Professional Documents
Culture Documents
POM All Units Combined
POM All Units Combined
Traditional Definition:
Henri Fayol stated: “to manage is to forecast and to plan, to organise, to command, to coordinate and to
control.”
Mary Parker Follet stated: “Management is the art of getting things done through people.”
Modern Definition:
Harold Koontz & Weirich stated: “Management is the creation and maintenance of an internal
environment in an enterprise where individuals, working in groups, can perform efficiently and effectively
towards the attainment of group goals.”
Effectiveness Vs Efficiency:
Two sides of a coin
Achieving goals (Completion of task on time) = effectiveness
With minimum resources (Completion of task with minimum cost) = efficiency
High efficiency + high effectiveness = aim of all managers
Inefficiency + ineffectiveness = poor management
Significance of Management:
Creates Dynamic organization: Management undertakes the conditions by assuring that these variations are
well accepted privately and that objection to change is controlled.
Achieving personal objectives:Management promotes leadership and furnishes motivation to the employees
to operate effectively in order to accomplish their personal aims while working towards the organizational
goals.
Systematised body of knowledge – • Has its own theory and principles which have
based on cause and effect relationship been developed over a period of time
• Draws principles from other disciplines like
economics, sociology, psychology etc
Principles based on Experimentation • Principles have evolved after repeated
experimentation and observation in different
type of organisation
• Can be called “Inexact “ science because it deals
with human beings which cannot be predicted
or replicated
Universal validity and application • Since management is inexact science, their
application is not universal. They have to be
modified according to the situation.
• But these principles provide basic standardised
techniques which can be used by all for training
and development purpose.
Based on practice and • One can achieve perfection after long practice and
creativity based on his own creativity
• Involvement in the activities of the organisation,
study of critical situation and formulation of theories
unique to the situation in concern
Management cannot be fully regarded as a profession but has some features of profession.
Levels of Management:
The term “Levels of Management’ refers to a line of demarcation between various managerial positions in
an organization. The number of levels in management increases when the size of the business and work
force increases and vice versa. The level of management determines a chain of command, the amount of
authority & status enjoyed by any managerial position.
The levels of management can be classified in three broad categories:
Top level / Administrative level
Middle level / Executory
Low level / Supervisory / Operative / First-line managers
• Coordinating the activities of different departments
• Welfare & survival of the organisation
• Overall goals and strategies for the organisation
• Framing policies
• Responsible for the activities of the business
According to Henry Fayol, “To manage is to forecast and plan, to organize, to command, & to control”.
Whereas Luther Gullick has given a keyword ’POSDCORB’ where P stands for Planning, O for Organizing,
S for Staffing, D for Directing, Co for Co-ordination, R for reporting & B for Budgeting. But the most
widely accepted are functions of management given by KOONTZ and O’DONNEL i.e. Planning,
Organizing, Staffing, Directing and Controlling.
For theoretical purposes, it may be convenient to separate the function of management but practically these
functions are overlapping in nature i.e. they are highly inseparable. Each function blends into the other &
each affects the performance of others.
Planning:
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.
According to KOONTZ, “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.
Overall, 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.
Organizing:
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:
1. Identification of activities.
2. Classification of grouping of activities.
3. Assignment of duties.
4. Delegation of authority and creation of responsibility.
5. Coordinating authority and responsibility relationships.
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 o staffing is to put right man on right job i.e. square pegs in square holes and round pegs
in round holes.
According to Kootz & O’Donell, “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:
1. Manpower planning (estimating man power in terms of searching, choose the person and giving the right
place).
4. Remuneration
5. Performance Appraisal
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.
Controlling:
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”.
According to Koontz & O’Donell “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:
3. Comparison of actual performance with the standards and finding out deviation if any.
4. Corrective action.
Coordination:
Co-ordination is the unification, integration, synchronization of the efforts of group members so as to
provide unity of action in the pursuit of common goals.
It is a hidden force which binds all the other functions of management.
According to Mooney and Reelay, “Co-ordination is orderly arrangement of group efforts to provide unity of
action in the pursuit of common goals”.
According to Charles Worth, “Co-ordination is the integration of several parts into an orderly hole to achieve
the purpose of understanding”.
Management seeks to achieve co-ordination through its basic functions of planning, organizing, staffing,
directing and controlling. That is why, co-ordination is not a separate function of management because
achieving of harmony between individuals efforts towards achievement of group goals is a key to success of
management.
Co-ordination is the essence of management and is implicit and inherent in all functions of management.
Coordination and Cooperation:
Co-ordination is an orderly arrangement of efforts to provide unity of action in the fulfillment of common
objective whereas co-operation denotes collective efforts of persons working in an enterprise voluntarily for
the achievement of a particular purpose. It is the willingness of individuals to help each other.
Co-ordination is an effort to integrate effectively energies of different groups whereas co-operation is sort to
achieve general objectives of business.
Though these two are synonymous but they are different.
Types of Business Organizations:
1. Sole Proprietorship
4. Cooperatives
Partnership:
Governed by Partnership Act 1932.
Formation/Partnership Agreement: A partnership firm is not a separate legal entity. But according to the
act, a firm must be formed via a legal agreement between all the partners. So a contract must be entered into
to form a partnership firm. Its business activity must be lawful, and the motive should be one of profit.
Unlimited Liability: In a unique feature, all partners have unlimited liability in the business. The partners
are all individually and jointly liable for the firm and the payment of all debts.
Continuity: A partnership cannot carry out in perpetuity. The death or retirement or bankruptcy or
insolvency or insanity of a partner will dissolve the firm.
Number of Members: Minimum of two members required. However, the maximum number will vary
according to a few conditions. For a banking business, the number of partners must not exceed 10. For a
business of any other nature, the maximum number is 20.
Mutual Agency: In this type of organisation, the business must be carried out by all the partners together. Or
alternatively, it can be carried out by any of the partners (one or several) acting for all of them or on behalf
of all of them. So this means every partner is an agent as well as the principal of the partnership.
Note: There can be general partnership with general partners, limited partnerships (or limited liability
partnership) etc. which operates like a company. Moreover, there can be different types of partners like
dormant/silent, nominal, secret, active and partner by estoppel (conduct/behavior).
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THANK YOU!
Principles of Management (POM)
The evolution of management thoughts started in the early days of man. It began since the period man
saw the need to live in groups. Mighty men were able to organize the masses, share them into various
groups. The sharing was done accord to the masses’ strength, mental capacities, and intelligence.
The point is that management has been practiced in one way or the other since civilization began.
Consider the organization of the olden days Roman Catholic Church, military forces as well as ancient
Greece - these are all excellent examples of management.
Industrial revolution brought drastic change. Suddenly, the need to develop a more holistic and formal
management theory became a necessity.
Emphasis on structure and authority is no longer as strong as it used to be in the past. Now the focus is
on employees. There are theories on the factors that motivate employees.
Understanding the theories can give you the needed knowledge to manage your employees
appropriately.
For better understanding, the evolution of management thought will be shared into four different stages.
These include:
1. Charles Babbage [Emphasized on work measurement, cost determination, bonus plans and profit sharing
specialization (dividing the work into various jobs) to increase managerial efficiency]
2. Robert Owens (Father of Personnel Management)
3. Charles Dupin (Emphasized more on management education than technical education)
Classical theory:
1. Systems Theory
2. Contingency Theory
3. Quantitative Theory (management as a system of mathematical models and processes)
4. Operational Theory (Operations management is concerned with controlling the production process and
business operations in the most efficient manner possible)
Scientific Management Theory:
Fredrick Winslow Taylor is the Father of Scientific Management Approach and also, he popularized as
Father of Industrial Engineering and Efficiency Movement.
The Principles of Scientific Management (1911) is perhaps the single most important book on the subject.
Several authors like Gantt, Thompson, Gilbreth etc. has also contributed to this theory.
Criticism:
1. Not appreciated by workers and unions demanding for more humanistic approach than mechanistic one.
2. Time consuming and expensive.
3. Criticism of ‘one best way’ approach.
Administrative Management Theory:
Henri Fayol is said to be the father of Management Process or Administrative Management School.
He was born in 1841 of a French family. He was a Mining Engineer who rose to the rank of Chief Executive.
He was a prolific writer on technical and scientific matters as well as management.
His most outstanding writing was ‘General and Industrial Administration’ published in French in 1916
which was later translated into English in 1949.
1. Planning
2. Organizing
3. Commanding
4. Coordinate
5. Controlling
10. Order: people and materials should be in the right place at the right time.
11. Equity: In running a business, a combination of kindness and justice is needed.
12. Stability of Tenure of Personnel: Staff works well if job safety and career improvement are guaranteed
to the team.
13. Initiative: Allowing all personnel to show their initiative in some way is a source of success for the
organization.
14. Esprit de Corps: It refers to ‘team spirit’. Promoting team spirit will build unity and harmony within the
organization.
Criticism:
1. The administrative theory is strategic management-oriented. (Too broad)
2. The administrative theory gives essential only to the formal organization structure, not for informal
organization structure.
3. The administrative theory has a mechanical approach. It does not sound ideal with some of the crucial
aspects of management such as motivation, communication, and leading.
Note: You can memorize easily the 14 principles through a short technique:-
‘DAD U SEE USSR OIC’
Bureaucratic Theory:
At the end of the 19th century, it was German sociologist Max Weber who was the first to use and describe
the term bureaucracy.
The theory given by him is also known as the bureaucratic theory of management, bureaucratic
management theory or the Max Weber theory.
He believed bureaucracy was the most efficient way to set up an organization and administration.
In a bureaucratic organization, everyone is treated equal and the division of labour is clearly described for
each employee.
3. Over-simplified assumptions
Classical theory ignored employee motivation and behavior. As a result, the behavioral school was a natural
outgrowth of this revolutionary management experiment.
The behavioral Management/ Science theory is often called the human relations movement because it
addresses the human dimension of work. Behavioral theorists believed that a better understanding of human
behavior at work, such as motivation, conflict, expectations, and group dynamics, improved productivity.
The theorists who contributed to this school viewed employees as individuals, resources, and assets to be
developed and worked with — not as machines, as in the past.
Several individuals and experiments contributed to this theory such as Abraham Maslow, Fredrick Herzberg,
Victor Vroom, Mc Gregor, Lawler, Sayles and Tannenbaum and others.
Some specific contributions of Human Relations or Neo-Classical approach are:
Social System:
An organization is a psycho-social system; with a culture of its own.
Social Environment:
Social Environment affects and gets affected by the workers. Management is not the only variable important.
Informal Organization and Group Dynamics:
Informal structure present within formal organizational structure. Informal groups have a serious impact on
workers’ productivity.
Conflict:
There are conflicts between the organization and the individuals goals. Integration necessary.
Leadership:
Friendly supervision has a favorable influence on human efficiency at work. Informal leadership
emphasized.
Communication:
Free flow of communication, in the organization makes for good human relations.
Role of money:
Money is not sole motivator of human behavior.
Criticism of Neo-classical approach:
Systems Theory/Approach:
In the 1960, an approach to management appeared which try to unify the prior schools of thought. This
approach is commonly known as ‘Systems Approach’. Its early contributors include Ludwing Von
Bertalanfty, Lawrence J. Henderson, W.G. Scott, Deniel Katz, Robert L. Kahn, W. Buckley and J.D.
Thompson.
Systems approach is based on the generalization that everything is inter-related and interdependent. A
system is composed of related and dependent element which when in interaction, forms a unitary whole. A
system is simply an assemblage or combination of things or parts forming a complex whole. One its most
important characteristic is that it is composed of hierarchy of sub-systems. That is the parts forming the
major system and so on.
Open System: Open/Organic system has an active interface with the environment through input-output
process. It can respond to the changes in environment through the feedback mechanism. For example, the
world can be considered to be a system in which various national economies are sub-systems. In turn, each
national economy is composed of its various industries, each industry is composed of firms’ and of course a
firm can be considered a system composed of sub-systems consisting of production, marketing, finance,
accounting and so on.
Closed System: A Closed system is self-dependent and does not have any interaction with the external
environment. It concentrates completely on internal relationship i.e. interactions between sub-systems only.
Because of lack of interaction with environment, it is unable to monitor changes occurring in the external
environment. For example, Physical and Mechanical systems are closed systems.
Under systems approach organization is seen as an organic and open system against closed system, which
is composed of interacting and interdependent parts, called subsystems. The system approach look upon
management as a system or as “an organized whole” made up of sub- systems integrated into a unity or
orderly totality.
Features of Systems Approach:
(i) A system consists of interacting elements. It is set of inter-related and inter-dependent parts arranged in a
manner that produces a unified whole.
(ii) The various sub-systems should be studied in their inter-relationships rather, than in isolation from
each other.
(iii) An organizational system has a boundary that determines which parts are internal and which are
external.
(iv) A system does not exist in a vacuum. It receives information, material and energy from other systems
as inputs. These inputs undergo a transformation process within a system and leave the system as output to
other systems.
The systems approach is considered for both general and specialized systems. The general systems approach
to management is mainly concerned with formal organizations and the concepts are relating to technique of
sociology, psychology and philosophy. The specific management system includes the analysis of
organizational structure, information, planning and control mechanism and job design, etc.
Action-oriented.
Determines relationship between situations, actions and outcomes.
Management should match or ‘fit’ its approach to requirements of the particular situation.
Significant contribution in organizational design.
Costly in terms of time and money. It also does not provide theoretical foundation upon which management
principles will be based.
It is not possible for managers to determine all the factors relevant to the decision making situation.
Application of this theory therefore, may be a complicated task as decisions are based on limited
information.
It is argued that what contingency theory asserts was asserted by Fayol also. He also talked of flexibility of
management principles. Therefore, the theory has added nothing new to the management thought.
Thank You!
Principles of Management (POM)
Planning is the fundamental management function, which involves deciding beforehand, what
is to be done, when is it to be done, how it is to be done and who is going to do it.
Planning is nothing but thinking before the action takes place. It helps us to take a peep into
the future and decide in advance the way to deal with the situations, which we are going to
encounter in future.
Goal oriented: It focuses on defining the goals of the organisation, identifying alternative
courses of action and deciding the appropriate action plan, which is to be undertaken for
reaching the goals.
Pervasive: It is pervasive in the sense that it is present in all the segments and is required at
all the levels of the organisation. Although the scope of planning varies at different levels and
departments.
Continuous Process: Plans are made for a specific term, say for a month, quarter, year and so
on. Once that period is over, new plans are drawn, considering the organisation’s present and
future requirements and conditions. Therefore, it is an ongoing process, as the plans are
framed, executed and followed by another plan.
Decision making: Decisions are made regarding the choice of alternative courses of action
that can be undertaken to reach the goal. The alternative chosen should be best among all,
with the least number of the negative and highest number of positive outcomes.
Planning is concerned with setting objectives, targets, and formulating plan to accomplish
them. The activity helps managers analyse the present condition to identify the ways of
attaining the desired position in future. It is both, the need of the organisation and the
responsibility of managers.
Importance of Planning:
It states in advance, what should be done in future, so it provides direction for action.
It sets out standards for controlling. It compares actual performance with the standard
performance and efforts are made to correct the same.
Steps involved in Planning: various types of plans.
Analyzing Opportunities:
Awareness of opportunities in the external
environment as well as within the
organisation is the real starting point for
planning. It is important to take a
preliminary look at possible future
opportunities and see them clearly and
completely. All managers should know
where they stand in the light of their
strengths and weaknesses, understand the
problems they wish to solve and know what
they gain.
Setting Objectives:
The major organisational and unit objectives
are set in this stage. This is to be done for the
long term as well as for the short range.
Objective specify the expected results and
indicate the end points of what is to be done,
where the primary emphasis is to be placed
and what is to be accomplished by the
Developing Premises:
Planning premises are planning assumptions the expected environmental and internal
conditions. Thus planning premises are external and internal. External premises include total
factors in task environment like political, social, technological, competitors, plans and
actions, government policies. Internal factors include organisation’s policies, resources of
various types, and the ability of the organisation to withstand the environmental pressure. The
plans are formulated in the light of both external and internal factors.
Identifying Alternatives:
Various alternatives can be identified based on the organisational objectives and planning
premises. The concept of various alternatives suggests that a particular objective can be
achieved through various actions. For example, if an organisation has set its objectives to
grow further, it can be achieved in several ways like expanding in the same Field of business
or product line diversifying in other areas, joining hands with other organisations, or taking
over another organisation and so on. Within each category, there may be several alternatives.
The most common problem is not finding alternatives but reducing the number of alternatives
so that the most promising may be analysed.
Evaluating Alternatives:
The various alternative course of action should be analysed in the light of premises and goals.
There are various techniques available to evaluate alternatives. The evaluation is to be done in
the light of various factors. Example, cash inflow and outflow, risks, limited resources,
expected pay back etc., the alternatives should give us the best chance of meeting our goals at
the lowest cost and highest profit.
Selecting an Alternative:
This is the real point of decision-making. An analysis and evaluation of alternative courses
will disclose that two or more alternative advisable and beneficial. The fit one is selected.
After formulating the basic plan, various plan are derived so as to support the main plan.
Implementing Action Plan:
After formulating basic and derivative plans, the sequence of activities is determined so those
plans are put into action. After decisions are made and plans are set, budgets for various
periods and divisions can be prepared to give plans more concrete meaning for
implementation.
Reviewing:
Reviewing your plans helps reveal assumptions that need to be adjusted. Plans rest upon
assumptions, whether you articulate those assumptions or not and therefore it should be
reviewed from time-to-time.
By planning process, an organisation not only gets the insights of the future, but it also helps
the organisation to shape its future. Effective planning involves simplicity of the plan, i.e. the
plan should be clearly stated and easy to understand because if the plan is too much
complicated it will create chaos among the members of the organisation. Further, the plan
should fulfil all the requirements of the organisation.
Derivative Plans:
Objectives:
A specific result that a person or system aims to achieve within a time frame and with
available resources. In general, objectives are more specific and easier to measure than goals.
Objectives are basic tools that underlie all planning and strategic activities. Goals are the
outcome you intend to achieve, whereas objectives are the actions that help you achieve a
goal.
Policies:
The set of basic principles and associated guidelines, formulated and enforced by the
governing body of an organization, to direct and limit its actions in pursuit of long-term goals.
It includes general statements or understandings which guide thinking and action and
exists at various levels of enterprise- corporate, divisional and departmental.
Strategies:
Strategy is an action that managers take to attain one or more of the organization’s goals.
Strategy can also be defined as “A general direction set for the company and its various
components to achieve a desired state in the future. Strategy results from the detailed strategic
planning process”.
A strategy is all about integrating organizational activities and utilizing and allocating the
scarce resources within the organizational environment so as to meet the present objectives.
Strategy is a well defined roadmap of an organization.
Procedures:
A fixed, step-by-step sequence of activities or course of action (with definite start and end
points) that must be followed in the same order to correctly perform a task. Repetitive
procedures are called routines.
Methods:
There is a method for accomplishing each phase of work within a procedure. A method is a
manual or mechanical means by which each operation is performed. It means an established
manner of doing an operation. It is only one step of a procedure.
Rules:
Rules are instructions that tell you what you are allowed to do and what you are not allowed to
do. It is more rigid than a policy and may or may not be apart of any procedure. For e.g.# NO
SMOKING!
Programmes:
Programmes are concrete schemes of action to accomplish certain objectives. It is always
action-based and result-oriented. Programme is a single-use plan and consists of a sequence of
activities which lays down definite steps to accomplish a given task.
Projects:
A project may be defined as complex cluster of related activities with a distinct objective and
a definite time period. The task of execution is put under the charge of Project Manager,
who is an expert in his area and takes ultimate decisions for formulation of various plans,
programmes and policies with respect to the project.
Budgets:
A budget is a single-use plan since it is drafted for a particular period of time. A budget is a
statement of expected results expressed in quantitative terms. For this reason it is also used as
a tool for managerial control.
A budget helps in achieving the following advantages:
1) Presents the objectives in financial and/or quantitative terms.
2) Serves as job description as it defines the tasks.
3) Provides standards for measurement of actual performance.
4) Helps in coordination and control.
5) Injects a sense of clarity in directing and performing the activities of the organisation.
Objectives:
Definition:
The objective is something that is expected as the end result to be achieved by the firm within
a definite period of time, through its operations. It prescribes the scope and also directs the
efforts of the concern. The objectives of the organization are expressed in relation to the
future. It is the fundamental step in the planning process, which are set by the company’s top
management while considering the broad and general issues. All the other components of
planning, i.e. policy, procedure, schedule, budget, etc. depends on it.
Characteristics of Objectives:
Based on vision and mission: The objectives of the organization are extracted from its vision
and mission statement.
Long term or short term: The objectives of the concern can be long term or short term. For
instance, the growth and expansion of the business is a long-range objective whereas sales
maximization, and the increase in the margin are considered as short term objectives.
Time-bound: It is a time-bound desired end, i.e. they must be achieved within the specified
time.
Hierarchical: It has a hierarchy, in the sense that objectives can be arranged according to their
importance and priority. Indeed, for each position in the organization, objectives are laid down.
Social Sanction: It should be created keeping in mind the society’s interest and norms.
Forms a network: These are interdependent and mutually supportive, however, it does not
mean that the achievement of one objective leads to the automatic achievement of the another.
There must be good coordination amidst the activities at the time of planning and its
implementation because when the objectives support one another, they can be achieved
simultaneously.
Multiple: The organizations do not exist with a single objective and so every organization has
several numbers of objective, which they need to balance so as to run the business effectively.
Dynamic: They are dynamic in nature as it can be reviewed, modified and replaced according
to the circumstances.
Verifiable: Objectives must be verifiable, i.e. expressed in numerical terms. However, all the
objectives cannot be expressed quantitatively and so in such circumstances, these are
expressed qualitatively.
Management by Objectives (MBO):
Management by objectives is a planning and controlling system, in which the superior and
subordinates work together in order to define business objectives and establish targets
that are to be achieved by the subordinates, and also determine each individual’s key area of
responsibility as regards the results expected. Further, these measures are considered as
yardstick to run the unit and also assess the contribution of each individual.
MBO relies on the premise that people tend to perform better when they know about what
is expected from them and when they can associate their personal goals with that of the
objectives of the organization. In addition to this, it also proposes that people have interest in
establishing goals and comparing the performance against the set target.
Process of Management by Objectives:
Goal Setting: First and foremost, the long term goals of the organization are defined, such as
its strategic intent, vision, mission and goals. Once these are formulated, the management then
decides specific objectives to be attained within the given time frame.
Therefore, goal-setting includes:
1) Defining overall corporate objectives (Defining goals set by top management)
2) Setting Departmental Goals Superior Subordinate co-
3) Setting of target for individuals ordination
Action Plan: Action plan refers to the way through which the objectives are achieved. It
provides direction regarding how the objectives can be achieved, as in what is to be done, what
steps are to be followed, etc.
This is followed by establishment of check-points or standards of performance through
periodic meetings of the superior and subordinates.
Performance Appraisal: Last but not the least, at this stage, a comparison is made between
actual and predetermined standards. These objectives acts as a basis for reviewing the
progress. This is generally followed by employee counseling.
Better Planning
Better Organisation
Self-control
Higher Productivity
Better Appraisal of Performance
Executive Development
Open Communication
According to Koontz & O’Donnell, “Planning premises are the anticipated environment in
which plans are expected to operate. They include assumptions or forecasts of the future and
known conditions that will affect the course of plans such as prevailing policies and existing
company plans that controls the basic nature of supporting plans.”
Planning premises constitute the framework within which planning is done. They imply
not only the assumptions about the future but also predictions.
Business forecasting refers to the analysis of the past and present economic conditions with the
object of drawing inferences about the future business conditions. In the words of Allen,
“Forecasting is a systematic attempt to probe the future by inference from known facts. The
purpose is to provide management with information on which it can base planning decisions.
Steps of Forecasting:
1. Developing the Basis:
The first step involved in forecasting is developing the basis of systematic investigation of
economic situation, position of industry and products. The future estimates of sales and general
business operations have to be based on the results of such investigation. The general
economic forecast marks as the primary step in the forecasting process.
2. Estimating Future Business Operations:
The second step involves the estimation of conditions and course of future events within the
industry. On the basis of information/data collected through investigation, future business
operations are estimated. The quantitative estimates for future scale of operations are made on
the basis of certain assumptions.
3. Regulating Forecasts:
The forecasts are compared with actual results so as to determine any deviations. The reasons
for his variations are ascertained so that corrective action is taken in future.
4. Reviewing the Forecasting Process:
Once the deviations in forecasts and actual performance are found then improvements can be
made in the process of forecasting. The refining of forecasting process will improve forecasts
in future.
Techniques of Forecasting:
There are a number of techniques through which forecasts can be made. No technique can
universally apply in similar business situations. These techniques, singly or in combination, are
used depending upon the business situations when they have to be used.
The techniques of forecasting generally fall into two categories:
1. Quantitative Forecasting:
It applies mathematical models to past and present information to predict future outcomes.
These techniques are used to have access to hard or quantifiable data. Some of the quantitative
techniques are time series analysis, regression models and econometric models etc.
2. Qualitative Forecasting:
It applies when data are not available or very little data are available. Managers use judgment,
intuition, knowledge and skill to make effective forecasts. Some of the qualitative techniques
are jury of executive opinion method, sales force composite method and users’ expectation
method etc.
Decision-making:
A decision is the conclusion of a process by which one chooses between two or more available
alternative courses of action for the purpose of attaining a goal(s). The process is called
decision making. Managerial decision making is synonymous with the whole process of
management.
Planning involves a series of decisions such as what should be done? When? How? Where? By
Whom? Hence planning implies decision making.
A decision is an act of choice wherein a manager forms a conclusion about what must be done
under a given situation. A decision represents a course of behaviour chosen from a number of
possible alternatives.
Definitions:
Decision-making is the selection based on some criteria from two or more possible
alternatives. “ - George R.Terry
A decision can be defined as a course of action consciously chosen from available alternatives
for the purpose of desired result - J.L. Massie
Stages in Decision-making:
(1) Defining the problem: The problem for analysis is defined and the conditions for
observation are determined. The aim is to frame right question for right answer.
(2) Analysing the problem: This involves mainly classifying the problem and gathering
related information.
(3) Collection of Data: Next, it’s time to gather information so that a decision can be made
based on facts and data. This requires making a value judgment, determining what information
is relevant to the decision at hand, along with how it can be acquired.
(4) Developing Alternatives: Once a clear understanding of the issue is attained, it’s time to
identify the various solutions at disposal. It’s likely to have many different options when it
comes to making decision, so it is important to come up with a range of options.
(5) Review of Key Factors: While Developing alternatives the principle of limiting factor has
to be taken care of. A limiting factor is one which stands in the way of accomplishing the
desired goal. It is a key factor in decision making. If identified properly, a manager can confine
his search of alternatives to those which will overcome the limiting factors. E.g# inadequate
funds, shortage of human resource, old machines, lack of marketing skills etc.
(6) Selecting the best alternative: When it’s time to make decision, a manager has to
understand the consequences involved with chosen route. Peter Drucker laid down 4 criteria in
order to weigh the consequences of various alternatives. They are:
i) Risk
ii) Economy of effort
iii) Situation or Timing
iv) Limitation of resources
(7) Implementing the decision: Not only taking decision is important but also its
implementation while overcoming any resistance from subordinates and other stakeholders.
Note:
Feedback: An often-overlooked but important step in the decision making process is
evaluating the decision for effectiveness. Asking oneself what went well and what can be
improved next time in the ongoing process of decision making.
Defining the
problem
Analysing the
Implementing problem
the decision
Selecting the
Review of Developing Collection of
best
alternative Key Factors Alternatives data
Thank You!
Principles of Management (POM)
Note: Organisation structure and process are not independent concepts. They are
complementary to each other. Once the organisation process is defined, organisation structure
is the end result or outcome of that process. Organisation structure is the result of organisation
process. Organisation is, in fact, a structured, on-going process that defines how to achieve
defined goals.
Process of Organising:
The process of organising involves the following steps:
(i) Determination of Objectives: Every organisation is established for some objective or goal.
Various tasks are determined to achieve this goal. Determining the workload of the
organisation is the first step in the process of organising.
(ii) Division of Activities: Since one person cannot manage all the activities, total task is
broken into smaller units and assigned to members. Work is assigned according to qualification
and ability of every person.
(iii) Grouping of Activities: After the work is assigned to people, those performing similar
activities are grouped in one department. Various departments like sales, finance, accounting
etc. are filled with people having different skills and expertise but performing similar activities.
Grouping of activities into departments is called departmentalisation and every department is
governed by a set of rules, procedures and standards.
(iv) Define Authority and Responsibility: Every department is headed by a person responsible
for its effective functioning. Departmental heads are appointed to carry out the activities of their
respective departments. Every head has authority to get the work done from his departmental
members. He delegates responsibility and authority to members of his department. This creates
a structure of relationships where every individual knows his superiors and subordinates and
their reporting relationships.
(v) Co-Ordination of Activities: When departments work for their objectives, there may
develop inter-departmental conflicts which can obstruct the achievement of organisational
goals. These conflicts can be resolved through co-ordination so that all departments share the
common resources optimally.
(vi) Reviewing and Re-organising: There is constant appraisal of the organising process so
that changes in the structure can be made consequent to changes in the environmental factors.
Constant appraisal and re-organisation is an integral part of the organising process.
Importance of Organising:
Organising is important for the following reasons:
(i) Facilitates Administration: The basic elements of organising (division of work, grouping of
activities, distribution of authority and coordination) facilitate better administration by the top
management.
(iii) Creates Synergies: People coordinate their tasks in the same and different departments.
This gives the benefit of ‘one plus one makes eleven.’
(vii) Facilitates Creativity: Creativity means creating something new. It develops new ways
of doing the things. A sound organisation enables the top management to improve the ways of
doing things by delegating routine affairs to people down the scalar chain. It creates a sense of
achievement amongst managers that provides moral boost for further creative thinking.
(viii) Facilitates Coordination: A well designed organisation structure promotes order and
system in its activities. It coordinates work of people at different levels in different
departments.
George Terry defines an organization chart as “a diagrammatical form which shows important
aspects of an organization, including the major functions and their respective relationships, the
channel of supervision and the relative authority of each employer who is in-charge of each
respective function.”
So a chart is a pictorial and indicating functions and their relationship, clear lines of authority
and responsibility, channels of communication and span of control and supervision.
1. Vertical Charts:
It shows the lines of command flowing from top to bottom in vertical lines. The highest
position is shown at the top and the next highest position is shown thereafter. This process
proceeds up to the lowest position, which is placed at the bottom. This chart is also called ‘Top-
to-Down Chart’. It is the mostly used chart.
2. Horizontal Chart:
In this type of organisation chart the highest position is placed horizontally at the extreme left
and the lowest position is shown at the extreme right. In between the two, each successive
subordinate position goes on from left to right. It is also known as ‘Left-to-Right Chart’.
3. Circular or Concentric Chart:
In such type of organisation chart, the highest position is placed at the centre in the innermost
circle and the lowest position at the outermost circle. In between these two positions, each
successive subordinate position extends in all directions outward from the centre. The minimum
distance of a position from the centre indicates the degree of closeness to the top position. Such
a chart can exhibit the personal relationships of the executives in a better way.
Benefits of organisation chart are as following:
3. Departmentation by Territory:
It is suitable for organisations having wide geographical market such as pharmaceuticals,
banking, consumer goods, insurance, railways etc. Here, the market is broken up into sales
territories and a responsible executive is put in charge of each territory. The territory may be
known as district, division or region.
Merits of Departmentation by Territory:
1. It helps in achieving the benefits of local operations such as local supply of materials &
labour, local markets etc.
2. Full attention can be paid to local customer groups.
3. A regional division achieves a better co-ordination and supervision of activities in a particular
area.
4. It helps in reducing transportation and distribution costs.
5. It facilitates the expansion of business to different regions.
6. It provides an opportunity to a regional manager to gain broad experience as he looks after
the complete operation in a particular territory
5. Departmentation by Process:
The production function may be further subdivided on the basis of the process of production
when the production process has distinct activity groups, they are taken as the basis of
departmentation. Process departmentation is suitable when the machines or equipment’s used
are costly and required special skill for operating. It is useful for organisations which are
engaged in the manufacture of products which involves several processes.
Merits of Departmentation by Process:
1. It provides economy of operation
2. The benefits of specialization are available.
3. Efficient maintenance of equipment’s is possible.
4. It simplifies supervision and plant layout.
6. Departmentation-Combined Base:
Sometimes, several bases of departmentation may be used simultaneously. For e.g# First the
organisation is divided on the basis of functions. The marketing department is further divided
on the basis of product lines i.e., refrigeration and chemical division. The refrigeration division
is further divided on the basis of territory and the territory is further divided on the basis of
customers i.e., retail and wholesale.
Combined base departmentation is also called as composite departmentation or mixed
departmentation. This type of departmentation provide the benefits of both functional and
product structures. But the conflicts between different departments and division may increase.
It becomes necessary to differentiate clearly between the line authority and functional
authority of managers.
Line and Staff Authority:
Line authority is exercised by the superior over his immediate subordinates. This forms a chain
of authority from top to bottom. People who exercise line authority are known as line
managers. Staff managers assist line managers (in advisory capacity) in discharging their
duties efficiently.
While production, marketing, finance and personnel are commonly considered as line
departments, the accounting, R&D and public relations are considered as staff departments.
While working in the organisation, the line and staff managers form a definite relationship
with each other which is called line and staff relationship. In a simple and small organisation,
line managers do not need assistance to perform the organisational functions and the need for
staff, therefore, is not felt but as the organisations grow in size and complexity, line managers
need staff assistance for making organisational decisions.
Staff officials provide advisory and auxiliary services to line managers. Staff managers are
experts in areas such as accounting, R&D and costing related to production, marketing, finance
and personnel departments. Staff managers do not have authority over line managers though
they have authority over people of their staff departments.
Merits of the Line and Staff Organisation:
1. Due to line of command there is fixation of responsibilities.
2. Since specialisation is embedded with line functions the required expertise is made available.
3. There is scope of flexibility for staff functions to take more responsibility in the interest of
organisation.
4. The line function is mainly responsible for output and to achieve objectives.
5. Organisational responsibility is distributed in such a way that nobody is overburdened,
responsibility is shared.
6. Better utilisation and mobilisation of human resources is ensured.
Limitations:
1. There is scope of conflict between line and staff functionaries.
2. Decision making gets delayed or difficult if executives of staff function are more dominant
than those of line functions.
3. In some organisations there is possibility of role confusions between line and staff
departments.
Delegation and Decentralisation of Authority:
After grouping of activities, the next thing in the process of organising is to distribute the
authority. Delegation of authority and demoralisation of authority are actions in that direction
only.
Delegation of Authority:
Authority is the right to do something; responsibility is an obligation to do something;
accountability is inseparability to superior; power is the ability to do something; and autonomy
is the freedom, independence and discretion in what one does. Delegation is the process by
which a manger assigns or entrusts a part of his workload to his subordinate(s).
It involves three steps apart from sizing-up of workload by the manager to decide what
is to be assigned to subordinates:
1. First, the manager assigns the responsibility or work to subordinate to do.
2. Second, to complete this assignment he grants necessary authority (like to spend money to
get information from confidential files, to use company’s resources, to liaise with outsiders, to
direct others, etc).
3. Finally, accountability of the subordinate is created towards the manager. Accountability is
an obligation of subordinate to a manager for the use of authority and performance of assigned
work.
Centralisation and Decentralisation of Authority:
While delegation is concerned with one to one relationship, the pattern of authority across the
different positions and departments is related to centralisation – decentralisation process. In
should be very clear that centralisation of activities and centralisation of authority are two
different concepts. Also important to note is that on the delegation continuum centralisation
and decentralisations are the two ends.
Thus, manpower planning, procurement (i.e., selection and placement), training and
development, appraisal and remuneration of workers are included in staffing.
Staffing is the function by which managers build an organisation through the recruitment,
selection, development, of individuals as capable employees.
The staffing function of management consists of few interrelated activities such as planning of
human resource, recruitment, selection, placement, training and development, remuneration,
performance appraisal, promotion and transfers. All these activities make up the elements of
the process of staffing. – Dalton E. McFarland
Thus, staffing plays a vital role in human resource planning. It ensures best utilization of
manpower in the organization.
Staffing is the key to all other managerial functions. It helps to maintain a satisfactory
workforce in an enterprise.
Staffing includes:
1. Identifying the requirement of workforce and its planning.
2. Recruitment and selection of appropriate personnel for new jobs or for positions which may
arise as a result of existing employees leaving the organisation.
3. Planning adequate training for development and growth of workforce.
4. Deciding on compensation, promotion and performance appraisals for the workforce.
Recruitment:
Recruitment or Hiring is the process of searching and attracting the right candidates for hiring
them for vacant jobs in an organization. There are two sources of recruitment, internal sources
and external sources.
Recruitment refers to the process of searching for potential employees and influencing
them to work for their organization. The purpose of the recruitment process is to find talented
and qualified individuals for the growth and development of their organization.
It is part of the human resource management(HRM) department.
Edwin B. Flippo defined the recruitment process – ‘Recruitment is the process of searching the
candidates for employment and stimulating them to apply for jobs in the organization.’
Selection:
The selection process can be defined as the process of selection and shortlisting of the right
candidates with the necessary qualifications and skill set to fill the vacancies in an organisation.
The selection process varies from industry to industry, company to company and even amongst
departments of the same company.
Selection Process:
Every organisation creates a selection process because they have their own requirements.
Although, the main steps remain the same.
Preliminary Interview: This is a very general and basic interview conducted so as to eliminate
the candidates who are completely unfit to work in the organisation. This leaves the
organisation with a pool of potentially fit employees to fill their vacancies.
Receiving Applications: Potential employees apply for a job by sending applications to the
organisation. The application gives the interviewers information about the candidates like their
bio-data, work experience, hobbies and interests.
Screening Applications: Once the applications are received, they are screened by a special
screening committee who choose candidates from the applications to call for an interview.
Applicants may be selected on special criteria like qualifications, work experience etc.
Employment Tests: Before an organisation decides a suitable job for any individual, they have
to gauge their talents and skills. This is done through various employment tests like intelligence
tests, aptitude tests, proficiency tests, personality tests etc.
Employment Interview: The next step in the selection process is the employee interview.
Employment interviews are done to identify a candidate’s skill set and ability to work in an
organisation in detail. Purpose of an employment interview is to find out the suitability of the
candidate and to give him an idea about the work profile and what is expected of the potential
employee. An employment interview is critical for the selection of the right people for the right
jobs.
Checking References: The person who gives the reference of a potential employee is also a
very important source of information. The referee can provide info about the person’s
capabilities, experience in the previous companies and leadership and managerial skills. The
information provided by the referee is meant to kept confidential with the HR department.
Medical Examination: The medical exam is also a very important step in the selection process.
Medical exams help the employers know if any of the potential candidates are physically and
mentally fit to perform their duties in their jobs. A good system of medical checkups ensures
that the employee standards of health are higher and there are fewer cases of absenteeism,
accidents and employee turnover.
Final Selection and Appointment Letter: This is the final step in the selection process. After
the candidate has successfully passed all written tests, interviews and medical examination, the
employee is sent or emailed an appointment letter, confirming his selection to the job. The
appointment letter contains all the details of the job like working hours, salary, leave allowance
etc. Often, employees are hired on a conditional basis where they are hired permanently after
the employees are satisfied with their performance.
Human Resource Development (HRD):
Human Resource Development (HRD) is a series of organised activities, conducted within a
specialised time and designed to produce positive behavioural changes. This is the definition
according to Dr. Leonard Nadler, who first introduced the concept in the United States in
1969.
Simply put, HRD is the training and development provided by an organisation to increase the
employees’ knowledge, skills, education and abilities.
HRD is needed by any organisation that wants to be dynamic and growth-oriented or to succeed
in a fast-changing environment. Organisations can become dynamic and grow only through the
efforts and competencies of their human resources.
Personnel policies can keep the morale and motivation of employees high, but these
efforts are not enough to make the organisation dynamic and take it in new directions.
Employee capabilities must continuously be acquired, sharpened, and used. For this
purpose, an “enabling” organisational culture is essential. When employees use their initiative,
take risks, experiment, innovate, and make things happen, the organisation may be said to have
an “enabling” culture.
Even an organisation that has reached its limit of growth, needs to adapt to the changing
environment. No organisation is immune to the need for processes that help to acquire and
increase its capabilities for stability and renewal.
Thank You!
Principles of Management (POM)
Characteristics/Nature of Direction:
Pervasive Function - Directing is required at all levels of organization. Every manager
provides guidance and inspiration to his subordinates.
Continuous Activity - Direction is a continuous activity as it continuous throughout the life
of organization.
Human Factor - Directing function is related to subordinates and therefore it is related to
human factor. Since human factor is complex and behaviour is unpredictable, direction
function becomes important.
Creative Activity - Direction function helps in converting plans into performance. Without
this function, people become inactive and physical resources are meaningless.
Executive Function - Direction function is carried out by all managers and executives at all
levels throughout the working of an enterprise, a subordinate receives instructions from his
superior only.
(1) Supervision: It refers to monitor the progress of routine work of one’s subordinates and
guiding them properly. Supervision has an important feature that face-to-face contact between
the supervisor and his subordinate is a must.
(2) Communication: It refers to an art of transferring facts, ideas, feeling, etc. from one
person to another and making him understand them. A manager has to continuously tell his
subordinates about what to do, how to do, and when to do various things.
Also, it is very essential to know their reactions. To do all this it becomes essential to
develop effective telecommunication facilities. Communication by developing mutual
understanding inculcates a sense of cooperation which builds an environment of coordination
in the organisation.
(3) Leadership: It refers to influence others in a manner to do what the leader wants them to
do. Leadership plays an important role in directing. Only through this quality, a manager can
inculcate trust and zeal among his subordinates.
(4) Motivation: It refers to that process which excites people to work for attainment of the
desired objective. Among the various factors of production, it is only the human factor which
is dynamic and provides mobility to other physical resources.
If the human resource goes static then other resources automatically turn immobile.
Thus, it becomes essential to motivate the human resource to keep them dynamic, aware and
eager to perform their duty. Both the monetary and non-monetary incentives are given to the
employees for motivation.
Characteristics of Leadership:
It is a inter-personal process in which a manager is into influencing and guiding workers
towards attainment of goals.
It denotes a few qualities to be present in a person which includes intelligence, maturity and
personality.
It is a group process. It involves two or more people interacting with each other.
A leader is involved in shaping and molding the behaviour of the group towards
accomplishment of organizational goals.
Leadership is situation bound. There is no best style of leadership. It all depends upon
tackling with the situations.
Leadership Styles:
Autocratic leadership style: In this style of leadership, a leader has complete command and
hold over their employees/team. The team cannot put forward their views even if they are best
for the team’s or organizational interests. They cannot criticize or question the leader’s way of
getting things done. The leader himself gets the things done. The advantage of this style is that
it leads to speedy decision-making and greater productivity under leader’s supervision.
Drawbacks of this leadership style are that it leads to greater employee absenteeism and
turnover. This leadership style works only when the leader is the best in performing or when
the job is monotonous, unskilled and routine in nature or where the project is short-term and
risky.
Democratic/Participative leadership style: The leaders invite and encourage the team
members to play an important role in decision-making process, though the ultimate decision-
making power rests with the leader. The leader guides the employees on what to perform and
how to perform, while the employees communicate to the leader their experience and the
suggestions if any. The advantages of this leadership style are that it leads to satisfied,
motivated and more skilled employees. It leads to an optimistic work environment and also
encourages creativity. This leadership style has the only drawback that it is time-consuming.
The Laissez Faire Leadership Style: Here, the leader totally trusts their employees/team to
perform the job themselves. He just concentrates on the intellectual/rational aspect of his work
and does not focus on the management aspect of his work. The team/employees are welcomed
to share their views and provide suggestions which are best for organizational interests. This
leadership style works only when the employees are skilled, loyal, experienced and
intellectual.
Motivation:
Motivation is the word derived from the word ’motive’ which means needs, desires, wants or
drives within the individuals. It is the process of stimulating people to actions to accomplish
the goals. In the work goal context the psychological factors stimulating the people’s
behaviour can be -
desire for money
success
recognition
job-satisfaction
team work, etc
One of the most important functions of management is to create willingness amongst
the employees to perform in the best of their abilities. Therefore the role of a leader is to
arouse interest in performance of employees in their jobs. The process of motivation consists
of three stages:-
A felt need or drive
A stimulus in which needs have to be aroused
When needs are satisfied, the satisfaction or accomplishment of goals.
Therefore, we can say that motivation is a psychological phenomenon which means
needs and wants of the individuals have to be tackled by framing an incentive plan.
Maslow’s Need Hierarchy Model:
Human behavior is goal-directed. Motivation cause goal-directed behaviour. It is through
motivation that needs can be handled and tackled purposely. This can be understood by
understanding the hierarchy of needs by manager. The needs of individual serves as a driving
force in human behaviour. Therefore, a manager must understand the “Hierarchy of needs”.
Maslow has proposed “The Need Hierarchy Model”. Once a need or a certain order of needs
is satisfied, it ceases to be a motivating factor.
Hygiene factors- Hygiene factors are those job factors which are essential for existence of
motivation at workplace. These do not lead to positive satisfaction for long-term. But if these
factors are absent / if these factors are non-existant at workplace, then they lead to
dissatisfaction. In other words, hygiene factors are those factors which when
adequate/reasonable in a job, pacify the employees and do not make them dissatisfied. These
factors are extrinsic to work. Hygiene factors are also called as dissatisfiers or maintenance
factors as they are required to avoid dissatisfaction. These factors describe the job
environment/scenario. The hygiene factors symbolized the physiological needs which the
individuals wanted and expected to be fulfilled.
Motivational factors- According to Herzberg, the hygiene factors cannot be regarded as
motivators. The motivational factors yield positive satisfaction. These factors are inherent to
work. These factors motivate the employees for a superior performance. These factors are
called satisfiers. These are factors involved in performing the job. Employees find these factors
intrinsically rewarding. The motivators symbolized the psychological needs that were perceived
as an additional benefit.
McClelland’s Theory of Needs:
David McClelland and his associates proposed McClelland’s theory of Needs / Achievement
Motivation Theory. This theory states that human behaviour is affected by three needs - Need
for Power, Achievement and Affiliation.
Need for achievement (nAch) is the urge to excel, to accomplish in relation to a set of
standards, to struggle to achieve success.
The individuals with high achievement needs are highly motivated by competing and
challenging work. They look for promotional opportunities in job. They have a strong urge for
feedback on their achievement. Such individuals try to get satisfaction in performing things
better. High achievement is directly related to high performance.
Need for power (nPow) is the desire to influence other individual’s behaviour as per your wish.
In other words, it is the desire to have control over others and to be influential.
The individuals who are motivated by power have a strong urge to be influential and
controlling. They want that their views and ideas should dominate and thus, they want to lead.
Such individuals are motivated by the need for reputation and self-esteem.
Need for affiliation (nAff) is a need for open and sociable interpersonal relationships. In other
words, it is a desire for relationship based on co-operation and mutual understanding.
The individuals who are motivated by affiliation have an urge for a friendly and
supportive environment. Such individuals are effective performers in a team. These people want
to be liked by others. The manager’s ability to make decisions is hampered if they have a high
affiliation need as they prefer to be accepted and liked by others, and this weakens their
objectivity.
Alderfer’s ERG Theory of Motivation:
To bring Maslow’s need hierarchy theory of motivation in synchronization with empirical
research, Clayton Alderfer redefined it in his own terms. His rework is called as ERG theory of
motivation. He recategorized Maslow’s hierarchy of needs into three simpler and broader
classes of needs:
Existence needs- These include need for basic material necessities. In short, it includes an
individual’s physiological and physical safety needs.
Relatedness needs- These include the aspiration individual’s have for maintaining significant
interpersonal relationships (be it with family, peers or superiors), getting public fame and
recognition. Maslow’s social needs and external component of esteem needs fall under this
class of need.
Growth needs- These include need for self-development and personal growth and
advancement. Maslow’s self-actualization needs and intrinsic component of esteem needs fall
under this category of need.
ERG Theory states that at a given point of time, more than one need may be
operational. ERG Theory also shows that if the fulfillment of a higher-level need is subdued,
there is an increase in desire for satisfying a lower-level need. According to Maslow, an
individual remains at a particular need level until that need is satisfied. While according to ERG
theory, if a higher- level need aggravates, an individual may revert to increase the satisfaction of
a lower- level need. This is called frustration- regression aspect of ERG theory. For instance-
when growth need aggravates, then an individual might be motivated to accomplish the
relatedness need and if there are issues in accomplishing relatedness needs, then he might be
motivated by the existence needs. Thus, frustration/aggravation can result in regression to a
lower-level need.
Managers must understand that an employee has various needs that must be satisfied at
the same time. According to the ERG theory, if the manager concentrates solely on one need at
a time, this will not effectively motivate the employee.
Motivational Technique- Job Enrichment:
Job enrichment is a management concept that involves redesigning jobs so that they're more
challenging to the employee and have less repetitive work. The concept is based on a 1968
Harvard Business Review article by psychologist Frederick Herzberg titled “One More Time:
How Do You Motivate Employees?”
Vertical job loading is the terminology used by Herzberg to describe his principles for
enriching positions and giving employees more challenging work. It's intended to contrast with
job enlargement, a.k.a. horizontal job loading, which often involves giving employees more
work without changing the challenge level.
The purpose of job enrichment is to make the position more satisfying to the employee.
Overall goals for the company often include increasing employee job satisfaction, reducing
turnover, and improving productivity of employees.
Communication:
Communications is fundamental to the existence and survival of humans as well as to an
organization. It is a process of creating and sharing ideas, information, views, facts, feelings,
etc. among the people to reach a common understanding. Communication is the key to the
Directing function of management.
A manager may be highly qualified and skilled but if he does not possess good
communication skills, all his ability becomes irrelevant. A manager must communicate his
directions effectively to the subordinates to get the work done from them properly.
Communications Process:
Communications is a continuous process which mainly involves three elements viz. sender,
message, and receiver. The elements involved in the communication process are explained
below in detail:
1. Sender: The sender or the communicator generates the message and conveys it to the
receiver. He is the source and the one who starts the communication
2. Message: It is the idea, information, view, fact, feeling, etc. that is generated by the sender
and is then intended to be communicated further.
3. Encoding: The message generated by the sender is encoded symbolically such as in the form
of words, pictures, gestures, etc. before it is being conveyed.
4. Media: It is the manner in which the encoded message is transmitted. The message may be
transmitted orally or in writing. The medium of communication includes telephone, internet,
post, fax, e-mail, etc. The choice of medium is decided by the sender.
5. Decoding: It is the process of converting the symbols encoded by the sender. After decoding
the message is received by the receiver.
6. Receiver: He is the person who is last in the chain and for whom the message was sent by
the sender. Once the receiver receives the message and understands it in proper perspective and
acts according to the message, only then the purpose of communication is successful.
7. Feedback: Once the receiver confirms to the sender that he has received the message and
understood it, the process of communication is complete.
8. Noise: It refers to any obstruction that is caused by the sender, message or receiver during the
process of communication. For example, bad telephone connection, faulty encoding, faulty
decoding, inattentive receiver, poor understanding of message due to prejudice or inappropriate
gestures, etc.
Barriers to Communication:
The communication barriers may prevent communication or carry incorrect meaning due to
which misunderstandings may be created. Therefore, it is essential for a manager to identify
such barriers and take appropriate measures to overcome them. The barriers to communication
in organizations can be broadly grouped as follows:
1. Semantic Barriers: These are concerned with the problems and obstructions in the process
of encoding and decoding of a message into words or impressions. Normally, such barriers
result due to use of wrong words, faulty translations, different interpretations, etc.
2. Psychological Barriers: Emotional or psychological factors also act as barriers to
communication. The state of mind of both sender and receiver of communication reflects in
effective communication. A worried person cannot communicate properly and an angry
recipient cannot understand the message properly.
Thus, at the time of communication, both the sender and the receiver need to be
psychologically sound. Also, they should trust each other. If they do not believe each other,
they cannot understand each other’s message in its original sense.
3. Organizational Barriers: The factors related to organizational structure, rules and
regulations authority relationships, etc. may sometimes act as barriers to effective
communication. In an organization with a highly centralized pattern, people may not be
encouraged to have free communication. Also, rigid rules and regulations and cumbersome
procedures may also become a hurdle to communication.
4. Personal Barriers: The personal factors of both sender and receiver may act as a barrier to
effective communication. If a superior thinks that a particular communication may adversely
affect his authority, he may suppress such communication. Also, if the superiors do not have
confidence in the competency of their subordinates, they may not ask for their advice. The
subordinates may not be willing to offer useful suggestions in the absence of any reward or
appreciation for a good suggestion.
Measures to improve communication effectiveness:
Communication of Clarification of the idea.
Communication should be according to the needs of the receiver.
Consulting others before communication.
Awareness about the language, tone and body postures and gestures.
Convey information useful to the receiver.
Ensure proper feedback.
Follow up communications.
Be a good listener.
For having an effective control system, certain prerequisites are enumerated below:
Emphasis on Objectives
Efficiency of control techniques
Responsibility for Control
Direct Control
Suitability
Flexibility
Self-Control
Control by Exception
Strategic Point Control
Corrective action
Forward-looking Control
Human factor
Economical
Objective standards
The Budget as Control Technique:
Budgetary Control: Budgetary control is the process of determining various actual results
with budgeted figures for the enterprise for the future period and standards set then comparing
the budgeted figures with the actual performance for calculating variances, if any. First of all,
budgets are prepared and then actual results are recorded.
The comparison of budgeted and actual figures will enable the management to find out
discrepancies and take remedial measures at a proper time. The budgetary control is a
continuous process which helps in planning and co-ordination. It provides a method of
control too. A budget is a means and budgetary control is the end-result.
Provide Standards
Important tool for Co-ordination
Helps in reducing unproductive operations
Easy controlling and financial planning
Facilitates Control by Exception
Device for fixing the responsibility of various position
Rigidity
Affected by changing price levels
Only means, not end
Can be misused
Costly
THANK YOU!
Principles of Management (POM)
Organisational Change:
Meaning:
Organizational change refers to the actions in which a company or business alters a major
component of its organization, such as its culture, the underlying technologies or infrastructure
it uses to operate, or its internal processes. Organizational change management is the
method of leveraging change to bring about a successful resolution, and it typically includes
three major phases: Preparation, implementation, and follow-through.
What Causes Organizational Change?
Many factors make organizational change necessary. Some of the most common faced by
managers include:
New leadership at the helm of the company or within its departments
Shifts in the organizational team structure
The implementation of new technology
The adoption of new business models
Types of Organizational Change:
Organizational change is a broad term. Some change is sweeping: A substantial evolution in the
direction of a company. Other shifts are less dramatic, focusing instead on a small aspect of a
firm.
It can be helpful to think of change as a spectrum. On one end, you’ll find adaptive
change, which speaks to those modest iterations. On the other, there’s transformational change,
in which vast change is pursued.
Adaptive changes are small, incremental changes organizations adopt to address needs that
evolve over time. Typically, these changes are minor modifications and adjustments that
managers fine-tune and implement to execute upon business strategies. Throughout the process,
leadership may add, subtract, or refine processes. One example of an adaptive change is an
organization that upgrades their computer operating systems from Windows 8 to Windows 10.
Transformational changes have a larger scale and scope than adaptive changes. They can
often involve a simultaneous shift in mission and strategy, company or team structure, people
and organizational performance, or business processes. Because of their scale, these changes
often take a substantial amount of time and energy to enact. Though it's not always the case,
transformational changes are often pursued in response to external forces, such as the
emergence of a disruptive new competitor or issues impacting a company’s supply chain. An
example of a transformational change is the adoption of a customer relationship management
software (CRM), which all departments are expected to learn and employ.
Many changes will fall somewhere between adaptive and transformational on the
spectrum. For this reason, managers need to understand that the change process must be tailored
to the unique challenges and demands of each situation.
Why Is Organizational Change Management Important?
Organizational change is necessary for companies to succeed and grow. Change management
drives the successful adoption and usage of change within the business. It allows employees to
understand and commit to the shift and work effectively during it.
Without effective organizational change management, company transitions can be rocky
and expensive in terms of both time and resources. They can also result in lower employee
morale and competent skill development. Ultimately, a lack of effective change management
can lead the organization to fail.
Preparing for Organizational Change (Management of Change):
To prepare for organizational change, it’s essential to first define the organizational change,
understand why it’s critical, and garner support from your colleagues.
Then, create a roadmap that clearly articulates and measures success, and explains how the
business—and its employees, customers, and constituencies—will be affected.
Ensure the process plan aligns with business goals and outlines the implementation and
sustainability of the organizational change. Note what challenges may arise and be flexible
enough to adjust accordingly. Be sure to celebrate small victories along the way.
Change management doesn’t stop once you’ve successfully executed the transition. Both
throughout and following the process, you need to continuously assess outcomes, measure data,
train employees on new methodologies and business practices, and readjust goals as necessary.
Conflict Management:
Wherever there are people, there always will be conflict. Managers have to deal with conflict in
the workplace every day. Conflict management is the ability to be able to identify and handle
conflicts sensibly, fairly, and efficiently.
Stress Management:
Stress:
Stress is defined in terms of its physical and physiological effects on a person, and can be a
mental, physical, or emotional strain.
Stress occurs when a demand exceeds an individual’s coping ability and disrupts his or her
psychological equilibrium. Stress occurs in the workplace when an employee perceives a
situation to be too strenuous to handle, and therefore threatening to his or her well-being.
Causes of Workplace Stress:
Work stress is caused by demands and pressure from both within and outside of the workplace:
Job stress can result from interactions between the worker and the conditions of the work. This can include
factors such as long work hours and an employee’s status in the organization.
Economic factors that employees are facing in the 21st century, such as company layoffs in response to
economic conditions, have been linked to increased stress levels.
Uncertainty around the future of one’s job, lack of clarity about responsibilities, inconsistent or difficult
expectations, interpersonal issues between workers, and physical demands of the work can also impact
stress levels.
Non-work demands, such as personal or home demands, can also contribute to stress both inside and
outside of work.
Stress Management in Organisations (Preventing Job Stress):
Specifically, organizations can prevent employee stress in the following ways:
Intentional Job Design:
Design jobs that provide meaning and stimulation for workers as well as opportunities for
them to use their skills. Establish work schedules that are compatible with demands and
responsibilities outside the job.Consider flexible schedules—many organizations allow
telecommuting to reduce the pressure of being a certain place at a certain time (which enables
people to better balance their personal lives). Monitor each employee’s workload to ensure it is
in line with their capabilities and resources.
Clear and Open Communication:
Teach employees about stress awareness and promote an open dialogue. Avoid ambiguity at all
costs—clearly define workers’ roles and responsibilities. Reduce uncertainty about career
development and future employment prospects.
Positive Workplace Culture:
Provide opportunities for social interaction among workers. Watch for signs of dissatisfaction
or bullying and work to combat workplace discrimination (based on race, gender, national
origin, religion, or language).
Employee Accountability:
Give workers opportunities to participate in decisions and actions that affect their jobs.
Introduce a participative leadership style and involve as many subordinates as possible in
resolving stress-producing problems.
Stress Prevention Programs:
Program activities included educating employees and management about workplace stress,
changing policies and procedures to reduce organizational sources of stress, and establishing of
employee assistance programs.
Personality:
Personality can be defined in many ways. Perhaps one of the more useful definitions for
purposes of organizational analysis is offered by Salvatore Maddi, who defines personality as
follows:
“. . . a stable set of characteristics and tendencies that determine those communalities and
differences in the psychological behavior (thoughts, feelings, and actions) of people that have
continuity in time and that may not be easily understood as the sole result of the social and
biological pressures of the moment.”
Several aspects of this definition should be noted:
First, personality is best understood as a constellation of interacting characteristics; it is
necessary to look at the whole person when attempting to understand the phenomenon and its
effects on subsequent behavior.
Second, various dimensions of personality are relatively stable across time. Although
changes—especially evolutionary ones—can occur, seldom do we see major changes in the
personality of a normal individual.
Third, the study of personality emphasizes both similarities and differences across people. This
is important for managers to recognize as they attempt to formulate actions designed to
enhance performance and employee well-being.
Personality refers to internal as well as external qualities, some of which are quite general. But
it is unique to each individual. It is not possible for a person to reproduce or imitate the
qualities of the personality of another person.
In the field of organizational behavior, personality is the aggregate of a person’s feelings,
thinking, behaviors and responses to different situations and people.