UNIT-2

MANAGEMENT FUNCTION.

Management by objectives (MBO), also known as management by results (MBR), is a process of defining objectives within an organization so that management and employees agree to the objectives and understand what they need to do in the organization in order to achieve them. The term "management by objectives" was first popularized by eter !rucker in his "#$% book The Practice of Management. The essence of &'( is participative goal setting, choosing course of actions and decision making. )n important part of the &'( is the measurement and the comparison of the employee*s actual performance with the standards set. +deally, when employees themselves have been involved with the goal setting and choosing the course of action to be followed by them, they are more likely to fulfill their responsibilities. )ccording to ,eorge -. (diorne, the system of management by objectives can be described as a process whereby the superior and subordinate jointly identify its common goals, define each individual.s major areas of responsibility in terms of the results e/pected of him, and use these measures as guides for operating the unit and assessing the contribution of each of its members. Features and advantages Unique features and advantages of the MBO process 'ehind the principle of &anagement by (bjectives (&'() is for employees to have a clear understanding of the roles and responsibilities e/pected of them. Then they can understand how their activities relate to the achievement of the organization.s goal. )lso places importance on fulfilling the personal goals of each employee. -ome of the important features and advantages of &'( are0 ". Motivation 1 +nvolving employees in the whole process of goal setting and increasing employee empowerment. This increases employee job satisfaction and commitment.

2. Better communication and coordination 1 3re4uent reviews and an interaction between superiors and subordinates helps to maintain harmonious relationships within the organization and also to solve many problems. 3. larity of goals

%. -ubordinates tend to have a higher commitment to objectives they set for themselves than those imposed on them by another person. $. &anagers can ensure that objectives of the subordinates are linked to the organization.s objectives. 5. 6verybody will be having a common goal for whole organization. That means, it is a directive principle of management. !imitations There are several limitations to the assumptive base underlying the impact of managing by objectives,7citation needed8 including0 ". +t over9emphasizes the setting of goals over the working of a plan as a

driver of outcomes. 2. +t under9emphasizes the importance of the environment or conte/t in

which the goals are set. That conte/t includes everything from the availability and 4uality of resources, to relative buy9in by leadership and stake9holders. )s an e/ample of the influence of management buy9in as a conte/tual influencer, in a "##" comprehensive review of thirty years of research on the impact of &anagement by (bjectives, :obert :odgers and ;ohn <unter concluded that companies whose =6(s demonstrated high commitment to &'( showed, on average, a $5> gain in productivity. =ompanies with =6(s who showed low commitment only saw a 5> gain in productivity.7citation needed8 ?hen this approach is not properly set, agreed and managed by organizations, self9centered employees might be prone to distort results, falsely representing achievement of targets that were set in a short9term, narrow fashion. +n this case, managing by objectives would be counterproductive. The use of &'( must be carefully aligned with the culture of the organization. ?hile &'( is not as fashionable as it was before, it still has its place in
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management today. The key difference is that rather than .set. objectives from a cascade process, objectives are discussed and agreed upon. 6mployees are often involved in this process, which can be advantageous. ) saying around &'( 1 "?hat gets measured gets done", @?hy measure performanceA !ifferent purposes re4uire different measures* 1 is perhaps the most famous aphorism of performance measurementB therefore, to avoid potential problems -&):T and -&):T6: objectives need to be agreed upon in the true sense rather than set.

C):+(D- &)E),6:+)F 3DE=T+(E- 6--6ET+)F 3(: ) &)E),6: +E )E (:,)E+-)T+(E. &anagers just don.t go out and haphazardly perform their responsibilities. ,ood managers discover how to master five basic functions0 lanning, (rganizing, -taffing, !irecting, =ontrolling

F)EE+E,.
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lanning involves defining the organizational goals, establishing strategies for achieving those goals and developing plans to integrate and coordinate work activities. +t*s concerned with both ends (what) and means (how). The term planning is used for formal planning. +n formal planning, specific goals covering specific time period are defined. These goals are written and shared with organizational members to reduce ambiguity and create a common understanding about what needs to be done. 3inally specific plan e/ist for achieving those goals. :easons for lanning. ". +t provides direction to managers and non9managers. 2. +t reduces uncertainty by forcing managers to look ahead. G. +t minimizes waste and redundancy %. lanning establishes goals or standards used in controlling.

6ssential components of planning. ". ,()Fa. -tated goals b. :eal goals 2. F)E-

TH 6- (3 F)E-.
BR"#$%& -trategic. (perational %'M" FR#M" Fong term -hort term ()" 'F' '%* !irectional -pecific FR" "+U", * OF U(" (ne time -tanding

=<):)=T6:+-T+=- (3 ?6FF ?:+TT6E ,()Fa) ?ritten in terms of outcome rather than actions.
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b) &easurable and 4uantifiable. c) <aving a clear time frame. d) =hallenging yet attainable e) -hould be written down f) =ommunication to all necessary organizational members.

-T6 - +E ,()F -6TT+E, a) :eview the organization mission and purpose. b) )vailable resource evaluation. c) !etermine the goals individually or with input from others. d) ?rite down the goals and communicate it to, who need to know. e) :eview results and see whether goals are met.

!+-)!C)ET),6- (3 F)EE+E,. ". 2. lanning may create rigidity. lans cannot be developed for a dynamic environment.

G. 3ormal plans cannot replace intuition and creativity. %. lanning focuses on today*s competition and not on tomorrow*s survival.

$. 3ormal planning reinforces success which will lead to failure. 5. ;ust planning not enough but e/ecution is important.

(:,)E+I+E,9 =(& (E6ET". ?ork -pecialization 2. !epartmentalization

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G. =hain of =ommand %. -pan of =ontrol $. =entralization J !ecentralization 5. 3ormalization

!epartmentalization ". 3unctional departmentalization9 )ccording to the functions that are performed specifically 2. ,eographical department G. %. roduct departmentalization rocess departmentalization

$. =ustomer departmentalization

=<)+E (3 =(&&)E! ". )uthority 2. :esponsibility - )E (3 =(ET:(F

=6ET:)F+-)T+(E J !6=6ET:)F+-)T+(E -F. E(. " 2 6nvironment is stable Fower level managers are not 6nvironment is comple/ as +n case of decentralization, they are capable !ecisions are significant
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=6ET:)F+-)T+(E

!6=6ET:)F+-)T+(E

capable as upper level G !ecisions are relatively minor

% $

(rganisation faces a chance of failure =ompany dispersed is less

+t is having less risk of failure

geographically =ompany is geographically dispersed

Fess

effective

implementation

of 6ffective strategy

implementation

of

company

company strategy

-T)33+E, +t is the process of matching the jobs with capable people. +t is concerned with the selection, placement, growth and development of people in an organization. +t involves the determination of what personal are re4uired in what 4uantity and of what 4uality. =haracteristics are9 ". -taffing involves people 2. -taffing is development oriented G. +t is continuous %. +t is a G9step process a. <iring right kind of person b. !eveloping skills through training c. :etention through favorable work condition

+& (:T)E=6 (3 -T)33+E, ". Key to other management functions 2. !esigning a sound organization G. &otivation for doing work 6F6&6ET- (3 -T)33+E, :(=6-". <uman :esource lanning 2. ;ob analysis
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G. :ecruitment %. -election $. lacement J (rientation

5. Training J !evelopment L. M. <D&)E :6-(D:=6 F)EE+E, -T6 ". 3orecasting the demand for human resources 2. reparing a manpower inventory erformance )ppraisal

G. !etermine the manpower gaps

;(' )E)FH-+!efinition9 +t is a process of gathering information abount a job. +t tries to reduce towards the things that people do in human work.

:(=6-- (3 ;(' )E)FH-+". 2. G. %. $. (rganizational analysis -election of representative positions to be analyzed =ollection of job analysis data reparation of job description reparation of job specification

;(' !6-=:+ T+(E

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+t is a written statement of what the job holder does, how it is done, under what condition it is done and why it is done. ". 2. G. %. ;ob title ;ob summary ;ob activities ?orking conditions

;(' - 6=+3+=)T+(E +t is a written statement of personal attributes in terms of traits, skills, training e/perience needed to carry out the job.

:6=:D+T&6ET &ethods of :ecruitment ". 2. G. %. $. 5. =ampus )dvertisement 6mployer referral Dnsolicricate applicantsN walk9in 69hiring rivate employment

(nce the person has been inducted, he has to undergo orientation programme.

T:)+E+E, (3 !6C6F( &6ET 9 9 (n the job (ff the job

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!+:6=T+E, (motivation) (bjectives of !irecting ". roductive use of resources

2. +ncreased use of efficiencies G. Ouality consciousness %. :ealization of organization activities and strategies $. 6nabling organizational structure 5. (rganizational stability

&)-F(?- T<6(:H (3 <+6:):=<H (3 E66!". 2. G. %. $. -elf9actualization -elf9esteem 'elongingness and love -afety and security hysiological

<erbervgs* 2 factor theory of motivation9 hygiene theory ". &otivation factors 2. <ygiene or maintenance factors G. :ecognition %. )dvancement $. :esponsibility 5. )chievement L. ossibility of growth
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M. ;ob content or the work itself

resence of motivational factors creates a motivating environment but their absence doesnot cause dis9satisfaction

<H,+6E6 (: &)+ET6E)E=6 ". 2. G. %. $. 5. L. M. #. =ompany policy and administration Technical supervision +nterpersonal relationship -alary ;ob security ersonal life ?orking condition -tatus +nter9personal relationship with superiors

"P. +nter9personal relationship with peons

=(ET:(FF+E, Three -teps -tep9"0 &easurement (measuring) a. <ow to measure i. ersonal observation

ii. -tatistical reports

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iii. (val reports iv. ?ritten records

-. E " ersonal (bservation ,et firsthand knowledge +nformation isn*t filtered +ntensive coverage of work activities 2. ". -ubject to personal bias Time consumi ng G. +t is not construc tive 2 -tatistical :eport G (ral :eports 6asy to visualize 6ffective for showing relationship +nstant way to give reports )llows verbal and nonverbal feedback ". provides limited information 2. ignores subjective factors ". information is filteredN distorted 2.information cannot be documented =ategory )dvantages !isadvantages

%.

?ritten :eports

%. $. 5.

=omprehensive 3ormal 6asy to file and retrieve

". takes more time to prepare

-tep920 =omparing )ctual result with desired result

-tep9G0
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Taking &anagerial )ction Three ways9 ". !o nothing (basic or immediate corrective action) 2. Take corrective actions G. !evise the standards

=(ET:(F- +E )E (:,)E+-)T+(E ". 3eed forward control (before the process starts) 2. =oncurrent control ( rocess is on) G. 3eedback control (process is over)

3+E)E=+)F =(ET:(F". Fi4uidity 1 current ratio (20") 2. Feverage9 !ebtN 64uity (20") G. )ctivity9 !ebtors turnover ratio %. rofitability9 Eet rofit 9 ,ross rofit

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