Department of Human Resource Management

Faculty of Management studies and Commerce

University of Jaffna

Course Title: MC9010 - Management Practices & Case Studies

Chapter Title: Introduction to Management Hand out No: 01
Prepared by: Ms.N.Jasintha Issued on: 06.03.2020

Intended Learning Outcome

After completing this chapter successfully, you should be able to:

 Define Organization and Management.

 Describe the four management functions, roles, skills and type of managers.
 Describe the characteristics of Management.
 Explain the challenges faced by the modern-day managers.

INTRODUCTION TO MANAGEMENT

1.1.INTRODUCTION

Since time immemorial, managing has been the most imperative activity as the society has
continuously relied on group efforts. Moreover, it has always been crucial to ensure the
coordination of individual efforts right from the time people engaged socially. Well-coordinated
efforts are pivotal for achieving the aims and objectives that cannot be realized individually.

As organized groups have become enormous over the years, the role of management has also
been increasing in importance and complexity. Organizations nowadays have become more
global; employee groups are more diverse; and organization structures do not contain large
hierarchies rather focus on a collaborative approach. To tackle these new challenges,
Organizations are adopting new methods and philosophies of management. In this chapter, let us
study the concept, meaning, roles, skills and levels of management and managers in detail.

1.2.DEFINITION OF ORGANIZATION, BUSINESS AND BUSINESS ORGANIZATION

What is meant by Organization?

A group of people who work together in a structured way for a shared purpose
(Cambridge Advanced Learners Dictionary)

An organization is a two or more people who work together in a structured way to achieve a
specific goal or set of goals.
(Stoner and Freeman,2009)
What is meant by Business?
A business is any economic activity carried out to satisfy human needs and wants.

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What is meant by Business Organization?
A business organization is a collection of individuals and deliberately structured entity
which produces goods and/or services utilizing limited resources to achieve its specific goals
and objectives.
Apply to all organizations: for profit, non-profit and not-for -profit.

1.3.DEFINITION – MANAGEMENT

Management has drawn concepts and principles from a number of disciplines such as Sociology,
Economics and Psychology and so on. The contributors from each of these groups have viewed
management differently. Therefore it becomes difficult to define management in a
comprehensive way and no definition of management has been universally accepted.

Many definitions were given by various contributors from different disciplines;

Mary Parker Follet (1868-1933)

Management is “the art of getting things done through people”.

Fayol,1930
Management is the process of planning, organizing, commanding, coordinating and controlling.

Daft,2012
Management is the attainment of organizational goals in an effective and efficient manner
through planning, organizing, leading and controlling organizational resources.

Hence, Management can be broadly defined as:

“A process of planning, organizing, leading and controlling the limited resources efficiently and
effectively to achieve predetermined goals and objectives in an ever changing business
environment.”

1.4.CORE CONCEPTS OF MANAGEMENT

1. Resources
o Man
o Machine
o Material 5Ms
o Method
o Money

2. Efficiency
o The degree to which limited resources are optimally used.
3. Effectiveness

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 o The degree to which the intended results are achieved.

Efficiency: Refers to getting the most output from the least amount of inputs. Because managers
deal with scarce inputs; including resources such as Man, Machine, Material, Method and
Money. They are concerned with the efficient use of those resources. It’s often referred to as
“doing things right”. That is, not wasting resources.

Effectiveness: Management is also concerned with being effective, completing activities so that
organizational goals are attained. Effectiveness is often described as “doing the right things”.
That is, doing those work activities that will help the organization reach its goals.

4. Productivity
o Productivity is the relationship between the output generated by a production or
service system and the input provided to create this output. In another way we can
say that productivity is the summation of Efficiency and Effectiveness.
o Productivity = Output
Input

1.5.CHARACTERISTICS OF MANAGEMENT

The critical analysis of the above definitions, the following characteristics of management
evolve.

1. Management is a continuous process

The process of management consists of planning, organizing, directing and controlling the
resources to ensure that resources are used to the best advantages of the organization. A single
function alone cannot produce the desired results. Management involves continuous planning,
organizing, directing and controlling.

2. Management is an art as well as science

 Management as a Science
Science is a body of knowledge pertaining to a specific field of study. It contains
theories, principles and facts.

 Management as an Art
Art implies the application of knowledge and skills to bring about the desired results.

Management is both a science as well as an art. Science (theory) and art (practice) are both
essential for the success of management.

3. Management aims at achieving predetermined objectives

All organizations have objectives that are laid down. Every managerial activity results in
achievement of these predetermined objectives.

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 4. Management is a factor of production
An enterprise produces goods or services using resources like land, labor, capital, machines etc.
These resources themselves cannot realize the organizations goals. The goals are achieved when
these are effectively coordinated by the management

5. Management is decision-making
Decision-making is selecting the best among alternative courses. The success or failure of an
organization depends upon the quality of decision. A manager must make a right decision at
right time.

6. Management is needed at all levels

The functions of planning, organizing, directing, controlling, decision-making are performed by
top level as well as lower level supervisors.

7. Management aims at maximum profit

The resources are properly utilized to maximize profit. Maximizing the profit is the economic
function of a manager.

1.6.IMPORTANCE OF MANAGERS TO THE ORGANIZATION

A manager is someone who coordinates and oversees the work of other people so that
organizational goals can be accomplished. There are several reasons we can list out for having a
manager in the organization. Here, three reasons are listed out for importance of managers.
1. Organizations need their managerial skills and abilities in uncertain, complex, and
chaotic times.
2. Managers are critical to getting things done in organizations.
3. Managers contribute to employee productivity and loyalty; the way employees are
managed can affect the organization’s financial performance; and managerial ability has
been shown to be important in creating organizational value.

1.7.LEVELS OF MANAGEMENT

Level of Management can be classified into three categories – Top Management, Middle
Management and Supervisory/Lower Level/ First-line management as shown in figure below

Board of Directors, Chairman, Chief

Top Executive

Department Heads, Divisional

Middle Heads, Section Heads

Lower Senior Supervisor, Front Line Supervisors

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Top level
Top level management determines goals and objectives. It performs overall planning,
organizing, staffing, directing and controlling. It integrates organization with environment,
balances the interest groups and is responsible for overall results.

Middle Level
Middle management stands between top management and supervisory management level.
Middle level management establishes programs for department and carries out functions for
achieving specific goals.

Lower Level/ First-Line Management

Supervisory management is concerned with efficiency in using resources of the organization. A
supervisor is an executor of policies and procedures making a series of decisions with well-
defined and specified premises.

1.8.MANAGERIAL SKILLS
Management is a challenging and complex task, and performing it effectively requires a variety
of skills. These skills are organized into three categories: conceptual, technical, and human.
They apply in varying degrees of importance to managers at all levels in an organization.

Conceptual skills
This refers to the ability to see the “big picture,” understand how the various parts of the
organization affect each other, and conceptualize how those parts can be organized to improve
the performance of the overall organization. In other words, conceptual skills are the foundation
for strategizing and organizing. Conceptual skills are most important to Top level managers.

Technical Skills
Technical skills enable managers to perform specific activities involving methods,
processes, or techniques. These skills include mastery of specific equipment or correctly
following procedures. Technical skills are most important to First line managers.

Human skills

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 Human skills refers that the managers need include the abilities to communicate,
persuade, manage conflict, motivate, coach, negotiate, and lead. Effective managers understand
the needs of their subordinates and act on this knowledge to improve employee well-being also.
Human skills are essential to all level managers equally.

1.9.MANAGEMENT FUNCTIONS

A function is a group of similar activities. Management functions can generally be classified into
four types;

1) Planning: Planning is the primary function of management. It is looking ahead and

preparing for the future. It determines in advance what should be done.
2) Organizing: Organizing is the distribution of work in group-wise or section-wise for
effective performance.
3) Leading: Leading is guiding and influencing the member of the organization to work
together with the interest of the organization.
4) Controlling: Control is the process of checking to determine whether or not proper
progress is being made towards the objectives and goals and acting if necessary to correct
any deviations.

1.10. ROLES OF MANAGEMENT

Henry Mintzberg’s observations and subsequent research indicate that diverse manager activities
can be organized into 10 roles. A role is a set of expectations for a manager’s behavior. The
following table provides examples of each of the roles. These roles are divided into three
conceptual categories:
1. Informational role: Informational roles describe the activities used to maintain and
develop an information network (managing by information).
2. Interpersonal role: Interpersonal roles pertain to relationships with others and are related
to the human skills (managing through people).
3. Decisional role: Decisional roles pertain to those events about which the manager must
make a choice and take action. These roles often require conceptual as well as human
skills (managing through action).

Category Role Activity

Conceptual Skills

Technical Skills

Top Level Manager

Human Skills

Middle Level Manager

First line/ Low Level Manager

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1. Informational Monitor  Seek and receive
information
 Scan periodicals and
reports
 Maintain personal contacts.
Disseminator  Forward information to
other organization
members
 Send memos and reports
 Make phone calls.
Spokesperson  Transmit information to
outsiders through speeches
reports and memos.
2. Interpersonal Figurehead  Perform ceremonial and
symbolic duties such as
greeting visitors, signing
legal documents.
Leader  Direct and motivate
subordinates.
 Train, counsel, and
communicate with
subordinates.
Liaison  Maintain information links
both inside and outside
organization.
 Use e-mail, phone calls,
and meetings.
3. Decisional Entrepreneur  Initiate improvement
projects.
 Identify new ideas.
 Delegate idea
responsibility to others.
Disturbance handler  Take corrective action
during disputes or crises.
 Resolve conflicts among
subordinates.
 Adapt to Environmental
crises.
Resource allocator  Decide who gets resources.
 Schedule, budget, set
priorities.
Negotiator  Represent department

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 during negotiation of union
contracts, sales, purchases,
budgets.
 Represent departmental
interests.
SOURCES: Adapted from Henry Mintzberg, The Nature of Managerial Work (New York: Harper & Row, 1973),
pp. 92_93; and Henry Mintzberg, “Managerial Work: Analysis from Observation,” Management Science 18 (1971):
B97_B110.

1.11. CHALLENGES FACED BY MODERN-DAY MANAGERS

 Managing global competition.
 Facing the competition through superior efficiency, quality, innovation, and
responsiveness.
 Increasing performance while being an ethical manager.
 Balancing the interests of different stakeholders.
(Stakeholders: A stakeholder is a party that has an interest in a company and can
either affect or be affected by the business. Eg: Owners, Employees, Customers,
Competitors, Suppliers, Government, Debtors, Creditors, Trade associations, Media,
Community and Etc.)
 Managing a diversified workforce.
 Adopting new technologies.
 Managing creativity, innovation and continuous change.

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 Department of Human Resource Management
Faculty of Management studies and Commerce
University of Jaffna

Course Title: MC9010 - Management Practices & Case Studies

Chapter Title: Planning Hand out No: 02
Prepared by: Ms.N.Jasintha Issued on: 12.03.2020

Intended Learning Outcome

After completing this chapter successfully, you should be able to:

 Define the term planning and discuss the nature of planning.

 Describe the types of planning Aspirations in an Organization.
 Describe the planning process.
 Discuss the characteristic of good plan, it’s important and type of planning.

PLANNING

1.1.DEFINITION
 “Planning is deciding in advance what to do, how to do it, when to do it and who is to
do it. It bridges the gap from where we are and to where we want to go. It is in essence the
exercise of foresight.”
o (Koontz and O’Donnel)
 “Planning is the function that determines in advance what should be done.” Planning
bridges the gap from where we are to where we want to go.”
o (Haimann)
Planning includes the selection of objectives, policies, procedures and programs from among
alternative. It is a Process of establishing Goals and Strategies.
Activities Involved in Planning
 Setting the goals & objectives
 Setting Strategies

Planning is a basic managerial function.

Under the management function; planning, organizing, leading and controlling, Planning is one
of the primary functions of management. This can be justified in the following manner.
 Planning precedes other functions of management.
 Planning involves selecting objectives or goals and the course of actions to achieve them:
o Provides the bridge to take us from where we are to where we want to go;
o Is a rational approach to achieving pre-selected objectives - based on innovation,
knowledge and purpose;
o Decision making in choosing the best from alternative courses of action and is
integral to planning;

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1.2.NATURE OF PLANNING
 Planning is goal-oriented
 Planning is a primary function
 Planning is all-pervasive
 Planning is a continuous process
 Planning is forward-looking
 Planning involves choice
 Planning is directed toward efficiency

1.3.TYPES OF ASPIRATIONS IN AN ORGANIZATION

Vision Mission Goals Objectives Target

Vision
Vision is the nonspecific directional and motivational guidance for the entire organization.
Top leaders or the common plan should have a clear mental picture an out the future context
about the company will operate in the long run.
“A mental image of what the future will or could be like.”
(Oxford dictionary)
Example:
Vision of University of Jaffna: Our vision is to be a leading centre of excellence in teaching,
learning, research and scholarship.

Mission
Mission means as an organization’s reason for being. It is concerned with scope or the
business
and what distinguishes this business from similar businesses. Mission reflects the culture and
values of top management. Mission defines the business in its scope and philosophy.

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Example:
Mission of University of Jaffna: Our mission is to be a leading centre of academic excellence in
producing intellectual, professionally competent and capable graduates by providing quality
teaching, learning, and carrying out research to meet the emerging needs of the national and
international community with special emphasis on the social, economical and cultural needs of
Northern Sri Lanka.

Goals
Goals are general guidelines that explain what you want to achieve in your community.
A goal is a desired result or outcome that a person or a system envisions, plans and commits to
achieve a personal or organizational desired end-point in some sort of assumed development.
Objectives
A specific result that a person or system aims to achieve within a time frame and with available
resources.
Objectives define strategies or implementation steps to attain the identified goals. Unlike
goals, objectives are specific, measurable, and have a defined completion date. They are more
specific and outline the “who, what, when, where, and how” of reaching the goals.
Objectives should be deal with “SMART” concept. SMART is the abbreviation of the following
concepts.
S- Specific
M- Measurable
A- Achievable
R- Relevant
T- Time bound

1.4.THE ORGANIZATIONAL PLANNING PROCESS

Step: 1 Develop the plan
 Mission
 Strategic goals
Step: 2 Translate the Plan
 Tactical objectives and plans
 Strategy map to align goals
 Contingency and scenario plans
 Intelligence teams
Step: 3 Plan Operations
 Operational goals and plans
 The measures and targets
 Crisis plans
Step 4 Execute the Plan
 Management by objectives (achieve organizational goals and individual goal)
 Performance dashboards (display organizational KPIs)
 single-use plans
 decentralized responsibility

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Step 5 Monitor and Learn
1.5.CHARACTERISTICS OF GOOD PLAN
 Must be realistic
 Must be implementable
 Must be cost effective
 Must be simple to understand
 Must be a clear description of the future direction

1.6.BENEFITS OF PLANNING
 Provide a sense of direction
 Prerequisite to successful growth
 Set up the organizational framework
 Helps delegation
 Helps motivate people
 Serves as a communication media
 Lays the basis for control
 Provides coordination
 Facilitates efficient use of resources.
 Reduces uncertainty by anticipating change

1.7.TYPES OF PLANNING
1.7.1. Strategic plan
 Strategic plans are designed with the entire organization in mind and begin with an
organization's mission.
 Top-level managers, such as CEOs or presidents, will design and execute strategic plans to
paint a picture of the desired future and long-term goals of the organization.
 Essentially, strategic plans look ahead to where the organization wants to be in three, five,
even ten years or more.
1.7.2. Tactical plans
 Tactical plans support strategic plans by translating them into specific plans relevant to a
distinct area of the organization.
 Tactical plans are concerned with the responsibility and functionality of lower-level
departments to fulfil their parts of the strategic plan. (Between one to two years scope)

1.7.3. Operational plans

 They are the plans that are made by frontline, or low-level, managers. All operational plans
are focused on the specific procedures and processes that occur within the lowest levels of the
organization.
 Managers must plan the routine task of the department. (Within one year scope)

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1.8 Planning for a turbulent environment
• Contingency planning
• Building Scenarios
• Crisis planning

1.8.1 Contingency planning

Contingency plan defines company responses to be taken in the case of emergencies, setbacks, or
unexpected conditions. A contingency plan is your organization's "Plan B" or "worst case
scenario" plan. Also called a business continuity plan or disaster recovery plan, it creates an
organized and coordinated set of steps to be taken if an emergency or disaster strikes.

Contingency planning is done to avoid or minimize damage, loss or injury, and to ensure that the
organization's key operations continue.

1.8.2 Building Scenarios

Scenario building involves looking at current trends and discontinuities and visualizing future
possibilities.

1.8.3 Crisis planning

Crisis planning refers to actions taken by an organisation to maintain its credibility and good
reputation after a situation has occurred that may affect it in a negative manner and therefore it
reduce sales its products or services.
It is reactive rather than proactive. Managers respond to events, which threaten the business and
could even lead to its closure. The managers can do little but minimise the potential damage to the
business and it is likely to result in a rather autocratic approach.

1.8.3.1 Two Stages of Crisis Planning

• Prevention
 Build relationships
 Detect signals from the environment
• Preparation
 Designate crisis management team and spokesperson
 Create detailed crisis management plan
 Set up effective communication system
1.9 Innovative approaches to planning
1. Decentralized Planning: Top executives or planning experts work with managers in major
divisions or departments to develop their own goals and plans.
2. Stretch Goals: Reasonable yet highly ambitious and compelling goals that energize people
and inspire excellence.
3. Business Performance dash boards: It helps managers oversee plans and measure progress
toward goals

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4. An intelligence team: A cross-functional group of people who work together to gain a
deep understanding of a specific competitive issue and offer insight and recommendations
for planning.

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 Department of Human Resource Management
Faculty of Management studies and Commerce
University of Jaffna

Course Title: MC9010 - Management Practices & Case Studies

Chapter Title: Managerial Decision Making Hand out No: 03
Prepared by: Ms.N.Jasintha Issued on: 13.03.2020

Intended Learning Outcome

After completing this chapter successfully, you should be able to:

 Describe the importance of Decision-making and Problem-solving in Management

 Define Problem, problem solving, decision and decision making
 Explain the types of decisions and decision making styles
 Describe the decision making conditions

MANAGERIAL DECISION MAKING

1.1.INTRODUCTION
Management can be considered as a process of successful decision-making and problem-solving
aimed at enhancing performance. Decision making is involved in every level of management,
functions of management and even the process of management. From acquiring the resource to
achieve the end results of the organizations it’s very crucial. A decision is one when there are
different things we can do and we pick one of them. We make lots of decisions everyday like;
what to eat in breakfast, what to wear, choose our career, choosing our friends and etc. In every
situation we have to search for how to make right decision. This chapter guides you to having
better understanding of decision making.

1.2.UNDERSTANDING RELATED TERMS

1.2.1. Problem
The unfavorable difference between the actual state of affairs and desired/expected state of
affairs
Actual Desired
State of affairs State of affairs

This problem can be categorized into two:

 Technical problem
 Human problem
1.2.2. Problem-Solving
Problem solving is the process of identifying & implementing best solutions to problems by
correctly diagnosing the route cause/s with right decisions.

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1.2.3. Decision
Decision means that selection or the choice for a particular problem. It can be defined as
“Selection of the best alternative solution for a problem.”
1.2.4. Decision Making
Decision making is the act or process of identifying problems, identifying possible solutions for
the problems/ opportunities and then choosing one alternative among a set of solutions.

1.3.TYPES OF DECISIONS
1.3.1. Programmed Decisions
A decision that is fairly structured solution to routine problems determined by rules,
procedures and habits.

1.3.2. Non-programmed Decisions

Specific solutions created through unstructured process to deal with non- routine
problems.

Content Programmed Non-programmed

Situation Routine & Repetitive Non-routine & Novel

Nature Structured unstructured

Degree of knowledge Familiar Unfamiliar

Made by Mostly Lower level managers Mostly Top level managers

1.4.DECISION MAKING CONDITIONS

 Certainty: All of the information the decision maker needs is fully available.
 Risk: A decision has clear goals and good information is available, but the future
outcomes associated with each alternative are subject to change.
 Uncertainty: Managers know which goals they wish to achieve, but information about
alternatives and future events is incomplete and managers may have to come up with
creative approaches to alternatives.
 Ambiguity and Conflict: The goals and/or problem are unclear and difficult to define.

1.5.PROCESS OF DECISION MAKING

a) Recognition of decision requirement
Awareness of a problem or opportunity is the first step in the decision sequence. Managers
confront a decision requirement in the form of either a problem or an opportunity.
b) Diagnosis and Analysis of causes
Diagnosis and analysis of cause step in the decision making process in which managers
analyze underlying causal factors associated with the decision situation.
c) Development of alternatives

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 The next stage is to generate possible alternative solutions that will respond to the needs of
the situation and correct the underlying causes.

d) Selection of the desired alternative

The best alternative is one in which the solution best fits the overall goals and values of the
organization and achieves the desired results using the fewest resources. Therefore the next
step of the decision making is select most appropriate alternative for the particular problem.
e) Implementation of the chosen alternative
The next step in the decision making process, that involves using managerial, administrative,
and persuasive abilities to translate the chose alternative into action.
f) Evaluation and Feedback
The last step of section is evaluation and feedback. In the evaluation stage of the decision
process, decision makers gather information that tells them how well the decision was
implemented and whether it was effective in achieving its goals.

1.6. DECISION MAKING STYLES

 Individual Decision Making: Made by a single person, Obvious in autocratic and
centralized environments.
 Group (Collective) Decision Making: Made by a group/team, Obvious in democratic
and de-centralized environments.

1.6.1. Advantages of Group Decision Making

 More background knowledge
 More alternatives generated
 More understanding of the decision
 More support for decision
 Helps fulfill social needs

1.6.2. Disadvantages of Group Decision Making

 Time consuming, inefficient
 Ineffective Compromise decisions
 Groupthink, social pressure, conflicts
 Lack of clear responsibility

1.6.3. Group Decision Making Techniques

 Brainstorming
Brainstorming uses a face to face interactive group to spontaneously suggest a wide
range of alternatives freely for decision making.
 Nominal Group Technique
This technique is used most often to generate creative and innovative alternatives or
ideas. Once alternative solutions are listed, group members vote by usually rank ordering

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 the various alternatives. The highest ranked alternative represents the decision of the
group.

 Delphi Technique
It is unique because it is a group process using written responses to a series of
questionnaires instead of physically bringing individuals together to make a decision.
 Majority Rule
This refers to a decision-making rule where each member of the group is given a single
vote, and the option that receives the greatest number of votes is selected.
 Group Decision Support Systems (GDSS)
GDSS are interactive computer-based systems that are able to combine communication
and decision technologies to help groups to make a better decision.

1.7.WHY MANAGERS MAKE BAD DECISIONS?

 Being influenced by initial impression

When considering decisions, the mind often gives disproportionate weight to the fi rst
information it receives. These initial impressions, statistics, or estimates act as an anchor
to our subsequent thoughts and judgments.
 Justifying past decisions
Many managers fall into the trap of making choices that justify their past decisions, even
if those decisions no longer seem valid.
 Seeing what you want to see
People frequently look for information that supports their existing instinct or point of
view and avoid information that contradicts it.
 Perpetuating the status quo
Managers may base decisions on what has worked in the past and fail to explore new
options, dig for additional information, or investigate new technologies.
 Being influenced by emotions
The decision response of a manager can be influenced by the mere wording of a problem.
 Overconfidence
Most people overestimate their ability to predict uncertain outcomes. Before making a
decision, managers have unrealistic expectations of their ability to understand the risk
and make the right choice.

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 Department of Human Resource Management
Faculty of Management studies and Commerce
University of Jaffna

Course Title: MC9010 - Management Practices & Case Studies

Chapter Title: Organizing Hand out No: 04
Prepared by: Ms.N.Jasintha Issued on: 25.03.2020

Intended Learning Outcome

After completing this chapter successfully, you should be able to:

 Discuss the fundamental characteristics of organizing including concepts of work
specialization, chain of command, span of management, and centralization Vs
decentralization.
 Describe functional, divisional and matrix approaches to structure.

1. INTRODUCTION
Managers in every organization face the question about how to organize for maximum efficiency
and effectiveness. Organizing refers to the deployment of organizational resources to achieve
strategic goals.

2. ORGANIZATION STRUCTURE
The organizing process leads to the creation of organization structure which is defined as the
framework in which the organization defines how tasks are divided, resources are deployed, and
departments are coordinated. The characteristics of structure can be portrayed in the
organization chart which is the visual representation of an organization’s structure.
Characteristics of organization structure include work specialization, chain of command, span of
management, and centralization and decentralization.

2.1.Work specialization
Work specialization, sometimes called, division of labor, is the degree to which organizational
tasks are subdivided into individual jobs.

2.2.Chain of command
The chain of command is an unbroken line of authority that links all employees in an
organization and shows who reports to whom. It is associated with two underlying principles.
Unity of command means that each employee is held accountable to one superior. The scalar
principle refers to a clearly defined line of authority in the organization that includes all
employees.

2.3.Authority, Responsibility and Delegation

Authority is the formal and legitimate right of a manager to make decisions, issue orders, and
allocate resources to achieve outcomes desired by the organization.

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Authority is distinguished by three characteristics;
1) Authority is vested in organizational positions, not people.
2) Authority flows down the vertical hierarchy
3) Authority is accepted by subordinates

2.3.1. Responsibility is the flip side of the authority coin; it refers to the duty to perform the
task or activity that one has been assigned.

2.3.2. Accountability is the mechanism through which authority and responsibility are brought
into alignment. Accountability means that the people with authority and responsibility
are subject to reporting and justifying task outcomes to those above them in the chain of
command.

2.3.3. Delegation is the process managers use to transfer authority and responsibility to
positions below them in the hierarchy.

2.4.Line and staff authority

Managers may have line authority, which refers to the formal power to direct and control
immediate subordinates, or staff authority, which refers to the right to advise, counsel, and
recommend in the manager’s area of expertise.

2.5.Span of Management
Span of management, sometimes called span of control, refers to the number of employees
reporting to a supervisor.
The average span of control used in an organization determines whether the structure is tall or
flat. A tall structure has an overall narrow span and more hierarchical levels. A flat structure has
a wide span, is horizontally dispersed, and has ever hierarchical levels.

2.6.Centralization and Decentralization

Centralization and decentralization pertain to the hierarchical level at which decisions are made.
Centralization means that decision authority is located near the top of the organization. With
decentralization, decision authority is pushed downward to lower organization levels.
Factors that typically influence centralization versus decentralization are as follows;
1) Greater change and uncertainty in the environment are usually associated with
decentralization.
2) The amount of centralization or decentralization should fit the firm’s strategy
3) In times of crisis or risk of company failure, authority may be centralized at the top.

2.7.Departmentalization
Departmentalization is the basis for grouping individual position into departments and
departments into the total organization.
Three traditional approaches to departmentalization are functional, divisional, and matrix.

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2.7.1.1.Functional Structure
A functional structure groups employees into departments based on similar skills, tasks, and use
of resources.
Advantages Disadvantages
 Efficient use of resources; economies of  Poor communication across functional
scale departments
 In-depth skill specialization and  Slow response to external changes;
development lagging innovation
 Top management direction and control  Decisions concentrated at top of
hierarchy, crating delay

2.7.2. Divisional Structure

The divisional structure groups employees and departments based on similar organizational
outputs (products or services), such that each division has a mix of functional skills and tasks.
An alternative approach to divisional structure is to group employees and departments based on
geographic region or customer group.

Advantages Disadvantages
 Fast response  Duplication of resources across
divisions
 Flexibility in unstable environment  Less technical depth and specialization
 Fosters concern for customer needs  Poor coordination across divisions
 Excellent coordination across
functional departments

2.7.3. Matrix Structure

The matrix approach uses both functional and divisional chains of command simultaneously, in
the same part of the organization. In a matrix structure, some employees, called two-boss
employees, report to two supervisors simultaneously.
A matrix boss is a functional or product supervisor responsible for one side of the matrix. In a
matrix structure, the top leader oversees both the product and the functional chains of command
and is responsible for the entire matrix.
Advantages Disadvantages
 More efficient use of resources than  Frustration and confusion from dual
single hierarchy chain of command
 Flexibility and adoptability to changing  High conflict between two sides of the
environment matrix
 Interdisciplinary cooperation, expertise  Many meetings, more discussion than
available to all division action

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2.8.CONTEMPORARY APPROACHES TO ORGANIZATIONAL STRUCTURE

2.8.1. Team Approach

The team approach gives managers a way to delegate authority, push responsibility to lower
levels, and be more flexible and responsive in a complex and competitive global environment.
One approach to using teams in organizations is through cross-functional teams, which consist of
employees from various functional departments who are responsible to meet as a team and
resolve mutual problems.
Second approach is to use permanent teams, groups of employees who are organized in a way
similar to a formal department.

Advantages Disadvantages
 Reduced barriers among departments,  Dual loyalties and conflict
increased compromise
 Shorter response time & quicker  Time and resource spent on meetings
decisions
 Better morale & enthusiasm from  Unplanned decentralization
employee involvement

2.8.2. Virtual Network Structure

With a virtual network structure, the organization subcontracts most of its major functions to
separate companies and coordinate their activities from a small headquarters organization.
A similar approach to networking is called the modular approach in which a manufacturing
company uses outside suppliers to provide large chunks of a product such as an automobile,
which are then assembled into a final product by a few employees.

Advantages Disadvantages
 Can draw on expertise worldwide  Lack of control; weak boundaries
 Highly flexible and responsive  Greater demands on managers
 Reduced overhead cost  Weaker employee loyalty

Reference:
Daft, R.L. (2015). New Era of Management, New Delhi: South-Western

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