MANAGEMENT IN ORGANIZATION

LESSON 1 THE ENTERPRISE

What is an enterprise? It is specially created,

to produce goods / services for the community

The output of the enterprise yields Profits for owners

Dividends for share-holders

Generates employment Generates revenue for the State

Features of an Organization: Statement of purpose Values on which the organization will run Translates objectives into action Staffs to produce output

The purpose of an enterprise

Generate wealth
Success of an enterprise: Efficiency of operations

Forms of business enterprise

Proprietary Partnerships

Companies
Multinational Corporations

Who is an entrepreneur?
Undertakes an economic venture, own, organizes, promotes & manages it

assumes the risk of business

& determines the end

The attributes of entrepreneurs Identifies oopportunities Influencing others to perform

A result oriented person

A strong desire to succeed Understanding the feelings of others

The following are the types of entrepreneurs:

Small scale The first generation of industrialist

Sons of industrialist The children of first generation industrialist

Professional managers Individuals with professional qualification, who head a private enterprise They run such enterprise as an entrepreneur
Public sector executives Individuals with professional qualification, who head a public enterprise They run such enterprise as an entrepreneur

Structure of an enterprise Board of Directors They provide direction to an organization

Management
Consists of CEO & his team Managers Members who contribute based on their functional expertize

Role of money: Motivation An exchange for the efforts

A means for raising the standard of living

LESSON 2 THE MANAGEMENT

What is Management? Optimum utilization of resources, to accomplish the organization goals

It is both an art & science.

Study of management knowledge is a science, the application of this knowledge is an art

Functional areas of management To accomplish the goals of the organization,

different types of activities have to be performed

like marketing, production, finance, purchase, human resources etc. These activities are called as functions of management

Management Process

A sequential activity performed

Conversion of an input into an output It is where value addition takes place

It should be efficient,

Management Techniques

Techniques are essentially ways of doing things

Types of techniques Value Engineering Benchmarking Partnering Business Process Re-engineering

Value Engineering Balance between cost, reliability & performance of product Aims to reduce unnecessary cost

Focus is on task

Benchmarking

identifying the best practice in the industry

Compares self performance with the benchmark, Formulates an action plan to reach that state. Aim is to improve performance

Partnering Two or more organizations join together To achieve specific business objectives By maximizing the effectiveness of each participants resources

Business Process Re-engineering Traditionally the businesses were focused on Tasks, jobs, structure, but not on processes. A business process is a value addition to an inputs to create an output Re-engineering means focusing on core activities & outsourcing the non-core activities

LESSON 3 DEVELOPMENT OF MANAGEMENT THOUGHT

Introduction Management has been built upon

the concepts, theory, & knowledge

mostly drawn from behavioural sciences, economics & industrial engineering Management is entrenched in the culture of persons who practice it.

Scientific Management Theory [Fredrick Taylor] According to him there is no inherent conflict between labour & employers. Labour wanted more income, employers wanted more profit, & the consumers wanted a better price All of them could be benefited, only if the plant produced more..

Taylor felt that the real problem was in determining a fair days pay for a fair days work. For this if a quantitative method could be evolved when a worker could know the basis of his wages & in which his income is moved up along with the increase of efforts put in.
Taylor said that the onus to devise such methods rested on employers.

Human Relations Theory [Elton Mayo]

Mayo proved through his Hawthorne Studies in GE plant that If working conditions were improved, production goes up
Production goes up, if workers participate in change management Management should accept the role of informal groups & informal leaders.

informal leaders should be identified, accepted & involved in the management process.
Formal management group should be trained in human relations in order to achieve better production

Theory X & Y [McGregor] Theory X is based on the following premises: People did not like to work basically Therefore they have to be told what to do. We have to use threat to make them work Theory Y was based on the following premise It is not that people do not or like work. They develop an attitude towards work based on their past experience

People like to select goals for themselves if they see the possibility of some kind of reward in it [material or psychological].

Management System Theory [Fayol]

He stated that out of all activities of an enterprise the managerial activities is the most important
Managerial activities consists of: Planning, Organization, Direction, Coordination & Control which exists in any kind & size of businesses.

According to Fayol, person responsible for management must have the following managerial qualities: Physical / Mental / Attitude / Technical

Motivation Theory [Herzberg Theory] He classified the factors that influenced their attitudes & performance & whose intensity & duration affected their work behaviour into Hygiene factors included Job / job security / work rules / promotions / incentives / leaves / service conditions / employment practices / etc. Motivation factors includes: Attitudes / feelings about jobs / desire to excel / care & concern about quality / etc

Motivation Theory [Herzberg Theory] continued

Hygiene factors are necessary to create motivation, but are powerless by themselves. This means that if hygiene factors are absent in a job, employees will not feel motivated. But the best techniques of motivation will not work if pay & employment conditions are not adequate. The lesson for management is that if you do not provide hygiene factors, you risk not having productivity & you do not expect motivated workforce. However if you provide hygiene factors, it can ensure you in certain circumstances that a job gets done in the quantitative senses. But if we are looking for looking for quality, desire to excel, concern for economy, care of the materials & equipment, then you need to create motivating environment
& this is what Herzberg called Management

NEEDS HIERARCHY THEORY [MASLOW] Maslow in his study concluded that man was never contended, He stated that needs of man motivated him to work & these needs arose in hierarchical manner. Needs were of following orders: Physiological / Security / Social / Esteem / Self-Realization It is pursuit of needs that people keep working & keep striving to get more & more Todays motivators are likely to become tomorrows hygiene factors

MCKINSEYS 7-S APPROACH The seven Ss are: Strategy / Structures / Systems / Style / Staff / Shared values / Skills It supports & similar to the framework of the managerial functions [planning / organizing / staffing / leading / controlling] This approach has identified the following conditions for success in business A bias for action Closer to customers / clients Productivity through people Autonomy & entrepreneurship Hands on, value driven Stick to knitting, what you know Simple form, lean staff Simultaneous loose tight properties

LESSON 4 MANAGEMENT PROCESS: PLANNING

Introduction Planning is the first step in the management process. Planning & Control go hand in hand Decisions are the core of planning. It is rational approach to accomplish the objectives of the organization

Mission It is the purpose of an organization.

Plan: Projected course of action to accomplish the objectives States in details the activities to be carried , resources to be deployed, & time frame to accomplish the outputs

The following are the terms used in planning: Objectives States what has to be accomplished.

Strategy Course of action with an intention to win.

Policy Framework within which decisions can be taken Procedure Method of handling work in a chronological sequence Rule It allows no deviation Applicable to all the employees Program Has an objective / strategies / procedure / rules Is for an event [short-term] Budget Statement of expected performance results in numerical terms It is a control device.

Levels of Planning Following are the levels of planning in a construction firm

Corporate Done by CEO & his team

Project Undertaken to complete a project within the time, cost, & quality parameters Site Done on daily basis at site

The following are the types of planning Strategic planning It is long term planning Done by Corporate Office Tactical planning It is short term. Done to meet new demands Rolling plan Link between long & short term plan. It fits into the long term plan Contingency planning Refers to stand by plan, incase the original plan does not go through

Steps in planning Setting objectives State the end results desired Premising Making assumptions Creating alternatives Identify various routes to reach the goal Selecting a course Select the best route by doing cost benefit analysis Listing the activities to be performed Estimating resource required & their allocation

Principles of Planning The Commitment Principle: The long range planning is planning for the future impact of todays decision. Understand the impact of todays decision on tomorrow. Principle of flexibility Building flexibility into plans will lessen the danger of losses incurred through unexpected events, but the cost of flexibility should be weighed against its advantages Principle of navigational change The more the planning decisions commit individuals to a future path, the more important it is to check on events & expectations periodically & redraw plans as necessary to maintain a course towards a desired goal.

Conclusion: The success of any plan depends not on the techniques but on the correct attitude of mind Planning should always be associated with performance.

LESSON 5 MANAGEMENT PROCESS: ORGANIZING

Introduction Bringing together the basic resources in an orderly manner Done to accomplish organization objectives efficiently & effectively The organizing process deals with creating structure

Creating a structure:

The following are the steps involved in creating a structure

The work is divisionized Persons are assigned to perform this divisional work Methods & procedures of handling work as well as role relationship are laid down.

The organization structure has logic behind it. It emphasizes Efficiency Written procedures of work Number of subordinates reporting to a senior A chain of command

A channel of communication
The structure should be flexible to achieve results

Assigning duties

It comprises of following steps

Determining the duties Grouping duties Assigning authority Span of control

Departmentalization

The following are the approaches

By functions By territory By product By customer: Matrix organization

By functions Organization structure is based on

functions of management
like finance, production, marketing, etc. Has advantages & disadvantages

By territory In this type of organization territory & functions are grouped together. Example: Railways Has its own advantages & disadvantages

By product

Product & functions are grouped together.

Products should be of similar nature Example: Tatas: Auto, Steel, Telecom, etc

Has its own advantages & disadvantages

By customer:
Customer & functions are grouped together. Example: Bank. We have separate sector for Corporate, agriculture, small scale industry, etc. Has its won advantages & disadvantages

Matrix organization
Takes place in project work An employee reports functionally to one senior, & administratively to another senior

Organizational Chart It is a pictorial presentation of the structure of the organization. It shows the organizational hierarchy, reporting relationship, status of various managers & various department

Span of control, Authority, & Delegation Span of control how many subordinates a senior can handle Authority decision making with respect to resources Delegation assigning certain tasks to subordinates. It can be with or without authority

LESSON 6 MANAGEMENT PROCESS: STAFFING

Introduction People are important resources to an organization Goals of the organization are achieved through people. Success of an organization depends upon it quality of people. This si done through staffing Staffing is having right people, with right skills at right time & at right places It consists of the following: Manpower planning / Recruitment / Selection / Placement WE WILL BE SEEING IN THIS DETAIL PERSONNEL MANAGEMENT

LESSON 7 MANAGEMENT PROCESS: MONITORING & CONTROLLING

Introduction Before control can be exercised it is necessary to have the following:

Quantifiable & variables objectives

Plans & programmes with milestones are identified Cost & time frame for activities to be undertaken The organization structure with fixed duties in the hierarchies

The basic control process involves the following stages Establishing standards Measuring actual performance against standard at intervals Taking corrective actions in case of deviation

Standards Yardsticks of expected performance Have it for critical activities It should be preferably quantifiable

Measure performance against standard on a forward looking basis, so that deviation may be detected in advance
Deviations are corrected by redrawing plans, modifying goals, reassigning or clarifying duties etc

Types of control The following are the types: Production & operations controls

Inventory controls
Quality controls Financial controls

Production & operations controls

Includes: Employees performance Machine performance

Inventory controls Governs the levels of materials & supplies, goods in process & finished goods Standards are based on optimal levels that balance the cost of carrying inventory with the costs of running out of stock

Quality controls Assures the acceptable quality of goods or services produced. A quality control standard specifies how many complaints will be considered as acceptable from customers

Financial controls Focuses on the flow of money. These controls regulate individual components of costs,like materials personnel as well as total unit or average costs for goods & services.

Critical control points Set up standards & performance measurement that really warn in advance of important deviations which strongly affect performance The following questions helps in identifying critical points What are the most important goals of the department? Of all the things that could go wrong among the people & activities, which ones would be the most damaging to the organizations performance

Complexity of controls
In feedback the source of deviation is from output In feedback loop system deviation occurs in process itself In feed forward control system the deviation takes place in inputs

Features of a workable control system Tailor make the controls Control system should be quantitative, objective & verifiable Flexibility should be built into the system

Should be economical, & cost effective & lead to corrective action

Controls should indicate the following critical points: Physical standards / Cost standards / Capital standards / Revenue standards / Program standards / Selected intangible standards

Budget as a control system It is statement of expenses. Involved in accomplishing the objectives Budgets are prepared based on past data Zero base budgets Budget is prepared with no past data

Human issues in control Self-control

Value of good standards

Effective communication Good control improves rather than punish

Self-control Allow the subordinate to set performance standards Hold him accountable for the outcome

Value of good standards Employees readily accept the standards that have been systematically developed & that are demons ratable

Effective communication

The control system will work better, if there is a two way communication

Good control improves rather than punish The real goal of control system is to improve performance & not punish Instead of blaming when standards are not accomplished mutually explore what went wrong in the process

LESSON 8 MANAGING PEOPLE

Introduction The process involved in managing people are: Leadership Communication

Authority
Delegation

Leadership
Process of influencing the activities of an individual or a group towards goal accomplishment A leaders is concerned about tasks & human relationships

A leaders style Autocratic : focus is on tasks, Democratic: focuses on relationships

The leader does the following with respect to: Goal: Plans strategies & makes programmes Secures facilities & infrastructure Process Shows how the goal can be accomplished Environment: Establishes friendly atmosphere within which people can work together without fear, anxiety or insecurity People: Helps individuals to taste success, seek excellence, & accept discipline

The following are the techniques of good leadership Giving appreciation Disbursing punishment Communicating Demonstrate [to subordinate that you can do it better] Use of power Knowledge of the organization Work with consensus

Getting the work done

Practice general rather than close supervision Delegate & know when to delegate & to whom

Characteristics of Communication Effective & efficient to accomplish the organization goals Have purpose. Can be Formal or Informal formal: vertical [upward / downward] informal: grapevine

Types of Communication Written Verbal Non-verbal

The communication process consists of Input: Sender Process: Medium [face to face [non-verbal, verbal] written Output: Receiver

The following are the reasons why communication becomes ineffective: Unclarified assumption Language Too many layers Omission [both sender & receiver withholds information] Untrustworthiness of the communicator Poor retention Inattention Lack of feedback

Art of listening
We listen through our eyes, & hear through our ears For good listening observe the following rules Put the talker at ease Show your interest Be patient Ask questions Allow other to talk. You dont talk

Authority It is the legitimate right to direct & influence the performance of others It is right to expect performance It is power in position, Authority relationship may be perpendicular or horizontal Perpendicular relationships are the line authority. They are accountable for accomplishing the objectives While staff authority [horizontal] help the line authority to work most effectively

Delegation Is with or without authority With authority Is empowerment Without authority is only activity One delegates non-core duties to subordinates. The following are the guidelines of delegating: To knowledgeable Who shows initiative Should set chain reaction Builds mutual relationship One is still accountable, for the outcomes of non-core duties one delegates

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