Principles of

Management
Sr.
Topics
No.

Introduction to Management and Business Organization

- Nature and Scope of Management

- Importance of Management Practices in Business
1.
- Levels of Management in the organization
- Skills Required to be a Good Manager
- Managerial Roles
- Basic Functions of Management
Forms of Business Organization

- Sole Proprietorship form

2. - Partnership
- Public and Private
- Cooperative Society
- Franchise
Planning and Decision Making

- Nature of Planning
- Importance of Planning
- Elements of sound Plan
3.
- Role of Decision Making
- Types of Decisions
- Decision Making Process

Organizing

- Elements of Organizing : Chain of Command, Span of Control,

4. Authority, Responsibility
- Organizing: Factors affecting Organization structure
- Centralization – Decentralization

Staffing - Managing Human Resources

5.
- Recruitment and selection
- Training and Development
 - Performance appraisal and its importance
- Motivation and its importance
- Incentives and it’s types
Leadership and Managing Team

- Leadership and its Importance

- Leadership Styles and its Suitability
6. - Leadership Vs. Management
- Team Building
- Levels of Conflicts and its effects
- Ways to manage Conflicts
- Channels and media of Communication in the organization
Controlling

7 - Importance
- Types of Control
- Control Implications for Managers
Functional Areas (Scope) of Management:

8 - Marketing Management : Nature, Scope, Functions

- Financial Management : Nature, Scope, Functions
- Production Management: Nature, Scope, Functions
Introduction to Management and Business Organization
Nature and Scope of Management

Introduction to Management
In the modern times one of the most important human activities is managing group of
people. Ever since people began forming groups to accomplish aims they could not achieve
as individuals, managing has been essential to ensure the co- ordination of individual
efforts. As society has come to rely increasingly on group effort and as many organized
groups have become large the task of managers has been rising in importance.

Management is the process of designing and maintaining an environment in which

individuals working together in groups efficiently accomplish selected aims.

The basic definition of Management explain that

* As managers, people carry out the managerial functions of planning organizing,

staffing, leading and controlling.

* Management applies to any kind of organization.

* It applies to managers at all organizational levels.

* The aim at all managers is the same to create a surplus.

* Managing is concerned with productivity, which implies effectiveness and efficiency.

Thus it may be concluded that management plays a key role in improving standard of living
of the people in the society through developing an ideal organizational structure and making
economic use of available resources.

The knowledge of management theory and practice enables managers to take more realistic
view about organizational and social problems and to find out their effective solution.

Management
Meaning:
Management is an important factor for the success of any organized activity. Today
management basically concern with changes and challenges, and it is difficult to manage.

Management is an art of getting things done through others. Management is to plan,

organize, direct and control the resources of the organization for obtaining common
objectives or goals. It is related with resources like material, money, machinery, methods,
manufacturing and marketing.
Management principles are universal in nature. Management is necessary for all types of
organization, such as public sector, private sector, govt. department, hotel, hospital, hostels,
educational institutes, require management for several growth and expansion.

Definitions of management:
1) According to Taylor:-

“Management is the art of knowing what you want to do and then seeing that it is done in
the best and cheapest way.”

2) According to Lawrence:-

“Management is the accomplishment of results through the efforts of other people.”

3) According to Henry Fayol:-

“To manage is to forecast and to plan, to organize, to co-ordinate and to control.”

Concepts of management
The term management has been interpreted in several ways; some of which are given
below:

Management as an Activity
Management is an activity just like playing, studying, teaching etc. As an activity
management has been defined as the art of getting things done through the efforts of other
people. Management is a group activity wherein managers do to achieve the objectives of
the group. The activities of management are:

• Interpersonal activities

• Decisional activities

• Informative activities

Management as a Process
Management is considered a process because it involves a series of interrelated functions. It
consists of getting the objectives of an organization and taking steps to achieve objectives.
The management process includes planning, organizing, staffing, directing and controlling
functions.

Management as a process has the following implications:

(i) Social Process: Management involves interactions among people. Goals can be
achieved only when relations between people are productive. Human factor is the most
important part of the management.
(ii) Integrated Process: Management brings human, physical and financial resources
together to put into effort. Management also integrates human efforts so as to maintain
harmony among them.

(iii) Continuous Process: Management involves continuous identifying and solving

problems. It is repeated every now and then till the goal is achieved.

(iv) Interactive process: Managerial functions are contained within each other. For example,
when a manager prepares plans, he is also laying down standards for control.

Management as an Economic Resource

Like land, labour and capital, management is an important factor of production.

Management occupies the central place among productive factors as it combines and
coordinates all other resources. This is shown in Figure.

Figure : Management as resource

Management as a Team
As a group of persons, management consists of all those who have the responsibility of
guiding and coordinating the efforts of other persons. These persons are called as managers
who operate at different levels of authority (top, middle, operating). Some of these
managers have ownership stake in their firms while others have become managers by virtue
of their training and experience. Civil servants and defence personnel who manage public
sector undertakings are also part of the management team. As a group managers have
become an elite class in society occupying positions with enormous power and prestige.

Management as an Academic Discipline

Management has emerged as a specialised branch of knowledge. It comprises principles and
practices for effective management of organisations. Management has become as very
popular field of study as is evident from the great rush for admission into institutes of
management. Management offers a very rewarding and challenging career.

Management as a Group
Management means the group of persons occupying managerial positions. It refers to all
those individuals who perform managerial functions. All the managers, e.g., chief executive
(managing director), departmental heads, supervisors and so on are collectively known as
management.

For example, when one remarks that the management of Reliance Industries Ltd. is good,
he is referring to the persons who are manag- ing the company. There are several types of
managers which are listed as under.

(i) Family managers who have become managers by virtue of their being owners or
relatives of the owners of a company.

(ii) Professional managers who have been appointed on account of their degree or diploma
in management.

(iii) Civil Servants who manage public sector undertakings.

Managers have become a very powerful and respected group in modern society. This is
because the senior managers of companies take decisions that affect the lives of a large
number of people. For example, if the managers of Reliance Industries Limited decide to
expand production it will create job for thousands of people. Managers also help to improve
the social life of the public and the economic progress of the country. Senior managers also
enjoy a high standard of living in society. They have, therefore, become an elite group in the
society.

Nature and Scope of management

To understand the basic nature of management, it must be analysed in terms of art and
science, in relation to administration, and as a profession, in terms of managerial skills and
style of managers.

Management is Combination of Art and Science

Management knowledge exhibits characteristics of both art and science, the two not
mutually exclusive but supplementary. Every discipline of art is always backed by science
which is basic knowledge of that art. Similarly, every discipline of science is complete only
when it is used in practice for solving various kinds of problems faced by human beings in an
organisation or in other fields of social life which is more related to an art. Art basically deals
with an application of knowledge personal skill and know-how in a specific situation for
efficiently achieving a given objective. It is concerned with the best way of doing things and
is consequently, personalised in nature.
During the primitive stages of development of management knowledge, it was considered
as an art. There was a jungle of managerial knowledge. It was not codified and systemised.
People used it to get things done by others, in their own way giving an impression that
whosoever uses it, knows the art of using it. This kind of loose and inadequate
understanding of management supported the view that it was an art.

Management as a Science
Science means a systematic body of knowledge pertaining to a specific field of study. It
contains general principles and facts which explains a phenomenon. These principles
establish cause-and-effect relationship between two or more factors. These principles and
theories help to explain past events and may be used to predict the outcome of actions.
Scientific methods of observations, and experiments are used to develop principles of
science. The principles of science have universal application and validity.

Thus, the essential features of science are as follows:

(i) Basic facts or general principles capable of universal application

(ii) Developed through scientific enquiry or experiments

(iii) Establish cause and effect relationships between various factors.

(iv) Their Validity can be verified and they serve as reliable guide for predicting future
events.

Let us now examine as to what extent management satisfies the above conditions:

(i) Systematic body of knowledge: Management has a systematic body of knowledge

consisting of general principles and techniques. These help to explain events and serve as
guidelines for managers in different types of organisations.

(ii) Universal principles: Scientific principles represent basic facts about a particular field
enquiry. These are objective and represent best thinking on the subject. These principles
may be applied in all situations and at all times. Exceptions, if any, can be logically
explained. For example, the Law of Gravitation states that if you throw an object in the air it
will fall on the ground due to the gravitational force of the earth. This law can be applied in
all countries and at all points of time. It is as applicable to a football as it is to an apple
falling from tree. Management contains sound fundamental principles which can be
universally applied. For instance, the principle of unity of command states that at a time one
employee should be answerable to only one boss. This principle can be applied in all types
of organisation-business or non business. However, principles of management are not
exactly like those of physics or chemistry. They are flexible and need to be modified in
different situations.

(iii) Scientific enquiry and experiments: Scientific principles are derived through scientific
investigation and reasoning. It means that there is an objective or unbiased assessment of
the problem situation and the action chosen to solve it can be explained logically. Sci- entific
principles do not reflect the opinion of an individual or of a religious guru. Rather these can
be scientifically proved at any time. They are critically tested. For example, the principle that
the earth revolves around the sun has been scientifically proved.

Management principles are also based on scientific enquiry and investigation. These have
been developed through experiments and practical experience of a large number of
managers. For example, it has been observed that wherever one employee has two or more
bosses simultaneously, confusion and indiscipline are likely to arise, with regard to following
the instructions.

(iv) Cause and effect relationship: Principles of science lay down a cause and effect
relationship between related factors. For example, when water is heated up to 100ºC, it
starts boiling and turns into vapour. Similarly, the principles of management establish cause
and effect relationship between different vari- ables. For instance lack of balance between
authority and responsibility will cause management to become ineffective.

(v) Tests of validity and predictability: Validity of scientific principles can be tested at any
time and any number of times. Every time the test will give the same result. Moreover, the
future events can be predicted with reasonable accuracy by using scientific principles.

For example, the Law of Gravitation can be tested by throwing various things in the air and
every time the object will fall on the ground. Principles of management can also be tested
for their validity. For example, the principle of unity of com- mand can be tested by
comparing two persons, one having a single boss and other having two bosses. The
performance of the first person will be higher than that of the second.

Thus, management is undoubtedly a science. It contains a systematic body of knowledge in

the form of general principles which enjoy universal applicability. However, management is
not as exact a science—Physics, Chemistry, Biology and other Physical sciences. This is
because management deals with people and it is very difficult to predict accurately the
behaviour of living human beings. Management principles are universal but they cannot be
expected to give exactly the same results in every situation. That is why management is
known as a soft science. Management is a social science. It is still growing, with the growing
needs of human organisations.

Management as an Art
Art implies the application of knowledge and skills to bring about the desired results. The
essential elements of arts are:

(i) Practical knowledge

(ii) Personal skill

(iii) Result oriented approach

(iv) Creativity

(v) Improvement through continuous practice

Let us judge how far management fulfils these requirements:

(i) Practical knowledge:

Every art signifies practical knowledge. An artist not only learn the theory but also its
application in practice. For example, a person may have adequate technical knowledge of
painting but he cannot become a good painter unless he knows how to make use of the
brush and colours. Similarly, a person cannot become a successful manager simply by
reading the theory and getting a degree or diploma in management. He must also learn to
apply his knowledge in solving managerial problems in practical life. A manager is judged
not just by his technical knowledge but by his efficiency in applying this knowledge.

(ii) Personal skill:

Every artist has his own style and approach to his job. The success of different artists differ
even when all of them possess the same technical knowledge or qualifications. This is due to
the level of their personal skills.

For example, there are several qualified singers but Lata Mangeshkar has achieved the
highest degree of success. Similarly, management is personalised. Every manager has his
individual approach and style in solving managerial problems. The success of a manager
depends on his personality in addition to his technical knowledge.

(iii) Result-oriented approach:

Arts seeks to achieve concrete results. The process of management is also directed towards
the accomplishment of desirable goals. Every manager applies certain knowledge and skills
to achieve the desired results. He uses men, money, materials and machinery to promote
the growth of the organisation.

(iv) Creativity:

Art is basically creative and an artist aims at producing something that had not existed
before. Therefore, every piece of art requires imagination and intelligence to create. Like
any other art, management is creative. A manager effectively com- bines and coordinates
the factors of production to create goods and services. Moulding the attitudes and
behaviour of people at work, towards the achievement of the desired goals is an art of the
highest order.

(v) Improvement through people:

Practice makes one perfect. Every artist become more and more efficient through constant
practice. A dancer, for example, learns to perform better by continuously practicing a dance.
Similarly, manager gains experience through regular practice and becomes more effective.
Thus, “management is both a science as well as an art”. It is a science because it has an
organised body of knowledge consisting of certain universal facts. It is known as an art
because it involves creating results through practical application of knowledge and skills.
However, art and science are complementary to each other. They are not mutually
exclusive. Science teaches one to know and art to do. Art without science has no guide and
science without art is knowledge wasted.

For example, a person cannot be a good surgeon unless he has scientific knowledge of
human anatomy and the practical skill of applying that knowledge in conducting an
operation.

Similarly, a successful manager must know the principles of management and also acquire
the skill of applying those principles for solving managerial problems in different situations.
Knowledge of principles and theory is essential, but practical application is required to make
this knowledge fruitful. One cannot become an effective manager simply by learning
management principles by heart. Science (theory) and art (practice) are both essential for
the success of management.

Scope of management
Clearly defined responsibilities, concepts, theories and principles related to managerial
functions define the scope of management. Let’s look at the various aspects of this.

Financial management
Financial management seeks to ensure the right amount and type of funds to business at
the right time and at reasonable cost. It comprises the following activities:

(a) Estimating the volume of funds required for both long-term and short-term needs of
business

(b) Selecting the appropriate source of funds

(c) Raising the required funds at the right time

(d) Ensuring proper utilisation and allocation of raised funds so as to maintain safety and
liquidity of funds and the credit- worthiness and profitability of business, and

(e) Administration of earnings

Thus, financial management involves the planning, organising and controlling of the
financial resources.

Marketing management
Marketing management refers to the identification of consumers needs and supplying them
the goods and services which can satisfy these wants. It involves the following activities:
(a) Marketing research to determine the needs and expectation of consumers

(b) Planning and developing suitable products

(c) Setting appropriate prices

(d) Selecting the right channel of distribution, and

(e) Promotional activities like advertising and salesmanship to communicate with the
customers.

Personnel management
Personnel management involves plan- ning, organising and controlling the procurement,
development, compensation, maintenance and integration of human resources of an
organisation. It consists of the following activities:

(a) Manpower planning

(b) Recruitments,

(c) Selection,

(d) Training

(e) Appraisal,

(f) Promotions and transfers,

(g) Compensation,

(h) Employee welfare services, and

(i) Personnel records and research, etc.

Production management
This type of management refers to the process of creating utilities. When you convert raw
materials to finished products and oversee the planning and regulation, you’re engaging in
production management. Without production, there isn’t any finished good or service and
without it, organizations can’t generate interest or profits. The final product must fulfill
customer requirements. The process includes quality control, research and development,
plan layout and simplification.

Office management
This includes controlling and coordinating all office activities to achieve an organization’s
goals and targets. For example, an administration’s efficiency impacts a business
significantly. The more organized the departments and responsibilities are, the more
effective an organization is.
 Characteristics or Importance of Management
The salient features which highlight the nature of management are as follows:

(i) Management is goal-oriented:

Management is not an end in itself. It is a means to achieve certain goals. Management has
no justification to exist without goals. Management goals are called group goals or
organisational goals. The basic goal of management is to ensure efficiency and economy in
the utilisation of human, physical and financial resources. The success of management is
measured by the extent to which the established goals one achieved. Thus, management is
purposeful.

(ii) Management is universal:

Management is an essential element of every organised activity irrespective of the size or

type of activity.

Wherever two or more persons are engaged in working for a common goal, management is
necessary. All types of organisations, e.g., family, club, university, government, army, cricket
team or business, require management. Thus, management is a pervasive activity. The
fundamental principles of management are applicable in all areas of organised effort.
Managers at all levels perform the same basic functions.

(iii) Management is an Integrative Force:

The essence of management lies in the coordination of individual efforts in to a team.

Management reconciles the individual goals with organisational goals. As unifying force,
management creates a whole that is more than the sum of individual parts. It integrates
human and other resources.

(iv) Management is a Social Process:

Management is done by people, through people and for people. It is a social process
because it is concerned with interpersonal relations. Human factor is the most important
element in management. According to Appley, “Management is the development of people
not the direction of things. A good manager is a leader not a boss. It is the pervasiveness of
human element which gives management its special character as a social process”.

(v) Management is multidisciplinary:

Management has to deal with human behaviour under dynamic conditions. Therefore, it
depends upon wide knowledge derived from several disciplines like engineering, sociology,
psychology, economics, anthropol- ogy, etc. The vast body of knowledge in management
draws heavily upon other fields of study.
(vi) Management is a continuous Process:

Management is a dynamic and an on-going process. The cycle of management continues to

operate so long as there is organised action for the achievement of group goals.

(vii) Management is Intangible:

Management is an unseen or invisible force. It cannot be seen but its presence can be felt
everywhere in the form of results. However, the managers who perform the functions of
management are very much tangible and visible.

(viii) Management is an Art as well as Science:

It contains a systematic body of theoretical knowledge and it also involves the practical
application of such knowledge. Management is also a discipline involving specialised training
and an ethical code arising out of its social obligations.

On the basis of these characteristics, management may be defined as a continuous social

process involving the coordination of human and material resources in order to accomplish
desired objectives. It involves both the determination and the accomplishment of
organisational goals.

Role and importance of management

Management is indispensable for the successful functioning of every organisation. It is all
the more important in business enterprises. No business runs in itself, even on momentum.
Every business needs repeated stimulus which can only be provided by management.
According to Peter Drucker,“ management is a dynamic life-giving element in an
organisation, without it the resources of production remain mere resources and never
become production”.

The importance of management has been highlighted clearly in the following points:

(i) Achievement of group goals:

A human group consists of several persons, each specialising in doing a part of the total task.
Each person may be working efficiently, but the group as a whole cannot realise its
objectives unless there is mutual cooperation and coordination among the members of the
group. Management creates team-work and coordination in the group. He reconciles the
objectives of the group with those of its members so that each one of them is motivated to
make his best contribution towards the accomplishment of group goals. Managers provide
inspiring leadership to keep the members of the group working hard.

(ii) Optimum utilisation of resources:

Managers forecast the need for materials, machinery, money and manpower. They ensure
that the organisation has adequate resources and at the same time does not have idle
resources. They create and maintain an environment conducive to highest productivity.
Managers make sure that workers know their jobs well and use the most efficient methods
of work. They provide training and guidance to employeers so that they can make the best
use of the available resources.

(iii) Minimisation of cost:

In the modern era of cut-throat competition no business can succeed unless it is able to
supply the required goods and services at the lowest possible cost per unit. Management
directs day-to-day operations in such a manner that all wastage and extravagance are
avoided. By reducing costs and improving efficiency, managers enable an enterprise to be
competent to face competitors and earn profits.

(iv) Survival and growth:

Modern business operates in a rapidly changing environment. An enterprise has to adapt

itself to the changing demands of the market and society. Management keeps in touch with
the existing business environment and draws its predictions about the trends in future. It
takes steps in advance to meet the challenges of changing environment. Changes in
business environment create risks as well as opportunities. Managers enable the enterprise
to minimise the risks and maximise the benefits of opportunities. In this way, managers
facilitate the continuity and prosperity of business.

(v) Generation of employment:

By setting up and expanding business enterprises, managers create jobs for the people.
People earn their livelihood by working in these organisations. Managers also create such an
environment that people working in enterprise can get job satisfaction and happiness. In
this way managers help to satisfy the economic and social needs of the employees.

(vi) Development of the nation:

Efficient management is equally important at the national level. Management is the most
crucial factor in economic and social development. The development of a country largely
depends on the quality of the management of its resources. Capital investment and import
of technical know- how cannot lead to economic growth unless wealth producing resources
are managed efficiently. By producing wealth, management increases the national income
and the living standards of people. That is why management is regarded as a key to the
economic growth of a country.

Levels of management
Every business organisation, irrespective of its size, has many mana- gerial positions in its
structure. These positions are created through the process of delegation of authority from
top to lower levels. Each position is marked by authority, responsibility, functions, roles and
relationships. The contents and nature vary, depending in the level at which the position
lies. As one moves upward in the organisation, the managerial position plays an important
role, larger the contribution, greater the authority and higher the responsibility. These
managerial positions lying in the chain of command may be classified into various groups or
levels of management. Broadly speaking, an organisation has two important levels of
management, namely functional and operative. The functional level is concerned with the
process of determining primary objectives, formulating basic policies, making vital decisions
and controlling and coordinating activities of person- nel. The operative level of
management is related to implementation of plans and decisions, and pursuit of basic
policies for achieving the objectives of the organisation.

Generally, the levels of management consisting of various mana- gerial positions in the
structure of an organisation, differ from one organisation to another, depending on the size
of business activity, philosophy of management, span of control and other related factors.
But, in a joint stock company, for conducting its business efficiently, managerial personnel
may be placed in three levels, that is, top, middle and lower or supervisory level.

Top Level Management

The top level management is generally occupied by the ownership group. In a joint stock
company, equity shareholders are the real owners of the company. Thus, they elect their
representatives as directors, form a board, known as board of directors, which constitutes
the top level of management. Besides the board, other functionaries including managing
director, general manager or Chief executive to help directors, are included in this level. It is
the highest level in the managerial hierarchy and the ultimate source of authority in the
organisation. The top level managers are accountable to the owners and responsible for
overall management of the organisation. The major functions of the top level management
are as under:

(i) To make a corporate plan for the entire organisation covering all areas of operations.
(ii) To decide upon the matters which are vital for the survival, profitability and growth of
the organisation such as introduction of new product, shifting to new technology and
opening new plant etc.

(iii) To decide corporate goals.

(iv) To decide structure of organisation, creating various positions there in.

(v) To exercise overall managerial control through the process of reviewing over all
financial and operating results.

(vi) To make decisions regarding disposal and distribution of profits.

(vii) To select key officials and executives for the company.

(viii)To coordinate various sub-systems of the organisation.

(ix) To maintain liaison with outside parties having a stake in business such as government,
trade union and trade associations etc.

(x) To formulate basic policies and providing direction and leader- ship to the organisation
as a whole.

Middle Level Management

In order to fill up the gap which exists between functional and operative level, some
managerial positions are created at the middle level of management. Middle level
management consists of departmental man- agers, deputy managers, foreman and
administrative officers etc. These executives are mainly concerned with the over all
functioning of their respective departments. They act as a link between top and lower level
managers. The activities of middle level managers centres around determining
departmental goals and devising ways and means for accomplishing them.

The main functions performed by these managers are as under:

(i) To prepare departmental plan covering all activities of the department within the basic
framework of the corporate plan.

(ii) To establish departmental goals and to decide upon various ways and means for
achieving these goals to contribute to organisational goals.

(iii) To perform all other managerial functions with regard to departmental activities for
securing smooth functioning of the entire department.

(iv) To issue detailed orders and instructions to lower level managers and coordinate the
activities of various work units at lower level.

(v) Middle level managers explain and interpret policy decisions made at the top level to
lower level managers.
Lower Level or Supervisory Level Management
Lower-level management is known as supervisory management, because it is concerned
mainly with personal oversight and direction of operative employees. It consists of factory
supervisors, superintendents, foremen, sales supervisors, accounts officers etc. They
directly guide and control the performance of rank and file workers. They issue orders and
instructions and guide day to-day activities. They also represent the grievances of the
workers to the higher levels of management.

Supervisory management performs the following functions:

(i) Planning of day to day work

(ii) Assignment of jobs and issuing orders and instructions

(iii) Supervising and guiding workers

(iv) Maintaining close personal contacts with workers to ensure discipline and team-work

(v) Evaluating operating performance

(vi) Sending reports and statements to higher authorities

(vii) Communicating the grievances and suggestions of workers to higher authorities.

Skills Required to be a Good Manager

1. Conceptual Skills:-

Conceptual skills are the abilities to think about the creative terms understand and visualize
the future, to organize and translate observation into ideas & concepts. Conceptual skills are
essential to identify and diagnose the problems. This will helpful in determining the goals.

2. Analytical Skills:- [Decision making]

Analytical skills mean ability to work out a complex problem or situation into component.
Analytical skills are required for solving problems and decision making. This is also helpful
for evaluation of performance and arriving at judgment.

3. Human relation Skills:-

Human relation skills represent the ability to understand the behavior of people, their
problems, their needs, working conditions and motivation to people. These skills are
essential in directing the people and for better co- ordination.
4. Administrative Skills:-

It involves the implementation of plan and use of available resources to get the desired
output that is profit and to regularize a performance in orderly manner. It is also helpful in
co-ordination of activities.

5. Technical Skills:-

These skills are essential for first line managers. He requires knowledge of a job, ability to
apply the methods and techniques of job. He is responsible for providing technical guidance
and instructions to subordinates.

6. Computer Skills:-

Computer knowledge is essential for today’s manager i.e. knowledge of hardware &
software. Hardware is technical term & software is ability to adopt the system in an
organization to attempt goals. In modern days computer is widely used in organization.
Hence today’s’ manager should possess the knowledge of computer. This is helpful in
decision making. It also helps to increase the productivity in the organization.

7. Communication Skills:-

Communication is systematic process of telling, listing and understanding. This skill requires
the ability of listening and speaking in an effective manner. The manager is responsible for
getting the things done by others. He should be expert in oral and written communication.
Communication skill is essential for getting success. It is depend upon the manager who
achieves the results with efforts of others. Co-ordination can be attained with the help of
proper communication. Success is depends upon proper communication.
Managerial Roles
 Basic Functions of Management
The major functions of management are discussed below:

Planning :

It includes forecasting, formation of objectives, policies, programmes, producer and budget.

It is a function of determining the methods or path of obtaining there objectives. It
determines in advance what should be done, why should be done, when, where, how
should be done. This is done not only for organization as a whole but also for every division,
section and department. Planning is thinking before doing.

Organizing:-

It includes departmentation, delegation of authority, fixing of responsibility and

establishment of relationship.

It is a function of providing every thing useful to the business organization. There are certain
resources which are mobilize i.e. man, machine, material, money, but still there are certain
limitations on these resources. A manager has to design and develop a structure of various
relations. This structure, results from identification and grouping work, delegation of
authority and responsibility and establishing relationship.

Staffing:-

It includes man power planning, recruitment, selection, placement and training.

People are basically responsible for the progress of the organization. Right man should be
employed for right job. It also involved training of personnel and proper remuneration.

Directing:-

It includes decision making, supervising, guidance etc. It reflects providing dynamic

leadership. When the manager performs these functions, he issues orders and instructions
to supervisors. It also implies the creation of a favorable work, environment motivation,
managing managers, managing workers and managing work environment.

Communication:-

Communication provides the vital link in any organization. Every successful manager has to
develop an effective system of communication.

Communication means exchange of facts, ideas and information between two or more
person. It helps in building up high moral.
Controlling:-

It is a process of checking actual performance against standard performance. If there is any

difference or deviation then these differences should be detected and necessary steps
should be taken. It involves three elements:

1. Establishing standard of performance.

2. Measuring actual performance with establishment.

3. Finding out reasons for deviation.

Management includes planning, organizing, staffing and decision making, motivation,

communication, co-ordination and so on.

The other functions of management are as follows:

Motivation :-

In a well organization unforeseen problems are created. It becomes necessary for the
workers to have a leader, to whom they can consult for the guidance. One must help the
worker to solve their problems. The manager is the leader for them. So he should accept the
problems, should appreciate the workers for the work done by them. He has to act as a well
motivation source for he workers.

Decision Making :-

It is the process in which a lot of actions are involved and lot of alternatives are available. A
manager has to choose right alternative for attainment of his goals. There are many
decisions which include marketing decision, cost price decision and capital investment
decision.

Forecasting :-

Correct sales forecasting is essential for manufacturing organization. This helps in

production, by making available right workers and right material at right place and at right
time. It also helps manager for purchasing of raw materials, equipments and labours. Many
times production is made in advance to meet future demands and forecasting is essential
because of short supply of raw material, lack of proper control, to fix up sales targets and to
meet future financial needs. It also helps to give ideas about expansion of business; and for
giving training to the personnel of the organization.

Forms of Business Organization

Starting a business involves making many important decisions, especially in terms of
selecting the right form of business. Taking time to research your options and understand
how different organizations work may help you make the best choice for your situation.
Here, we will discuss the various forms of business structures, including the advantages and
disadvantages of each, and how to choose the right structure for your needs.

Sole Proprietorship form

‘Sole Proprietorship’ form of business organisation refers to a business enterprise
exclusively owned, managed and controlled by a single person with all authority,
responsibility and risk.

Definition of Sole Proprietorship:

According to J. L. Hanson – “A type of business unit where one person is solely responsible
for providing the capital and bearing the risk of the enterprise, and for the management of
the business.”

Characteristics of Sole Proprietorship:

i. Single Ownership – The sole proprietorship form of business organisation has a single
owner who himself/herself starts the business by bringing together all the resources.

ii. No Separation of Ownership and Management – The owner himself/herself manages the
business as per his/her own skill and intelligence.

iii. Less Legal Formalities – The formation and operation of a sole proprietorship form of
business organisation does not involve any legal formalities.

iv. No Separate Entity – The businessman and the business enterprise are one and the
same, and the businessman is responsible for everything that happens in his business unit.

v. No Sharing of Profit and Loss – The sole proprietor enjoys the profits and losses alone.

vi. Unlimited Liability – The liability of sole proprietor is unlimited.

vii. One-man control- The owner has complete control of operations.

Advantages of Sole Proprietorship:

i. Easy to form and wind up – It is very easy and simple to form a sole proprietorship form
of business organisation. No legal formalities are required to be observed. Similarly, the
business can be wound up any time if the proprietor so decides.
ii. Quick Decision and Prompt Action – Nobody interferes in the affairs of the sole
proprietary organisation. So he/she can take quick decisions on the various issues relating to
business and accordingly prompt action can be taken.

iii. Direct Motivation – In sole proprietorship form of business organisations entire profit of
the business goes to the owner. This motivates the proprietor to work hard and run the
business efficiently.

iv. Flexibility in Operations – It is very easy to effect changes as per the requirements of the
business. The expansion or curtailment of business activities does not require many
formalities as in the case of other forms of business organisation.

v. Maintenance of Business Secrets – The business secrets are known only to the
proprietor. He is not required to disclose any information to others unless and until he
himself so decides. He is also not bound to publish his business accounts.

vi. Personal Touch – Since the proprietor himself handles everything relating to business, it
is easy to maintain a good personal contact with customers and employees.

Limitations of Sole Proprietorship:

i. Limited Resources – The resources of a sole proprietor are always limited. It is not always
possible to arrange sufficient funds from personal sources.

ii. Lack of Continuity – The continuity of the business is linked with the life of the proprietor.
Illness, death or insolvency of the proprietor can lead to closure of the business. Thus, the
continuity of business is uncertain.

iii. Unlimited Liability – In the eyes of law, the proprietor and the business are one and the
same. So personal properties of the owner can also be used to meet the business
obligations and debts.

iv. Unsuitable for Large Scale Operations – As the resources and the managerial ability are
limited, sole proprietorship form of business organisation is not suitable for large- scale
business.

v. Limited Managerial Expertise – A sole proprietorship form of business organisation

always suffers from lack of managerial expertise. A single person may not be an expert in all
fields like, purchasing, selling, financing etc.

Suitability of Sole Proprietorship:

In short, this is a simple one person firm where, one can use his brand name, apply for
payment gateways and be able to issue invoice on his brand name to customers. It is best
form for the testing of ideas in the starting stage whether it’s an e-commerce or tech
startup, on later stage, one can easily set up another elaborate forms like private limited
company or public limited company.
 Partnership
‘Partnership’ is an association of two or more persons who pool their financial and
managerial resources and agree to carry on a business, and share its profit. The persons
who form a partnership are individually known as partners and collectively a firm or
partnership.

Definition of Partnership:

Indian Partnership Act, 1932 defines partnership as “the relation between persons who
have agreed to share the profits of the business carried on by all or any of them acting for
all”.

Partnership form of business organisation in India is governed by the Indian Partnership Act
1932. The agreement between the partners may be in oral, written or implied. When the
agreement is in writing, it is termed as partnership deed.

However, in the absence of an agreement, the provisions of the Indian Partnership Act 1932
shall apply. Partnership Deed contains the terms and conditions for starting and continuing
the partnership firm. It is always better to insist on a written agreement in order to avoid
future legal hurdles.

Characteristics of Partnership:

i. Two or More Persons – To form a partnership firm at least two persons are required.

ii. Contractual Relationship – Minors, lunatics and insolvent persons are not eligible to
become the partners. However, a minor can be admitted to the benefits of partnership firm
i.e., he can have share in the profits without any obligation for losses.

iii. Sharing Profits and Business – There must be an agreement among the partners to share
the profits and losses of the business of the partnership firm. If two or more persons share
the income of jointly owned property, it is not regarded as partnership.

iv. Existence of Lawful Business – The business of to be carried on by partners, must be

lawful. Any agreement to indulge in smuggling, black marketing or any other lawful activity
cannot be called a partnership firm in the eyes of law.

v. Principal Agent Relationship – There must be an agency relationship between the

partners. Every partner is the principal as well as the agent of the firm. When a partner
deals with other parties he/she acts as an agent of other partners, and at the same time the
other partners become the principal.

vi. Unlimited Liability – The partners of the firm have unlimited liability. They are jointly as
well as individually liable for the debts and obligations of the firms. If the assets of the firm
are insufficient to meet the firm’s liabilities, the personal properties of the partners can also
be utilized for this purpose
vii. Voluntary Registration – The registration of partnership firm is not compulsory. But an
unregistered firm suffers from some limitations which make it virtually compulsory to be
registered.

Merits of Partnership:

1. Ease of Formation:

A partnership is easy to form as no cumbersome legal formalities are involved. An

agreement is necessary and the procedure for registration is very simple. Similarly, a
partnership can be dissolved easily at any time without undergoing legal formalities.
Registration of the firm is not essential and the partnership agreement need not essentially
be in writing.

2. Larger Financial Resources:

As a number of persons or partners contribute to the capital of the firm, it is possible to

collect larger financial resources than is possible in sole proprietorship. Creditworthiness of
the firm is also higher because every partner is personally and jointly liable for the debts of
the business. There is greater scope for expansion or growth of business.

3. Specialisation and Balanced Approach:

The partnership form enables the pooling of abilities and judgment of several persons.
Combined abilities and judgment result in more efficient management of the business.
Partners with complementary skills may be chosen to avail of the benefits of specialisation.
Judicious choice of partners with diversified skills ensures balanced decisions. Partners meet
and discuss the problems of business frequently so that decisions can be taken quickly.

4. Flexibility of Operations:

Though not as versatile as proprietorship, a partnership firm enjoys sufficient flexibility in its
day-to-day operations. The nature and place of business can be changed whenever the
partners desire. The agreement can be altered and new partners can be admitted whenever
necessary. Partnership is free from statutory control by the Government except the general
law of the land.

5. Keen Interest – Since partners share the profit and bear the losses, they take keen
interest in the affairs of the business.

6. Benefits of Specialization – Partnership firm enjoys benefits of individual partners,

specialisation, for instance, in a partnership firm, providing legal consultancy to people, one
partner may deal with civil cases, one in criminal cases, and another in labour cases and so
on as per their area of specialization.
7. Protection of Interest – In partnership form of business organisation, the rights of each
partner and his/her interests are fully protected. If a partner is dissatisfied with any
decision, he can ask for dissolution of the firm or can withdraw from the partnership.

8. Secrecy – Business secrets of the firm are only known to the partners.

9. Sharing of Risks – The losses of the firm are shared by all the partners equally or as per
the agreed ratio as decided in the partnership agreement.

Limitations of Partnership:

A partnership firm also suffers from certain limitations:

i. Unlimited Liability – Partners in partnership firm suffer from the problem of unlimited
liability. Resultantly, members may end up using personal assets to meet the liabilities of
business.

ii. Instability – Every partnership firm has uncertain life. The death, insolvency, incapacity or
the retirement of any partner bring the firm to an end. Not only that any dissenting partner
can give notice at any time for dissolution of partnership.

iii. Limited Capital – A partnership firm suffers due to limited personal capacity of partners.

iv. Non-transferability of share – The share of interest of any partner cannot be transferred
to other partners or to the outsiders.

v. Possibility of Conflicts – At times there is a strong possibility of conflict among partners

due to divergent views and interest.

Suitability of Partnership:

Usually persons having different abilities, skill or expertise can join hands to form a
partnership firm to carry on the business. Business activities like construction, providing
legal services, accounting and financial services etc. can successfully run under this form of
business organization.

It is also considered suitable where capital requirement is of a medium size. Thus,

businesses like a wholesale trade, professional services, mercantile houses and small
manufacturing units can be successfully organized as partnership firms.

Private Company:

Section 2 (68) of Companies Amendment Act, 2013 defines a Private Company as follows:

“Private company” means a company having a minimum paid-up share capital of one lakh
rupees or such higher paid-up share capital as may be prescribed, and which by its articles—

i. Restricts the right to transfer its shares;

ii. Except in case of One Person Company, limits the number of its members to two
hundred-

Provided that where two or more persons hold one or more shares in a company jointly,
they shall, for the purposes of this clause, be treated as a single member-

Provided further that:

a. Persons who are in the employment of the company; and

b. Persons who, having been formerly in the employment of the company, were members
of the company while in that employment and have continued to be members after the
employment ceased, shall not be included in the number of members; and

iii. Prohibits any invitation to the public to subscribe for any securities of the company.

Benefits of a Private Company:

A private company offers the following benefits:

i. Stability – being a separate legal entity, the existence of a private company is independent
of the existence of its members.

ii. Limited liability – the liability of members is limited only to the extent of the unpaid
capital on the shares held by them.

iii. Comparative flexibility of operations – a private company enjoys lesser compliance and
more privileges as compared with a public company, making it a suitable choice for
entrepreneurs.

iv. Improved credibility – due to incorporation, a private company enjoys an improved

credibility in doing transactions with various stakeholders.

v. Team building – private company offers stock ownership and ESOP schemes to attract
talented pool of workforce for the company.

vi. Expansion – In private companies, scope of expansion is large as fund raising can easily be
done by receiving funds from its members, directors. Bank also give high value to private
companies and sanction loans accordingly.

Limitation of Private Company:

i. Process and Formalities:

As the registration of the company requires many formalities, one needs assistance from
professionals like C.As or C.S, w.r.t. registration and other compliances with the relevant
laws.
ii. Limited Availability of Funds:

Due to restrictions on seeking public funding, the prospects of growth and expansion are
limited to the personal financing capacities of members of a private company.

iii. Exit Strategy:

Though it is easy for a shareholder to exit from a company, the procedures to wind up a
private limited company is complicated and involves cumbersome procedures and
substantial liquidation cost.

Public Limited Company:

Public company is a separate legal entity incorporated under companies act, allowing the
members to transfer their shares, while having a larger number of shareholder base.

Definition of Public Company:

u/s2 (71) of Companies Act Amendment 2013, public company means a company which:

i. Is not a private company;

ii. Has a minimum paid-up share capital of five lakh rupees or such higher paid-up capital, as
may be prescribed –

Provided that a company which is a subsidiary of a company, not being a private company,
shall be deemed to be public company for the purposes of this Act even where such
subsidiary company continues to be a private company in its articles.

Public companies are able to attract large funding through issue of equity, debt and other
forms of financing domestically as well as internationally. Due to too much legal constraints
and compliances, a public company is not a very suitable form of business especially for
small scale businesses and small entrepreneurs.

However once a business is well established in the industry, then riding on the prestige and
credibility of the business, at a later stage, a business can unravel the option of being
formed as a public company.

Advantages of a Public Limited Company (PLC):

Following are the prominent advantages of having a public limited company:

i. Limited Liability of shareholders – The business is viewed as a separate legal entity. This
means that even if a shareholder leaves the PLC or dies, the business can continue.

ii. Ability to raise large amount of capital – Public limited companies are able to raise large
sums of money because there is no limit on the maximum number of members.

iii. Transferability of shares – the shares of a PLC can be freely transferable. This provides
liquidity for shareholders.
iv. Exit strategy – due to transferability of shares and being widely recognizable in the public
domain, a public company magnifies its chances of easily seeking future suitors for the
company.

v. Limited liability of shareholders – The liability of shareholders is limited to the extent of

unpaid capital on the shares held by them.

vi. Separate legal entity – The public company due to incorporation is distinct legal person
different from its shareholders.

Disadvantages of a Public Limited Company:

Despite having several benefits, a public limited company suffers from the following
disadvantages:

i. There are many legal formalities and regulatory compliances to be adhered to by a

company during the stage of formation as well as carrying of day to day operations.

ii. Ownership and control woes – due to larger shareholder base, at times it’s difficult to
take speedy and timely business decisions especially if the shareholders are geographically
scattered.

iii. Vulnerable to takeovers – With shares being freely transferable, a potential bidder can
secretly stock up the shareholding of the company even from open market, to stage a
hostile takeover bid.

iv. Larger possibility of conflicts between management and owners

v. Lack of secrecy – due to open access of books of accounts to public, as well as inspection
by the relevant authorities, it is difficult to maintain secrets of business within the confined
walls of business.

vi. In order to protect the interest of investors, a public company is required to follow many
controls and regulations.

vii. There is a possibility that the original owners can lose control of the public limited
company in the issue of a dispute or violation.

viii. Some public limited companies can grow very large. As a result, many can suffer from
mismanagement and slow decision making.

ix. Owing to higher degree of transparency and accountability, public companies suffer from
slow decision making woes.
 Co-Operatives (Common Ownership):
Co-operatives provide a structure for starting up business in which all the members of the
cooperative jointly own, control, and work for the business. They share responsibility
equally, make collective decisions on the basis of one person one vote and, in most co-
operatives receive equal pay.

The concept of a co-operative enterprise is not a political concept but the idea of co-
operative working is supported by the Government. Co-operative or common ownership
enterprise can be divided basically into a society or a company.

Franchise
Franchise is a form of business organization in which a firm which already has a successful
product or service (the franchisor) enters into a continuing contractual relationship with
other businesses (franchisees) operating under the franchisor’s trade name and usually with
the franchisor’s guidance, in exchange for a fee.

Why Franchising?

i. Boom in real estate prices

ii. Less Legal formalities

iii. Growing Disposable income

iv. Mushrooming of Malls

v. Fostering the spirit of entrepreneurship skills.

The franchisee has the rights to market the product or service using the operating methods
of the franchisor. The franchisee has the obligation to pay the franchisor certain fees and
royalties in exchange for these rights.

The franchisor has the obligation to provide these rights and generally support the
franchisee. In this sense, franchising is not a business or an industry, but a method used by
businesses for the marketing and distribution of their products or services. Both the
franchisor and franchisee have a strong vested interest in the success of the brand and
keeping their customers happy. Typically, there are two types of franchise methods. There is
“business format franchising” and “product and trade name franchising.”

The salient features of the franchising system are given below:

(i) Two Parties – In a franchise there are at least two sides – the franchiser and the
franchisee. There can be more than one franchisee.

(ii) Written Agreement – There is an agreement in writing between the franchiser and the
franchisee.
(iii) Exclusive Right – The franchiser owns a brand or trade mark and allows the franchisee to
use it in a specific area under a license.

(iv) Payment – The franchisee makes an initial payment for the license and becomes a part
of the franchiser’s network. He also pays a regular license fee which may be an agreed
percentage of sales or profits.

(v) Support – The franchiser provides assistance to the franchisee in marketing, equipment
and systems, staff training, record keeping. The franchiser initially sets up the business to be
run by the franchisee.

(vi) Restrictions – The franchisee is required to operate the business in accordance with the
policies and procedures specified by the franchiser. He gives an undertaking not to carry on
any competing business and not to disclose confidential information regarding the
franchise. The franchiser cannot terminate the agreement before its expiry except for ‘good
cause’.

(vii) Specified Period – The agreement is for a specific period e.g., five years. On the expiry of
this period, the agreement may be renewed with the mutual consent of both the parties.

Planning and Decision Making

Planning means deciding in advance what to do, why to do it, and when to do it. It is one of
the foremost managerial functions. Before initiating a task, the manager must formulate an
idea of how to perform a particular task. Hence, this function of management is closely
related to creativity and innovation. A manager can only know where he has to go if he first
sets an objective as planning bridges a gap between where we stand today and where we
want to reach. Planning is all about what managers at all levels perform. It requires adopting
a decision as it involves making a choice from an alternative course of action.

Thus, planning involves setting the target and developing an appropriate method or strategy
to attain the desired objective. Planning provides an intellectual approach for attaining the
organization’s predetermined goals. Hence, all members need to work together toward
achieving organizational goals. These goals set the target which needs to be achieved and
against which actual performance is measured. Therefore, planning means setting
objectives and targets and developing an action plan to attain them.

The planning that is formulated has a given time frame but time is a limited resource. It
needs to be used intelligently. If the timing is not considered, the conditions in the
environment may change and all the business plans may go unproductive. Planning may go
in vain if it is not implemented.

Planning Definition
Planning is defined as setting an objective for a given time period, developing various
strategies or methods to attain them, and then selecting the best possible alternatives from
the various methods available.

Feature/ Nature/ Characteristics of Planning

Planning Contributes to the Objective

Planning helps in achieving the objective. We cannot think of achieving any objective
without any kind of planning. Planning is one of the primary functions of management that
contributes immensely to the achievement of predetermined objectives. Planning is The
Primary Function of Management- Planning is the first step that any manager or anyone
adapts to use to move towards any goal.

Pervasive

Planning is universal. Planning is there in every organization, whether it is a small size, mid-
size or large size or at whatever level it is, every manager, every individual employee plans
on at his/her level.

Planning is Futuristic

We do planning for the future. Hence it is called a futuristic process. We always stay in the
present and plan for the future. Planning is never done in the past.

Planning is Continuous

We plan to achieve any goal. Planning is done for a specific period of time. It may be for a
month, a quarter, or a year. There is always a need for a new plan after the expiry of that
period. Hence it is called a continuous process. The continuation of planning is related to the
business cycle. It implies that once the plan is framed and implemented, it is followed by
another plan and so on.

Planning Involves Decision Making

In planning, function managers evaluate various alternatives and select the most
appropriate way to manage things.

Planning is a Mental Exercise-

In planning, assumptions and predictions regarding the future are made by scanning the
environment properly. This activity requires a higher level of intelligence.

Importance of Planning
1) Planning Provides Direction-

Planning provides us with direction. How to work in the future includes planning. By stating
in advance, how work has to be done, planning provides direction for action.
2) Planning Reduces the Risk of Uncertainties-
Uncertainty means any events in the future that change our course of action. Planning helps
the manager to face uncertainty. We cannot remove such uncertainty from our life.
However, due to planning, we can work on such uncertainty. Just like an unforeseen event is
going to come in which we are going in loss. So, if we are already ready, we have made
funds for it, then we will be able to use it to fight that unforeseen situation.

3) Planning Reduces Overlapping and Wasteful Activity- Overlapping means the working
relationship has not been allocated specifically. If we plan, our time will not be wasted.

4) Planning Promotes Innovative Ideas- If you are planning, then you get feedback from
your senior managers or juniors, from there you can get innovative ideas. Besides, if you
make your employees part of the decision-making, then you can get new creative ideas
from there too.

5) Planning Facilitates Decision- Planning helps in decision-making. The more efficient you
plan, the more right you will be in the decision. With good planning, our decision-making
gets accurate, it becomes feasible and it also gets improved.

6) Planning Establishes a Standard for Controlling- Controlling is incomplete without

planning and planning is incomplete without controlling. If you have done the planning but
you do not know if the thing is happening or not, then the planning is useless. In case, there
is no planned output then the controlling manager will have no base to compare whether
the actual output is adequate or not.

7) Focuses Attention on Objectives of that Company- Through planning, efforts of all the
employees are directed towards the achievement of organizational goals and objectives.

Elements of a Sound Plan

Plans are formulated with a view to achieve organizational goals. A good plan will be one
that enables the management to achieve its goals.

A good plan should have the following essentials:

1. It should be simple and clear.

2. It should be easily understandable to the followers.

3. It should be prepared on the basis of clearly defined objectives.

4. It should cover all aspects that are needed for the fulfillment of the objectives.

5. It should be flexible to changing situations.

6. It should be as economical as possible.

7. It should be adaptable.
8. It should provide standards for the evaluation of actual performance.

9. It should provide a basis for decentralization of its various activities.

10. It should guide decision-making.

Decision Making
Decision-making is an integral part of modern management. Essentially, Rational or sound
decision making is taken as primary function of management. Every manager takes
hundreds and hundreds of decisions subconsciously or consciously making it as the key
component in the role of a manager. Decisions play important roles as they determine both
organizational and managerial activities. A decision can be defined as a course of action
purposely chosen from a set of alternatives to achieve organizational or managerial
objectives or goals. Decision making process is continuous and indispensable component of
managing any organization or business activities. Decisions are made to sustain the activities
of all business activities and organizational functioning.

Decisions are made at every level of management to ensure organizational or business goals
are achieved. Further, the decisions make up one of core functional values that every
organization adopts and implements to ensure optimum growth and drivability in terms of
services and or products offered.

As such, decision making process can be further exemplified in the backdrop of the
following definitions.

Definition of Decision Making

According to the Oxford Advanced Learner’s Dictionary the term decision making means -
the process of deciding about something important, especially in a group of people or in an
organization.

Trewatha & Newport defines decision making process as follows:, “Decision-making involves
the selection of a course of action from among two or more possible alternatives in order to
arrive at a solution for a given problem”.

As evidenced by the foregone definitions, decision making process is a consultative affair

done by a comity of professionals to drive better functioning of any organization. Thereby, it
is a continuous and dynamic activity that pervades all other activities pertaining to the
organization. Since it is an ongoing activity, decision making process plays vital importance
in the functioning of an organization. Since intellectual minds are involved in the process of
decision making, it requires solid scientific knowledge coupled with skills and experience in
addition to mental maturity.

Further, decision making process can be regarded as check and balance system that keeps
the organisation growing both in vertical and linear directions. It means that decision
making process seeks a goal. The goals are pre-set business objectives, company missions
and its vision. To achieve these goals, company may face lot of obstacles in administrative,
operational, marketing wings and operational domains. Such problems are sorted out
through comprehensive decision making process. No decision comes as end in itself, since in
may evolve new problems to solve. When one problem is solved another arises and so on,
such that decision making process, as said earlier, is a continuous and dynamic.

A lot of time is consumed while decisions are taken. In a management setting, decision
cannot be taken abruptly.

It should follow the steps such as

1) Defining the problem

2) Gathering information and collecting data
3) Developing and weighing the options
4) Choosing best possible option
5) Plan and execute
6) Take follow up action

Since decision making process follows the above sequential steps, a lot of time is spent in
this process. This is the case with every decision taken to solve management and
administrative problems in a business setting. Though the whole process is time consuming,
the result of such process in a professional organization is magnanimous.

Role and importance of Decision Making

Management is essentially a bundle of decision-making process. The managers of an
enterprise are responsible for making decisions and ascertaining that the decisions made
are carried out in accordance with defined objectives or goals.

Decision-making plays a vital role in management. Decision-making is perhaps the most

important component of a manager’s activities. It plays the most important role in the
planning process. When the managers plan, they decide on many matters as what goals
their organisation will pursue, what resources they will use, and who will perform each
required task.

When plans go wrong or out of track, the managers have to decide what to do to correct the
deviation.

In fact, the whole planning process involves the managers constantly in a series of decision-
making situations. The quality of managerial decisions largely affects the effectiveness of
the plans made by them. In organising process, the manager is to decide upon the structure,
division of work, nature of responsibility and relationships, the procedure of establishing
such responsibility and relationship and so on.

In co-ordination, decision-making is essential for providing unity of action. In control, it will

have to decide how the standard is to be laid down, how the deviations from the standard
are to be rectified, how the principles are to be established how instructions are to be
issued, and so on.

The ability to make good decisions is the key to successful managerial performance. The
managers of most profit-seeking firms are always required to take a wide range of
important decision in the areas of pricing, product choice, cost control, advertising, capital
investments, dividend policy, personnel matters, etc. Similarly, the managers of non-profit
seeking concerns and public enterprises also face the challenge of taking vital decisions on
many important matters.

Decision-making is also a criterion to determine whether a person is in management or not.

If he participates in decision-making, he is regarded as belonging to management staff. In
the words of George Terry: “If there is one universal mark of a manager, it is decision-
making.”

Types of Decisions

Strategic Decisions and Routine Decisions

As the name suggests, routine decisions are those that the manager makes in the daily
functioning of the organization, i.e. they are routine.
Such decisions do not require a lot of evaluation, analysis or in-depth study. In fact, high-
level managers usually delegate these decisions to their subordinates.

On the other hand, strategic decisions are the important decisions of the firm. These are
usually taken by upper and middle-level management. They usually relate to the policies of
the firm or the strategic plan for the future.

Hence such decisions require analysis and careful study. Because strategic decisions taken at
this level will affect the routine decisions taken daily.

Programmed Decisions and Non-Programmed Decisions

Programmed decisions relate to those functions that are repetitive in nature. These
decisions are dealt with by following a specific standard procedure. These decisions are
usually taken by lower management.

For example, granting leave to employees, purchasing spare parts etc are programmed
decisions where a specific procedure is followed.

Non-programmed decisions arise out of unstructured problems, i.e. these are not routine or
daily occurrences. So there is no standard procedure or process to deal with such issues.

Usually, these decisions are important to the organization. Such decisions are left to upper
management. For example, opening a new branch office will be a non-programmed
decision.

Policy Decisions and Operating Decisions

Tactical decisions pertaining to the policy and planning of the firm are known as policy
decisions. Such decisions are usually reserved for the firm’s top management officials. They
have a long term impact on the firm and require a great deal of analysis.

Operating decisions are the decisions necessary to put the policy decisions into action.
These decisions help implement the plans and policies taken by the high-level managers.

Such decisions are usually taken by middle and lower management. Say
the company announces a bonus issue. This is a policy decision. However, the calculation
and implementation of such bonus issue is an operating decision.

Organizational Decisions and Personal Decisions

When an executive takes a decision in an official capacity, on behalf of the organization, this
is an organizational decision. Such decisions can be delegated to subordinates.

However, if the executive takes a decision in a personal capacity, that does not relate to the
organization in any way this is a personal decision. Obviously, these decisions cannot be
delegated.
Individual Decisions and Group Decisions

When talking about types of decisions, let us see individual and group decisions. Any
decision taken by an individual in an official capacity it is an individual decision.
Organizations that are smaller and have an autocratic style of management rely on such
decisions.

Group decisions are taken by a group or a collective of the firm’s employees and
management. For example, decisions taken by the board of directors are a group decision.

Decision Making Process

Decision making is the process of making choices by identifying a decision, gathering

information, and assessing alternative resolutions.

Using a step-by-step decision-making process can help you make more deliberate,
thoughtful decisions by organizing relevant information and defining alternatives. This
approach increases the chances that you will choose the most satisfying alternative
possible.

Step 1: Identify the decision

You realize that you need to make a decision. Try to clearly define the nature of the decision
you must make. This first step is very important.

Step 2: Gather relevant information

Collect some pertinent information before you make your decision: what information is
needed, the best sources of information, and how to get it. This step involves both internal
and external “work.” Some information is internal: you’ll seek it through a process of self-
assessment. Other information is external: you’ll find it online, in books, from other people,
and from other sources.

Step 3: Identify the alternatives

As you collect information, you will probably identify several possible paths of action, or
alternatives. You can also use your imagination and additional information to construct new
alternatives. In this step, you will list all possible and desirable alternatives.

Step 4: Weigh the evidence

Draw on your information and emotions to imagine what it would be like if you carried out
each of the alternatives to the end. Evaluate whether the need identified in Step 1 would be
met or resolved through the use of each alternative. As you go through this difficult internal
process, you’ll begin to favor certain alternatives: those that seem to have a higher potential
for reaching your goal. Finally, place the alternatives in a priority order, based upon your
own value system.

Step 5: Choose among alternatives

Once you have weighed all the evidence, you are ready to select the alternative that seems
to be best one for you. You may even choose a combination of alternatives. Your choice in
Step 5 may very likely be the same or similar to the alternative you placed at the top of your
list at the end of Step 4.

Step 6: Take action

You’re now ready to take some positive action by beginning to implement the alternative
you chose in Step 5.

Step 7: Review your decision & its consequences

In this final step, consider the results of your decision and evaluate whether or not it has
resolved the need you identified in Step 1. If the decision has not met the identified need,
you may want to repeat certain steps of the process to make a new decision. For example,
you might want to gather more detailed or somewhat different information or explore
additional alternatives.
 Organizing
Organising refers to the process of the identification, classification and coordination of work
to be performed by establishing reporting relationships between the people, setting up their
responsibilities and authorities so as to collectively integrate the human efforts for the
successful achievement of organisational objectives.

Hence, Organising is responsible for:

 Implementation of plans into action.

 It decides by whom, how and where a particular task will be performed.

Chain of Command

In an organizational structure, “chain of command” refers to a company's hierarchy of

reporting relationships – from the bottom to the top of an organization, who must answer
to whom. The chain of command not only establishes accountability, it lays out a company’s
lines of authority and decision-making power. A proper chain of command ensures that
every task, job position and department has one person assuming responsibility for
performance.

Span of Control

A manager may be linked to many or few subordinates. The number of people reporting to a
manager is called a manager’s span of control. Managers with wide spans of control have
many subordinates, and it’s not possible for a manager to closely examine activity.
Consequently, employees under such managers have more authority to perform their jobs
and even make decisions than do employees reporting to managers with narrow spans of
control.

Delegation

Delegation refers to the downward transfer of authority from a superior to a subordinate to

enable subordinates to perform their responsibilities effectively and efficiently.

Elements of Delegation

Delegation means assigning responsibility and authority to subordinates and creation of

accountability for work.

Authority:

It refers to the right of an individual to command his or her subordinate and take action
within the scope of his or her position. Authority flows in a downward direction, that is top
to bottom, as the superior has authority over his subordinate. Also the level of authority
increases as one moves higher in the management hierarchy.
Responsibility:

Responsibility is the obligation of a subordinate to properly perform the duties assigned by

the superior. It always flows in upward direction, as the subordinate is responsible for his
superior.

Accountability:

Accountability means being answerable for the outcome of the assigned work. It flows from
bottom to top, that is in upward direction, as a subordinate is accountable for his work and
performance to his superior.

Difference between Authority, Responsibility and Accountability

Types of Organisational Structure

These are divided into two types:

1. Functional structure:

 Organisational structure where business is managed in the form of a separate

department created on the basis of function each department performs.
Suitability

 Functional structure is suitable for large scale businesses providing specialised

services or performing diversified activities.
Advantages

 Specialisation: Employees perform similar tasks within a department and are able to
improve performance which leads to occupational specialisation.

 Coordination: Similarity in the task being performed remote control and

coordination.

 Operational efficiency: The managerial and operational efficiency reduces cost and
results in higher profits. Division of work into smaller tasks leads to minimal
duplication and lowers cost.

 Makes training easier: The range of skills are focused which makes training of
employees easier.

 Higher Focus: Individuals performing similar and smaller tasks can focus better on
the activities they are responsible for.

Disadvantages

 Deviation in interests: Department interest may be pursued at the cost of

organisational interest to create a functional empire.

 Conflicts: Departmental interests may lead to conflicts of interest among

departments and hinder interaction between them.

 Lack of Coordination: Conflicts of interest among departments may lead to problems

in coordination.

 Rigidity: Employees performing similar tasks may not be open to ideas or newer
methods resulting in lack of flexibility.

2. Divisional Structure:
 Divisional structure is a type of organisational structure which works as separate
units or divisions.

 There are many units and divisions that deal with various products.

 Each division is accountable for its own job and must consider its own profit and
loss.

 Each division has its own divisional manager who oversees and has power over the
entire unit.
Suitability

 Divisional structure is suitable for organisations producing a variety of products for

performing diversified activities.
 Advantages:

 Product Specialisation: Product specialisation contributes to the development of

diverse abilities in a divisional head, preparing him for higher roles. This is due to the
fact that he obtains experience in all functions relating to a specific product.

 Accountability: Divisional heads are held accountable for profits since revenues and
costs associated with various departments are clearly identifiable and attributed to
them. This gives a solid foundation for measuring performance. It also aids in the
assignment of blame in times of poor division performance, allowing appropriate
corrective action to be performed.

 Flexibility: It encourages flexibility and initiative because each division operates as

an autonomous unit, resulting in faster decision making.

 Expansion: It allows for expansion and growth by allowing for the addition of new
divisions without disrupting present operations by simply adding another divisional
head and personnel for the new product line.

 Prepare for future positions: Experience in a variety of operations prepares

managers for higher positions.

 Better Initiatives: Dependent and independent functioning of divisions encourages

managers to take initiatives to find better means and ways to perform the best.

Disadvantages

 Conflicts: Conflicts may emerge between different divisions on the allocation of

cash, and a specific division may aim to maximize its profits at the expense of other
divisions.

 Duplication of efforts: It may result in cost increases due to duplication of efforts

across products. Providing each division with its own set of equivalent functions
raises costs.

Misuse of power: It gives managers the authority to oversee all activities relating to a
specific division. Over time, such a manager may develop influence and, in an attempt to
establish his independence, may disregard organizational interests.
 Difference between Functional Structure and Divisional Structure:

Basis of
Functional Structure Divisional Structure
Difference

These are created based on These are built on the basis of

Creation
functions. product lines as well as functions.

It is expensive because there is a

It is cost-effective because higher rate of duplication of work
Cost
duplication of effort is avoided. and resources between
departments.

Because each product department

Duplication of Work overlapping is reduced as a
performs the same functions, work
work result of functional specialization.
overlapping is increased.

More appropriate for multiproduct

More appropriate for businesses that
Suitability companies with a focus on
focus on 'operational specialisation.'
'differentiated products.'

When departments are created on

The departments are divided into
Functional the basis of product-line categories,
horizontal functional hierarchies
Hierarchy a vertical functional hierarchy is
based on key operations.
formed.

Decisions for various departments Decisions are decentralized because

Decision
are made by the coordinating head, each division of the product line has
making
which centralises decision making. its own decision-making authority.

Management is difficult because

Management is simplified because
each task must report to a
Management each product has its own
coordinating head at the highest
department.
level of management.
 Factors Affecting Organisation Structure.
As a business owner, you have multiple structural choices for your company. These choices
are made easier by the number of organizational design principle examples from successful
companies that you can adopt. Common organizational design principle examples include
maximizing the talents and skills of your staff, encouraging accountability, and focusing on
the things you can control. However, choosing the appropriate business structure requires
you to take into account several factors that can determine the success or failure of your
company.

For example, a business that has a large number of employees who work on many different
projects, may benefit from a structure in which you authorize project leaders to make
important decisions without needing upper-management approval. Understanding which
factors influence organizational structure is the key to choosing a structure aligned with
your long-term goals

Size of an Organization

The Small Business Administration defines the average small business in the U.S. as a
company that generates $750,000 to $35 million per year, and has 100 to 1,500 employees.
This is a broad range, which is why the size of your organization plays a significant role in the
structural choices you make. For example, a business that has only 10 employees, may best
be served by a simple structure, in which you create and implement all strategies and
processes, with little-to-no middle management involvement. However, if you own a
business that has 1,000 employees, you may opt for a top-down structure, which includes
senior management, middle management, lower management, as well as your employees,
to ensure that your vision is properly implemented.

Business Development Stage

Organizational structural choices are also dictated by the life-cycle stage of your business. In
many instances, companies that are in the beginning stage of their development tend to
concentrate power and authority in the hands of the founder, and on a small group of
trusted advisors. Many companies at this stage don’t have a formal design, because
business owners haven’t mastered which factors influence organizational structure.
However, as companies move into a growth phase, control often shifts from the upper tier
of management to a more pyramid-like structure, in which authority is granted throughout
the various levels.

Type of Business Strategy

When trying to understand which factors influence organizational structure, you must take
into account the way you’re positioning your company in the market. For example, if you’re
pursuing a differentiation strategy to be the first company in your industry to release the
best products or services, you will need to have an agile structure that can respond quickly
to change. A flat structure would be ideal in this scenario, because employees are
empowered to make quick decisions without supervisory approval. On the other hand, if
your business is pursuing a strategy of innovating existing products and services, then
efficiency is the key to success, which likely calls for a tall or a top-down structure in which
there is a clearly defined chain of command. By aligning your strategy with the most
important organizational design principles examples, you will maximize your chances for
sustained success.

Centralisation
All powers and authority of decision-making is retained with the top level management in
this concept.

All the decisions are taken by the higher level management in a centralised firm.

Though an organisation cannot be completely centralised, as it may disrupt the production

efficiency as well as discourage departments and employees to perform to the best of their
abilities. Hence for this a balance between centralisation and decentralization is needed.

Decentralisation
The power and decision-making authority are delegated or shared among all the levels of
management and all departments.
Difference between Centralisation and Decentralisation

Basis of Centralisation Decentralisation

Difference

Authority At the highest levels of management, Lower levels of management are

authority is still concentrated in a few given authority.
hands.

Creativity Middle and lower-level managers' Encourages creativity and

creativity is hampered. innovation at all levels

Work load Increased workload for top-level Workload is reduced as authority

executives. and responsibility are shared.

Scope of Delegation has a limited scope because Delegation has a broader scope
delegation power is concentrated in a few hands. now that authority can be
transferred.

Subordinate Limits the scope of subordinate initiatives Encourages subordinates to

initiative because workers must follow a come forward and take initiative
predetermined path. by providing them with the
necessary working freedom.

Decision Decision making is slowed because power Because the authority is close to
making is concentrated only in the hands of the the action, decisions are made
top management. Before any action can quickly.
be taken, the problem must pass through
several levels.
Staffing - Managing Human Resources
Selection Process Definition

The selection process can be defined as shortlisting the right candidates with the required
qualifications to fill the vacancies in an organization. The process varies from company to
company hence need to be understood what type of process suits accordingly.

The Selection Process is quite a lengthy and complex process as it involves a series of steps
before making a final decision.

Selection Process Meaning

The selection process refers to selecting the right candidate with the required qualifications
and capabilities to fill the vacancy in the organization. The selection process is quite a
lengthy one and also complex. It involves a series of steps before the final selection. The
procedure of selecting the employees may vary from industry to industry according to their
own needs. Every organization designs their selection process while keeping in mind the
urgency of hiring the people and the requisites for the vacancy of the job.

Recruitment and Selection

Recruitment is the process where the potential applicants are searched for and are
encouraged to apply for a vacancy. While the selection is the process of hiring the
employees from the shortlisted candidates and providing them with a job in the
organization. The success of any organization depends on its employees because when an
employee is well suited for their job the entire company can enjoy the benefits of their
success. Recruitment and selection help organizations to choose the right candidates for the
right positions in the business.

Steps in Selection Process

Popularly there are seven stages in the process of selection :

1. Application – After the job opening has been announced, the candidates apply for
the respective jobs which suit them.

2. Screening and Pre-selection – The goal of this second phase is to reduce the number
of candidates from a large group to a manageable group of between 3-10 people
that can be interviewed in person. The selection is based on their selection
technique and according to the company’s needs.

3. Interview – The interview gives insight into a person’s verbal accuracy and how
sociable they are. This also provides the opportunity to ask the candidate job-related
queries.
 4. Assessment-The full assessment usually is more accurate as this helps the
organization to check the candidate well. Assessments include work sample tests,
integrity tests, and related job knowledge tests.

5. Reference And Background Check- An essential step is the reference check, which is
to confirm about the candidate. The candidates are asked to give references and he
follows up on these.

6. Decision- The next step is to decide to choose the correct candidate who promises
the greatest future potentiality for the organization.

7. Job Offer and Contract – After the decision-making process, the candidate needs to
accept the offer which is known as the contract.

Types of Selection Process

Selection types differ according to different types of organizations. The types of the
selection process are -

1. Application forms and CVs

2. Online screening and shortlisting

3. Interviews

4. Psychometric testing

5. Ability and aptitude tests

6. Personality profiling

7. Presentations

8. Group exercises

9. Assessment centers

10. References

Importance of Selection
Selection is an important facet for the organization, it’s importance can further be summed
up as below-

1. It identifies the right candidates for the company.

2. Recruiting talented employees can help increase the overall performance of the
organization.

3. Helps in avoiding false negatives and false positives of the candidates.

Above all, the process selection has all the way become more complicated. As the
organizations want to hire talented and effective employees, this can create a difference in
the interest of the organization, hence the organizations carefully have adopted different
methods of recruiting a candidate.
Difference between Recruitment and Selection:

Basis of
Recruitment Selection
difference

The process of locating and The process of selecting the best candidate
enlisting the necessary from a pool of candidates gathered during
Meaning
personnel for a job is the recruitment process is referred to as
referred to as recruitment. selection.

Recruitment is the second Selection is the third stage of the staffing

Sequence
stage of the staffing process. process, following recruitment.

The organization does not The organization offers an employment

offer any employment contract to candidates who successfully
Employment
contracts to the candidates complete the selection process, which
contract
gathered through includes information such as the date of
recruitment. joining, terms and conditions, and so on.

The recruitment process

entails attracting as many The selection process entails selecting only
Characteristic
candidates as possible for the best candidates and rejecting the rest.
the job.

Training and Development

 This is an attempt to improve the current and future performance of the employee
by increasing the ability to perform through various training programs and
introducing him or her with skills and knowledge.

 Training is the process of improving an employee's skills and competence required to

perform a specific job.

 The process of an employee's overall growth is referred to as development.

Importance of Training and Development

Training and Development is one of the most important parts of skill enhancement and is
very important for career growth of the employees and objective fulfillment for the
organization.

Benefits to the organization

 Providing training to the employees in a systematic manner is better than the hit and
trial methods which generally leads to wastage of time and efforts of both the
organization and the employee.

 The productivity of the employees in both the terms quantity and quality leading to
better profits.

 Training helps in catering to the fast changing needs of the environment and also
reduces absenteeism and employee turnover. It also equipped the future managers
to take over in case of emergencies.

Benefits To the Employee

 It improves the skill set of the employees and knowledge which will lead to a better
and a bright career of the individual.

 It makes the employees more efficient to handle machines which makes them less
prone to accidents.

 It increases the performance of the individual and helps in burning more. Also it
increases the satisfaction and morale of the employees.

Difference Between Training and Development:

Basis of
Training Development
Difference

Training is the process of

improving an employee's skills and The process of an employee's overall
Meaning
competence required to perform growth is referred to as development.
a specific job.

Scope Training is limited in scope and Development is broader in scope and

 focuses on how to become more focuses on the employee's overall
efficient in one's intended job. personality development. Training is a
component of development.

The focus of training is on the

The focus of development is on overall
Focus specific job requirement, so it is
growth and, as a result, is career oriented.
job-oriented.

Training, development and Education

 Training: Training is the process of improving an employee's skills and competence

required to perform a specific job.

 Development: Development refers to the learning opportunities that are designed

to help the employee's grow.

 Education: It is the method of increasing the knowledge and understanding of the

employees. It helps in better interpretation of the knowledge.

Training Methods

A. On the Job Methods

On-the-job training refers to the training where the subordinates learn by doing in the
workplace, under the supervision of superiors. It includes:

 Apprenticeship Programmes: It is a method in which a trainee works under the

guidance of a master worker for a prescribed period of time with an aim to acquire
specific skills.

 Coaching: It is a method in which a superior acts as a coach and guides or instructs

the employee trainee to learn skills and processes within a defined period of time.

 Internship Training: It is a combined effort of educational institutions and business

organisations to give work exposure to students and prepare them for real work
culture.

 Job Rotation: It is a method of training where employees are trained with a full
range of skills by shifting them from one job to another aur from one department to
another.
B. Off the Job Methods

On-the-job training refers to the training where the subordinates learn by doing at a place
away from the workplace. It includes:

 Classroom Lectures/ Conference: It is a method of training where information is

conveyed through lectures for conferences.

 Films: It is a method of training where important information or skills are

demonstrated using films, televisions, videos or presentations.

 Case study: It is a method of training where actual work situations of the past are
discussed to identify problems, analyse its causes, and develop alternative solutions
to solve problems.

 Computer Modelling: It is a method of training where the actual work environment

is imitated by programming a computer.

 Vestibule Training: It is a method of training where a duplicate work environment

called ‘vestibule’ is created to train employees with the technical and operating
skills.

 Programmed Instructions: It is a method of training where specific skills or

knowledge are broken into units and arranged in a logical and sequential learning
package.

What is Performance Appraisal?

Appraisal is required in the growth of every sphere, hence also an employee need an
appraisal system to keep a check on their work. This is a regular review system of an
employee's job performance and their overall contribution to a company.

Performance appraisal also known as the annual review performance or evaluation of the
employee, this evaluates an employee's skills, achievements, and growth - or lack in growth
thereof.In this article, we will discuss performance appraisal in detail.

Performance Appraisal Overview

A performance appraisal is a review of an employee's job performance and his overall
serving in a company. This appraisal is done annually or at different intervals. Organizations
use performance appraisals, giving the employees a showcase of their work in a big-picture
in the form of feedback, this justifies the increment in their pay scale and bonuses as well.

The appraisal report can be conducted at any given time but generally this tends to be
annual, semi-annual, or even quarterly. Companies have a limited budget from which they
award their increments and bonuses. Performance appraisals further help to determine how
to allocate the funds. This appraisal system provides a way for the companies to determine
which employees have contributed the maximum to the company’s growth.
Types of Performance Appraisal
Appropriate Appraisal methods for an organisation will largely depend on the variety of
roles that is performed within the organisation, the time available to invest in the review
process, and objectives for carrying out the reviews also matters for different organizations.

We also need to incorporate elements of methodology within the review system. Popular
types of appraisal system are as follows:

1) Straight Ranking Appraisals

2) Grading
3) Management by Objective
4) Trait and Behavior Based Appraisals
5) Behaviorally Anchored Rating Scale
6) 360 Degree Appraisals

360 Degree Appraisal

Organisations who focus on employee development use this 360-degree tool to analyse the
performance and potentiality of the staff and this enables the employees to path their
career based on the feedback received. Organisations usually perform this 360-degree
feedback on an employee before a major decision about the professional's career.

The results from the 360-degree feedback are usually used by the person receiving the
feedback to plan for the training and development. Results are also used by some
organizations while making administrative decisions, such as pay hike or promotion
strategies.

Employee Appraisal

An employee performance appraisal is a process that combines both the written and oral
element. Here management evaluates and provides feedback on employee’s job
performance.

These include steps to improve or redirect the activities as per needed. Documenting
performance provides a basis to increase their pay and promotions. Appraisals are
important to the staff members to improve their performance and provide an avenue by
which they can be rewarded or recognized for a job well done.

The goals can be now easily realized if employee performance appraisal is processed. It
fetches as the ultimate purpose for the betterment of all the parties. To create and also to
maintain the framework, employers need to inform the workers about their value,
appreciate them for their best works, also establish a track record for fair and honest
feedback, that is to be consistent in their treatment of all the employees, and workers for
their own check about their participation into the company's processes and operations.

Annual Performance Review

Successful annual performance appraisals have a thing in common that they are carefully
planned and prepared for the employees as well as for the organization. Managers need to
take time to carefully prepare the process of performance appraisal by gathering the
information they need to effectively rate their employees' according to their performance.
They can checklist the following for the preparation of appraisal report:

 Conduct the performance appraisal meeting.

 Set a comfortable environment for the meeting.
 Review and discuss the performance ratings.
 Discuss the performance on goals.
 Review and discuss all over parameters.
 Set goals for the coming year.
 Set development plans with the employees.
 Engage the employees in the discussion on their career aspirations.
 Finally complete the administrative paperwork.

Hence, we see how important the appraisal system is for an organization. This helps in the
overall conduct of an employees’ performance in an organisation.

Motivation and its importance

Motivation is incitement or inducement to act or move. It is the process of inducing the
employees of an organization to act in a predetermined desired manner so as to achieve
organizational goals. At the core of this concept, lies three important sub-concepts. They are
Motive, Motivation, and Motivator.

Motive refers to the inner state of mind that initiates and controls behavior towards
business goals. They directly correspond to the needs of individuals.

Motivation is the process of stimulating action by understanding the needs of employees

and by utilizing their motives. The motivator is the technique used for motivation such as
pay bonuses, promotion among others.

Importance of Motivation in an Organisation.

The process of motivation plays a very important role in any organization, profit, or non-
profit. The managerial process of direction is driven primarily by the process of motivation
as it creates within the mind of an employee the desire to work in the direction determined
by the manager. The following aspects may be considered under this head:

1. Increases Productivity

Motivation is a process that leads to an increase in the productivity of the employee.

Motivation meets the needs of the employee and thereby creates the drive to work to the
best of his abilities. A well-employee will be willing to put in more effort towards the
betterment of the organization than another disheartened employee.
2. Ensures Organisational Efficiency

Motivation plays an important role in changing the attitudes of the employees in the
organization. An Indifferent attitude is extinguished most efficiently by motivation. The
presence of such a favorable attitude allows the organization to thrive and be successful.

3. Ensures Loyal Workforce

A well-motivated workforce is a loyal workforce. Motivated employees have high levels of

morale and commitment towards the organization and its goals and objectives. Motivation
thus reduces employee turnover and reduces the need for constant induction of new
employees.

4. Ensures a Reactive Workforce

Adapting to changing business environments is an important feature of any successful

business. In order to react to changes easily and to continue smooth functioning, an
organization requires extensive loyalty and commitment of its employees. This reduces
resistance to the changes that the organization intends to make. This in effect makes the
organization efficient in adapting to changing needs.

5. Facilitates Direction

Direction is an important managerial function and forms one of its core functions.
Motivation as already mentioned is a vital part of the direction. The direction is a process
that involves directing or initiating action according to a plan drawn up requires the
employees to work wholeheartedly with commitment and loyalty. The process of direction
is thus possible only when the employees proceed in the direction that the manager
determines and this requires a motivated workforce.

Motivation

A stimulator used by managers to make people act in a desired way to achieve

organizational goals.

The Related terms in motivation are:

 Motive: It is the inner state of an individual which directs his behaviour towards a
goal.

 Motivation: It is the process of stimulating people into action.

 Motivators: These are The techniques used for motivating people.

Features of Motivation

1. Motivation is an internal feeling: It is the urge or desire to satisfy needs or wants

which influences human behavior.

2. Motivation produces goal-directed behaviour: All actions are directed to achieve

specific goals.

3. Motivation may be positive or negative: Positive motivators are like high salaries
that influence constructively while negative motivators are like punishments that
inculcates fear in the employees.

4. Motivation is a complex process: It involves dealing with people of different types

and expectations.

Motivation Process

Unsatisfied need

Tension

Drives

Search behavior

Satisfied need

Reduction of tension

a. Unsatisfied Want: The motivation process begins with an individual's unsatisfied need.

b. Tension: As the desire goes unsatisfied, frustration builds up in the individual's mind.

c. Motives/Drives: Frustration motivates the individual to seek out alternatives to meet

his needs.
d. Search Behaviour: He selects one of several options and begins acting in accordance
with it.

e. Satisfied Needs: After a period of time, he evaluates whether or not his need has been
met.

f. Reduced Tension: Once the need is met, the individual's frustration and tension are
relieved.

Example: Assume a person wishes to advance in his or her career. This makes him uneasy,
and he begins to look for other ways to advance in his career. He may consider working
harder and bettering his performance. After consistently working hard, he may receive
recognition and a promotion, which will finally satisfy his desire and alleviate his frustration.

Importance of Motivation

1. Improves Performance: It satisfies employee’s needs resulting in higher level of

performance contributing towards organizational goals.

2. Develops a positive attitude: Motivation techniques eliminate negativity and create

a desire to realize maximum potential.

3. Reduces employee turnover: A satisfied employee prefers to remain loyal to the

organization leading to a lesser number of people quitting the organization.

4. Reduces absenteeism: Motivation helps to make the workplace a source of pleasure

and provides the workers with a pleasant experience resulting in increased level of
commitment from employees towards work.

5. Brings change smoothly: A motivated staff accepts changes with much lesser
resistance.

Theories of Motivation
Maslow's Need Hierarchy Theory of Motivation

This theory was given by Abraham Maslow in 1943, and is based on human needs.

Assumptions

 Satisfaction of needs influences people's behaviour.

 Needs are in hierarchical order.

 Once need is satisfied only, the next higher need can motivate individuals.

 Satisfaction of lower-level needs motivates to move to the next level of need.

Hierarchy of needs

According to Maslow need hierarchy theory, employees need and wants can be categorised
as a hierarchy of five needs:

1. Basic Physiological Needs: It includes basic needs like hunger, thirst, shelter, sleep,
etc.

2. Safety/ Security Needs: It includes needs of security and protection like job security,
etc.

3. Affiliation/ Social/ Belonging Needs: It includes needs like affection, sense of

belongingness, friendship, etc.

4. Esteem Needs: It includes needs like self respect autonomy, status, recognition, etc.

5. Self Actualization Needs: It includes needs that drive to realize a dream.

Financial and Non Financial Incentives

 Incentives are the means to satisfy an employee's needs and motives. These can be:

 Financial

 Non-Financial
Financial Incentives

Incentives offered to employees which are either in direct monetary form or can be valued
in monetary terms.

Types of Financial Incentives

1. Pay and allowances: These include salary, dearness allowance and other allowances
paid to employees.

2. Productivity linked wage incentives: Wages paid at different rates to increase

productivity.

3. Bonus: Incentive offered above the wages or salary.

4. Profit Sharing: Providing a fixed percentage of profit to employees.

5. Co-partnership/ Stock option: Shares offered to employees at a price which is lower

than the market price.

6. Retirement benefits: Benefits offered after retirement such as provident fund,

pension, etc.

7. Perquisites: Benefits over and above the salary offered such as car allowance,
housing, medical aid, etc.

Non-Financial Incentives

Incentives which are given to provide psychological and emotional satisfaction rather than
monetary satisfaction.

Types of Non-Financial Incentives

1. Status: It is the level of authority, responsibility and recognition an employee

commands in the organization.

2. Organizational climate: Characteristics influencing an individual's behaviour such as

individual autonomy, reward orientation, consideration to employees, etc.

3. Career advancement opportunity: Opportunities of growth and development in the

organization to the higher level.

4. Job enrichment: It refers to a variety of work offered to challenge the knowledge

and skills of highly motivated employees.

5. Employee recognition programmes: It involves recognising and appreciating the

contribution of employees in public.
 6. Job security: It refers to the certainty and stability offered in a job about future
income and work.

7. Employee participation: Involvement of employees in the decision making process,

seeking their advice or suggestions.

8. Employee empowerment: Opportunities provided to employees to take decisions

independently and perform jobs assigned to them.

Leadership and Managing Team

Leadership is a vital management function that helps to direct an organization's resources
for improved efficiency and the achievement of goals. Effective leaders provide clarity of
purpose, motivate and guide the organization to realize its mission. Regardless of your
position, understanding the role of leaders can help you contribute more meaningfully to
the accomplishment of your company's objectives.

What is the importance of leadership?

Leadership serves several functions crucial to the success of an organization. One of the
most important functions of a leader is to provide a vision for the company. The leader
explains the vision and what members of the organization must do to achieve it.

While an organization may have people with various talents and capabilities, it is leadership
that harnesses individual efforts towards the collective goal. By inspiring and motivating
teams and coordinating personal actions for the advancement of a common goal, leaders
help their companies achieve excellence.

Why is leadership important?

Leadership is important for the success of an organization because it provides guidance,

purpose and helps others understand the long-term strategies and goals of a business. Here
are the reasons to value effective leadership:

1. Vision

Successful leadership creates a clear vision of what the organization can achieve. Leaders
provide a roadmap outlining the steps and resources their company needs to arrive at the
preferred destination.

2. Communication

Leaders help to communicate the vision and mission of the firm to employees. This provides
direction and helps everybody identify the roles that best fit skills and experiences. Through
clear communication, leaders encourage their subordinates to act for the actualization of
objectives.
3. Decision Making

Decision making is one of the top leadership skills. Successful leadership takes the best
decision for the organization in all situations. Leaders are experts at taking the right
decisions based on the prevailing circumstances. They weigh their organization's strengths
and weaknesses to ensure that their choices put them at an advantage now and in the
future.

4. Passion

Leaders are passionate about their vision and infect others with their energy to achieve it.
Effective leadership inspires others to buy into the company's objectives and provide a
powerful reason for everybody to remain dedicated to their duties.

5. Guidance

Once employees know what to do to deliver on projects, effective leaders oversee their
work to ensure they perform their roles effectively. Leaders make sure employee efforts
align with organizational goals for improved efficiency.

6. Commitment

Effective leaders are committed to the success of their organization and its employees. They
remain focused on the company's long-term goals and do not allow temporary setbacks to
dampen their spirits. When they face a setback, good leaders motivate their teams and help
them see beyond the problems preventing them from reaching the common goal.

7. Integrity

Successful leadership teaches the organization ethical values. Regardless of their problems,
successful leaders do the right things to achieve their goals. For them, integrity, truthfulness
and fairness are core attributes they want to see in their company and its relations with
contractors and clients.

8. Confidence

Leaders help subordinates to excel at their work and every aspect of life by expressing
confidence in their abilities. They listen to employees' worries about their work, provide
positive feedback and ensure the office environment brings out the best in them.

9. Morale

Leadership boosts staff morale by winning their trust. It assures employees of the leader's
confidence in their abilities to deliver on the vision and mission of the organization. High
morale among employees reduces distraction and motivates them to devote their energies
to achieve organizational goals.
10. Growth

The best leaders create an environment where others can grow. They are open to new ideas
and methods of achieving results and are flexible enough to admit their mistakes. Successful
leaders encourage subordinates to provide inputs on how to improve work processes and
reward excellence to increase creativity and loyalty.

Leadership Styles and its Suitability

1) Autocratic Management Style

Definition

There is a simple autocrat definition: Any leader with a “Because I told you so…” mentality.
Authoritative leadership means a manager takes complete control of (and responsibility for)
a situation.

Application

This directive leadership style can suit your team when members have little or no
experience. Of course, it also becomes necessary in high-risk fields. For example, fire-
fighters parachuting out of airplanes into wildfires need to follow orders without question
or delay.

If your situation calls for an authoritative management style, use the path-goal method of
leadership. Set (and communicate) clear and immediate goals for your team. Ensure they
know exactly how to carry out your instructions – and have all the resources they need.
Everyone in your team should understand their roles and responsibilities – and how to
handle any obstacles that may arise.

Depending on your work environment, you may find this leadership style works well in small
doses – and in specifically-targeted cases.

In a manufacturing plant, for example, new workers must follow their supervisors’
instructions carefully (and without creativity) to avoid injuring themselves and others. Over
time, however, these neophyte workers will grow into shift leaders. A smart manager would
provide ongoing training/education opportunities, determine each worker’s level of
expertise, and occasionally meet team members (away from heavy machinery) to get their
feedback on procedures and systems.

As work teams gain skill and reliability, smart managers shift from strict, top-down methods
to other, more flexible, leadership styles.

Suitability

This traditional (and often uncomfortable) leadership style does have its place. Subordinates
need to obey instructions without question in many life-or-death environments:
  Military Deployments

 Search and Rescue Operations

 Heavy Industry

 Sensitive Laboratory Experiments

 First Responder Situations

 Emergency Rooms/Surgical Settings

Sometimes, complying without thinking or questioning authority figures creates the best
outcomes for all stakeholders.

2) Affiliative Management Style

Affiliative managers promote connection and harmony between team members. They solve
personality conflicts between team members, praise good work, and maintain healthy
morale.

Definition

Management researchers associate the affiliative approach to leadership with the creation
of trusting relationships. Imagine the faltering but talented team in the first act of your
favorite sports movie. The coach comes in, helps everyone work together, and makes
something great out of an impossible situation.

Application

Focus on relationships and collaboration during stressful transitions and peak output. Use
affiliative management strategies after setbacks – and when personality conflicts damage
productivity.

Use affiliative management when creating a new team from scratch (unlike authoritative
management, which works best when introducing new workers into existing, high-risk
environments). Give everyone time to learn their roles and work out the personality
conflicts which naturally arise in the early stages of team development.

When reorganizing a department, take special care to understand how each team member
works best.

Some people will want to work in the comfortable niches they created for themselves under
previous systems and managers.

Others see transitions as opportunities for rapid change – and address their pet peeves.

Smart managers take things slowly. They challenge entrenched workers to adapt and help
creative types remain patient.
Healthy change takes time.

Group cohesion requires trust, which is only earned over time. Affiliative leaders stand in
the middle of the seesaw – leaning to one side or the other to create balance. They know
everyone needs to feel a little uncomfortable during times of instability – but no one should
feel out-of-place or unappreciated.

Suitability

Some managers believe poor performance goes unnoticed (or, at least, unchallenged) by
affiliative managers. Use this style of leadership sparingly, just as you would the
authoritative leadership style. In many ways, these two methods represent the two ends of
the management spectrum.

Use extreme patience and tolerance to heal your team and get them back on track. Employ
affiliative management techniques when team members need to identify their strengths
and weaknesses, sort out their roles and responsibilities, and put aside their ego battles.
When things start working smoothly again, transition into a more goal-based management
style and challenge your team to increase their productivity and efficiency!

3) Coaching Management Style

Leaders and managers act as coaches to inspire, encourage, and guide their teams to
greater outputs and efficiencies.

Definition

Coaching leaders balance authoritative and affiliative management styles. They make
decisions themselves, but with feedback from the group. They facilitate positive interactions
between team members but also let people know where they stand.

Application

The coaching model works best with maturing teams. For instance, once a new wilderness
firefighter has been through a few seasons, they don’t need specific instructions. They need
information about new technology, terrain, etc. but can be trusted to work independently –
or even begin leading small groups.

Managers that work with new teams (or departments in transition) can shift from affiliative
to coaching leadership styles once their teams get through the early phases of
development (i.e. initial eagerness and personality conflicts). Once teams experience
success and learn to work well together, they can benefit from a greater level of managerial
expectation.

Smart leaders know when their teams have the cohesion and trust to handle new challenges
– and new responsibilities.
Suitability

Coaching works best with employees who have demonstrated competency and earned their
coworkers’ trust. Use this hybrid model to guide teams toward higher performance after
using an extremely strict or lenient management style to accommodate new employees and
difficult environments.

4) Democratic Management Style

Democratic leaders value listening, collaboration, and investment. They allow people time
and space to create the best possible products and services.

Definition

Simply put, democratic leadership involves getting everyone’s consensus on decisions.

Application

If every voice is heard, leaders know they’re getting the most possible information and
feedback. In situations that require the investment of all stakeholders (startup companies,
for example), building consensus can mean the difference between success and failure.
Projects—and even entire companies—in high-quality and high-tech markets can go big or
go bust depending on employee engagement.

Suitability

Democratic leaders work best in situations where time and resources don’t limit
brainstorming and debate. However, even teams in rigid and dangerous environments can
benefit from occasional democratic decisions. A leader of a surgical team could encourage
the group to choose the location of their next training retreat by vote – or just the location
of an after-hours hangout.

5) Pacesetting Management Style

Pacesetting leaders use their experience in a certain market/niche to get the most they can
from highly-motivated workers.

Definition

Often high achievers themselves, pacesetters lead by example and ask a lot from their
followers. They set high standards, though they lead best by setting both short and long-
term goals.

Application

Unlike other management styles, this strategy often involves restraining achievers with big
egos to avoid burnout and increase sustainability. Leaders who embrace this method often
use detailed performance metrics to get the best possible outputs from their teams. Certain
employees in certain fields (such as sales) thrive when recognized and rewarded for their
specific achievements.

Suitability

In fast-paced environments such as sales, certain production facilities, and food

service/retail, serving a large number of customers (or creating a great number of
widgets) matters. Smart managers balance the need for high performance while fostering
healthy competition – not an unhealthy obsession with short-term results.

6) Visionary Management Style

When managers need teams to invest heavily, but situations don’t allow for democratic
leadership, visionaries rise to the occasion.

Definition

Visionary leaders help people see the impossible as possible. They facilitate engagement
and inspire trust in high-risk, high-reward settings.

Application

Visionary leadership relies on strong central leadership to maintain cohesion. If you use this
tactic, you can realize incredible results and experience massive organizational growth.

However, you must take time to listen.

These followers can form a cult of personality around their managers/CEOs, which can
create results at the expense of perspective.

Suitability

Smart visionaries know when to inspire – and when to empower.

They can create impressive movements, but must use the trust they gain wisely.

By identifying and promoting strong leaders (including those who use the other methods
I’ve described here), they can create long-lasting organizations that maintain momentum
well after they achieve their first big successes.

Putting It All Together

You may resonate with one or many of these management styles. If you find something
valuable in all of these methods, take a second look. Narrow your ideas down to the few
that suit your industry and team the best.

No one wants to be the cliché manager who tries to implement a great new idea every
Monday morning.

Conversely, if you recognize yourself as only one of these management types, consider a
hybrid approach.
Stick with your strengths but remember that every problem seems like a nail when all you
have is a hammer.

Leadership Vs. Management

Team Building
What is Team Building ?
Team building refers to the various activities undertaken to motivate the team members
and increase the overall performance of the team. You just can’t expect your team to
perform on their own. A motivating factor is a must. Team Building activities consist of
various tasks undertaken to groom a team member, motivate him and make him perform
his best.

We all are human beings and love appreciation. Any individual performing exceptionally
well must be appreciated well in public. He feels happy and motivated to perform even
better the next time. If any team member has come out with a unique idea; treat him with
any thing that makes him happy. Never criticize any team member or demotivate him if he
has failed to perform. Ask him to “Buck up”.
Team Building Exercises
Let us throw some light on some team building execises.

 Encourage many trust building exercises in your team. Team members must trust
each other for the maximum output. Blindfold half of your team members and ask
them to jump over bricks with the help of members who can see. Repeat this
exercise and now blindfold those who could see earlier. This exercise goes a long
way in building the trust among the team members. An individual might be a little
hesitant initially, but the moment he jumps over the brick with his fellow team
member without getting hurt, he starts trusting him. The trust factor increases with
time and relations among the team members improve.

 One must know his fellow team member well. You can’t work with someone you
don’t know. Include a lot of exercises which help the team members know each
other well. Make pairs and ask them to write whatever they know about their
partner and vice a versa. You can ask anyone to write his partner’s favourite colour,
favourite outfit, preferred hangout zone and so on. Ask his partner to correct him if
he is wrong in his answers. People know a lot about each other this way and also find
out some unknown facts about their partner. Ask the team members to give their
introduction one by one once the team is formed.

 The team members must be compatible with each other. Include icebreaking
activities in the team. Take them out for picnics; get togethers where they can
interact with each other freely on any topic. Allow the individuals to bring their
families as well. People come a lot closer this way. Relationships improve.
Remember your team member’s birthday, anniversary or any other important date
and do not forget to wish him that day. Ask for a treat! This way, individuals are no
longer strangers to each other and the bonding increases.

 Encourage activities where individuals come together as a single unit and work for
a common task. Collect some even sized sticks, rope, nails, hammer, and glue stick.
Ask your team members to construct a bridge out of the sticks using the rope,
hammer, gluestick and nails. You will be surprised to see that everyone will be
involved in the activity and help each other in making the bridge. The concentration
and will power to do something increases and individuals learn to work as a single
unit. They all work together, each one contributing something or the other to
construct the bridge i.e. accomplish the task assigned to their team.

Need for Team Building - Why Team Building ?

Team Building activities are of utmost importance as they help in the overall development
of the team members and in turn improving the team’s performance. It also strengthens the
bond among the employees and they feel motivated to work and achieve the targets. Some
kind of team building activities must be undertaken from time to time to encourage the
team members to work hard and realize their dreams.

Types of Conflict
If we are to try to understand the roots of conflict, we need to know what type of conflict is
present. At least four types of conflict can be identified:

1. Goal conflict. Goal conflict can occur when one person or group desires a different
outcome than others do. This is simply a clash over whose goals are going to be
pursued.

2. Cognitive conflict. Cognitive conflict can result when one person or group holds
ideas or opinions that are inconsistent with those of others. This type of conflict is
evident in political debates.

3. Affective conflict. This type of conflict emerges when one person’s or group’s
feelings or emotions (attitudes) are incompatible with those of others. Affective
conflict is seen in situations where two individuals simply don’t get along with each
other.

4. Behavioral conflict. Behavioral conflict exists when one person or group does
something (i.e., behaves in a certain way) that is unacceptable to others. Dressing for
work in a way that “offends” others and using profane language are examples of
behavioral conflict.

Each of these types of conflict is usually triggered by different factors, and each can lead to
very different responses by the individual or group.

Levels of Conflict
In addition to different types of conflict, there exist several different levels of
conflict. Level refers to the number of individuals involved in the conflict. That is, is the
conflict within just one person, between two people, between two or more groups, or
between two or more organizations? Both the causes of a conflict and the most effective
means to resolve it can be affected by level. Four such levels can be identified:

1. Intrapersonal conflict. Intrapersonal conflict is conflict within one person. We often

hear about someone who has an approach-avoidance conflict; that is, she is both
attracted to and repelled by the same object. Similarly, a person can be attracted to
two equally appealing alternatives, such as two good job offers (approach-approach
conflict) or repelled by two equally unpleasant alternatives, such as the threat of
being fired if one fails to identify a coworker guilty of breaking plant rules
(avoidance-avoidance conflict). In any case, the conflict is within the individual.
 2. Interpersonal conflict. Conflict can also take form in an interpersonal conflict, where
two individuals disagree on some matter. For example, you can have an argument
with a coworker over an issue of mutual concern. Such conflicts often tend to get
highly personal because only two parties are involved and each person embodies the
opposing position in the conflict. Hence, it is sometimes difficult to distinguish
between the opponent’s position and her person.

3. Intergroup conflict. Third, conflict can be found between groups. Intergroup

conflict usually involves disagreements between two opposing forces over goals or
the sharing of resources. For example, we often see conflict between the marketing
and production units within a corporation as each vies for more resources to
accomplish its subgoals. Intergroup conflict is typically the most complicated form of
conflict because of the number of individuals involved. Coalitions form within and
between groups, and an “us-against-them” mentality develops. Here, too, is an
opportunity for groupthink to develop and thrive.

4. Interorganizational conflict. Finally, we can see interorganizational conflict in

disputes between two companies in the same industry (for example, a disagreement
between computer manufactures over computer standards), between two
companies in different industries or economic sectors (for example, a conflict
between real estate interests and environmentalists over land use planning), and
even between two or more countries (for example, a trade dispute between the
United States and Japan or France). In each case, both parties inevitably feel the
pursuit of their goals is being frustrated by the other party.

The Positive and Negative Sides of Conflict

People often assume that all conflict is necessarily bad and should be eliminated. On the
contrary, there are some circumstances in which a moderate amount of conflict can be
helpful. For instance, conflict can lead to the search for new ideas and new mechanisms as
solutions to organizational problems. Conflict can stimulate innovation and change. It can
also facilitate employee motivation in cases where employees feel a need to excel and, as a
result, push themselves in order to meet performance objectives.

Conflict can at times help individuals and group members grow and develop self-identities.

Conflict, which aims at a resolution of tension between antagonists, is likely to have

stabilizing and integrative functions for the relationship. By permitting immediate and direct
expression of rival claims, such social systems are able to readjust their structures by
eliminating their sources of dissatisfaction. The multiple conflicts which they experience
may serve to eliminate the causes for dissociation and to re-establish unity. These systems
avail themselves, through the toleration and institutionalization of conflict, of an important
stabilizing mechanism.
Conflict can, on the other hand, have negative consequences for both individuals and
organizations when people divert energies away from performance and goal attainment and
direct them toward resolving the conflict. Continued conflict can take a heavy toll in terms
of psychological well-being. As we will see in the next chapter, conflict has a major influence
on stress and the psychophysical consequences of stress. Finally, continued conflict can also
affect the social climate of the group and inhibit group cohesiveness.

Thus, conflict can be either functional or dysfunctional in work situations depending upon
the nature of the conflict, its intensity, and its duration. Indeed, both too much and too little
conflict can lead to a variety of negative outcomes, as discussed above. In such
circumstances, a moderate amount of conflict may be the best course of action. The issue
for management, therefore, is not how to eliminate conflict but rather how to manage and
resolve it when it occurs.

Ways of Managing Conflict in Organizations

Conflict is not a strange thing for people. Human beings experience it in their day-to-day
lives – with their friends, families, and more so their professional lives. In the workplace,
conflict causes a massive degree of frustration, pain, discomfort, sadness, as well as anger. It
is a normal life aspect. In the world of today, organizations hire employees from diverse
geographical locations with dissimilar cultural and intellectual backgrounds, as well as
various viewpoints. In a working environment where people have disparate outlooks toward
the same problems, disagreements are bound to happen.

Conflicts are inevitable in a person’s day-to-day life. And when they happen, the idea is not
to try to prevent them but rather to resolve and manage them in an effective manner.
When people use the appropriate tools of resolution to address issues, they will be able to
keep their differences from rising to major problems.

Ways of Managing conflicts

1. Clarify what is the source of conflict

The first step in resolving conflict is clarifying its source. Defining the cause of the conflict
will enable you to understand how the issue came to grow in the first place. Additionally,
you will be able to get both parties to consent to what the disagreement is. And to do so,
you need to discuss the needs which are not being met on both sides of the issues. Also, you
need to warranty mutual understanding. Ensure you obtain as much information as possible
on each side’s outlook. Continue asking questions until you are confident that all the
conflicting parties understand the issue.
2. Find a safe and private place to talk

Many people often wonder and ask, “What is an approach to solving problems peacefully?”
To have a constructive conversation, you need to find an environment that is safe for you to
talk to. Such a place also enables you to take the necessary risks for honest communication
regarding the issues at hand.

So, before trying to resolve any issue, find a safe and private place to talk. Do not choose the
office of either party or a location near them. And while at this place, ensure that each party
gets enough time to air out their views regarding the matter.

3. Listen actively and let everyone have their say

After getting both parties to meet in a secure and private place, let each of them have the
opportunity to air out their views and perceptions regarding the issue at hand. Maybe your
colleagues still study in college and can’t manage their work time.. Give each party equal
time to express their thoughts and concerns without favoring the other. Embrace a positive
and assertive approach while in the meeting. If necessary, set ground rules. Taking this
approach will encourage both these parties to articulate their thoughts in an open and
honest manner as well as comprehend the causes of the conflict and identify solutions.
4. Investigate the situation

After listening to the concerns of both parties, take time, and investigate the case. Do not
prejudge or come up with a final verdict on the basis of what you have. Dig deeper and find
out more about the happenings, involved parties, the issues, and how people are feeling.
Have an individual and confident conversation with those involved and listen in a keen
manner to ensure you comprehend their viewpoints. You can do so by summarizing their
statements and replicating them back to them. Also, try finding any underlying conflict
sources which may not be evident or noticeable at fast.

5. Determine ways to meet the common goal

When managing conflict processes, you need to have a common objective, which is
resolving the issue and ensuring it does not resurface. And to solve any problem, you need
to be aware of the different stages of conflict. This will enable you to look for the ideal ways
to meet the common goal. After clarifying the source of conflict, talking to both parties, and
investigating the situation, you need to sit down with both parties and discuss the common
ways you can execute to meet the common goal, which is managing and resolving the
matter at hand. Listen, communicate and brainstorm together until you exhaust all options.
According to the team lead of Edu Jungles writing company — Kevin Smith, find the source
of conflict is the main step to solve any problem.
6. Agree on the best solution and determine the responsibilities each party has in the
resolution

Managing and resolving conflict leaps model of communication. Employees will find it easy
to interact with another as they understand that they have one goal, which is meeting the
company’s objectives. So, after investigating the situation and determine ways through
which you can resolve the issue, both parties need to develop a conclusion on the best
solution for the problem. And to agree on the best, you need to identify the solutions which
each party can live with. Find common ground. Afterward, determine the responsibilities
each party has in resolving the conflict. Also, it is crucial to use this chance to identify the
root cause and ensure this issue will not come about again.

7. Evaluate how things are going and decide preventative strategies for the future

Never presume that the issue is resolute. Effective communication ought to dominate in the
business. So, ask yourself, “What is the second step of effective communication?” Knowing
this will help you ensure that the employees are working together to meet the
organizational goals. So, continue keeping an eye on the issue and assess if the solution is
effective. If the issue resurfaces, take necessary action.

Channels and media of Communication in the organization

Communication channels include face-to-face communication, broadcast media, mobile
channels, electronic communication and written communication.

Face-to-Face or Personal Communication

Face-to-face or personal communication is one of the richest channels of communication

that can be used within an organization. Physical presence, the tone of the speaker's voice
and facial expressions help recipients of a message interpret that message as the speaker
intends. This is the best channel to use for complex or emotionally charged messages,
because it allows for interaction between speaker and recipients to clarify ambiguity. A
speaker can evaluate whether an audience has received his message as intended and ask or
answer follow-up questions.
Broadcast Media Communications

TV, radio and loud speakers all fall within the broadcast media communication channel.
These types of media should be used when addressing a mass audience. Businesses seeking
to notify customers of a new product may advertise or do promotions using a broadcast
channel. Similarly, a CEO may do a global company address by having a television feed
broadcast across global sites. When a message intended for a mass audience can be
enhanced by being presented in a visual or auditory format, a broadcast channel should be
used.

Mobile Communications Channels

A mobile communication channel should be used when a private or more complex message
needs to be relayed to an individual or small group. A mobile channel allows for an
interactive exchange and gives the recipient the added benefit of interpreting the speaker's
tone along with the message. Some within an organization may opt to use this channel
versus a face-to-face channel to save on the time and effort it would take to coordinate a
face-to-face meeting.

Electronic Communications Channels

Electronic communication channels encompass email, Internet, intranet and social media
platforms. This channel can be used for one-on-one, group or mass communication. It is a
less personal method of communication but more efficient. When using this channel, care
must be taken to craft messages with clarity and to avoid the use of sarcasm and innuendo
unless the message specifically calls for it.

Written Methods of Communication

Written communication should be used when a message that does not require interaction
needs to be communicated to an employee or group. Policies, letters, memos, manuals,
notices and announcements are all messages that work well for this channel. Recipients may
follow up through an electronic or face-to-face channel if questions arise about a written
message.

Controlling
Definition: Control is a primary goal-oriented function of management in an organisation. It
is a process of comparing the actual performance with the set standards of the
company to ensure that activities are performed according to the plans and if not then
taking corrective action.

Every manager needs to monitor and evaluate the activities of his subordinates. It helps in
taking corrective actions by the manager in the given timeline to avoid contingency or
company’s loss.

Controlling is performed at the lower, middle and upper levels of the management.
Features of Controlling

 An effective control system has the following features:

 It helps in achieving organizational goals.

 Facilitates optimum utilization of resources.

 It evaluates the accuracy of the standard.

 It also sets discipline and order.

 Motivates the employees and boosts employee morale.

 Ensures future planning by revising standards.

 Improves overall performance of an organization.

 It also minimises errors.

Controlling and planning are interrelated for controlling gives an important input into the
next planning cycle. Controlling is a backwards-looking function which brings the
management cycle back to the planning function. Planning is a forward-looking process as it
deals with the forecasts about the future conditions.

Process of Controlling

Control process involves the following steps as shown in the figure:

 Establishing standards: This means setting up of the target which needs to be

achieved to meet organisational goals eventually. Standards indicate the criteria of
performance.

Control standards are categorized as quantitative and qualitative standards. Quantitative

standards are expressed in terms of money. Qualitative standards, on the other hand,
includes intangible items.
  Measurement of actual performance: The actual performance of the employee is
measured against the target. With the increasing levels of management, the
measurement of performance becomes difficult.

 Comparison of actual performance with the standard: This compares the degree of
difference between the actual performance and the standard.

 Taking corrective actions: It is initiated by the manager who corrects any defects in
actual performance.

Controlling process thus regulates companies’ activities so that actual performance

conforms to the standard plan. An effective control system enables managers to avoid
circumstances which cause the company’s loss.

Types of control

There are three types of control viz.,

1. Feedback Control: This process involves collecting information about a finished task,
assessing that information and improvising the same type of tasks in the future.

2. Concurrent control: It is also called real-time control. It checks any problem and
examines it to take action before any loss is incurred. Example: control chart.

3. Predictive/ feedforward control: This type of control helps to foresee problem

ahead of occurrence. Therefore action can be taken before such a circumstance
arises.

In an ever-changing and complex environment, controlling forms an integral part of the

organization.

Advantages of controlling

 Saves time and energy

 Allows managers to concentrate on important tasks. This allows better utilization of

the managerial resource.

 Helps in timely corrective action to be taken by the manager.

 Managers can delegate tasks so routinely chores can be completed by subordinates.

On the contrary, controlling suffers from the constraint that the organization has no control
over external factors. It can turn out to be a costly affair, especially for small companies.
 Control Implications for Managers
Managers must recognize several behavioral implications in the process of control and its
implementation. Although an effective control system should aid in employee motivation, it
can also have negative effects on employee morale and performance.

Some of the behavioural implications of control are as follows:

1. Control affects individual freedom. Hence, it is common for individuals to resist certain
controls if such controls put constraints on their freedom.

2. Control carries certain status and power implications. For example, a quality control
inspector may carry more power than a line supervisor and this may be resented.

3. When controls are based upon subjective and personal judgements as against quantified
performance, standards and appraisals, these may create interpersonal or intergroup
conflicts within the organization.

4. Excessive number of controls may limit flexibility and creativity.

This may lead to low levels of employee satisfaction and personal development.

5. Controls may influence the generation of invalid and inaccurate information. For example,
if the top management habitually reduces budget requests when reviewing them (a control
activity), then the lower management, when proposing a new budget or a new project may
overstate the cost of resources needed. Similarly, managers may set objectives lower than
what are attainable so that a higher output will look better at performance appraisal time.

6. Controls can be resented by employees if they have no control over the situation. For
example, if a professor’s performance is appraised over the number of publication of books
and research articles, but he is not afforded the freedom of time to do so because of heavy
teaching loads and excessive committee work, then it can result in frustration which may be
detrimental to the entire control system. Similarly, a manager will become highly frustrated
if his performance evaluation is based upon profits achieved by his department but he does
not have the authority and control to make operational changes such as hiring and firing of
workers.

7. The control system must be synchronized to create a balance among all affecting and
inter-connected variables. The standards should complement each other and not contradict
each other. For example, a control system which emphasizes increased sales as well as
reduction in advertising expenditure at the same time may seem contradictory to the
marketing manager and thus may be frustrating for him.
 Functional Areas (Scope) of Management:
Marketing Management : Nature, Scope, Functions
Marketing Management performs all managerial functions in the field of marketing.

Marketing Management identifies market opportunities and comes out with appropriate
strategies for exploring those opportunities profitably.

Management is the process of getting things done in an organised and efficient manner.
Marketing management aims at efficient operation of marketing activities.

Marketing management smoothen the process of exchange of ownership of goods and

services from seller to the buyer. Marketing management, like all other areas of
management comprises of the function of planning, organising, directing coordinating and
controlling.

According to Philip Kotler, “Marketing Management is the art and science of choosing
target markets and building profitable relationship with them. Marketing management is
a process involving analysis, planning, implementing and control and it covers goods,
services, ideas and the goal is to produce satisfaction to the parties involved”.

Nature of Marketing Management

It Combines the Fields of Marketing and Management

As the name implies marketing management combines the fields of marketing and
management. Marketing consists of discovering consumer needs and wants, creating the
goods and services that meet those needs and wants; and pricing, promoting and delivering
those goods and services. Doing so requires attention to six major areas - markets, products,
prices, places, promotion, and people.

Management is getting things done through other people. Managers engage in five key
activities - planning, organizing, staffing, directing, and controlling. Marketing management
implies the integration of these concepts.

Marketing Management is a Business Process

Marketing management is a business process, to manage marketing activities in profit-

seeking and non-profit organizations at different levels of management, i.e. supervisory,
middle-management, and executive levels. Marketing management decisions are based on
strong knowledge of marketing functions and a clear understanding and application of
supervisory and managerial techniques. Marketing managers and product managers are
there to execute the processes of marketing management. We, as customers, see the
results of such a process in the form of products, prices, advertisements, promotions, etc.
Marketing Management is Both Science and Art

“Marketing management is art and science of choosing target markets and getting, keeping
and growing customers through creating, delivering and communicating superior customer
value.” (Kotler, 2006). Marketing management is a science because it follows general
principles that guide marketing managers in decision-making. The Art of Marketing
management consists of tackling every situation in a creative and effective manner.
Marketing Management is thus a science as well as an art.

Scope of Marketing Management.

Marketing management, like all other areas of management comprises of the function of
planning, organising, directing coordinating and controlling.

1. Marketing research:

Marketing research involves identification of needs, wants taste and preferences of the
targeted customer. Marketing management conducts a continuous analysis of consumer’s
behaviour towards firm’s marketing mix strategies, business environment; competitor’s
marketing strategies in order to plan effectively the marketing activities of future.

2. Determination of Objectives:

Marketing management performs the task of setting marketing objectives. The marketing
objectives are set in accordance with the overall organisational objectives of profit
maximization. Marketing objectives relates to attracting new customers, retention of
current customer, expansion of customer base, introduction of new product, improvement
of old product and so on. Marketing management aims at maximising the customer’s value
by providing high satisfaction to the customers.

3. Planning Marketing Activities:

Planning involves determining the future course of action. Planning helps in

accomplishment of objectives in a systematic manner. Planning of marketing activities
relates to determining product line strategies, planning for product diversification,
advertisement and promotional activities, planning related to selling and distribution
process.

Planning may be conducted on short term, medium term and long term basis depending
upon the requirements. Plans should be flexible so as to adjust with the changing business
environment.

4. Product Planning and Development:

Product is the basic element of marketing. Products are goods or services that are offered to
the customer for satisfying their needs and wants. Products are customer oriented and
offered to the customer’s as per their requirement and preferences. Product planning
involves new product development, product innovation, product diversification plan.

5. Pricing of Product:

Pricing is a complex function of marketing management. In most of the cases prices form
the decision making criterion for purchase decision. Pricing decisions are based on cost of
the manufacturing and distribution of product, competitor’s pricing strategies, customer’s
willingness to pay for the product, customer’s perception about the product.

6. Promotion:

Promotion and advertisement are essential in order to maximise sales. Promotion and
advertisement is essential to provide information to the customers about the product, to
attract new customers, to provide reminder to customers about the product and to
continue purchase, to provide information about product improvement or introduction of
new brand. Marketing management develops new techniques and tools for promotion of
their product.

7. Distribution:

Distribution process facilitates easy availability of goods and services to the customers at
right time and at right and convenient location. Selection of distribution channel depends
upon the nature of the product, price of the product, availability of intermediaries for
distribution and cost involved in the distribution process.

8. Evaluation and Controlling of Marketing Activities:

Marketing management performs the task of evaluation and controlling of the marketing
activities. Evaluation enables identification of effectiveness of marketing plans and actions.

Functions of Marketing Management.

Marketing is related to markets and therefore marketing management calls for integration
of the various elements of market. It has the task of organising these elements into an
effective operating system so that it can serve both customer and business enterprise
effectively.

Various functions of marketing management are:

1. Assessing the Marketing Opportunities:

Determination of marketing objectives and assessment of the marketing opportunities for

the firm, is an important function of marketing management. The constantly changing
market conditions and opportunities make it imperative for the marketing management to
come out with planned progammes to meet the challenges, and reap the opportunities.
2. Planning the Marketing Activities:

Planning is an important managerial function. Planning of marketing activities is a crucial

task and involves numerous steps. It involves planning effective strategies to achieve the
desired marketing objectives. It is concerned with formulation of policies relating to
product, price, channels of distribution, promotional measures, forecast of target sales etc.
Planning provides the basis for an effective marketing for the enterprise.

3. Organising the Marketing Activities:

Another significant function of marketing is organising it implies determination of various

activities to be performed and assigning these activities to right person, so that marketing
objectives are achieved. In the light of the changing concept of marketing, it is necessary
that the organisation structure is flexible and accommodative. This will help in better
interaction between organisation and environment.

4. Co-Ordinating Different Activities of Enterprise:

Even the best of planning will not be rewarding if there is improper coordination between
different activities of the organisation. Marketing involves various activities and these are
inter-related and interdependent. Product decisions, pricing strategies, channel structure
research activities all require proper coordination. Only then the objectives can be achieved.

5. Directing and Motivating the Employee:

A good direction is a must for effective performance of marketing functions. Direction helps
in rightful performance of the work. Different leadership style are practised to guide the
subordinates. A leader directs his subordinates and ensures through effective supervision,
that the performance is as per planned specification. At the same time, it is necessary that
employers are properly motivated. Motivation not only helps in better performance by the
employee but also holds him back to the organisation for longer periods.

These days organisations are very serious as far as their motivation policies are concerned.
New ways of motivation are being introduced so that the employee gives his best of
services.

6. Evaluating and Controlling Marketing Efforts:

In order to have a profitable venture, marketing manager must on a continuous basis,

evaluate the marketing efforts. This will help him in knowing the deficiencies if any, which
can be corrected beforehand only and proper adjustments can be made with the changing
environment. Controlling is a managerial function concerned with comparison of actual
performance with the standard performance and locating the shortcomings if any, finally
corrective measures are taken to overcome the shortcomings.
 Financial Management : Nature, Scope, Functions
“Financial management is the activity concerned with planning, raising, controlling and
administering of funds used in the business.” – Guthman and Dougal

“Financial management is that area of business management devoted to a judicious use of

capital and a careful selection of the source of capital in order to enable a spending unit to
move in the direction of reaching the goals.” – J.F. Brandley

Nature, Significance, and Scope of Financial Management

Financial management is an organic function of any business. Any organization needs

finances to obtain physical resources, carry out the production activities and other business
operations, pay compensation to the suppliers, etc. There are many theories around
financial management:

1. Some experts believe that financial management is all about providing funds needed
by a business on terms that are most favorable, keeping its objectives in mind.
Therefore, this approach concerns primarily with the procurement of funds which
may include instruments, institutions, and practices to raise funds. It also takes care
of the legal and accounting relationship between an enterprise and its source of
funds.

2. Another set of experts believe that finance is all about cash. Since all business
transactions involve cash, directly or indirectly, finance is concerned with everything
done by the business.

3. The third and more widely accepted point of view is that financial management
includes the procurement of funds and their effective utilization. For example, in the
case of a manufacturing company, financial management must ensure that funds are
available for installing the production plant and machinery. Further, it must also
ensure that the profits adequately compensate the costs and risks borne by the
business.

In a developed market, most businesses can raise capital easily. However, the real problem
is the efficient utilization of the capital through effective financial planning and control.

Further, the business must ensure that it deals with tasks like ensuring the availability of
funds, allocating them, managing them, investing them, controlling costs, forecasting
financial requirements, planning profits and estimating returns on investment, assessing
working capital, etc.
The scope of Financial Management
The introduction to financial management also requires you to understand the scope of
financial management. It is important that financial decisions take care of the shareholders‘
interests.

Further, they are upheld by the maximization of the wealth of the shareholders, which
depends on the increase in net worth, capital invested in the business, and plowed-back
profits for the growth and prosperity of the organization.

The scope of financial management is explained in the diagram below:

You can understand the nature of financial management by studying the nature of
investment, financing, and dividend decisions.

Core Financial Management Decisions

In organizations, managers in an effort to minimize the costs of procuring finance and using
it in the most profitable manner, take the following decisions:

Investment Decisions: Managers need to decide on the amount of investment available out
of the existing finance, on a long-term and short-term basis. They are of two types:

 Long-term investment decisions or Capital Budgeting mean committing funds for a

long period of time like fixed assets. These decisions are irreversible and usually
include the ones pertaining to investing in a building and/or land, acquiring new
plants/machinery or replacing the old ones, etc. These decisions determine the
financial pursuits and performance of a business.

 Short-term investment decisions or Working Capital Management means committing

funds for a short period of time like current assets. These involve decisions
pertaining to the investment of funds in the inventory, cash, bank deposits, and
other short-term investments. They directly affect the liquidity and performance of
the business.
Financing Decisions: Managers also make decisions pertaining to raising finance from long-
term sources (called Capital Structure) and short-term sources (called Working Capital).
They are of two types:

 Financial Planning decisions which relate to estimating the sources and application
of funds. It means pre-estimating financial needs of an organization to ensure the
availability of adequate finance. The primary objective of financial planning is to plan
and ensure that the funds are available as and when required.

 Capital Structure decisions which involve identifying sources of funds. They also
involve decisions with respect to choosing external sources like issuing shares,
bonds, borrowing from banks or internal sources like retained earnings for raising
funds.

Dividend Decisions: These involve decisions related to the portion of profits that will be
distributed as dividend. Shareholders always demand a higher dividend, while the
management would want to retain profits for business needs. Hence, this is a complex
managerial decision.

Production Management: Nature, Scope, Functions

Nature of Production Management
1. Results in Value Addition: Production management is a key tool available with an
organization which assist in value addition. It is a process which enables in producing
high-quality products by purchasing raw materials from the right source, in right
form, at right price and in right quantity. These quality goods provide better
satisfaction to customers thereby improving goodwill of an organization.

2. Inter-Disciplinary Approach: It is an inter-disciplinary approach which is derived

from several disciplines and subjects. Different subjects like statistics, mathematics,
economics, engineering, sociology and human psychology have contributed toward
the development of production management approach.

3. Part of General Management: Production management is an essential component of

General management. It is a tool which assist managers in planning, organizing,
coordinating and controlling all activities related to the production of products and
services.

4. Transformation Process: It is a process of transformation in which raw materials are

converted into finished products that are ready for consumption by
consumers. Production management focuses on economical production of products
avoiding any wastage of raw materials used.
 5. Operative Function: Production management monitors day to day operations of
business for ensuring long-term continuity. It supervises all production activities on
daily basis for checking out whether all resources are efficiently utilized.

6. Both Art and Science: It can be treated both as an art as well as science. Production
management is termed as art as it is the one which assign, coordinates and monitors
all work activities of an organization. Whereas, it is a science as it manages all
machines and technical aspects helping in production activities.

7. Management of Service Sector: Production management not only manages the

activities related to production of tangible products. It is a process which monitors
the service sector also where intangible products are provided to customers as per
their needs.

Scope of Production Management

Facility location: It involves selecting the right location for setting up production facilities of
business that affects its long term growth. This is an important decision to be taken as it
involves long term commitment and huge investments in land, building and machinery.
Location of facility should be appropriate from where raw materials, labor and other factors
of production are easily accessible by business.

Plant layout and Material Handling: Plant layout is concerned with physical arrangement of
facilities set up by business. It involves deciding departments, work Centre’s, machines and
necessary equipment’s within the facility for ensuring better productivity. Material handling
refers to managing the movement of materials from storeroom to machinery and from
machinery to another stage of production like packaging and storing.

Product Designing: Product designing means giving shapes to ideas of products for
converting them into a reality. Every organization should come up with innovative products
in market after conceiving new ideas based on market requirements.

Designing of Process: Process design is an overall route followed by business for

transforming raw materials into finished products. It is a crucial decision to be taken as it
determines the efficiency of business. It involves choosing appropriate technology, deciding
sequence of production processes and facilities layout.

Production Planning and Control (PPC): It involves planning and controlling various aspects
of production activities. PPC is a process of deciding production in advance, setting up the
exact route for each item, deciding the start and finish deadline of each product for
directing production orders to shops and following product progress in accordance with the
order.

Quality Control: Quality control is a process of checking and maintaining the required
quality standards of production activities within the organization. It ensures that goods
produced are of high quality by setting up check points and measuring performance from
time to time.

Maintaince Management: It refers to evaluation of all business activities for identifying any
deviations if there. Maintaince management involves taking all corrective steps for
removing these deviations. It focuses on keeping all the processes on track in line with
decided quality, pre-determined cost schedule and time range. Taking care of all machinery
repairs, replacement and servicing are included in this.

Functions of Production Management

Functions of Production Management

Selection Of Products And Its Design

Production management helps the firm in selection of proper products and design. Selection
of the right product and its proper design is important for the survival of every business in
the market. It performs several research programs to understand the wants of customers.
Proper knowledge of customer requirements helps the firm in deciding the right product.
After choosing a product, its proper design is selected to ensure that customer needs are
fully satisfied at a lower cost.

Production Planning And Control

Planning and monitor production activities are quite important for every business.
Production management keeps an eye on each and every activities and element associated
with production operations. It decides in advance what to produce and in how much
quantity, then decides process for production, sets the starting and completion dates for
production activities. It designs an exact plan route in advance and implements that in
operations to ensure timely delivery of orders. Production managers monitor all production
activities and take all necessary activities as and when required.

Location Of Facilities

Selection of proper location for setting production facilities is a must for ensuring smooth
functioning. It is a long term capital decision which affects the business organisation in the
long run. Production management properly analyse the area before setting up production
plants and other facilities of business. It takes into account various geographical and other
factors to ensure the availability of raw materials, enough employees and various
infrastructural facilities.

Machines Maintenance And Replacement

Production management plays a significant role in the maintenance of machinery and plant.
Proper functioning of machinery is important for uninterrupted production. Production
management process focuses on continuous routine inspection of machines, performs
regular cleaning and oiling, removal and replacement of any obsolete and damaged
equipment’s. All these steps taken by production management prevent any machinery
breakdown and avoid any production halts.

Enhances Goodwill And Reputation Of Business

Goodwill and image of a business is a key element in attracting and retaining customers.
Production management helps the business in improving its goodwill by properly satisfying
customer needs. Production management ensures that the right quality products at the
right cost are delivered to customers at the right cost. This increase the overall confidence
and satisfaction level of customers.

Helps In Facing Competition

Production management helps the business is facing stiff competition in the market. It
properly analyzes the market requirements and competitors activities before planning for
production activities. All strategies are framed and implemented in accordance with the
situations of the market. It ensures that a firm produces the right product in the right
quantity, at the right time and provides it to the customer at the right cost. Customers’
needs are given prime importance by production management. This will helps in facing the
competition easily.

Helps In Expansion And Growth

Expansion and growth are the ultimate aims of every business. Production management
supports the business in its expansion and growth. It aims at increasing the profitability of
the business by decreasing the overall operating cost. This process ensures optimum
utilisation of all resources. Production monitors operations of every department of business
and takes all corrective measures as and when required. High-profit earnings by business
help in expanding its operations and growing its size.