Chapter 1 The work done in any place — be it a household, a business establishment, a Legislative Assembly or the Parliament, requires Proper planning, organisation, direction, co-ordination and control, Planning helps to do the work ina systematic manner. Organising helps to mobilise the necessary resources and fix responsibilities on individuals. Direction helps to supervise and motivate people at work. Co-ordination establishes link between the various activities performed. Control helps us to know whether the plan has been successfully implemented and the objective laid down in the plan has been fully achieved. Meaning of Management am Management is basically concerned with the performance of planning, organising, directing, co-ordinating and controlling, which, in fact, are its main functions. Management is also regarded as the art of getting things done through others. It is not possible for any individual to do all the work himself. The work is always shared with others.’ Ina household, for example, the head of th« housé — the father earns for the family maintenance. The lady of the house manages the kitchen and so on. Similarly, in a bank there are different individuals to look after cash, savings bank account, fixed deposit, current account, recurring deposit account and so on. The overall control lies with the Bank Manager. Thus, it becomes clear that the work is assigned to many in any work place and responsibilities are fixed on them. The person assigning the work, ie, the manager, knows how to get things done through others, i.e. subordinates, A manager who is unable to make his acnates work cannot be a successful manager. Management is the art of getting things done through people — Mary Parker Follet. To manage is to forecast and plan, to organise, to command, to co-ordinate, and to control — Henry Fayol. Management is what a manager does — Louis Allen. Management is the process of getting things done through the agency of a community. The functions of management are the handling of a community with a view to fulfilling the purposes for which it exists - Sir Charles Reynold.Principles of Management jsible. It cannot be seen. But it can be 9; tis intangible— Managements , piesa ign nagement wil become clear ifa comparison is made ae oe eeson working atrandom and the performance of the came individual working ina more systematic manner i fession — Like Medical, Law and Engineering, tis a Prof to ane rsa come 10 be recognised as a profession. person who Institute of Manager ;cognised as a Man businessmen on such areas as Marketing, Personnel ot tor of Production Management is also considered as a factor of production us like land, labour, capital and enterprise. Management, in fact, els an even more prominent place because it has to properly combine and co- ordinate all other available resources. 1 Distinction between Administration and Management ‘Managers, on the other hand, are e basic difference between dia Management ~ Nature and Scope ‘The differences between Admini shown below: " ia |All policy decisions are made by the administration, ‘concern, stration and Management may be tabulated as important matt Mar: gers are the pai employees of the concer, 1660 ‘The managers are empowered to take decisions only on routine matters. They are usually guided by opinions, ‘values and beliefs in making decisions. They also act based on precedents, ‘e,, past happenings. ‘Management is n: ‘Managers may resign,a Principles of Management = Manager trepreneur [een 5 le for the 7 Hels employe bythe entrepreneur ne to work for the accomplishment He is res ise. caahiment ofthe ETE ofthe goal ofthe enterprise. ). He has to simply work within 2 freedom to determine |? ; : ete objectives of his the framework of objectives st by the entrepreneur. ae ve miomatyinvoved | He only concerned with the ke en of bringing out routine affairs of the business ‘something new. He is, therefore, and is not expected to be an an innovator. innovator. 4, He is rewarded with profits 4, He gets his salary for the work done by him. 5, The manager is always assured of 0 the his salary which is often a fixed 5, The profits # centrepreneurare uncertain and also irregular He is always expected to undertake risks. He, however, amount. ;. He does only a routine job and does not undertake any kind of business risk. fakes only calculated risks. 7, He makes all important 7, His job is only to implement the decisions, decisions. Routine decisions may be ‘made by him. & Hehasto invest ahuge amount | §. Hedoes not contribute any capil to work as a manager. 9 ty of resources, 9, Beliefs, attitudes, opinions etc., Government regulations, market influence decisions made by a conditions ec, influence his manager on certain routine matters. ‘Management as Profession : aime inmran ini as aprofession in the way medical, engineering are recognised. profession i different from an occupation. A gwcis nl A ASO ea abla asta be¥? NEN eae ps ee a On the other hand, a person isk cmieiag lerkoras an officer or in some other capacity in a bank or Scone as Stee a Neal veo amp) professor who is employed ina college or University. 3 Management — Nature and Scope LT ieee his salary atthe end of the month and is an employee ofthe institution wheres ‘employed. A professional can be an employer for many. A doctor, for exam, may have his own clinic and employ nursing staff, lab technicians and others. Management, as a profession, fulfils the following criteria of a profession: 1. An organised body of knowledge: Management as a profession like medicine, law and engineering has well-developed concepts, princi and practices. A management professional cannot perform his tasks ifhe is not ples, etc. Qualification: A person who wants to become a medical or al has to possess the minimum qualification and training i management engineering p: prescribed for professional has to fulfil the educational quali holding an MBA degree obtained from one ofthe Indian Institutes of Management or its equivalent is considered a management profession 3, Regulatory Authority: The Medical Council and the Bar Council acts the regulatory authority for medical and law professionals. Inthe same manner, the Indian Management Association acts as the regulatory authority and prescribes certain obligations for the management professionals. 4. Code of Conduct: Every member of a professio ethical standards laid down for that profession. The code thieal norms which the members shal observe while dealing with thei clients, Such a code of conduct exists for management professionals too inthe manner it Exists for medical, law and other professionals. Any member found tobe violating the code of conduct might be disqualified from functioning as a professional. &. Serving the Community: A professional's main obligation isto serve the Tle must not think in terms of personal gain always although his profession gives ample scope to eam. Doctors and lawyers have their own clients and from them. As a result they enjoy the status of professionals, Those aut ied in management often work fr reputed organisations for amonthy rremunerat isites. It is probably because of this difference that ified in management as professionals. Incontrast to medical and legal professionals who are known evento the illiterate ‘mass, management professionals are recognised mostly by intellectuals. Management—Both a Scienceand an Art « Science establishes cause-effect relations Scientists have developed. certain basic proces va theo by means a i experiment. inciples have universal relevance. cents ee in any part of the world n has to observe certain of conduct lays down get their remuneration directly ps between different variables._ gee les of Management “ame, Management isa Social don, Management scientists les that a i be the’ iment Wi and the outcome of such an expe! MS Science ike Sociology, Psy®hO}OE oe vl may ea ere heres mage oe ora 0 - Mont lean principles govet ae esentially management CONCEDES at unlike Physics or Chemistry where ¢2 ‘Social Sciences no such de eee iteness that financial rewards shi use-effect relati said with defi all the Sas ‘outcome of every exper a aga ey abo ‘ay fom place to plac and om country 0 COHN Rae of rao the countries ty nt be tue in the cae of Tian Vor For yorkers in the western countries Wor ir protest whenever they have grievances. But the workers individuals which isa complex affai the focus is on inanimate objects the bet predicted. ‘Art involves the use of personal s rary from individual to individual two persons are asked to draw the same picture, the performanice of 1. Same is true with respect to music or dance or nly influenced by such factors as To be a successfil manager an Knowledge of haviour of which can be accurately pecforming his duties. For example, a manager who has the ski psychology of his workers may be able to get things done better than a manager ‘who knows only the theories and principles of management. ‘Hise he sbove dessin that management is bot Science and an. ‘\, ri tee fi Importance of Management i ‘Management enables a business to attain its goal in the mo ie goa inthe most efficient manner. Xe rears te employee o adopt systematic approach tonards ther work Met, machines, materi and money are, no dub, indspensabl usiness. Bu, itis only management that makes it possible to Sexes ‘The importance of management may be stated as follows: ‘ae fae tie oes se paery Pini which is one of the important nctions of manageme fora systematic approach to work. It fixes Management — Nature and Scope 19 nm Pe 4 pie resources — Every business needs men, oney. The extent to whic ir and the proportion in wich hese ae be eminence a by organising which is yet another important function of management. Grouping of , delegation of authority by a superior to his subordinates and are some ofthe other tasks performed by the manager. n of work —-Management recognises the need for division of work in any work place. The total work to be done is divided into different parts and ceach partis entrusted to a particular individual, The advantage of divi labour is that each individual becomes a specialist in what he does and it also facilitates quick performance of the work. under-qualified, he cannot cope with the nature of work, Therefore, it becomes necessary to get the right person to do a particular job. The staffing function of ‘management takes care ofthe issues concerning the recruitment and selection of employees. '5, Manpower development ~The candidates, who have been selected for the various jobs, may not have practical exposure to work. The skill of some of the employees, already working in the organisation, needs to be with the advancement in science and technology. This necessitates training which is again a management activity Inducement of workers — Another important role played by management ‘matter of motivating the employees of the organisation. Employees cannot be handled in the manner in which machines and materials are handled. Employees need to be constantly motivated. Motivation may be done by means ‘of monetary as well as non-monetary measures. Even a word of appreciation may ‘motivate an employee to work harder. 7, Stability of tenure - Management advocates stability of tenure for all nan n and particularly for the managerial personnel. If an employee is 1m one branch to another he will frequ not be able to cope with such a change. This — Ina business a number of activities and sales take place. ‘There are separate important here is 8, Integration of business act e purchase, production, mar Took after these various be able to produce departments. For example, the producti only ifthe materials needed by it are provided by the purchase department. The piirchase department willbe able to buy only ifthe finance department provides the necessary finds, Thus, i s necessary that the various departments work in proper co-ordination. Management takes care of this aspect also. ar eltPrinciples of Management Toning consists ofthe following stages: at ing the environment. nt and analysis of the necessary information. i) Coll z (i) Determination of objectives. ; (i). Knowledge ofthe planing premises or assumptions. (a). Knowledge ofthe altemative courses of action, (ai) Evaluation ofthe altemative courses of action. (ci) Selecting a particular course. reed of derivative plans, | Procedures, Rules and Strategies are examples of repeated-use plans. | ORGANISING resource ‘grouping marketing andso ‘willbe headed by amanager. The manag ious types, e.g., production, a department. Each department be assisted by an assistant manager, There willbe a number of subordinates in every department to whom the manager _willassign some work. The subordinates willbe given certain authority to carry ‘ut the work assigned to them. They are answerable to their superiors on the worlkdone by thenito 22 i d ott eabivow © The characteristics of organising may be stated as fo ~@ Itis concerned withthe accomplishment of the enterprise goal,’ ()_Iedivides the total work into different pars for beter performance. This is (¥) Delegation of authority by a superior to his subor feature of organisatic rh on sviauigement ~ Nature and Scope sto be performed for the accomplishment of 'o departments or divisions based on their nature. to the subordinates by the superiors. Delegation of authority by the superiors’to their subordinates to enable the latter to carry out the task. (¥) Creation of accountability to make the subordinates answerable for the use of authority. é STAFFING The staffing function of management is concerned with the performance of the following activities: Recruitment and selection of employees Training ‘Wage and salary administration Performance appraisal Every organisation employees to do various j ‘olume of work. Therefore, it becomes necessary to have the right number of “employees at any given point of time. «,_ Recruitment ofemployees may be done fiom internal as wellas external sources | Transfer from branches having surplus stafl, pro are some of the “ selection process by holding 8 candidates need to be trained to enable them to perform their ‘There are on-the-job and off-the-job training methods. ‘the correct remuneration for the employees and payment of fina entives are also part and parcel of the staffing function. The performance of the employees must also be periodically appraised or evaluated 50 as to know whether they are efficient and effective,ion based on their experience, merit ~ Employees become le sal fortes rom one Bane 0 another fhe ide. The employe, anderen Er ii serve condions provide he splays cor rom one place id performance of are found to be towing nepigne who have not shown 2¢ Bi = demoted (sent to a lower Pt i Tessie maybe eget yeesmay alsobe terminated. of ine! ment. cdr sing mame 1 function is concerned with the following act The directn a i sion. @ Undertaking supervision. _ fs a Ro scemns olen aaa i fmanagemeht eid the (i) Proper comiminication relationship between ‘employees. Leadership — to guide employees. ae manager has to supervise the work done by the Clie i aa the manager has the rig! when needed. This will be possi r See lnecmnteninates under him. Ifa manager/superior is asked to ervise more subordinates than the optimum number, he will not be able to do His work effectively. On the other hand, iffewer subordinates are placed under a superior, his potentials cannot be fully utilised. It, therefore, becomes necessary to determine accurately the optimum number of subordinates a manager can control. This is what is known as “Span of Control’ or ‘Span of Management’. ‘The manager often has to give orders and instructions to his subordinates Pertaining to theit work. This willnot be possible without proper communication. Communication may be oral as well as written. It may be formal and informal. Formal communication takes place when the organisational hierarchy is strictly adhered to while conveying information. Here, the superior — subordinates relationship is not ignored. Informal communication, on the other hand, ignores the organisational structure or hierarchy. The information may be received from any individual. {adership is yet another integral prt of the directing function, Leadership is the ability of manager to induce his subordinates to work towards the common | Boal. A leader is supposed to possess certain qualities as mentioned below: @ Physical fimess : oy Management — Nature and Scope Ta NS Leadership styles are of different types as stated below: oO @ Gi) Laissez Faire (iv) Functional () Institutior Ww CO-ORDINATING s performed by the various departments in ax enterprise are different, all such activities are directed towards the attainment of the overall business objective. The finance department provides finance, the purchase department buys raw materials, the production department produces goods and the marketing department tmdertakes marketing and sales to enable the business toachieve its goal. The activities of the various departments are inte:-dependent. For example, the production department will be able to produce only if the Purchase department buys the necessary raw materials at the right time. The Purchase department will be able to buy only if the finance department provides the necessary funds. It, therefore, becomes necessary to establish link between the various act Performed by these different departments. This is done by the co-ordinating function of management. mn may be achieved by means of any of the following ways: @_ Planning (i Rules and procedures (ii) | Sound organisation ~ proper use of hierarchy (iv) Effective communication (¥) By having Liaison officers (vi) By setting up a task force comy departments (vil) Creation of a separate co-ordination department. CONTROLLING looking ahead’, controlling is ‘looking back’. Control enables prising representatives from the interacting ie 5 & business enterprise to know whether the plan has been successflly implemented ji and its goal has been achieved. The process of control involves the following stages: @ Establishment of standards Gi) Measurement of actual performance anePrinciples of Management ee ‘Consumer satisfaction, emp it ‘ble standards. This will help the manager to FUNCTIONAL AREAS OF MANAGEMENT (SCOPE OF MANAGEMENT) ‘Management practices are applied inthe following major functional areas of business: {) Production ~ Production Management (i) Personnel — Personnel Management (Gi) Marketing - Marketing Management (iv) Finance — Financial Management igement — Nature and Scope Personnel Management Organising BUSINESS MANAGEMENT § S g 3 : = g : S € 3 = 2 é 3 g 5 &Management Nature and Scope 119 manufacturing £0085 is concern : on management {8 F fanetion. Pr co-ordinate as follows: ee ivties ofa business M9Y np ces otter Tant and machinery cessful products (i Acquistion of the necessary P se ~ the measures to be adopted to handle the various 5) Purchase and storage ofraw mater cycle consisting of introduction, growth, maturity orca the targeted eve of production and decline stages ©) ona (¥) Branding — selection ofthe most appropriate name forthe product w ty (vi). Packing — determi Be isc) the type of container or wrapper for the product. yjuman Resources Management’. Personnel This alo refered ta he management ofthe human resources ofab ites et ‘The following activities will come within the purview bus vi 0 cof personnel management: “ | | Manpower Planning {G)_ Recruitment and Selection of employees Gi) Employee training Target return on investment (i) Maximising market share Gi) Meeting competition (iv) Preventing competition and so on. The different types of pricing, which are followed by marketers, include, among others, the following: @ Oddpricing Gi) _psychological pricing (iv) Monopoly pricing Skimming pricing ~setting a very hig! Penetration pricing ~ setting a very o price © The marketer must also have kriowledge of the various types of discounts and allowances offered to the middlemen and the consumers.” FOS He ama neic requirement of any business. A business re raat selcecsiietandand uling plant and machin (0 buy raw materials, pay salari and to meet out all other routine expenses. ‘The following are the sources of fixed capital: () The proprietor’s own funds ~ in the case of one-man partnership or a private company. (i) Share ca irs fgg FY, ig 1S and Wages ‘under pressure mos ofthe time ticular busines, inthe case of public and Government companies that the authori authority delegated sj subordinates. authority exente re } ei oseret ry po hea iauday smc \ 6) Longe oan fom ancl insttons ike the IDB, the CIC may not be able to cary out the tsk ails ae The sources of working capital are as follows: % ~ Managers, often, may + | Overdran fo hold meetings to h meetings are aso from the subordinates on the departments also may have before their ‘subordinates. Suc! 10 get feedback inform. i) Cash credit Progress oftheir work. Managers of, ii) Discounting of eligible bills gular intervals to se "cure Proper co-ordination and to: review (iv) Trade credit from creditors et. cieceteeci {| Financial management is concerned withthe follow ing important activities: . abetinetece . ee: | @ To find out the long-term and shor-term financial needs of the Only then, he will beable o suid and motivate te business, v him. (To identify and choose the right source of rising funds. Gi) To ensure proper utilisation of funds, | (%) To ensure safer of investments and also maximum retums on such (vid) Proper use of resources ~ The manager has to ensute that the il resourees such as men, machines, materials and money are investments, oS 10) To remain in the ood books ofthe creditors, bankers and others by ‘such conflicts and arrive at an amicable: ‘maintaining the creditworthiness of the business. (®) To undertake trips ~ Managers, particular Ww ‘To ensure the shareholders a reasonable return on their holdings. ‘have to undertake business trips frequently and as a res Roleofa manager beable toremait i 3rding to working hours. They may have to work toler, hsv bya manager in a busines organisation may be stated #8 arto tatsg vistovina wee istane ont follows: aR lest: ane at te i work. — O Tohave comacts - He has to_ t rts agement Thoughi ae sof = we benefited as a result of Increased output, , management is ee a. hadi between the workers aj frarmonious the management. between the workers and the mana eration gement and between xpect higher profits only if the workers work with nagement can ¢: The workers will be benefited only if the management iciency. The ficiency and comes forward to reward th €M suitably, Scientific erefore, contemplates absolute C0-Operatio Dee IS also of Paramount ‘ork done by them is inter-related an inter-dependent Anat restrcted ougpyy. For the ment maximum output “oll and lower cost of duction, Gre. itp nore remuneration, hus, } ug maximising ne i Management J—_— mt eds The experiments revealed ight eet aly flight inboth the 10. et Saeco, Experiments — nS Werg, Test Room FAP where telephone relay units wer, sssebly depart ts wastoascertain the relations, jectofthe exer ivity. Those employed in the the work was arepetitive one. A group of ina separate room. AS they wWerg introduced during the period o¢ increased due t0 ew Programme —A si ; : rain ea Po views a their sre yorking conditions, supervision, Doe 10s ee the morale of the workers improved as they had the Ee aaa views were bear, The complains of the workers satisfaction ere not objective statement of facts. They were reflections of a Worker's personal and sentiments. eae observations ~ The main aim of the study here is to find out the influence of the group on a worker to restrict his output in spite ofthe existence of incentives for higher output. The working conditions were not altered for the sake ofthe investigation. The group consisted of fourteen workers and its task was to telephone equipment, soldering and to check the incentives given forthe work were attractive, But neither an individi ‘worker nor the, sa whole mé attempt increase output. The was conducted aS. a Mary Parker Follett (1868-1933) Contributions of Experts to Manugement Thought 212 4, An individual in a i ‘group is accepted as its leader by the other members. «+ Such an informal leader is able to guide and influence the co-workers, 5. What encourages a worker more is the feeling that his views and suggestions are heard by the management. Criticism of Hawthrone Experiments > The following are some ofthe criticisms of the Hawthome Experiments: 1. The study is confined to a particular company. The findings, therefore, lack universal applicability 2. The study has considered only the internal environment and has ignored the extemal environment completely, 3.,, There was no basis for the selection of the workers, the physical environment, ete, The study, therefore, was unsci 4. The view that satisfied workers produce more output has also not been accepted. 5.” Undue importance has been given to social factors like affection, sense of i i the quantum of output. The fear of loss of 964) professor of management. His book titled ular even today. He developed the famous ‘X Theory’ and ‘Y Theo: ion. Theory X adopts a negative approach towards workers. It assumes that workers dislike their work basically and are not ambitious and creative. It further says that satisfaction of basic needs alone is important for most workers and that the workers need to be closely supervised while at work. are properly motivated, they will certainly come forward to accept responsi Workers can also be creative and satisfaction of basic needs alone is priority, Close supervision is not necessary when the workers are doing their work. They can exetciseselfcontrok Theory X and Theory Y are popular even among the contemporary managers. 8Pier ey Ee erauretinas something i a hip as something preneurship Simon of federal organisation in pi srfral organisation there will be ye product produced et ng to the product tga i marketing am msiders entre with ould contain the least number of autag scion structure 8 ity 6, The organisatior levels. jon-making in his work by say, for decision: id Y Sayin, 7, Drucker ee he does through making decisions”, 78 areca to prepare managers face the CHAINS of ture. py & “ is ene of management development is important. thisa pro Management by Objectives (MBO) ‘An important contribution of Drucker « whic th superior andthe subordinate jointly identity the obj be achieved by the subordinate in tune with the overall results expected, The following are the stages involved inthe process of MBO: 1. Establishment of Objectives — Once the basic objectives of the enterprise have been established, objectives of individual departments will have p be set. The targets of the subordinates of every department wi fixed mutually between the subordinate concerned and his superior. This will be done after a certain number of meetings between the two. While Setting the targets of subordinates, it will be ensured that they are in tine with the enterprise targets. In other words, there shall be perfect co- ordination between the targets of the subordinates and those of the enterprise. The subordinates shall express their expected tasks in clear measurable terms. alt ) 2 Periodical Review - ‘The performance of the subordinates shall be subject ‘periodic review. The superiors shall provide appropriate direction fet the effective performance of the task be revised if itis found undertaken. The targets may Tight direction, Final Review ~ In the fi oe ne ‘a ee a inal meeting, between, the superior and the sind ie te latter's performance,.if itis found that te ns i tasks, he gets not only ion or such other benefit | that the subordinates are not able to proceed inthe | Contributions of E: xxperts to Management Thought 2.16 ‘Advantages of MBO 1 his subordinates. Itgives the subordinate an opportunity to fix his own targets in consultation lo by considering his own potentials. The subordinate knows precisely what he is expected to do. . As the subordinates have the freedom to determine their own targets, they feel motivated and also show keen interest in their attainment. |. The periodic review of the subordinate’s performance enables him to know whether he is proceeding in the right direction. Disadvantages of MBO 1 2 3. aeNe .. What do you mean by di ‘The superior and his subordinate may have to meet several times for the sake of setting the objectives mutually. Periodic review of the subordinate’s performance involves lot of time and also paper work. MBO has not much to do with the lower levels of management, Review Questions SECTION A What is Taylor's differential piece rate system? n of labour? What is Scalar Chain? }. Differentiate Unity of Command from Unity of Direction. Whe What is a Gang Boss? the object of Time Study? Mention the experiments conducted by Elton Mayo and his team. . What is meant by Fatigue Study? Briefly state what McGregor has done for management, . What is MBO? SECTION B Explain Functional Foremanship? Write briefly on the elements of Scientific Management, How has Fayol classified the activities of industrial cocems? Explain the concept of MBO together with its merits and demerits,Chapter 3 Planning Meaning The first and the foremost function of management is planning. Simply stated, planning is deciding in advance what should be done. It is future oriented. To attain its goal of profit maximisation, the business has to produce and sell goods. ItSiyearly production and sales targets are broken into weekly and monthly targets by proper planning. This makes it possible to work systematically. The logic of planning can be better explained with another example. A student, who has'to write his University exams in the month of April, may prepare a plan to revise his lessons, subject wise, according to a particular order. This will certainly help him not only to prepare well for his exams but also to get good marks. Organising, staffing, co-ordinating and controlling,: which are the other important functions of management, succeed planning. The basic objective of planning is to work in a systematic manner so that the goal of the enterprise can beachieved with maximum efficiency. Planning eliminates the tendency to work atrandom. Definitions of Planning Planning is deciding inadvance what to do, how to do it, when to do it, and who is to do it. It bridges the gap from where we are to where we want to go — Koontzand O’Donnell. Planning is a mental predisposition to do things in orderly way, to think before acting and to act in the light of facts rather than guess — Urwick. Planning is deciding the best alternative among others to perform different managerial operations in order to achieve the predetermined goal —Henry Fayol. Planning is deciding in advance what is to be done. It involves the selection f objectives, policies, procedures and programmes from among alternatives — E. Hurley. ‘oncept of executive action that embodies the skills of ing and controlling the nature and direction of change — 283 of thinking through and making explicit the strategy, necessary to accomplish an overall objective or purposePrinciples of Manag ; in the visualisation 1 32__ Fg ede real ay Planning 33 i i Planing ites believed nee eon units of a certain product during a particular financial year, it ean prepare ae ised foresight, the vision : its plan that specifies the weekly output, monthly output, the quantity of RTE inking proces, He OF aes 85d raw-materals to be purchased, the number of workers to be engaged and anning isa thinking for intelligent action — Alford and Bey. ¢ : A is required for a 0 on. Once the plan is prepared, the business can proceed to acquire the factand experience thatplanning is meant for future use ang i ta c lear i definitions make it % epeesgitlcis Ast om us ionship between Forecasting li inning and Decision-Making ] di) eer yeaing planning and decision-making MAY appearto be an ya acl ie butare inter-related. Forecasting is noy nd tosom ise tohappen in future. The weather of ; adele Te we of the word Lain place ae ismeaningles.A businessmay forecast tumover of R25 jy for be caret financial yar. Past records may provide’ a basis for busing! forecasts. Now, toaain the forecasted tumover of RS.25 lakhs, the business hg z ie to prepare a plan. Such a plan will provide for weekly and monthly productgg wand sales targets : a Decision-making is nothing but the process of selecting & particular opting 7 from among the very many options available: The need for decision-making wi x arise only when thee are many options. Inieexample given above, the busines oI ‘may have certin options, ie, to produce using indigenous raw-materials gp te ‘imported materials to sell the output inthe domestic market or in the international a ‘market or in both the markets and so on. wm Nature of planning (Basie Characteristics or Features of planning) ; a The following are the basic characteristics of planning: =i @ Planning is the primary function of management ow Ht (),Itisanimelecal activity (W) Itis future oriented 3 : ‘ 15. continuous process f ‘ Let. us now diseuss each i © Planning s the prima Point of manage, ir Lt ‘managerial fictions, ich gives meaning to all other controling, staffing, co-ordinating and nctions cannot be effectively target of producing 10,000 yi, tJ wi) Necessary men, machines, materials and money. Thus, planning, as the mary function, gives focus to all other functions of management. tis goal-oriented ~The goal of every business is to make profits. Planning helps to attain the goal in the most effective and efficient manner. The annual production and sales targets are broken into weekly and monthly targets. Thus, planning provides for a systematic approach and eliminates a random approach towards work. It safeguards the business against idle time loss, oss due to surplus labour and so on. It is all-pervasive ~ By this we mean that planning is done by everyone at every level of management, namely top, and lower levels. Top- level managers (Managing Director, General Manager and others) prepare long-term plans for the business as a whole. Middle-level managers (Production Manager, Marketing Manager and others) prepare departmental plans. The lower managers (Foremen, Supervisors and others) prepare plans to carry out the daily ro It involves 1, in a systematic manner, the leration of several factors ity of materials and machines, the time required, market trends, Government regulations, ete. Sound planning, therefore, depends on the availability of knowledgeable persons in the organisation, [tis future- oriented ~ Planning is required to attain the future goals ofan ‘organisation, However, past happenings provide the basis for plans. As future is uncertain, a plan must make suitable provisions to meet any crisis. Fluctuating demand, unavailability of raw materials, changes in Government regulations, union demands, etc., may come as a hurdle in stage. The plan itself must, therefore, provide a ation that may ati in future, It requires an integrated approach— There must be a link between the plans of different departments. ‘The production plan of a business must, be in tune with its financial plan, The marketing plan, likewise, must be in tune with the production plan and vice versa. One shall not contradict the other. As the plans of different departments are inter-related and inter- " dependent, a co-ordinated approach is needed for the successful implementation ofeach plan.2 O28 2 son Ok oY v that a stage i oes metal Planing isrequited as fo, lot ess is concemed, Plannin Ss needs ‘As far 85" rages ‘Once a plan period ends, the gy ness bet by the Union Government eal budget i "The budget comes into effect from j exampl 3 1* March in the succeeding yea h the finance plan ete., prepared ; By i ih production plan, th a ce the pl | business is always fp us, planning is always @ COntiNUOUS prog) another plan is requir soradvanagssofplai2) foie sragement planing is considered Vitalin ey) tance of planning may be stated as follows: i the objective of the business has bey for its effective accomplish, eat salised overnight. It has to be achie The enterprise objective ae fen eaingre tn Aha argh a over & cor Fa business cannot be achieved in a week, j prodution deparvo weekly, monthly, quarterly and half-year tq shouldbe dvie ‘ga be successfully achieved if only the week a aoe a ere ore attained. Thus, planning helps to attain the spec sony pusness in a systematic manner. Plan gives thrust tot aie ‘goal. In the absence of planning, the activities of a busines ‘vill be without a focus. Thus, planning helps to aim and hit and avoid beating around the bush. he | Ithelpsto avoid ‘no work or ‘work pressure’ situations~ Inthe abseng of planning the workers in an organisation may have to work even beyon ‘working time due to the volume of work particularly towards the end the year. Its also possible that on certain days they may not have ay ‘work todo, Thus, absence of planning leads to ‘no work’ or ‘work pressu sinations in an establishment. Planning helps to distribute work eve throughout the year It helps o avoid wastage of resources ~ Planning makes it possiblet make optimum use ofthe available resources, namely, time, money, mate and machines. This is possible as the employees and the executives kr beforehand what they have to do. As the daily target of each is known advance, resources are required only to the extent of the work to be dat ach day. In the alsence of planning there may be wastage of reso due to lack of target and a casual approach to the work by the staff. | jive — Once focuses on rte next step isto prepare @PlaN Planning 35 : i 4, Itensures efficiency as well as effectiveness — Efficiency is ensured by doing right things and effectiveness is achieved by doi things right. Planning helps to do not only right things but also things right. Each department knows what itis supposed in advance asa result of planning, Planning ensures optimum utilisation of the available resources and avoids wastage of the same, Plat action. Itreduces risk and uncertainty — Planning is for future use and future is uncertain. While planning, future uncertainties are anticipated and 1g also selects the best course of enterprise are carr thout planning, it is possible that some crisis may arise and disturb the progress of work. It provides for co-ordination — The work done in any organisation is a team-work. Different departments part in the process of goal attainment. Planning makes the respon of each individual control without planning is meaningless. Control helps the enterprise to know whether the plan has been successfully implemented and the objective has been achieved. The task of control requires the establishment of standards against which the actual performance is measured. Deviations are noted and corrective actions are taken. If there is no planni need for control will not arise. Planning without control will make the plan le exercise. Planning, thus, provides the basis for control. Planning also provides scope for decentralisation — Dispersal of authority throughout the organisation is what is known as decentralisation. Once the basic and derivative plans of the enterprise have been prepared, the next step is to explain the same to all the subordinates who are going to perform the various tasks. Thus, planning helps the managers to invol the subordinates in the process of target attainment. The managers will be able to assign work to every subordinate and the latter becomes responsible to the former on the work done by him. Each subordinate has authority to carry out his duties. The authority has been delegated to him by his superior.present level. ‘Appointment fadditional staffto cope with the volume of Work, ete. Rarer taming The period ofthe shorttem pl ss t-term Planning ~ eee est 3 ene soknown a operational planning. Such J one year. Iti ls known i ofthe following matters: (Purchase of raw materials. ing for employee traning. : s aan arenes forte sts with else finds, ee : ee aa ature and scope ae classified under two categories ag. shown below: ‘Methods of Planning Figure 3.1 - Methods of Planning swan 6 Selatan 9 Planning 3.1 = Rian We fis REG are used again and again, occur frequently over a ave been discussed below: sation is considered to be the ultimate objective of any business, the ig objectives are also considered important: @ Abigher market share i) Customer satisfaction w (iv) Cordial management-labour relationships (¥) Greater productivity Cost control Favourable employee attitudes Product. i f objectives depends on whether they have been stated in , when stated quantitatively, can be realised better, ent of objectives only leads to ambiguity and confusion. Let ‘examples — @ Toensure proper (To be socially responsible, ii). To achieve maximum customer satisfaction, et. Tt may be easy to set objectives such as these. But what is difficult is to find ‘out whether such objectives have been fully realised or not. On the other hand, ifobjectives are stated in monetary terms, itis easy to ensure their accomplishment, The following may be given as examples (©, 20 percent return on investment.depends on the existence of business obj, ifthe enterprise does not have a spec ; 3 imegraton ofthe ‘ ‘Mets Tats ahoush the diferent deparmen od finance, ete, perform dite fina the vel enterprise objective that brings them to ana euites Bethe, perrmanct, As every member of the o ; rganisa Supposed odo it becomes easy fo assess his oor £ sem ene: ees vel that he wl ji se con complete hs task and wi & Clear cut objectives also facil i ciltate decentralist meer voto his sds andalss cong __ allay rable thm o cary out the aaa s LinitationsDisadvantages/Demerits of Objectives 1. Asmentioned eat earlier, certain object eer as ets cant be ttm tom i ome he srnn ‘Sometimes obj loyee attitude, etc. lishment ¢¢ e pjectives may be th ‘%, ailabk inthe omic ne organisation — ing into acco Asareslitmay nate possible esa eee ible to realise the objective ™™ re. Inthename of; goal attainm workers, tthe This results in frustrat “ 'may also be a tendency to. expl lott Ofte, @ number, amor : of objet ng the work tins. The usu esa ers, only ay w Pa “ Series of ste ™ Steps affectir Trait it en ms Guides gaes affect the labour ame Tener tions 5 Objectiy may be ectives ven IN precise 3 MBS | 3.13 procedures, table poli Planning “4, Objectives must be supported by su icies ames and strategies 2S ‘accomplishment of objectives depends on jstence of these. : make objectives fle bjectives may For example, . tis also necessary 0 ‘ uation prevaiting each | of production and sales may not be mi omic recession. ned during the same level periods of boom and econ as a valuable guide to those individuals who hay ‘A policy serves certain important decisions in the come ‘of accomplishment of the business provide ready answers 0, qUeS to certain fecisions have its within which the organk ding employee Pro! — whether ‘senior producing goods only the indigenous buyers. motion, for ? or‘merit” forthe ‘an organisation reget sample, may indicate te terion Fr promotion epoth. Certain business houses follow policy of foreign market. Their products are not meant for Essentials ofa good policy should not be vague. It should be clear and definite. It should not give any scope for misinterpretation + severy policy ofan organisation influences #S image, it is important that the policy is sound and logical, this also important that the policy conforms t of the society in general and the busines 44, Thepplicy should be fair and do justice to one an the organisation. Trahwuld not be prepared to favour unduly certain ind duals. be two policies pertaining tothe same issue, This will ation. 10 the ethical or moral values particular. result in du Policies should be reviewed and revised periodical remain up-to-date and also relevant. However, frequent am affect consistency. Factors determining policy-making Several factors influence the formulation of polic ly so that they endments jes, The important ones areChapter 4 Decision-Making ase ee Meaning Decision-making is the Process of selecting one alternative from among a number of alternatives available. The need for decision-making will arise only when there are options. If there is only one way of doing a task, there is nothing to decide. For example, a business enterprise that wants to buy a machinery may find several models of the machinery. As it can buy only one model, it has to decide which model to buy. It will select the best model by examining the merits and demerits of all the alternative models and will select the one that offers maximum benefits. 7 Given below are some of the important decision-making situations in a business organisation: The source of buying raw materials. The source of recruitment of employees — Whether internal or external. The market for the products of the business — Whether local, national or international market. eps a The criterion for employee promotion — Whether seniority or merit or both. 5. The method of promoting sales — Whether by advertisement, personal selling, sales promotion or publicity. 6. The medium of advertisement — Whether newspapers, radio or television. Definitions of Decision-Making _ According to Haynes and Massie, “Decision-making is a process of selection froma set of. femnative courses of action which is thought to fulfil the objective Abi 2195 his Sit 1 z 5 ofthe decisio n-proble more saistactorly than others i th s of George Terry, ‘Decision-making is the selecting of an : ire alternatives, to determine an opinion or a course of Peseisi , " sing as ‘the work a manager performs to arrive at ebeano2 0: b making is a process involving information, ition, and evaluation that is directed toy * goataina spe pes ts clear that decision-m ets courses of action inorder to select alte! Mh Adit Upon ij : On dency the University from among the 8 Vari neues. Tus series of gt to | a Comets art ‘or in the Evening college depending Ee ‘iho possible that he may study by corresp creat Ther agin, be can cise th aiversites hat offer omespon reeds to be taken by the student. eta goal to produce ad sll one lakh ni may make different fferent situations. For example, a Alesina yo ala period To afain such a eer nt teacher may permit stident coming late to enter the class on a particular a certain product Sind atevery stage. Itmay, fre ay but may not allow him on another day. Likewise, a worker may be have tomake certain importan ‘Gorn 6 Pl, sanctioned leave on a particular day but may be refused leave on another in eon ert soure om UY the ray ay i duction. Si 2s to e Pati 3 ee is required. Ithas also to determine the, ec 1 be voluntary o induced ~ When the decision-maker makes the prc forthe product andthe particular market to which the products vil n himself and is not pressurised by anyone, such a decision is besold loa market, national market or international market and sq Existence of alternative course of action — As mentioned earlier, ty. need for decision-making would arise only when thee are alternate ‘ays of performing a task If there i only one course of action avail, thereisnothing to decide. For example, an outdated product, which cana be updated, has to be abandoned by a business enterprise and there ae no altematives. Similarly, a worker, who is inefficient and withou Commitment has o be sent out ofthe organisation. In both these cass, thereis no scope for decision-making at ll.On the other hand, a produc, that offers scope for alteration or modification, maybe altered and therey 8, updated. Likewise, a worker, whois showing commitment for work, buts ‘ot picking up things fast, may be given additional training to enable him to do beter Ti may be postive or negative — Another interesting feature of decision making i thatthe decision made may be either positive or negative, For . It is an ongoing activity ~ Decision-m: Decisions are to be taken in everyon a business organisat ight from cradle to grave. In ns need to be taken right fromDecision-Making 47 Process of Decision-Making or Steps involved in Decision-Making The different stages involved in the explained below: 1. Identifying and Understanding the Problem—The first step in the process of decision-making is to identify and understand the actual problem. If only the actual problem is identified, it will be possible to provi l ide a remedy by evolving a suitable decision. Sometimes, the symptom is misunderstood as the actual problem and an attempt is made to find a solution to it. For example, ifa business enterprise finds decline in sales, such a decline is only a symptom or an indication and the actual problem may be any one or more of the following: @ Inherent product defect. (High price. : (ii) Lack of sales promotion. (iv) Intense competition. |), Faulty distribution system and so on. Understanding the problem correctly is, theref. wre, decision-making. . iX i 2:2. Making an analysis of the problem — Once the actual problem is identified, the next step is to make a detailed analysis of the same. Analysis of the problem Tequires data which may be obtained from both internal and external sources. If; in the example, given in step | above, lack of promotional measures is found to be the reason for a declining trend in sales, information may be gathered on the various aspects of sales promotional measures. If: only a detailed analysis of the problem is made, the business will be able to find the Tight answer for the following questions: Process of decision-making have been the starting point of @ Is the allocation for promotion adequate? (i) Does the organisation have the required number of sales personnel? _ iil) Are the salesmen doing their job well? > (iv) _Is the choice of medium of. advertisement right? Etc, 3. Identifying alternative solutions ~ After the problem has been analysed in detail, the next step is to develop alternative solutions. Any organisational has many solutions. It is, therefore, necessary, that the decision-maker s the alternative solutions. The problem of lack of promotional efforts d by adopting any of the following solutions: ther allocation of resources for media advertisement if the de already is inadequate. , si ‘ p additional sales staff if the existing number is insufficient. fairs and exhibitions, etc.SL sss anvorm ed in step 3 to ensure better sal prone’ ° and drawbacks. Its, therefore, my ast viable one, under t ial ae selection of the best alternative: @ Resources available. : @ The -values and beliefs of the decision-maker. (i) Opinions of the staff. (qv) Pastexperience, ete fe Jementing the decision — After the final deci a ‘same, Implementing the decision is done oncemed. The responsibility for carrying ou, uals. Necessary procedures shoiild be ij le provision must be made.to watch { review of the decision, during the period oft decision must be fixed on down for executing the deci the expected results. Devi taken then and there, Certain modifications or alterations in the decisior gal made if necessary. ‘Types of Decisions Managerial decisions may be of the following types: 1” Organisational decisions may il anvil valle ocho 4 300 Bi a 4, x 6 7. Proganmed or sme decisions 8. Non-programined or unstructured decisio 9. Individual decisions, and © 10.” Group decisions, | ai regularly late for work, ocsisicer M shin shetoiA c ‘Organisational Decisions ~ These decisions are made by a manager in his official capacity. For example, the manager of a concern may decide to place an employee, who has mi Such decisions are m: interest of the organisation. Personal ms ~ The decisions made’ by a manager in his personal capacity are called personal decisions. For example, te manager of a concem may give a personal loan, out of his own funds, toa subordinate. [fthe subordinate does not repay, the manager cannot take action against him in his official capacity. Strategic or Basic Decisions— Strategic decisions are complex in nature and ‘commitinent on the part of the staff. The in the market or instil a very expensive do not have a serious impact on the future or fate of the organisation. The decision to buy certain raw materials for the factory, stationery items for the office, sanction leave for an employee etc., may be cited as an example of a routine decision: Policy Decisions — Obviously; these decisions relate to certain policy matters and they provide suitable guidelines for certain important organisational issues. is for, employee promotion has to be evolved by every forapolicy decision, Usually, ‘seniority’ and ‘merit’ are purpose of employee promotion. An organisation may or merit or both. b ns ~ These decisions are necessary for implementing or mas, Faking the example for policy decision given above, ty is to be adopted as the basis for promotion, the manner in. which should be determined also needs to be decided. Seniority of an individual determined in different ways, An employee's length of service in the present organisation alone may be considered for determi jority or his ‘other organisations also may be taken into account for the purpose. 1¢ merit of an employee may be dete by his academic tions, achievement inthe present job, level of efficiency, ete. Operating decisions are concerned only with such matters." | 5 © Programmed of Structured Decisions — These Shave already been evolved and they provide a basis for action. These decisions are the outcome of past experience, tradition, custom and so on. For example, iPan empleyee is , the employer knows how to deal with him. oeis erp Corea te te manage asto refer hea Ny Nae ‘ble totake an independent de ‘ty pote jsions made by ing re are decisions made by indivigug, | in x Foy is th “ar he workers and the management, the ase nmr and anoun 4) thee is2 cis who may conduct an enquiry lounce bis dl eed 92 HO nto wll be binding on both the Workers 5 icon of th , Rg ‘The decision 4 masa, | sine! ae Person Groxp Decisions ittee consisting of th “hy xist a commi ig Of the representa cops tt 2 ranagement When there is any dispute tne ‘These are decisions made by @ group of L se workers andthe b snd mnagenent he matt wil be refere he comin on tan enquiry and announce its decision which ig cntoih the workers and the management. ‘Merits of Group Decisions | eons re eel considered beter than individual dec view ofthe following advantages: | nthe ry * nse The problem, theefre, canbe thoroughly discussed ag ; bes sain canbe fund out. Such an advantage isnot availa case ofinivdval decisions 2 Te deison ofa group, ut ery member ofthe proup has his own thrust is views on thers. There isa , cating individual decisions, = : aie both of members who represent diferent seamed oe kare ie gee Member will ensure that injustice} Te pass of pomp deskin nar | 5 aah Setion-making also provides scope for proj! > be a biased one, This i beg ideals and Values. No member ways chance for the bia e i 4 Members mons the members, Every memberbt A Gro deisos en nto confidence when he discusses any is decisions, —* “YY 8 greater sense of ‘acceptability than individ 0.08 : ; Decision-Making Demerits of Group Decisions Group decisions, however suffer from the fo ‘on any member of the group for the quality therefore, possible that a casual approach may ‘be adopted throughout the decision-making process. 3. Group decisions are often found to be compromise decisions, This happens because the members may give divergent views on the consensus has to be reached somehow at the end. The decision is finally made so as not to hurt anybody's sentiments. Such a decision can only be a compromise decision and not the best. 4. ‘Its also possible that a few influential members of the group may try to put pressures on others and get their consent. 5._ Group decisions are always expensive compared to individual decisions interms of time, money and efforts required. 6. Conflicts may also arise between the members ofthe group. Asa result, a decision may not be evolved at all and the entire process may be deferred indefinitely. the same. Timely ns. Based on the id the degree of confidence in such information, ns have been identified: 1, Certainty 2 Risk, and 3. Uncertainty. ‘These have been explained below: ‘wages of the employees would certainly be outcome of such a decision, obviously, is nes therefore may not be favourably considered, On the other hand, a decisi ion to cut the price of the company’s produets would certainlybe’weleomed by the Customers and the management, therefore, may go ahead with such a decision,5 Chapter 5 naomi Organisation — Nature and Scop, “ ism’ which m vereansation’ has come from the word ‘organism ans, ee ie interdependent parts. The parts or components o¢ structure of ine chines, materi ds, money, function, sation consist of men, ma oney, functions, oy and responsibility. is to unite or integraje sar poents effectively fr the purpose of attaining the common goal Definitions Mowibin i Some ofthe important definitions on organisation, given by eminent persons, areas follows: 1. ‘Organising is the process of identifying and grouping the work to be performed, defining and delegating responsibility and authority, ang establishing relationships for the purpose of most effectively together in accomplishing objectives’ — Allen. 2. ‘Organisation embraces the duties of designing the departments and the personnel that are to carry work, defining their functions and specifying the relations that are to exist between departments and individuals? — Kimballand Kimball, mal structure of roles mired to achieve the goals ‘ofan enterprise, the grouping of these activities, the assignment of such Soups toa manager, the delegation of authority to cary them out, and provision for co-ordination, horizontally and vertically, inthe organisa structure’-Koontz and O’Donnel. aieeenee | + ‘Organising is the establishing of effective authority relationshi selected work, persons, and work places in order neve together efficiently’ GR. Tey. eee ‘Organisation means the. relations eer Organisation — Nature and Scope 52 7.. Organisation is a harmonious adjustment of specialised parts for the 9, Organisation is a process of welding together a framework of positions which can be used as a management for the most effective pursuit of the goals of an enterprise — James Lundy. 10: Organisation is the process of combing the work which individuals or groups have to perform with facilities necessary for its execution, that the duties so performed provide is concerned with grouping of activities, establishing authority — responsibility relationships between them and creating accountability for the accomplishment ofthe enterprise goal. Process of Organisation The process or act of organise 1. Division of Work into a number of ‘manufacturing con: ion involves the following stages: ire work of a business enterprise is may be divided into purchase, storage, display, ertising, etc. 2, Grouping of activities — As the second step, activi in nature and also closely related, will be put under the control of a department. For example, window display, advertising, management of sales staff, sales promotion, etc., are the activities to be grouped and _ brought under the control of the marketing department. Similarly, “ management of working capital, provision of funds for making purchases, . buying machinery, etc., are the activities performed by the finance department. Assignment of work — After the activities have been grouped into departments, the next step is to assign work to every individual who is icular department, For example, in the finance vid accounting, , Which are similaree " 3s been Assigned some mn Sn i to jor to a sul & se Pe ay by a super pe salesman who has been asked ty of authority. For © reeds to be given the Necessary delegation of auth fcular region Mm i lok ar sales 7 lc, say ere and met i din wa funds to 8 et nds forte S He ail Vulbitbet mi pase ‘amount, the salesm e able - the necessary the authority to draw | to dois work. ity A subordinate to whom authority has been 5. CretonofAcounailty faethe superior forthe se of authoriy Sa fing accountability, the superior can Only by creating i i | sr eta : isused the authori : a a as means that every subordinate should know Op . mate vverior is and inthe same manner every Superior must Know the Pf vpordintes under him Every subordinate has to carry out the tasks ’ assigned to himby his superior only and he is accountable to that supetir alone, [Importance of Organisation re¥dt0 i «The benefits or advantages or the importance of organisation may be explained asfollows: 1 for implementing plans - Organisation follows planning, Implementation of the business plans cannot be possible without the aid of organisation. Itis only through organisation, the resources required, to accomplish the enterprise goal, are acquired: Organisation assigns ‘work to the superiors and subordinates. Accomplishment of tasks by individuals and departments should result in realisation of the business goal. 2. Specialisation ~ The entire work of a manufacturing concern is divided into production, finance, personnel and marketing according to importan Each functional ead looks wey id : gre tdening fey bate ctivith x it ier te various activites ofthe, 5X Shag otrl can be xete et! ect ™ SS -many key ext view ofthegregcooe BL” individual ew of theyre ficiency a5 each individual concentrate, A. There will be taki ; 3 Tt Z Pa ea standardisation will result in mass production, : fers from the following drawbacks: Fenctional organisation, however, su Drawbacks of Functional Organisation 1 Functional organisation i uve in view ofthe presence ofa nung of departments and divisions. ta ‘2 itis always difficult to secure proper co-ordination among the differen, departments and individuals. 3. Anymajor decision requires the patipaton of different Functional hee, Thismay alto del in ariving ata decision. 4 Fumcoal xgstion is also expensive t adopt. The creation of, snuraber of departments and divisions and also the employment of many xcetives and subordinate staff will involve heavy expenditure ‘Committee Organisation Acommittee %sa.group of persons entrusted with certain tasks, The members are expected to discuss the problem un consideration Board ofDirectors ofa 5, Formal Committee, and 6 Informal Committee, Let us now study about them, membership, isanexample, ‘Temporary or Ad hoc Committee ‘A temporary committe is on that is created fora specific purpose. As soon as the purpose ‘complished, the committee stands dissolved. For example, if was mis di workers, it. As soon the committee su Executive Committee mittee is one that has powers to make important decisions «¢ Board of Directors ofa company has such decisive powers. Advisory Committee ‘An advisory committee can only make suggestions. It does not have the powers to make decisions, Formal Committee A formal committee is one that isc the org: das per the rules and policies of iccording to the lines of authority, Evaluation of Committees Advantages: ‘The following are the advantages of a committee: Committee provides scope for: ‘Sroup judgement. Every member of the an express his/her views whenever a problem is discussed.‘when they “pated ng ion with tl ie Sgenert decision same E ‘it. i iter funct Ne yups, the committee 7 tions. eth See emit constuedin abuse! dvaion FOT*EP.”« ofboth the management ang deere repeats s “4 gual will ave to be rete als drawn from dif detisions on cet, follows: nm vnsiveafi. The committee men : tater work. They have fo be oa id remuneration ance each time a meeting feat the very purpose 4 Toreachaconsensis mong the membe! view to satisfying every member, # com sometimes, atthe last minue, 4. There may also bea tendency onthe part te committee to thrust their views on others. 5, There is no fixed esponsibility on any member of the committe forthe outcome ofits decision Ithe decision tums outto be a failure, no individual will come forward to take the blame, The committee may often be constituted without ved persons. The ide ‘of'some influential members sation — Nature and Scope 522 ittee must not have too many members. For the committee to do job effectively, the number of members should be restricted to five or 4. The agenda (programme) for the meeting should be prepared well in advance and sent to every member. This would enable him to equip himself better. 5. The proceedings of the meeting must be carefully recorded in the minute book. 4 6. Every member ofthe committee should be informed of the action taken onR&D Qualty.control Accounts Engineering GENERAL MANAGER _ Figure 5,5. Project Organisation 524 Organisation —Nature and Scope Bo ae NOP ae gt Evaluation — Merits of Project Organisation ‘The merits of project organisation are given below: It can be designed to suit individual projects. It makes use of s, ised knowledge and skill wherever required. 3. It fixes responsibility on individuals on the work done by them. Demerits of Project Organisatio ‘The Demerits of project organisation are as follows: 1. The project manager may have a tough time dealing with specialists from different field. 2, Evaluation of performance of the various specialists also poses problems for the project manager as he may not be well versed in engineering, R&D, accounts and so on. -making is also difficult for the he project manager who may be “pressurised by the specialists. * > which the project has to be completed will put pressure i fered suitable where a large number of small projects will have to be managed. A marix organisation is also known as 2 le command system’ as it has two chains of command ie. the flow of is both vertical (Line Authority) as well ashorizontal (Project Authority). departments are established for each specified task. But thesePrinciples of| Managemen ee ‘ Li Organisation — Nature and Scope 5.26 ‘Organisation = See pe angio 209/07¢ } Review Questions SECTION A 1, Define Organisation sie” ©” MANAGER. ANAGER- MANAGER... ppesoNNEL ©” ACCOUNTS propucrion, = RED pt | 1 1 o 7, What is an ad hoe committee? PERSONNEL ACCOUNTS, ‘Who are staff specialists? anager. PRODUCTION” RAD 8 7 GROUP GROUP GROUP © GROUP A a { personne “ACCOUNTS GER- ltt RED Pi ‘ORCTE \ GROUP GROUP {GROUP GROUP SECTION B bigest Cae - matrix organisation. SECTION C Evaluation — asec ve eecone nese am brid oles te fish iil pion wel sch tion. ‘What are its advantages and disadvantages? swhacks and suggest measures to make tommittees specialisation, es Itcanbe sare to sind pes, in | Neat) It offers greater mtvaton forthe personel engaged ject and | . they show keen interest in its successful completion, Ps 4. Italso promotes communication between witha projet. the various personnel associatedChapter 6 Delegation and Decentralisatig, ae east mee sgh ofaperson todo and make things happy, dae a The peson vested with authority is known as the ‘Supeiae oe on on who he autor is exercised is knowm as the ‘Subordings, sis ret right to give orders, make deci ns and alloca, ares utoty cone ote superior by vite ofhis offical positon Power e i ‘Theterm ‘Power’ may appear to be similar to authority. Power is the apaciy of apesont stand infene others It doesnot come oa person by reasong tifa poston. person gets power by vite ofhisintelligence, knowles, skilland ther persona tits u Disincton betveen ‘Authority’ and ‘Power? The distinction beeen authority and power may be stated as follows: 1. Itisthe capacity of an individual, 2 Wacerues toa person by virtue this personal positon which is Delegation and Decentralsation 62 erent Deeualatloo eee es tel flows downward 4. Power may flow in all directions. may delegate ‘A foreman, for example, by reason authority to his subordinate. of his skill and intelligence may. influence even the production manager 5, Authority relationships can be | 5. Power positions cannot be shown shown inthe organisation chart by means ofthe organisation chart 6 The authority of an official | 6, The power ofan individual does ith an elevation not change with a change in his in his official status. offical status. Theories on thesource of Authority © There are different views on the source of authority: Some management thinkers are of the view that authority flows downward. There are others who hold the view that authority flows upward, ie, acceptance of the superior’s authority by the subordinates is necessary. There are three different theories on the source of authority which are given below: @ ‘Formal Authority Theory, (i) “Acceptance Theory, and (@ “Competence Theory. Each of these theories has been explained below: flows downward in an organisation through tion. In a joint stock company, for example, the ultimate is only the shareholders who entrust the the company to the Bi delegates the. author ‘The acceptance theory Was developed by a management expert called Chester Bamard) According to this theory, the formal authority ha sign is accepted by the subordinate: authority depends on the less of the subordinates to accep: ‘Subordinate will accept the of authority ifthe advantages accruing to Accepting it exceed the advantages accruing from not accepting, an order ift is consistent with the organisational t and he is able to comply with it both———— ee 64 tofind isnot uncommon f0 8 pesltng fa subordinate, to whom go, sibility gation of 2 subordinate, om pron 8 38) ET betas equred. Responsiy wear ena are eg vento hun is an impor for can be i aween te PesO0S ee for example, may sp ssignnet of POs Tish ie ble to do becuse ofthe oy some lity ings done by the eee a ‘ura, my or confined to a speci, foreman to the producti, aa cone, On the other hand ¢ the job of installing a plant to a technician, former is confined to that work al Sate erie asain ct person may be defined in terms of functions or tare asthe case may be. The responsibility ofan office manager or a legal officer, fy cxample isin terms of functions. The responsibility ofa factory worker, on ty other hand, is in terms of targets (output to be produced). 'A superior who assigns some responsibilty to his subordinate should alg sive the later the requisite authority to perform the task. For example, a sales ‘who has been given a certain sales target to be attained within a specific period should be given the authority to draw the necessary cash from the fine ‘department to meet ou the expenses in connection with his travel, stay and food ‘the company gives him atwo-wheeler, he needs to be given the cash necessiy ‘to meet out the fuel and maintenance expenses, He must also have access tote telephone. The present-day salesmen are given cell-phones or pagers, . | elegation and Decentraistion EE ‘pecountability sponsibi leto the latter for remains liable whether or not he leted the work assigned, he must offer givens not acceptable tothe superior, ity alone is not enough to make the salesmen the necessary authority to carry out their ” is only the process of transfer of Definitions of Delegation of Authority The following are some of the important definitions of delegation of authority: ‘The process of delegation involves the determination of results expected, the assignment of tasks, the delegation of authority for the accomplishment of these tasks and the exaction of responsibility for their accomplishment 1d O’Donnell. is the process a manager follows in dividing the work assigned that he performs that part which only he, because of his unique al placement can perform effectively, and so that he can get iim with what remains — Allen. 3, Delegat passing on to others of a share in the four elements of the management process, that is to say, in the command of the activities of other people and in the responsibility for the decision that will determine “the planning, co-ordination and control of the activities of such other people-E.RL. Brech, “4. Delegation of authority merely means the granting of authority to Subordinates to operate within prescribed limits—Haimann, 5. Delegation means assigning work to others and giving them authority to do it—F.G, More,we definitions that delegation is the Proce ility and transfer of the necessary author Sy sf) es clear from the abo Meer of work espns The following are ved in the process OF delepayy, @ Assignment of Duties, (@ Delegation of Authority and (i) Creation of Accountability. ‘ : ach ofthese stages has been explained below: is of Duties 7 . departments or divisions in an enterprise, namely, Productiog marketing, personnel, finance, ete are headed by the respective departmenty = Mbagers A umber of subordinates work in each ofthese departments. Eyey departmental manager assigns work to each of the subordinates working Under the superior/manager shall take into accoun, “' him, While assigning work or duty, ies of his subordinates, Although the departmental managers assig work to their subordinates, for the due performance of the work they (the managers) remain liable to the General Manager (or the Managing Director orthe Chief Executive as the case may be) of the concen. Assignment of duty alone is not enough to get the work done by. the subordinates. The subordinates need to be given the requisite authority to cary /. Delegation of authority will enable the subordinates to te have access to the resources of the enterprise, namely, men, machines, materials + and money. Further, authority also enables them to meet customers and enter into contracts on behalf of the concem. : Creation of Accountability ne subordinate, who has been assigned some work and given the necessary authority, remains liable or answerable to his superior for the due performance of the work, This is necessary in view of the following reasons: / (The superior remains liable, on the i i eta performance of his subordinates, to (The superi Min cardia ensue hat there hasbeen no misuse of authority by , Gi) The overall objective of the enterprise has to be attai Bi Svenone cvacemed wih he enterprise has opt ines Setey —_pelegation and Decentralisation Advantages/Benefits/Merits/Importance of Delegation The advantages of delegation of authority in an organisation may be stated 1. 2. SS or intangible benefits. ‘Such a person, therefore, as follows: Vital for every Organisation — Delegation of authority is indispensable for every organisation. No individual, in any organisation, can perform all the tasks himself. He needs the support of a team of individuals. The work, therefore, has to be shared by different persons working in'a department. The task of sharing the work and accomplishing the same is done through the process of delegation, ; Relief to Managers — The manager of each department is able to the entire work of his department among his subordinates. After assi work to every subordinate staff, the manager also gives him the requisite authority. The manager, thus, is able to concentrate on more important duties. The routine work is attended by his subordinates. Specialisation ~ The very division of the work of a business enterprise into production, marketing, finance, personnel, etc, is to derive the benefits of specialisation. Each of these divisions is looked after by a manager. Each such manager will work under the control of the General Manager of the concem. Within each division there is further scope for deriving the benefits of spe in the marketing department, different individuals may specialise in different marketing activities like advertising, sales promotion, packing, gathering market news and so on. ork under the control of the Marketing Manager. Prompt Decisions - Delegation of authority to subordinates enables them tomake decisions within the scope of their authority, For example, a foreman has the authority to make certain decisions withi level of authority. It is, therefore, not necessary to refer every matter to the superior and to await his decision. Improvement of Job Satisfacti responsibilities to subordinates gives : certainly motivate them to put in greater efforts in ion — Assignment of work and them the feeling that they are being recognised. This would > order to show good results. A subordinate showing good results should definitely be rewarded. The reward may come to him in the form oftangible is boundto have a higher level of job satisfaction. an Jness expansion ~ As the subordinates of the organisatio Sens ere Keir tasks and also have the expertise in forming their : ¢ business can successfully undertake expansion orthe subordinate has the authoriy, for the accomplishment of thy given general authority fy ensure prompt despatg, General delegation - ‘ a case of ener celegnion of aun to perform any function that may be ne a eral enterprise 203! ih salesman who has been £1 ean me iseproucion or packing 20 or ehe goods he has agreed (° supply. if tion aan the subordinate has the authority to perform only a specif In this case, UF “for example, may have tHe authority only to Supervise thy Z P Manager at regular intervals. fiction ake opt to the Production Se ual by written orders and instructions is what is known a written delegation. A “power of attorney’ may be cited as an example. Unwritten delegation . ‘ Here, delegation is based on customs OF conyentions. Formal delegation Inthe case of formal delegation, authority is delegated as laid down in tt organisation structure. The personel manager, for example, has the authority newspapers and solicit applications from mn has the policy to recruit people from outside sour. | delegation, a subordinate performs a. certain functiot although he is not offically bound to doit. This he does because of the per relationship he has with the superior who has ‘assigned the work to him. elatonship he samy by eran stationary items needed bythe f= Informal delegation In the case of inform: DelegtionandDecenmaistion gt Upward delegation ee + Delegation is usual authority to his subori i tion is superior may perform the work of a subordinate ifdisractazanedinieangen cn doing it. This he does only to make hii him ee ncticnten understand the methodology of work. Sideward delegation takes : assign his work to another. In the same way a RL Fr nlagees ueratins ol he same level ey bel ES Re Principles of Delegation é The following are the important principles of delegation of eto 11.’ Delegation to go by expeeted results Before delegating authority to hi subordinates, the superior must be clear about the tasks that ea = ‘them to perform so as to realise the expected results. The extent areaibciy ere upon the nature and quantum of work to be done. If the tasks to performed by the subordinates are not properly determined by the superior, he may not be able to decide on the extent of authority required. absolute — A superior can delegate only authority and Beara MG performance of work by his subordinates the 7 sp his own superior. For example, the Sales Manager of'a concer is responsible, for the performance of the salesmen working under him, to the General Manager. I, therefore, goes without saying that the superior has to constantly monitor the performance of his subordinates 3, Authority to match responsibility — There should always be parity between authority and responsit e,, one must be equal to the other. If authority given to a subordinate is more than his responsibilty, there may be a tendency to misuse the authority. On the other hand, if responsibility is more than the authority, the subordinate ‘will not be able to perform the task. Iti, therefore, necessary that both should be equal 4s Unity of Command ~ This principle says that 2 subordinate should be assigned duty or responsibility by one superior only. He is also accountable to that superior alone. For example, @ foreman should work as per the orders received from the production manager and should also report to him only. A salesman has to cary out the orders of the sales manager under whom he works. Iftwo manage” command a subordinate, hhe would not know whose orders he should carry out. Clarification of the limits of authority — The subordinate should know the limits of his authority. ‘while delegating a not responsibil suthority to his subordinate,