1 Features of Management

2 Organizing
Organizing refers to formal grouping of people and activities to facilitate achievement of the
firm’s objectives. Organisation theory is study of structure, functioning and performance of
organization and the behaviour of groups and individuals within them.
Organization theory is defined as a set of interrelated constructs, definitions and
propositions that present a systematic view of behaviour of individuals, groups and
subgroups interacting in some relatively patterned sequence of activity, the interest of
which is goal directed.

2.1 Approaches
 Organisation as Process
Organization is understood as a dynamic process and managerial activity which is
necessary for bringing people together and unifying them in the pursuit of common
objectives.
 Organization as Structure
Organization refers to the structure of relationships among positions and jobs
through which goals are sought to be attained.

2.2 Common Features

1. Division of labour
Organization structure comes into existence when total work considered necessary
for realization of common objective is divided into activities and functions. In
business organization, the work may be divided, say, according to functions like
production, marketing, finance and personnel.
2. Coordination
Having divided up the work, it becomes necessary to link up or integrate the various
divisions, functions or activities so that all of them unified in harmony.
3. Accomplishment of goals or objectives
An organization structure has no meaning or purpose unless it is built around certain
clear-cut goals or objectives. In fact, an organization structure is built up precisely
because it is the ideal way of making a rational pursuit of objectives.
4. Authority-responsibility structure
 An organisation structure consists of various positions arranged in a hierarchy with a
clear definition of the authority and responsibility associated with each of these. An
organization cannot serve certain specific purposes or goals unless some positions
are placed above the others and given authority to bind them by their decisions.
Hence an organisation structure is quite often defined as a structure of authority-
responsibility relationships.

2.3 Principles of Organization

1. Unity of objectives: Every part of the organization and the organization as whole
should be geared to the basic objective determined for the enterprise.
2. Efficiency: The organization should be able to attain the predetermined goals and
objectives at the minimum cost. If it does so, it will satisfy the test of efficiency. From
the point of view of an individual, a good organization should provide the maximum
work of satisfaction. Similarly, from the social point of view, an organization will be
efficient when it contributes the maximum toward the welfare of the society.
3. Span of management: It is widely recognized that a manager can directly supervise
only a limited number of executives. It is necessary to have proper number of
executives, answerable to the top manager. Most of the authorities prescribe a
maximum of six for this.
4. Division of work: A good organization should consist of departments established to
reflect the most efficient breakdown of enterprise activities. Proper
departmentalization is an important principle of sound organization.
5. Functional definition: The duties and the authority relationships in a good
organization must be properly and clearly defined, so that there is no confusion or
overlapping.
6. Scalar Principle (Chain of command): The chain of command or the line of authority
must be clearly defined for building sound organization. Every subordinate must
know who is superior and to whom policy matters beyond his own authority must be
referred for decision.
7. Exception principle: A good organization is so arranged that only exceptionally
complex problem are referred to the higher levels of management and the routine
matters are dealt with by executive at lower levels. This is called exception principle.
 8. Unity of command: In a good organization, each subordinate should have one
superior whose command he has to obey. This will avoid conflict of commands and
help in fixing responsibility.
9. Unity of direction: There must be only one plan for a group of activities directed
towards the same end. If each person in a department begins to work under a
different plan or program of action, nothing but confusion will follow.
10. Responsibility: In a good organization, the superior is responsible for the activities of
his subordinates and the subordinates must be held responsible to their superiors
for the performance of the tasks assigned to them.
11. Authority and responsibility: The authority and responsibility must be coexisting in
an organization. If it is not so, the subordinates cannot discharge their responsibility
for want of necessary power to proceed with the task assigned.
12. Balance: Some matters may be left to disposed of by the subordinates at the lower
or the lowest level while some other must be centralized and a balance between
centralization and decentralization should thus be achieved.
13. Flexibility: The organization must avoid complicated procedures, red-tapism and
excessive complication of control so that it can adapt itself easily and economically
business and technical changes.
14. Continuity: The organization must be so arranged as to provide for continuity of the
enterprise. For this, there must be proper provisions for executive development or
training.
15. Facilitation of leadership: The organization structure should be so devised that there
is enough opportunity for the management to give effective lead to enterprise.

2.4 Process of organizing

1. Determination of objectives
Organizations are built around objectives. For example, a business firm must decide
whether it will publish books, manufacture cloth, sell machinery or run vehicles on
commercial basis. The overall enterprise objectives will depend on the immediate,
the short-term and the long-term objectives.
2. Enumeration of activities
 The first step in organizing group effort is the division of total job into essential
activities. For example, the work of an industrial concern may be divided into the
following major functions
 Production
 Financing
 Purchasing
 Sales
 Personnel
3. Classification of activities
The next step will be to classify activities according to similarities and common
purposes and function and taking the human and material resources into account.
For each class of activity, there may be a department and for each sub-class, a
section of the department and so on. The various activities connected with
production, for example, may be grouped and classified as production department
activities.
4. Fitting individuals to functions
Having determined the various activities of the job to be done, the next step will be
to fix suitable and well qualified persons into these activities. Each person in the
group will be given a specific part of the job to do and will be made responsible for it.
5. Assignment of authority for action
Each member of the group, available for a particular part of the job, having been
given the responsibility for its completion, will be able to proceed only when he has
authority to proceed with it. Hence, delegation of authority to help complete the
assigned part of the job is the next step in organising.

2.5 Types of Organization

 Military or Line System
 Functional system
 Line and Staff system
 Matrix System
 Hybrid Design
3 Controlling
Control is an element of management process involves analysing whether actions are taken
as planned and taking corrective actions to make these to conform to planning.

Features of Control
 Control is forward looking because one can control future happenings and not the
past. In control process, always the past performance is measured. In the light of
measurement, managers suggest corrective actions for future period.
 Control is an executive process from the point of view of organization as a system. As
an executive process, each manager has to perform control function in organization.
 Control is continuous process. Through managerial control enables the manager to
exercise control at the point of action.
 A control system is coordinated-integrated system. In the sense, control system is
single system but it is more accurate to think of it as a set of interlocking subsystems.

3.1 Steps in Controlling

Desired Performance
Implementation of Correction Performance
Corrective actionAnalysis
plan of causes of deviation

Actual Performance
Measurement of Performance
Comparison of actual & standard
Identification of deviation

1. Establishment of Control Standards

Every function in the organization begins with plans which are goals, objectives or
targets to be achieved. In the light of these, standards are established which are
criteria against which actual results are measured. After setting the standards, it is
also important to decide about the level of achievement of performance which will
be regarded as good or satisfactory.
2. Measurement of Performance
 This step involves measuring the performance in respect of a work in terms of
control standards.
3. Comparison Actual and Standard performance
This step involves two steps
 Finding out the extent of deviation
 Identify the causes of such deviations
4. Correction of deviations
This is the last step in the control process which requires that actions should be
taken to maintain the desired degree of control in the system or operation.

3.2 Types of control

Strategic and Operational Control
Strategic control is the process of taking into accounts the changing planning premises both
external and internal to organisation on which the strategy is based; continuously evaluating
the strategy as it is being implemented; and taking corrective actions to adjust the strategy
to new requirements.
Operational Control is concerned with action or performance and is aimed at evaluating the
performance of the organisation as a whole or its different components- strategic business
units, divisions and departments.

3.3 Stages of control

Depending on the stages at which control is exercised, it may be of three types
 Control of inputs that are required in an action known as feed forward control
 Control at difference stages of action process known as concurrent, real-time, or
steering control
 Post action control based on feedback from completed action known as feedback
control

Feed Forward Control Concurrent Control

Inputs Processing Output

Feedback Control
 1. Feed forward control
Feed-forward control involves evaluation of inputs and taking corrective action
before a particular sequence of operation is completed. Feed-forward control
monitor inputs into processes to determine whether the inputs are as planned. If
inputs are not as planned, corrective action is taken to adjust the inputs according to
the plan so that desired results achieved within the planned input.
2. Concurrent Control
Concurrent control is exercised during the operation of a programme. It provides
measures for taking corrective action or making adjustments while the programme is
still in operation and before any major damage is done.
3. Feedback Control
Feedback control is based on measurement of the results of an action, Based on this
measurement, if any deviation is found between performance standards and actual
performance, the corrective action is undertaken.

3.4 Control Areas

For effective control, it is important to know what the critical areas where control would be
exercised. The identification of these areas of control enables the management to
 Delegate authority and fixing up of responsibilities
 Reduce the burden of supervising each activity in detail
 Have means of securing satisfactory results
Following are the control areas
 Control over Policies: Policies are formulated to govern the behaviour and action of
the personnel in the organisation.
 Control over Organisation Structure: Organization structure attempt at solving
organization problems and conflicts, making long-range organisation planning
possible, enabling rationalisation of organization structure, helping in proper
designing and clarification of each part of organization.
 Control over Personnel: Head of personnel department keeps control over personnel
in the organization.
 Control over Wages and Salaries: Control over wages and salaries are done by having
programme of job evaluation and wage and salary analysis.
 Control over Costs: Control over costs is exercised through making comparison
between standard costs and actual costs. Standard costs are set in respect of
different elements of costs. Cost control is also supplemented by budgetary control
system which includes different types of budget.
 Control over Methods and Manpower: Control over methods and manpower is
exercised to ensure that each individual is working properly and timely.
 Control over Capital Expenditure: Control over capital expenditure is exercised
through the system of evaluation of projects, ranking of projects on the basis of their
importance, generally on the basis of their earning capacity.
 Control over Service Department: Control over service department is effected either
through budgetary control within operating departments, through putting the limits
upon the amount of service an individual department can ask, through authorising
the head of service department to evaluate the request of service.
 Control over Line of Products: Control over line of products is exercised be a
committee whose members are drawn from production, sales and research
departments.
 Control over Research and Development: Control over research and development is
exercised through a budget for research and development and by evaluating each
project keeping in view saving, sales or profit.
 Control over Foreign Operations: Foreign operations are controlled in same way as
domestic.
 Control over External Relations: External relations are regulated by the public
relations department.
 Overall Control: Control over each segment of organisation contributes to overall
organisation control.
3.5 Design of Effective Control System
Managers face a number of challenges in designing a control system that provides accurate
feedback in a timely and economical fashion that is acceptable to organisation members.
Most of these challenges can be traced back to decision about what need to be controlled
and how often progress needs to be measured. In overcome these challenges, managers
should design their control system based on following principles
 Integrating Strategic Planning and Control System
Strategic planning and management control are two most important processes and
system contributing to the effectiveness of business organization. Therefore there
should be proper integration of these two systems. This integration can be achieved
by developing consistency of strategic objectives and performance measures.
 Identifying Strategic Control Points
Managers should identify strategic control points in the system at which monitoring
or collecting information should occur. The method for selecting strategic control
points is to focus on the most significant elements in a given operation.
 Organisation Communication
The organization has to design a communication network for carrying the control
information both downward and upward. Through downward communication, a
superior send the information about what a subordinate is expected to do; the
upward communication is used to get control information from subordinates that is
what they have done.
 Motivational Dynamics
The control is affected by the motivational dynamics of people and how organisation
is going to satisfy the various needs of the people. The motivational dynamics have
two-fold role in control; first a control system should focus adequately on the need
of the participant ants and suit them. Second the organization itself provides
motivation or de-motivation to the people to work. Human beings, being gregarious,
seek to remain in the organization.
3.6 Essentials of Effective Control System
While the basic principals involved in designing the control system in organisation may be
universal, the actual system in an organisation requires some specific design. In this tailoring
of control system, following are certain requirement which should be kept in mind
 Reflecting Organisation Needs: All control systems and techniques should reflect the
functions they are to perform. The manger should choose an appropriate tool for
control which helps him in controlling actions according to plans.
 Forward Looking: The control should be forward looking. A control system should be
such that it provides aid in planning process. This is done in two ways: it draws
situation where new planning is needed and it provides some of the data upon which
plans can be based.
 Promptness in Reporting Deviations: Ideal control system detects deviations
promptly and informs the manager concerned to take timely action. This is done
through designing good appraisal and information systems.
 Pointing out Exceptions at Critical Points: Control should point out exception at
critical points and suggest whether action is to be taken for deviations or not. Some
deviation in organization have no impact while others through very little in quantity,
may have great significance.
 Objective: Control should be objective, definite and determinable in a clear and
positive way. The standard of measurement should be quantified as far as possible.
 Flexible: Control system should be flexible so that it remains workable in the case of
changed plans, unforeseen circumstances or outright failures.
 Economical: Control should be economical and must be worth its costs. Economy is
relative since the benefits vary with the importance of the activity, the size of the
operation, the expense that might be incurred in the absence of control and the
contribution that control system can make.
 Simple: Control system must be simple and understandable so that all managers can
use it effectively.
 Motivating: Control system should motivate both controller and controlled. The
design of control system should be such that aims at motivating people by fulfilling
their needs.
  Reflecting Organisation Pattern: Control should reflect organization pattern by
focusing attention on positions in organization structure through which deviations
are corrected.

3.7 Causes of Resistance to Control

Control implies and involves a continuous check on the performance and behaviour of
people in the organization.
 Curb on Freedom: The basic notion of the term control is to curb freedom as it tries
to regulate behaviour and performance in a specified way. This specified way may
not match with individual’s own way of behaving and doing. To the extend, there is
difference between specified way and natural way of behaving, control is resisted to
make it more meaningful.
 Curb on Creativity and Innovation: Human being have endowed with great amount
of creativity and innovation. However they can use their creativity and innovation in
conductive environment which must be free from control and regulations as these
put unnecessary curbs on the motivation to be creative and innovative.
 Rigid Control Standards: Individual’s resistance to control emerge from the feeling
that control standards are set too high and observed rigidly. Since the control results
are used as basis for progression of the individual’s career in the organization, they
resist it to safeguard their career.
 Faulty Evaluation System: Individual object to control because of the perception that
evaluation system through which the performance is measured may not be objective
and many shortcomings may emerge in the evaluation process. Expressing work
performance in qualitative way may have different interpretations as the concept of
quality is influenced by personal factors Because of these individual factors, often,
there is clash between those who exercise control and who are controlled.
 Fear of Discrimination: Individual may perceive that they are likely to be
discriminated by those who exercise control. There is lack of trust between
controller and controlled and control information is used to devise reward and
punishment system. In these situations, individuals tend to resist control terming it
as unfair.
3.8 Overcoming Behavioural Problems
Approaches to overcome behavioural problem
 As far as possible, direct hierarchical pressure should be avoided. This problem can
be overcome by structural arrangement.
 Management should build cooperation through participation. This is the problem
related with setting right organisation climate.
 Management should build communication network based on open and two-way
communication.
 For obtaining co-ordination and co-operation in control, group processes must be
strengthened.
 Management should reinforce both economic and non-economic needs of the
people.
 Management should have long-term perspective in designing control system so that
frequent and abrupt changes do not take place.