MANAGEMENT CONCEPTS AND

ORGANISATIONALBEHAVIOUR

KMBN-101
UNIT -2
ORGANIZING AND STAFFING

Organisation- Organization is an instrument for achieving organizational goals.

It is a process of combining and inter-relating in a sequence the various organs of a
system or of an institution. The purpose of grouping these organs /parts is to
channelize all the resources towards the achievement of the strategies of the
company.

Definitions-
Louis Allen- “Organization is the process of identifying and grouping work to be
performed, defining and delegating responsibility and authority and establishing
relationships for the purpose of enabling people to work most effectively together in
accomplishing objectives.”

Koontz and O’Donnell- ‘The establishment of authority relationships with provision

for co-ordination between them, both vertically and horizontally in the enterprise
structure.”

Spriegel has given a wide definition of the organization. He has described it as the
relationship among persons, factors in the enterprise. All factors of production are
coordinated in order to achieve Organizational objectives.

Characteristics of an organisation:
➢ A purpose, goal or goals are the task of planning.
➢ A clear concept of the major duties or activities required to achieve the
purpose.
➢ Classification of activities into jobs.
➢ Establishment the relationship between the jobs in the order to ensure co-
ordination.

Organization Structure
An organizational structure is a system that outlines how certain activities are
directed in order to achieve the goals of an organization. These activities can include
rules, roles, and responsibilities. The organizational structure also determines how
information flows between levels within the company.

There are generally two types of organization-

1. Vertical/ tall organizations
2. Horizontal / flat organizations

Types of Organizational Structures

Types of common organizational structures are implemented in the real world.
1. Line Organisation:

Line organisation is the simplest and oldest form of organisation structure. It is called
as military or departmental or scalar type of organization. Under this system,
authority flows directly and vertically from the top of the managerial hierarchy ‘down
to different levels of managers and subordinates and down to the operative level of
workers. Line organisation clearly identifies authority, responsibility and
accountability at each level. The personnel in Line organization are directly
involved in achieving the objectives of the organization.

2. Line and Staff Organization:

This type of organization structure is in large enterprises. The functional specialists
are added to the line in line and staff organization. Staff is basically advisory in
nature and usually does not possess any command authority over line managers.
Allen has defined line and staff organization as follows.
“Line functions are those which have direct responsibility for accomplishing the
objectives of the enterprises and staff refers to those elements of the organization
that help the line to work most effectively in accomplishing the primary objectives of
the enterprises.”
3. Project Organisation:
This organisational structure are temporarily formed for specific projects for a
specific period of time, for the project of achieving the goal of developing new
product, the specialists from different functional departments such as production,
engineering, quality control, marketing research etc., will be drawn to work together.
These specialists go back to their respective duties as soon as the project is
completed.

4. Matrix Organisation:
According to Stanley Davis and Paul Lawrence matrix organisation is “any
organisation that employs a multiple command system that includes not only the
multiple command structure, but also related support mechanism and an associated
organisational culture and behaviour pattern.”

A matrix organisation, also referred to as the “multiple command system” has two
chains of command. One chain of command is functional in which the flow of
authority is vertical.
 DECENTRALISATION

Decentralization is a systematic delegation of authority at all levels of

management and in all of the organization. In a decentralization concern, authority in
retained by the top management for taking major decisions and framing policies
concerning the whole concern. Rest of the authority may be delegated to the middle
level and lower level of management.
The degree of centralization and decentralization will depend upon the amount of
authority delegated to the lowest level.
According to Allen- “Decentralization refers to the systematic effort to delegate to
the lowest level of authority except that which can be controlled and exercised at
central points.
Decentralization is not the same as delegation. In fact, decentralization is all
extension of delegation. Decentralization pattern is wider is scope and the
authorities are diffused to the lowest most level of management.
Delegation of authority is a complete process and takes place from one person to
another. While decentralization is complete only when fullest possible delegation has
taken place.

Implications of Decentralization

1. There is fewer burdens on the Chief Executive as in the case of

centralization.
2. In decentralization, the subordinates get a chance to decide and act
independently which develops skills and capabilities.
3. In decentralization, diversification and horizontal can be easily implanted.
4. In decentralization, concern diversification of activities can place effectively
since there is more scope for creating new departments. Therefore,
diversification growth is of a degree.
 5. In decentralization structure, operations can be coordinated at divisional level
which is not possible in the centralization set up.
6. In the case of decentralization structure, there is greater motivation and
morale of the employees since they get more independence to act and
decide.
7. In a decentralization structure, co-ordination to some extent is difficult to
maintain as there are lot many department divisions and authority is
delegated to maximum possible extent, i.e., to the bottom most level
delegation reaches. Centralization and decentralization are the categories by
which the pattern of authority relationships became clear. The degree of
centralization and de-centralization can be affected by many factors like
nature of operation, volume of profits, number of departments, size of a
concern, etc. The larger the size of a concern, a decentralization set up is
suitable in it.

STAFFING
The managerial function of staffing involves manning the organization structure
through proper and effective selection, appraisal and development of the personnel’s
to fill the roles assigned to the employers/workforce.
According to Theo Haimann, “Staffing pertains to recruitment, selection,
development and compensation of subordinates.”
Concepts:

1. Staffing is an important managerial function- Staffing function is the most

important managerial act along with planning, organizing, directing and
controlling. The operations of these four functions depend upon the
manpower which is available through staffing function.
2. Staffing is a pervasive activity- As staffing function is carried out by all
mangers and in all types of concerns where business activities are carried
out.
3. Staffing is a continuous activity- This is because staffing function continues
throughout the life of an organization due to the transfers and promotions that
take place.
4. The basis of staffing function is efficient management of personnel’s-
Human resources can be efficiently managed by a system or proper
procedure, that is, recruitment, selection, placement, training and
development, providing remuneration, etc.
5. Staffing helps in placing right men at the right job- It can be done
effectively through proper recruitment procedures and then finally selecting
the most suitable candidate as per the job requirements.
6. Staffing is performed by all managers depending upon the nature of
business, size of the company, qualifications and skills of managers, etc. In
small companies, the top management generally performs this function. In
medium and small scale enterprise, it is performed especially by the
personnel department of that concern.

Nature of Staffing
Staffing is an integral part of human resource management. It facilitates procurement
and placement of right people on the right jobs.
The nature of staffing function is discussed below:
(i) People Centred- Staffing is people centred and is relevant in all types of
organizations. It is concerned with all categories of personnel from top to bottom of
the organization.
(ii) Responsibility of Every Manager- Staffing is a basic function of management.
Every manager is continuously engaged in performing the staffing function. He is
actively associated with recruitment, selection, training and appraisal of his
subordinates. Thus, staffing is a pervasive function of management and is performed
by the managers at all levels.
It is the duty of every manager to perform the staffing activities such as selection,
training, performance appraisal and counselling of employees
(iii) Human Skills- Staffing function is concerned with training and development of
human resources. Every manager should use human relations skill in providing
guidance and training to the subordinates. Human relations skills are also required in
performance appraisal, transfer and promotion of subordinates
(iv) Continuous Function- Staffing function is to be performed continuously. It is
equally important in the established organizations and the new organizations. In a
new organization, there has to be recruitment, selection and training of personnel. In
a running organization, every manager is engaged in various staffing activities.

Importance of Staffing
It is most importance for the organization that right kinds of people are employed.
They should be given adequate training so that wastage is minimum. They must also
be induced to show higher productivity and quality by offering them incentives.
In fact, effective performance of the staff function is necessary to realize the
following benefits:
1. Efficient Performance of Other Functions-Staffing is the key to the efficient
performance of other functions of management. If an organization does not
have competent personnel, it can’t perform planning, organization and control
functions properly.
2. Effective Use of Technology and Other Resources- It is the human factor
that is instrumental in the effective utilization of latest technology, capital,
material, etc. the management can ensure right kinds of personnel by
performing the staffing function.
3. Optimum Utilization of Human Resources- The wage bill of big concerns is
quite high. They also spend money on recruitment, selection, training and
development of employees. In order to get the optimum output from the
personnel, the staffing function should be performed in an efficient manner.
4. Development of Human Capital- The management is required to determine
the manpower requirements well in advance. It has also to train and develop
the existing personnel for career advancement. This will meet the
requirements of the company in future.
5. Motivation of Human Resources- The behaviour of individuals is shaped by
many factors such as education level, needs, socio-cultural factors, etc. that is
why, the human aspect of organization has become very important. The
workers can be motivated through financial and non-financial incentives.
 6. Building Higher Morale- Right type of climate should be created for the
workers to contribute to the achievement of the organizational objectives. By
performing the staffing function effectively, management can show the
significance it attaches to the personnel working in the enterprise. This will
increase the morale of the employees.

RECRUITMENT AND SELECTION

Recruitment and Selection is an important operation in HRM, designed to maximize
employee strength in order to meet the employer’s strategic goals and objectives. In
short, Recruitment and Selection is the process of sourcing, screening, shortlisting
and selecting the right candidates for the filling the required vacant positions.

The Scope of Recruitment and Selection

The scope of Recruitment and Selection is very wide and it consists of a variety of
operations. Resources are considered as most important asset to any organization.
Hence, hiring right resources is the most important aspect of Recruitment. Every
company has its own pattern of recruitment as per their recruitment policies and
procedures.
The scope of Recruitment and Selection includes the following operations:

• Dealing with the excess or shortage of resources

• Preparing the Recruitment policy for different categories of employees
• Analyzing the recruitment policies, processes, and procedures of the
organization
• Identifying the areas, where there could be a scope of improvement
• Streamlining the hiring process with suitable recommendations
• Choosing the best suitable process of recruitment for effective hiring of
resources

Placement
Placement is a process of assigning a specific job to each of the selected
candidates. It involves assigning a specific rank and responsibility to an individual. It
implies matching the requirements of a job with the qualifications of the candidate.
Significance of placement is as follows:

• It improves employee morale.

• It helps in reducing employee turnover.
• It helps in reducing absenteeism.
• It helps in reducing accident rates.
• It avoids misfit between the candidate and the job.
• It helps the candidate to work as per the predetermined objectives of the
organization.

TRAINING AND DEVELOPMENT

Training and development is vital part of the human resource development. It is
assuming ever important role in wake of the advancement of technology which has
resulted in ever increasing competition, rise in customer’s expectation of quality and
service and a subsequent need to lower costs. It is also become more important
globally in order to prepare workers for new jobs. In the current write up, we will
focus more on the emerging need of training and development, its implications upon
individuals and the employers.

The need for Training and Development

Training is also necessary for the individual development and progress of the
employee, which motivates him to work for a certain organization apart from just
money. We also require training update employees of the market trends, the change
in the employment policies and other things.
The following are the two biggest factors that contribute to the increased need to
training and development in organizations:

1. Change: It is one of the biggest factors that contribute to the need of training
and development. There is in fact a direct relationship between the two.
Change leads to the need for training and development leads to individual and
organizational change, and the cycle goes on and on.
2. Development: It is again one the strong reasons for training and
development becoming all the more important. People who work with
organizations seek more than just employment out of their work; they look at
holistic development of self. Spirituality and self awareness. People seek
happiness at jobs which may not be possible unless an individual is aware of
the self.

Designing and Developing Effective Training Programs

Training programs play a crucial role in enhancing employee’s capabilities,
upgrading his existing knowledge and help him acquire new skills and learnings.
Effective training programs help employees to cope up with changes, think out of the
box, survive the cut throat competition with a smile and contribute effectively to the
success of organization.
Training programs need to be designed, keeping in mind the needs and
requirements of employees. Training modules ought to be precise, crisp and
informative.
Training programs should not be designed just for the sake of it. Find out whether
your employees really need any kind of training or it is being conducted just as a
mere formality?

Designing and Developing Effective Training Modules

Know Your Employees: Know your employees well before you begin designing
training programs for them. Sit with them and try to find out where all they need
assistance. It is essential for managers to know the strengths and weaknesses of all
his team members. Design your training program accordingly.

Dividing Employees into Groups: One cannot design similar training programs for
each and every employee. Divide employees into groups where employees who
need to learn the same set of skills can be put into one group. You can also group
employees as per their age, work experience, departments, functional areas and so
on.
Preparing the Information: The content needs to be informative but interesting.
Include diagrams, graphs, flow charts, pictures to make your training program
interesting so that individuals do not lose interest in the middle of the session. The
information needs to be relevant and authentic. Teach them what all is necessary
and would help them in their current as well as future assignments. Prepare your
training program keeping your audience in mind.

Presenting the Information: Decide how would you like to present your
information? PowerPoint or word helps you design your training program. It is
absolutely up to the trainer to decide the software which he/she would like to use.
Make sure there are no spelling errors. Read your presentation twice or thrice and
find out whether it has covered entire information you wish to convey or not?
Highlight important information. Make your presentation in bullets.

Delivering Training Programs: Select your trainers carefully. Remember, the right
trainer makes all the difference. Training programs should not be a mere one way
communication. As a trainer, you need to understand that you are speaking not only
for the individuals sitting in the front row but also for employees sitting at the back.
Be loud and clear. Do not speak too fast. The trainer needs to involve his/her
audience and encourage employees to come up with questions and doubts.
Employees should not attend training programs to mark their attendance. Try to gain
as much as you can. Do not sit with a closed mind.

DIRECTING AND CONTROLLING

Directing is one of the important functions of management and is the art and process
of getting things done. While other functions like planning, organizing and staffing
are merely preparations for doing the work; the directing function actually starts the
work.
Directing refers to a process or technique of instructing, guiding, inspiring,
counseling, overseeing and leading people towards the accomplishment of
organizational goals. It is a continuous managerial process that goes on throughout
the life of the organization.

Directing consists of the following four sub-functions:

1. Communication or issuing of orders and instructions to subordinates. A manager
has to instruct the subordinates what to do, how to do it and when to do it.
2. Guiding, energizing and leading the subordinates to perform the work
systematically and also building up among workers confidence and zeal in the work
to be performed.
3. Inspiring the subordinated to do work with interest and enthusiasm for the
accomplishment of the enterprise's objectives.
4. Exercising supervision over the subordinates to ensure that the work done by
them is in conformity with the objectives that are determined

8 Most Important Principles of Directing

(1) Principle of Maximum Individual Contribution:
According to this principle, management should adopt that directing policy through
which the employees get motivated and give their maximum individual contribution
for the achievement of organizational objective.
(2) Principle of Harmony of Objectives:
According to this principle, there must be full coordination between organizational
and individual objectives. Employees work in an organization with an objective to get
better remuneration, promotion, etc. On the other hand, organizational goal can be to
earn more profits and to increase market share. Sometimes it is seen that there is a
conflict between the objectives of both the parties, e.g., organization

(3) Principle of Unity of Command:

According to this principle, a subordinate should get directions from one officer at a
time. If the subordinate gets directions from more than one officer, the subordinate
will be unable to priorities his work.

(4) Principle of Appropriateness of Direction Technique:

According to this principle, appropriate direction techniques should be used, e.g., to
supervise effectively, to provide able leadership, to adopt free communication and to
motivate through right medium.

(5) Principle of Managerial Communication:

According to this principle, it should be monitored by the management that the
subordinates get the same meaning for what has been said. This simplifies the job of
the subordinates and they need not go to the managers repeatedly for enquiring.

(6) Principle of Use of Informal Organization:

According to this principle, there must be a free flow of information between the
seniors and the subordinates. The success of direction depends upon effective
exchange of information to a great extent. Information should be given both through
formal and informal mediums. Special attention should be given to the informal
organization. This strengthens the formal organization.

(7) Principle of Leadership:

According to this principle, while giving directions to the subordinates a good
leadership must be provided by the managers. By this, subordinates get influenced
by the managers. In this situation, subordinates act according to the wish of the
managers.

(8) Principle of Follow Through:

According to this principle, it must be monitored by management as to what extent
the policies framed and issued directions have been enforced. Thus, it must be seen
whether the employees are following the management or not.

Direction has following elements:

(i) Supervision– implies overseeing the work of subordinates by their superiors. It is
the act of watching & directing work & workers.
(ii) 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.
(iii) Leadership– may be defined as a process by which manager guides and
influences the work of subordinates in desired direction.
(iv) Communications– is the process of passing information, experience, opinion
etc from one person to another. It is a bridge of understanding.
Controlling
Controlling is one of the important functions of a manager. In order to seek planned
results from the subordinates, a manager needs to exercise effective control over the
activities of the subordinates. In other words, the meaning of controlling function can
be defined as ensuring that activities in an organization are performed as per the
plans. Controlling also ensures that an organization’s resources are being used
effectively & efficiently for the achievement of predetermined goals.

• Controlling is a goal-oriented function.

• It is a primary function of every manager.
• Controlling the function of a manager is a pervasive function

Importance of Controlling
A good control system helps an organization in the following ways:

1. Accomplishing Organizational Goals- The controlling function is an

accomplishment of measures that further makes progress towards the organizational
goals & brings to light the deviations, & indicates corrective action. Therefore it helps
in guiding the organizational goals which can be achieved by performing a controlling
function.

2. Judging Accuracy of Standards- A good control system enables management

to verify whether the standards set are accurate & objective. The efficient control
system also helps in keeping careful and progress check on the changes which help
in taking the major place in the organization & in the environment and also helps to
review & revise the standards in light of such changes.

3. Making Efficient use of Resources- Another important function of controlling is

that in this, each activity is performed in such manner so an in accordance with
predetermined standards & norms so as to ensure that the resources are used in the
most effective & efficient manner for the further availability of resources.

4. Improving Employee Motivation- Another important function is that controlling

help in accommodating a good control system which ensures that each employee
knows well in advance what they expect & what are the standards of performance on
the basis of which they will be appraised. Therefore it helps in motivating and
increasing their potential so to make them & helps them to give better performance.

5. Ensuring Order & Discipline- Controlling creates an atmosphere of order &

discipline in the organization which helps to minimize dishonest behaviour on the
part of the employees. It keeps a close check on the activities of employees and the
company can be able to track and find out the dishonest employees by
using computer monitoring as a part of their control system.

6. Facilitating Coordination in Action- The last important function of controlling is

that each department & employee is governed by such pre-determined standards
and goals which are well versed and coordinated with one another. This ensures that
overall organizational objectives are accomplished in an overall manner.
 Coordination: The Essence of Management:
Coordination brings unity of action and integrates different activities of organization.

Coordination is considered as the essence of management because of following

reasons
1. Coordination is needed to perform all the functions of management:
(i) In planning coordination is required between main plan and supportive plans of
different departments.
(ii) In organizing coordination is required between different resources of an
organization and also between authority responsibility and accountability.
(iii) In staffing coordination is required between skill of a person and job assigned to
him, between efficiency and compensation etc.
(iv) In directing function coordination is required between superior and subordinates,
between orders, instructions, guidelines and suggestions etc.
(v) In controlling function coordination is required between standards and actual
performance.
2. Coordination is required at all the levels:
(i) Top level requires coordination to integrate all the activities of organization and
lead the efforts of all the individuals in one common direction.
(ii) Coordination is required at middle level to balance the activities of different
departments so that these can work as a part of one organization only.

(iii) Lower level requires coordination to integrate the activities of workers towards
achievement of organizational objectives.

3. Coordination is the most important function of an organization:

Any company which fails to coordinate its activities cannot survive and run
successfully for a long period of time. For example, Allwyn Company, established in
1942, was the first company to produce a double-decker bus. It was running
successfully as a leading electronic industry, especially in refrigeration industry. By
the end of 1980 the company faced the problem of coordination. There was lack of
balance and integration of different activities; as a result the company started facing
huge losses and by 1993 company had an accumulated loss of Rs. 168 crore.
Company failed to balance its departmental activities and product folios.

So in short we can say without coordination no company can work efficiently and
earn profit.

Need of coordination
(i) Growth in size: As organizations grow in size, the number of people in the
organization also increases. They may work for cross purposes. So, coordination is
needed to integrate their efforts and activities, i.e., to bring unity of action.

(ii) Functional differentiation: In an organization, there may be separate

departments of production, finance, marketing and human resources. All
departments have their own objectives, policies, strategies, etc. So, there may arise
a conflict between them. For example, the marketing department’s objective may be
to increase sales by 10 percent by offering discounts. But the financial department
may not approve such discounts as it means loss of revenue. Therefore,
coordination is necessary to link the activities of various departments and to avoid
conflicts among them.
(iii) Specialization: In modern organizations, there is a high degree of
specialization, arising out of the complexities of modern technology and the diversity
of tasks to be performed. So, organizations employ a number of specialists, who
think that they only are members, which leads to conflict between them. Therefore,
coordination is required to avoid conflict between the specialists and the other
members.
Controlling Process in Business Management
1) Setting Performance Standards- The first step in the process of controlling is
concerned with setting performance standards. These standards are the basis for
measuring the actual performance.
Thus, standards act as a lighthouse that warns & guides the ships at sea. Standards
are the benchmarks towards which efforts of entire organization are directed. These
standards can be expressed both in quantitative and qualitative terms.
2) Measurement of Actual Performance
Once the standards have been determined, the next step is to measure the actual
performance. The various techniques for measuring are sample checking,
performance reports, personal observation etc. However, in order to facilitate easy
comparison, the performance should be measured on same basis that the standards
have.
Following are some of the ways for measuring performance:
(a) Superior prepares a report regarding the performance of an employee.
(b) Various ratios like gross profit ratio, debtor turnover ratio, return on investment,
current ratio etc are calculated at periodic intervals to measure company’s
performance.
(c) Progress made in areas like marketing can be measured by considering the
number of units, increase in market share etc.
(d) In small organisations, each unit produced can be checked personally to ensure
the quality standards.
(e) In large organisation, the technique of sample checking is used. Under this
technique, some pieces are checked at random for quality specifications.

3. Comparing Actual Performance with Standards- This step involves

comparing the actual performance with standards laid down in order to find the
deviations. For example, performance of a salesman in terms of unit sold in a
week can be easily measured against the standard output for the week.

4. Analysing Deviations- Some deviations are possible in all the activities.

However, the deviation in the important areas of business needs to be corrected
more urgently as compared to deviation in insignificant areas. Management
should use critical point control and management by exception in such areas.
5. Taking Corrective Action- The last step in the process of controlling involves
taking corrective action. If the deviations are within acceptable limits, no
corrective measure is required. However, if the deviations exceed acceptable
limits, they should be immediately brought to the notice of the management for
taking corrective measures, especially in the important areas.

Techniques of Controlling

1. Direct Supervision and Observation-'Direct Supervision and Observation' is the

oldest technique of controlling. The supervisor himself observes the employees and
their work. This brings him in direct contact with the workers. So, many problems are
solved during supervision. The supervisor gets first hand information, and he has
better understanding with the workers. This technique is most suitable for a small-
sized business
2. Financial Statements- All business organisations prepare Profit and Loss
Account. It gives a summary of the income and expenses for a specified period.
They also prepare Balance Sheet, which shows the financial position of the
organisation at the end of the specified period. Financial statements are used to
control the organisation. The figures of the current year can be compared with the
previous year's figures.
3. Budgetary Control- A budget is a planning and controlling device. Budgetary
control is a technique of managerial control through budgets. It is the essence of
financial control. Budgetary control is done for all aspects of a business such as
income, expenditure, production, capital and revenue. Budgetary control is done by
the budget committee.

4. Break Even Analysis- Break Even Analysis or Break Even Point is the point of no
profit, no loss. The Break-even analysis acts as a control device. It helps to find out
the company's performance. So the company can take collective action to improve
its performance in the future. Break-even analysis is a simple control tool.

5. Return on Investment (ROI)- Investment consists of fixed assets and working

capital used in business. Profit on the investment is a reward for risk taking. If the
ROI is high then the financial performance of a business is good and vice-versa.
ROI is a tool to improve financial performance. It helps the business to compare its
present performance with that of previous years' performance. It helps to conduct
inter-firm comparisons. It also shows the areas where corrective actions are needed.

6. Management by Objectives (MBO)- MBO facilitates planning and control. It must

fulfill following requirements:-
1. Objectives for individuals are jointly fixed by the superior and the subordinate.
2. Periodic evaluation and regular feedback to evaluate individual performance.
3. Achievement of objectives brings rewards to individuals.

7. Management Audit- Management Audit is an evaluation of the management as a

whole. It critically examines the full management process, i.e. planning, organizing,
directing, and controlling. It finds out the efficiency of the management. To check the
efficiency of the management, the company's plans, objectives, policies, procedures,
personnel relations and systems of control are examined very carefully.
Management auditing is conducted by a team of experts. They collect data from past
records, members of management, clients and employees. The data is analysed and
conclusions are drawn about managerial performance and efficiency.

8. Management Information System (MIS) -In order to control the organization

properly the management needs accurate information. They need information about
the internal working of the organization and also about the external environment.
Information is collected continuously to identify problems and find out solutions. MIS
collects data, processes it and provides it to the managers. MIS may be manual or
computerized. With MIS, managers can delegate authority to subordinates without
losing control.
9. PERT and CPM Techniques- Programme Evaluation and Review Technique
(PERT) and Critical Path Method (CPM) techniques were developed in USA in the
late 50's.
CPM / PERT can be used to minimize the total time or the total cost required to
perform the total operations.
10. Self-Control- Self-Control means self-directed control. A person is given
freedom to set his own targets, evaluate his own performance and take corrective
measures as and when required. Self-control is especially required for top level
managers because they do not like external control.

Management by Exception

Management by exception is a concept that managers use to focus on key areas of

business performance instead of looking at the business as a whole. Managers only
look at the areas that have large variances from the standard or budgeted
projections. Every other process that is running smoothly and closely to the standard
goals is ignored. These variances could be good or bad. The budget on one project
might have been way over and the budget of another project might be way under
budget. A manager who uses the management by exception philosophy will take a
look at both projects to determine why the large variances exist and how they can be
minimized.
Management by exception is a way for managers to effective save time and more
efficiently run their department or business. Management by exception usually is
most effective when managers have control over the problem areas. That way they
can change processes to improve the company.

Advantages of Management by Exception:

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

2. Concentrated efforts are possible, as this system enables the manager to
decide when and where he should pay his attention. It identifies crisis and
critical problems.
3. Lesser number of decisions is required to be taken, which enables the
manager to go into detail.
4. This enables to increase span of control and increase the activities for a
manager.
5. Use of past trends, history and available data can be made fully.
6. It alarms the management about the good opportunities as well as difficulties.
7. Qualitative and quantitative yardsticks are provided for judging the current
position.
8. It prevents management from over managing.

How Management by Exception works

Management by exception consists of four steps:

1. Setting the objectives and defining what the norm should be

2. Assessing performance to see whether performance is on track
3. Analyzing work or records to determine where performance deviates from
objectives
4. Investigating and solving the exceptions to the norm