CERTIFICATE IN SOCIAL WORK AND COMMUNITY DEVELOPMENT

ADMINISTRATION AND MANAGEMENT NOTES

Topic One: MEANING, SCOPE AND IMPORTANCE OF ADMINISTRATION AND

MANAGEMENT
Definition of terms:
 Management and administration
 Management training
 Management development
 Job of management
 Importance of Administration and Management
Topic Two: MANAGEMENT FUNCTIONS AND TECHNIQUES
Function of Management
 Planning
 Organizing
 Staffing
 Directing
 Controlling
Relationship between administration and management
Techniques in Management
 Leadership
 Delegation (power, authority, responsibility)
 Supervision
 Motivation
 Decision making
 Co-ordination
 Communication
 Evaluation
Management Types
 Management by objectives
 Management by crisis
 Management by exception
 Management by team approach

Topic Three: PERSONNEL MANAGEMENT AND ADMINISTRATION

Human Factors In Management
 Motivation
 Morale
 Attitude
Recruitment policies

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Terms and condition of service
 Meaning and purpose
 Government
 Parastatals
 Private sector
 Non-governmental organization
Personnel Records
 Types
 Sources of data
 Recording systems
 Safety
Personnel Training
Types: in-service
Pre-service
On-job training
Health, Safety and Security in Employment
 National social security fund
 National hospital insurance fund
 Windows and children’s pension scheme
 Provident fund
 Factories act
 Workmen’s compensation
 Trade disputes act
 Employment act

Topic Four: FINANCIAL MANAGEMENT AND ADMINISTRATION

Estimates
 Expenditures
 Revenue
 Provision for depreciation and adjustment
Budgeting
 Recurrent
 Development
Control of Funds
 Government accounting systems
 Business accounting systems
 NGO’s accounting systems
Books of Accounts
 Savings
 Current
 Fixed
 Cash
 Petty
Double Entry Book Keeping

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  Debit
 Credit
Topic Five: SUPPLIES MANAGEMENT AND ADMINISTRATION
 Definition of supplies management and administration
 Scope of supplies management and administration
Ordering Procedures:
a. Listing requirements
b. Balancing
c. Catalogues
d. Cost estimates
e. Requisitions
Storage of Supplies
 Types of storage
 Recording:    Receipt
 Issues
Stock Ledger
Issuing stores
 Ledger records
 Issue voucher
 Inventory
Controlling
 Inspection check-list
 Discrepancies
 Maintenance of equipment
Topic Six: OFFICE MANAGEMENT AND ADMINISTRATION
Definition of terms office
 Official correspondence communication
 Mails
 Telephone messages
 Basic office stationery
 Major common filling subjects
 General office equipment

Topic Seven: COMMITEES MANAGEMENT

Meaning and purpose of committees
Types of committees and terms of references
Terms used in committee procedure
 Agenda
 Minutes
 Quorum
 Annual general meetings
 Special general meetings
 Ad-hoc committee
 Interim chairman
 Select committee

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 Effective Committee Meeting Procedure Minute Writing

CHAPTER ONE

MEANING, SCOPE AND IMPORTANCE OF MANAGEMENT & ADMINSTRATION

Administration- the act of managing duties, responsibilities, or rules.  The group of individuals who are
in charge of creating and enforcing rules and regulations, or those in leadership positions who
complete important tasks.
Administration is a process of systematically arranging and co-ordinating. the human and material
resources available to any organization for the. main purpose of achieving stipulated goals of that
organization.
Management is the organizational process that includes strategic planning, setting objectives, managing
resources, deploying the human and financial assets needed to achieve objectives, and measuring
results. Management also includes recording and storing facts and information.
Henri Fayol: “Management is conduct of affairs of business, moving towards its objective through a
continuous process of improvement and optimization of resources”.
Koontz: “Management is the process of designing and maintaining an environment in which
individuals, working together in groups, efficiently accomplish selected aims”.
Mary Parker Follett: “Management is the art of getting things done through people”.
George R. Terry: “Management is a process consisting of planning, organizing, actuating and
controlling, performed to determine and accomplish the objectives by use of people and
resources”.
ILO: “Management is the complex of continuously coordinated activity by means of which any
undertaking administration/public or private service conducts its business”.
Lawrence A. Appley: “Management is guiding human and physical resources into a dynamic, hard
hitting organization until that attains its objectives to the satisfaction of those served and with a
high degree of morale and sense of attainment on the part of those rendering the service”

Management and administration may seem the same, but there are differences between the two.
Administration has to do with the setting up of objectives and crucial policies of every

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 organization. What is understood by management, however, is the act or function of putting into
practice the policies and plans decided upon by the administration.

Administration is a determinative function, while management is an executive function. It also follows

that administration makes the important decisions of an enterprise in its entirety, whereas
management makes the decisions within the confines of the framework, which is set up by the
administration.
Administration is the top level, whereas management is a middle level activity. If one were to decide the
status, or position of administration, one would find that it consists of owners who invest the
capital, and receive profits from an organization. Management consists of a group of managerial
persons, who leverage their specialist skills to fulfill the objectives of an organization.
Administrators are usually found in government, military, religious and educational organizations.
Management is used by business enterprises. The decisions of an administration are shaped by
public opinion, government policies, and social and religious factors, whereas management
decisions are shaped by the values, opinions and beliefs of the mangers.
In administration, the planning and organizing of functions are the key factors, whereas, so far as
management is concerned, it involves motivating and controlling functions. When it comes to the
type of abilities required by an administrator, one needs administrative qualities, rather than
technical qualities. In management, technical abilities and human relation management abilities
are crucial.
Administration usually handles the business aspects, such as finance . It may be defined as a system of
efficiently organizing people and resources, so as to make them successfully pursue and achieve
common goals and objectives. Administration is perhaps both an art and a science. This is
because administrators are ultimately judged by their performance. Administration must
incorporate both leadership and vision.
Management is really a subset of administration, which has to do with the technical and mundane facets
of an organization’s operation. It is different from executive or strategic work. Management
deals with the employees. Administration is above management, and exercises control over the
finance and licensing of an organization.
Therefore, we can see that these two terms are distinct from one another, each with their own set of
functions. Both these functions are crucial, in their own ways, to the growth of an organization.

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The difference between Management and Administration can be summarized under 2 categories:

Basis Management Administration

Meaning Management is an art of getting things done It is concerned with formulation of

through others by directing their efforts broad objectives, plans & policies.
towards achievement of pre-determined goals.

Nature Management is an executing function. Administration is a decision-

making function.

Process Management decides who should as it & how Administration decides what is to
should he dot it. be done & when it is to be done.

Functio Management is a doing function because Administration is a thinking

n managers get work done under their function because plans & policies
supervision. are determined under it.

Skills Technical and Human skills Conceptual and Human skills

Level Middle & lower level function Top level function

On the Basis of Usage: -
Basis Management Administration

Applicabilit It is applicable to business concerns It is applicable to non-business

y i.e. profit-making organization. concerns i.e. clubs, schools, hospitals
etc.

Influence The management decisions are The administration is influenced by

influenced by the values, opinions, public opinion, govt. policies, religious
beliefs & decisions of the managers. organizations, customs etc.

Status Management constitutes the Administration represents owners of the

employees of the organization who enterprise who earn return on their
are paid remuneration (in the form of capital invested & profits in the form of
salaries & wages). dividend.

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 Management training
Management training is the knowledge gained from activities and courses that are intended to
develop and improve the skills of the managers in a company: training that improves
leadership, supervising and managing. Skills like handling interpersonal relationships,
communicating and handling stress are also gained. Companies may provide their own
management training, but other courses and workshops are available.  This involves:
Team Building
 Team building teaches effective strategies for working together. Team building is used to
show that individuals are important for achieving the group goal. Respect and trust are key
components.
Time Management
 Time management teaches organizational skills for budgeting time. Knowing how to
schedule, organize and plan accordingly is essential for management efficiency.
Human Resources
 Human resources training teach supervisors how to handle the interview and selection
processes. It helps managers understand their employees and build better relationships with
them.
Decision Making
 It is important to be able to weigh options quickly and effectively and make the right
decisions. Decision making training teaches perspective and analytical processes.
Leadership skills

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 Being a better leader can build trust and motivate others to work harder. Leadership skills
training focuses on the importance of using leadership styles accordingly and having strong
people skills.
Management Development
Management development is a process through which potential managers develop
their managerial skills on handling situations, people and problems. It largely depends on
imparting knowledge rather than skills; hence, it is a long education process of developing future
managers. Training focuses on development of specific skills especially for middle and lower
level employees. Management development is implemented for the development
of managerial potentials.
In other words, it is a process consisting of all activities by which potential managers or
executives learn required skills and knowledge to improve their behavior and
performance. Management development is a continuous process of developing managerial
potential by enhancing conceptual, interpersonal and decision making skills.
More specifically, management development can be defined as an attempt of
improving managerial performance by imparting knowledge, changing attitude or increasing
skills thereby enhancing the future performance of the company. It is very important due to ever
changing environmental forces accompanied by the effect of globalization and breakthrough in
physical science. It is concerned with skill development activity provided to the higher level
managers which attempts to instill sound reasoning process. It helps to understand cause and
effect relationship, synthesize for experience, visualize relationship, or think logically.
Management Education
Management education is an academic discipline by which students are taught to be business
leaders, managers in future.
Management education focuses on training future business leaders. Through theory and
knowledge of management practice, students learn how to develop the leadership capabilities
necessary to run a team of workers. Part of the curriculum focuses on assessing and evaluating
teams in order to examine the role as a manager. People who undertake management education
must be able to adapt to changes in laws, regulations and trends affecting organizations.
 
JOB OF MANAGEMENT

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The job of management is to improve business performance through the achievement of the main
organizational objectives. 

Mr. Drucker divided the job of the manager into various basic tasks. The manager,
1) Sets objectives. The manager sets goals for the group, and decides what work needs to be
done to meet those goals from where the work actually starts.
2) Organizes. The manager divides the work into manageable activities, and selects people to
accomplish the tasks that need to be done.
3) Motivates and communicates. The manager creates a team out of his people, through
decisions on pay, placement, promotion, and through his communications with the team. He
motivates the employees with economic and non-economic rewards and thereby gets the work
from the subordinates.
4) Measures. The manager establishes appropriate targets and yardsticks, and analyzes,
appraises and interprets performance.
5) Develops people. With the rise of the knowledge worker, this task has taken on added
importance. In a knowledge economy, people are the company’s most important asset, and it
is up to the manager to develop that asset.
6) Providing guidance- A leader has to not only supervise but also play a guiding role for the
subordinates. Guidance here means instructing the subordinates the way they have to perform
their work effectively and efficiently.

7) Create confidence- Confidence is an important factor which can be achieved through

expressing the work efforts to the subordinates, explaining them clearly their role and giving
those guidelines to achieve the goals effectively. It is also important to hear the employees
with regards to their complaints and problems.

8) Build morale- Morale denotes willing co-operation of the employees towards their work
and getting them into confidence and winning their trust. A leader can be a morale booster by
achieving full co-operation so that they perform with best of their abilities as they work to
achieve goals.

9) Builds work environment- Management is getting things done from people. An efficient
work environment helps in sound and stable growth. Therefore, human relations should be

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 kept into mind by a leader. He should have personal contacts with employees and should listen
to their problems and solve them. He should treat employees on humanitarian terms.
10) Co-ordination- Co-ordination can be achieved through reconciling personal interests with
organizational goals. This synchronization can be achieved through proper and effective co-
ordination which should be primary motive of a leader
Administration department is backbone of an organization. An effective administrator is an asset
to an organization. He or she is the link between an organization's various departments and
ensures the smooth flow of information from one part to the other. Thus without an effective
administration, an organization would not run professionally and smoothly.
An effective administrator should have the ability:
 To understand general concepts of Administration
 To enhance the office staff’s ability to manage and organize office effectively and
professionally
 File in the proper way and filing standard
 Develop an appropriate office management strategy
 Develop an appropriate assets management strategy
 Able to develop administrative procedures
 Able to plan and control administrative budge

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 CHAPTER TWO
MANAGEMENT FUNCTIONS AND TECHNIQUES
1. Planning

Setting goals and objectives and identifying all ways and methods to achieve the goals, It is the
basic function of management. It deals with chalking out a future course of action & deciding in
advance the most appropriate course of actions for achievement of pre-determined goals.
Planning is deciding in advance - what to do, when to do & how to do. It bridges the gap from
where we are & where we want to be”. A plan is a future course of actions. It is an exercise in
problem solving & decision making. Planning is determination of courses of action to achieve
desired goals. Thus, planning is a systematic thinking about ways & means for accomplishment
of pre-determined goals. Planning is necessary to ensure proper utilization of human & non-
human resources. It is all pervasive, it is an intellectual activity and it also helps in avoiding
confusion, uncertainties, risks, wastages etc.
 
2. Organizing

This involves designing jobs, roles, structure and system to achieve the goals. It is the process of
bringing together physical, financial and human resources and developing productive
relationship amongst them for achievement of organizational goals. According to Henry Fayol,
“To organize a business is to provide it with everything useful or its functioning i.e. raw
material, tools, capital and personnel’s”. To organize a business involves determining &
providing human and non-human resources to the organizational structure. Organizing as a
process involves:

 Identification of activities.

 Classification of grouping of activities.

 Assignment of duties.

 Delegation of authority and creation of responsibility.

 Coordinating authority and responsibility relationships.

 
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 3. Staffing

It is the function of manning the organization structure and keeping it manned. Staffing has
assumed greater importance in the recent years due to advancement of technology, increase in
size of business, complexity of human behavior etc. The main purpose of staffing is to put right
man on right job i.e. square pegs in square holes and round pegs in round holes. Managerial
function of staffing involves manning the organization structure through proper and effective
selection, appraisal & development of personnel to fill the roles designed un the structure”.
Staffing involves:

 Manpower Planning (estimating man power in terms of searching, choose the person and
giving the right place).

 Recruitment, Selection & Placement.

 Training & Development.

 Remuneration.

 Performance Appraisal.

 Promotions & Transfer.

Directing

Directing is concerned with telling people what to do and seeing that they do it as best they can it
includes assigning tasks, and duties, explaining procedures, issuing orders providing on the job
instructions, monitory performance and correcting deviations motivating people for attainment of
goals, It is that part of managerial function which actuates the organizational methods to work
efficiently for achievement of organizational purposes. It is considered life-spark of the
enterprise which sets it in motion the action of people because planning, organizing and staffing
are the mere preparations for doing the work. Direction is that inert-personnel aspect of
management which deals directly with influencing, guiding, supervising, motivating sub-ordinate
for the achievement of organizational goals. Direction has following elements:

 Supervision

 Motivation

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  Leadership

 Communication
Supervision- implies overseeing the work of subordinates by their superiors. It is the act of watching &
directing work & workers.
Motivation- means inspiring, stimulating or encouraging the sub-ordinates with zeal to work. Positive,
negative, monetary, non-monetary incentives may be used for this purpose.
Leadership- may be defined as a process by which manager guides and influences the work of
subordinates in desired direction.
Communications- is the process of passing information, experience, opinion etc from one person to
another. It is a bridge of understanding.
 
5. Controlling

Monitoring the deviations from the plans and thus evaluating the level of attainment of goals. It
implies measurement of accomplishment against the standards and correction of deviation if any
to ensure achievement of organizational goals. The purpose of controlling is to ensure that
everything occurs in conformities with the standards. An efficient system of control helps to
predict deviations before they actually occur. According to Theo Haimann, “Controlling is the
process of checking whether or not proper progress is being made towards the objectives and
goals and acting if necessary, to correct any deviation”. Controlling is the measurement &
correction of performance activities of subordinates in order to make sure that the enterprise
objectives and plans desired to obtain them as being accomplished”. Therefore controlling has
following steps:

a. Establishment of standard performance.

b. Measurement of actual performance.

c. Comparison of actual performance with the standards and finding out deviation if
any.

d. Corrective action.

Techniques in Management
1. Delegation
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A manager alone cannot perform all the tasks assigned to him. In order to meet the targets, the
manager should delegate authority. Delegation of Authority means division of authority and
powers downwards to the subordinate. Delegation is about entrusting someone else to do parts of
your job. Delegation of authority can be defined as subdivision and sub-allocation of powers to
the subordinates in order to achieve effective results.
Elements of Delegation

1. Authority - in context of a business organization, authority can be defined as the power and
right of a person to use and allocate the resources efficiently, to take decisions and to give orders
so as to achieve the organizational objectives. Authority must be well- defined. All people who
have the authority should know what is the scope of their authority is and they shouldn’t
misutilize it. Authority is the right to give commands, orders and get the things done. The top
level management has greatest authority.
Authority always flows from top to bottom. It explains how a superior gets work done from his
subordinate by clearly explaining what is expected of him and how he should go about it.
Authority should be accompanied with an equal amount of responsibility. Delegating the
authority to someone else doesn’t imply escaping from accountability. Accountability still rest
with the person having the utmost authority.

2. Responsibility - is the duty of the person to complete the task assigned to him. A person
who is given the responsibility should ensure that he accomplishes the tasks assigned to
him. If the tasks for which he was held responsible are not completed, then he should not
give explanations or excuses. Responsibility without adequate authority leads to
discontent and dissatisfaction among the person. Responsibility flows from bottom to top.
The middle level and lower level management holds more responsibility. The person held
responsible for a job is answerable for it. If he performs the tasks assigned as expected,
he is bound for praises. While if he doesn’t accomplish tasks assigned as expected, then
also he is answerable for that.
 
Authority Responsibility

It is the legal right of a person or a It is the obligation of subordinate to perform the work

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 superior to command his assigned to him.
subordinates.

Authority is attached to the position Responsibility arises out of superior-subordinate

of a superior in concern. relationship in which subordinate agrees to carry out
duty given to him.

Authority can be delegated by a Responsibility cannot be shifted and is absolute

superior to a subordinate

It flows from top to bottom. It flows from bottom to top.

2. Power

McClelland and Burnham’s simply define power as “influencing others” (McClelland and
Burnham 1976, 101).  In a similar vein, Miner defines power as “the ability to induce a person to
do something he or she would not have otherwise done.”  Yet he makes a distinction between
power and influence. “Influence is a broader concept, referring to anything a person does to alter
the behavior, attitudes, values, feelings and such of another person.”  Thus, according to Miner,
power is one of many other forms of influence (Miner 1988, 481). Power is influence potential –
the resource that enables a leader to gain compliance or commitment from others
Types of Power
Position- makes decisions and demands compliance
2.  Reward
Behaviour- gives and withdrawals resources for compliance
3.  Coercive
Behavior – Punishes or uses threats to deal with non-compliance
Disadvantages
1.  Invites Retaliation destroys relationships and does not produce permanent change
4.  Expert
Provides expertise to other
5.  Charismatic
Maintain attractive personal qualities
6.  Association
Uses personal connection with powerful persons to influence other people

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Evaluation
Rigorous analysis of completed or ongoing activities that determine or support
management accountability, effectiveness, and efficiency. Evaluation of completed activities
is called ex-post evaluation, post-hoc evaluation, or summative evaluation. Evaluation of
current or ongoing activities is called in-term evaluation. See also effectiveness evaluation

Description of the emotions, attitude, satisfaction, and overall outlook of employees during their

time in a workplace environment. Part of effective productivity is thought to be directly related
to the morale of the employees. Employees that are happy and positive at work are said to have
positive or high employee morale. Companies that maintain employees who are dissatisfied and
negative about their work environment are said to have negative or low employee morale
but the workers feel satisfied and contented.
Management By Objectives (MBO)
Definition.
MBO begin with goals setting and continues through performance review.  The approach
actively involves staff members of every organizational level.  By building on the link between
planning and controlling functions MBO help to overcome many of the barriers to planning
Process of MBO
Implementation of MBO involves the following steps:
Top level goal setting
MBO begins with establishment of overall goals of the organization by the managers.  Top
managers must see goals /corporate objectives by consulting with the other
organizational/departmental managers.
Collaborating goal setting throughout the organization
Each person major areas of responsibilities are already in terms of mess liable objectives.
Managers consult with departmental or divisional members when setting objectives of the
department or individuals.
Period/continuous review of performance
The objectives set are used by management and employees to review or monitor the actual
implementation of objectives and to correct their own performance.

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Final Evaluation / appraisal of feed back
Performance appraisal is finally conducted at the end of the accepted period to determine the
level of achievements of goals/objectives, so that their final corrective measures may be taken.
As a collaborative planning approach, MBO enable managers and subordinates to set goals
jointly.

Merits of MBO
 It clarifies to employees what is expected of them i.e. the objective to be achieved
 It help, managers set achievable targets from their employees
 It improves individual motivation to goals achievements are made accountable and
responsible
 Improves term spirit in the organization and high chances of goal achievements
 Improves communication between managers and subordinates
 It aids managers in reviewing employees performance i.e. it helps implement controlling
and planning, function simultaneous
 It helps to identify the training needs of employees and the provision of training to
employees

Demerits/Limitation of MBO
 Difficulty in setting goals to be achieved i.e. in appropriate or un attainable goals may be
set due to lack of training MBO process.
 It’s expensive in terms of training to managers and other resources required to effectively
implements the Programme
 It kills creativity and innovations in an organization i.e. individual are not tied only to
achieve the stated goals.  It does not have room for creativity.
 The manager /subordinates goal setting process require high level of skills and
interpersonal relationship.  Many managers have neither previous experience nor natural
ability in this area. This may affects the success of MBO
 Its time consuming
 Several meetings must be held in setting goals and reviewing performance

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  Adopting charges in job description is a different task particularly where there are
frequent changes in working environments

Communication
Definition & Importance
This is the transfer of information from one person to the other.  It from sender to the receiver of
the message. Communication can also be defined as the process by which people attempt to
share meanings through the transmission of symbolic messages i.e. through words, letters.
Gresting, numbers sounds etc.  
Decision Making
Decision making may be defined broadly as the process through which managers identifies
organizational problems and attempts to solve them.  Specifically decision making is that part of
problem solving in which a manager makes a choice from variable alternatives to solve
problems. Decision making or choice making is therefore a choosing one options for alternative
options.
 
Management by Crisis
Crisis management is the application of strategies designed to help an organization deal with a
sudden and significant negative event.
A crisis can occur as a result of an unpredictable event or as an unforeseeable consequence of
some event that had been considered a potential risk. In either case, crises almost invariably
require that decisions be made quickly to limit damage to the organization. For that reason, one
of the first actions in crisis management planning is to identify an individual to serve as crisis
manager. 
Other crisis management best practices include: 
 Planning in detail for responses to as many potential crises as possible.
 Establishing monitoring systems and practices to detect early warning signals of any
foreseeable crisis. 
 Establishing and training a crisis management team or selecting an external crisis
management firm with a proven track record in your business area. 

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 Involving as many stakeholders as possible in all planning and action stages. 
 
Management by exception (MBE)
 It is a system of identification and communication that signals the manager as to when and
where his attention is needed. The main object of this system is to enable the manager to identify
and isolate the problems that call for decision and action, and avoid or ignore or pay less
attention to less critical problems which better be handled by his subordinates.

Under this system the manager should receive only condensed, summarised and invariable
comparative reports covering all the elements, and he should have all the exceptions to the past
averages or standards pointed out, both the specially good and the specially bad exceptions.

This gives him a full view of the progress in a few minutes of time. Thus by using the experience
in a systematic way (i.e., having the knowledge of past attainments), a careful analysis is made
with reference to existing records and standards of performances.

Advantages of Management by Exception:

1. It saves time. Manager attends to real problems at a particular point of time.

2. Concentrated efforts are possible, as this system enables the manager to decide when and
where he should pay his attention. It identifies crisis and critical problems.

3. Lesser number of decisions is required to be taken, which enables the manager to go into
detail.

4. This enables to increase span of control and increase the activities for a manager.

5. Use of past trends, history and available data can be made fully.

6. It alarms the management about the good opportunities as well as difficulties.

7. Qualitative and quantitative yardsticks are provided for judging the current position.

8. It prevents management from over managing.

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Limitations of Management by Exception:

Management by exception is not a solution to all management problems; it has its limitations as
well.

Some of them are:

1. It requires a comprehensive observing and reporting system.

2. It increases paper work.

3. The system is silent till the problem becomes critical.

4. Some important factors, like human behaviour, are difficult to measure.

Management By Team Approach

Team management is the ability of an individual or an organization to administer and coordinate

a group of individuals to perform a task. Team management involves teamwork, communication,
objective setting and performance appraisals. Moreover, team management is the capability to
identify problems and resolve conflicts within a team. There are various methods and leadership
styles a team manager can take to increase personnel productivity and build an effective team.

When team members first come together they will all have different ideas, however the key to a
successful team is the alignment of objectives within the team. It is essential that the team leader
sets a common goal the entire team is willing to pursue. This way, all the team members will put
in effort in order to attain the goal. If there is not a common goal, team members who disagree
with the objective in hand will feel reluctant to utilize their full effort, leading to failure to
achieve the goal. In other cases, team members might divert themselves to other tasks due to a
lack of belief or interest in the goal.

Defined team roles and responsibilities

Poorly defined roles are often the biggest obstacle to a successful team. [4] If team members are
unclear of what their role is, their contributions towards the team will be minimal, therefore it is

20
the team leader’s duty to outline the roles and responsibilities of each individual within the team
and ensure that the team is working together as an integral unit.

In a successful team, a team leader will first evaluate the mission of the team to understand what
is needed to accomplish the task. Then, they will identify the strengths and weaknesses of their
team members and assign roles accordingly. Lastly, they must ensure that all team members
know what each other’s responsibilities are to avoid confusion and to create an effective channel
of communication.

Team-building activities

Team-building activities are a series of simple exercises involving teamwork and

communication. The main objectives of team building activities are to increase the trust amongst
team members and allow team members to better understand one another.[15]
Definition
Practice whereby only the information that indicates a significant deviation of actual results from
the budgeted or planned results is brought to the management's notice. Its objective is to facilitate
management's focus on really important tactical and strategic tasks. In MBE, the decision that
cannot be made at one level of management is passed on to the next higher level.

A whole team approach recognizes that in order for the team to be successful, members cannot
operate in isolation. Each team member must know and appreciate every other team member's
strengths and skills.  Each team member must also be willing to switch roles when the need
arises and remained focused on the success of the project, doing whatever is necessary whether
or not it's technically "their job."
Directing
Directing is concerned with telling people what to do and seeing that they do it as best they can it
includes assigning tasks, and duties, explaining procedures, issuing orders providing on the job
instructions, monitory performance and correcting deviations
Literacy, directing implies moving into action.  Directing involves issuing orders and instruction
and taking steps to get them carried out properly.

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 CHAPTER THREE

PERSONNEL MANAGEMENT AND ADMINISTRATION

Human Factors In Organization

Motivation in an Organization
-  Motivation is an integral part of the process of direction, while directing his subordinates a
manager must creates and sustain in them the desire to work for specified objectives.
Motivation is the process of channeling a person's inner drives so that he wants to accomplish the
goals of the organization. Motivation concern itself with the will to work. It seeks to know the
incentives for work and tries to find out the ways and means whereby their realization can be
helped and encouraged.
 The following are the role of motivation in an organization
:
(i) Motivation is one of the important elements in the directing process. By motivating the
workers, a manager directs or guides the workers' actions in the desired direction for
accomplishing the goals of the organization.
(ii) Workers will tend to be as efficient as possible by improving upon their skills and
knowledge so that they are able to contribute to the progress of the organization thereby
increasing productivity.
(iii) For performing any tasks, two things are necessary. They are: (a) ability to work and (b)
willingness to work. Without willingness to work, ability to work is of no use. The willingness to
work can be created only by motivation.
(iv) Organizational effectiveness becomes, to some degree, a question of management's ability to
motivate its employees, to direct at least a reasonable effort towards the goals of the
organization.
(v) Motivation contributes to good industrial relations in the organization. When the workers are
motivated, contented and disciplined, the frictions between the workers and the management will
be reduced.

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(vi) Motivation is the best remedy for resistance to changes. When changes are introduced in an
organization, generally, there will be resistance from the workers. But if the workers of an
organization are motivated, they will accept, introduce and implement the changes whole heartily
and help to keep the organization on the right track of progress.
(vii) Motivation facilitates the maximum utilization of all factors of production, human, physical
and financial resources and thereby contributes to higher production.
(viii) Motivation promotes a sense of belonging among the workers. The workers feel that the
enterprise belongs to them and the interest of the enterprise is their interests.
(ix) Many organizations are now beginning to pay increasing attention to developing their
employees as future resources upon which they can draw as they grow and develop.
Requirements of A Sound Motivation System
It is very difficult for an average manager to sort through all the different motivational theories
and models and know when and how to maximize their application in widely differing situations.
There should be a sound system of motivation to make the workers put forth their best efforts. A
sound system of motivation should have the following essential features.
1. A sound motivation system should satisfy the needs and objectives of both organization and
employees.
2. Motivational system should change with the changes in the situation.
3. Jobs should be designed in such a way as to provide challenge and variety.
4. Managers should recruit the active co-operation of subordinates in improving the
organization's output. Subordinates should be made to realize that they are stakeholders in the
organization.
5. The motivational system should satisfy the different needs of employees. It should be directly
related to the efforts of the employers
Recruitment Policy

A recruitment policy governs the way an employer attempts to fill vacant staff positions.

Creating a suitable recruitment policy is the first step in the efficient hiring process. A clear and
concise recruitment policy helps ensure a sound recruitment process.

23
It specifies the objectives of recruitment and provides a framework for implementation of
recruitment program. It may involve organizational system to be developed for implementing
recruitment programs and procedures by filling up vacancies with best qualified people.
A proactive recruitment policy involves continuously identifying suitable job candidates for
positions, regardless of whether the positions are currently filled. Organizations that proactively
recruit often hire surplus employees and put them through training so that they can immediately
step in to positions that become vacant. This enables these organizations to avoid slowdowns in
production caused by key personnel vacating positions. Depending on the complexity of the job
it can take weeks or months to hire a new employee, so proactive hiring enables firms to avoid
extended periods of operating with staff shortages.
Components of the Recruitment Policy
 The general recruitment policies and terms of the organization
 Recruitment of temporary / permanent employees
 The job descriptions
 The selection process
 Recruitment services of consultants
 The terms and conditions of the employment
Factors affecting Recruitment Policy
 Organizational objectives
 Personnel policies of the organization and its competitors
 Government policies on reservations
 Preferred sources of recruitment
 Need of the organization
 Recruitment costs and financial implications.
A recruitment policy of an organization should be such that:
 To aid and encourage employees in realizing their full potential.
 It should focus on recruiting the best potential people.
 Recruitment policy should be unbiased.
 Transparent, task oriented and merit based selection.
 Weight age during selection given to factors that suit organization needs
 Optimization of manpower at the time of selection process.

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 Defining the competent authority to approve each selection.
 Integrates employee needs with the organizational needs.
 Abides by relevant public policy and legislation on hiring and employment relationship.
 To ensure that every applicant and employee is treated equally with dignity and respect

National Social Security Fund

Background

The National Social Security Fund (NSSF) was established in 1965 by an Act of Parliament
(CAP 258 of the Laws of Kenya) in order to administer a provident fund scheme for all workers
in Kenya. Initially the fund operated as a government department under the Ministry of Labour
but as its membership grew and its operations became complex, the NSSF Act was amended in
1987 to transform it into an autonomous State Corporation. Since 1988, the Fund has been
operating under a Board of Trustees, which is constituted by representatives of 3 key
stakeholders: the government, workers, and employers.

Benefits Payable by NSSF

(i) Age/Retirement Benefit:

 Members are eligible for this benefit when they reach the age of 55 years, or when they
ultimately retire from regular paid employment. On retirement one should submit the
required documents in-person to the nearest NSSF office including a certified copy of the
retirement letter OR certificate of service OR termination letter.

(ii) Withdrawal Benefit:

 Members are eligible for this benefit if they are at least 50 years of age and they have
retired from regular paid employment. A member would opt to apply for this benefit
(over the age/retirement benefit) if they retire before attaining 55 years of age. On
retirement one should submit the required documents in-person to the nearest NSSF
office including a certified copy of retirement letter OR certificate of service OR
termination letter

25
(iii) Invalidity Benefit:

 Members are eligible if certified to be permanently incapable of working because of

physical or mental disability. Members who are at least 50 years of age and suffer from a
partial incapacity of a permanent nature that prevents them from undertaking
employment are also considered. One should complete an Application for Invalidity
Benefit Form, the application form should be endorsed by a qualified doctor at the
hospital/clinic one attend(ed). One should submit the completed application form and
other required documents (in person) to the nearest NSSF office. One is examined for
confirmation of invalidity by the Fund’s appointed doctor after completion and
submission of the form.

(iv) Emigration Grant:

 This grant is paid to members who are permanently emigrating from Kenya. One should
submit the required documents in person at the nearest NSSF office including an
Affidavit of permanent emigration. This must contain the phrase without intentions of
coming back, photocopy of passport, original and photocopy of visa document,
permanent emigration visa or evidence in support of permanent emigration claim (e.g.,
proof of marriage to a foreigner),bank account number and bank name and address,
Green card (if emigrating to the United States) and Citizenship of country of residence.
Additional documentation/information is required for non-Kenyans including; Copy of
work permit (whether valid or expired), Evidence of contribution, Copy of alien
registration card and/or refugee identity card (if applicable). This must contain name,
number, photograph, and date of validity and any other identification document (e.g., the
East African Travel Certificate [shahada ya dharura] for Tanzanian citizens)

(v) Funeral Grant:

 The grant is payable to a dependant of a deceased member. This dependant must be

nominated by the family and must be identified by local administration. The deceased
member must have been a member of the fund who made at least three (3) monthly
contributions to NSSF and the deceased/beneficiary had not yet been paid his/her

26
 benefits. Documents required are; Certified documentation from the local administration
indicating that one is the dependant nominated by the family to obtain the grant, Copy of
the deceased’s identity card and Copy of the deceased’s membership card. This is money
given by NSSF to assist in the burial of a deceased contributor. It is not deducted from
the deceased’s account. The amount payable for this grant currently stands at Kshs 2,500.
The grant must be paid within three (3) months of a member’ death

(vi)  Survivors’ Benefit:

This benefit is payable to the survivor(s)/dependant(s) relative(s) of a deceased member. The

dependant relatives qualify for this benefit in the following order: the husband/wife of the
deceased member, all children irrespective of age or gender (if the husband/wife of the deceased
member is also deceased, or if the deceased member was a single parent). Children who are
minors will be paid through bank accounts of confirmed guardians. The parents of the deceased
(if the deceased member was not married and had no children), Sisters/brothers of the deceased
(if the deceased was single, had no children, and both parents are deceased), the guardian to the
children of the deceased member (where both the parents are deceased and all the deceased
members’ children are minors) and an applicant who has letters of administration (where all
dependants are exhausted). One should Complete the Application for Survivor’s Benefit Form,
get local administration (i.e., the administration in your home district) to endorse the form. One
should submit the completed application form and the required documents (in person) to the
nearest NSSF office including; deceased members’ original membership card, Photocopy of the
deceased members National Identity Card, Original death certificate of the member and any
beneficiary who is deceased. This must contain: Gender, Age, Date of death, Date of registration
of death, Date of Issuance, Serial number, Registration number, Full names tallying with the
statement of accounts, Certified copy of the marriage certificate or other evidence of marriage in
case the deceased was married

Exempt Persons
1. Persons eligible to receive any pension benefits under any scheme to which the Pensions Act
applies, and persons entitled to receive pension benefits under any scheme(statutory or non-
statutory) approved by the Minister in writing as a scheme providing comparable benefits, being

27
persons in the public service, local government authority or any corporation or body established
for public purposes.

2. Persons in the service of any University or College who are entitled to receive benefits under
any superannuation scheme approved by the Minister in writing.

3. Persons entitled to exemption from contribution to social security schemes under any
International Convention.

4. Members (other than civilian employees) of –

(a) the armed forces;
(b) the Kenya Police Service;
(c) the Prison Services;
(d) the National Youth Services.

5. Persons not ordinarily resident in Kenya who are employed in Kenya for periods not
exceeding three years at any one time (or such longer periods as the Minister may allow in any
particular case or class of case), being persons who are liable to contribute to or are or will be
entitled to benefit from –
(a) the social security scheme of any country other than Kenya approved by the Minister in
writing
(b) any scheme associated with their employment under which the benefits are comparable to the
benefits provided by this Act, and approved by the Minister in writing for the purposes of this
Schedule.

6. Persons undergoing full-time instruction in Schools, Colleges, University or similar

educational instructions; Provided that where bona fide students become employed during the
periods of vacation, any payment in cash in the nature of allowances made at any time in respect
of such employment shall not be construed as wages
The National Hospital Insurance Fund Kenya
(NHIF)

28
National Hospital Insurance Fund is a State Parastatal that was established in 1966 as a
department under the Ministry of Health. The original Act of Parliament that set up this Fund in
1966 has over the years been reviewed to accommodate the changing healthcare needs of the
Kenyan population, employment and restructuring in the health sector. Currently an NHIF Act
No.9 of 1998 governs the Fund. The Fund's core mandate is to provide medical insurance cover
to all its members and their declared dependants (spouse and children). The NHIF membership is
open to all Kenyans who have attained the age of 18 years and years and have a monthly income
of more than Ksh 1000. NHIF has 31 fully autonomous branches across the country. Each of
these branches offers all NHIF services including payment of benefits to hospitals or members or
employers. Smaller satellite offices and service points in district hospitals also serve these
branches.
Benefits
 Upon admission in hospital an NHIF member is accorded services and the hospital
makes a claim to the Fund for reimbursement
 An in-patient cover for the contributor, declared spouse and children
 Provides comprehensive medical cover in majority of over 400 accredited Government
facilities, Mission health providers and some private health providers across the country
 Provides in-patient services in private and high cost hospitals on a co-payment basis
 Comprehensive maternity and CS (Caesarian) package in government hospitals, majority
of mission and some private hospitals
 Dialysis at Kenyatta National Hospital & Moi Teaching & Referral Hospital at a rebate
 Family planning – Vasectomy and Tubal Ligation
 NHIF does not exclude any disease.

Contributions
Formal sector employees' contributions are deducted and remitted to the Fund by their
employers through Cheque or E-banking. For members under the voluntary category, they pay
Kshs.160 per month (Kshs.1920 per annum). For those in formal employment, contributions are
made as per their income (see premium rate schedule below).

29
Payment of claims 
Claims are submitted by hospitals directly to NHIF after the contributors have been discharged
from the hospitals. The claims are examined by the Fund to ensure validity before payment. The
Fund is to pay claims within 14 days upon receipt of the claim from the hospitals. Members who
opt to clear the bills with the hospital may launch a general claim directly to NHIF for
reimbursement.

Accrediting and contracting hospitals

The comprehensive in-patient health cover has been introduced for NHIF contributors and their
dependants. To enhance these benefits, NHIF has contracted hospitals under three Categories; A,
B & C, to provide in-patient medical cover and partial cover for surgical cases in some of these
hospitals. Members are at liberty to attend hospitals under any category.
Under Category A (government hospitals), members enjoy full and comprehensive cover for
maternity and medical diseases including surgery. They do not pay for anything on admission
provided they are fully paid up members of NHIF. Members admitted under contract Category B
(private and mission) hospitals will enjoy full and comprehensive cover but where surgery is
required, the contributor may be required to co-pay.

Those visiting facilities contracted under Category C (private) continue with the system where
NHIF pays specified daily benefits.
 The Fund strives to accredit as many hospitals as possible so as to ensure all members
access NHIF benefits whenever they are across the country.
 NHIF has an objective criteria and guidelines that aim to encourage hospitals towards
quality improvement.
 Accredited organizations are those recognized by the Fund and allowed to offer services
to NHIF members and claim reimbursements thereof.
 Accreditation of a health provider takes into account the services, personnel,
infrastructure and equipments among other issues that the institutions have. The level of
rebate therefore corresponds to the grade after scoring the various aspects.

30
  The Fund, further contracts the health facilities to ensure they provide services
comprehensively. This means that NHIF members walk in and walk out of the facilities
fully treated at the cost of NHIF without making additional payments.
 The contracts spell out the obligations of the health provider and NHIF.

Civil servants and disciplined forces Medical scheme

The following Benefit package was negotiated by the government and NHIF and will be
delivered through a capitation model:
a) In-patient  
All necessary medical treatment and services provided by or on the order of a clinician to the
Member when admitted to an NHIF Accredited Hospital offering services under levels as
defined by the Kenya Essential package for Health (KEPH).The cover includes hospital bed
charges, nursing care, diagnostic, laboratory or other medically necessary facilities and
services, physician's, surgeons, anesthetists', or physiotherapist's fees, operating theatre
charges, specialist consultations or visits and all drugs, dressings or medications prescribed by
the physician for in-hospital use.
b) Out-patient
All necessary outpatient medical treatment and services provided by or on the order of a
clinical to the member when admitted to an NHIF Accredited Hospital offering services under
levels as defined by the Kenya Essential Package for Health (KEPH).The outpatient cover
shall include but is not limited to:
i) Consultation
ii) Laboratory investigations
iii) Drug administration and dispensing
iv) Dental health care services
v) Radiological examination
vi) Nursing and midwifery services
vii) Minor surgical services
viii
Physiotherapy services
)
ix) Optical care
x) Occupational therapy services

31
 xi) Referral for specialized services
xii) Any other benefit as approved by the NHIF Board of management
c) Maternity cover and Reproductive Health
This cover will include for Delivery and Caesarean section. For reproductive health cover
includes family planning services, excluding fertility treatment. This benefit is not available
for dependants other than declared spouse.
d) Ex-Gratia
NHIF shall not be liable for Ex-gratia payments upon the limits being exhausted.
e) Group life
NHIF shall pay death benefit upon demise of a member whilst in service subject to provision
and receipt of full documentations.
f) Last Expense cover
NHIF shall upon written notification of death of a member while this cover is in force, pay to
the Client or such other person or persons as the Client may in writing direct, the amount
specified in the schedule to cater for the funeral expenses.
 Premium rates
Below are the premium rates for formal sector categorized by various income brackets.

Personnel Records
Personnel Records are records pertaining to employees of an organization. These records are
accumulated, factual and comprehensive information related to concern records and detained. All
information with effect to human resources in the organization is kept in a systematic order. Such
records are helpful to a manager in various decision -making areas.
Personnel records are maintained for formulating and reviewing personnel policies and
procedures. Complete details about all employees are maintained in personnel records, such as,
name, date of birth, marital status, academic qualifications, professional qualificationsprevious
employment details, etc
Types of Personnel Records
1. Records of employment contain applicants past records, list sources, employees progress,
medical reports, etc.
2. Wages and salaries records contain pay roll records, methods of wages and salaries, leave
records, turnover records and other benefit records.
3. Training and development contains appraisal reports, transfer cases, training schedule,
training methods.

32
 4. Health and safety records include sickness reports, safety provisions, medical history,
insurance reports, etc.
5. Service Records are the essential records containing bio-data, residential and family
information, academic qualifications, and marital status, past address and employment
records.
Purposes of Personnel Records
According to the critics of personnel records, this system is called as a wastage of time and
money. According to personnel records, followers of this: Dale Yoder, an economist of Michigan
University, USA has justified the significance of personnel records after making an in-depth
study.
1. It helps to supply crucial information to managers regarding the employees.
2. To keep an update record of leaves, lockouts, transfers, turnover, etc. of the employees.
3. It helps the managers in framing various training and development programmes on the
basis of present scenario.
4. It helps the government organizations to gather data in respect to rate of turnover, rate of
absenteeism and other personnel matters.
5. It helps the managers to make salary revisions, allowances and other benefits related to
salaries.
6. It also helps the researchers to carry in- depth study with respect to industrial relations
and goodwill of the firm in the market

ATTITUDES

Are the beliefs, feelings and behavioral tenderness held by a person about an object even or
person (called attitude object) are the evaluation statements – either favorable or unfavorable
concerning object, people or events.

Components Of Attitudes

Affective component: this involves a person’s feelings / emotions about the attitude object.
For example: “I am scared of spiders”.

33
 Behavioral (or conative) component: the way the attitude we have influences how we act or
behave. For example: “I will avoid spiders and scream if I see one”.
Cognitive component: this involves a person’s belief / knowledge about an attitude object. For
example: “I believe spiders are dangerous”.

Types of Attitudes
They are mainly three:
Job Satisfaction -Job satisfaction refers to one’s feeling towards one’s job. An individual having
satisfaction is said to possess positive attitude towards the job. Conversely, a dissatisfied person
will have negative attitude towards his other job.
Job Involvement-Job involvement refers to the degree with which an individual identifies
psychologically with his or her job and perceives his or her perceived performance level
important to self-worth. High degree of job involvement results in fewer absence and lower
resignation rates.

Organizational Commitment-It is understood as one’s identification with his or her organization

and feels proud of being its employee. Job involvement refers to one’s attachment to a job
whereas organizational commitment implies an employee’s identification with a particular
organization and its goals
Morale
 It is the degree to which individual needs are satisfied.
 It is also the degree to which the individual   desire satisfaction from his total job
situation.
 Morale reflects attitudes of employees towards their jobs or any work situation e.g.
There are likes or dislikes.
 High morale leads to high productivity in the firm.
Ways of improving morale (Building Morale)
 Through sound manpower management e.g.  Better handling of grievances, safety
measures, discipline, rules and welfare activities all that improves morale.
 Human relation approach e.g.  Individuals to be treated as human being in the firm and
treated equally important to the firm.

34
  Management attitudes: the management should have favorable attitudes towards its
employees.

 Through the organization structure e.g.  The structure should be clear to enable vertical
communication upwards that will increase the morale of employees.
 By allowing participation of the employees: In some issues of the organization.
 Through job enlargement and enrichment that will make employees feel more responsible
thus increasing their morale.
 By better handling of conflicts in the organization.
 Through good suspension to ensure effective control of absenteeism.
 By improving poor working conditions.
Importance Morale in Organization
  Overall satisfaction:
 The other name of morale is satisfaction, which relates to needs of the individual, his job,
his colleagues, supervisors and so on. So a condition of high moral means overall
satisfaction, peace, harmony and stability.
 Productivity:
 Morale increases productivity in two ways - directly through inducing more effort and
indirectly, by removing some of the handicaps like employee grievance, absenteeism,
turnover and the like.
 Discipline:
 Where morale is high, there is practically no problem of indiscipline.
 Ease of management:
 High morale also reduces the need for supervision. Motivated workers themselves take
the initiative to work harder and better.
 Better company image:
 If morale can be maintained at a high level for a long period, it will create a good image
in the public mind about the company. While employees themselves may publicize its
policies, working conditions and so, on absence of disputers and general atmosphere of

35
 harmony produce a favourable impact on suppliers, customers and the neighboring
community
TYPES OF TRAINING:

On-the-Job Training Methods : This type of training is imparted on the job and at the work place
where the employee is expected to perform his duties. It enables the worker to get training under
the same working conditions and environment and with the same materials, machines and
equipments that he will be using ultimately after completing the training. This follows the most
effective methods of training the operative personnel and generally used in most of the individual
undertaking.

1. On Specific Job : On the job training methods is used to provide training for a specific job
such a electrician moror mechanic pluming etc.

(a) Experience : This is the oldest method of on-the-job training. Learning by experience cannot
and should not be eliminated as a method of development, though as a sole approach, it is a
wasteful, time consuming and inefficient. In some cases, this method bas proved to be very
efficient though it should be followed by other training methods to make it more meaningful.

(b) Coaching : On-the-Job coaching by the superior is an important and potentially effective
approach is superior. The technique involves direct personnel instruction and guidance, usually
with extensive demonstration.

2. Job Rotation : The major objective of job rotation training is the broadening of the background
of trainee in the organisation. If trainee is rotated periodically from one job to another job, he
acquires a general background. The main advantages are : it provides a general background to
the trainee, training take place in actual situation, competition can be stimulated among the
rotating trainees, and it stimulates a more co-operative attitude by exposing a man to other fellow
problem and view-points.

3. Special Projects : This is a very flexible training device. The trainee may be asked to perform
special assignment, thereby he learns the work procedure. Sometime a task-force is created
consisting of a number of trainees representing different functions in the organisation.

36
 4. Apprenticeship : Under this method, the trainee is placed under a qualified supervisor or
instructor for a long period of time depending upon the job and skill required. Wages paid to the
trainee are much less than those paid to qualified workers. This type of training is suitable in
profession, trades, crafts and technical areas like fitter, turner, electrician, welders, carpenters
etc.

5. Vestibule Training : Under this method, actual work conditions are created in a class room or
a workshop. The machines, materials and tools under this method is same as those used in actual
performance in the factory. This method gives more importance to learning process rather than
production.

6. Multiple Management : Multiple management emphasizes the use of committies to increase

the flow of ideas from less experience managers and to train them for positions of greater
responsibility. In this method; a junior board authorized to discuss any problem that the senior
board may discuss, and its members are encouraged to put their mind to work on the business a
whole, rather than too concentrate to their specialized areas.

Off-the-job Training Methods Following are the off the job training techniques :

1. Special Courses and Lectures: Lecturing is the most traditional form of formal training method
Special courses and lectures can be established by business organizations in numerous ways as a
part of their development programmes. First, there are courses, which the organizations
themselves establish to be taught by members of the organizations. A second approach to special
courses and lectures is for organizations to work with universities or institutes in establishing a
course or series of course to be taught by instructors by these institutes. A third approach is for
the organizations to send personnel to programmes established by the universities, institutes and
other bodies. Such courses are organized for a short period ranging from 2-3 days to a few
weeks.

2. Conferences : This is also an old method, but still a favorite training method. In order to
escape the limitations of straight lecturing many organizations have adopted guided, discussion
type of conferences in their training programmes. In this method, the participants pools, their
ideas and experience in attempting to arrive at improved methods of dealing with the problems,

37
which are common subject of discussion; Conferences may include buzz sessions that divide
conferences into small groups of four or five intensive discussion. These small groups then
report back to the whole conference with their conclusions or questions. Conference method
allows the trainees to look at the problem from a prouder angle.

3. Case Studies : This technique, which has been developed, popularized by the Harvard
Business School, U.S.A is one of the most common form of training. A case is a written account
of a trained reporter of analyst seeking to describe an actual situation. Some causes are merely
illustrative; others are detailed and comprehensive demanding extensive and intensive analytical
ability. Cases are widely used in variety of programmes. This method increases the trainee‘s
power of observation, helping him to ask better questions and to look for broader range of
problems.

4. Brainstorming : This is the method of stimulating trainees to creative thinking This approach
developed by Alex Osborn seeks to reduce inhibiting forces by providing for a maximum of
group participation and a minimum of criticism. A problem is posed and ideas are invited.
Quantity rather quality is the primary objective. Ideas are encouraged and criticism of any idea is
discouraged. Chain reactions from idea to idea often develop.

5. Laboratory Training : Laboratory training adds to conventional training by providing

situations in which the trains themselves experience through their own interaction some of the
conditions they are talking about. In this way, they more or less experiment on themselves.
Laboratory training is more concerned about changing individual behaviour and attitude. There
are two methods of laboratory training: simulation and sensitivity training.

(a) Simulation : An increasing popular technique of management development is simulation of

performance. In this method, instead of taking participants into the field, the field can be
simulated in the training session itself Simulation is the presentation of real situation of
organisation in the training session. It covers situations of varying complexities and roles for the
participants. It creates a whole field organisation, relates participants, through key roles in it, and
has them deal with specific situations of a kind they encounter in real life. There are two
common simulation methods of training : role-playing is one and business game is the other.

38
(i) Role-playing : Role-playing is a laboratory method, which can be used rather easily as a
supplement of conventional training methods. Its purpose is to increase the trainee‘s skill in
dealing with other people. One of its greatest use, in connection with human relations training,
but it is also used in sales training as well. It is spontaneous acting of a realistic situation
involving two or more persons, under classroom situations. Dialogue spontaneously grows out of
the situation, as the trainees assigned to it develop it.

(ii) Gaming : Gaming has been devised to simulate the problems of running a company or even
a particular department. It has been used for a variety of training objectives from investment
strategy, collective bargaining techniques to the morale of clerical personnel. It has been used at
all the levels, from the executives for the production supervisors.

(b) Sensitivity Training : Sensitivity training is the most controversial laboratory training
method. Many of its advocates have an almost religious zeal in their enhancement with the
training group experience. Some of its critics match this favour in their attacks on the technique.
As a result of criticism and experience, a somewhat revised approach, often described as ‗team
development‘ training. has appeared. National Training Laboratories at Bethel U.S.A. The
training groups themselves called ‗T GROUP‘ first used it. Since then its use has been extended
to other organizations, universities and institutes.

39
 CHAPTER FOUR

OFFICE MANAGEMENT AND ADMINISTRATION

 Definition of terms office

 Official correspondence communication
 Mails
 Telephone messages
 Basic office stationery
 Major common filling subjects
 General office equipment

OFFICE
It is place, a room or a building where a number of clerical activities   of business enterprise
takes place so as to achieve the management, goals of the business enterprise.
For the achievement s of goals and objectives to be realized, a number of managerial functions
must take place e.g. planning, organizing, directing etc.

Major filling subjects

Classification of files refers to the process of selecting heading under which documents are
grouped or classified on the basis of common characteristics. The bases of classification are as
follows

 1. Alphabetical classification

The filing method under which files and folders are arranged in order of alphabets of the names
of person or institution concerned with such file is alphabetical classification. It is most popular
and common method of filing. In case name of more than one person starts with same letter then
second letter of name is taken into consideration. It is flexible method. It is used in both small
and large organization.
 Advantages
Simple and easy to understand
Doesn’t need separate index
It is flexible
 
Disadvantages

40
 Time consuming

 Difficult to arrange files

 Difficult to locate in case of common names

 2. Numerical classification
The filing method under which files and folders are arranged in order of number is called
numerical classification. All files and folders are given separate numbers. It is indirect method of
classification of filing. In this filing alphabetical index is required. It includes name, address,
phone number, subject and other information along with file number.

Advantages

 Suitable for large offices having large number of files and folders

 Accurate method of filing

 It is flexible

 Separate index can be easily developed using numbers.

 Disadvantages

 It is expensive

 It is time consuming

 Not suitable for small organization

 It is not easy to operate

 Separate alphabetical index is required.

 3. Subjective classification
In this filing method, records are classified according to their subject; letters and documents are
classified and arranged in files and folders into subject or sub-subject wise. In this filing, subject
must be arranged alphabetically. It is widely used in those cases where subject is more important

41
 than the name of the person or organization. All documents relating to same subject are filed
together in one file.
 Advantages

 Simple to operate

 Flexible

 Convenient

 Easy to locate

Disadvantages

 Not applicable for filing miscellaneous subject

 Time consuming

 Difficult to locate when subject matter is not properly understood

 4. Geographic classification
In this method, files are grouped according to the geographical location of firm, organization or
person. Under this method name of places are written in file and are arranged in drawer either in
alphabetical or numerical order whichever is suitable for organization. It used in multinational
companies or those organization whose business and branches are located in many places of the
nation or the world.

Advantages

 Easy to understand and use

 Can be arranged in alphabetical and numerical order

 It used in those organizations whose business is engaged in correspondence with the

businesses all over the globe or the nation.
 

42
Disadvantages

 Expensive

 Not suitable for small scale organization

 Time consuming

 No use of card or index

5. Chronological classification
In this method, files and folders of documents are arranged in an order of their date, day, and
time. In an office, several letters and documents may be received and dispatched. They all are
arranged according to time and date when they were received and dispatched
Correspondence

Correspondence
Correspondence consists of memos, letters, and electronic mail. In engineering and science,
correspondence is an effective way to make requests, submit changes to a job, and deliver
specific information. Unlike telephone conversations, correspondence presents the audience with
a legal contract that is dated and can support a claim in court. This section presents formats for
memos and letters. Because electronic mail usually has a built-in format, no format is assigned
here for it. In addition, this section provides helpful links for job letters and résumés.
In your correspondence, you should concentrate on being clear and precise. Because audiences
tend to read letters and memos quickly, opt for shorter sentences and paragraphs than you would
use in a formal report or journal article. Also, in correspondence, you should consider carefully
the tone. Tone is difficult to control in correspondence. For instance, in a job application letter,
how do you talk about your accomplishments without sounding boastful? Or in a letter
complaining about faulty workmanship, how do you motivate the reader to repair the damage
without alienating the reader? The answers are not simple. Often, engineers and scientists lose
control of tone by avoiding simple straightforward wording. When some people sit down to write
a business letter or memo, they change their entire personality. Instead of using plain English,
they use convoluted phrases such as "per your request" or "enclosed please find." Because these

43
phrases are not natural or straightforward, they inject an undesired attitude, usually arrogance,
into the writing. For more information about the style of correspondence, see Chapter 12 of The
Craft of Scientific Writing. To gain practice in identifying common problems in correspondence,
perform the following exercises.
Memos
Typically, you write memos to people within your place of work, and you write letters to people
outside your place of work. One major difference between memos and letters is the title line
found in memos. Because readers often decide whether to read the memo solely on the basis of
this title line, the line is important. Another difference between letters and memos is that you
sometimes write memos that serve as short reports. In such cases, the format for the memo
changes somewhat. For instance, in a memo serving as a progress report for a project, you might
include subheadings and sub-subheadings. Notice that people who are mentioned in a memo or
are directly affected by the memo should receive a copy. Included here is a sample memo
format and a sample memo. Also included is a sample memo report
Letters
Formats for letters vary from company to company. For instance, some formats call for
paragraph indents; others don't. Included in this section is a sample format for letters. Also
included in this section is asample thank-you letter written by someone after a job interview. In
this letter, notice how the writer gets to the point in the first sentence of the first paragraph.
Notice also the simple and straightforward salutation ("Sincerely"). As with a memo, people who
are mentioned or directly affected by the letter should receive a copy.
E-mail
Electronic mail is a less formal version of memos and letters. Electronic mail is relatively new
and is changing in terms of sophistication in format and expectation by audience. The principal
advantages of electronic mail over other types of correspondence are its speed and ease of use.
For instance, in minutes, you can send out information to many recipients around the world.
Included in this section is a sample e-mail format.
One disadvantage of electronic mail is the crudeness of the format. Many electronic mail systems
do not allow such things as tabs or italics. For that reason, the look of the message is not as
attractive as a memo or letter that has been printed on letterhead paper. Because the message
does not look formal, many people mistakenly adopt a style that lacks the "appropriate formality"

44
[Markel, 1996]. For instance, these people include needless abbreviations (such as "BTW" rather
than "by the way").
Another disadvantage of electronic mail is also one of its advantages: its ease of use. With letters
and memos, you must print out the correspondence before you send it. That printing out allows
you to view the writing on paper--a step that makes it easier for you to proof for mechanical
mistakes in spelling, usage, and punctuation. With electronic mail, though, you are not forced to
print out on paper before you send. For that reason, electronic messages often are not as well
proofed as regular correspondence. Remember: Because most networks archive electronic mail,
you should take the same care with electronic mail as you do with printed correspondence. That
means using the appropriate formality in style and carefully proofing your message before you
hit the "send" button.
 
TYPES OF OFFICE EQUIPMENT

i. Duplication machines
ii. Dictating machines
iii. Calculators
iv. Accounting machines
v. Computers

45
 CHAPTER FIVE
COMMITEES MANAGEMENT
Meaning and purpose of committees
Types of committees and terms of references
Terms used in committee procedure
Agenda
Minutes
Quorum
Annual general meetings
Special general meetings
Ad-hoc committee
Interim chairman
Select committee
Effective committee meeting procedure Minute writing
Meaning and purpose of committees
According to Hicks, "A committee is a group of people who meet by plan to discuss or make a
decision for a particular subject."
According to Louis A Allen, "A committee is a body of persons appointed or elected to meet on
an organised basis for the consideration of matters brought before it."
A committee may formulate plans, make policy decisions or review the performance of certain
units. In some cases, it may only have the power to make recommendations to a designated
official. Whatever may be the scope of their activities, committees have come to be recognised
as an important instrument in the modern business as well as non-business organisations.
Objectives of committees
 To have consultations with various persons to secure their view-points
 To give participation to various groups of people
 To secure cooperation of different departments
 To coordinate the functioning of different departments and individuals by bringing about
unity of directions.

46
Types of committees
1. Line committee: If a committee is vested with the authority and responsibility to decide and
whose decisions are implemented, it is known as line committee.
2. Staff committee: If a committee is appointed merely to counsel and advise, it is known as a
staff committee.
3. Formal committee: When a committee is constituted as a part of the organisation structure and
has clear-cut jurisdiction, it is a formal committee.
4. Informal committee: An informal committee is formed to advice on certain complicated
matters. It does not form part of the organisation structure.
5. Coordinating committee: It is constituted to coordinate the functioning of different
departments.
6. Executive committee: It is a committee which has power to administer the affairs of the
business.
7. Standing committee: are formal committees that are of permanent character.
8. Ad hoc committee: They are temporary bodies. It is appointed to deal with some special
problem and stops functioning after its job are over.
Advantages or merits of committee type of organisation
1. A committee is an effective method of bringing the collective knowledge and experience of a
number of persons. Therefore, many multi-dimensional and complex problems of modern
enterprises, which cannot be solved satisfactorily by individual managers, can be solved by
committees.
2. Committees offer scope for group deliberations and group judgment. Results obtained by
group deliberation and group judgment are likely to be better than those obtained by individual
judgment.
3. When it is necessary to integrate varying points of view, which cannot conveniently be
coordinated by individuals, the committee may be used to bring about coordination.
4. The management can give representation to the employees in various committees. This will
motivate the employees for better performance as they feel that they have a say in the affairs of
the organisation.
5. A committee form of organisation facilitates pooling of authority of individual managers for
making some type of decisions of an inter-departmental nature.

47
6. A committee form of organisation tends to promote organisational cohesiveness. Group
endeavour, team spirit and collective responsibility are control to the philosophy of committees.
Disadvantages of committee type of organisation
(a) If a manager has an opportunity to carry a problem to a committee, he may take it as a means
of avoiding decision-making or to escape the consequences of an unpopular decision.
(b) Sometimes, a committee may not be able to take the needed decision because of the
conflicting views of the members.
(c) Committees take more time in procedural matters before any decision is taken. In some cases,
slowness seriously handicaps the administration of the organisation.
(d) Committees are an expensive device both in terms of cost and time.
(e) When the committee findings represent a compromise of different viewpoints, they may be
found to be weak and indecisive.
(f) No member of a committee can be individually held responsible for the wrong decision taken
by the committee.
(g) It is very difficult to maintain secrecy regarding the deliberations and the decisions taken by a
committee, especially when there are many members in the committee.
Committee Meeting Terminology 
To feel more at ease in meetings, it is necessary to be acquainted with the meeting terminology.
The following terms are mostly applicable to formal meetings such as management committee
meetings rather than workplace meetings. However terms such as ‘agenda’, ‘apologies’,
‘minutes’ and ‘business arising’ are common to most different meetings.
Agenda
The plan for a meeting, it lists the items to be discussed in the order in which they will be
discussed.
Amendment
Proposed modification to a motion which is not in conflict with the general thrust of that motion.
If the amendment is adopted it becomes part of the original motion (now called ‘motion as
amended’ or ‘substantive motion’)
Apologies
Formal notifications of inability to attend a meeting
Brainstorming

48
A technique used to gather ideas from a group, it involves the members of the group thinking of
as many ideas as they can in a short period of time.
Business Arising       
Discussion on any matter recorded in the minutes of the previous meeting.
Chair
The person who controls the conduct of the meeting, a sort of umpire.
Consensus
A type of group decision making. It involves coming to a decision acceptable to all members of
the group without a vote being taken.
Constitution
A document setting out the fundamental principles governing the running of an organisation. It
normally includes such things as the goals of the organisation, membership requirements,  rights
and fees, meeting times, voting rights and standing orders for meetings. More information on the
constitution of an association
General Business   
The body of the meeting where the main objectives of the meeting are discussed
Minutes
The formal written record of a meeting. Copies are circulated to attendees and those who
apologised (and sometimes to other interested parties), and formally confirmed at the next
meeting as being a true record.
Motion       
A formal statement, usually involving some proposed action, put to a meeting for discussion and
subsequent decision by vote.
Mover        
The proposer of a motion
Motion of Dissent
A formal statement involving some proposed action, put to a meeting for discussion and
subsequent decision by vote.
Other Business   
An item on the agenda (usually the last) that provides an opportunity for those present to suggest
additional matters for discussion.

49
Point of Order
A formal complaint (to the chair person) at a meeting that a speaker is being irrelevant, unduly
repetitive, exceeding prescribed time, speaking out of turn or in some way violating standing
orders.
Procedural motion
A motion aimed at changing the sequence or timing of events at a meeting, rather than one which
addresses an agenda item.
Quorum
Minimum number (or percentage of those invited) required to be at a meeting for it to proceed
legitimately.
Seconder   
Someone who formally supports the mover of a motion
Standing Orders
An organisation’s rules that govern how its meetings should be run.
The above meeting terminology is by no means the full list. However the above terms are
commonly used in formal meetings and beneficial to learn. It is often the case that the
constitution of the organisation will provide further explanation of the common meeting
terminology.
Special General Meeting
  Is a meeting of members of an organisation, shareholders of a company, or employees of an
official body, which occurs at an irregular time. The term is usually used where the group would
ordinarily hold an  (AGM), but where an issue arises which requires the input of the entire
membership and is too serious or urgent to wait until the next AGM. 
Annual General meeting
Gathering of the directors and stockholders (shareholders) of every incorporated firm, required
by law to be held each calendar year. Generally, not more than 15 months are allowed to elapse
between two AGMs, and a 21-day's written notice of its date is required to be given to the
stockholders. The main purpose of an AGM is to comply with legal requirements, such as the
presentation and approval of the audited accounts, election of directors, and appointment of
auditors for the new accounting term. Other items that may also be discussed include

50
compensation of officers, confirmation of proposed dividend, and issues raised by the
stockholders

Ad-hoc committee -Committee formed for a specific task or objective, and dissolved after the
completion of the task or achievement of the objective

Interim Chairman A person appointed by a committee’s board to assume the role of chairman
during a time of transition or as the result of the sudden departure of the previous chairman.
Chairman is tagged with the "interim" tag due to the fact that they have not officially been given
the title of full-time chairman.

51
 CHAPTER SIX
SUPPLIES MANAGEMENT AND ADMINISTRATION

A broad term describing the various acts of identifying, acquiring and managing the products
and/or resources needed to run a business or other organization. These include physical goods as
well as information, services and any other resources needed. Supply management divisions
within large corporations can be very large, with budgets in the billions and employing hundreds
of workers. The main goals within supply management are to control costs, efficiently allocate
resources and gather information to be used in strategic business decisions.
Definition of supply management. Today it reads: "The identification, acquisition, access,
positioning, management of resources and related capabilities the organization needs or
potentially needs in the attainment of its strategic objectives." .
Identification: Supply professionals' interactions are broader than ever before, from consumer
and customer and across the company's stakeholders and top management and through the
supply base—all with the goal to identify opportunities and needs. Identification continues with
understanding risks, effects, performance requirements and paradigm shifts across products,
services, processes and geographies.
Acquisition and Access: Acquisition is a broad concept capturing the concept of the many ways
an organization can acquire and use products and services. Access reflects the use of the assets of
others. For example, outsourcing is a way of accessing the use of others' assets. Other forms of
access include creating close relationships that utilize innovation resources and energies from
outsiders.
Positioning: Positioning is the posturing of the overall organization to acquire and access the best
possible goods, services, assets and energies from suppliers. It means becoming the best
customer to a supplier in order to attain superior services, attract first innovation, and assure
quality and supply flow. Positioning entails having the ability to influence and affect suppliers'
actions, behaviors and investments for the organization's own benefit.
Management of Resources: Management of resources spans both the internal and external
spectrums. Internally, the supply professional leads and manages how the organization produces
goods and services for its customers and constituents. Externally, the supply professional
collaborates with suppliers and influences product manufacturing, delivery of services, logistics
performance and delivering value through effective process management. Supply professionals
manage resources to ensure lowest overall cost, increase efficiency and transparency in
processes, and shrink the asset base. Leading companies share their engineering, IT, logistics and
other experts to help suppliers innovate and enhance processes, thus improving and lowering
costs' levels and prices.
Related Capabilities: This final dimension, related capabilities, addresses approaches, personal
strengths and organizational abilities that best combine tasks, skills, competencies and systems to
meet any challenge or to identify and gain benefit from any first advantage.

52
Building Supply Management for the Organization
Creating an expanded future for supply management requires two things: a vision and a
roadmap. Characteristics of an effective supply organization include:
 A well-defined vision statement that is written and communicated throughout the entire
organization;
 Strategic process models for products, services, outsourcing, insourcing, access and
technologies;
 Business alignment that is synchronous with the strategies and initiatives of the rest of the
organization;
 A highly-developed understanding of the need for global awareness, culture, geopolitics,
demographics and geography.
 Assertive roles for influencing value-add throughout the organization and pulling it from
the suppliers;
 Planning and support of on-going change, development of consultative skills, and
building talent;
 Leading with new information, intelligence and measurements; and,
 Extended influence and "selling" internally and externally.
In these dynamic times, the global environment can bring more change and demands in a month
than were experienced previously over a few years. The supply field and profession will continue
to expand and grow in complexity and challenges. Supply professionals today must understand
strategic elements of the business first and then competitively manage the business as an
effective supply professional and leader.
is integration across fourteen components:
Components and Scope of supply management and administration Definitions
Source: ISM Glossary of Key Supply Management Terms, fifth edition, 2009
Disposition/Investment Recovery
Disposition is the act of moving goods out of one's internal organization to another organization
due to loss of value, obsolescence, excess inventory or product change. Investment recovery
refers to a systematic, centralized organizational effort to manage the surplus/obsolete
equipment/material and scrap recovery/marketing/disposition activities in a manner that recovers
as much of the original capital investment as possible.
Distribution
Distribution refers to: (1) Businesses established for the purpose of buying goods from
manufacturers and reselling them to a general customer base. Distributors sell in smaller
quantities than manufacturers, often with immediate delivery, and provide services that
manufacturers are not willing to do. (2) Process by which commodities move to final customers,
including return of goods. Activities include storing, transacting, packaging and shipping. (3)

53
Relative arrangement of the elements of a statistical population based on distinctive
characteristics.
Inventory Control
Inventory control is the management of inventories, including: decisions about which items to
stock at each location; how much stock to keep on hand at various levels of operation; when to
buy; how much to buy; controlling pilferage and damage; and managing shortages and back
orders.
Logistics
Logistics is the process of planning, implementing and controlling the efficient, cost-effective
flow and storage of raw materials, in-process inventory, finished goods and related information
from point of origin to point of consumption for the purpose of conforming to customer
requirements.
Manufacturing Supervision
Manufacturing is defined as planning, managing and performing the processing of materials into
intermediate or final products, usually in large quantities.
Materials Management
Materials management is a managerial and organizational approach used to integrate the supply
management functions in an organization. It involves the planning, acquisition, flow and
distribution of production materials from the raw material state to the finished product state.
Activities include procurement, inventory management, receiving, stores and warehousing, in-
plant materials handling, production planning and control, traffic, and surplus and salvage. In
spite of a slight difference in meaning, this term is often used interchangeably with supply
management.
Packaging
Packaging is the container, wrapper or shipping box of a product. Packaging serves a number of
functions, including containment, protection, apportionment, unitization, convenience and
communication.
Procurement and Purchasing
Procurement is an organizational function that includes specifications development, value
analysis, supplier market research, negotiation, buying activities, contract administration,
inventory control, traffic, receiving and stores. Purchasing refers to the major function of an
organization that is responsible for acquisition of required materials, services and equipment.
Product and Service Development
Product and service development is a series of integrated processes in new product development
chronicling steps from idea conception to commercialization.
Quality
Quality has been defined in a number of ways, including: synonymous with "innate excellence";
a precise and measurable variable that is inherently present in the characteristics of the
product/service, defined by the user and therefore products and services have to have clusters of
attributes which groups' of people (users) want; "right the first time"; conformance and
efficiency; design and measured conformance with no waste, meaning lower costs; performance

54
at an acceptable price; or conformance at an acceptable cost or conformance to specifications,
satisfying or surpassing customer needs throughout the life of the product.
Receiving
Receiving is the business function that is responsible for verifying that the goods received are the
goods that the organization ordered. This involves inspecting and accepting incoming shipments.
Strategic Sourcing
Strategic sourcing is the selection and management of suppliers with a focus on achieving the
long term goals of a business.
Transportation/Traffic/Shipping
Transportation, traffic and shipping are terms describing the movement of goods and passengers
over distances. Traffic is a materials management activity that controls buying, scheduling,
auditing and billing of common and contract carriers.
Warehousing/Stores
Warehousing or physical distribution refers to a range of materials management activities that
involves taking care of shipping, receiving, internal movement, and storage of raw materials and
finished goods.

55
 CHAPTER SEVEN
FINANCIAL MANAGEMENT AND ADMINISTRATION
Estimates
Expenditures
Revenue
Provision for depreciation and adjustment
Budgeting
Recurrent
Development
Control of funds
accounting systems ( Government, Business, NGO’s )
Books of accounts (Savings, Current, Fixed Cash, Petty Double entry book keeping- Debit
Credit)
THE ACCOUNTING EQUATION
A business owns properties. These properties are called assets. The assets are the business resources
that enable it to trade and carry out trading. They are financed or funded by the owners of the
business who put in funds.

These funds, including assets that the owner may put is called capital. Other persons who are not
owners of the firm may also finance assets. Funds from these sources are called liabilities.

The total assets must be equal to the total funding i.e. both from owners and non-owners. This is
expressed inform of accounting equation which is stated as follows:
ASSETS = LIABILITIES + CAPITAL

Each item in this equation is briefly explained below.

Assets:- An asset is a resource controlled by a business entity/firm as a result of past events for which
economic   benefits are expected to flow to the firm.

An example is if a business sells goods on credit then it has an asset called a debtor. The past event is
the sale on credit and the resource is a debtor. This debtor is expected to pay so that economic
benefits will flow towards the firm i.e. in form of cash once the customers pays.

Assets are classified into two main types:

i. Non-current assets (formerly called fixed assets).
ii. Current assets.

56
Non-current assets are acquired by the business to assist in earning revenues and not for resale. They
are normally expected to be in business for a period of more than one year.

Major examples include:

 Land and buildings
 Plant and machinery
 Fixtures, furniture, fittings and equipment
 Motor vehicles

Current assets are not expected to last for more than one year.  They are in most cases directly related
to the trading activities of the firm. Examples include:
 Stock of goods – for purpose of selling.
 Trade debtors/accounts receivables – owe the business amounts as a resort of trading.
 Other debtors – owe the firm amounts other than for trading.
 Cash at bank.
 Cash in hand.

Liabilities:- These are obligations of a business as a result of past events settlement of which is
expected to result to an economic outflow of amounts from the firm. An example is when a
business buys goods on credit, then the firm has a liability called creditor. The past event is the
credit purchase and the liability being the creditor the firm will pay cash to the creditor and
therefore there is an out flow of cash from the business.

Liabilities are also classified into two main classes.

i. Non-current liabilities (or long term liabilities)
ii. Current liabilities.

Non-current liabilities are expected to last or be paid after one year.  This includes long-term loans
from banks or other financial institutions.  Current liabilities last for a period of less than one year
and therefore will be paid within one year. Major examples:
 Trade creditors/or accounts payable – owed amounts as a result of business buying goods
on credit.
 Other creditors - owed amounts for services supplied to the firm other than goods.
 Bank overdraft - amounts advanced by the bank for a short-term period.

Capital:- This is the residual amount on the owner’s interest in the firm after deducting liabilities
from the assets.

The Accounting equation can be expressed in a simple report called the Balance Sheet.  The basic
format is as follows:

Name
Balance sheet as at 31.12.
ShSh ShSh
Capital xx
Non-Current Assets

57
Non-Current Liabilities Land & Buildings xx
Loan Plant & Machinery xx
Fixtures, furniture & fittings    
xx
Motor vehicles xxxx
Current Liabilities Current assets
Overdraft  Stock xx
Creditors   Debtors xx
  Cash at Bank xx
  Cash in Hand xxxx
Capital & Liabilities Total Assets xx

The above format of the balance sheet is the horizontal format however currently the practice is to
present the Balance Sheet using the vertical format which is shown below.

Name
Balance sheet as at 31.12.

Non-Current Assets Sh Sh Sh
Land & Buildings xx
Plant & Machinery xx
Fixtures, furniture & fittings xx
Motors vehicles xx
xx
Current Assets
Stocks/inventories xx
Debtors/ trade receivables xx
Cash at bank xx
Cash in hand xx

Current Liabilities
Bank Overdraft          xx
Creditors/trade payables xx (xx)
Net Current Assets xx
Net assets xx

Capital xx                    
Non-Current Liabilities
Loan (from bank or other sources) xx
xx

Please pay attention to the format. The Non Current assets are listed in order of permanence as
shown i.e. from Land and Buildings to motor vehicles.  The Current Assets are listed in order of
liquidity i.e. which asset is far from being converted into cash. Example, stock is not yet sold,

58
 (i.e. not yet realised yet) then when it is sold we either get cash or a debtor (if sold on credit).
When the debtor pays then the debtor may pay by cheque (cash has to be banked) or cash.
The Current Liabilities are listed in order of payment i.e. which is due for payment first.  Bank
overdraft is payable on demand by the bank, then followed by creditors.
Note that in the vertical format, current liabilities are deducted from current assets to give net
current assets.  This is added to Non-Current assets, which give us net assets.
Net assets should be the same as the total of Capital and Non-Current Liabilities.

Example 1.1
B Kelly has a business that has been trading for some time.  You are given the following
information as at 31.12.2002
  Ksh.
Buildings 11,000
Furniture & Fittings   5,500
Motor Vehicles   5,800
Stocks  8,500
Debtor  5,600
Cash a bank  1,500
Cash in hand     400
Creditors  2,500
Capital 30,800
Loan  5,000

You are required to prepare a Balance Sheet as at 31 December 2001

B Kelly
Balance Sheet as at 31 December 2001
Non Current Assets  Ksh.          Ksh.  
Buildings  1,000
Furniture & Fittings  5,500
Motor Vehicles  5,800 22,300

Current Liabilities
Stock 8,500      
Debtors           5,600
Cash at bank           1,500
Cash in hand    400
                            16,000
Creditors                           (2,500)
Net Current Assets      13,500
Net Assets      35,800

Capital                 30,800

Non-Current Liabilities
Loan  5,000
35,800
Types of Budgets for Businesses

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Budgets help businesses track and manage their resources. Businesses use a variety of budgets to
measure their spending and develop effective strategies for maximizing their assets and
revenues. The following types of budgets are commonly used by businesses:
Master Budget
A master budget is an aggregate of a company's individual budgets designed to present a
complete picture of its financial activity and health. The master budget combines factors like
sales, operating expenses, assets, and income streams to allow companies to establish goals and
evaluate their overall performance, as well as that of individual cost centers within the
organization. Master budgets are often used in larger companies to keep all individual managers
aligned.
Operating Budget
An operating budget is a forecast and analysis of projected income and expenses over the course
of a specified time period. To create an accurate picture, operating budgets must account for
factors such as sales, production, labor costs, materials costs, overhead, manufacturing costs, and
administrative expenses. Operating budgets are generally created on a weekly, monthly, or
yearly basis. A manager might compare these reports month after month to see if a company is
overspending on supplies.
Cash Flow Budget
A cash flow budget is a means of projecting how and when cash comes in and flows out of a
business within a specified time period. It can be useful in helping a company determine whether
it's managing its cash wisely. Cash flow budgets consider factors such as accounts payable and
accounts receivable to assess whether a company has ample cash on hand to continue operating,
the extent to which it is using its cash productively, and its likelihood of generating cash in the
near future. A construction company, for example, might use its cash flow budget to determine
whether it can start a new building project before getting paid for the work it has in progress.
Financial Budget
A financial budget presents a company's strategy for managing its assets, cash flow, income, and
expenses. A financial budget is used to establish a picture of a company's financial health and
present a comprehensive overview of its spending relative to revenues from core operations. A
software company, for instance, might use its financial budget to determine its value in the
context of a public stock offering or merger.
Static Budget
Static budget is a fixed budget that remains unaltered regardless of changes in factors such as
sales volume or revenue. A plumbing supply company, for example, might have a static budget
in place each year for warehousing and storage, regardless of how much inventory it moves in
and out due to increased or decreased sales.
Types of Accounts
The Accounts maintained by a Business Organization are classified into three types
1. Personal Accounts: - It deals with Accounts of individuals like Creditors, Debtors, and Banks
etc. It shows the Balances due to these individuals or the Balance due from these individuals on a
particular date.
2. Real Accounts: - It represents Assets like Plant and Machinery, Land and buildings, Goodwill
etc. As on a particular date, this Account shows the worth of an Asset.
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3. Nominal Accounts: - It consists of Different types of expenses or Incomes or loss or profit.
These Accounts show the amount of income earned or expenses
incurred for a particular period say a month, a year etc.
Books of Accounts
An organization maintains three important books namely:-
Cash Book: - To record the Cash Receipts and the payments including receiptsand the payments
through a bank. A separate Cash Book is kept to record the petty expenses. The petty Cash Book
is recorded by the Imprest System.
Journal: - To record non-cash transactions like Credit Sales, Credit purchases, Sales Returns,
Yearend Adjustments, if any. These Books are also called as Subsidiary Books
Ledger: - Ledger contains a classified summary of all transactions recorded in Cash Book and
the Journal. A Ledger is not an Independent Record. The transactions recorded in a Ledger are
either derived from a Cash Book or from a Journal.
Sources and Uses of Funds
Since ‘Sources’ and ‘Uses’ are relatively longer words, as in Chemistry, they can be replaced by
shorter symbols. The accepted symbol for sources is Cr. And that for uses is Dr. these symbols
are purely incidental and could well have been switched or entirely changed without any loss in
generality whatsoever. However the symbol Cr. is commonly pronounced as Credit and the
symbol Dr. is commonly pronounced as Debit. In accounting terms the symbols Debit and Credit
are merely two different sound and do not have the same implication as they have in the English
Language.
Thus an increase in the Liabilities, Revenues or profits being sources of funds is all called Credit
items. Similarly an increase in assets, expenses and losses being uses of funds are all called ‘Dr’
items.
Nature of Debit and Credit
It is necessary to point out at the outset that the words ‘Debit’ and ‘Credit’ represent two
different concepts the meaning of which has been clearly distinguished as under
The word Debit represents Outflow of Resources (Expenses like Rent Expense, Salaries Expense
and Assets like Land, Buildings, and Machinery) and it also represents all those who owe money
to the business ( E.g.:- Debtors).
The word Credit represents Inflow of Resources (like Incomes:- Sales, Rent Received, Dividend
Received, Commission Received etc., and Liabilities like Salaries Unpaid , Expenses unpaid
etc.) and it also represents all those to whom the business owes the money (E.g. Creditors,
Banks, Overdrafts etc.)
Budgets
 A budget is a prediction of income and expenses for a future period based on past
experience. A personal budget, for example, accounts for expected salary as income and
itemizes anticipated costs for housing, food, entertainment, education and the other
expenses of day-to-day living. A business or organizational budget is conceptually
similar but is generally more complex than a personal budget, involving income from a
variety of sources, such as sales, currency exchange, investments and contributions and
an equally complex array of expenses for items such as salaries, insurance, taxes, legal
fees, regulatory compliance, raw materials and supplies.
Recurring Items
 Recurring budget items are those that appear regularly and, by their nature, are somewhat
predictable. For example, your rental expenses are a recurring budget item and can be

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 accurately predicted in advance, even though there is always a possibility of an
unanticipated rent increase. Organizations have recurring budget items too. Your
apartment management company, for example, anticipates receiving recurring rent each
month as business income.
Recurring Budget
 A recurring budget is an itemization of all anticipated recurring costs and income for a
future period. The items in a recurring budget represent expenses and receipts with a high
degree of regularity and predictability. An excess of recurring income over recurring
costs represents cash available to meet nonrecurring expenses. Similarly, an excess of
recurring expenses over recurring income represents a shortfall that must be made up
from nonrecurring sources of income.

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