CHAPTER-1 INTRODUCTION TO MANAGEMENT

Meaning of Management
Management is the process of planning, organizing, directing, staffing and controlling the use of resources to accomplish
the performance goals.
Management involves coordinating and overseeing the work activities of others, so that their activities are completed
efficiently and effectively.
Management brings together all Six Ms (i.e.) Men and Women, Money, Machines, Materials, Methods and Markets. They
use these resources for achieving the objectives of the organization such as high sales, maximum profits, business
expansion, etc.

Definition of Management:
According to Peter F. Drucker, "Management is a multi-purpose organ that manages business and manages managers and manages
workers and work."

NATURE OF MANAGEMENT
1. Universal Phenomenon: Management is a Universal phenomenon. In fact management is present where ever there is human
activity. In short, it is present at all spheres of life. No doubt, there may be slight variations in approach and style of management
from concern to concern, but the basic aspect of carrying out management is the same everywhere.
2. It is an Organized Activity: Management is an organized activity or process, as management attains its full meaning only
when there is an organized focus towards achieving a common objective which is much concerned with efficient use of
resources.
3. It is a Group Activity: Management is a group activity concerned with management of people. As stated earlier as
management is all about getting things done through others, it speaks about getting such work done through people working
together as a group thereby achieve the needful objective successfully.
4. Management is a Systematic Process: It means to state that management is a process or function which includes within it a
series of operations which needs to be followed systematically with proper determination, formulation, organizing, creating
proper environment and exercising full control over such process.
5. It is a Social Process: Management takes place only through people and is concerned with building mutual understanding and
co-operation with different classes of people in order to achieve a common goal.
6. It is about 'Getting things done through people': Management is all about the art of getting things done through others; it
only matters as to what method one adapts in order to achieve the required objective.
7. Management is an Integrated Process: Management is an integrating or unifying force i.e. the task of management is
wielding or integrating into a single working force the human and the physical resources.
8. Management is Intangible: It is abstract and cannot be seen, it can be evidence by the quality of the organization and the
results such as productivity and increased morale among its employees.
9. Goal-Oriented: Management is a purposeful or goal-oriented activity. That is to say, it is concerned with the achievement of
the pre-determined objectives of the organization. In fact, the success of management is measured by the extent to which the
organization goals are achieved.
10. Inter-Disciplinary Approach: Management is a body of discipline that takes the help of other social sciences like
psychology, sociology, engineering, economics etc.
11. Dynamic: Management is dynamic and not static, as it adapts itself to changes in environment and also initiates and
Introduces changes i.e., innovations, in methodology.
12. Management is about System Authority: It speaks about the right to give orders and power to get them executed. Since
management is the process of directing men to perform the pre determined task, authority to accomplish the work from others is
implied in the very concept of management. In fact authority is considered to be the basis for the performance of managerial
functions, In every enterprise, there are built-in levels of authority to direct and control the operations of the business.
13. Good Leadership: It is all about ability to lead and get the desired course of action from the subordinates. In other words it
is the function of executive leadership everywhere.
14. Management is an Economic Activity: It means to say that management is profit oriented and hence involves several inputs
such as Man, Money and material which by itself do not ensure growth; they require the proper catalyst to channel them together
in order to achieve maximum results.
15. One of the Factors of Production: Management is one of the factors of production like land, labor and capital. It is one of
the economic resources or factors of production, because like land, labor, capital managerial skills also have to be acquired and
used for the production of good quality goods and services.
16. Management is a Profession: A profession may be defined as an organized body of knowledge skills and techniques
consciously and where the entry is restricted and regulated by an external apex agency with ethical codes or standards and
underlined spirit of service to society.

CHARACTERISTICS OF MANAGEMENT

1. Continuous and never ending process: Management is a Process. It includes four main functions, viz., Planning, Organizing,
Directing and Controlling. The manager has to Plan and organize all the activities. He had to give proper Directions to his
subordinates. He also has to Control all the activities. The manager has to perform these functions continuously; therefore,
management is a continuous and never ending process.
2. Getting things done through people: The managers do not do the work themselves. They get the work done through the
workers. The workers should not be treated like slaves. They should not be tricked, threatened or forced to do the work. A
favourable work environment should be created and maintained.
3. Result oriented science and art: Management is result oriented because it gives a lot of importance to "Results". Examples of
Results like, increase in market share increase in profits, etc. Management always wants to get the best results at all times.
4. Multidisciplinary in nature: Management has to get the work done through people. It has to manage people. This is a very
difficult job because different people have different emotions, feelings, aspirations etc. Similarly, the same person may have
different emotions at different times. So, management is a very complex job. Therefore, management uses knowledge from many
different subjects such as Economics, Information Technology, Psychology, Sociology etc. Therefore, it is multidisciplinary in
nature.
5. A group and not an individual activity: Management is not an individual activity. It is a group activity. It uses group
(employees) efforts to achieve group (owners) objectives. It tries to satisfy the needs and wants of a group (consumers).
Nowadays, importance is given to the team (group) and not to individuals.
6. Follows established principles or rules: Management follows established principles, such as division of work, discipline,
unity of command etc. These principles help to prevent and solve the problems in the organisation.
7. Aided but not replaced by computers: Now-a-days, all managers use computers. Computers help the managers to take
accurate decisions. However, computers can only help management. Computers cannot replace management. This is because
management takes the final responsibility. Thus Management is aided (helped) but not replaced by computers.
8. Management is all pervasive: Management is necessary for running a business. It is also essential for running business,
educational, charitable and religious institutions. Management is a must for all activities, and therefore, it is all pervasive.

OBJECTIVES OF MANAGEMENT
1. Obtaining maximum output with minimum input: Management is basically concerned with achieving the objectives of the
business by utilizing the available physical and human resource of the enterprise. The successful management must achieve the
objectives of the business by making optimum utilization of resources with minimum efforts. Attaining maximum results with
minimum resources and the least wastage is the ultimate aim of every business.
2. Maximize employer's and employee's prosperity: Every management should make sincere efforts to earn maximum profit
for the enterprise. It is equally important that the management should pay fair reasonable and competitive remuneration to
employees. In order to win the confidence and whole-hearted support of employee's financial and non-financial incentives should
also be provided. Prosperity for both the employer and employees hence should be the primary objective of management.
3. Improving efficiency: the management should not only make best possible utilization of available factors of production but
should try to develop and improve the efficiency of the factors of production. Increased productivity of resources will result in
excellent performance.
4. Social justice and human betterment: an effective management brings prosperity for employers and employees. Excellent
remuneration improves the standard of living of workers. The growth of business generates employment opportunities. Equal pay
for equal work automatically generates social Justice.

Importance of Management
1. Achieving Organizational Goals. Management is relevant in the context of organizations and all organizations are purposive
creations and strive for achieving certain goals. Management helps in achieving these goals by developing and effectively
utilizing organizational resources, both human and non-human.
2. Increasing Efficiency. Management attempts at increasing efficiency in an organization through reducing costs and increasing
productivity by using suitable management process Involving planning, organizing, staffing, directing and controlling and
achieving coordination among these functions.
3. Inculcating Creativity. Management inculcates creativity in organization's people. Creativity involves generating a unique
combination or unusual association of ideas. Creativity helps In bringing innovation which is the process of creating or doing
new things like developing new products, Introducing new ways of serving customers and so on. Innovation is Important to face
competition effectively.
4. Building Dynamic Organization. Management builds dynamic organization by bringing changes on a continuous basis. A
dynamic organization is one which continuously interacts with its environment and brings necessary changes in it to meet
environmental needs.
5. Integrating Various Interest Groups. An organization may be termed as a coalition of different interest groups: owners,
employees, customers, suppliers, financiers, government. and society. Each group has its own goals which it tries to achieve
through organizational functioning. Many a times, these goals are mutually conflicting, Management integrates the goals of
various Interest groups in such a way that every group is able to achieve its goals without putting undue pressure on achievement
of goals of other groups.
6. Developing Society. Management helps in developing society in three ways. First, management helps in developing resources
of the society, more particularly human resources. Second, management uses resources of the society at those places where their
contributions are the most. Third, management undertakes various projects to develop backward areas of society resulting in
overall development of the society.

Scope of Management
Scope of management specifies the organizational functions in which management is relevant. Organizational functions differ
from organization to organization depending on their nature while functions of management are the same in all organizations. In
a business organization, organizational functions are divided into four categories: production, marketing, finance, and human
resource. These organizational functions are called functional areas of management and have their own strategies, policies,
procedures, etc. With reference to these functional areas, the term management is suffixed with each functional area like
production management, marketing management, etc.
Production Management
Production management Involves planning, organizing, directing, and controlling the production function so as to produce the
right goods, in the right quantity, at the right time, and at the right cost. It includes the following activities:
1. Location and layout of plant and building
2. Designing the product.
3. Planning and control of factory operations.
4. Purchase and storage of materials.
5. Repairs and maintenance of plant and other related assets.
6. Inventory, cost and quality management.
7. Research and development.
Marketing Management
Marketing management involves identification of customers' needs and supplying them the products (goods and services) which
can satisfy these needs. It involves the following activities:
1. Marketing research to determine the needs and expectations of customers.
2. Planning and developing suitable products.
3. Setting appropriate prices.
4. Selecting the right channel of distribution.
5. Undertaking promotional activities like advertising sales promotion, and personal selling to communicate with the customers
6. Customer relationship management.
Financial Management
Financial management involves ensuring the right amount and type of funds to business at the right time and at reasonable cost.
It includes the following activities:
1. Assessing the volume of funds required for both long-term and short-term needs of business.
2. Selecting the appropriate sources of funds,
3. Raising the required funds at the right time.
4. Ensuring proper allocation and utilization of funds so as to maintain safety and liquidity of funds and the creditworthiness and
profitability of business.
5. Appropriation of earnings.
Human Resource Management
Human resource management involves recruiting and employing right type of personnel, developing, retaining, and integrating
these personnel with the organization to achieve desired objectives. It includes the following activities:
1. Human resource planning
2. Recruitment and selection.
3. Training and development.
4. Performance appraisal.
5. Promotions and transfers.
6. Compensation.
7. Employee welfare services.
8. Industrial relations.
9. Human resource records and research.

MANAGEMENT AS A SCIENCE
Science is a systematic body of knowledge pertaining to a specific field of study that contains general facts which explains a
phenomenon. It establishes cause and effect relationship between two or more variables and underlines the principles governing
their relationship. These principles are developed through scientific method of observation and verification through testing.

1) Universally Acceptance Principles: Scientific principles represent basic truth about a particular field of enquiry. These
principles may be applied in all situations, at all time and at all places. Example: law of gravitation which can be applied in all
countries irrespective of the time. Management also contains some fundamental principles which can be applied universally like
the Principle of Unity of Command i.e., one man, one boss. This principle is applicable to all type of organization - business or
non business.
2) Experimentation and Observation: Scientific principles are derived through scientific investigation and researching i.e. they
are based on logic. Example: the principle that earth goes round the sun has been scientifically proved. Management principles
are also based on scientific enquiry and observation and not only on the opinion of Henry Fayol. They have been developed
through experiments and practical experiences of large no. of managers. Example: it is observed that fair remuneration to
personal helps in creating a satisfied work force.
3) Cause and Effect Relationship: Principles of science lay down cause and effect relationship between various variables.
Example: when metals are heated, they are expanded. The cause is heating and result is expansion. The same is true for
management; therefore it also establishes cause and effect relationship. Example: lack of parity (balance) between authority and
responsibility will lead to ineffectiveness. If you know the cause i.e. lack of balance, the effect can be ascertained easily i.e. in
effectiveness. Similarly if workers are given bonuses, fair wages they will work hard but when not treated in fair and just manner
reduces productivity of organization.
4) Test of Validity and Predictability: Validity of scientific principles can be tested at any time or any number of times i.e. they
stand the test of time. Each time these tests will give same result. Moreover future events can be predicted with reasonable
accuracy by using scientific principles. Example: H2 and 02 will always give H2O. Principles of management can also be tested
for validity. Example: principle of unity of command can be tested by comparing two persons - one having single boss and one
having 2 bosses. The performance of 1st person will be better than 2nd.

MANAGEMENT AS AN ART
An art is the systematic application of skill and knowledge in affecting desired result. An art is practiced, stated differently
science is "to know" and art is "to do".
1. Practical knowledge: The management has to plan, organize, guide, co-ordinate and control the activities of his subordinates;
therefore practical knowledge of these functions is very essential for him. He is also required to work in real situations of
business which need his overall understanding of the business environment. This knowledge and its application make
management science and art also.
2. Personalized skill or application is personalized: Management is personal and individual skill. The psychology of individual
differences applies in case of management also. Every manager has his own original distinct way of doing his own work
according to his ability, understanding, tactfulness and experience, which makes management an art. Management thus can be
justified as an art because it is creative.
3. Concrete result/Result oriented approach: Management activities aim at achieving a definite goal. The objective may be
reaching production or sales target in the most economical manner. The success of management lies in the maximum satisfaction
of shareholders, employees, customers and public.
4. Constructive objectives: The management as an art creates such congenial atmosphere, wherein the motivated employee
offers his best services to the enterprise.
5. Perfection through practice: The old saying 'Practice makes man perfect truly applies in case of management also. Like other
arts managerial efficiency is developed through practice. The real business situations and opportunities go on changing from time
to time and the management has to work in the changing circumstances. Through experience he is able to evolve his own
individual and novel approach of dealing with the problem.
Management hence can be regarded as an art because application of management principles is personalized, it can be regarded as
science as its basic principles can be applied in all real situations and is henceforth universal, further management can be
regarded as profession because unlike other field management is an existence of body of specialized knowledge or techniques
and it based on certain ethical codes. It is also a social process as management owes within it the welfare of its people thereby
being a part in the society's development.
Management is a combination of all the factors; thereby it can be regarded as art as well as science and also social process and
profession.
MANAGEMENT AS A PROFESSION
A profession may be defined as an occupation that requires specialized knowledge and intensive academic preparations to which
entry is regulated by a representative body. The essentials of a profession are:
1. Specialized Knowledge - A profession must have a systematic body of knowledge that can be used for development of
professionals. Every professional must make deliberate efforts to acquire expertise in the principles and techniques. Similarly a
manager must have devotion and involvement to acquire expertise in the science of management.
2. Formal Education & Training- There are no. of institutes and universities to impart education & training for a profession.
No one can practice a profession without going through a prescribed course. Many institutes of management have been set up for
imparting s education and training. For example, a CA cannot audit the A/C's unless he has acquired a degree or diploma for the
same but no minimum qualifications and a course of study has been prescribed for managers by law. For example, MBA may be
preferred but not necessary.
3. Social Obligations Profession is a source of livelihood but professionals are primarily motivated by the desire to serve the
society. Their actions are influenced by social norms and values. Similarly a manager is responsible not only to its owners but
also to the society and therefore he is expected to provide quality goods at reasonable prices to the society.
4. Code of Conduct - Members of a profession have to abide by a code of conduct which contains certain rules and regulations,
norms of honesty, integrity and special ethics. A code of conduct is enforced by a representative association to ensure self
discipline among its members. Any member violating the code of conduct can be punished and his membership can be
withdrawn. The AIMA has prescribed a code of conduct for managers but it has no right to take legal action against any manager
who violates it.
5. Representative Association - For the regulation of profession, existence of a representative body is a must. For example, an
institute of Charted Accountants of India establishes and administers standards of competence for the auditors but the AIMA
however does not have any statuary powers to regulate the activities of managers.

MANAGEMENT AND ADMINISTRATION

There is considerable controversy or confusion regarding use of the term 'Management' and 'Administration'. These two terms are
interpreted or used in different senses by different writers. There are three main schools of thought regarding the meaning of
these two terms.

View of First School of Thought

According to one school of thought, i.e., according to some writes like Henry Fayol, William Newman, Harold Kootnz,
O'Donnell, Dalton E, Earnest Dale and Peter F. Drucker, there is no difference between the terms "Administration &
Management". Both the terms are synonymous and they can be used interchangeably.
According to this of thought, running of a business or a social institution or a government office necessitates certain executive
functions. The executive functions involved in running of business enterprises are called 'Management and the executive
functions involved in the running of social institutions and government offices are called 'administration. So, the terms
'administration & management mean one and the same, and there is no distinction between the two. Henry Fayol has categories
stated that there is only one administration or management science, which can be applied equally to all institutions whether
business or social or government. View of the Second School of Thought
View of Second School of Thought
According to another school of thought, i.e., according to some other writers like Oliver Sheldon, William R. Spriegel,
G.E.Milward, Lansberg, Sergeant Florence, Ordway Tead, William Schulze and Haimann, 'administration' and 'management' are
different terms. They refer to different functions,
According to this school of thought, 'administration' is a top level function. It is the thinking function. It is concerned with the
determination of the major policies and the objectives of the business enterprise. 'Management' is, on the other hand, a lower
level function. It is the doing function. It is concerned with the execution of the policies laid down by the administration and the
directing of the operations to attain the objectives laid down by the administration.
View of Third School of Thought
According to yet another school of thought, i.e., according to some other writers like E. F. L. Brech, Kimball and others
"Management" is a comprehensive generic term which includes administration.
According to the third school point of view 'management' is a comprehensive generic term including administration.
Management can be divided into two categories, viz., (1) Administrative Management and (2) Operative Management. The
administrative management is the upper level of management; it is concerned with policy determination, planning and control.
The operative management is the lower level of management. It is concerned with the use of men, materials, machines and
money, implementation of policies and direction of routine tasks.
Conclusion: Tough the terms 'Administration' and 'Management' have been interpreted in different senses by different schools of
thought, today, the controversy over the interpretation of the terms is done away with, and in practice no distinction is made
between management and administration because it is very difficult to make a clear demarcation between administrative
functions and managerial functions. To conclude, today, the controversy over the interpretation of the terms 'Administration' and
'Management' is overcome by using the terms 'management to mean the whole process of managing a business includes
administration.

Difference between administration and management

Basis Administration Management

1. Nature of It is a determinative or thinking function. It is an executing or doing function.

Function

2. Type of It is concerned with determination of It is concerned with implementation of

Work major objectives and policies. policies and objective achievement.

3. Scope of It is quite broad and conceptual. It is mainly narrow and operational.

Function

4. Levels of It is mainly a top level function. It is largely a middle and lower level
Authority function.

5. Influence Administrative decisions are influenced mainly Managerial decisions are influenced by
by public and other outside forces. objectives and policies of the organization.

6. Direction It is not directly concerned with direction of It is actively concerned with direction of human
of Human human efforts. efforts in policy execution.
Efforts

7. Main Planning and control are the main Directing and organizing are the
Functions main functions.
Functions.

8. Skills It requires mostly conceptual skills It requires mainly technical and human
Required skills.

9. Usage It is used largely in Government It is used mainly in business organizations.

organizations.

LEVELS AND TYPES OF MANAGEMENT

1. Top Level Management
It consists of the Board of Directors and the chief executive officers of the firm referred to as top management. The chief officer
can be referred to as general manager, President, President cum Chairman, Chairman cum Managing Director etc. The top level
is held responsible for the overall management, administration, policymaking, directing and controlling.
The following are the functions performed by the top level management:
i) To define the long term objectives, plans and policies of the firm.
ii) Appointment of department heads and key executives of the firm.
iii) To represent the company to the outside world, i.e., trade unions, press, government etc.
iv) To review the overall activities of the company.
v) To co-ordinate the various activities of different departments.
vi)To define the development and organizational activities of the firm and to implement the same.

2. Upper Middle Level Management

The departmental and the divisional heads are called the upper middle level management These managers are responsible for
achieving the short term goals and targets as decided by the top level management, day to day management of various activities
within their departments, coordinating, controlling and directing their subordinates etc. these managers acts as the middle men
between the top management and middle and lower level managers. Their responsibilities include executing and implementing
the orders, plans and policies of the top level management and to supervise the lower level managers. These managers are also
known as intermediate management Marketing manager, accounting manager, Finance manager, HR manager, Production
manager etc. are referred to as Intermediate management. Their functions can be listed as follows:
i) To co-ordinate the activities of the departments.
ii) To be responsible for the specific results of their departments.
iii) To attain the objectives as designed and defined by top level management.
iv) To supervise the middle and lower level management.

3. Middle Level Management

These managers handle the day to day activities of the firm. They also develop, train and recruit the operating lower level
management. This level of management consists of co-ordinators of different departments, sectional office, plant managers,
office managers, branch managers, area managers, deputy department heads etc. the functions are listed below.
i) To develop and train lower level staff.
ii) To co-ordinate various activities within their department.
iii) To give clear instructions to be carried out in their departments.
iv)To control wastage, inefficiency etc., in their department.
v)To interpret and explain the policies framed by the lower level and upper middle level management etc.

4. Operating/Shop Floor/Lower Level/Functional Level Management

These managers generally possess technical knowledge. These managers are responsible for explaining the procedures, sending
reports, supervising and controlling the workers maintaining discipline and to maintain a good interdepartmental relationship
within the organization. The lower level managers consist of foreman and supervisor. Their functions can be listed as follows:
i) To plan day to day production activities laid down by the top level and upper middle level management.
ii) To assign the jobs to workers.
iii) To arrange for the materials needed for the production, up-keep and maintenance of machinery etc.
iv)To explain the work procedure to the workers.
v) To maintain discipline and good human relations among the workers.
vi) To get feedback from the workers.
vii)To supervise and control workers and maintain a good personal relationship with them etc.

Issues and challenges for Managers in Twenty-first Century

Economic liberalization in India along with rapid technological advances throughout the world has changed the way the business
was being done in India. How this change has posed the challenges before the managers can be gauged by taking a few examples:
companies like Orkay Silk Mills, Metal Box India, Hind Cycles, etc., once key players in the concerned market, have become
extinct: companies like Reliance Industries, TCS, Infosys, etc. have touched new heights. Nature of environment for both groups of
companies has been almost the same. The basic factor which has differentiated the two groups of companies is non-adaptability or
adaptability to environment. In the present scenario, Indian managers have to face the following challenges:
RESPONDING TO GLOBALIZATION
In a broad sense, globalization is "a process by which the people of the world are united into a single society. This process is a
combination of economic, technological, socio-cultural, and political forces". However, from the point of view of organizational
behaviour, globalization means integration of world economy into a single market through removal of trade barriers or restrictions
among countries. From this point of view, degree of globalization is measured on the following features:
1. Goods and services-exports and imports as a proportion of national income
2. Human resource-toward outward migration flows in relation to total national population
3. Capital-toward/outward direct investment as a proportion of national income
4. Technology-international research and development flows.
In the context of management, globalization has provided many challenges
Globalization Challenges Globalization of business is helpful in earning profit but at the same time, it creates many challenges for
management. These challenges are cultural diversity, language diversity, working diversity, and economic diversity

1. Cultural Diversity. Culture is a set of beliefs, attitudes, and values that are shared commonly by the members of the society:
Each country has its own culture. Cultural diversity is the degree of difference between cultures of two countries which is
measured on the basis of five cultural dimensions:
(i) Individualism versus collectivism. People with individualism orientation place value on themselves while people with
collectivism orientation emphasize the group.
(ii) Power distance. People with high power distance prefer to be in a situation where the authority is clearly understood and lines
of authority are never bypassed while people with low power distance are quite comfortable circumventing lines of authority to
accomplish jobs.
(iii) Uncertainty avoidance. People with high uncertainty avoidance orientation prefer to be in clear and unambiguous situations
while people with low uncertainty avoidance orientation can tolerate ambiguity and do not experience stress because of unknown
future
(iv) Masculinity versus femininity. People having masculinity orientation place more emphasis on career, money, etc while people
having femininity place more emphasis on social goals, such as relationships, helping others, etc.
(v) Time orientation. People having long-term orientation focus on future, prefer to work on projects having a distant payoff, and
have persistence and thrift while people having short-term orientation are more oriented towards past and present and have respect
for traditions and social obligations.

2. Multicultural Workforce
Workforce is the building block of an organization but there multicultural workforce (also known as multi ethnic workforce) in
global companies because employees of different countries work in these companies. Each country has different culture and ethnic
groups. Based on their place of origin, employees of a global company may be divided into three groups
(a) parent-country national-permanent resident of the country where the company is headquartered,
(b) host-country national permanent resident of the country where the company's operations are located, and
(c) third-country national-permanent resident of a country other than the parent country and the host country. Multicultural
workforce implies that various categories of employees bring not only their skills and expertise but also their attitudes, motivation
to work or not to work, and other personal characteristics. Therefore, it is a challenge before managers how to integrate these
diverse employees with the organization.

3. Language Diversity. Globalization has problem in the form of language diversity. Language is a medium of expression but
employees from different countries have different languages. Though English is a very common language, It does not serve the
purpose adequately as it does not cover the entire world. While employees coming from different countries may be encouraged to
learn the language of the host country for better dissemination of information, it does not become feasible in many cases. An
alternative to this is to send multilingual communication. It implies that anything communicated to employees should appear in
more than one language to help the employees in understanding the message correctly. This system of communication puts extra
burden on the communication channels.

4. Economic Diversity. Economic diversity is measured in terms of per capita income of different countries in which a global
company operates. Economic diversity has implication to compensation management, that is, paying wages/salaries and other
financial compensation to employees located in different countries. One of the basic principles of paying to employees is that there
should be equity in paying to employees'.

5. WORKING IN NETWORKED ORGANIZATION

To cope up with the requirements of fast-changing environment, newer organizational designs have emerged. Networked
organization is one of these designs. Networked organization is a temporary network of Independent companies-supplies,
customers, even erstwhile rivals linked by information technology to share skills, costs, and access to one another's markets. It has
neither central office nor organization chart; it has no hierarchy, no vertical integration. The basic reason behind creating a
networked organization is to generate synergy through temporary alliances. Creating synergy is the process of putting two or more
elements together to achieve sum total greater than the sum total of individual elements separately. The synergistic effect is
generated in virtual organization because of the complementarily of competences of different partners.
People of a networked organization interact among them through Internet or other communication device. They seldom have
personal contacts. In such a situation, the persons concerned should have skills which are relevant for interacting with others
without personal contacts. Knowledge of organizational behaviour helps the persons to develop such skills.

6. IMPROVING PEOPLE'S SKILLS

Organizational behaviour aims at improving human skills of people by providing knowledge about what types of human skills are
relevant and how these skills may be developed. It has been observed that technical people have proficiency in their discipline but
they lack in human skills. Therefore, their effectiveness is adversely affected. This is the reason that most of the organizations
employing technical persons organize training programmes to improve their human skills. In these programmes, emphasis is
placed on relevant concepts of organizational behaviour and how these concepts may be put into practice to develop required
skills.

7. ENHANCING EMPLOYEE WELL-BEING AT WORKPLACE

Enhancing employee well-being at workplace is a key issue in the present context because features of workplace are major source
of employee satisfaction or dissatisfaction. Positive workplace features lead to employee satisfaction while negative features lead
to employee dissatisfaction Employee satisfaction leads to better employee productivity. Therefore, organizations are making
efforts to enhance employee well-being at workplace through a number of measures like employee empowerment, creating
autonomous work teams, flexibility in work schedule, job enrichment opportunity of growth, participation in decision making, etc.

BUSINESS OUTSOURCING
Business outsourcing has become a very common practice in the present environment because of high emphasis on specialization.
Thus, it is not necessary that a business organization does everything on its own but can get some things done by others who can
do these in a much better way and at competitive cost because of their specialization in those fields. This feature of doing business
has given the concept of business outsourcing (generally called as outsourcing). Outsourcing means getting things done externally
rather than doing these within the organization.

Need for Outsourcing

1. Focus on Core Activities. By adopting outsourcing, an organization may focus on its core activities which are critical to
achievement of its objectives. For example, for an Electricity Board, the core activities are generation of power and its distribution.
In this process, it requires preparing bills of electricity users. However, this is not a core activity but it requires lot of facilities.
Therefore, this activity may be assigned to another entity.
2. Advantages of Specialization. A business organization generally selects a service provider which has specialization in the work
that is assigned to it. Thus, the vendor performs the assigned work at a much lower cost than what the business organization may
do.
3. Flexibility. As a business organization grows over a period of time, its activities in supporting systems go on increasing. If the
organization performs all these activities on its own, its system of working becomes very rigid. Because of this rigidity,
organizational changes may not be made as required by the business environment which keeps on changing. This problem may be
overcome by going through outsourcing.
4. Freeing up Financial Resources. For undertaking various activities, Investment is required in creating facilities necessary for
performing these activities. By adopting outsourcing, an organization may save lot of its financial resources which may be invested
in creating facilities required for core activities.

Categories of BPO
The BPO industry is divided into three categories, based on the location of the vendor business can achieve total process
optimization by combining the three categories:
1. Offshore: Offshore vendors are located outside of the company's own country. For example a U.S. company may use an
offshore BPO vendor in the Philippines.
2 Near shore: Near shore vendors are located in countries that neighbor the contracting company's country. For example, in the
United States, a BPO in Mexico is considered near shore vendor.
3. Onshore: Onshore vendors operate within the same country as the contractor, although these may be located in a different city
or state. For example, a company in Seattle, Washington could use an onshore outsourcing vendor located in Seattle, Washington,
or in Huntsville Alabama.

Services of BPO
1. Information technology-enabled services (ITES) BPO: This form of BPO leverages information technology (IT) over the
internet or data network to deliver services. Some examples of ITES BPO jobs are service desk analyst, production support analyst,
and IT analyst.
2. Knowledge process outsourcing (KPO): KPO has changed BPO a bit. Some KPO vendors support functions that are
considered core in business, although they may not be core functions in the particular business that hires them. KPO firms offer
more than process expertise; they may also provide business and domain-based expertise. Some examples of KPO services include
research, analysis, or Microsoft Word and Excel work. KPOS may be capable of making low-level business decisions if they do
not conflict with higher-level business policies, but those decisions may be undone easily. KPO vendors are usually linked to the
business's value chain, and they hire people who are competent in a specific field.
3. Legal process outsourcing (LPO): LPO is a subset of KPO and encompasses a huge range of higher-level legal work, not
merely lower-level legal transcription; LPO firms can draft patent applications and legal agreements, as well as perform legal
research. Some LPO firms even advise clients. In-house legal departments usually retain LPOs. Experienced paralegals using
industry-standard databases do the work
4. Research process outsourcing (RPO): A subset of KPO, RPO specializes in research and analysis functions. RPO companies
perform research and analysis work that supports business, investment, biotech, and marketing firms.
5 Travel: This pertains to all the operations a business needs to support its travel logistics, from reservations to hotel and vehicle
bookings. Travel BPO saves money for the company because it cuts costs while increasing customer satisfaction. Airline and travel
companies also engage in BPO for either front- or back-office process streamlining. For example, an airline could outsource its
ticketing process.

Advantages of BPO
1. Achieve savings: When a company outsources certain business processes to an external supplier, especially a foreign one, it can
increase its profits thanks to the reduced costs of the tasks. In the case of purchasing outsourcing, for example, the company can
obtain better prices on products and in the long run-increase its margins.
2. Gaining flexibility: By entrusting certain missions to an external service provider, the company has a better reactivity and can
react more quickly to changes in the market. It can also- in the event of unforeseen events- quickly turn to other partners.
3. Paying less: Outsourcing allows you to gain flexibility in your workforce and avoid the need to hire. In addition to the legal
obligations relating to the employment contract, the company does not have to bear any expenses related to the recruitment of an
employee (salary, wage costs, etc.).
4. Increasing its competitiveness: By delegating certain business processes, the company saves precious time that it can devote to
high value-added tasks and strategic missions.

Disadvantages of BPO
1. Security: It is possible that this information could be stolen by a third party, or exploited by an ill-intentioned supplier. It is
essential to verify the guarantees related to security and data protection.
2. Unforeseen costs: Outsourcing can sometimes involve costs that can be difficult to predict. The company may underestimate
the amount of work required, or it may simply not think about calculating costs properly in advance.
3. Work-Life Balance: Most of the BPOs function in a client environment which would require agents in India to work as per the
timings of the US, UK or Australia. This means frequent night shifts or early morning shifts as the normal working hours.
4. Communication difficulties: In case of offshore outsourcing, there is a risk that it may be difficult to communicate with the
supplier, or that cultural differences may be encountered. For this reason, it is recommended to choose a supplier near shore, and
that has already a global presence, and especially for purchasing outsourcing.
5. Health Issues: Most of the work here involves sitting in front of the computer and speaking over headphones. Working in such
an environment for years on end leads to long-term health complications in an individual. This includes gastric problems,
hormonal imbalance and sleep disorders amongst other things.

CONCEPT OF KPO
Knowledge Process Outsourcing (KPO) means information related business task or knowledge-based processes such as research,
analysis, consultancy or any other high-level task are outsourced i.e. done by the workers of another company or allocated to the
subsidiary of the same organization.
Advantages of KPO:
1. Cost-effectiveness: One of the biggest advantages of KPO is obviously the cost advantage. The company does not have to set up
any infrastructure or bear any operational or running costs. And it gets effective, expertise service at a fraction of cost.
2. Access to the best talent: KPO's provide the company with the best, most knowledgeable skilled professionals available in the
global talent pool. And if KPO is in a developing country like India or Philippines then the cost of such talent is relatively low.
3. Focus: Outsourcing some of the processes, allows the company to focus on its core functions. The KPO handles the peripheral
functions, and the company can better focus on its core functions and improve their efficiency and results.
4. Better utilization of resources: If the company outsources the process that is not at the core of their business strategy, it can use
the resources it saves in better places.

VIRTUAL ORGANIZATIONS
A virtual organization is an organization or a productive entity that does not have a central geographical location and exists solely
through Information technology tools.
The term virtual organization is used to describe a network of independent firms that join together, often temporarily, to produce a
service or product. Virtual organization is often associated with such terms as virtual office, virtual teams, and virtual leadership.
The ultimate goal of the virtual organization is to provide innovative, high-quality products or services instantaneously in response
to customer demands.
A virtual organization is defined as an organization that is dependent on electronic linking to complete the process of production. It
can be of permanent or temporary nature and can include groups, individuals dispersed at various locations, the entire organization
or even an organizational unit.

Advantages of Virtual Organization

1. Employee efficiency: An essential advantage of virtual organisation is an increase in employee efficiency.
2. Vast Area: This proves beneficial for such companies as they can hire employees from any part of the world very quickly
without worrying about simple facts.
3. Cost Saving: The benefit of creating a virtual organization is that it is possible to minimize the operating costs to a great extent.
4. Time Savings: Virtual organization helps to save time and travel expenses because there is simply no need to reach the
workplace.
5. Balance in life: A virtual organization offers the employees a golden chance to accommodate and balance their professional and
personal life.

Disadvantages of virtual organization

1. Lack of solidarity: This type of warmth and bonding is absent in employees working for a virtual organisation.
2. Reputational risks: People are still not comfortable in dealing with companies that do not have a physical presence.
3. Lack of communication: The fact is quite different from the assumption as the remote teams are simply not interested in
passing any information as they are still unknown for each other.
4. Agreement and security issues: There is always a chance of breach or cyber hack, and it result in loss of the data to a third
party.

TOTAL QUALITY MANAGEMENT (TQM)

Total Quality Management (TQM) refers to an active approach encompassing a companywide operating philosophy and system for
continuous improvement of quality. Its philosophy extends beyond product quality to human quality.
Definition of Total Quality Management
According to Feigebaum, "Total Quality Management is an effective system of integrating the quality development, quality
maintenance and quality improvement efforts of various groups in an organization so as to enable marketing, engineering,
production and service at the most economical levels which allow for full customer satisfaction".

Characteristics of Total Quality Management

1. Goals: In TQM, the most important goal to achieve is Quality. Quality policy must be set toward customer. Meeting customer's
needs mean satisfying every customer requirement but not trying to reach some quality standards set before.
2. Possibility: To ensure the quality of service and product, TQM system requires the extending of production process to suppliers
and sub-contractors. Normally, the trading of material in production may account for 70% of final product cost (depend on types of
product). Therefore, to ensure the quality of the input material, it is necessary to set up specific standards for each type of material
to control its quality. It is also necessary to change the method of placing order to make it suitable with the production process.
3. Form: Instead of controlling the quality of the finished product (after production), TQM sets up plans and programs to supervise
and prevent problems right before the production process. Statistical tools are used to supervise, quantitatively analyze the results
as well as factors affecting the quality, consider the reasons and take appropriate prevention methods.
4. Basis of TQM system: The basis of TQM practice in the company is human. Talking about quality, people usually think about
the product quality. But it is the quality of employees that is the main concern of TQM.
5. Organization: TQM system is cross organized and functioned in order to manage, interestedly corporate with different
activities of the system and facilitate group working. The implementation of TQM requires the participation of high and middle
level managers. A proper organization will help duties to be assigned clearly. Thus, TQM needs new management model, with
different characteristics from the previous model.
6. Management skills and tools: Methods to implement must be based on the principle "do correctly at the very beginning", in
researching and designing to minimize economic cost. Strictly apply damming circle to make foundation for the continuous quality
improvement.

Principles of Total Quality Management

1) Quality Oriented Management
The mission and vision should be such that balance the need of both company and customers. Management should inspire and
motivate the entire work force. Management must be as role model in ethical behaviour, communication and in coaching i.e. role
model in communication there should be open communication with both customer and employees.
2) Focus on Customer
Customer consider as most important asset of an organization. Consumer buy product and if they are satisfied will purchased more,
in turn the organization will more profitable and can compete over market. Thus an organization must define all its process and
function with customer point of view.
3) Involving entire work force
The work force should consider as internal customer and should be satisfy their basic needs which include:
i) Safety. Job security, communicating centres.
ii) A satisfy employee will work his best for the attainment of organization goal.
iii) Another way to involve the employees is employee's empowerment.
iv) Employee empowerment simply is the individual responsibility for decision making organization.
4) Force Continuous Improvement
Continuous improvement means bringing perfection in all organization function and process Ways through which improvement
can be made:
i) Dissatisfaction with current level of performance.
ii) Eliminating waste when it occurs through rework.
iii) Organization management improvement can play a vital role such that break down the complex process into sub process and
them improving them.
5) Supplier Partnership
A supplier is considered as partner because:
i)Need of trust supplier that supplies the quality material.
ii) Principles of customer and supplier relation.
iii) Mutual responsibility for quality material.
iv) Both should independent from each other.
v)Contract on Quality, quantity, price of material.
vi)All transaction should in the best fever of end user.
6) Measuring performance
Measuring performance means judging what have been planed either achieved or not. Objective behind performance management:
i) Indicate the process gain or loss.
ii) Compare the goal with what been achieved.
iii) Determine what process needs to improve.
iv) Determine the overall performance of the organization.

Advantages of Total Quality Management

1) Cost reduction: When applied consistently over time, TQM can reduce costs throughout an organization, especially in the areas
of scrap, rework, field service, and warranty cost reduction.
2) Customer satisfaction: Since the company has better products and services, and its interactions with customers are relatively
error-free, there should be fewer customer complaints.
3) Defect reduction: TQM has a strong emphasis on improving quality within a process, rather than inspecting quality into a
process. This not only reduces the time needed to fix errors, but makes it less necessary to employ a team of quality assurance
personnel.
4) Morale: The ongoing and proven success of TQM and in particular the participation of employees in that success can lead to a
noticeable improvement in employee morale, which in turn reduces employee turnover.
Disadvantages of Total Quality Management
1)Workers may feel that their jobs or occupations within the company are at risk under a comprehensive TQM program, and as a
result, they may be slow or resistant to making the necessary changes for the TQM program to work properly.
2) Skilled workers may be lost as they decide to leave because of their unease at the direction that things are headed within the
company, or they may not implement things properly, causing increased costs.
3) Initial introduction costs- training workers and disrupting current production whilst being implemented.
4) Benefits may not be seen for several years.

Talent Management
Talent management is the systematic process of planning, decision making, organizing, leading, motivation and controlling the
natural aptitude and inner quality of potential human resources to match the position of an organization for achieving long-term
business objectives.
Definitions of Talent Management
According to M. Armstrong, "Talent management is the processes of ensuring that talented people are attracted, retained,
motivated and developed in line with the needs of the organization.”

Objectives of Talent Management

(1) To plan for the overall goals of organization: Planning aligns your talent management model in line with the overall goals of
your organization. Only with the correct planning can you ensure that you seek talent with the right skills and experience. In
addition, it assesses current employees to see what is working well for the company. For instance, if employees with certain
characteristics tend to stay at the organization for longer, you should plan to hire more workers like them.
(II) To attract the talent human resources: It is not always as simple as when one person leaves the company, you start a search
for someone else to fill the role. For instance, you needs may change or employees may take on new responsibilities. Talent
management ensures that you always have sufficient staff to carry out all your operations and prevent heavy workloads that could
cause demotivation. The right strategy will attract just the kind of workers you want at your business. Such hires will be driven,
skilled, and seeking to advance within the company.
(III) To develop the workers' skills and knowledge: The development part of the model involves taking steps to help talent grow
within the company. It should be aligned with the employee development plan and includes identifying roles where particular
employees could move to in the future as well as considering how to expand workers' skills and knowledge fulfill new challenges
facing your organization.
(IV) To retain the highly qualified people: Another objective of talent management is to keep people at your company for
longer. Employees need to continue feeling that the company is an enjoyable, meaningful place to work. Through training and
other types of engagement employees have the chance to create a career without leaving the company. You may achieve this by
focusing on compensation (monetary and otherwise) as well as company culture.
(v) Transitioning: After hiring and developing their skills, you need to plan for employees transitions. Your aim at this stage is to
keep their knowledge within the company this is called knowledge management. You need to have a plan in place to promote
employees or move them to another role, department, or office. If a worker does decide to leave, you need to know why.

Scope of Talent Management

Talent management is a constant process that involves attracting and retaining high-quality employees, developing their skills, and
continuously motivating them to improve their performance. Scope of Talent Management can be summarized as follows:
1. Talent sourcing: Organizations and businesses need people for different roles. This need is met through recruitment process for
which this new term of talent sourcing is used. In fact talent sourcing is an extension of recruitment function. The traditional
methods of recruitment like advertising are still being used but now more and more organizations are willing to recruit people with
right profile through referrals, sourcing from social media platforms etc.
2. Talent Development: Under talent management there is strong focus on talent development. Every progressive organization
makes substantial investment in equipping its people with required knowledge, skills and aptitude. This investment is in forms of
money, time and efforts. Various methods are used for the purpose of talent development. Training is most common of these.
Depending on specific needs, organizations provide product, process and behavioural training to their people. Coaching and
mentoring are other tools used for talent development.
3. Succession Planning: Generally organizations have to last longer than people. Roles in organizations stay even though people
move. After attaining a certain age people have to superannuate. In addition organizations have to plan for contingencies when
sudden vacancies occur due to unexpected departures like deaths and attrition of employees. Succession planning is the strategy to
ensure availability of suitable talent whenever the need arises. Under this, organizations groom people for higher responsibilities
and also for new roles that may emerge in future.
4. Employee Engagement: To get best out of their people organizations have to create an enabling environment. Such an
environment is employee friendly and encouraging. Employee engagement activities are aimed at improving workplace design,
help employees find meaning in their work, make them more attached to their work and enhance their commitment to organization.
5. Compensation and benefits: This function of talent management deals with salaries allowances, other reimbursements and
payouts to employees. In case of private sector jobs now the trend is to negotiate salary for almost every employee hired.
Organizations calculate cost to company and accordingly offer financial package which may differ for different employees hired
for the same role or position. Also in many cases the pay is divided into fixed and variable pay. The quantum and periodicity of
increments also varies from case to case. The new age employee comes with different expectations when it comes to work
conditions and pay. Accordingly organizations are becoming more flexible in such matters with the purpose of attracting and
retaining right talent. Permitting employees to work from home is an example of this.
6. Performance review and management: Employee performance review has been a part of HR process since decades. Now
organizations are putting in substantial efforts to make it more realistic, objective and scientific. In many organizations the
appraisal process participative and the focus is not only to evaluate the performance but also to understand the potential an
employee may have. With such understanding it becomes easier for organizations to place employees in roles, positions and
functions where they are likely contribute most.
7. Social media presence: Now most organizations are keen to establish their strong social media presence and build a positive
employer brand. Employees keep posting at social media channels, their opinion about employer companies with both their
positive and negative work experiences Companies also are curious to learn about such comments which come to them as feedback
and help them modify their talent management practices where considered necessary.
8. HR Analytics: This is the most recent function added to talent management. It is also known as talent analytics. Under analytics
we use data to draw conclusions and make decisions HR departments have plethora of data pertaining to past and present
employees. Through data analytics predictions can be made for future trends and requirements. For example analytics can help in
knowing the additional headcount required when business is expected to grow at a particular rate, which employees are more likely
to quit the job and if there are some differences in performance indicators of candidates recruited from various campuses. In older,
long standing big organizations you may find exclusive departments for Transfer & Placements, Promotions, Industrial Relations
etc. under HR function. These also form part of talent management.