CHARACTER FORMATION 2

(Leadership Management,
Decision Making,
Management And
Administration)
ULO –C
UNDERSTANDING
MANAGEMENT
 What is Management?
Management is a set of principles relating to the functions of
planning, organizing, directing, and controlling, and the
applications of these principles in harnessing physical,
financial, human, and informational resources efficiently and
effectively to achieve organizational goals.

It is a problem-solving process of effectively achieving

organizational objectives through the efficient use of scarce
resources in a changing environment.

It is an art of getting things done through and with the

people in formally organized groups.
Leadership and Management
Leadership is the ability to influence or guide people within an
organization or business.

Leadership refers to an individual's ability to influence,

motivate, and enable others to contribute toward organizational
success.

Management is the ability to control day-to-day processes and

keep employees on track to achieve company goals.

Management consists of controlling a group or a set of entities

to accomplish a goal.
 Difference between Leadership
and Management
LEADERSHIP MANAGEMENT
• Focuses on people • Focuses on things
• Articulates a vision • Executes plans
• Trusts & develops • Directs & coordinates
• Creates change • Manages change
• Uses influence • Uses authority
• Authority comes from personal • Authority stems from position in the
relationships organization
• Thinks strategically • Determines long-term objectives and
strategies.
• Delegates responsibility • Acts decisively
• Appropriate risk taking and innovation • Decides how to use personnel and other
resources
 Difference Between Leadership and Management

1. DIFFERENCES IN VISION
Managers set out to achieve organizational goals by implementing
processes, such as budgeting, organizational structuring, and staffing.

Managers' vision is bound to the implementation strategies, planning,

and organizing tasks to reach the objectives set out by leaders.

Leaders on the other hand, are considered as visionaries. They set the
pathways to excel in organizational growth. They always examine where their
organization stands, where they want to go, and how they can reach there by
involving the team.
 2. ORGANIZING VS
ALIGNING

Leaders are more focused on how to align and

influence people rather than how to assign work to
them.

Managers achieve their goals by using coordinated

activities and tactical processes.
 3. DIFFERENCES IN QUERIES

A leader asks what and why, whereas a manager focuses on the

questions of how and when. If a firm has a stumbling block, a leader will
be the one to step up and ask, 'What did we learn from this?' and
'Why has this happened?’

While managers are not required to assess and analyze failures.

Their job description emphasizes asking How and When, which assists
them in ensuring that plans are carried out correctly.
 4. Position vs Quality

A manager is a role that frequently refers to a specific job

within an organization's structure.

A manager is a job title that comes with a fixed set of

responsibilities.

Leadership emerges because of your actions.

An individual is a leader if he/she acts in a way that inspires

others to do their best. It makes no difference what his/ her
title or position is.
 Principles of Management

Henry Fayol (1841- 1925) was a French coal-mine engineer, also

known as the father of modern management theory.

The fourteen principles of management created by Henri

Fayol are:

1. Division of Work

The objective of division of work is to produce more

and better work with the same effort. It lads to specialization,
and specialization helps to increase efficiency which results in
improvements in the productivity and profitability of the
organization.
2. Balancing Authority and Responsibility

Authority is the right to give orders and power to

exact obedience. While responsibility is a corollary of
authority, it is its natural consequence and essential
counterpart, and wherever authority is exercised
responsibility arises.

There should be a balance between Authority

(Power) and Responsibility (Duties).

If the authority is more than responsibility, then chances

are that a manager may misuse it.

If responsibility is more than authority, then he may feel

frustrated
 3. Discipline

Discipline means respect for the rules and regulations of

the organization. The workers must respect the rules that run
the organization. To establish discipline, good supervision and
impartial judgment are needed.

4. Unity of Command

A subordinate (employee) must have and receive

orders from only one superior (boss or manager). A
subordinate must report to only one superior.
 5. Unity of Direction
It is expressed as one head and one plan for a group
of activities having the same objective. It is essential for unity of
actions, coordination of strengths and focusing of effort.

6. Subordination of Individual Interests to the

General Interest

The interest of one individual or one group should not

prevail over the general good. The general interest should be
given the most importance. If not, the organization will
collapse. The interest of the organizational goal should not be
sabotaged by the interest of an individual or of the group.
 7. Remuneration of Personnel
Remuneration of personnel is the price of the services
rendered. It should be fair and affords satisfaction to both the
personnel and the firm. It should include both financial and
non-financial incentives. Compensation should be based on
a systematic attempt to reward good performance.

8. Centralization

In centralization, the authority is concentrated only in

a few hands. While decentralization has the authority
distributed to all the levels of management.
9. Scalar Chain
The chain of command, also known as the scalar chain,
is the formal line of authority, communication, and responsibility
within an organization. It is the line of authority from top to
bottom of the organization. This chain implements the unity-of-
command principle and allows the orderly flow of information

10. Order
There must be an orderly placement of the resources
such as Men and Women, Money, Materials, etc in the
organization. Human and material resources must be in the right
place at the right time.

Material Order - order for things .

Social Order - order for people .
 11. Equity

Equity is a combination of kindness and justice. It creates

loyalty and devotion in the employees toward the organization. The
equity principle suggests that the managers must be kind as well as
equally fair to the subordinates.

12. Stability of Tenure of Personnel

The employees should have job security because

instability leads to inefficiency. Successful firms usually had a stable
group of employees. Employees need to be given sufficient time to
settle into their jobs. They need time to learn their job and to
become efficient.
 13. Initiative

Initiative gives satisfaction to the employees and brings

success to the organization. They should encourage the
employees to make their own plans and to execute these plans.
It allows the subordinates to think out a plan and do what it takes to
make it happen.

14. Esprit De Corps

Esprit de Corps means Team Spirit, the management

should create unity, co-operation, and team-spirit among the
employees. It's agreat source of strength in the organization.
Five Functions of Management
 Functions of Management

In general, there are five basic functions of Management they are:

1. Planning
Planning is the first task of a manager and forms the basis of which all
other tasks are derived. Management decides the future of the organization,
by planning, strategizing, and implementing plans. Planning is the
continuous process of making present entrepreneurial decisions
systematically and with best possible knowledge of their future,
organizing systematically the efforts needed to carry out these decisions and
measuring the results of these decisions against the expectations through
organized and systematic feedback.
 An effective planning program incorporates the effect
of both:

A. External Factors

This includes shortages of resources; both capital

and material, general economic trend as far as interest
rates and inflation are concerned, dynamic technological
advancements, increased governmental regulation
regarding community interests, unstable international
political environments, etc.
B. Internal Factors

This includes limited growth opportunities due to

saturation requiring diversification, changing patterns of the
workforce, more complex organizational structures,
decentralization, etc.
 Characteristics of Planning

The following are the characteristics of Effective Planning:

Planning is goal oriented - it is made to achieve the desired

objectives of an organization. Planning identifies the action that
would lead to desired goals quickly and economically.

Planning is looking ahead - It is done for the future. It is based

on forecasting. It is a mental predisposition for things to happen in
the future .

Planning is an intellectual process- It is a mental exercise

which involves creative thinking, sound judgment, and
imagination.
Planning involves choice and decision making - It essentially
involves choice among various alternatives. A manager is surrounded
by a number of alternatives.

Primacy of planning - It lays a foundation for other functions of

management.

Planning is a continuous process - It is a never-ending function due

to the dynamic business environment.

Planning is all pervasive - It is required at all levels of the organization

and in all of its departments.
Planning facilitates coordination - it revolves around the
organizational goals, and all activities are directed towards
common goals. There is an integral effort throughout
the organization.

Planning encourages innovation - In the process of

planning, managers have the opportunities of suggesting
ways and means of improving performance.
2. Organizing
Organizing is the process of creating structure for the
organization that will enable the various players to work
together effectively towards its objectives.

It requires a formal structure of authority and the direction

and flow of such authority through which work subdivisions are
defined, arranged and coordinated so that each part relates to
the other part.

Organizational Structure is the basic framework of

formal relationship among responsibilities, tasks, and people in
the organization.
 Basic Principles of Organizing
Effective organizations are guided by the following principles:

Division of work and specialization - It involves dividing

the total workload into tasks that can be logically and
effectively performed by individuals with specialized
knowledge.

Departmentation - It refers to the logical groupings into

manageable sizes of organizational activities that belong
together. The departments created constitute the
organization's structure and appear on organizational charts.
Coordination - It refers to the process of integrating departments
both horizontally and vertically. Involve allocation of responsibility
and authority to each position in the organizational structure.

Chain of Command - it defines the reporting lines of individuals

and groups in the organizations.

Unity of Command - It implies that each subordinate must have

only one manager to report to.

Span of Control - It refers to the number of subordinates working

under one manager.
 3. Staffing

Staffing, also known as Human resource. It involves the

process of recruiting, training, developing, compensating, and
evaluating employees and maintaining this workforce with
proper incentives and motivations.
 Components of Staffing

Staffing involves:

1. Manpower Planning

It involves the estimation of manpower in terms of searching,

choosing the person and giving the right place.
2. Recruitment, Selection & Placement

Recruitment is the process of identifying the sources for prospective candidates

to stimulate them to apply for jobs in the organization.

Selection is the process of choosing from among the candidates the most
suitable person for the current position or for the future position.

Placement may be defined as the determination of the job to which a selected

candidate is to be assigned, and his assignment to the job.
3. Training & Development

These are educational activities within an

organization that are designed to improve the job
performance of an individual or group. Involve advancing a
worker's knowledge and skill sets and instilling greater
motivation to enhance job performance.

4. Remuneration

Remuneration is any type of compensation or

payment that an individual or employee receives as payment
for their services or the work that they do for an organization
or company. Includes expense account funds, bonuses, and
stock options.
5. Performance Appraisal

Is a regular review of an employee's job performance and

contribution to a company. Used to determine which employees
have contributed the most to the company's growth, review
progress, and reward high-achieving workers.

6. Promotions & Transfer

Promotion is defined as the movement of an employee
from one position to another position of a higher pay grade or
salary.

Transfer is defined as the movement of an employee from

one position to another position at the same pay grade level or
similar salary.
4. Directing

Directing is a managerial function which actuates the

organizational method to work efficiently to achieve
organizational goals. Direction is the inert-personnel aspect of
management which deals directly with influencing, guiding,
supervising, motivating to achieve the organization's goals.
 Elements of Directing

The following are the elements of directing as management function:

Supervision - It implies overseeing the work of subordinates by their

superiors.

Motivation - It involves inspiring, stimulating or encouraging the subordinates

with zeal to work.

Leadership - It is a process by which a manager guides and influences the

work of subordinates in desired direction.

Communications - It is the process of passing information, experience,

opinion etc. from one person to another. It is a bridge of understanding.
 5. Controlling

Controlling is the measurement & correction of

performance activities of subordinates in order to
make sure that the enterprise objectives and plans
desired to obtain them as being accomplished.
 Components of Controlling

The controlling as managerial function involves:

1. Establishment of Standard Performance

Performance standards are the expression of

management-approved performance thresholds, expectations, and
requirements that are to be met so that the employees are eligible
for appraisal.

It consists of a proper plan or pointers so that employees

will have guidance about the organization's journey.
2. Measurement of Actual Performance

Performance should be measured based on an

employee's overall impact, cost efficiency, effectiveness, and
ability to implement best practices.

Performance should be measured in an objective and

reliable manner. These include personal observation, sample
checking, performance reports, etc.
3. Comparison of Actual Performance with the Standards
and Finding out Deviation

Comparing actual performance with standards or goals

involves accepting or rejecting the product or outcome.

This compares the degree of difference between the

actual performance and the standard. It is completely
necessary to evaluate deviations to determine why the
standard is not being met when performance falls short of the
standard.
4. Taking Corrective Action

The final step of the control process. If the deviations in

the third step are in an unacceptable range, then the firm needs
to improve their performances.

The management must take action to get better the

actual-performance of the firm in those problem areas.
 Timing of Controls
The three categories are:

1. Feedback Controls

● It occurs after an activity or process is completed. It is reactive.

● If the standard or goal is met, production continues. If not, adjustments
can be made to the process or to the standard.
2. Proactive Controls

Also known as preliminary, preventive, or feed-forward control,

involves anticipating trouble, rather than waiting for a poor outcome and
reacting afterward. It is about prevention or intervention.

Proactive control looks forward to problems that could reasonably

occur and devises methods to prevent the problems.
3. Concurrent Controls

Monitoring takes place during the process or

activity.
Concurrent control may be based on standards,
rules, codes, and policies.
 CHAPTER 6
MANAGER, UNDERSTANDING
DECISION MAKING
AND ADMINISTRATION
What is a Manager?
The noun “manager” comes from the verb “to manage”, which
came to the UK around 1560.

It came from Italian “maneggiare” which means “to handle” or

“to control a horse”.

A manager is a professional who takes a leadership role in

an organization and manages a team of employees.

He/ She is an individual within an organization who

oversees coordinating the efforts of individuals or the allocation of
resources.
 Qualities of Manager

1. Caring - Good managers take time to get to know the

individuals in their team. They're genuinely interested
in a team member's success and personal wellbeing.

2. Good Coach - Good Managers focuses on developing

the people they work with as well as getting the job
done. They ensure they have regular 1-on-1 meetings
with team members and encourage them to present
solutions to problems.
3. Great Communicators - Good Managers become great
communicators by being good listeners. They allow time for
others to speak.

4. Pro Employee-Development - Good Managers who show a

genuine interest in employees' career development
acknowledge improvement and not just deliverables.

5. Emotional Resilience - Good Managers who are aware of

how their mood affects others. They remain calm and
productive under pressure and cope well with change

6. Fairness - Good Managers who value fair treatment will

allocate tasks and set schedules keeping in mind people's
capacity and development goals.
7. Innovative - Good Managers empower their teams to make decisions.
They encourage innovative ideas and approaches and help people to
implement them.

8. Empowering and Motivational - Good Managers help people stay

motivated to do their best work. They make the people they manage feel
valued, supported, and empowered.

9. Results Oriented - Good Managers ensure performance standards are

maintained. They work with team members to help remove blockades and
get the team workable outcomes from team meetings.
10. Technically Capable - Good Managers add value to
their teams. They empathize with the challenges the
team faces and have the necessary skills to help
devise solutions .

11. Visionary - Good Managers ensure the organization's

vision and strategy are translated into an actionable
vision and strategy for the team.
 Role of Manager in an Organization

Leading a Team - A key responsibility of a manager is leading

their team. They give direction to their employees and answer
their questions.

Training Employees - Managers act as mentors to their

employees and teach them skills that they can use as they
advance their careers.

Managing Conflicts - Managers usually exercise conflict

resolution skills and mediate workplace conflicts.
Managing their Department's Budget - Managers can
sometimes take responsibility for their department's budget and
use finance and accounting tools. They can also determine how
much funding their department needs to operate.

Conducting Performance Reviews - In performance reviews,

managers give their employees' feedback and suggestions on
how they can improve.
Hiring New Employees - Managers also frequently work with their
company's human resources department to hire new employees.
They may identify job candidates, conduct interviews, and extend job
offers.

Making Decisions - managers make difficult decisions, so it's

important for them to have a strong decision-making process. This
can help them make the best possible decisions for the success of
their departments.
 The Levels of Management

1. Top-level Managers

● They are the “bosses” of the organization.

● These include the board of directors, president,

vice-president, and CEO. These managers are
responsible for controlling and overseeing the
entire organization. They develop goals,
strategic plans, company policies, and make
decisions on the direction of the business.
2. Middle-level Managers

These include general managers, branch managers, and

department managers are all examples of middle-level managers.
They are accountable to the top management for their
department's function.
 3. Low-level Managers

These include supervisors, section leads, and foremen are

examples of low-level management titles. These managers focus
on controlling and directing
 Concept of Decision Making

Decision making is the process of making

choices by identifying a decision, gathering
information, and assessing alternative resolutions.

A decision-making process is a series of steps

taken by an individual to determine the best option or
course of action to meet their needs.
 Steps to Effective Decision Making

Step 1: Identify the Decision - This is the very important step;

it is where the manager realizes that he/she needs to make a
decision. He / She needs to clearly define the nature of the
decision he/she must make.

Step 2: Gather Relevant Information -This is where the

manager needs to collect some pertinent information such as
what information is needed, the best sources of information,
and how to get it;
Step 3: Identify the Alternatives – After the manager collects
information, He/she will identify several possible paths of action;
or alternatives. The manager can also use his/her imagination and
additional information to construct new alternatives.

Step 4: Weigh the Evidence - Manager draws on his/her

information and emotions to imagine what it would be like if
he/she carried out each of the alternatives to the end. Manager
needs to evaluate whether the need identified in Step 1 would be
met or resolved through the use of each alternative. Finally, place
the alternatives in a priority order, based upon the manager's
personal value system.
Step 5: Choose Among Alternatives - After the Manager weighs all the
evidence, he/she is ready to select the alternative that seems to be the best
one for him/her. The manager may even choose a combination of alternatives.

Step 6: Take Action - This is where the manager will make some positive
action by beginning to implement the alternative, he/she chose in Step 5.

Step 7: Review of the Decision & its Consequences - The final step is
where the manager considers the results of his/her decision and evaluates
whether it has resolved the need identified in Step 1. If the decision has not
met the identified need, the manager may want to repeat certain steps of the
process to make a new decision.
 Types of Decisions

Programmed Decisions

● Refers to decisions that do not have major

consequences or even require a lot of thought.

● These are decisions that occur frequently enough that

we develop an automated response to them. The
automated response we use to make these decisions is
called the decision rule.
Non-programmed Decisions

● Refers to decisions that are unique and important that

require conscious thinking, information gathering, and
careful consideration of alternatives.

● Problems or situations that don't have a concrete set of

rules or guidelines to follow rely on non-programmed
decision-making. These are complex and have a long-
term impact.
 Three Categories of Decision Making
1. Strategic Decisions - It sets the course of organization. These
are the decisions that are concerned with the whole environment
in which the organization operates.

2. Tactical Decisions - These are decisions about how things will

get done. These decisions relate to the implementation of
strategic decisions. These decisions are taken at the middle level
of management

3. Operational Decisions - These are the decisions that employees

make each day to run the organization. They have a short-term
horizon as they are taken repetitively. Operational decisions are
taken at lower levels of management .
 Characteristics of Decision Making
It is a selective process in which the optimal alternative is
Selective opted, among the various alternatives. The selection of
the alternative is done, only after evaluating all the
alternatives against the objectives.

Decision making encompasses the application of

Cognitive intellectual abilities, such as analysis, knowledge,
experience, awareness, and forecasting, it is a cognitive
process.
It is a dynamic activity in the sense that a particular
Dynamic problem may have different solutions, depending upon
the time and circumstances.
Positive or A decision is not always positive, sometimes even after
Negative analyzing all the points a decision may turn out as a
negative one.

An organization has a perpetual succession and various

Ongoing decisions are taken daily by different levels of
process management to keep it going. These decisions are taken,
keeping in mind the objectives of the organization.

Evaluation of the possible alternatives using critical

Evaluative appraisal methods, is a part of the decision-making
process.
 Approaches in Decision Making

1. Rational Approach

Rational approach assumes that the

organization aims to make logical choices and do
what makes the most sense;

Rational decision-making is selecting among

alternatives in a form that appropriately accords with
beliefs of an individual or group decision making.
The steps in rational decision-making model are:

1. Identify the problem,

2. Establish decision criteria,
3. Weigh on decision criteria,
4. Generate alternatives,
5. Evaluate the alternatives,
6. Choose the best alternative,
7. Implement the decision, and
8. Evaluate the decision.
2. Bounded Rational Approach

The bounded rational decision-making model holds

that humans make decisions based on limited information,
including their minds' cognitive and rational limits. These
represent a narrowed down set of options under the
absence of complete information and unlimited resources.
3. Heuristics Approach

Heuristics approach posits that judgment under

uncertainty often rests on a limited number of simplifying
heuristics rather than extensive algorithmic processing.
Heuristic is a mental shortcut that allows people to solve
problems and make judgments quickly and efficiently.
 4. Intuition Approaches

Intuition is Supra-logic that cuts out the routine process of

thought and leaps straight from the problem to the answer.

Intuitive decision-making is making decisions based on

experience, feelings, and accumulated judgment.

The intuitive decision-making model refers to arriving at

decisions without conscious reasoning.

Intuitive decision-making ability is also known as 'sixth sense'

and involves being able to gather information that other individuals
may miss.
5. Naturalistic Approaches

The Naturalistic Approaches of decision-making aim to

capture and demonstrate human cognitive performance by
researching how humans, individually or in teams, take the
decisions and real-world context.

It proposes that better decisions can be achieved by

strengthening intuition through experience, which results in
sharper perceptual skills and richer mental models
 What is Administration?

Administration is the activities that relate to running

an organization; or a group of people who manage the
way an organization functions.

Administration means overall determination of

policies, setting of major objectives, the identification of
general purposes, and laying down of broad programs and
projects

The nature of administration is bureaucratic. It is a broader

term as it involves forecasting, planning, organizing and
decision-making functions at the highest level of the
enterprise.
 Difference between Management and
Administration
MANAGEMENT ADMINISTRATION
The management has a middle level and The administration is the top-level
lower level authority. authority.
The management of an organization The administration of an organization
works under the administration. has full control over the activities and
policies of an organization.
The skills required for management are The skills required for administration are
technical and human skills. conceptual and human skills.

The management of an organization is The administration of an organization is

concerned with the implementation of concerned with the formulation of the
the policies. policies.
 MANAGEMENT ADMINISTRATION
The management of an organization The administration of an organization
makes decisions like who should do the makes decisions like what should be
work? Or how a work should be done? done? And when should it be done?
The management is usually seen in The administration is applicable in
business or profit-making organizationsorganizations like educational
like hotels, restaurants, etc. organizations, government offices,
religious organizations, government
offices, hospitals, business enterprises,
and military clubs etc.
The focus of management is on The focus of the administration is on the
managing the work in the best possible allocation of resources available to the
way. organization.
 MANAGEMENT ADMINISTRATION
Management is usually done by the The administration consists of people
people hired by the organization on who owns the organization and the
remuneration. people who get the return on the
investment.
The function of management is The function of administration is
governing and executing. determinative and legislative.
The key person in management is a The key person in administration is an
manager. administrator.
 Essential Skills of an Administrator
An administrator is a person who directs the activities of
their team or employees and undertakes the responsibility to
achieve the objectives of a particular organization or business.

1. Technical skills - A successful administrator needs to

understand and be proficient in the relevant technologies for
their specific segment. Administrator must understand
technology and know how to use and apply it.

2. Human skills - It is related to working with people. This skill

encompasses how an administrator interacts with their
subordinates, equals, and superiors. It also includes the
ability to communicate well and to understand people you
work with or manage.
3. Conceptual skills - This is the ability to see an
organization and know how each part works and how it
relates to other functions. This helps the administrator
monitor proper coordination, since the proper running of
one process depends on other processes.