be filled up from within the organisation or
from outside. Thus, there are two sources of recruitment – Internal and
External.
Internal Sources: There are two important sources of internal recruitment
1. Transfers
2. Promotions.
External Sources: External recruitment provides wide choice and brings new
blood in the organisation. The commonly used external sources of recruitment
are discussed below:
1. Direct Recruitment
2. Casual Callers
3. Advertisement
4. Employment Exchange
5. Placement Agencies and Management Consultants
6. Campus Recruitment
7. Recommendations of Employees
8. Advertising on Television:
9. Web Publishing:
10. Labour Contractors:
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Selection
Selection is the process of identifying and choosing the best person out of
a number of prospective candidates for a job.
Process of Selection
The important steps in the process of selection are as follows:
i) Preliminary Screening
ii) Selection Tests: Important Tests Used for Selection of Employees:
(a) Intelligence Tests
(b) Aptitude Test
(c) Personality Tests: Personality tests
(d) Trade Test
(e) Interest Tests
i) Employment Interview
ii) Reference and Background Checks
iii) Selection Decision
iv) Medical Examination
v) Job Offer
vi) Contract of Employment
Training and Development
Training is any process by which the aptitudes, skills and abilities of
employees to perform specific jobs are increased. It is a process of learning
new skills and application of knowledge. It attempts to improve their
performance on the current job or prepare them for any intended job.
Education is the process of increasing the knowledge and understanding
of employees. It is the understanding and interpretation of knowledge. It does
not provide definite answers, but rather develops a logical and rational mind
that can determine relationships among pertinent variables and thereby
understand a phenomenon.
Development refers to the learning opportunities designed to help
employees grow. It covers not only those activities which improve job
performance but also those which bring about growth of the personality, help
individuals in the progress towards maturity and actualization of their
potential
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Training Methods
On the Job Methods
i) Apprenticeship Programmes
ii) Coaching
iii) Internship Training
iv) Job Rotation
Off the Job Methods
i) Class Room Lectures/Conferences
ii) Films
iii) Case Study
iv) Computer Modeling
v) Vestibule Training
vi) Programmed Instruction
Performance Appraisal
Performance appraisal is a regular review of an employee's job
performance and overall contribution to a company. Also known as an annual
review, performance review or evaluation, or employee appraisal, a
performance appraisal evaluates an employee’s skills, achievements, and
growth--or lack thereof. Companies use performance appraisals to give
employees big-picture feedback on their work and to justify pay increases and
bonuses, as well as termination decisions. They can be conducted at any given
time but tend to be annual, semi-annual, or quarterly.
How Performance Appraisals Work
Because companies have a limited pool of funds from which to award
raises and bonuses, performance appraisals help determine how to allocate
those funds. They provide a way for companies to determine which employees
have contributed the most to the company’s growth so companies can reward
their top-performing employees accordingly.
Performance appraisals also help employees and their managers create a
plan for employee development through additional training and increased
responsibilities, as well as to identify shortcomings the employee could work
to resolve.
Ideally, the performance appraisal is not the only time during the year that
managers and employees communicate about the employee’s contributions.
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More frequent conversations help keep everyone on the same page,
develop stronger relationships between employees and managers, and make
annual reviews less stressful.
Performance Appraisal Types
Most performance appraisals are top-down, meaning supervisors evaluate
their staff with no input from the subject. But there are other types:
 Self-assessment: Individuals rate their job performance and behavior.
 Peer assessment: An individual's work group rates his performance.
 360-degree feedback assessment: Includes input from an individual,
her supervisor, and her peers.
 Negotiated appraisal: A newer trend that utilizes a mediator and
attempts to moderate the adversarial nature of performance
evaluations by allowing the subject to present first. Also focuses on
what the individual is doing right before any criticism is given. This
structure tends to be useful during conflicts between subordinates
and supervisors.
Performance Appraisal Criticism
An issue with performance appraisals is that differentiating individual and
organizational performance can be difficult. If the evaluation's construction
doesn't reflect the culture of a company or organization, it can be detrimental.
Employees report general dissatisfaction with their performance appraisal
processes. Other potential issues include:
 Distrust of the appraisal can lead to issues between subordinates and
supervisors or a situation in which employees merely tailor their
input to please their employer.
 Performance appraisals can lead to the adoption of unreasonable
goals that demoralize workers or incentivize them to engage in
unethical practices.
 Some labor experts believe that use of performance appraisals has led
to lower use of merit.
 Performance appraisals may lead to unfair evaluations in which
employees are judged not by their accomplishments but by their
likability. They can also lead to managers giving underperforming
staff a good evaluation to avoid souring their relationship.
 Unreliable raters can introduce a number of biases that skew
appraisal results toward preferred characteristics or ones that reflect
the rater's preferences.
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 Performance appraisals that work well in one culture or job function
may not be useful in another.
Bibliography
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Chapter - 7
Directing
Key words: Directing, Supervision, Motives, Motivation, Incentives,

Leadership, Communication
Definition:
Directing refers to the process of instructing, guiding, counseling,
motivating and leading people in the organisation to achieve its objectives.
Directing is not a mere issue of communication but encompasses many
elements like supervision, motivation and leadership. It is one of the key
managerial functions performed by every manager. Directing is a managerial
process which takes place throughout the life of an organisation.
The main characteristics of directing are discussed below:
(i) Directing initiates action.
(ii) Directing takes place at every level of management
(iii) Directing is a continuous process
(iv) Directing flows from top to bottom
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Importance of Directing
The points which emphasize the importance of directing are presented as
follows:
i) Directing helps to initiate action by people in the organisation
towards attainment of desired objectives. For example, if a supervisor
guides his subordinates and clarifies their doubts in performing a
task, it will help the worker to achieve work targets given to him.
ii) Directing integrates employees efforts in the organisation in such a
way that every individual effort contributes to the organizational
performance. Thus, it ensures that the individuals work for
organizational goals. For example, a manager with good leadership
abilities will be in a position to convince the employees working
under him that individual efforts and team effort will lead to
achievement of organizational goals.
iii) Directing guides employees to fully realize their potential and
capabilities by motivating and providing effective leadership. A good
leader can always identify the potential of his employees and
motivate them to extract work up to their full potential.
iv) Directing facilitates introduction of needed changes in the
organisation. Generally, people have a tendency to resist changes in
the organisation. Effective directing through motivation,
communication and leadership helps to reduce such resistance and
develop required cooperation in introducing changes in the
organisation. For example, if a manager wants to introduce new
system of accounting, there may be initial resistance from accounting
staff. But, if manager explains the purpose, provides training and
motivates with additional rewards, the employees may accept change
and cooperate with manager.
v) Effective directing helps to bring stability and balance in the
organisation since it fosters cooperation and commitment
Principles of Directing
Providing good and effective directing is a challenging task as it involves
many complexities. A manager has to deal with people with diverse
background, and expectations. This complicates the directing process. Certain
guiding principles of directing may help in directing process. These principles
are briefly explained below:
i) Maximum individual contribution
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ii) Harmony of objectives
iii) Unity of Command
iv) Appropriateness of direction technique
v) Managerial communication
vi) Use of informal organisation
vii) Leadership
viii) Follow through
Elements of Direction
The process of directing involves guiding, coaching, instructing,
motivating, leading the people in an organisation to achieve organizational
objectives.
The elements of directing are:
i) Supervision
ii) Motivation
iii) Leadership
iv) Communication
Supervision
The term supervision can be understood in two ways. Firstly, it can be
understood as an element of directing and secondly, as a function performed
by supervisors in the organizational hierarchy.
Supervision being an element of directing, every manager in the
organisation supervises his/her subordinates. In this sense, supervision can be
understood as the process of guiding the efforts of employees and other
resources to accomplish the desired objectives. It means overseeing what is
being done by subordinates and giving instructions to ensure optimum
utilization of resources and achievement of work targets.
Secondly, supervision can be understood as the function to be performed
by supervisor, a managerial position in the organisation hierarchy at the
operative level i.e., immediately above the worker. The functions and
performance of the supervisor are vital to any organisation because he is
directly related with workers whereas other managers have no direct touch
with bottom level workers.
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Importance of Supervision
The importance of supervision can be understood from multiple roles
performed by a supervisor. These are explained below:
i) Supervisor maintains day-to-day contact and maintains friendly
relations with workers. A good supervisor acts as a guide, friend and
philosopher to the workers.
ii) Supervisor acts as a link between workers and management. This role
played by supervisor helps to avoid misunderstandings and conflicts
between management and workers/employees.
iii) Supervisor plays a key role in maintaining group unity among
workers placed under his control. He sorts out internal differences
and maintains harmony among workers.
iv) Supervisor ensures performance of work according to the targets set.
v) Supervisor provides good on the-job training to the workers and
employees. A skilled and knowledgeable supervisor can build
efficient team of workers.
vi) Supervisory leadership plays a key role in influencing the workers in
the organisation. A supervisor with good leadership qualities can
build up high morale among workers.
vii) A good supervisor analyses the work performed and gives feedback
to the workers.
Motivation
Motivation means incitement or inducement to act or move. In the context
of an organisation, it means the process of making subordinates to act in a
desired manner to achieve certain organizational goals.
i) Motive: A motive is an inner state that energizes, activates or moves
and directs behavior towards goals.
ii) Motivation: Motivation is the process of stimulating people to action
to accomplish desired goals. Motivation depends upon satisfying
needs of people.
iii) Motivators: Motivator is the technique used to motivate people in an
organisation.
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Features of Motivation
The analysis of various definitions and viewpoints on motivation reveals
the following features of motivation.
1. Motivation is an internal feeling.
2. Motivation produces goal directed behavior.
3. Motivation can be either positive or negative.
4. Motivation is a complex process as the individuals are heterogeneous
in their expectations, perceptions and reactions.
Importance of Motivation: Motivation is considered important because it
helps to identify and satisfy the needs of human resources in the organisation
and thereby helps in improving their performance.
The importance of motivation can be pointed out by the following
benefits:
i) Motivation helps to improve performance levels of employees as
well as the organisation
ii) Motivation helps to change negative or indifferent attitudes of
employee to positive attitudes so as to achieve organizational goals.
iii) Motivation helps to reduce employee turnover and thereby saves the
cost of new recruitment and training
iv) Motivation helps to reduce absenteeism in the organisation
v) Motivation helps managers to introduce changes smoothly without
much resistance from people.
Maslow’s Need Hierarchy Theory of Motivation
Abraham Maslow, a well-known Psychologist in a classic paper
published in 1943, outlined the elements of an overall theory of motivation.
His theory was based on human needs. He felt that within every human being,
there exists a hierarchy of five needs. These are:
i) Basic Physiological Needs: These needs are most basic in the
hierarchy and corresponds to primary needs. Hunger, thirst, shelter,
sleep and sex are some examples of these needs. In the organizational
context, basic salary helps to satisfy these needs.
ii) Safety/Security Needs: These needs provide security and protection
from physical and emotional harm. Examples: job security, stability
of income, Pension plans etc.,
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iii) Affiliation/Belonging Needs: These needs refer to affection, sense
of belongingness, acceptance and friendship.
iv) Esteem Needs: These include factors such as self-respect, autonomy
status, recognition and attention.
v) Self Actualization Needs: It is the highest level of need in the
hierarchy. It refers to the drive to become what one is capable of
becoming.
Maslow’s theory is based on the following assumptions:
i) People’s behaviour is based on their needs. Satisfaction of such needs
influences their behavior.
ii) People’s needs are in hierarchical order, starting from basic needs to
other higher level needs.
iii) A satisfied need can no longer motivate a person; only next higher
level need can motivate him.
iv) A person moves to the next higher level of the hierarchy only when
the lower need is satisfied.
Maslow’s Theory focuses on the needs as the basis for motivation. This
theory is widely recognized and appreciated. However, some of his
propositions are questioned on his classification of needs and hierarchy of
needs. But, despite such criticism, the theory is still relevant because needs,
no matter how they are classified, are important to understand the behavior. It
helps managers to realize that need level of employee should be identified to
provide motivation to them.
Herzberg's Motivation-Hygiene Theory and Dual-Factor Theory
The two-factor theory (also known as Herzberg's motivation-hygiene
theory and dual-factor theory) states that there are certain factors in
the workplace that cause job satisfaction while a separate set of factors cause
dissatisfaction, all of which act independently of each other.
Two-factor theory distinguishes between:
 Motivators (e.g. challenging work, recognition for one's
achievement, responsibility, opportunity to do something
meaningful, involvement in decision making, and sense of
importance to an organization) that give positive satisfaction, arising
from intrinsic conditions of the job itself, such as recognition,
achievement, or personal growth.
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 Hygiene factors (e.g. status, salary, work conditions, good pay, paid
insurance, vacations) that do not give positive satisfaction or lead to
higher motivation, though dissatisfaction results from their absence.
The term "hygiene" is used in the sense that these are maintenance
factors. These are extrinsic to the work itself, and include aspects
such as company policies, supervisory practices, or wages/salary.
Herzberg often referred to hygiene factors as "KITA" factors, which is an
acronym for "kick in the ass", the process of providing incentives or threat of
punishment to make someone do something.
According to the Two-Factor Theory, there are four possible
combinations:
1. High Hygiene + High Motivation: The ideal situation where
employees are highly motivated and have few complaints.
2. High Hygiene + Low Motivation: Employees have few complaints
but are not highly motivated. The job is viewed as a paycheck.
3. Low Hygiene + High Motivation: Employees are motivated but
have a lot of complaints. A situation where the job is exciting and
challenging but salaries and work conditions are not up to par.
4. Low Hygiene + Low Motivation: This is the worst situation where
employees are not motivated and have many complaints.
Financial and Non-Financial Incentives
Incentive means all measures which are used to motivate people to
improve performance. These incentives may be broadly classified as financial
and non-financial.
Financial Incentives: Financial incentives refer to incentives which are
in direct monetary form or measurable in monetary term and serve to motivate
people for better performance. These incentives may be provided on
individual or group basis. The financial incentives generally used in
organizations are listed below:
i) Pay and allowances:
ii) Productivity linked wage incentives
iii) Bonus:
iv) Profit Sharing
v) Co-partnership/ Stock option
vi) Retirement Benefits:
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vii) Perquisites:
Non-Financial Incentives: Psychological, social and emotional factors
also play important role in providing motivation. Nonfinancial incentives
mainly focus on these needs.
Some of the important non-financial incentives are discussed below:
i) Status
ii) Organizational Climate
iii) Career Advancement Opportunity
iv) Job Enrichment
v) Employee Recognition programmes
vi) Job security
vii) Employee participation
viii) Employee Empowerment
Leadership
Definitions:
1. Leadership is the activity of influencing people to strive willingly for
group objectives. (George Terry).
2. Leadership is the art or process of influencing people so that they will
strive willingly and enthusiastically towards the achievement of
group goals. (Harold Koontz and Heinz Weihrich).
3. Leadership is a set of interpersonal behaviors designed to influence
employees to cooperate in the achievement of objectives. (Glueck).
4. Leadership is both a process and property. The process of leadership
is the use of noncoercive influence to direct and coordinate the
activities of the members of an organized group towards the
accomplishment of group objectivities. As a property, leadership is
the set of qualities or characteristics attributed to those who are
perceived to successfully employ such influence. (Gay and Strake).
Features of leadership
An examination of the above definition reveals the following important
features of leadership:
i) Leadership indicates ability of an individual to influence others.
ii) Leadership tries to bring change in the behavior of others.
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iii) Leadership indicates interpersonal relations between leaders and
followers.
iv) Leadership is exercised to achieve common goals of the
organisation.
v) Leadership is a continuous process.
Importance of leadership
Leadership is a key factor in making any organisation successful. History
reveals that, many times, difference between success and failure of an
organisation is leadership. The importance of leadership can be discussed from
the following benefits to the organisation:
i) Leadership influences the behavior of people and makes them to
positively contribute their energies for the benefit of the organisation.
Good leaders always produce goods results through their followers.
ii) A leader maintains personal relations and helps followers in fulfilling
their needs. He provides needed confidence, support and
encouragement and thereby creates congenial work environment.
iii) Leader plays a key role in introducing required changes in the
organisation. He persuades, clarifies and inspires people to accept
changes whole-heartedly. Thus, he overcomes the problem of
resistance to change and introduces it with minimum discontentment.
iv) A leader handles conflicts effectively and does not allow adverse
effects resulting from the conflicts. A good leader always allows his
followers to ventilate their feelings and disagreement but persuades
them by giving suitable clarifications.
v) Leader provides training to their subordinates. A good leader always
builds up his successor and helps in smooth succession process.
Qualities of Good Leader
One approach to leadership emphasizes that a person should possess
certain qualities or traits to become a successful leader. It assumes that leaders
can be distinguished from non-leaders by certain unique traits possessed by
them. Some of these qualities are listed below:
i) Physical features:
ii) Knowledge
iii) Integrity
iv) Initiative.
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v) Communication skills
vi) Motivation skills
vii) Self Confidence
viii) Decisiveness
ix) Social skills
Leadership Style
There are many theories of leadership behavior and styles. Research
studies have revealed certain traits and qualities which a leader might possess.
However, these are not conclusive since many people may possess these
qualities but may not be leaders. There are several bases for classifying
leadership styles. The most popular classification of leadership styles is based
on the use of authority.
Depending on the use of authority, there are three basic styles of
leadership:
i) Autocratic
ii) Democratic
iii) Laissez-faire
i) Autocratic or Authoritarian leader: An autocratic leader gives
orders and expects his subordinates to obey those orders. If a manager
is following this style, then communication is only one-way with the
subordinate only acting according to the command given by the
manager. This leader is dogmatic i.e., does not change or wish to be
contradicted. His following is based on the assumption that reward
or punishment both can be given depending upon the result. This
leadership style is effective in getting productivity in many situations
like in a factory where the supervisor is responsible for production
on time and has to ensure labour productivity. Quick decision-
making is also facilitated. But there are variations also, they may
listen to everyone’s opinion, consider subordinates ideas and
concerns but the decision will be their own.
ii) Democratic or Participative leader: A democratic leader will
develop action plans and makes decisions in consultation with his
subordinates. He will encourage them to participate in decision
making. This kind of leadership style is more common now-a days,
since leaders also recognize that people perform best if they have set
their own objectives. They also need to respect the other’s opinion
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and support subordinates also perform their duties and accomplish
organizational objectives. They exercise more control by using forces
within the group.
iii) Laissez faire or Free-rein leader: Such a leader does not believe in
the use of power unless it is absolutely essential. The followers are
given a high degree of independence to formulate their own
objectives and ways to achieve them. The group members work on
their own tasks resolving issues themselves. The manager is there
only to support them and supply them the required information to
complete the task assigned. At the same time, the subordinate
assumes responsibility for the work to be performed. Depending
upon the situation a leader may choose to exercise a combination of
these styles when required. Even a laissez faire leader would have
certain rules to be followed while doing work and a democratic leader
may have to take his own decision in an emergency situation.
Communication
Communication plays key role in the success of a manager. Directing
abilities of a manager mainly depend upon his communication skills. That is
why organisation always emphasizes on improving communication skills of
managers as well as employees. The word communication has been derived
from the Latin word ‘communis’ which means ‘common’ which consequently
implies common understanding. Communication is defined in different ways.
Generally, it is understood as a process of exchange of ideas, views, facts,
feelings etc., between or among people to create common understanding.
Elements of Communication
Communication has been defined as a process. This process involves
elements like source, encoding, media/channel, receiver, decoding, noise and
feedback.
The elements involved in communication process are explained below:
i) Sender: Sender means person who conveys his thoughts or ideas to
the receiver. The sender represents source of communication.
ii) Message: It is the content of ideas, feelings, suggestions, order etc.,
intended to be communicated.
iii) Encoding: It is the process of converting the message into
communication symbols such as words, pictures, gestures etc.,
iv) Media: It is the path through which encoded message is transmitted
to receiver. The channel may be in written form, face to face, phone
call, internet etc.,
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v) Decoding: It is the process of converting encoded symbols of the
sender.
vi) Receiver: The person who receives communication of the sender.
vii) Feedback: It includes all those actions of receiver indicating that he
has received and understood message of sender.
viii) Noise: Noise means some obstruction or hindrance to
communication. This hindrance may be caused to sender, message or
receiver. Some examples of noise are:
a) Ambiguous symbols that lead to faulty encoding.
b) A poor telephone connection.
c) An inattentive receiver.
d) Faulty decoding (attaching wrong meanings to message).
e) Prejudices obstructing the poor understanding of message.
f) Gestures and postures that may distort the message.
Importance of Communication
Communication is one of the most central aspects of managerial
activities. It has been estimated that a manager spends 90 percent of his time
in communicating-reading, writing, listening, guiding, instructing, approving,
reprimanding, etc. Effectiveness of a manager depends significantly on his
ability to communicate effectively with his superiors, subordinates and
external agencies such as bankers, suppliers, union and government.
The importance of communication in management can be judged from
the following:
i) Acts as basis of coordination.
ii) Helps in smooth working of an enterprise.
iii) Acts as basis of decision making.
iv) Increases managerial efficiency.
v) Promotes cooperation and industrial peace.
vi) Establishes effective leadership.
vii) Boosts morale and provides motivation.
Formal and Informal Communication
Communication taking place within an organisation may be broadly
classified as formal and informal communication.
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Formal Communication
Formal communication flows through official channels designed in the
organisation chart. This communication may take place between a superior
and subordinate, a subordinate and superior or among same cadre employees
or managers. The communications may be oral or written but generally
recorded and filed in the office. Formal communication may be further
classified as – Vertical and Horizontal. Vertical communication flows
vertically i.e., upwards or downwards through formal channels. Upward
communications refer to flow of communication from subordinate to superior
whereas downward communication indicates communication from a superior
to subordinate. The examples of upward communication are – application for
grant of leave, submission of progress report, request for grants etc. Similarly,
the examples of downward communication include – sending notice to
employees to attend a meeting, ordering subordinates to complete an assigned
work, passing on guidelines framed by top management to the subordinates
etc. Horizontal or lateral communication takes place between one division and
another.
The pattern through which communication flows within the organisation
is generally indicated through communication network. Different types of
communication networks may operate in formal organisation
i) Single chain: This network exists between a supervisor and his
subordinates. Since many levels exist in an organisation structure,
communication flows from every superior to his subordinate through
single chain.
ii) Wheel: In wheel network, all subordinates under one superior
communicate through him only as he acts as a hub of the wheel. The
subordinates are not allowed to talk among themselves.
iii) Circular: In circular network, the communication moves in a circle.
Each person can communicate with his adjoining two persons. In this
network, communication flow is slow.
iv) Free flow: In this network, each person can communicate with others
freely. The flow of communication is fast in this network.
v) Inverted V: In this network, a subordinate is allowed to communicate
with his immediate superior as well as his superior’s superior.
Informal Communication
Communication that takes place without following the formal lines of
communication is said to be informal communication. Informal system of
communication is generally referred to as the ‘grapevine’ because it spreads
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throughout the organisation with its branches going out in all directions in
utter disregard to the levels of authority. The informal communication arises
out of needs of employees to exchange their views, which cannot be done
through formal channels. Workers chit chating in a canteen about the
behaviour of the superior, discussing about rumours that some employees are
likely to be transferred are some examples of informal communications. The
grapevine/ informal communication spreads rapidly and sometimes gets
distorted. It is very difficult to detect the source of such communication. It
also leads to generate rumours which are not authentic. People’s behavior is
affected by rumours and informal discussions and sometimes may hamper
work environment. Sometimes, grapevine channels may be helpful as they
carry information rapidly and, therefore, may be useful to the manager at
times. Informal channels are used by the managers to transmit information so
as to know the reactions of his/her subordinates. An intelligent manager
should make use of positive aspects of informal channels and minimize
negative aspects of this channel of communication.
Barriers to Communication
It is generally observed that managers face several problems due to
communication breakdowns or barriers. These barriers may prevent a
communication or filter part of it or carry incorrect meaning due to which
misunderstandings may be created. Therefore, it is important for a manager to
identity such barriers and take measures to overcome them. The barriers to
communication in the organizations can be broadly grouped as: semantic
barriers, psychological barriers, organizational barriers, and personal barriers.
These are briefly discussed below:
Semantic barriers
Semantics is the branch of linguistics dealing with the meaning of words
and sentences. Semantic barriers are concerned with problems and
obstructions in the process of encoding and decoding of message into words
or impressions. Normally, such barriers result on account of use of wrong
words, faulty translations, different interpretations etc. These are discussed
below:
i) Badly expressed message
ii) Symbols with different meanings:
iii) Faulty translations
iv) Unclarified assumptions
v) Technical jargon
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vi) Body language and gesture decoding
Psychological barriers
Emotional or psychological factors acts as barriers to communicators. For
example, a worried person cannot communicate properly and an angry
receiver cannot understand the real meaning of message. The state of mind of
both sender and receiver of communication reflects in the effective
communication. Some of the psychological barriers are:
i) Premature evaluation: Sometimes people evaluate the meaning of
message before the sender completes his message. Such premature
evaluation may be due to pre-conceived notions or prejudices against
the communication.
ii) Lack of attention: The preoccupied mind of receiver and the
resultant non-listening of message acts as a major psychological
barrier. For instance, an employee explains about his problems to the
boss who is pre-occupied with an important file before him. The boss
does not grasp the message and the employee is disappointed.
iii) Loss by transmission and poor retention: When communication
passes through various levels, successive transmissions of the
message results in loss of, or transmission of inaccurate information.
This is more so in case of oral communication. Poor retention is
another problem. Usually people cannot retain the information for a
long time if they are inattentive or not interested.
iv) Distrust between communicator and communicate acts as a barrier.
If the parties do not believe each other, they cannot understand each
other’s message in its original sense.
Organizational barriers
The factors related to organisation structure, authority relationships, rules
and regulations may, sometimes, act as barriers to effective communication.
Some of these barriers are:
i) Organizational policy: If the organizational policy, explicit or
implicit, is not supportive to free flow of communication, it may
hamper effectiveness of communications. For example, in an
organisation with highly centralized pattern, people may not be
encouraged to have free communication.
ii) Rules and regulations: Rigid rules and cumbersome procedures
Page | 59
may be a hurdle to communication. Similarly, communications
through prescribed channel may result in delays.
iii) Status: Status of superior may create psychological distance between
him and his subordinates. A status conscious manager also may not
allow his subordinates to express their feelings freely.
iv) Complexity in organisation structure: In an organisation where
there are number of managerial levels, communication gets delayed
and distorted as number of filtering points are more.
v) Organizational facilities: If facilities for smooth, clear and timely
communications are not provided communications may be
hampered. Facilities like frequent meetings, suggestion box,
complaint box, social and cultural gathering, transparency in
operations etc., will encourage free flow of communication. Lack of
these facilities may create communication problems.
Personal barriers: The personal factors of both sender and receiver may
exert influence on effective communication. Some of the personal barriers of
superiors and subordinates are mentioned below:
i) Fear of challenge to authority
ii) Lack of confidence of superior on his subordinates
iii) Unwillingness to communicate
iv) Lack of proper incentives
Improving Communication Effectiveness
The barriers to effective communication exists in all organizations to a
greater or lesser degree. Organizations keen on developing effective
communication should adopt suitable measures to overcome the barriers and
improve communication effectiveness. Some such measures are indicated
below:
i) Clarify the ideas before communication: The problem to be
communicated to subordinates should be clear in all its perspective
to the executive himself. The entire problem should be studied in
depth, analyzed and stated in such a manner that is clearly conveyed
to subordinates.
ii) Communicate according to the needs of receiver: The level of
understanding of receiver should be crystal clear to the
communicator. Manager should adjust his communication according
to the education and understanding levels of subordinates.
iii) Consult others before communicating: Before actually
Page | 60
communicating the message, it is better to involve others in
developing a plan for communication. Participation and involvement
of subordinates may help to gain ready acceptance and willing
cooperation of subordinates.
iv) Be aware of languages, tone and content of message: The contents
of the message, tone, language used, manner in which the message is
to be communicated are the important aspects of effective
communication. The language used should be understandable to the
receiver and should not offend the sentiments of listeners. The
message should be stimulating to evoke response from the listeners.
v) Convey things of help and value to listeners: While conveying
message to others, it is better to know the interests and needs of the
people with whom you are communicating. If the message relates
directly or indirectly to such interests and needs it certainly evokes
response from communicate.
vi) Ensure proper feedback: The communicator may ensure the
success of communication by asking questions regarding the
message conveyed. The receiver of communication may also be
encouraged to respond to communication. The communication
process may be improved by the feedback received to make it more
responsive.
vii) Communicate for present as well as future: Generally,
communication is needed to meet the existing commitments to
maintain consistency, the communication should aim at future goals
of the enterprise also.
viii) Follow up communications: There should be regular follow up and
review on the instructions given to subordinates. Such follow up
measures help in removing hurdles if any in implementing the
instructions. (ix) Be a good listener: Manager should be a good
listener. Patient and attentive listening solves half of the problems.
Managers should also give indications of their interest in listening to
their subordinates.
Bibliography
Page | 61
Page | 62
Chapter - 8
Controlling
Key words: Controlling, Coordinating, Management, Performance,
Definition: Controlling involves comparison of actual performance with

the planned performance. If there is any difference or deviation, then finding
the reasons for such difference and taking corrective measures or action to
stop those reasons so that they don‘t re-occur in future and that organizational
objectives are fulfilled efficiently.
Importance of Controlling
1. Controlling helps in achieving organizational goals: The controlling
function measures progress towards the organizational goals and
brings to light/indicates corrective action.
2. For Evaluating/Judging accuracy of standards: A good control
system enables management to verify whether the standards set are
accurate or not by careful check on the changes taking place in the
organizational environment.
Page | 63
3. Making efficient use of resources: By the process of control, a
manager seeks to reduce wastage of resources.
4. Improves employees motivation: A good control system ensures that
employees know well in advance what they are expected to do & also
the standard of performance. It thus motivates & helps them to give
better performance.
5. Facilitating Coordination in action: In controlling each department
and employee is governed by predetermined standards which are well
coordinated with one another. Control provides unity of direction.
6. Ensuring order and discipline: Controlling creates an atmosphere of
order and discipline in the organization by keeping a close check on
the activities of its employees.
Nature of Controlling/Features of Controlling
1. Goal oriented: Controlling is directed towards accomplishment of
organizational goals in the best possible manner.
2. Pervasive: Controlling is an essential function of every manager and
exercised at all levels of management.
3. Continuous: It is not an activity to be pursued in the end only; it has
to be done on a continuous basis.
4. Controlling is looking back: Controlling involves measurement of
actual performance and its comparison with the desired performance.
It is the process of checking and verification.
5. Controlling is forward looking: It is related to future because it seeks
to improve future results on the basis of experience gained in the past.
6. Depends on planning: It pre supposes existence of planning because
without planning no control is possible.
7. Action oriented*: Control has no meaning if no corrective action is
taken; So timely action should be taken to prevent deviations.
8. Primary Function of Management– controlling is performed at all
levels and in all types of organizations.
9. Brings back management cycle back to planning:* Control should
not be viewed as the last function. In fact it links back to planning.
Controlling involves
Page | 64
Relationship between Planning and Controlling
1. Planning and controlling are interrelated and in fact reinforce each
other in the sense that-
2. Planning is pre-requisite for controlling. Plans provide the standard
for controlling. Thus, without planning, controlling is blind. If the
standards are not set in advance managers have nothing to control.
3. Planning is meaningless without controlling. It is fruitful when
control is exercised. It discovers deviations and initiates corrective
measures.
4. Effectiveness of planning can be measured with the help of
controlling.
5. Planning is a future oriented function as it involves looking in
advance and making policies for the maximum utilization of
resources in future that is why it is considered as forward looking
function. In controlling we look back to the performance which is
already achieved by the employees and compare it with plans. If there
are deviations in actual and standard performance or output then
controlling functions makes sure that in future actual performance
matches with the planned performances. Therefore, controlling is
also a forward looking function. Thus, planning & controlling cannot
be separated. The two are supplementary function which support
each other for successful execution of both the function. Planning
makes controlling effective whereas controlling improves future
planning.
Controlling Process
1. Setting Performance Standards: Standards are the criteria against
which actual performance would be measured. Thus standards
become basis for comparison and the manager insists on following
of standards.
2. Measurement of Actual Performance: Performance should be
measured in an objective and reliable manner which includes
personal observation, sample checking. Performance should be
measured in same terms in which standards have been established,
this will facilitate comparison.
3. Comparing Actual Performance with Standard: This step
involves comparison of actual performance with the standard. Such
comparison will reveal the deviation between actual and desired
Page | 65
performance. If the performance matches the standards it may be
assumed that everything is under control.
4. Analyzing Deviations: The deviations from the standards are
assessed and analyzed to identify the causes of deviations.
5. Taking Corrective Action: The final step in the controlling process
is taking corrective action. No corrective action is required when the
deviation are within the acceptable limits. But where significant
deviations occur corrective action is taken.
Limitations of Controlling
1. Difficulty in setting quantitative standards: Control system loses
its effectiveness when standards of performance cannot be defined in
quantitative terms. This makes comparison with standards a difficult
task. e.g areas like human behavior, employee morale, job
satisfaction cannot be measured quantitatively.
2. Little control on external factors: An enterprise cannot control
external factors like government policies, technological changes,
competition. etc.
3. Resistance from employees: Control is resisted by the employees as
they feel that their freedom is restricted.
4. Costly: Control involves a lot of expenditure, time and effort. A
small enterprise cannot afford to install an expensive control system.
Managers must ensure that the cost of installing and operating a control
system should not exceed the benefits derived from it.
Techniques of Managerial Control
The techniques of managerial control can be classified in two categories
as Traditional Techniques and Modern Techniques.
A. Traditional techniques have been in use by managers since long ago.
The following are traditional techniques of managerial control:
1) Personal observation: Under this technique, managers directly
oversee the work done. It ensures that managers get the right
information, and prompts workers to perform up to the mark.
However, this technique proves to be very time consuming and
cannot be used in cases where a large number of tasks or activities
are to be performed.
2) Statistical reports: A statistical analysis of the performance is done
Page | 66
in the form of averages, ratios and percentages. Such statistical
analysis helps in easy comparison of actual performance with set
standards and also with past performance.
3) Breakeven analysis: It comprises a study of relationship between
costs, volume and profits. Under this technique, the costs and profits
at various levels of quantity are studied. Accordingly, the level of
output where the profit is maximized is identified. Breakeven is said
to occur when there is neither profit nor loss. That is the total revenue
earned by the organisation equals the total cost incurred.
4) Budgetary control: Under the technique of budgetary control,
budgets are prepared for each activity and operation in the
organisation. Here, the term budget refers to defining the goals and
objectives which are to be achieved in quantitative terms. Then the
actual results of the activities are compared with the budgetary
standards. Accordingly, the work done is assessed and evaluated.
Deviations from the set standards are identified and corrective
actions are decided.
B. Modern techniques refer to techniques which are recent in origin.
The following are modern techniques of controlling:
1) Return on investment: Return on investment refers to the benefits
from investment. In other words, it is an assessment of whether the
investment is beneficial. In an organisation, managers use this
technique for comparing the performance of various departments or
for comparing present actions and past performance.
2) Ratio analysis: Various ratios are calculated to analyze financial
statements. The most commonly used ratios are as follows:
 Liquidity Ratio: Analyses the short-term solvency of a business
 Solvency Ratio: Evaluates the long-term solvency of a business
 Profitability Ratio: Determines the position of the business
with regard to profitability
 Turnover Ratio: Analyses whether the activities are carried out
efficiently
3) Responsibility accounting: Under the system of responsibility
accounting, various divisions in the organisation are set up as
responsibility centres. Each division is given a target and it is the
responsibility of the head of the division to achieve the set target.
Different types of responsibility centres in an organisation can be
Page | 67
cost centre, investment centre, profit centre and revenue centre.
4) Management audit: Under this technique, a systematic assessment
is made of the overall work and activities of the management of the
company. The basic objective of this technique is to evaluate
efficiency and effectiveness in the tasks of the management.
Accordingly, it helps in identifying the areas which require corrective
actions.
5) PERT and CPM: Programme Evaluation and Review Technique
(PERT) and Critical Path Method (CPM) are based on network
analysis. Under these techniques, the entire task is divided into
various smaller activities. Each activity is then accorded a timeline
and a cost estimate. In this way, it helps in effective execution of the
tasks and activities.
6) Management and information system: Management Information
System (MIS) is a computer based controlling technique wherein
managers are provided with timely data and information so as to help
in the decision-making process. MIS proves to be cost effective in
terms of information management.
Bibliography
5. In Search Of Excellence: Lessons from America's Best-Run Companies.
Thomas J. Peters.
Page | 68
Index
Authority, 24
Barriers to Communication, 90
Breakeven analysis, 100
Budgetary Control, 101
Communication, 85,86, 87
Controlling, 96,97,98,99,100
Directing, 71
Delegation,55
Decentralization, 57
Fredrick Winslow Taylor, 20
Herzberg's motivation-hygiene theory, 78
Leadership Styles, 83
Maslow’s Hierarchy,77
Management, 9,10, 11,12,13,14
Management Audit, 102
Management information System, 102
Motivation, 75, 76,77, 78
Organizing, 46, 47, 48
Planning,
Performance Appraisal, 68,69, 70
Staffing, 60
Selection, 66, 67
Recruitment, 64
Page | 69
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