Principles of Management

BBA SEM I (106 Principles of Management) Bora Institute of Management Sciences
Unit I: Introduction, nature of management, development of management thought, schools of management thought,
management process & co-ordination, managers need to understand internal and external environment.
Que: Define management. Discuss the role of a manager in the modern organization.
Introduction:
Management is an important in the business as brain in the human body. Management consists of six Ms ie Men ,
Material, Machine, Money, Method and Markets. Management is the process of reaching organizational goals by working
with and through people and other organizational resources. The attainment of organizational goals in an efficient and
effective manner through planning, organizing, directing and controlling organizational resources.
Management is a purposive activity. It is something that directs group efforts towards the attainment of certain pre -
determined goals. It is the process of working with and through others to effectively achieve the goals of the organization,
by efficiently using limited resources in the changing world. Of course, these goals may vary from one enterprise to
another. E.g.: For one enterprise it may be launching of new products by conducting market surveys and for other it may
be profit maximization by minimizing cost.
Management has three different meanings:

1. Management as a Discipline: It refers to a field of study having well defined concepts and principles.
2. Management as a process: It is defined as a systematic method of planning activities. It refers to the functions of
management ie planning, organizing, directing and controlling etc.
3. Management as a group of People: It refers to management as a group of people in which we include all those
personnel who perform managerial and non- managerial functions in organizations.
4. Management as an activity: As an activity, management is an art of getting things done through the efforts of
others. It has power to make decisions regarding use and control the resources of the organization- its finance,
equipment, information, material and most important its personnel. It must make the most efficient use of its
resources.
Definitions:
According to Harold Koontz, "Management is the art of getting things done through and with people in formally
organized groups."
According to Henri Fayol, "To manage is to forecast and to plan, to organize, to command, to co-ordinate and to control."
According to Mary Parker Follet, "Management is the art of getting things done through people."
“Management is effective utilization of human and material resources to achieve the enterprise’s objectives.” William F.
Gluck
“Management is the accomplishment of results through efforts of other people.” Lawrence Appley.
“Management means decision making.” Rose Moore.
Characteristics:
1. Continuous and never ending process
Management is a Process. It includes four main functions, viz., Planning, Organizing, Directing and Controlling. The
manager has to Plan and Organize all the activities. He had to give proper Directions to his subordinates. He also has to
Control all the activities. The manager has to perform these functions continuously. Therefore, management is a
continuous and never ending process.
2. Getting things done through people
The managers do not do the work themselves. They get the work done through the workers. The workers should not be
treated like slaves. They should not be tricked, threatened or forced to do the work. A favourable work environment
should be created and maintained.
3. Result oriented science and art
Management is result oriented because it gives a lot of importance to "Results". Examples of Results like, increase in
market share, increase in profits, etc. Management always wants to get the best results at all times.
4. Multidisciplinary in nature
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Management has to get the work done through people. It has to manage people. Therefore, management uses knowledge
from many different subjects such as Economics, Information Technology, Psychology, Sociology, etc. Therefore, it is
multidisciplinary in nature.
5. A group and not an individual activity
Management is not an individual activity. It is a group activity. It uses group (employees) efforts to achieve group
(owners) objectives. It tries to satisfy the needs and wants of a group (consumers). Nowadays, importance is given to the
team (group) and not to individuals.
6. Follows established principles or rules
Management follows established principles, such as division of work, discipline, unity of command, etc. These principles
help to prevent and solve the problems in the organization.
7. Aided but not replaced by computers
Now-a-days, all managers use computers. Computers help the managers to take accurate decisions. However, computers
can only help management. Computers cannot replace management. This is because management takes the final
responsibility. Thus Management is aided (helped) but not replaced by computers.
8. Situational in nature
Management makes plans, policies and decisions according to the situation. It changes its style according to the situation.
It uses different plans, policies, decisions and styles for different situations. The manager first studies the full present
situation. Then he draws conclusions about the situation. Then he makes plans, decisions, etc., which are best for the
present situation. This is called Situational Management.
9. Need not be an ownership
In small organizations, management and ownership are one and the same. However, in large organizations, management
is separate from ownership. The managers are highly qualified professionals who are hired from outside. The owners are
the shareholders of the company.
10. Both an art and science
Management is result-oriented. Therefore, it is an Art. Management conducts continuous research. Thus, it is also a
Science.
11. Management is all pervasive
Management is necessary for running a business. It is also essential for running business, educational, charitable and
religious institutions. Management is a must for all activities, and therefore, it is all pervasive.
12. Management is intangible
Management is intangible, i.e. it cannot be seen and touched, but it can be felt and realised by its results. The success or
failure of management can be judged only by its results. If there is good discipline, good productivity, good profits, etc.,
then the management is successful and vice-versa.
13. Uses a professional approach in work
Managers use a professional approach for getting the work done from their subordinates. They delegate (i.e. give)
authority to their subordinates. They ask their subordinates to give suggestions for improving their work. They also
encourage subordinates to take the initiative. Initiative means to do the right thing at the right time without being guided
or helped by the superior.
14. Dynamic in nature
Management is dynamic in nature. That is, management is creative and innovative. An organization will survive and
succeed only if it is dynamic. It must continuously bring in new and creative ideas, new products, new product features,
new ads, new marketing techniques, etc.
Que: Comment on nature of management

Ans: Nature of Management
The following are the important features or characteristics of management.
1. Management is getting things done: A manager does not do any operating work himself but gets it done through
others. He must motivate the subordinates for the accomplishment of the task assigned to them.
2. Management is an activity: Management is a process of organized activity. It is concerned with the efficient use of
resources like men, money and materials in the organization.
3. Management is a group activity: Management cannot exist independent of the group or organization it manages. It is
a cardinal part of any group activity and inspires workers to put forth their best efforts.
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4. Management is a universal activity: Management is a universal phenomenon. However, management principles are
not universally applicable but are modified to suit the given situation and the type of organization.
5. Management is purposeful: Management is a goal oriented activity. It is concerned with the accomplishment of goals
through its various functions like planning, organizing, staffing, directing, and controlling.
6. Management is a process: Management is a process which involves planning, organizing, directing and controlling the
efforts of human resources in the use of material resources. These are the basic functions which every manager performs
for the accomplishment of certain goals.
7. Management is an integrating process: Management integrates men, machines and materials for performing various
operations and accomplishing the stated goals. Thus, management acts as a catalytic agent in getting maximum
productivity from all the resources.
8. Management is intangible: Management is abstract and cannot be seen with the eyes. It is evidenced by the quality of
the organization and the results. Thus, feeling of management is result-oriented.
9. Management is a profession: Management is a profession because some of its established principles are being applied
in practice.
10. Management is a science and an art: Management has developed certain principles and laws which have wide
applications. So it is treated as a science. It is also an art, because it is concerned with the application of knowledge for the
solution of organizational problems.
11. Management is dynamic: Management is dynamic because it adapts itself to the social changes and introduces
innovation in methodology.
12. Management involves decision-making: Management process involves decision-making at various levels for getting
things done by others. It involves selecting the most appropriate alternative out of the several.
13. Management applies economic principles. Management is the art of applying the economic principles that underline
the control of men and materials in the organization.
14. Management is concerned with direction and control: Management is concerned with the direction and control of
the various activities. It deals particularly with the active direction of the human effort.
Que: Discuss the role, importance and functions of management in detail.
Ans: MANAGEMENT ROLES: In the late 1960s, Henry Mintzberg conducted a precise study of managers at work. He
concluded that managers perform 10 different roles, which are highly interrelated. Management roles refer to specific
categories of managerial behavior. Overall there are ten specific roles performed by managers which are included in the
following three categories:
Formal Authority and status Personal skills and characteristics
Interpersonal Roles Informational Roles Decisional Roles

Figurehead Monitor Entrepreneur
Leader Disseminator
Liaison Disturbance handler
Spokesperson Resource allocator
Negotiator
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1) Interpersonal roles include figurehead, leadership, and liaison activities.

2) Informational roles include monitoring, disseminating, and spokesperson activities.
3) Decisional roles include entrepreneur, disturbance handler, resource allocator, and negotiator.
IMPORTANCE OF MANAGEMENT
The importance of management has been highlighted clearly in the following points:
1. Achievement of group goals: A human group consists of several persons, each specializing in doing a part of the total
task. Each person may be working efficiently, but the group as a whole cannot realize its objectives unless there is mutual
cooperation and coordination among the members of the group. Management creates team-work and coordination in the
group.
2. Optimum utilization of resources: Managers forecast the need for materials, machinery, money and manpower. They
ensure that the organization has adequate resources and at the same time does not have idle resources.
3. Minimization 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.
4. 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
5. Generation of employment: By setting up and expanding business enterprises, managers create jobs for the people.
People earn their livelihood by working in these organizations. Managers also create such an environment that people
working in enterprise can get job satisfaction and happiness
6. 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.
MANAGEMENT FUNCTIONS:
According to the functions approach managers perform certain activities to efficiently and effectively coordinate the work
of others. They can be classified as
1) Planning involves defining goals, establishing strategies for achieving those goals, and developing plans to integrate
and coordinate activities.
2) Organizing involves arranging and structuring work to accomplish the organization’s goals.
3) Leading involves working with and through people to accomplish organizational goals.
4) Controlling involves monitoring, comparing, and correcting work performance.
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The main objectives of management:-
 To increasing organizational effectiveness.

 To achieve optimum utilization of various resources.
 To have co-ordination between various department in the organization.
 To maintain cordial relationship between capital and labour.
 To control the material quality.
 To reduces the execution time for various activities of the organization.
 To help in development of labour force
 To manage and control economy execution.
 To help in achieving the pre-determined objectives
 Getting maximum results through minimum efforts.
 Human service and social justice
Que: Management v/s Administration:

Management and Administration- a comparative study:
According to Theo Haimann, “Administration means overall determination of policies, setting of major objectives, the
identification of general purposes and laying down of broad program and projects”.
It refers to the activities of higher level. It lays down basic principles of the enterprise. According to Newman,
“Administration means guidance, leadership & control of the efforts of the groups towards some common goals”.
Whereas, management involves conceiving, initiating and bringing together the various elements; coordinating, actuating,
integrating the diverse organizational components while sustaining the viability of the organization towards some pre-
determined goals. In other words, it is an art of getting things done through & with the people in formally organized
groups.
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SCOPE OF MANAGEMENT:
The field of management is very wide. The operational areas of business management may be classified into the following
categories:
(i) Production Management: Production management implies planning, organizing, directing and controlling the
production function so as to produce the right goods, in right quantity, at the right time and at the right cost. It includes the
following activities:
(a) Designing the product
(b) Location and layout of plant and building
(c) Planning and control of factory operations
(d) Operation of purchase and storage of materials
(e) Repairs and maintenance
(f) Inventory cost and quality control
(g) Research and development etc.
(ii) 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
(iii) 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 utilization and allocation of raised funds so as to maintain safety and liquidity of funds and the
creditworthiness and profitability of business, and
(e) Administration of earnings Thus, financial management involves the planning, organizing and controlling of the
financial resources.
(iv)Personnel Management: Personnel management involves planning, organizing and controlling the procurement,
development, compensation, maintenance and integration of human resources of an organization. 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.
Que: “Management is regarded as an art by some, science by others and inexact science by many more.” In list of
this statement explain the concept and nature of management.
Ans: Management as an Art, Science or Profession?
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Management can be defined as art, science and profession. So let’s discuss why it is an art, science and profession.
Management as a science:
Management as a science, it has systematized body of knowledge, concept and principles. Management deals different
problems and issues by using quantitative models and decision making techniques and issues by using quantitative models
and decision making techniques to arrive at right decisions. As a science management contains concepts, hypothesis,
theories, experimentation all verified and tested accordingly to clarify about cause and effect relationship between many
facts or events occurred.
→management is systematic body of knowledge with theories, concepts, principles, experiments and functions which are
systematically and logically analyzed
→the theories related to management are applicable and used in all types of organization irrespective of size, type, capital
and so on. However, the usage and method may vary according to the situation of organization and time.
→all the managerial knowledge and practices are developed through various observations and experiments which are
researched and experiment based
→tests of management theories are applied in situational and judgmental cases which help in prediction of future events.
→management is not a pure science but a social science
→management relates itself to cause and effect relationship. Results of modern management are acceptable to all
employees. Good and efficient management system enhances the purity in organization.
Management as an art:
Management includes the activities of planning, organizing, direction, decision making, regulating and integration of all
resources which requires special skill and art. According to Mary Parker,” management is an art of getting things done
through others. Management enables a manager to get thongs done through employees.”
→management performs non programmed and non routine work using creativity and innovations
→management accomplishes any job within time and budget to achieve organizational goals with ease.
→managers apply their interest, ability and skills for solving contemporary issues through decisions which ignite their
creativity. They can use their skills in field of job performance, solving exceptional issues, forming objectives etc.
→managers must posses practical knowledge not only theoretical acquired from experiences which helps in working
according to situation
→managerial activities are practices by using knowledge, ability and skill to solve the problems.
Management as a profession:
In general sense, profession means occupation. Occupation is rendering service. Similarly management is a distinct
profession backed up by specialization. As a professional activity all management efficient people should have academic
qualification and personal qualification from any body. Here profession is not only an occupation of specialized skill but
these skills should be applicable in large scale and interest of society as a whole.
→management is a separate discipline which includes research, observations and practice
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→management requires formal education and training with updates of professionalism.
→professional managers must be joined in an association that follow rules and regulation according to the objectives set.
→a professional association requires code of conduct to maintain self discipline ethical behavior. Violation of code must
be punishable
→organizations should be responsible towards society. An organization gets its birth in a society, lives and grows in a
society and finally liquidates or dissolves in a society. Thu, an organization has responsibility towards members of society
such as consumer, investors, employees and shareholders.
Que: Managerial skills:
Management is a challenging job. It requires certain skills to accomplish such a challenge. Thus, essential skills which
every manager needs for doing a better management are called as Managerial Skills.
According to Professor Robert Katz, there are three managerial skills, viz.,
1. Conceptual Skills,
2. Human Relations Skills, and
3. Technical Skills.
According to Prof. Robert Katz, all managers require above three managerial skills. However, the degree (amount) of
these skills required varies (changes) from levels of management and from an organisation to organisation.
The above picture or diagram shows the managerial skills which are required by managers working at different levels of
management. The top-level managers require more conceptual skills and less technical skills. The lower-level managers
require more technical skills and fewer conceptual skills. Human relations skills are required equally by all three levels of
management.
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1. Conceptual Skills: Conceptual skill is the ability to visualise (see) the organisation as a whole. It includes Analytical,
Creative and Initiative skills. It helps the manager to identify the causes of the problems and not the symptoms. It helps
him to solve the problems for the benefit of the entire organisation.
2. Human Relations Skills: Human relations skills are also called Interpersonal skills. It is an ability to work with
people. It helps the managers to understand, communicate and work with others. It also helps the managers to lead,
motivate and develop team spirit.
3. Technical Skills: A technical skill is the ability to perform the given job. Technical skills help the managers to use
different machines and tools. It also helps them to use various procedures and techniques.
4. Communication Skills: Communication skills are required equally at all three levels of management. A manager must
be able to communicate the plans and policies to the workers. Similarly, he must listen and solve the problems of the
workers. He must encourage a free-flow of communication in the organisation.
5. Administrative Skills: Administrative skills are required at the top-level management. The top-level managers should
know how to make plans and policies. They should also know how to get the work done. They should be able to co-
ordinate different activities of the organization. They should also be able to control the full organization.
6. Leadership Skills: Leadership skill is the ability to influence human behavior. A manager requires leadership skills to
motivate the workers. These skills help the Manager to get the work done through the workers.
7. Problem Solving Skills: Problem solving skills are also called as Design skills. A manager should know how to
identify a problem. He should also possess an ability to find a best solution for solving any specific problem. This requires
intelligence, experience and up-to-date knowledge of the latest developments.
8. Decision Making Skills: Decision-making skills are required at all levels of management. However, it is required more
at the top-level of management. A manager must be able to take quick and correct decisions. He must also be able to
implement his decision wisely. The success or failure of a manager depends upon the correctness of his decisions.
Que: Levels of Management:

Many managers work in an organization. However, these managers do not work at the same level. They work and operate
at different positions. Hierarchy of these managerial positions is called Levels of Management. Generally, there are
Three Levels of Management, viz.,
1. Administrative or Top Level of Management.

2. Executive or Middle Level of Management.
3. Supervisory or Lower Level of Management.
At each level, individual manager has to carry out different roles and functions.
Top Level of Management:

The Top Level Management consists of the Board of Directors (BOD) and the Chief Executive Officer (CEO). The Chief
Executive Officer is also called General Manager (GM) or Managing Director (MD) or President. The Board of Directors
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are the representatives of the Shareholders, i.e. they are selected by the Shareholders of the company. Similarly, the Chief
Executive Officer is selected by the Board of Directors of an organization.
Middle Level of Management:
The Middle Level Management consists of the Departmental Heads (HOD), Branch Managers, and the Junior Executives.
The Departmental heads are Finance Managers, Purchase Managers, etc. The Branch Managers are the head of a branch
or local unit. The Junior Executives are Assistant Finance Managers, Assistant Purchase Managers, etc. The Middle level
Management is selected by the Top Level Management.
Lower Level of Management
The lower level management consists of the Foremen and the Supervisors. They are selected by the middle level
management. It is also called Operative / Supervisory level or First Line of Management.
Que: Management process and co-ordination:

Ans: Meaning of Management Process:
The term management is explained in different ways. For example, it is said that management is what management does.
Here, management is explained with reference to its basic functions which include planning, organizing, coordinating and
controlling. Similarly, management is described as a process which involves various elements. Management process is a
continuous one and is run by the managers functioning at different levels.
Definition of Management Process

According to D. E. McFarland, "Management is the distinct process by which the managers create, direct, maintain and
operate purposive organization through systematic, co-coordinated and cooperative human efforts”.
According to Gemp R. Terry, "Management is a distinct process consisting of planning, organizing, actuating, and
controlling, performed to determine and accomplish objectives by the use of people and other resources".
Functions of Management
The essential elements/components of Management Process are four.
1. Planning
2. Organizing
3. Directing and
4. Controlling.
We may add some more elements in the management process. Such elements are:-
i) Motivating
ii) Co-coordinating
iii) Staffing and
iv) Communicating.
The elements in the management process are actually the basic functions of management these functions constitute the
management process in practice. Management process is in fact, management in practice. This process suggests what a
manager is supposed to, do or the basic functions that he has to perform while managing the job assigned to him.
Luther Gullic gave a new formula to suggest the elements of Management Process i.e. basic functions of management.
According to him, management process may be indicated by the word "PODSCORB”. Here, ‘P' states for 'planning'. "O"
for 'organizing', "D" for 'directing', "S" for 'Staffing', "CO" for 'Coordinating, "R" for 'Reporting' and "B" for 'Budgeting'.
Gullic coined the word "PODSCORB" to suggest seven functions of management.
The following figures show the management process and the elements involved:
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Elements of Management Process
1. Planning: Planning is the primary function of management. It involves determination of a course of action to achieve
desired results/objectives. Planning is the starting point of management process and all other functions of management are
related to and dependent on planning function.
2. Organizing: Organizing is next to planning. It means to bring the resources (men, materials, machines, etc.) together
and use them properly for achieving the objectives. Organizing means arranging ways and means for the execution of a
business plan. It provides suitable administrative structure and facilitates execution of proposed plan.
3. Staffing: Staffing refers to manpower required for the execution of a business plan. Staffing, as managerial function,
involves recruitment, selection, appraisal, remuneration and development of managerial personnel.
4. Directing (Leading): Directing as a managerial function, deals with guiding and instructing people to do the work in
the right manner. Directing/leading is the responsibility of managers at all levels. They have to work as leaders of their
subordinates.
5. Coordinating: Effective coordination and also integration of activities of different departments are essential for orderly
working of an Organization. This suggests the importance of coordinating as management function. A manager must
coordinate the work for which he is accountable. Co-ordination is rightly treated as the essence of management.
6. Controlling: Controlling is an important function of management. It is necessary in the case of individuals and
departments so as to avoid wrong actions and activities. Controlling involves three broad aspects: (a) establishing
standards of performance, (b) measuring work in progress and interpreting results achieved, and (c) taking corrective
actions.
7. Motivating: Motivating is one managerial function in which a manager motivates his men to give their best to the
Organization. It means to encourage people to take more interest and initiative in the work assigned. Organizations
prosper when the employees are motivated through special efforts including provision of facilities and incentives.
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8. Communicating: Communication (written or oral) is necessary for the exchange of facts, opinions, ideas and
information between individual’s and departments. In an organization, communication is useful for giving information,
guidance and instructions.
Que: Development of Management Thought:
Management thought has a long history. It is as old as human civilization itself. Management in one form or the other has
been a significant feature of economic life of mankind throughout ages. Management thought is an evolutionary concept.
Evolution of Management Thought
This evolution of management thought can be studied in the following three broad stages:
1. The Classical Theory of Management (Classical Approach): It includes the following three streams of thought: (i)
Bureaucracy, (ii) Scientific Management; and (iii) Administrative Management
2. The Neo-classical theory of Management: It includes the following two streams: (i) Human Relations Approach and
(ii) Behavioral Sciences Approach.
3. The Modern Theory of Management: It includes the following three streams of thought: (i) Quantitative Approach to
Management (Operations Research); (ii) Systems Approach to Management and (iii) Contingency Approach to
Management.
Que: Differentiate between the theories of Taylor and Fayol. What is the modern approach towards management?
Or What are the basic elements & tools of scientific management?
I] The classical Theory of Management:
a) Taylor's Scientific Management: Contribution of F. W. Taylor to Management Thought F.W. Taylor is one of the
founders (the other two are Max Weber and Henry Fayol) of classical thought/classical theory of management. He
suggested scientific approach to management also called scientific management theory. F. W. Taylor (1856-1915) is
rightly treated as the father of scientific management. He suggested the principles of scientific management.
Principles of Scientific Management

According to Taylor, scientific management in its essence consists of a philosophy which results in a combination of four
important underlying principles of management
1. The development of 'One best way" of doing a job. This suggests the task of finding out the best method for
achieving the objectives of a given job. The standards are decided scientifically for Jobs and incentive wages were
paid for all production above this standard. Here, job analysis and standardization of tools, equipment, machinery,
etc. are required.
2. Scientific selection of workers and their development through proper training.
3. Scientific approach by management. The management has to develop a true science in all fields of work activity
through scientific investigation and experiments.
4. Close co-operation of managers and workers (labour management relations) for better results and understandings.
5. Elimination of conflict between methods and men. The workers are likely to resist to new methods. This can be
avoided by providing them an opportunity to earn more wages.
Benefits / Advantages of Scientific Management
1. Application and use of scientific methods.

2. Wide scope for specialization and accurate planning.
3. Minimum wastages of materials, time and money.
4. Cordial relations between workers and management.
5. Benefits to workers (higher wages and less burden of work), management (cost reduction, better quality productions)
and consumers (superior goods at lower prices)
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F. W. Taylor’s Contribution to the Development of Management Thought / Science
The contribution of F. W. Taylor to management thought is as explained below:
Emphasis on rational thinking: Taylor suggested rational thinking on the part of management for raising efficiency
and productivity. He wanted managements to replace old methods and techniques by Modern methods which will raise
productivity and offer benefits to all concerned parties.
Introduction of better methods and techniques of production: F. W. Taylor suggested the importance of improved
methods and techniques of production. Work-study techniques are his contribution to management thought. He
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suggested new methods after systematic study and research. Taylor recommended the use of new methods for raising
overall efficiency and productivity.
Emphasis on planning and control of production: Taylor suggested the importance of production planning and
control for high production, superior quality production and also for low cost production. He introduced the concept of
production management in a systematic way.
Importance of personnel and personnel department: Taylor suggested the importance of manpower in management.
He was in favor of progressive personnel policies for the creation of efficient and satisfied labor force. He suggested the
need of personnel department and its importance. He favored incentive wage payment to workers.
Industrial fatigue and rest pauses: Taylor noted the nature of industrial fatigue and suggested the introduction of
suitable rest pauses for removing such fatigue of workers. He wanted to reduce the burden of work on workers through
the use of scientific methods.
Time and motion study: Taylor introduced new concepts like time study, motion study and work study in the field of
industrial management such concepts are for the introduction of new methods which will be more quick, scientific and
less troublesome to workers.
Criticism of Scientific Management or Opposition to Scientific Management

Criticism from Employers
1. Huge investment required: Heavy investment is necessary for reorganization of preliminary standardization of tools,
machines and equipment and conduct of time and motion studies and other research activities for the introduction of
scientific management. Such investment may not be possible in small and medium size enterprises.
2. Sudden change may disturb existing working arrangements: Sudden change due to the introduction of scientific
management may paralyze the existing arrangement of work and will bring the entire Organisation in difficulties. There
will be loss due to reorganization, if scientific management is to be introduced.
3. Unsuitable to small units: Small manufacturers argue that the concept of scientific management is not suitable to their
units due to financial and other difficulties.
4. Benefits after a long period: The benefit of scientific management will be available only after a long period and the
business unit may come in financial and other difficulties during the process of introduction of new changes as suggested
in the scientific management.
5. Huge overhead expenses required: Introduction of scientific management involves huge overhead expenses which
may erode profitability.
Que: Critically examine the contributions of Henry Fayol in the field of management. Or Assess the contribution of
Henry Fayol to the development of management thought.
Ans: b) Fayol Administrative Theory: Henri Fayol, a mining engineer and manager by profession, defined the nature
and working patterns of the twentieth-century organization in his book, General and Industrial Management, published in
1916. In it, he laid down what he called 14 principles of management. This theory is also called the Administrative
Theory. The principles of the theory are:
1. Division of work: tasks should be divided up with employees specializing in a limited set of tasks so that expertise is
developed and productivity increased.
2. Authority and responsibility: authority is the right to give orders and entails enforcing them with rewards and
penalties; authority should be matched with corresponding responsibility.
3. Discipline: this is essential for the smooth running of business and is dependent on good leadership, clear and fair
arguments, and the judicious application of penalties.
4. Unity of command: for any action whatsoever, an employee should receive orders from one superior only; otherwise
authority, discipline, order, and stability are threatened.
5. Unity of direction: a group of activities concerned with a single objective should be co-coordinated by a single plan
under one head.
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6. Subordination of individual interest to general interest: individual or group goals must not be allowed to override
those of the business.
7. Remuneration of personnel: this may be achieved by various methods but it should be fair, encourage effort, and not
lead to overpayment.
8. Centralization: the extent to which orders should be issued only from the top of the organization is a problem which
should take into account its characteristics, such as size and the capabilities of the personnel.
9. Scalar chain (line of authority): communications should normally flow up and down the line of authority running
from the top to the bottom of the organization, but sideways communication between those of equivalent rank in different
departments can be desirable so long as superiors are kept informed.
10. Order: both materials and personnel must always be in their proper place; people must be suited to their posts so there
must be careful organization of work and selection of personnel.
11. Equity: personnel must be treated with kindness and justice.
12. Stability of tenure of personnel: rapid turnover of personnel should be avoided because of the time required for the
development of expertise.
13. Initiative: all employees should be encouraged to exercise initiative within limits imposed by the requirements of
authority and discipline.
14. Esprit de corps: efforts must be made to promote harmony within the organization and prevent dissension and
divisiveness.
c) Structural theory/ Weber’s Bureaucratic Model:

Simultaneously, the German sociologist Max Weber developed a theory of authority structures and described
organizational activity as based on authority relation. He was one who looked at management and organizational behavior
from a structural perspective.
Weber described an ideal type of organization that he called a bureaucracy. The detail features of his ideal bureaucratic
structure are as follows:
i. Job — specialization: Jobs are broken into simple, routine and well defined tasks.
ii. Authority hierarchy: Positions are organized in a hierarchy, each lower one controlled by and supervised by a higher
one.
iii. Formal selection: All organization members be selected on the basis of technical qualifications demonstrated by
training, education or exams.
iv. Rules and regulations.- To ensure uniformity and to regulate the actions of employees, managers must depend upon
company’s rules.
v. Impersonality.- Rules and controls are applied uniformly. Avoiding involvement of personalities and personnel
preferences.
vi. Career orientation: Managers are professionals and not owners of units they manage. They work for fixed salaries
and pursue their careers within their organizations.
or almost a century.
Que: Neo classical theory Or Discuss the contributions of ‘ Hawthorne experiments’ in the development of
management thought Or Discuss in brief the facts uncovered by Hawthorne Experiments and out their significance
from the organ point of view.
Ans: II] NEO-CLASSICAL THEORY
1. Human Relations
Contribution of Elton Mayo to the Development of Management Thought
Hawthorne Experiment:
In 1927, a group of researchers led by Elton Mayo and Fritz Roethlisberger of the Harvard Business School were invited
to join in the studies at the Hawthorne Works of Western Electric Company, Chicago. The experiment lasted up to 1932.
The Hawthorne Experiments brought out that the productivity of the employees is not the function of only physical
conditions of work and money wages paid to them. Productivity of employees depends heavily upon the satisfaction of the
employees in their work situation. Mayo’s idea was that logical factors were far less important than emotional factors in
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determining productivity efficiency. Furthermore, of all the human factors influencing employee behaviour, the most
powerful were those emanating from the worker’s participation in social groups. Thus, Mayo concluded that work
arrangements in addition to meeting the objective requirements of production must at the same time satisfy the
employee’s subjective requirement of social satisfaction at his work place. The Hawthorne experiment consists of four
parts. These parts are briefly described below:-
1. Illumination Experiment.
2. Relay Assembly Test Room Experiment.
3. Interviewing Programme.
4. Bank Wiring Test Room Experiment.
1. Illumination Experiment:
This experiment was conducted to establish relationship between output and illumination. When the intensity of light was
increased, the output also increased. The output showed an upward trend even when the illumination was gradually
brought down to the normal level. Therefore, it was concluded that there is no consistent relationship between output of
workers and illumination in the factory. There must be some other factor which affected productivity.
2. Relay Assembly Test Room Experiment:
This phase aimed at knowing not only the impact of illumination on production but also other factors like length of the
working day, rest hours, and other physical conditions. In this experiment, a small homogeneous work-group of six girls
was constituted. These girls were friendly to each other and were asked to work in a very informal atmosphere under the
supervision of a researcher. Productivity and morale increased considerably during the period of the experiment.
Productivity went on increasing and stabilized at a high level even when all the improvements were taken away and the
pre-test conditions were reintroduced. The researchers concluded that socio-psychological factors such as feeling of being
important, recognition, attention, participation, cohesive work-group, and non-directive supervision held the key for
higher productivity.
3. Mass Interview Programme:
The objective of this programme was to make a systematic study of the employees’ attitudes which would reveal the
meaning which their “working situation” has for them. The researchers interviewed a large number of workers with regard
to their opinions on work, working conditions and supervision. Initially, a direct approach was used whereby interviews
asked questions considered important by managers and researchers. The researchers observed that the replies of the
workmen were guarded. Therefore, this approach was replaced by an indirect technique, where the interviewer simply
listened to what the workmen had to say. The findings confirmed the importance of social factors at work in the total work
environment.
4. Bank Wiring Test Room Experiment:
This experiment was conducted by Roethlisberger and Dickson with a view to develop a new method of observation and
obtaining more exact information about social groups within a company and also finding out the causes which restrict
output. The experiment was conducted to study a group of workers under conditions which were as close as possible to
normal. This group comprised of 14 workers. After the experiment, the production records of this group were compared
with their earlier production records. It was observed that the group evolved its own production norms for each individual
worker, which was made lower than those set by the management. Because of this, workers would produce only that
much, thereby defeating the incentive system. Those workers who tried to produce more than the group norms were
isolated, harassed or punished by the group. The findings of the study are:-
 Each individual was restricting output.
 The group had its own “unofficial” standards of performance.
 Individual output remained fairly constant over a period of time.
 Informal groups play an important role in the working of an organization.
Contributions of the Hawthorne Experiment:
Elton Mayo and his associates conducted their studies in the Hawthorne plant of the western electrical company, U.S.A.,
between 1927 and 1930. According to them, behavioural science methods have many areas of application in management.
The important features of the Hawthorne Experiment are:-
1. A business organization is basically a social system. It is not just a techno-economic system.
2. The employer can be motivated by psychological and social wants because his behaviour is also influenced by
feelings, emotions and attitudes. Thus economic incentives are not the only method to motivate people.
3. Management must learn to develop co-operative attitudes and not rely merely on command.
4. Participation becomes an important instrument in human relations movement. In order to achieve participation,
effective two-way communication network is essential.
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5. Productivity is linked with employee satisfaction in any business organization. Therefore management must take
greater interest in employee satisfaction.
6. Group psychology plays an important role in any business organization. We must therefore rely more on informal
group effort.
7. The neo-classical theory emphasizes that man is a living machine and he is far more important than the inanimate
machine. Hence, the key to higher productivity lies in employee morale. High morale results in higher output.
Features of Human Relations Approach

a) A business organisation is not merely a techno-economic system but also a social system and involves human
element.
b) An individual employee is motivated not merely by economic incentives but also by non economic incentives,
psychological and social interests, needs and aspirations.
c) The informal groups in the organisation are more important than individuals and play an important role in raising
productivity.
d) In place of task-centered leadership, the employee-centered, humanistic, democratic and participative style of
leadership should be introduced as it is more effective / productive.
e) Employees are not necessarily inefficient or negative in their approach. They are capable of self-direction and
control.
f) Employee’s performance can be raised by meeting their social and psychological needs. Cordial atmosphere at
work place is also useful for raising productivity.
g) Management needs social skills along with technical skills in order to create a feeling (among the employees) that
they are a part and parcel of the organisation and not outsiders.
h) Employees need respect and positive feeling from the management. For this, employees should be encouraged to
participate and communicate freely their views and suggestions in the concerned areas of decision-making.
i) The management has to secure willing cooperation of employees. The objective before the management should be
to secure cooperative effort of its employees. For this, employees should be made happy and satisfied.
Limitations of Human Relations Approach

1. Too much importance to employees, and social needs: Human relations approach to management has given too
much importance to employees, their needs and satisfaction. It has given undue stress on the social side of management
as compared to technical side. It is another extreme as compared to classical theory where employees were neglected
considerably. Human relations approach has also neglected many other aspects such as organizational issues,
environment at the work place, labor unions, structure of the organization and so on.
2. Employee-oriented approach to a limited extent: It is argued that human relations approach is apparently employee-
oriented but in reality it is organization-oriented. Many measures are suggested for the happiness and satisfaction of
employees. Measures are suggested to satisfy employees in order to achieve organizational objectives and not for
meeting the real needs of workers. Their participation in management or upward communication with the management,
etc. is outwardly employee-oriented and gives them a false sense of happiness. In brief, the human relations approach is
employee-oriented but only to a limited extent.
3. Faulty assumption in the theory: The human relations approach is based on a wrong assumption that satisfied
workers are more productive. After 1950s, it was proved that productivity improvement, as a result of better working
conditions and the human relations skills of manager’s did not result in productivity improvement as expected. Thus,
workers satisfaction is one but not the only factor which raises industrial productivity.
4. Limited importance to economic incentives: The human relations approach has given limited importance to
economic incentives in motivating employees. They prefer informal groups and cordial relations among them.
However, their interest and loyalty to the organization largely depends on monetary incentives. Low wages lead to
Labor turnover even when the good treatment is given to employees.
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2. Behavioral Science Approach
Main contributors - Maslow, F.Herz berg & D.Mc Gregor. Application of behavioral science such as psychology,
sociology & anthropology to the study of human relationship.
1) Organisation is basically a social system and not just techno economical system.
2) Individuals may behave differently under different situations.
3) Attempts should be made to connect organisational goals & human needs.
4) Management must develop social skills in addition to technical skill. Man to man relationship, team spirit & group
harmony should be given top preference by management.
III. MODERN MANAGEMENT THEORIES

Contributions to management thought/theory after 1960s are covered by modem management theories. Modem theories
are based on classical and neo-classical theories but consider the management problems as they developed in the recent
years. There are three streams under modern management theory. These are:-
a. Quantitative / Mathematical Approach to Management,

b. Systems Approach to Management, and
c. Contingency Approach to Management.
1. Systems Approach to Management Thought
Systems Management School: A system is an organised entity i.e. a company or a business enterprise made up of parts
connected and directed to some purpose. Each system has an input, a process and an output. It acts as a self sufficient unit.
Every system is interlinked with its subsystems.
Features of Systems Approach to Management
1. Open or Closed Systems: Systems may be either open or dosed. An open system is one that is dependent on the
outside environment for survival e.g., human body as a system is composed of many subsystems. This is an open
system and it must depend on outside input and energy for survival. A system is considered closed if it does not interact
with the environment. Physical and mechanical Systems are closed system because they are insulted from their external
environment. Traditional organisation theorists regarded organisations as closed systems while according to the modern
view organizations are open systems, always interacting with the environment.
2. Interdependent parts: A system is a set of interdependent parts which together form a unitary whole that perform
some function. An organisation is also a system which consists of four interdependent parts viz., task, structure, people
and technology.
3. Consideration of whole system: No part of the system can be precisely analyzed and under-stood apart from the whole
system. Conversely, the whole system cannot be exactly evaluated without understanding all its parts. Each part is
related to every other part
4. Information, energy and material: Generally, there are three basic inputs that enter the processor of the system viz.,
information (technology), energy (motive power) and materials to be transformed into goods. If the output is service,
materials are not included in the inputs. If we have manufacturing company, output is goods or materials. If we have a
consultancy firm, output is information or advice. if we have a power generating company, output is energy.
5. Defined boundaries: Each system including an organisation has its own boundaries which separate it from other
system in the environment. For open systems the boundaries are penetrable whereas for closed systems, they are not.
6. Synergy: Output of a system is always more than the combined output of its parts. This is called 'synergy’. In
organizational terms, synergy means when separate departments within an organisation cooperate and interact, they
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become more productive than if they had acted in isolation e.g., it is certainly more efficient for each department to deal
with one secretarial department than for each department to have a separate secretarial department of its own.
7. Feedback mechanism: A system can adopt and adjust itself to the changing environment through the feedback
mechanism. As operations of the system proceed information in feedback to the appropriate people. This helps to assess
the work and if need be, to get it corrected.
8. Multidisciplinary approach: Systems approach integrates and uses with profit ideas emerging from different schools
of thought. Management freely draws concepts and techniques from many fields of study such as psychology,
sociology, ecology, economics, mathematics, statistics, operations research, systems analysis etc.
Que: Contingency Theory:

Ans: 2. Contingency Management School / Contingency Approach to Management / Situational Approach
The contingency/situational approach is the second approach (the first being the systems approach) which attempts to
integrate the various schools of management thought in an orderly manner. The contingency management approach is
similar to known leadership theory called situational leadership theory. The basic theme of contingency approach is that
organisations have to deal with different situations in different ways. There is no single best way of managing applicable
to all situations. In order to be effective, the internal functioning of the organisation must be consistent with the needs and
demands of the external environment. In other words internal organisation should have the capacity to face any type of
external situation with confidence.
Features of the Contingency / Situational Approach
1. Management is entirely situational. The management has to use the measures/techniques as per the situation from time
to time.
2. Management should match its approach as per the requirements of the situation. The policies and practices used should
be suitable to environmental changes.
3. The success of management depends on its ability to cope up with its environment. Naturally, it has to make special
efforts to anticipate and comprehend the possible environmental changes. Managers should realize that there is no one
best way to manage. They have to use management techniques as per the situation which they face.
Merits of Contingency Approach
1. Contingency approach is pragmatic and open minded It discounts preconceived notions, and universal validity of
principles.
2. Theory relieves managers from dogmas and set principles. It provides freedom/choice to manage to judge the
external environment and use the most suitable management techniques. Here, importance is given to the
judgment of the situation and not the use of specific principles.
3. The contingency approach has a wide-ranging applicability and practical utility in, organisation and management.
It advocates comparative analysis of organisations to bring suitable adjustment between organisation structure and
situational peculiarities.
4. The contingency approach focuses attention on situational factors that affect the management strategy. The theory
combines the mechanistic and humanistic approaches to fit particular/specific situation. It is superior to systems
theory as it not only examines the relationships between sub-systems of an organisation but also the relationship
between the organisation and its external environment.
Limitations of Contingency Approach

1. It is argued that the contingency approach lacks a theoretical base.
2. Under contingency approach, a manager is supposed to think through all possible alternatives as he has no dried
principles to act upon. This brings the need of more qualities and skills on the part of managers. The responsibility of a
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manager increases as he has to analyze the situation, examine the validity of different principles and techniques to the
situation at hand, make right choice by matching the technique to the situation and finally execute his choice. The areas of
operation of a manager are quite extensive under this theory.
3. Quantitative Approach
Main contributors – Taylor, Gilbreths, Gantt, Newman &Joel Dean.
1) Management is concerned with problem solving and it must make use of mathematical tools and techniques for the
purpose.
2) The different factors involved in management can be quantified and expressed in the form of equations which can be
solved with the help of mathematical tools.
3) Management problems can be described in mathematical models.
4) Operation research, mathematical tools, simulation and model building are the basic methodologies developed by this
approach.
Que: “Managers needs to understand the internal as well as the external environment in which their organization
in operating.” In the light of above what are the major factors they need to consider?
Ans: Business Environment:
Every business organization has to interact and transit with its environment. Hence, both the business and environment are
totally interrelated and mutually interdependent.
“The environment of a company as the pattern of all external influences that affect its life and development.”
Nature of Business Environment:
1. Complex in nature
2. Dynamic
3. Interdependence
4. Relatively
5. Totality of external factors
6. Specific and general forces
7. Uncertainty
8. Inter-relatedness
Components of Business Environment:

Internal environment External Environment
a) Financial factors a) Micro Environment:
b) Physical and human resources Suppliers, Customers, Competitors
c) Objectives of business Marketing intermediaries, public
d) Managerial policies b)Macro Environment:
e) Morale and commitment of human resources social, legal, international, political
f) Work environment technological, economic and natural
g) Company image and brand equity
h) Labour management relationship
i) R&D and technological capabilities
j) Promoter’s vision
Managers need for understanding Internal and external environment:
a) Basis of decisions
b) Survival
c) Early warning signal
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d) Public image
e) Giving direction for growth
f) Technological planning
g) Change agent
h) Continuous learning
i) Image building
j) Customer focus
k) First mover advantage
l) Strategy formulation
The SWOT Analysis

SWOT is a structured planning tool that can be used to evaluate the Strengths, Weaknesses, Opportunities, and Threats
involved in running a business venture. Using a SWOT analysis can be used to help a business determine the advantages
or disadvantages of changes they want to make based on internal and external factors. A SWOT analysis can be broken
into two distinct parts. The strengths and weaknesses are based on internal environmental factors. Opportunities and
threats are based on external environmental factors.
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UNIT II
Planning:
Syllabus: Planning: Fundaments of planning, objectives, policy & strategy, forecasting, decision making,
organizing; organization theory, design of organization structure, authority & responsibility, line & staff
relationships, pattern organizational design, groups in organization, dysfunctional aspects of organization,
organizational change.
Que: “Planning and decision making are the two faces of the same coin.” Comment. Also explain the
steps in decision making process giving suitable example.
Ans: When a manager makes a decision, it is in effect the organization’s response to a problem. As such,
decisions should be thought of as means rather than ends. Every decision is the outcome of a dynamic process
which is influenced by multiple forces. A process is basically a dynamic concept rather than static. Events and
relationships are dynamic, continuous and flexible and must be considered as a whole in which many forces
interact, a force affecting others and being affected by others. Moreover, the process reveals that it is more
applicable to non-programmed decisions than to characterized by a great deal of uncertainty regarding their
outcome; require the manager to utilize the entire process. For frequently occurring structured problems. It is
not necessary to consider the entire process. If the policy is established or a specific rule or procedure developed
to handle such problems, it will not be necessary to develop and evaluate various alternatives each time the
problem arises.
Process of Decision Making:

These steps can be explained as under:
1. Define the problem:
The first and the foremost step in the decision-making process are to define the real problem. A problem can be
explained as a question for and appropriate solution. The manager should consider critical or strategic factors in
defining the problem. These factors are, in fact, obstacles in the way of finding proper solution. These are also
known as limiting factors.
For example, if a machine stops working due to non-availability of screw, screw is the limiting factor in this
case. Similarly fuse is a limiting or critical factor in house lighting. While selecting alternative or probable
solution to the problem, the more the decision-making takes into account those factors that are limiting or
critical to the alternative solutions, the easier it becomes to take the best decision.
2. Analysing the problem:
After defining the problem, the next important step is a systematic analysis of the available data. Sound
decisions are based on proper collection, classification and analysis of facts and figures.
3. Developing alternative solutions:
After defining and analysing the problem, the next step is to develop alternative solutions. The main aim of
developing alternative solutions is to have the best possible decision out of the available alternative courses of
action. In developing alternative solutions the manager comes across creative or original solutions to the
problems.
4. Selecting the best type of alternative:
After developing various alternatives, the manager has to select the best alternative. It is not an easy task.
5. Implementation of the decision:
Under this step, a manager has to put the selected decision into action.
For proper and effective execution of the decision, three things are very important i.e.,
(a) Proper and effective communication of decisions to the subordinates. Decisions should be communicated in
clear, concise and understandable manner.
(b) Acceptance of decision by the subordinates is important. Group participation and involvement of the
employees will facilitate the smooth execution of decisions.
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(c) Correct timing in the execution of decision minimizes the resistance to change. Almost every decision
introduces a change and people are hesitant to accept a change. Implementation of the decision at the proper
time plays an important role in the execution of the decision.
6. Follow up:
A follow up system ensures the achievement of the objectives. It is exercised through control. Simply stated it is
concerned with the process of checking the proper implementation of decision. Follow up is indispensable so as
to modify and improve upon the decisions at the earliest opportunity.
7. Monitoring and feedback:

Feedback provides the means of determining the effectiveness of the implemented decision. If possible, a
mechanism should be built which would give periodic reports on the success of the implementation. In addition,
the mechanisms should also serve as an instrument of “preventive maintenance”, so that the problems can be
prevented before they occur.
Planning: Introduction:
Planning can be defined as “thinking in advance what is to be done, when it is to be done, how it is to be done and by
whom it should be done”. In simple words we can say, planning bridges the gap between where we are standing today and
where we want to reach.
Planning involves setting objectives and deciding in advance the appropriate course of action to achieve these objectives
so we can also define planning as setting up of objectives and targets and formulating an action plan to achieve them.
Features/Nature/Characteristic of Planning:
1. Planning contributes to Objectives:
Planning starts with the determination of objectives. We cannot think of planning in absence of objective. After setting up
of the objectives, planning decides the methods, procedures and steps to be taken for achievement of set objectives.
Planners also help and bring changes in the plan if things are not moving in the direction of objectives.
2. Planning is Primary function of management:
Planning is the primary or first function to be performed by every manager. No other function can be executed by the
manager without performing planning function because objectives are set up in planning and other functions depend on
the objectives only.
3. Pervasive:
Planning is required at all levels of the management. It is not a function restricted to top level managers only but planning
is done by managers at every level.
4. Planning is futuristic/Forward looking:
Planning always means looking ahead or planning is a futuristic function. Planning is never done for the past. All the
managers try to make predictions and assumptions for future and these predictions are made on the basis of past
experiences of the manager and with the regular and intelligent scanning of the general environment.
5. Planning is continuous:
Planning is a never ending or continuous process because after making plans also one has to be in touch with the changes
in changing environment and in the selection of one best way.
6. Planning involves decision making:
The planning function is needed only when different alternatives are available and we have to select most suitable
alternative. We cannot imagine planning in absence of choice because in planning function managers evaluate various
alternatives and select the most appropriate. But if there is one alternative available then there is no requirement of
planning.
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7. Planning is a mental exercise:

It is mental exercise. Planning is a mental process which requires higher thinking that is why it is kept separate from
operational activities by Taylor. In planning assumptions and predictions regarding future are made by scanning the
environment properly.
Objectives of Planning
1. Reduce uncertainty and co-ordination
2. Bring co-operation and co-ordination
3. Remove conflicts
4. Avoid duplication of work
5. Economy in operation
6. Best utilization of resources
7. Anticipate unpredictable contingencies and events
8. Achieve pre-determined goals
9. Reduce competition
Need of Planning:
1. Providing knowledge
2. Planning gives a definite direction to work
3. Forecasting
4. Planning brings certainty in actions
5. Best utilization of scarce resources
6. Planning brings economy in management efforts
7. It brings uniformity and co-ordination in activities
8. Achieving determined objectives
9. Increasing efficiency
10. Decreased future risks
Importance/Significance of Planning:
1. Planning provides Direction:
Planning is concerned with predetermined course of action. It provides the directions to the efforts of employees. Planning
makes clear what employees have to do, how to do, etc.
2. Planning Reduces the risk of uncertainties:
Organisations have to face many uncertainties and unexpected situations every day. Planning helps the manager to face
the uncertainty because planners try to foresee the future by making some assumptions regarding future keeping in mind
their past experiences and scanning of business environments.
3. Planning reduces over lapping and wasteful activities:
The organisational plans are made keeping in mind the requirements of all the departments. The departmental plans are
derived from main organisational plan. As a result there will be co-ordination in different departments. On the other hand,
if the managers, non-managers and all the employees are following course of action according to plan then there will be
integration in the activities. Plans ensure clarity of thoughts and action and work can be carried out smoothly.
4. Planning Promotes innovative ideas:
Planning requires high thinking and it is an intellectual process. So, there is a great scope of finding better ideas, better
methods and procedures to perform a particular job. Planning process forces managers to think differently and assume the
future conditions. So, it makes the managers innovative and creative.
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5. Planning Facilitates Decision Making:

Planning helps the managers to take various decisions. As in planning goals are set in advance and predictions are made
for future. These predictions and goals help the manager to take fast decisions.
6. Planning establishes standard for controlling:
Controlling means comparison between planned and actual output and if there is variation between both then find out the
reasons for such deviations and taking measures to match the actual output with the planned. But in case there is no
planned output then controlling manager will have no base to compare whether the actual output is adequate or not.
7. Focuses attention on objectives of the company:
Planning function begins with the setting up of the objectives, policies, procedures, methods and rules, etc. which are
made in planning to achieve these objectives only. When employees follow the plan they are leading towards the
achievement of objectives. Through planning, efforts of all the employees are directed towards the achievement of
organisational goals and objectives.
Que: Explain the process of planning. Also discuss the benefits and limitations of planning.
Ans: Planning Process:
1. Setting up of the objectives:
In planning function manager begins with setting up of objectives because all the policies, procedures and methods are
framed for achieving objectives only. The managers set up very clearly the objectives of the company keeping in mind the
goals of the company and the physical and financial resources of the company.
2. Developing premises:
Premises refer to making assumptions regarding future. Premises are the base on which plans are made. It is a kind of
forecast made keeping in view existing plans and any past information about various policies. There should be total
agreement on all the assumptions. The assumptions are made on the basis of forecasting.
3. Listing the various alternatives for achieving the objectives:
After setting up of objectives the managers make a list of alternatives through which the organisation can achieve its
objectives as there can be many ways to achieve the objective and managers must know all the ways to reach the
objectives.
4. Evaluation of different alternatives:
After making the list of various alternatives along with the assumptions supporting them, the manager starts evaluating
each and every alternative and notes down the positive and negative aspects of every alternative.
5. Selecting an alternative:
The best alternative is selected but as such there is no mathematical formula to select the best alternative. Sometimes
instead of selecting one alternative, a combination of different alternatives can also be selected. The most ideal plan is
most feasible, profitable and with least negative consequences.
6. Implement the plan:
The managers prepare or draft the main and supportive plans on paper but there is no use of these plans unless and until
these are put in action. For implementing the plans or putting the plans into action, the managers start communicating the
plans to all the employees very clearly because the employees actually have to carry on the activities according to
specification of plans
7. Follow-up:
Planning is a continuous process so the manager’s job does not get over simply by putting the plan into action. The
managers monitor the plan carefully while it is implemented. The monitoring of plan is very important because it helps to
verify whether the conditions and predictions assumed in plan are holding true in present situation or not. If these are not
coming true then immediately changes are made in the plan.
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Benefits of Planning:
There are many ways to state the benefits of planning or anticipatory decision making. The following claimed benefits are
discussed in a number of sources.
1. Planning helps decision makers by providing guidelines and goals for future decisions.
2. Planning helps a manager exercise more control in a situation, establish goals "proactively" and consider contingencies.
3. Planning can help quantify goals and establish a means of measuring success.
4. Planning can help insure that a coherent set of actions are implemented that are consistent with the values and priorities
of the decision maker.
5. Planning helps allocate limited resources like staff, materials, and time in an orderly and systematic manner.
Limitations of Planning:
1. Planning leads to rigidity:
Once plans are made to decide the future course of action the manager may not be in a position to change them. Following
predefined plan when circumstances are changed may not bring positive results for organisation. This kind of rigidity in
plan may create difficulty.
2. Planning may not work in dynamic environment:
Business environment is very dynamic as there are continuously changes taking place in economic, political and legal
environment. It becomes very difficult to forecast these future changes. Plans may fail if the changes are very frequent.
3. It reduces creativity:
With the planning the managers of the organisation start working rigidly and they become the blind followers of the plan
only. The managers do not take any initiative to make changes in the plan according to the changes prevailing in the
business environment. They stop giving suggestions and new ideas to bring improvement in working because the
guidelines for working are given in planning only.
4. Planning involves huge Cost:
Planning process involves lot of cost because it is an intellectual process and companies need to hire the professional
experts to carry on this process. Along with the salary of these experts the company has to spend lot of time and money to
collect accurate facts and figures. So, it is a cost-consuming process. If the benefits of planning are not more than its cost
then it should not be carried on.
5. It is a time consuming process:
Planning process is a time-consuming process because it takes long time to evaluate the alternatives and select the best
one. Lot of time is needed in developing planning premises. So, because of this, the action gets delayed. And whenever
there is a need for prompt and immediate decision then we have to avoid planning.
6. Planning does not guarantee success:
Sometimes managers have false sense of security that plans have worked successfully in past so these will be working in
future also. There is a tendency in managers to rely on protested plans.
7. Lack of accuracy:
In planning we are always thinking in advance and planning is concerned with future only and future is always uncertain.
In planning many assumptions are made to decide about future course of action.
External Limitations of Planning:

Sometimes planning fails due to following limitations on which managers have no control.
(i) Natural calamity:
Natural calamities such as flood, earthquake, famine etc. may result in failure of plan.
(ii) Change in competitors’ policies:
Sometimes plan may fail due to better policies, product and strategy of competitor which was not expected by manager.
(iii) Change in taste/fashion and trend in the market:
Sometimes plans may fail when the taste/fashion or trend in market goes against the expectation of planners.
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(iv) Change in technologies:

The introduction of new technologies may also lead to failure of plans for products using old technology.
(v) Change in government/economic policy:
Managers have no control over government decisions. If government economic or industrial policies are not framed as
expected by manager then also plans may fail.
Que: Fundaments/Elements/Components/ Scope of Planning:

I. Objectives:
Objectives are the ends towards which the activities are directed. They are the end result of every activity. It is a
commitment to a course of action. They provide a foundation for the standards of organizational performance and
evaluation of performance.
Definition: “Objective is a term commonly used to indicate the end point of the management program.”
Functions/ Role:
a) Defining organization
b) Directions for decision making
c) Performance standards
d) Integrating organization, group and individual
An objective:
(a) Should be related to single activity;
(b) Should be related to result and not to activity to be performed;
(c) It should be measurable or must be measured in quantitative term;
(d) It must have a time limit for achievement of objective;
(e) It must be achievable or feasible.
Importance:
1. It provides direction to the individual efforts and activities.
2. They provide basis for determining policies, strategies, procedures, budgets and other plans.
3. They serve as a means for achieving personal goals.
4. They help in effective delegation of authority
5. They serve as standards for evaluation of actual performance
6. They help in co-ordination the efforts of the people.
II. Policies:
Policy can be defined as organisation’s general response to a particular problem or situation. In simple words, it is the
organisation’s own way of handling the problems. Policies are made at every level because the managers at every level
need to decide or predetermine the way of handling a situation and policy acts as a guide to take decisions in unexpected
situation.
Policy formation always encourages initiatives of employees because employees have to deal with situations and the way
of handling the situation is decided in consultation with the employees. Then they will be able to handle the situation in a
much better way.
Definition:
“Policies are general statements which guide or channel the thinking of all personnel charged with decision making.”
- Theo Haimann
Characteristics:
1. It is an expression of intentions of top management
2. It presents the principles that will guide the organizational actions.
3. It is based on objectives of the enterprise.
4. It is long lasting.
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5. It is realistic, hence can be translated into actions in every department.

6. It is developed with the active participation of the people engaged in it.
7. It is consistent with other policies of the enterprises.
Benefits/ Advantages of Policies:

1. It facilitates better administrative control.
2. It secures co-ordination and integration of efforts in achieving the goals.
3. It saves time and efforts by pre-determining the problems in repetitive situations.
4. It helps managers at various levels to act with confidence without the need for consulting the superiors every time.
5. By setting policies, it ensures that policies are made keeping in mind the objectives and interest of the
organization.
Limitations/ disadvantages of Policies:

1. It does not cover all the problems.
2. It is not ever lasting
3. It does not substitute human judgment.
4. It does not give any space for initiative by the subordinates.
Kinds/ Types of Policies:

1. Internal policies: Such policies are closely related to the organizational objectives.
Basic Policy: It is used primarily by the top management and is broad in scope.
General Policy: It affects the middle level managers and is more specific than a basic policy
Departmental Policy: It is highly specific in nature and is applicable at the lowest level of the management to
provide a guide in day to day acrtivities.
2. External Policies: These policies arise to meet the various pressures and request of forces outside the enterprises
such as government, trade unions and trade associations.
3. Stated/ Explicit Policies: Such policies are usually in writing and form a part of enterprise. They are definite and
rigid.
4. Unstated/ Implied Policies: These policies are not recorded in writing even though they are followed at every
level. It is flexible in nature.
5. Functional Policies: These are set up in the key areas of the organization like production, purchase, finance,
personnel and marketing.
6. Appealed Policies: Such policies are formulated on the basis of the suggestions and complaints received from the
employees.
Que: III. Strategy:

The term strategy is defined as a unified and critical plan of action to achieve an object or set of objectives.
Definition: “It may be defined as a behavior whose purpose is to achieve success for organizational or personnel goals in
a competitive environment, based on the actual or probable actions of others.” - Mc Farland
Classification of Strategies:
1. On the basis of Scope: Master strategies, sub- strategies.
2. On the basis of Organizational Level: Corporate headquarter strategies and divisional strategies.
3. On the basis of Purpose: Growth strategy, market development strategy
4. On the basis of Function: Marketing strategy
Importance of Strategies:
1. It gives meaning to other plans.
2. It provides direction for the achievement of organizational goals.
3. It helps in relating an organization to its external environment.
4. It helps the organization in meeting the demands of difficult situations.
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IV. Procedures:
Procedures are required steps established in advance to handle future conditions. The sequence of steps to be followed by
employees in different situations must be predetermined so that everyone follows same steps.
The procedure can be defined as the exact manner in which an activity has to be accomplished.
Que: Rule and Policy

V. Rules:
Rules spell out special actions or non-actions of the employees. There is no discretion allowed in rules, i.e., they must be
followed strictly and if rules are not followed then strict actions can be taken against employees who are disobeying the
rules. Rules are spelt out to create the environment of discipline in the organisation. For example, there can be rule of no
smoking in the organisation. Rules generally guide the general behaviour of the employees and employees cannot make
any changes in them.
VI. Programmes:
Programmes are the combination of goals, policies, procedures and rules. All these plans together form a program. The
programmes are made to get a systematic working in the organisation. The programmes create relation between policies,
procedures and goals. The programmes are also prepared at different levels. A primary programme is prepared by the top
level and then to support the primary programme supportive programmes of different levels are prepared for smooth
function of the company.
For example, construction of shopping mall, Development of new product.
VII. Methods:
Methods can be defined as formalized or systematic way of doing routine or repetitive jobs. The managers decide in
advance the common way of doing a job. So, that
(a) There is no doubt in the minds of employees;
(b) There can be uniformity in actions of the employees;
(c) These help in applying the techniques of standardization and simplification;
(d) Act as guide for employees.
VIII. Budget:
Budget is the statement of expected result expressed in numerical terms. In budgets the results are always measurable and
most of the time these are financial in nature but it does not mean that company prepares only financial budget. Financial
budget is also known as profit plan of the company because it includes the expected income and related expenditures with
that income and the profit which the company will earn in the coming year.
Que: How is forecasting an integral part of the planning process.

X. Forecasting: Forecasting is the process of estimating the relevant events of future, based on the analysis of their past
and present behavior. Thus the past and present analysis of events provides information about their future occurrences.
Since forecasting may require the use of various statistical techniques, some persons equate this analysis with statistical
analysis.
Definition: “Forecasting is a systematic attempt probe the future by inference from known facts.”
Features:
1. It relates to future events.
2. It defines the probability of happening of future events.
3. It is made by analyzing the past and present relevant events.
4. The analysis of various factors may require the user of various statistical tools and techniques.
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Planning and Forecasting: A Comparison

Some persons equate both planning and forecasting because both deal with future phenomena. However, both the
different and clear-cut difference can be drawn between the two. The difference lies basically in the scope of two
processes. Planning is more comprehensive which includes many sub-processes and elements in order to arrive at
decisions. Such decisions may be in terms of what is to be done, how is to be done, when is to be done. Commitment of
actions is the basic ingredients of planning.
Forecasting on the other hand, involves the estimation of future events and provides parameters to the planning. It may
also involve many sib-processes and elements but these are used to project what will happen in future. This may not
require any commitment of action but may help in planning the future course of action. In fact, forecasting is one of the
major ingredients of planning process because planning involves determination of future course of action in the light of
forecast made.
Importance:
a) Promotion of business
b) Key to planning
c) Implementation of project
d) Coordination
e) Control
f) Success in organization
g) Achieving objectives
h) Improving the quality of general management
i) Helping in every aspect
Limitations:
1. Based on assumptions
2. Not absolute truth
3. Time and cost factor
Que: Discuss the concept of decision making.
IX. Decision Making:
Introduction:
Every action of a manager is generally an outcome of a decision.
The word ‘decides’ means to come to a conclusion or resolution as to what one is expected to do at some later time.
According to Manely H. Jones, “It is a solution selected after examining several alternatives chosen because the decider
foresees that the course of action he selects will do more than the others to further his goals and will be accompanied by
the fewest possible objectionable consequences”‘.
Definition of Decision-Making:
Some of the important definitions of decision-making are given as under.

“Decision-making is the selection based on some criteria from two or more possible alternatives.”-—George R.Terry
“A decision can be defined as a course of action consciously chosen from available alternatives for the purpose of desired
result”. —J.L. Massie
“A decision is an act of choice, wherein an executive forms a conclusion about what must be done in a given situation. A
decision represents a course of behaviour chosen from a number of possible alternatives.”-—D.E. Mc. Farland
Features or Characteristics of Decision-Making:
1. Rational Thinking:
It is invariably based on rational thinking. Since the human brain with its ability to learn, remember and relate many
complex factors, makes the rationality possible.
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2. Process:
It is the process followed by deliberations and reasoning.
3. Selective:
It is selective, i.e. it is the choice of the best course among alternatives. In other words, decision involves selection of the
best course from among the available alternative courses that are identified by the decision-maker.
4. Purposive:
It is usually purposive i.e. it relates to the end. The solution to a problem provides an effective means to the desired goal
or end.
5. Positive:
Although every decision is usually positive sometimes certain decisions may be negative and may just be a decision not to
decide.
6. Commitment:
Every decision is based on the concept of commitment. In other words, the Management is committed to every decision it
takes for two reasons- viz., (/) it promotes the stability of the concern and (ii) every decision taken becomes a part of the
expectations of the people involved in the organisation.
7. Evaluation:
Decision-making involves evaluation in two ways, viz., (i) the executive must evaluate the alternatives, and (ii) he should
evaluate the results of the decisions taken by him.
Importance:
1. Implementation of managerial function: Without decision making different managerial function such as planning,
organizing, directing, controlling, staffing can’t be conducted. In other words, when an employee does, s/he does the work
through decision making function. Therefore, we can say that decision is important element to implement the managerial
function.
2. Pervasiveness of decision making: the decision is made in all managerial activities and in all functions of the
organization. It must be taken by all staff. Without decision making any kinds of function is not possible. So it is
pervasive.
3. Evaluation of managerial performance: Decisions can evaluate managerial performance. When decision is correct it
is understood that the manager is qualified, able and efficient. When the decision is wrong, it is understood that the
manager is disqualified. So decision making evaluate the managerial performance.
4. Helpful in planning and policies: Any policy or plan is established through decision making. Without decision
making, no plans and policies are performed. In the process of making plans, appropriate decisions must be made from so
many alternatives. Therefore decision making is an important process which is helpful in planning.
5. Selecting the best alternatives: Decision making is the process of selecting the best alternatives. It is necessary in
every organization because there are many alternatives. So decision makers evaluate various advantages and
disadvantages of every alternative and select the best alternative.
6. Successful operation of business: Every individual, departments and organization make the decisions. In this
competitive world; organization can exist when the correct and appropriate decisions are made. Therefore correct
decisions help in successful operation of business.
Advantages:
1. Pooling of knowledge and information
2. Satisfaction and commitment
3. Personnel development
4. More risk taking
Disadvantages:
1. Time consuming and costly
2. Individual domination
3. Problem of responsibility
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4. Groupthink
Organizing:
Organizing is the function of management which follows planning. It is a function in which the synchronization and
combination of human, physical and financial resources takes place. All the three resources are important to get results.
Therefore, organizational function helps in achievement of results which in fact is important for the functioning of a
concern. According to Chester Barnard, “Organizing is a function by which the concern is able to define the role
positions, the jobs related and the co-ordination between authority and responsibility. Hence, a manager always has to
organize in order to get results.
Definition:
"Organizing is the process of defining and grouping the activities of the enterprise and establishing the authority
relationships among them."
Nature:
a) Division of labour
b) Co-ordination
c) Social system
d) Objectives
e) Cooperative relationship
f) Well defined hierarchy
g) Communication
Importance of Organizing:
1. Specialization - Organizational structure is a network of relationships in which the work is divided into units and
departments. This division of work is helping in bringing specialization in various activities of concern.
2. Well defined jobs - Organizational structure helps in putting right men on right job which can be done by
selecting people for various departments according to their qualifications, skill and experience. This is helping in
defining the jobs properly which clarifies the role of every person.
3. Clarifies authority - Organizational structure helps in clarifying the role positions to every manager (status quo).
This can be done by clarifying the powers to every manager and the way he has to exercise those powers should
be clarified so that misuse of powers does not take place. Well defined jobs and responsibilities attached helps in
bringing efficiency into managers working. This helps in increasing productivity.
4. Co-ordination - Organization is a means of creating co-ordination among different departments of the enterprise.
It creates clear cut relationships among positions and ensure mutual co-operation among individuals. Harmony of
work is brought by higher level managers exercising their authority over interconnected activities of lower level
manager.
5. Effective administration - The organization structure is helpful in defining the jobs positions. The roles to be
performed by different managers are clarified. Specialization is achieved through division of work. This all leads
to efficient and effective administration.
6. Growth and diversification - A company’s growth is totally dependant on how efficiently and smoothly a
concern works. Efficiency can be brought about by clarifying the role positions to the managers, co-ordination
between authority and responsibility and concentrating on specialization. In addition to this, a company can
diversify if its potential grow. This is possible only when the organization structure is well- defined. This is
possible through a set of formal structure.
7. Sense of security - Organizational structure clarifies the job positions. The roles assigned to every manager are
clear. Co-ordination is possible. Therefore, clarity of powers helps automatically in increasing mental satisfaction
and thereby a sense of security in a concern. This is very important for job- satisfaction.
8. Scope for new changes - Where the roles and activities to be performed are clear and every person gets
independence in his working, this provides enough space to a manager to develop his talents and flourish his
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knowledge. A manager gets ready for taking independent decisions which can be a road or path to adoption of
new techniques of production. This scope for bringing new changes into the running of an enterprise is possible
only through a set of organizational structure.
Organizing Process:
1. Fixing the objectives of the organization:

At the top level, administrative management first fixes the common objectives of organization. At the middle level,
executive management fix the departmental objectives. Lastly, at the lower level, supervisory management fix the day-to-
day objectives. All the objectives of the organization must be specific and realistic.
2. Finding activities must for achieving objectives

After fixing the objectives, the top-level management prepares a list of different activities (or works) which are required to
be carried out for achieving these objectives. This list is prepared at random without following any sequence or order.
This is a very important step because it helps to avoid duplication, overlapping and wastage of efforts.
3. Grouping the similar activities
All similar or related activities having a common purpose are grouped together to make departments. For e.g. all activities
or works which are directly or indirectly connected with purchasing are grouped together to make the Purchase
Department. So various departments such as Purchase, Production, Marketing, Finance, etc. are made. The grouping of
similar activities leads to division of labor and specialization.
4. Defining responsibilities of each employee:
The responsibilities (duties) of each employee are clearly defined. This will result in the selection of a right person for the
right post / job. He / she will know exactly what to do and what not to do. Therefore, it will result in efficiency.
5. Delegating authority to employees:
Each employee is delegated (surrender or given) authority. Without authority, the employees cannot carry out their
responsibilities. Authority is the right to give orders and the power to get obedience. The authority given to an employee
should be equal to the responsibility given to him.
6. Defining authority relationship:
When two or more persons work together for a common goal, it becomes necessary to clearly define the authority
relationship between them. Each person should know who is his superior, from who he should take orders, and to whom
he will be answerable. Similarly, each superior should know what authority he has over his subordinates.
7. Providing employees all required resources:
After defining the authority relationships, the employees are provided with all the material and financial resources, which
are required for achieving the objectives of the organization. So in this step, the employees actually start working for a
common goal.
8. Coordinating efforts of all to achieve goals:
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This is the last stage or step in the process of organization. Here, the efforts of all the individuals, groups, departments,
etc. are brought together and co-coordinated towards the common objectives of the organization.
Que: Dysfunctional aspects of organization:
a) Wasteful leadership
b) Dysfunctional uses of power
c) Coercive power
d) Dysfunctionality of conflict
e) Negative internal policies
f) Personal agendas
g) Dysfunctional CEOs
h) Dysfunctional group
Que: Explain the meaning of organization. Discuss the various types of organizational structures. Or Define
organizational structure and discuss the different types of organizational structures.
Ans: Organization:
Introduction: Organization is one important element of the management process. It is next to planning. In management,
organization is both the process as well as the end-product of that process which is referred to as organization structure.
The success of the management process will be determined by the soundness of the organization structure.
The term 'Organization' is derived from the word 'organism' which means a structure of body divided into parts that are
held together by a fabric of relationship as one organic whole. In an enterprise, many managers and employees work
together for achieving common objectives
Definitions:
An Organisation has been defined by E. F. L. Breach as "a system of structural interpersonal relationships. In it,
individuals are differentiated in terms of authority, status and roles with the result that personal interaction is prescribed,
and anticipated reactions between individuals tend to occur while ambiguity and spontaneity are decreased".
According to Louis A. Allen, Organisation is "the process of identification and grouping the work to be performed,
defining and delegating responsibility and authority and establishing relationships for the purpose of enabling people to
work most effectively together in accomplishing objectives".
James Mooney defines organisation as "the form of every human association for attainment of a common purpose".
Importance of Organisation:
1. Ensures optimum utilization of human resources: Every enterprise appoints employees for the conduct of various
business activities and operations. They are given the work according to their qualifications and experience. Organisation
ensures that every individual. Is placed on the job for which he is best suited.
2. Facilitates coordination: It acts as a means of bringing coordination and integration among the activities of individuals
and departments of the enterprise. It establishes clear-cut relationships between operating departments and brings proper
balance in their activities.
3.Facilitates division of work: Different departments are created for division of work, specialization and orderly working
of the enterprise. Similarly, delegation relieves top level managers from routine duties.
4. Ensures growth, expansion and diversification: Sound Organisation structure facilitates expansion/diversification of
an enterprise. Organisation structure has in-built capacity to absorb additional activities and also effective control on
them. A business enterprise brings diversification in its activities within the framework of its Organisation.
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5. Stimulates creativity: Organisation provides training and self-development facilities to managers and subordinates
through delegation and departmentation. It also encourages initiative and creative thinking on the part of managers and
others.
6. Facilitates administration: Effective administration of business will not be possible without the support of sound
organisation structure. Delegation, departmentation and decentralisation are the tools for effective administration.
7. Determines optimum use of technology: Sound Organisation structure provides opportunities to make optimum use
of technology. It facilitates proper maintenance of equipment and also meets high cost of installation.
8. Determines individual responsibility: Responsibility is an obligation to perform an assigned work. In a sound
Organisation, the manager finds it easy to pinpoint individual responsibility when the work is spoilt.
Organization as A Structure:
The term organisation can be studied as a structure and also as a process. In a static sense, organisation is a structure. A
group of people functions within this structure and try to accomplish certain objectives. Organisation is a structure for the
conduct of business activities efficiently. In the words of Kast and Rosenzweig, "structure is the established pattern of
relationships among the component parts of the organisation". In this sense, Organisation structure refers to the network of
relationships among individuals and positions in an Organisation.
Organisation As A structure - Implies 4 Elements:

1. Intentionally created: In order to attain specific goals, Organisation structure is deliberately created which converts
resources (of management) into a productive enterprise.
2. Provides framework: Organisation structure usually takes the shape of a pyramid. Once established, it acts as a
framework that can either constrain or facilitate managerial actions.
3. Use of Chart: In an Organisation, the structural relationships are normally shown through Organisation charts. These
charts indicate the intended final relationships at a given time.
4. Provides formal picture: Organisation structure may be horizontal or vertical. The horizontal aspects display basic
departmentalization and vertical aspects display creation of hierarchy of superiors and subordinates.
Principles of Organisation / Organising:

1. Unity of Objectives: Objectives of the enterprise influence the Organisation structure and hence the objectives of the
enterprise should first be decided clearly and firmly. In addition, there should be unity among the objectives decided.
2. Division of Work and Specialization: Division of work leads to specialization. Every department of an Organisation
should be given specialized functions. This will raise the overall efficiency and quality of work of an Organisation.
3. Delegation of Authority: There should be proper delegation of authored in every Organisation, particularly in large
organisations. The basic idea behind delegation is to see that decision-making power is placed at a proper place.
4. Coordination: Organisation involves division of work and departmentation. This naturally suggests the need of proper
coordination among the departments and efforts of people working in an Organisation. Due to coordination one clear-
cut direction is given to people/ departments and efforts will not be wasted or misdirected. Coordination also brings
integration in the basic functions of management.
5. Unity of Command: Unity of command principle suggests that each subordinate should have only one superior whose
command he has to obey. Dual subordination is undesirable as it leads to confusion, disorder, uneasiness and
indiscipline.
6. Flexibility: According to the principle of flexibility, the Organisation structure should be flexible and not rigid. Such
structure is adaptable to changing situations and permits expansion or replacement without any serious dislocation and
disruption.
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7. Simplicity: The Organisation structure should be simple for clear understanding of employees. The structure should be
easy to manage. Internal communication will be easy due to simplicity of Organisation. The Organisation structure
should be simple as far as possible. The levels of management should also be limited.
8. Span of Control: The span of control, as far as possible, should be small and fair. This means a manager should not be
asked to keep supervision on large number of subordinates. The span of control should be narrow and manageable. It
should be properly balanced.
9. Scalar Principle (Chain of Command): The principle of chain of command suggests that the line of authority from
the chief executive to the first line of superior should be clearly defined. The line of authority should be properly
defined so as to avoid any confusion as regards the line of authority. This principle suggests that as far as possible, the
chain of authority should be short and should not be broken.
10. Exception Principle: The executives at the higher level are busy in important matters and have limited time for the
study of routine administrative matters. It is not desirable to take routine matters to the top level managers frequently.
Very crucial and exceptionally complex problems should be referred to the top executives and routine matters should be
dealt with by the junior executives at the lower levels. Moreover, time of top executives is saved. They can use their
time for dealing with more important and complex problems.
Types of Organization Structure/ Organizational Design:

Organization structure is defined as "The logical arrangement of task and the network of relationships and roles among the
various positions established to carry out the activities necessary to achieve the predetermined objectives of business".
Internal Organization structures can be broadly classified into the following types/forms:
a) Line Organization structure.
b) Functional Organization structure.
c) Line and staff Organization structure.
d) Product Organization structure.
e) Committee and Matrix Organization Structure
Que: Distinguish b/w Line & Staff authority Or Discuss the importance of line and staff relationship in an
organization.
I. Line Organization Structure:
Line Organization (also called Military/Scalar Organization) is the oldest and the simplest form of internal Organization
structure. It was first developed by the Roman army and later adopted by armies all over the world. Factory owners also
used line Organization structure in its purest form in the nineteenth century in England.
In the line Organization, the line of authority moves directly from the top level to the lowest level in a step-by-step
manner. It is straight and vertical. The top-level management takes all major decisions and issues directions for actual
execution. Thus authority moves downward and also step-by-step. The responsibility, on the other hand, moves in the
upward direction.
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Advantages of Line Organization Structure:

1. Simplicity: Line Organization structure is easy to understand and follow by superiors and subordinates. It is simple and
clear as regards authority and accountability.
2. Prompt decisions: Line Organization facilitates prompt decision-making at all levels as the authority given is clear and
complete.
3. Discipline: It brings discipline in the Organization due to unity of command, delegation of authority and direct
accountability.
4. Economical: Line Organization is economical as experts are not appointed.
5. Attraction to talented persons: Line Organization brings out talented workers and develops in them quality of
leadership. It offers opportunities of self-development to employees.
6. Quick communication, high efficiency, flexibility and high employee morale are some more advantages of line
Organization structure.
Limitations of Line Organization Structure:

1. Heavy burden on line executives: The line executives are given too many duties and responsibilities. Even the quality
of the decisions of executives may suffer due to heavy burden of duties and responsibilities.
2. Non-availability of services of experts: There is absence of skilled experts in line organization. Expert assistance is
not available promptly when needed by line executives.
3. Favoritism: There is wide scope for favoritism and nepotism in the line organization. Leadership of departmental
executive is autocratic due to heavy concentration of powers. He may favor some employees at the cost of others.
4. Too much dependence on limited executives: In the line organization, all powers are concentrated in the hands of a
few executives. Naturally, the success and stability of the entire organization depends on their personal skill, initiative and
interest. Special difficulties arise when one executive is to be transferred/replaced/promoted.
5. Rigidity: There is rigidity in the working of line organization.
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6. Delays in communication, limited freedom to employees and unsuitability to modern large business units are some
more demerits of line Organization.
Que: “Describe functional & Divisional organization structure” Also discuss various basis & departmentation in
organization
Ans: II. Functional Organization Structure:
F.W.Taylor, founder of scientific management, conceived the functional Organization structure. In the functional
Organization suggested by F.W.Taylor, the job of management is divided according to specialization. As a result,
functional departments are created. For example, the personnel department will look after the recruitment, selection,
training, wage payment, etc. of all persons of the Organization. Similar will be the position of other departments like
production, sales, etc. The scope of work of the department is limited but the area of authority is unlimited.
In the functional Organization structure, there will be separation of planning of work and execution of the plan prepared.
The basis of division is the function and naturally the Organization structure created will be called "Functional
Organization".
In the functional foremanship, there will be eight specialists/functional heads called bosses. Out of eight bosses, four
bosses will be at the planning level and the remaining four will be at the slop floor level.
Merits of Functional Organization Structure:

1. Facilitates specialization: Functional Organization structure facilitates division of work and specialization. Each boss
has specialized knowledge of his functional area. He is in a better position to guide and help the workers.
2. Benefits of large-scale operations: Functional Organization offers the benefit of economy of large-scale operation. In
this Organization, one administrative unit manufactures all products. The available machinery, equipment and facilities
are used fully for large-scale production.
3. Facilitates effective coordination: Functional Organization facilitates effective coordination within the function. This
is possible as one boss is in-charge of a particular function and he looks after all activities, which come within that
function.
4. Operational flexibility: Functional Organization possesses operational flexibility. Necessary changes can be
introduced easily to suit the needs of the situation without any adverse effect on the efficiency.
5. Ensures effective supervision: Functional Organization facilitates effective supervision by the functional heads and
foremen. Due to specialization, they concentrate on the specific functional area and also keep effective supervision on
their subordinates.
Demerits of Functional Organization Structure:
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1. Absence of unity of command: Unity of command is absent in the functional Organization as each worker gets orders
and instructions from several bosses.
2. Fixing responsibility is difficult: In functional Organization, responsibility is difficult to fix on a specific person. This
is because the responsibility itself is divided among many.
3. Unsuitable to non-manufacturing activities: Functional Organization can be introduced in the case of manufacturing
activities. However, its application to non-manufacturing activities such as marketing, etc. has not been successful.
4. Costly: Functional Organization is costly, as more specialists are required to be appointed.
5. Creates confusion among workers: Functional Organization is based on specialization as function is taken as a base
for dividing the work. The authority is overlapping the responsibility is divided. This confuses workers.
6. Conflicts among foremen, delays in decision-making and limited discipline within the departments are some more
demerits of functional Organization.
III. Line and Staff Organization Structure:

In the line and staff Organization, line executives and staff (specialists) are combined together. The line executives are
'doers' whereas staff refers to experts and act as 'thinkers'. The following chart shows line and staff Organization structure:
The line executives are concerned with the execution of plans and Policies. They do their best to achieve the
organizational objectives. The staff concentrates their attention on research and planning activities. They are experts and
conduct advisory functions.
Characteristics of Line and Staff Organization:

1. Planning and execution: There are two aspects of administration in this Organization, viz., planning and execution.
2. Combining line and staff: Planning function is entrusted to staff specialists who are 'thinkers' while execution function
is given to line executives who are 'doers'. The staff is supportive to line.
3. Role of authority: The line managers have authority to take decisions as they are concerned with actual production.
The staff officers lack such authority.
4. Guidance from staff: The staff provides guidance and advice to line executives when asked for. Moreover, line
executives may or may not act as per the guidance offered.
5. Exercising control: The staff manager has authority over subordinates working in his department.
6. Scope for specialization: There is wide scope for specialization in this Organization as planning work is given to staff
and execution work is given to line executives.
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7. Possibility of conflicts: Conflicts between line and staff executives are quite common in this Organization but can be
minimized through special measures.
8. Suitability: Line and staff Organization structure is suitable to large-scale business activities.
Merits of Line and Staff Organization:

1. Less burden on executives: Line executives get the assistance of staff specialists. This reduces the burden of tine
executives. This raises overall efficiency and facilitates the growth and expansion of an enterprise.
2. Services of experts available: The benefits of services of experts are provided to line managers. Highly qualified
experts are appointed and they offer guidance to line executives.
3. Sound decision-making: Line and staff Organization facilitates sound management decisions because of the services
of experts and specialists. The decisions are also taken in a democratic method i.e. in consultation with the experts.
4. Limited tension on line managers: The pressure of work of line bosses is brought down as they are concerned only
with production management.
5. Benefits of specialization: There is division of work and specialization in this Organization. Naturally, the benefits of
division of work and specialization are easily available.
6. Training opportunities to employees: Better opportunities of advancement are provided to workers. The scope for
learning and training for promotions are available.
Demerits of Line and Staff Organization:

1. Delay in decision-making: The process of decision-making is delayed, as line executives have to consult staff experts
before finalizing the decisions. The decisions of line managers are likely to be delayed due to this lengthy procedure.
2. Buck passing among executives: The line bosses are concerned with actual execution of work. However, they depend
on staff experts for guidance. If something goes wrong, the attempt is made to pass on the blame by one party to the
other. Thus, there is shifting of responsibility or buck-passing.
3. Conflicts between line and staff executives: In this Organization, quarrels and conflicts between line managers and
staff specialists are quite common. The line managers are generally not interested in the advice offered by experts.
Secondly, specialists feel that the line bosses lack knowledge of new ideas. Such conflicts lead to bitterness.
4. Costly Organization: Line and staff Organization is a costly Organization as the line executives are supported by
highly paid staff executives who are experts. All this adds to the overhead expenses and the cost of production
increases.
5. Complicated operation: This Organization is too complicated in actual operation because of dual authority, division of
functions and too much dependence on staff. The unity of command principle is violated.
6. Internal discipline is affected adversely: The internal discipline is likely to be affected adversely due to
decentralization and division of loyalty of subordinates.
Organization Chart:
Organization structure of a company can be shown in a chart. Such chart indicates how different departments are
interlinked on the basis of authority and responsibility. It is a simple diagrammatic method of describing an Organization
structure. It indicates how the departments are linked together on the basis of authority and responsibility. Such
Organization chart provides information of the Organization structure at a glance. Organization chart is like a blue print of
a building. It indicates the number and types of departments, superior-subordinate relationship, chain of command and
communication.
Definition of Organization Chart.

According to George Terry, Organization chart is "a diagrammatical form which shows important aspects of an
Organization, including the major functions and their respective relationships, the channels of supervision and the relative
authority of each employee who is in-charge of each respective function".
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Features of Organization Chart:

The definition noted above indicates the following features of Organization charts:
1. Organization chart is a diagrammatical presentation.
2. It represents the formal Organization structure.
3. It shows the lines of authority in the Organization.
4. It indicates the channel of communication.
5. It indicates who supervises whom and how various units are inter-related.
Advantages of Organisational Chart.

1. Brings clarity to the Organisation: The very process of preparing a chart makes the executive think more clearly
about the Organisation relationships.
2. Provides dear picture of the Organisation: Once the charts are prepared, they provide lot of information about the
Organisation, both to the members of the Organisation as well as to the outsiders. This information relates to number
and types of departments, superior subordinate relationships, chain of command and communication and job titles of
each employee.
3. Facilitates training of employees: Organisation charts are useful in familiarizing and training new employees.
4. Ensures organizational changes: Organisation charts provide a starting point for planning organizational changes
after having discovered the weaknesses of the existing structure.
5. Provides quick understanding: A chart serves as a better method of visualizing an Organisation than a lengthy written
description of it.
Limitations of Organisational Chart:

1. Details are not provided: The Organisation chart does not provide all the details of Organisation structure created. For
example, the chart will show the line of authority but not the extent of authority.
2. Informal relationship is not shown: The chart fails to give details of informal relationship available in a firm. In fact,
human relationships cannot be shown on a chart.
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3. Updated position is not available: The chart shows the position of Organisation structure when it was formed. It gives
a static picture of the Organisation. Changes made thereafter may not be available in such charts.
4. Fosters buck-passing: The charts tend to foster 'buck-passing' and emphasize only formal channels of communication.
5. Lacks flexibility: Organisation chart lacks an element of flexibility. Such chart also brings an element of rigidity in the
working of an Organisation.
6. Creates rank consciousness: An Organisation chart leads to rank consciousness among the staff. It destroys team
spirit and collective approach on the part of the staff.
Types of Organisation Chart:

1. Vertical chart: One of the most popular methods is the vertical chart in which the highest job is shown at the top with
other jobs shown in a descending order, connected by lines to show the authority and the line of communication.
2. Horizontal chart: This chart shows the Organisation structure in the form of a pyramid.
3. Circular chart: The top management is shown at the centre of the circle and other management levels are shown in
concentric circles.
4. Departmental chart: This chart is devoted exclusively to particular department and gives details of relationships,
authority, responsibility, etc. within the department.
Uses of Organisation Chart:

1. An Organisation chart facilitates ready reference. It enables the management to find out different positions of authority
and their relationships in the Organisation structure.
2. It provides proper guidance to managers in executing, their assignments and helps them to avoid overlapping and
duplication of work.
3. It provides complete information to understand the character of an Organisation.
4. An Organisation chart indicates ways to better utilisation of available manpower.
5. An organisation chart points out the consistencies and deficiencies of an Organisation and enables the management to
correct them.
Authority and Responsibility:

Responsibility
Responsibility indicates the duty assigned to a position. The person holding the position has to perform the duty assigned.
It is his responsibility. The term responsibility is often referred to as an obligation to perform a particular task assigned to
a subordinate. In an organisation, responsibility is the duty as per the guidelines issued.
Definitions of Responsibility
According to Davis, "Responsibility is an obligation of individual to perform assigned duties to the best of his ability
under the direction of his executive leader."
In the words of Theo Haimann, "Responsibility is the obligation of a subordinate to perform the duty as required by his
superior".
McFarland defines responsibility as "the duties and activities assigned to a position or an executive".
Characteristics of Responsibility:
1. The essence of responsibility is the obligation of a subordinate to perform the duty assigned.
2. It always originates from the superior-subordinate relationship.
3. Normally, responsibility moves upwards, whereas authority flows downwards.
4. Responsibility is in the form of a continuing obligation.
5. Responsibility cannot be delegated.
6. The person accepting responsibility is accountable for the performance of assigned duties.
7. It is hard to conceive responsibility without authority.
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Authority
Authority is the right or power assigned to an executive or a manager in order to achieve certain organizational objectives.
A manager will not be able to function efficiently without proper authority. Authority is the genesis of organizational
framework. It is an essential accompaniment of the job of management. Without authority, a manager ceases to be a
manager, because he cannot get his policies carried out through others. Authority is one of the founding stones of formal
and informal organisations. An Organisation cannot survive without authority. It indicates the right and power of making
decisions, giving orders and instructions to subordinates. Authority is delegated from above but must be accepted from
below i.e. by the subordinates. In other words, authority flows downwards.
Definitions of Authority
According to Henri Fayol, "Authority is the right to give orders and the power to exact obedience."
According to Mooney and Reily, "Authority is the principle at the root of Organisation and so important that it is
impossible to conceive of an Organisation at all unless some person or persons are in a position to require action of
others."
Characteristics:
1. Basis of getting things done
2. Legitimacy
3. Decision making
4. Implementation
Types of Authority
1. Traditional Authority: The first type of authority is called traditional authority because authority is based on customs
and traditions which are long established. That is, people of a community show respect to a particular authority on the
ground that their forefathers did the same and naturally they cannot violate the tradition.
In earlier epochs authority existed and received obedience from the citizens. The tradition continues. The authority, in this
way is sanctioned by the tradition. An aspect of the traditional authority is that there is no legal sanction behind such
authority. Simple customs, traditions and conventions have made the authority legitimate.
2. Charismatic Authority: Charismatic authority is Weber’s second type of legitimate authority. People obey the
authority or show allegiance mainly due to the charisma possessed by the authority. An individual creates tremendous
impact upon the mind of the people by dint of his personality or charisma. Not all individuals or men holding power
possess such type of personality or charisma. If we open the pages of history we shall find that few leaders such as Hitler,
Mussolini, Nepoleon, Ayatoallah Khomeini, and Fidel Castro possessed he charismatic power.
The charisma is so powerful that people do not go into the legal aspects of the power. With the help of charisma the
authority exercises power and people accept it. Charismatic authority is not always supported by law. Charisma is a
special quality or gift of God. Sometimes charisma and legality are to be find a single person. For example, de Gaulle of
France, Margaret Thatcher of Britain had exceptional qualities to influence people.
Nehru of India had the same qualities. But all these persons came to power through legal and constitutional means. Not in
reality it is not always clear who is simply a charismatic authority and legal or constitutional authority. This is specially
correct if we consider the regimes of Hitler and Mussolini. Hitler, Mussolini and even to some extent de Gaulle forcefully
seized political power and they remained in power with the help of charisma.
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3. Legal-Rational Authority: Weber’s final classification is legal-rational authority. In almost all the modern states this
type of authority is generally found. It is legal because the formal authority is supported by existing laws of the
constitution. It is rational on the ground that the posts and positions are clearly defined by law. Power and duty are also
clearly stated Rational-legal authority is the explicit form of a right to give orders and to have been obeyed.
Que: Authority v/s Responsibilty:
Ans: Differences between Authority and Responsibility
Authority Responsibility
It is the legal right of a person or a It is the obligation of subordinate to perform the work
superior to command his assigned to him.
subordinates.
Authority is attached to the position Responsibility arises out of superior-subordinate

of a superior in concern. relationship in which subordinate agrees to carry out
duty given to him.
Authority can be delegated by a Responsibility cannot be shifted and is absolute

superior to a subordinate
It flows from top to bottom. It flows from bottom to top.
Que: What is meant by delegation of authority? Discuss the difficulty in effective delegation and suggest the
guidelines for securing better delegation
Ans: Delegation of Authority

Definition: The Delegation of Authority is an organizational process wherein, the manager divides his work among the
subordinates and give them the responsibility to accomplish the respective tasks. Along with the responsibility, he also
shares the authority, i.e. the power to take decisions with the subordinates, such that responsibilities can be completed
efficiently.
In other words, a delegation of authority involves the sharing of authority downwards to the subordinates and checking
their efficiency by making them accountable for their doings. In an organization, the manager has several responsibilities
and work to do. So, in order to reduce his burden, certain responsibility and authority are delegated to the lower level, i.e.
to the subordinates, to get the work done on the manager’s behalf.
Definition: The Delegation of Authority is a process wherein the manager assigns responsibility to its subordinate along
with the certain authority to accomplish the task on the manager’s behalf.
According to Douglas C. Baril, "Delegation refers to a manager's ability to share his burden with others. It consists of
granting authority or the right to decision making in certain defined areas and charging the subordinates with
responsibility for carrying through an assigned task.'
Features of Delegation of Authority
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1. Delegation means giving power to the subordinate to act independently but within the limits prescribed by the superior.
Also, he must comply with the provisions of the organizational policy, rules, and regulations.
2. Delegation does not mean that manager give up his authority, but certainly he shares some authority with the
subordinate essential to complete the responsibility entrusted to him.
3. Authority once delegated can be further expanded, or withdrawn by the superior depending on the situation.
4. The manager cannot delegate the authority which he himself does not possess. Also, he can not delegate his full
authority to a subordinate.
5. The delegation of authority may be oral or written, and may be specific or general.
6. The delegation is an art and must comply with all the fundamental rules of an organization.
Principles of Delegation of Authority

Following are the guidelines that can be followed by the managers to practice an efficient delegation:
1. Principle of Functional Definition: An organization is comprised of different functional departments, each contributing
to the organizational goals and, in turn, have their specific objectives. Thus, clearly defined objectives of each department,
the expected results, the specific activities to be performed and intradepartmental relationships help the manager to
determine the requirements of that specific position.
2. Principle of Result Expected: Before actually delegating the authority to the subordinate, the manager must know the
purpose of such delegation and the results expected from it. The goals, targets and the standard of performance must be
clearly defined to direct the actions of the subordinate towards the accomplishment of a given task in a required manner.
This principle helps in determining the authority to be delegated which is sufficient for completing the responsibility.
3. Principle of Parity of Authority and Responsibility: This principle states that the responsibility and the authority co-
exists. This means, if the subordinate is assigned certain responsibility, he must be given some level of authority i.e.
power to perform his responsibility. Thus, both the responsibility and the authority shall be clearly defined to the
subordinate, so that he knows what he is required to do within the powers delegated to him.
4. Principle of Unity of Command: According to this principle, every subordinate should have a single supervisor from
whom he gets the authority and to whom he is solely accountable. This means the subordinate should get the instructions
from a single superior and perform those responsibilities as assigned by him. In case, if the subordinate is required to
report to more than one boss, then there may be a conflict and delay in the managerial operations.
5. Principle of Absoluteness of Responsibility: This principle asserts that responsibility cannot be delegated. This means
even after delegating the authority to the subordinate to perform certain tasks on the manager’s behalf; the manager will
be solely responsible for the doings of the subordinate. In other words, whatever actions being taken by the subordinate,
the manager will be accountable to his senior. Thus, the responsibility is absolute and remains with the superior.
6. The Scalar Principle: There are clear lines of authority in the organization, i.e. who is under whom. This helps the
subordinate to know, who delegates the authority to him and to whom he shall be accountable. Also to whom he shall
contact in case things are beyond his control. Thus, this principle asserts, that there should be a proper hierarchy in the
organization.
7. Principle of Exception: According to this principle, the subordinate shall be given complete freedom to perform his
responsibilities under the purview of his authority. The manager should not interfere in between his work and must allow
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him to do even if he commits mistakes. But in some exceptional cases, the managers can interfere and even withdraw the
authority delegated to the subordinate.
Difficulties Faced in the Way of Effective Delegation:

A. On the part of the superior:
Managerial failure in delegation may be on account of the following factors:
(i) Feeling of perfectionism:
Some managers think that they can do the job better and for this reason, do not delegate authority. “I can do it better
myself” fallacy hinders delegation of authority.
(ii) Lack of ability to direct:
Lack of ability of the executive to identify and communicate the essential features of his plans, creates obstacles for
effective delegation.
(iii) Lack of confidence in subordinates:
Delegation implies a mutual trust and confidence between the manager and the subordinate. Lack of confidence in the
ability, capacity and dependability of the subordinate obstructs the boss to delegate authority. If a manager has no
confidence in the subordinates, he will not delegate authority to give them any chance to make mistakes and learn how to
take correct decisions.
(iv) Lack of Control:
While delegating authority the manager must find means of assuring himself that the authority is being used to complete
the given tasks. Where manager does not establish adequate controls nor has no means of knowing the use of authority, he
may hesitate to delegate the authority.
(v) Cautious temperament and conservative attitude:
The conservative attitude of manager and his cautious temperament generally act as obstacle in the delegation of
authority, as the process of delegation involves risk which a manager with cautious temperament would not like to
undertake.
(vi) Fear of competition from subordinates:
In delegation of authority, subordinates learn to take decisions. The managers may develop a feeling of fear of
competition from subordinates. Due to this, he may be unwilling to delegate authority to subordinates. This obstacle is
usually unexpressed and may be unconscious.
B. On The Part of the Subordinate:

Even if the superiors are willing to delegate authority, the subordinates avoid shouldering responsibilities because
of the following reasons:
(i) Dependence on the boss:
If a subordinate finds it easier to ask the boss for taking decisions while tackling problems, he may avoid accepting
authority even though the boss may be prepared to delegate it.
(ii) Fear of criticism:
If a subordinate fears that he will be criticised even for a small mistake, he will shirk from accepting authority.
(iii) Lack of self-confidence and fear of failure:
A subordinate lacking in self- confidence will generally try to shirk responsibility even though the superior is prepared to
delegate.
(iv) Lack of information and resources:
Inadequacy of information and lack of resources are other bottlenecks act as a hindrance in the way of accepting authority
by the subordinates.
(v) Lack of positive incentives:
A subordinate may be unwilling to accept more work (delegated to him by boss) if he does not get adequate positive
incentives in the form of pay increase, opportunity for promotion, personal recognition or approval by the boss.
(vi) Overburdened with work:
If a subordinate is already overburdened with work, he may not accept authority. This is a legitimate reason for such
refusal.
C. On the Part of the Organization:

The difficulties in delegation of authority may also lie within the organisation. they may include the following:
(i) Vague organisation structure and non-clarity of authority and responsibility relationships.
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(ii) Inadequate planning and policy formulation.
GUIDELINES FOR MAKING DELEGATION EFFECTIVE:

1. Give employees task to pursue tasks in their own way.
2. Establish Mutually agreed upon results and performance standards for delegated tasks.
3. Encourage employees to take an active role in defining, implementing and communicating progress on tasks.
4. Entrust employee with completion of whole projects or tasks whenever possible.
5. Explain the relevance of delegated tasks to larger projects or to department or organizational goals.
6. Give employees the authority necessary to accomplish tasks.

7. Allow employees access to all information, people and departments necessary to perform delegated tasks.
8. Provide training and guidance necessary for employees to complete delegated tasks satisfactorily.
9. When possible, delegate tasks on the basis of employee interests.
Que: Groups in Organization:

A group consists of two or more persons who interact with each other, consciously for the achievement of common
objectives.
“A group comprises, of two or more persons who interact with one another in such a manner that each person influences
and is influenced by each other person.”
Nature:
1. Social Interaction
2. Stable structure
3. Common interest
4. Perceived themselves as a part of group
Types of Groups:
1. Primary and secondary groups
2. Membership and reference groups
3. In groups and out groups
4. Interest and friendship groups
5. Formal and informal groups
6. Temporary and Permanent groups
7. Nominal and non-performing groups
Advantages:
1. Pooling of knowledge and information
2. Satisfaction and commitment
3. Personnel development
4. More risk taking
Disadvantages:
1. Time consuming and costly
2. Individual domination
3. Problem of responsibility
4. Dependency
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Que: What do you mean by planned change? Elaborate the process of change in organization.
Organizational Change:
Introduction:
Change refers to alteration that occurs in total work environment. Organizational change involves disequilibrium in the
situation and environment in which the people and the group exists.
Definition:
“Organizational change is an ongoing process of social construction that comprises spiral patterns of discursive change
and restructuring of collective meanings.”
Objectives:
1. Survival and growth
2. Organizational development
3. Mould and modify the behavioural pattern
Forces of organizational Change:

Forces of Organizational Change
External Forces Internal Forces
1. Technology 1. Changes in managerial

2. Marketing personnel
Condition 2. Changes in operative
3. Social Changes Personnel
4. Political Changes 3. Deficiences in existing
structures
Organizational Change Process:
Problem Recognition
Identifying the cause of problem
Implementing change
Generating motivation for change
Managing the transition state
Supporting Change
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Evaluating the change
Que: What is resistance to change? Why do people resist change?
Resistance to Change:Resistance to change involves employee’s behavior designed to delay, prevent the changes
introduced for the development of the organization. They resist because they are afraid of their job security, working
conditions, status, and other factors.
Definition:
“Resistance is an incomplete transition in response to change.”
“Resistance is a valuable passion, which cen be channeled more constructively.”
Levels of Resistance:
Levels of Resistance
Individual Resistance Group resistance Organizational Resistance

Habit Group Norms Power and conflict
Security Group cohesiveness Differences in functional orientation
Economic factors Group think Mechanistic Structure
Fear of unknown Escalation of commitment Organizational culture
Strategies for overcoming resistance to change:
1. Education & Communication: One of the best ways to overcome resistance to change is to educate people about the
change effort beforehand. Up-front communication and education helps employees see the logic in the change effort. This
reduces unfounded and incorrect rumors concerning the effects of change in the organization.
2. Participation & Involvement: When employees are involved in the change effort they are more likely to buy into
change rather than resist it. This approach is likely to lower resistance more so than merely hoping people will acquiesce
to change.
3. Facilitation & Support: Managers can head-off potential resistance by being supportive of employees during difficult
times. Managerial support helps employees deal with fear and anxiety during a transition period. This approach is
concerned with provision of special training, counseling, time off work.
4. Negotiation and Agreement: Managers can combat resistance by offering incentives to employees not to resist
change. This can be done by allowing change resistors to veto elements of change that are threatening, or change resistors
can be offered incentives to go elsewhere in the company in order to avoid having to experience the change effort. This
approach will be appropriate where those resisting change are in a position of power.
5. Manipulation and Cooptation: “Cooptation” (no it’s not misspelled) involves the patronizing gesture of bringing a
person into a change management planning group for the sake of appearances rather than their substantive contribution.
This often involves selecting leaders of the resisters to participate in the change effort. These leaders can be given a
symbolic role in decision making without threatening the change effort.
6. Explicit and Implicit Coercion: Managers can explicitly or implicitly force employees into accepting change by
making clear that resisting change can lead to losing jobs, firing, or not promoting employees.
7. Timing of change: Timing of introduction of change can have a considerable impact on the resistance. There is always
a right time and a wrong time for introducing change.
8. Selecting People who accept change: Research suggests the ability to easily accept and adapt to change is related to
personality. It appears that people who adjust best to change are those who are open to experience, take a positive attitude
towards change and are flexible in nature.
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Kurt Lewin’s Theory of Planned Change:

A lot has changed since the theory was originally presented in 1947, but the Kurt Lewin model is still extremely relevant.
A key theme of Kurt Lewin's model is the idea that change, especially at the psychological level, is a journey rather than a
simple step. This journey may not be simple and may involve several stages of misunderstanding before people get to the
other side.
Kurt Lewin proposed a three stage theory of change commonly referred to as Unfreeze, Change( or Transition), Freeze (or
Refreeze).
Unfreeze Change ( Transition Refreeze ( Freeze)
Stage 1: Unfreeze - this is the first of Lewin's change transition stages, where people are taken from a state of being
unready to change to being ready and willing to make the first step.
The Unfreezing stage is probably one of the more important stages to understand in the world of change we live in today.
This stage is about getting ready to change. It involves getting to a point of understanding that change is necessary, and
getting ready to move away from our current comfort zone.
This first stage is about preparing ourselves, or others, before the change (and ideally creating a situation in which we
want the change). The more we feel that change is necessary, the more urgent it is, the more motivated we are to make the
change.
Stage 2: Change (Transition) - once you have unfrozen the people, the next question is how you keep them going.
Kurt Lewin was aware that change is not an event, but rather a process. He called that process a transition. Transition is
the inner movement or journey we make in reaction to a change.
This second stage occurs as we make the changes that are needed. People are 'unfrozen' and moving towards a new way of
being.
That said this stage is often the hardest as people are unsure or even fearful. This is not an easy time as people are learning
about the changes and need to be given time to understand and work with them. Change (Transition) Freeze Unfreeze
(Refreeze)
Support is really important here and can be in the form of training, coaching, and expecting mistakes as part of the
process.
Using role models and allowing people to develop their own solutions also help to make the changes. It's also really useful
to keep communicating a clear picture of the desired change and the benefits to people so they don't lose sight of where
they are heading.
Stage 3: Freezing (or Refreezing) - refreezing is the third of Lewin's change transition stages, where people are taken
from a state of being in transition and moved to a stable and productive state.
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UNIT III
Syllabus: Staffing, fundaments of staffing, recruitment & selection, training & development, performance appraisal,
directing, fundamentals of directing, motivation: concept & techniques; Leadership approaches & communication.
Que: Explain the meaning and nature of the directing function of management. Discuss the various elements
involved in the directing process.
Direction:
Introduction and Meaning:
In addition to planning, organising and staffing, every manager must also direct his subordinates. Directing is an
important managerial function. Directing is an important managerial function which initiates organizer’s action.
It is concerned with managing the members of the organisation. Directing is the managerial function that consists of those
activities which are concerned directly with influencing, guiding or supervising the subordinates in their jobs.
Definition:
These are given as under:
“Directing concerns the total manner in which a manager influences the actions of subordinates. It is the final action of a
manager in getting others to act after all preparations have been completed.” —Joseph Massie
“Direction is the impersonal aspect of managing by which subordinates are led to understand and contribute effectively
and efficiently to the attainment of enterprise objectives.” —Koontz and O’Donnell
“Direction is the sum total of managerial efforts that are applied for guiding and inspiring the working terms to make
better accomplishments in the organisation. ” —S.S. Chatterjee
Features or Characteristics:
From the above definitions, following characteristics of direction can be derived:

(i) It is concerned with issuing of orders and instructions to the subordinates.
(ii) It is guiding and counseling the subordinates in their work with a view to improving their performance.
(iii) It is supervision of the work of subordinates to ensure that it conforms to plans.
(iv) Directing is pervasive because it is performed at all levels of management.
(v) It is a continuous process because it deals with the continuous guidance to be provided by the superiors to their
subordinates.
(vi) It always follows a top down approach.
(vii) It provides linkage between other managerial functions such as planning, organising and staffing.
Elements/ Functions of Directing:

The essential elements of directing are:
1. Issuing orders and instructions: Every instruction given by the manager in the process of directing his subordinates
should be reasonable, complete and clear. It must be in writing, so that the possibility of misunderstanding can be avoided.
2. Guiding, counselling and teaching the subordinates: The manager should guide, counsel and teach the subordinates
with regard to the proper way of doing the job in order to enable them to carry out their job-effectively and efficiently.
3. Supervising the work of subordinates: Every work of subordinates should be supervised by the manager to ensure
that their performance conforms to the plan.
4. Motivating the subordinates: Motivating the subordinates to meet the expectations of the superiors is another element
of directing.
5. Maintaining Discipline: Another element of directing is maintaining discipline and rewarding efficient performance.
6. Consultative Direction: Before the issue of any order, the people responsible for executing order will be consulted
with regard to its feasibility, workability and the best way of accomplishing the results.
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Important Features/Characteristics:
1. Directing Initiates Action: Other functions prepare a base or setting of action, i. e., how action has to be carried on the
directing initiate or start action.
2. Continuing Function: Directing is a continuous process. A manager cannot just rest after issuing orders and
instructions. He has to continuously guide, supervise and motivate his subordinates. He must continuously take steps to
make sure that orders and instructions are carried out properly.
3. Directing takes place at every level: Directing is a pervasive function as it is performed by managers at all levels and
in all locations. Every manager has to supervise, guide, motivate and communicate with his subordinate to get things
done. However, the time spent in directing is comparatively more at operational level of management. Directing takes
place wherever superior subordinate relation exists.
4. Directing flows From Top to Bottom: Directions are given by managers to their subordinates. Every manager can
direct his immediate subordinate and take directions from immediate boss. Directing starts from top level and flows to
lower level.
5. Performance Oriented: Directing is a performance oriented function. The main motive of directing is bringing
efficiency in performance. Directing converts plans into performance. Performance is the essence of directing. Directing
functions direct the performance of individuals towards achievement of organisational goal.
6. Human Element: Directing function involves study and molding of human behaviour. It improves interpersonal and
intergroup relationship. It motivates employees to work with their best ability.
Principles of Direction:
(1) Principle of Maximum Individual Contribution: According to this principle, management should adopt that
directing policy through which the employees get motivated and give their maximum individual contribution for the
achievement of organisational objective.
(2) Principle of Harmony of Objectives: According to this principle, there must be full coordination between
organisational and individual objectives. Employees work in an organisation with an objective to get better remuneration,
promotion, etc. On the other hand, organisational goal can be to earn more profits and to increase market share.
(3) Principle of Unity of Command: According to this principle, a subordinate should get directions from one officer at
a time. If the subordinate gets directions from more than one officer, the subordinate will be unable to priorities his work.
(4) Principle of Appropriateness of Direction Technique: According to this principle, appropriate direction techniques
should be used, e.g., to supervise effectively, to provide able leadership, to adopt free communication and to motivate
through right medium.
(5) Principle of Managerial Communication: According to this principle, it should be monitored by the management
that the subordinates get the same meaning for what has been said. This simplifies the job of the subordinates and they
need not go to the managers repeatedly for enquiring.
(6) Principle of Use of Informal Organisation: According to this principle, there must be a free flow of information
between the seniors and the subordinates. The success of direction depends upon effective exchange of information to a
great extent.
Information should be given both through formal and informal mediums. Special attention should be given to the informal
organisation. This strengthens the formal organisation.
(7) Principle of Leadership: According to this principle, while giving directions to the subordinates a good leadership
must be provided by the managers. By this, subordinates get influenced by the managers. In this situation, subordinates
act according to the wish of the managers.
(8) Principle of Follow Through: According to this principle, it must be monitored by management as to what extent the
policies framed and issued directions have been enforced. Thus, it must be seen whether the employees are following the
management or not.
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Process of Direction:
The four-step approach is as follows:
1. Set goals: First you need to set a team goal that supports organizational goals. Goals don't need to be expressed in
measurable terms; in fact goals are typically stated in abstract and general terms. They do need to support the
organization's overall mission, vision, and values. Involving your team members in developing a goal will give them
a sense of ownership and increase their commitment to achieving the goal.
2. Create objectives: In line with the goals set for the team, you need to create objectives to make sure the team
achieves those goals. Objectives must be measurable so that progress can be tracked. You should use the SMART
model, ensuring that the objectives you set are specific, measurable, achievable, realistic, and time-bound.
3. Define a plan of action: Once you've set goals and objectives, you have to specify what must be done to accomplish
them. This is the action plan for your team. An action plan identifies the tasks and deliverables that must be
completed to achieve objectives, which in turn enable the team to achieve its goals. You must also provide direction
in the form of targets and timelines. At a team level, it's really the action plan that sets direction and pace. Define a
new action plan for each budget period to ensure that your team's work is aligned with the goals and vision of the
organization.
4. Follow up: After providing direction in the form of an action plan, you need to monitor progress. This is the purpose
of the final step of following up. You need to ensure that what's laid out in the plan is being achieved. If necessary,
modify the action plan to get progress back on track or to reflect changes made at higher levels of the organization.
During the follow-up step, you can also evaluate the overall performance of the team and the effectiveness of its
goals and objectives, and provide feedback and encouragement to keep team members on track.
Motivation:
Que: Define the concept and nature of motivation.
Introduction:
Motivation is derived from the word Motive. It refers to the needs, wants, drives, impulses within individuals. It
may be defined as the process of stimulating people to action, to accomplish desired goals.
“Motivation refers to the way in which urges, drives, desires, aspirations, striving or needs direct control or
explain the behaviour of human beings.” -Dalton E. McFarland
Features of Motivation
1. Motivation can be positive or negative: - There can be positive motivation and negative motivation.
Positive motivation can be simulative, such as higher pay, power position etc. Negative motivation implies the
use of penalties, punishments etc.
2. Motivation is goal oriented: - Motivation is a behavioral concept. It directs human behavior towards the
accomplishment of goals. If properly motivated, employees put in their best possible efforts in orders to achieve
the desired goals.
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3. Motivation is complex in nature: - Different individuals behave differently to a given set of incentives.
Some employees may be highly motivated when they are given monetary incentives, whereas others may be
more motivated with the use of non-monetary incentives.
4. Motivation is system oriented: - Motivation is a combined effect of these groups of factors. Forces
operating within individual, i.e. his nature, needs, values etc.
5. Motivation is different from job satisfaction:- Motivation is the act to satisfy needs and desires. Job
satisfaction results only when such needs and desires are fulfilled. Job satisfaction is the outcome of
motivation.
6. Motivation is a continuous process:- Motivation is not a onetime process. This is because, human needs and
desires are never ending. When one needs is satisfied, another needs emerges that is to be satisfied. Therefore
managers have to identify the emerging needs of their subordinates and strive to satisfy such needs at regular
intervals.
Importance of Motivation
1. Maximum utilization of factors of production : Workers perform the work sincerely through the
inspiration of motivation.
2. Willingness to work: Motivation influences the willingness of people to work. A man is technically,
mentally and physically fit to perform the work but they may not be willing to work.
3. Reduced absenteeism: Financial incentive schemes coerce the workers to work more. This reduces
absenteeism.
4. Reduced labour turnover: Motivation has both financial and non-financial incentive schemes. This helps to
retain the existing labourers.
5. Availability of right personnel: Financial and non- financial incentives not only retain the existing
employees but also attract the employees from outside the enterprise.
6. Building of good labour relations : Motivation helps to solve the labour problems of absenteeism, labour
turnover, indiscipline and grievance.
7. Increase in the efficiency and output: Both workers and management have got benefits from motivational
plans.
8. Sense of belonging: A proper motivation scheme promotes closer rapport between enterprise and workers.
9. Basis of co-operation : Efficiency and output are increased through co-operation. The co-operation could not
be obtained without motivation, so motivation is a basis of co-operation.
10. Helps in realizing organizational goals : Organizational goals are achieved quickly through motivation.
Motivated employee have a feeling of total involvement in the performance of organization task.
Nature of Motivation
1. Based on motives: Motivation is based on individual's motives which are internal to the individual. These
motives are in the form of feelings that the individual lacks something.
2. Affected by motivating: Motivation is affected by way the individual is motivated the act of motivating
channelises need satisfaction.
3. Goal – directed behavior: Motivation leads to goal-directed behavior. A goal-directed behavior is one which
satisfies the causes for which behavior takes placed.
4. Related to satisfaction: Motivation is related to satisfaction. Satisfaction refers to the contentment
experience of an individual which he derives out of need fulfillment thus satisfaction is a consequence of
rewards and punishment associated with past experience.
5. Person motivated in totality: A person is motivated in totality and not in past. Each individual in the
organization is a self-contained unit and his needs are interrelated.
6. Complex process: Motivation is a complex process, complexity emerges because of the nature of needs and
the type of behavior that is attempted to satisfy those needs.
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Que: Techniques of Motivation:

1. Monetary Incentives and Non- monetary Incentives:
Monetary or Financial Incentives: The reward or incentive which can be calculated in terms of money is
known as monetary incentive. These incentives are offered to employees who have more physiological, social
and security need active in them. The common monetary incentives are:
1. Pay and Allowances: Regular increments in salary every year and grant of allowance act as good motivators.
In some organisations pay hikes and allowances are directly linked with the performance of the employee. To
get increment and allowance employees perform to their best ability.
2. Profit Sharing: The organisations offer share in the profit to the employees as a common incentive for
encouraging the employees for working efficiently. Under profit sharing schemes generally the companies fix a
percentage of profit and if the profit exceeds that percentage then the surplus profit is distributed among the
employees. It encourages the employees to work efficiently to increase the profit of the company so that they
can get share in the profit.
3. Co-Partnership/Stock Option: Sharing the profit does not give ownership right to the employees. Many
companies offer share in management or participation in management along with share in profit to its
employees as an incentive to get efficient working from the employees. The co-partnership is offered by issue
of shares on exceeding a fixed target.
4. Bonus: Bonus is a onetime extra reward offered to the employees for sharing high performance. Generally
when the employees reach their target or exceed the target then they are paid extra amount called bonus. Bonus
is also given in the form of free trips to foreign countries, paid vacations or gold etc. Some companies have the
scheme of offering bonus during the festival time (Diwali, Christmas bonus, New Year, etc.)
5. Commission: Commission is the common incentive offered to employees working under sales department.
Generally the sales persons get the basic salary and along with this, commission on every sales order. The
income of the sales persons is directly linked with the efforts put in by them. More orders mean more
commission.
6. Suggestion System: Under suggestion system the employees are given reward if the organisation gains with
the suggestion offered by the employee. For example, if an employee suggests a cost saving technique of
production and organisation is able to reduce the cost by that technique, then extra payment is given to
employee for giving that suggestion.
The amount of reward or payment given to the employee under suggestion system depends on the gain or
benefit which organisation gets with that suggestion. It is a very good incentive to keep the initiative level of
employees high.
7. Productivity Linked with wage Incentives: There are certain wages rate plans. Which offer higher wages
for more productivity, for example under differential piece wages system efficient workers are paid higher
wages as compared to inefficient workers? To get higher wages workers perform efficiently.
8. Retirement Benefits: Some organisations offer retirement benefits such as pension, provident fund, gratuity
etc. to motivate people. These incentives are suitable for employees who have security and safety need.
9. Perks/Fringe Benefits/Perquisites: It refers to special benefits such as medical facility, free education for
children, housing facility etc. These benefits are over and above salary. These extra benefits are related with the
performance of the employees.
Non-Monetary/Non-Financial Incentives:
Money is not the only motivator, the employees who have more of esteem and self actualisation need active in
them get satisfied with the non-monetary incentives only.
The incentives which cannot be calculated in terms of money are known as nonmonetary incentives. Generally
people working at high job position or at high rank get satisfied with non-monetary incentives. The common
means or ways of non-monetary incentives are:
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1. Status: Status refers to rank, authority, responsibility, recognition and prestige related to job. By offering
higher status or rank in the organisation managers can motivate employees having esteemed and self-
actualisation need active in them.
2. Organisational Climate: It refers to relations between superior/subordinates. These are the characteristics
which describe an organisation. These characteristics have direct influence over the behaviour of a member. A
positive approach adopted by manager creates better organisational climate whereas negative approach may
spoil the climate. Employees are always motivated in the healthy organisational climate.
3. Career Advancement: Managers must provide promotional opportunities to employees. Whenever there are
promotional opportunities employees improve their skill and efficiency with the hope that they will be
promoted to high level. Promotion is a very big stimulator or motivator which induces people to perform to
their best level.
4. Job Enrichment/Assignment of Challenging Job: Employees get bored by performing routine job. They
enjoy doing jobs which offer them variety and opportunity to show their skill. By offering challenging jobs,
autonomy to perform job, interesting jobs, employees get satisfied and they are motivated. Interesting, enriched
and challenging job itself is a very good motivator or stimulator.
5. Employees Recognition: Recognition means giving special regard or respect which satisfies the ego of the
subordinates. Ego-satisfaction is a very good motivator. Whenever the good efforts or the positive attitudes are
shown by the subordinates then it must be recognised by the superior in public or in presence of other
employees. Whenever if there is any negative attitude or mistake is done by subordinate then it should be
discussed in private by calling the employee in cabin.
Examples of employee’s recognition are congratulating employee for good performance, displaying the
achievement of employee, giving certificate of achievement, distributing moments, gifts etc.
6. Job Security: Job security means life time bonding between employees and organisation. Job security means
giving permanent or confirmation letter. Job security ensures safety and security need but it may have negative
impact. Once the employees get job secured they lose interest in job. For example government employees do
not perform efficiently as they have no fear of losing job. Job security must be given with some terms and
conditions.
7. Employee’s participation: It means involving employee in decision making especially when decisions are
related to workers. Employees follow the decision more sincerely when these are taken in consultation with
them for example if target production is fixed by consulting employee then he will try to achieve the target
more sincerely.
8. Autonomy/Employee Empowerment: It means giving more freedom to subordinates. This empowerment
develops confidence in employees. They use positive skill to prove that they are performing to the best when
freedom is given to them.
Que: Distinguish between Positive and Negative motivation

Positive and Negative Incentives:
Positive Incentives: Positive incentives makes people willing to do their in the best way they can and improve
their performance. Positive incentives offer some reward to people to act in the desired manner. It is, indeed, a
tool of creating an interest in the mind of the employees for better performance so as to each the attainment of
organization goals.
Negative Incentives: Negative incentives mean the act of forcing employees to work by means of threats and
punishment. Sometimes must initiates some against employees with a view to discouraging them understand
behavior and encouraging positive behavior. It is the negative treatment exercise on the employees who are not
performing their work as expected. Provisions relating to demotion, dismissal, transfer, penalties, group
rejection, etc. are few examples of negative motivations.
3. Individual and Collective Incentives:
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Individual Incentives: It is offered to individual who are those employees who contribute their special efforts
or extra benefit by their efforts.
Collective Incentives: These are offered collectively to group of workers. The main aim is to motivate whole
group.
Theories of Motivation:
1. Content Theories about Motivation
Que: Maslow’s theory of motivation gives a hierarchy of needs. Write the theory in brief and comment
whether human needs follow this hierarchy or not, giving reasons for your answer.
a) Abraham Maslow’s Hierarchy of Needs
When motivation theory is being considered the first theory that is being recalled is Maslow’s hierarchy of
needs which he has introduced in his 1943 article named as “A Theory of Human Motivation”. According to
this theory, individual strives to seek a higher need when lower needs are fulfilled. Once a lower-level need is
satisfied, it no longer serves as a source of motivation. Needs are motivators only when they are unsatisfied.
 In the first level, physiological needs exist which include the most basic needs for humans to survive,
such as air, water and food.
 In the second level, safety needs exist which include personal security, health, well-being and safety
against accidents remain.
 In the third level, belonging needs exit. This is where people need to feel a sense of belonging and
acceptance. It is about relationships, families and friendship. Organizations fulfill this need for people.
 In the fourth level, self-esteem needs remain. This is where people looks to be respected and to have
self-respect. Achievement needs, respect of others are in this level.
 In the top-level, self-actualization needs exist. This level of need pertains to realising the person’s full
potential.
b) Alderfer’s ERG Theory
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In 1969, Clayton P. Alderfer, simplified Maslow’s theory by categorizing hierarchy of needs into three
categories:
 Physiological and Safety needs are merged in Existence Needs,

 Belonging needs is named as Relatedness Needs,
 Self-esteem and Self-actualization needs are merged in Growth Needs
c) McGregor's Theory-X and Theory-Y
McGregor's Theory-X represented the traditional management view that employees are lazy, was uninterested
in work, and needed to be prodded to perform. In contrast his theory Y viewed employees as creative, complex,
and mature individuals interested in meaningful work. McGregor believed that under the right circumstances,
employees would willingly contribute their ingenuity and their talents for the benefits of the organization. He
suggested that the mangers motivate employees by giving them the opportunity to develop their talents more
fully and by giving them the freedom to choose the methods they would use to achieve organizational goals. In
McGregor's view the mangers role was not to manipulate employees but to align their needs with needs of the
organization so that employees would regulate their own actions and performance. These insights lead
researches to investigate the origins and processes of motivation more closely
d) Herzberg’s Two Factor Theory
Frederick Herzberg, introduced his Two Factor Theory in 1959. He suggested that there are two kinds of factors
affect motivation, and they do it in different ways:
Que: 1) Hygiene factors: A series of hygiene factors create dissatisfaction if individuals perceive them as
inadequate or inequitable, yet individuals will not be significantly motivated if these factors are viewed as
adequate or good. Hygiene factors are extrinsic and include factors such as salary or remuneration, job security
and working conditions.
2) Motivators: They are intrinsic factors such as sense of achievement, recognition, responsibility, and personal
growth.
The hygiene factors determine dissatisfaction, and motivators determine satisfaction. Herzberg theory conforms
with satisfaction theories which assert that “a satisfied employee tends to work in the same organization but this
satisfaction does not always result in better performance”. In other words, satisfaction does not correlate with
productivity.
Que: Motivational Process:

1. Need Identification: First phase of motivation process is need identification where the employee feels
his/her some unsatisfied need. The motivation process begins with an unsatisfied need, which creates tension
and drives an individual to search for goals that, if attained, will satisfy the need and reduce the tension.
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2. Searching Ways to satisfy needs: Second phase is finding the different alternatives that can be used to
satisfy the needs, which were felt in first stage. These needs lead to thought processes that guide an employee's
decision to satisfy them and to follow a particular course of action
3. Selecting Goals: Once if the need is assessed and employee is able to find out the way to satisfy the need
than next phase is selection of goals to be performed.
4. Employee Performance: These needs lead to thought processes that guide an employee's decision to satisfy
them and to follow a particular course of action in form of performance.
5. Consequences of performance Reward/punishments: If an employee's chosen course of action results in
the anticipated out come and reward, that person is likely to be motivated by the prospect of a similar reward to
act the same way in the future. However, if the employee's action does not result in the expected reward, he or
she is unlikely to repeat the behavior
6. Reassessment of Need deficiencies: Once felt need is satisfied through certain rewards in response to
performance than employee reassesses any deficiencies and entire process is repeated again.
Leadership:
Meaning:
Leadership is an important element of the directing function of management. Wherever, there is an organized
group of people working towards a common goal, some type of leadership becomes essential. “The power of
leadership is the power of integrating. The leader stimulates what is best in us he unites and concentrates what
we feel only gropingly and shatteringly. The person who influences me most is not he who does great Deeds,
but he who makes me feel that I can do great deeds.” Marry Parker Follet.
Leadership is the ability to build up confidence and zeal among people and to create an urge in them to be led.
To be a successful leader, a manager must possess the qualities of foresight, drive, initiative, self-confidence
and personal integrity. Different situations may demand different types of leadership.
Definitions:
Koontz and O’Donnell, “Leadership is the ability of a manager to induce subordinates to work with confidence
and zeal.”
Dubin, R “Leadership is the exercise of authority and making of decisions.”
Allford and Beaty, “Leadership is the ability to secure desirable actions from a group of followers voluntarily,
without the use of coercion.”
George R. Terry, “Leadership is the activity of influencing people to strive willingly for group objectives.”
Nature and Characteristics of Leadership:

1. Leadership is a personal quality.
2. It exists only with followers. If there are no followers, there is no leadership?
3. It is the willingness of people to follow that makes person a leader.
4. Leadership is a process of influence. A leader must be able to influence the behaviour, attitude and beliefs of
his subordinates.
5. It exists only for the realization of common goals.
6. It involves readiness to accept complete responsibility in all situations.
7. Leadership is the function of stimulating the followers to strive willingly to attain organizational objectives.
8. Leadership styles do change under different circumstances.
9. Leadership is neither bossism nor synonymous with; management.
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Leadership Functions:
1. Setting Goals:
A leader is expected to perform creative function of laying out goals and policies to persuade the subordinates
to work with zeal and confidence.
2. Organizing:
The second function of a leader is to create and shape the organization on scientific lines by assigning roles
appropriate to individual abilities with the view to make its various components to operate sensitively towards
the achievement of enterprise goals.
3. Initiating Action:
The next function of a leader is to take the initiative in all matters of interest to the group. He should not depend
upon others for decision and judgment. He should float new ideas and his decisions should reflect original
thinking.
4. Co-Ordination:
A leader has to reconcile the interests of the individual members of the group with that of the organization. He
has to ensure voluntary co-operation from the group in realizing the common objectives.
5. Direction and Motivation:
It is the primary function of a leader to guide and direct his group and motivate people to do their best in the
achievement of desired goals, he should build up confidence and zeal in the work group.
6. Link between Management and Workers:
A leader works as a necessary link between the management and the workers. He interprets the policies and
programmes of the management to his subordinates and represents the subordinates’ interests before the
management. He can prove effective only when he can act as the true guardian of the interests of his
subordinates.
Qualities of a Good Leader:

Importance of Leadership in Management:
1. It Improves Motivation and Morale:

Through dynamic leadership managers can improve motivation and morale of their subordinates. A good leader
influences the behaviour of an individual in such a manner that he voluntarily works towards the achievement
of enterprise goals.
2. It Acts as a Motive Power to Group Efforts:
Leadership serves as a motive power to group efforts. It leads the group to a higher level of performance
through its persistent efforts and impact on human relations.
3. It Acts as an Aid to Authority:
The use of authority alone cannot always bring the desired results. Leadership acts as an aid to authority by
influencing, inspiring and initiating action.
4. It is needed at All Levels of Management:
Leadership plays a pivotal role at all levels of management because in the absence of effective leadership no
management can achieve the desired results.
5. It Rectifies the Imperfectness of the Formal Organisational Relationships:
No organizational structure can provide all types of relationships and people with common interest may work
beyond the confines of formal relationships. Such informal relationships are more effective in controlling and
regulating the behaviour of the subordinates. Effective leadership uses there informal relationships to
accomplish the enterprise goals.
6. It Provides the Basis for Co-operation:
Effective leadership increases the understanding between the subordinates and the management and promotes
co-operation among them.
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Process or Techniques of Effective Leadership:

The following are the techniques of effective leadership:
1. The leader should consult the group in framing the policies and lines of action and in initiating any radical
change therein.
2. He should attempt to develop voluntary co-operation from his subordinates in realizing common objectives.
3. He should exercise authority whenever necessary to implement the policies. He should give clear, complete
and intelligible instructions to his subordinates.
4. He should build-up confidence and zeal in his followers.
5. He should listen to his subordinates properly and appreciate their feelings.
6. He should communicate effectively.
7. He should follow the principle of motivation.
Que: Elaborate types of leadership style based on the use of powers & authority.
Leadership Styles:
1. Autocratic or Authoritative Style:
It is also known as leader centered style. Under this style of leadership there is complete centralisation of
authority in the leader i.e., authority is centered in the leader himself He has all the powers to take decisions. He
designs the work-load of his employees and exercise tight control over them. The subordinates are bound to
follow his order and directions.
Advantages:
(i) Autocratic leadership style permits quick decision-making.
(ii) It provides strong motivation and satisfaction to the leaders who dictate terms.
(iii) This style may yield better results when great speed is required.
Disadvantages:
(i) It leads to frustration, low moral and conflict among subordinates,
(ii) Subordinates tend to shirk responsibility and initiative.
2. Democratic Style:
Under this style, a leader decentralises and delegates high authority to his subordinates. He makes a final
decision only after consultation with the subordinates. Two way communication channel is used. While
delegating a lot of authorities to subordinates, he defines the limits within which people can function.
Democratic leaders have a high concern for both people and work.
Advantages:
(i) Exchange of ideas among subordinates and leader improves job satisfaction and morale of the subordinates.
(ii) Human values get their due recognition which develops positive attitude and reduces resistance to change.
(iii) Labour absenteeism and labour turnover are reduced.
(iv) The quality of decision is improved.
Disadvantages:
(i) Democratic style of leadership is time consuming and may result in delays in decision-making.
(ii) It is less effective if participation from the subordinates is for name sake.
(iii) Consulting others while making decisions go against the capability of the leader to take decisions.
3. Free Rein or Laissez Fair style:

Under this style, a manager gives complete freedom to his subordinates. The entire decision-making authority is
entrusted to them. There is least intervention by the leader and so the group operates entirely on its own. There
is free flow of communication. In this style manager does not use power but maintains contact with them.
Subordinates have to exercise self control. This style helps subordinates to develop independent personality.
Advantages:
(i) Positive effect on job satisfaction and moral of subordinates.
(ii) It gives chance to take initiative to the subordinates.
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(iii) Maximum possible scope for development of subordinates.

Disadvantages:
(i) Under this style of leadership, there is no leadership at all.
(ii) Subordinates do not get the guidance and support of the leader.
(iii) Subordinates may move in different directions and may work at cross purpose which may create problem
for the organisation.
Free rein style of leadership may be appropriate when the subordinates are well trained, highly knowledgeable,
self-motivated and ready to assume responsibility.
4. Paternalistic leadership
Under this management style the leader assumes that his function is fatherly or paternal. Paternalism means
papa knows best. The relationship between the leader and his group is the same as the relationship between the
head of the family and the members of the family. The leader guides and protects his subordinates as members
of his family.
As the head of the family he provides his subordinates with good working conditions and fringe benefits. It is
assumed that workers will work harder out of gratitude. This leadership style was admirably successful in Japan
with her peculiar social background.
This leadership style has still been widely prevalent in small firms in India. However, this paternalistic approach
is unlikely to work with mature adult employees, many of whom do not like their interests to be looked after by
a “godfather.” Instead of gratitude, it might generate antagonism and resentment in the subordinates.
Theories of Leadership: Trait Theory, Situation Theory and Behaviour Theory!

1. Trait Theory:
The trait theory says that there are certain identifiable qualities or characteristics that are unique to leaders and
those good leaders possess such qualities.
The trait theorists have identified a list of qualities that are as follows:
(1) Intelligence:
A leader should be intelligent enough of understanding the context and contents of his position and function. He
should be able to grasp the dynamics of environmental variables, both internal as well as external, which affect
the activities of the enterprise. He should also have technical competence and sound general knowledge.
(2) Personality:
The term personality here means not only physical appearance but also inner-personality qualities. Such
qualities include emotional stability and maturity, self-confidence, decisiveness, strong drive, extrovertness,
achievement orientation, purposefulness, discipline, skill in getting along with others, integrity in character and
a tendency to be co-operative.
(3) Other qualities:
In addition to the above said qualities, a good business leader should possess qualities such as open mindedness,
scientific spirit, social sensitivity, ability to communicate, objectivity and a sense of realism.
In olden days, it was believed that leaders in general and great leaders in particular are born, not made. Born
leaders inherit several favourable traits or qualities which separate them from non-leaders or the mass of
humanity. However, it is not always so.
The trait theory is the modification of the above said view and it argues that leadership qualities or traits can be
acquired. They need not always be inborn. Leadership qualities may be in-born or acquired through training and
practice.
The trait theory of leadership is criticised mainly on account of the following inadequacies:
1. It is not based on any research or systematic development of concepts and principles.
2. It fails to emphasise the intensity and the extent to which each of the agreed traits should be present in an
individual.
3. Leaders must display different leadership characteristics at different times and under different situations.
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4. Researchers have shown that leadership should be looked beyond personal qualifications and traits of the
individual.
5. The theory does not offer scale to measure the degree of these traits. Therefore, measuring a trait is not an
easy task.
6. Skills are sometimes mistaken for traits.
2. Situation Theory:
The situation approach does not deny the importance of individual traits in leadership. But it goes further and
asserts that leadership pattern is the product of a situation in a particular group and that leadership will be
different in different situations.
It was discovered in a research study conducted by Bavelas and Barrett that no individual emerges as leader
when all the participants have equal access to the information and that the individual commanding maximum
information will sooner or later emerge as a leader.
Thus it is obvious that a leader can so structure the organisation that a favourable situation is created for the
subordinates to emerge as a leader. Fred E. Fiedler has developed a contingency model of leadership
effectiveness. This approach was the result of the most extensive programme of research about leadership styles
and effective group performance carried out by Fred E. Fiedler.
The situational variables considered by this research are:
(1) Leader-member relations:
Leader – member relations are good or bad depending upon leader being liked or not liked by the group being
supervised.
(2) Task structure:
Task structure is said to be high or low depending upon the extent to which work to be done and goals to be
achieved, are defined clearly and unambiguously.
(3) Power position:
Power position is strong or weak depends upon the amount of reward and coercive and legitimate power
possessed. Only the above three factors are considered by this theory. However, there are other situational
factors (such as group performance) that also have a bearing upon the pattern of leadership style. Finally, he
concluded that production oriented leadership is most efficient either in highly favourable or un-favourable
situations from the point of view of the leader.
A task oriented leader is needed when difficult situation is en-counted, things are not clear, work to be carried
out and goals to be attained are ambiguous and have to be defined by the leader. In the intermediate situations, a
manager who is people- oriented is likely to do better.
3. Behavioural Theory:
The behavioural theory of leadership lays emphasis on this fact that the leadership is the outcome of effective
role of behaviour. It relies mainly on the acts of an individual rather than his traits. Under this approach
leadership is described as what leaders do instead of what they are. This theory states that a leader to be
effective should perform his function in such a way that will enable the group to attain its goals.
Que: Define communication. Discuss the barriers to communication.

Communication:
The word communication is derived from the Latin word ‘Communicare” that means to share, to make
common, to impart, to participate, to convey, or to transmit.
Definition: “It is an exchange of facts, ideas, opinions, or emotions by two or more persons.”
Importance of Communication:
The communication is an important element of directing because of following points:
1. Act as basis of Coordination and Cooperation:
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Generally the organisational objectives are set up at planning stage and these objectives have to be
communicated to management at all levels. That is why through communication only the objectives and goals
of the organisation are made clear to every employee.
While setting up the personal targets and objectives of employees the managers must get the accurate
information which reaches manager through communication only. Through communication the top level
management is able to interact with lower level management and all the employees. This interaction helps in
getting the commitment and co-operation and coordination of people.
2. Act as basis for Decision Making:
For taking any major decision or solving any problem in the organisation there is a need to get the most accurate
information and information moves in organisation through communication only. Whenever the managers are
taking decisions they keep in mind the ‘pros’ and ‘cons’ or positive or negative aspects. The accurate
information regarding the positive and negative aspect comes only through communication.
3. Increase managerial efficiency:
Every individual in the organisation is assigned a job or task. He is made responsible for some activities. He is
granted authority to carry on those responsibilities. This classification of task, responsibility and authority is
possible only when the information reaches accurately to the employees.
The employees must know clearly who has to report to whom, what part of total job they are expected to
perform and what are their decision making powers. The clarity about these questions comes only with smooth
flow of communication.
4. Establish effective leadership:
If there is two way information flows between the superiors and subordinates then there will be definitely
positive reaction of employees. Generally rules are framed by the top level authority but these are applied on all
the employees in the organisation. So it is always advisable to interact clearly with all the levels of employees
before framing the rigid rules and regulations. The rules are more effective when they are formed with the
interaction of employees.
5. Helps in Process of Motivation and Morale Development:
Motivation is a psychological process of developing willingness to work. In the motivation process the
superiors try to analyse the needs of subordinates and the needs can be recognised only when there is smooth
flow of information and exchange of views between the superiors and subordinates.
With the communication it becomes more convenient for the superiors to offer financial and non-financial
incentives. The job satisfaction and the moral of the employee depend on the communication between superior
and subordinates.
6. Helps in Smooth Working of an Enterprise:
All interactions in organisation depend upon communication. Smooth working of an enterprise is possible only
when there is no communication gap. Right from establishing of enterprise till its survival communication is
essential.
Through communication managers give directions to subordinates for smooth functioning of organisation.
7. Promotes Cooperation and Peace:
Through two way communication process managers try to develop mutual understanding between management
and workers. Through smooth flow of communication subordinates and superior can discuss their problems,
grievances and aspirations. Cooperation brings peace in the organisation.
Barriers to Effective Communication:

Sometimes the message sent by sender does not reach the receiver in the same manner as expected by the
sender. This filtration, misrepresentation of communication may cause misunderstanding. Therefore it is
important for a manager to identify these barriers and take measures to overcome these.
The barriers can be grouped in following categories:
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i. Semantic Barriers
ii. Psychological Barriers
iii. Organisational Barriers
iv. Personal Barriers
1. Semantic Barriers:
Sometimes the same words and sentences can be understood differently by different people in the organisation
which means difference in the understanding levels of employees. For example, if the production manager
announces in the meeting that there will be increase in budget of production department then employees may
understand that their salary will increase but managers may understand it that expensive machinery will be
purchased. Main causes for semantic problem can be
(i) Badly expressed message:
Sometimes due to lack of vocabulary manager may use wrong words, omission of needed words. Due to this the
manager may fail to convey the same meaning to his subordinates.
(ii) Symbols with different meanings:
Sometimes a word may have different meanings. Receiver may understand the other meaning. For example:
Price, Prize, Principle, Principal, Right, Write, etc. or handle with care. Hold the handle of door carefully.
(iii) Faulty Translations:
Sometimes the workers do not understand the language which is used by manager so workers get it translated. If
translator is not efficient he may make mistake in translation. Due to wrong translation there may be transfer of
wrong message.
(iv) Un-clarified Assumptions:
Sometimes the worker may misinterpret the assumptions. For example boss may instruct the subordinate to
“take care of goods”. He may mean that takes care of quality of goods whereas workers may understand that he
is instructing to keep the goods safely.
(v) Technical Jargon:
While explaining to subordinates many specialised experts use technical words which may not be understood by
the workers.
(vi) Body language and gesture decoding:
Along with verbal communication another important mode of communication is body language and gestures
shown by person who is talking. If the verbal communication is not matching with the body language, then
workers may get confused and misunderstand the meaning. Example—If manager is telling a joke but there are
signs of anger on his face then worker will get confused.
2. Psychological Barriers:
Emotional or psychological factors also act as barriers to effective communication. The state of mind has great
influence over the information and its reflection. As a frightened person may not communicate properly
similarly an angry person may not receive the communication effectively.
Some of the psychological barriers to effective communication are:
(i) Premature Evaluation:
It means deriving conclusions before completion of message. Sometimes people evaluate the meaning of
message before the sender completes the message. In such case the receiver may not have an open mind.
He may have some personal prejudice against the sender. He may resist change. He jumps to conclusions
without logical deduction from the situation.
(ii) Lack of Attention:
It means when receiver does not pay complete attention to the message as a result communication becomes
ineffective. The reason can be preoccupied mind of receiver. For example, when worker is giving suggestion
regarding method of production, the manager is preoccupied with an important file.
Sometimes managers do not give attention due to extreme emotions for example, depression or jubilation. This
lack of attention may disappoint the employees.
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(iii) Loss by Transmission and Poor Retention:

When communication passes through various levels, this results in filtering or loss of information. Specially
when is oral information sometimes manager may not be able to retain all information for a longer time. They
may ignore or misinterpret some of the information when they are not interested.
(iv) Distrust:
Distrust between communicator and receiver also acts as a barrier to effective communication. They may not
understand each other’s message in the original sense, secondly they do not give much importance to the
information exchanged between them.
3. Organisational Barriers:
Factors related to organisational structure, authority relationship, rules, regulations may act as barriers to
effective communication.
Some of the organisational barriers are:
(i) Organisational Policy:
If organisational policy does not support free flow of information it may result in barriers. For example in
centralised organisation most of the information remain at top level only. People at lower level may not be able
to communicate freely in centralised organisation.
(ii) Rules and Regulations:
Rigid rules, regulations may also create barriers as following rules may lead to red tapism, delay of action and
delay in movement of information.
(iii) Status Difference:
Sometimes the people working at higher level do not believe in the information supplied by the lower level
employees as they feel how would he know about my job and who is he to give me suggestions.
(iv) Complex organisation:
When the information passes through various levels then there can be screening or filtering of information at
different levels. For example, while giving the feedback the subordinates filter all their negative points and
highlight only their positive side.
(v) Organisational Facilities:
In large organisation free and effective flow of communication is possible only when some facilities like social
get together, complaint box, task force, etc. exist. In absence of such facilities there can be delay and barrier to
effective communication.
4. Personal Barriers:
Certain personal factors of sender and receiver may influence the free flow of information.
Some of the personal barriers are:
(i) Lack of Confidence of Superior in his subordinates:
If superiors have no confidence and trust in their subordinates then they pay no attention to their advice, opinion
or suggestions.
(ii) Lack of incentives:
If there is no incentive for communication then subordinates may not take initiatives to give suggestions.
For example if there is no reward given for giving some good suggestion then employees will take no initiative
to give good suggestions.
(iii) Fear of Authority:
Sometimes superiors conceal and hide information if they have fear of losing their authority over the
subordinates.
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Improving Communication Effectiveness:

All organizations face barriers to effective communication. By using following measures they can overcome
such barriers.
1. Clarify the idea before communication:
In the first place we must be clear about what we want to communicate. The message can be conveyed properly
only if it is clearly formulated in the mind of the communicator. The message should be encoded in direct and
simple language so that the receiver is able to understand it without much difficulty.
2. Communication according to the need of the receiver:
Whenever we communicate we must keep in mind the needs of the receiver of the message or it should be our
effort to see that whatever message or information we send across must be of value to receiver. This will make
receiver more receptive. Sender must select the words according to the education level of receiver.
3. Consult others before communicating:
Before communicating the message it is advisable to consult others. Effective communication is the
responsibility of all persons in the organisation as all have to work towards a common goal. If plans are
developed with consultation and involvement of subordinates, they will accept it with full cooperation.
4. Use of proper language, tone and contents of message:
For an effective communication the words, tone and symbols used in message must be selected very carefully.
The language used should not offend the sentiments of listener. The symbols used in message must be known to
the listener.
5. Proper feedback:
Feedback helps to know the effect or success of communication given by sender. Communication is complete
only when the message is understood by the receiver.
We can never know whether receiver has understood the message or not unless we get the feedback. Feedback
also provides opportunity for suggestions and criticism.
6. Communication for the present as well as for future:
Communication must meet the need of present organisation as well as for future organisation. There must be
consistency in the past, present and future communication.
7. Follow up communication:
There should be proper follow up of the information given by manager to subordinate. This follow up helps to
remove hurdles, misunderstanding of instructions given by manager to subordinates.
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8. Good listener:
The sender must listen to receiver’s words alternatively; on the other hand receiver must also listen with due
attention. Patient and attentive listening solve many problems.
9. Open mind:
The parties to communication must have open mind. They should not try to withhold information for their
personal interest. They should not react before receiving and listening the full message.
10. Completeness of message:
A message is effective only when it is given completely. The receiver should not be left guessing. It may lead to
misunderstanding. A complete message carries all necessary facts and figures.
Principles of Effective Communication:

According to the 7 Cs, your communication should always be:
1. Clear: Make the goal of your message clear to your recipient. Ask yourself what the purpose of your
communication is.
2. Concise: Your message should also be brief and to the point. Why communicate your message in six
sentences when you can do it in three?
3. Concrete: Ensure your message has important details and facts, but that nothing deters the focus of your
message.
4. Correct: Make sure what you're writing or saying is accurate. Bad information doesn't help anybody.
Also make sure that your message is typo free.
5. Coherent: Does your message make sense? Check to see that all of your points are relevant and that
everything is consistent with the tone and flow or your text.
6. Complete: Your message is complete when all relevant information is included in an understandable
manner and there is a clear "call to action". Does your audience know what you want them to do?
7. Courteous: Ensure that your communication is friendly, open, and honest, regardless of what the
message is about. Be empathetic and avoid passive-aggressive tones.
Elements of Communication Process:

Seven major elements of communication process are: (1) sender (2) ideas (3) encoding (4) communication
channel (5) receiver (6) decoding and (7) feedback.
Communication may be defined as a process concerning exchange of facts or ideas between persons holding
different positions in an organisation to achieve mutual harmony. The communication process is dynamic in
nature rather than a static phenomenon.
Communication process as such must be considered a continuous and dynamic inter-action, both affecting and
being affected by many variables.
(1) Sender:
The person who intends to convey the message with the intention of passing information and ideas to others is
known as sender or communicator.
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(2) Ideas:
This is the subject matter of the communication. This may be an opinion, attitude, feelings, views, orders, or
suggestions.
(3) Encoding:
Since the subject matter of communication is theoretical and intangible, its further passing requires use of
certain symbols such as words, actions or pictures etc. Conversion of subject matter into these symbols is the
process of encoding.
(4) Communication Channel:
The person who is interested in communicating has to choose the channel for sending the required information,
ideas etc. This information is transmitted to the receiver through certain channels which may be either formal or
informal.
(5) Receiver:
Receiver is the person who receives the message or for whom the message is meant for. It is the receiver who
tries to understand the message in the best possible manner in achieving the desired objectives.
(6) Decoding:
The person who receives the message or symbol from the communicator tries to convert the same in such a way
so that he may extract its meaning to his complete understanding.
(7) Feedback:
Feedback is the process of ensuring that the receiver has received the message and understood in the same sense
as sender meant it.
Que: Staffing Or Define the term staffing. What functions are convert under staffing function of
management? Also explain the importance of job analysis in staffing.
Meaning of Staffing:
The term ‘Staffing’ relates to the recruitment, selection, development, training and compensation of the
managerial personnel. Staffing, like all other managerial functions, is the duty which the apex management
performs at all times. In a newly created enterprise, the staffing would come as a. third step—next to planning
and organizing—but in a going enterprise the staffing process is continuous.
“The managerial function of staffing involves manning the organisational structure through effective and
proper selection, appraisal, and development of personnel to fill the roles designed into the structure.” —
Koontz and O’Donnell: “Staffing pertains to recruitment, selection, development and compensation of
subordinates.”
Nature of Staffing:
Staffing is an integral part of human resource management. It facilitates procurement and placement of right
people on the right jobs.
The nature of staffing function is discussed below:
1. Staffing is an important managerial function- Staffing function is the most important mangerial act
along with planning, organizing, directing and controlling. The operations of these four functions
depend upon the manpower which is available through staffing function.
2. Staffing is a pervasive activity- As staffing function is carried out by all mangers and in all types of
concerns where business activities are carried out.
3. Staffing is a continuous activity- This is because staffing function continues throughout the life of an
organization due to the transfers and promotions that take place.
4. The basis of staffing function is efficient management of personnels- Human resources can be
efficiently managed by a system or proper procedure, that is, recruitment, selection, placement, training
and development, providing remuneration, etc.
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5. Staffing helps in placing right men at the right job. It can be done effectively through proper
recruitment procedures and then finally selecting the most suitable candidate as per the job
requirements.
6. Staffing is performed by all managers depending upon the nature of business, size of the company,
qualifications and skills of managers,etc. In small companies, the top management generally performs
this function. In medium and small scale enterprise, it is performed especially by the personnel
department of that concern.
Importance and need of Staffing:

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

1. Manpower requirements- The very first step in staffing is to plan the manpower inventory required by
a concern in order to match them with the job requirements and demands. Therefore, it involves
forecasting and determining the future manpower needs of the concern.
2. Recruitment- Once the requirements are notified, the concern invites and solicits applications according
to the invitations made to the desirable candidates.
3. Selection- This is the screening step of staffing in which the solicited applications are screened out and
suitable candidates are appointed as per the requirements.
4. Orientation and Placement- Once screening takes place, the appointed candidates are made familiar to
the work units and work environment through the orientation programmes. Placement takes place by
putting right man on the right job.
5. Training and Development- Training is a part of incentives given to the workers in order to develop
and grow them within the concern. Training is generally given according to the nature of activities and
scope of expansion in it. Along with it, the workers are developed by providing them extra benefits of
in-depth knowledge of their functional areas. Development also includes giving them key and important
jobs as a test or examination in order to analyse their performances.
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6. Remuneration- It is a kind of compensation provided monetarily to the employees for their work
performances. This is given according to the nature of job- skilled or unskilled, physical or mental, etc.
Remuneration forms an important monetary incentive for the employees.
7. Performance Evaluation- In order to keep a track or record of the behaviour, attitudes as well as
opinions of the workers towards their jobs. For this regular assessment is done to evaluate and supervise
different work units in a concern. It is basically concerning to know the development cycle and growth
patterns of the employees in a concern.
8. Promotion and transfer- Promotion is said to be a non- monetary incentive in which the worker is
shifted from a higher job demanding bigger responsibilities as well as shifting the workers and
transferring them to different work units and branches of the same organization.
Que: Differentiate between Recruitment & Selection. Discuss the major tests that are used in selection for
employment.
Basis Recruitment Selection
Meaning It is an activity of establishing It is a process of picking up more

contact between employers and competent and suitable employees.
applicants.
Objective It encourages large number of It attempts at rejecting unsuitable

Candidates for a job. candidates.
Process It is a simple process. It is a complicated process.
Hurdles The candidates have not to cross Many hurdles have to be crossed.
over many hurdles.
Approach It is a positive approach. It is a negative approach.
Sequence It proceeds selection. It follows recruitment.
Economy It is an economical method. It is an expensive method.
Time Less time is required. More time is required.

Consuming
Types of tests for selection

1. Aptitude Tests: These tests measure whether an individual has the capacity or latent ability to learn a given job if
given adequate training. Aptitudes can be divided into general and mental ability or intelligence and specific aptitude such
as mechanical, clerical, manipulative capacity etc.
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2. Intelligence Tests: These tests in general measure intelligence quotient of a candidates. In detail these tests measure
capacity for comprehension, reasoning, word fluency, verbal comprehension, numbers, memory and space .
3. Personality Tests: These tests prove deeply to discover clues to an individualâ€™s value system, his emotional
reactions and maturity and characteristic mood. They are expressed in such traits like self-confidence, tact, emotional
control, optimism, decisiveness, sociability, conformity, objectivity, patience, fear, distrust, initiative, judgment
dominance or submission, impulsiveness, sympathy, integrity, stability and self-confidence.
4. Interest Test: These tests are inventories of the likes and dislikes of candidates in relation to work, job, occupations,
hobbies and recreational activities. The purposes of this test is to find out whether a candidate is interested or disinterested
in the job for which he is a candidate and to find out in which area of the job range/occupation the candidate is interested.
5. Mechanical Aptitude Tests: These tests measure the capacities of spatial visualization, perceptual speed and
knowledge of mechanical matter. These tests are useful for selecting apprentices, skilled, mechanical employees,
technicians etc.
Psychomotor Tests: These tests measure abilities like manual dexterity, motor ability and eye-hand coordination of
candidates. These tests are useful to select semi-skilled workers and workers for repetitive operations like packing, watch
assembly.
Clerical Aptitude Tests: Measure specific capacities involved in office work. Items of this test include spelling,
computation, comprehension, copying, word measuring etc.
6. Achievement Tests: These tests are conducted when applicant claims to know something as these tests are concerned
with what one has accomplished These tests are more useful to measure the value of specific achievement when an
organization wishes to employ experienced candidates. These tests are classified into:
Job Knowledge test; (b) Work sample test.
7. Job Knowledge Test: Under this test a candidate is tested in the knowledge of a particular job. For example, if a junior
lecturer applies for the job of a senior lecturer in commerce, he may be tested in job knowledge where he is asked
questions about Accountancy principle, Banking, Law, Business Management etc.
8. Situational Test: This test evaluates a candidate in a similar real life situation. In this test the candidates is asked either
to cope with the situation or solve critical situations of the job.
Recruitment:
Meaning: Recruitment is a positive process of searching for prospective employees and stimulating them to apply for the
jobs in the organisation. When more persons apply for jobs then there will be a scope for recruiting better persons.
Definition:
According to Edwin B. Flippo, “It is a process of searching for prospective employees and stimulating and
encouraging them to apply for jobs in an organisation.” He further elaborates it, terming it both negative and
positive.
In the words of Dale Yoder, “Recruitment is the process to “discover the sources of manpower to meet the
requirements of the staffing schedule and to employ effective measures for attracting that manpower in
adequate numbers to facilitate effective selection of an efficient working force.”
Kempner writes, “Recruitment forms the first stage in the process which continues with selection and ceases
with the placement of the candidates.”
Nature/ Features:
1. Managerial and Continuous Process

2. Linking Activity
3. Positive Function
4. Important Function
5. Pervasive Function
6. Two way Process
7. Identifies human Resources
8. Fulfillment of Manpower Needs
9. Dependency
10. Complex Job
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Importance:
1. Determines the present and future requirements
2. Creates and increases the applicants pool
3. Establishes Link
4. Increases the success rate of selection
5. Reduces the probability
6. Meet the organization’s obligations
7. Increases and evaluates effectiveness
Que: Sources/Types of Recruitment

1. Internal Recruitment - is a recruitment which takes place within the concern or organization. Internal
sources of recruitment are readily available to an organization. Internal sources are primarily three - Transfers,
promotions and Re-employment of ex-employees. Re-employment of ex-employees is one of the internal
sources of recruitment in which employees can be invited and appointed to fill vacancies in the concern. There
are situations when ex-employees provide unsolicited applications also.
Internal sources are primarily 3
a. Transfers
b. Promotions (through Internal Job Postings) and
c. Re-employment of ex-employees - Re-employment of ex-employees is one of the internal
sources of recruitment in which employees can be invited and appointed to fill vacancies in the
concern. There are situations when ex-employees provide unsolicited applications also.
2. External Recruitment - External sources of recruitment have to be solicited from outside the organization.
External sources are external to a concern. But it involves lot of time and money. The external sources of
recruitment include - Employment at factory gate, advertisements, employment exchanges, employment
agencies, educational institutes, labour contractors, recommendations etc.
Employment at Factory Level - This a source of external recruitment in which the applications for vacancies
are presented on bulletin boards outside the Factory or at the Gate. This kind of recruitment is applicable
generally where factory workers are to be appointed. There are people who keep on soliciting jobs from one
place to another. These applicants are called as unsolicited applicants. These types of workers apply on their
own for their job. For this kind of recruitment workers have a tendency to shift from one factory to another and
therefore they are called as “badli” workers.
Advertisement - It is an external source which has got an important place in recruitment procedure. The biggest
advantage of advertisement is that it covers a wide area of market and scattered applicants can get information
from advertisements. Medium used is Newspapers and Television.
Employment Exchanges - There are certain Employment exchanges which are run by government. Most of the
government undertakings and concerns employ people through such exchanges. Now-a-days recruitment in
government agencies has become compulsory through employment exchange.
Employment Agencies - There are certain professional organizations which look towards recruitment and
employment of people, i.e. these private agencies run by private individuals supply required manpower to needy
concerns.
Educational Institutions - There are certain professional Institutions which serves as an external source for
recruiting fresh graduates from these institutes. This kind of recruitment done through such educational
institutions, is called as Campus Recruitment. They have special recruitment cells which helps in providing jobs
to fresh candidates.
Recommendations - There are certain people who have experience in a particular area. They enjoy goodwill
and a stand in the company. There are certain vacancies which are filled by recommendations of such people.
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The biggest drawback of this source is that the company has to rely totally on such people which can later on
prove to be inefficient.
Labour Contractors - These are the specialist people who supply manpower to the Factory or Manufacturing
plants. Through these contractors, workers are appointed on contract basis, i.e. for a particular time period.
Under conditions when these contractors leave the organization, such people who are appointed have to also
leave the concern.
Process of Recruitment:
Recruitment Process Passes through the Following Stages:
(i) Searching out the sources from where required persons will be available for recruitment. If young managers
are to be recruited then institutions imparting instructions in business administration will be the best source.
(ii) Developing the techniques to attract the suitable candidates. The goodwill and reputation of an organisation
in the market may be one method. The publicity about the company being a professional employer may also
assist in stimulating candidates to apply.
(iii) Using of good techniques to attract prospective candidates. There may be offers of attractive salaries,
proper facilities for development, etc.
(iv)The next stage in this process is to stimulate as many candidates as possible to apply for jobs. In order to
select a best person, there is a need to attract more candidates.
Selection:
Selection in staffing is the part of the recruiting process that deals with choosing an employee to hire from
among a narrowed-down list of outstanding candidates. Selection can actually occur several times throughout
the recruiting process. Managers select which candidates to contact based on their resumes, which candidates to
bring in for an interview and finally which applicants to hire for open positions. Understanding the different
levels of selection and what to look for at each level can help you to select the ideal job candidates for long-
term success.
“Selection is the process of making a hire or no hire decision regarding each applicant for a job.”
“Selection is the process of screening job applications to ensure that the most appropriate candidates are hired.”
Purpose:
1. Select suitable candidate
2. Determine applicant’s capabilities
3. Place right candidate at right job
4. Generate information about candidate
5. To save cost
Importance:
1. It requires high cost but results in a very high rate of return.
2. Managers know the techniques used to discover the deficiencies in candidates
3. The inexperienced candidates cannot meet the requirements of today’s job.
4. If the job specifications are not clearly described, it makes the selection procedure a difficult one.
5. The high degrees of education and employment opportunities have made the labour market a buyer’s
market.
Selection Process:
Employee selection Process takes place in following order-
1. Preliminary Interviews- It is used to eliminate those candidates who do not meet the minimum eligiblity
criteria laid down by the organization. The skills, academic and family background, competencies and interests
of the candidate are examined during preliminary interview. Preliminary interviews are less formalized and
planned than the final interviews. The candidates are given a brief up about the company and the job profile;
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and it is also examined how much the candidate knows about the company. Preliminary interviews are also
called screening interviews.
2. Application blanks- The candidates who clear the preliminary interview are required to fill application
blank. It contains data record of the candidates such as details about age, qualifications, reason for leaving
previous job, experience, etc.
3. Written Tests- Various written tests conducted during selection procedure are aptitude test, intelligence test,
reasoning test, personality test, etc. These tests are used to objectively assess the potential candidate. They
should not be biased.
4. Employment Interviews- It is a one to one interaction between the interviewer and the potential candidate. It
is used to find whether the candidate is best suited for the required job or not. But such interviews consume time
and money both. Moreover the competencies of the candidate cannot be judged. Such interviews may be biased
at times. Such interviews should be conducted properly. No distractions should be there in room. There should
be an honest communication between candidate and interviewer.
5. Medical examination- Medical tests are conducted to ensure physical fitness of the potential employee. It
will decrease chances of employee absenteeism.
6. Appointment Letter- A reference check is made about the candidate selected and then finally he is
appointed by giving a formal appointment letter.
Que: How will you determine between training & development? Name various techniques of framing &
explain it. Or Define training. Why is training so important for manpower development? Discuss any two
methods of training.
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Ways/Methods of Training
1. On the job Methods- On the job training methods are those which are given to the employees within the
everyday working of a concern. It is a simple and cost-effective training method. The in proficient as well as
semi- proficient employees can be well trained by using such training method. The employees are trained in
actual working scenario. The motto of such training is “learning by doing.” It includes:
a) On the job training (OJT)

b)Job instruction Training
c) Coaching
d) Job Rotation
e) Understudy
2. Off the job Methods- Off the job training methods are those in which training is provided away from the
actual working condition. It is generally used in case of new employees. Instances of off the job training
methods are workshops, seminars, conferences, case study, role playing, simulation etc. Such method is costly
and is effective if and only if large number of employees have to be trained within a short time period. Off the
job training is also called as vestibule training, i.e., the employees are trained in a separate area( may be a hall,
entrance, reception area, etc. known as a vestibule) where the actual working conditions are duplicated.
a) Lectures
b) Discussion Methods
c) Demonstration
d) Simulation
e) Case study
f) Role Playing
g) Brain storming
h) Field Trip
Training of Employees
Meaning:
It is a systematic and continuous process of providing relevant information and knowledge to employees rearing
the job performed by them.
“Managerial training pertains to the use of mostly short term programmes that facilitate the learning process to
help managers to do their jobs better.”
“Training is an act of increasing the knowledge and skills of an employee for doing a particular job.”
Importance of Training
1. To improve performance
2. To prepare for promotion
3. To acquire new skill
4. To update and increase existing skill
5. To motivate employees
6. To familiarize with technological changes, new areas of knowledge and new methods of doing work.
7. To improve their working behavior like discipline, good relations with co-workers, subordinates etc.
Need for Training:

1. Environmental changes:
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Mechanization, computerization, and automation have resulted in many changes that require trained staff
possessing enough skills. The organization should train the employees to enrich them with the latest technology
and knowledge.
2. Organizational complexity:
With modern inventions, technological up gradation, and diversification most of the organizations have become
very complex. This has aggravated the problems of coordination. So, in order to cope up with the complexities,
training has become mandatory.
3. Human relations:
Every management has to maintain very good human relations, and this has made training as one of the basic
conditions to deal with human problems.
4. To match employee specifications with the job requirements and organizational needs:
An employee’s specification may not exactly suit to the requirements of the job and the organization,
irrespective of past experience and skills. There is always a gap between an employee’s present specifications
and the organization’s requirements. For filling this gap training is required.
5. Change in the job assignment:
Training is also necessary when the existing employee is promoted to the higher level or transferred to another
department. Training is also required to equip the old employees with new techniques and technologies.
Benefits and Advantages of training:

1. Improves morale of employees- Training helps the employee to get job security and job satisfaction.
The more satisfied the employee is and the greater is his morale, the more he will contribute to
organizational success and the lesser will be employee absenteeism and turnover.
2. Less supervision- A well trained employee will be well acquainted with the job and will need less of
supervision. Thus, there will be less wastage of time and efforts.
3. Fewer accidents- Errors are likely to occur if the employees lack knowledge and skills required for doing
a particular job. The more trained an employee is, the less are the chances of committing accidents in job
and the more proficient the employee becomes.
4. Chances of promotion- Employees acquire skills and efficiency during training. They become more
eligible for promotion. They become an asset for the organization.
5. Increased productivity- Training improves efficiency and productivity of employees. Well trained
employees show both quantity and quality performance. There is less wastage of time, money and resources
if employees are properly trained.
6. Reduced rate of turnover and absenteeism
7. Reduced cost of operation, with less wastage, breakage and better upkeep of machines.
Disadvantages:
1. Time consuming
2. Costly Affair
3. Increases Competition
4. Loss of investment to organizations
5. Increase in responsibility
6. Develops feeling of jealousy and competition
7. Sometimes leads to frustration
8. Natural Skills of employees remain explored
9. Feeing of boredom
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Que: Discuss the need/ importance of performance appraisal & describe. Or What are the barriers to
effective appraisal? How will be overcome? Or enumerate various methods of performance appraisal &
describe.
Performance Appraisal: Performance Appraisal is the systematic evaluation of the performance of employees
and to understand the abilities of a person for further growth and development.
Definition: Dale S. Beach, "Performance appraisal is systematic evaluation of the individual with respect to his
or her performance on the job and his or her potential for development".
Features of Performance Appraisal:

1. Systematic Process
2. Evaluating Process
3. Future oriented
4. Periodic Process
5. Employee Development
6. Determine employee’s potentialities
7. It may be formal or informal
Objectives of Performance Appraisal:
1. To maintain records in order to determine compensation packages, wage structure, salaries raises, etc.
2. To identify the strengths and weaknesses of employees to place right men on right job.
3. To maintain and assess the potential present in a person for further growth and development.
4. To provide a feedback to employees regarding their performance and related status.
5. To provide a feedback to employees regarding their performance and related status.
6. It serves as a basis for influencing working habits of the employees.
7. To review and retain the promotional and other training programmes.
Importance of Performance Appraisal

1. Performance appraisal helps supervisors to assess the work performance of their subordinates.
2. Performance appraisal helps to assess the training and development needs of employees.
3. Performance appraisal provides grounds for employees to correct their mistakes, and it also provides proper guidance
and criticism for employee's development.
4. Performance appraisal provides reward for better performance.
5. Performance appraisal helps to improve the communication system of the organization
6. Performance appraisal evaluates whether human resource programs being implemented in the organization have been
effective.
7. Performance appraisal helps to prepare pay structure for each employee working in the organization.
8. Performance appraisal helps to review the potentiality of employees so that their future capability is anticipated..
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Advantages of Performance Appraisal:

1. Promotion: Performance Appraisal helps the supervisors to chalk out the promotion programmes for
efficient employees. In this regards, inefficient workers can be dismissed or demoted in case.
2. Compensation: Performance Appraisal helps in chalking out compensation packages for employees.
Merit rating is possible through performance appraisal. Performance Appraisal tries to give worth to a
performance. Compensation packages which includes bonus, high salary rates, extra benefits,
allowances and pre-requisites are dependent on performance appraisal. The criteria should be merit
rather than seniority.
3. Employees Development: The systematic procedure of performance appraisal helps the supervisors to
frame training policies and programmes. It helps to analyse strengths and weaknesses of employees so
that new jobs can be designed for efficient employees. It also helps in framing future development
programmes.
4. Selection Validation: Performance Appraisal helps the supervisors to understand the validity and
importance of the selection procedure. The supervisors come to know the validity and thereby the
strengths and weaknesses of selection procedure. Future changes in selection methods can be made in
this regard.
5. Communication: For an organization, effective communication between employees and employers is
very important. Through performance appraisal, communication can be sought for in the following
ways:
a. Through performance appraisal, the employers can understand and accept skills of subordinates.
b. The subordinates can also understand and create a trust and confidence in superiors.
c. It also helps in maintaining cordial and congenial labour management relationship.
d. It develops the spirit of work and boosts the morale of employees.
All the above factors ensure effective communication.
6. Motivation: Performance appraisal serves as a motivation tool. Through evaluating performance of
employees, a person’s efficiency can be determined if the targets are achieved. This very well motivates
a person for better job and helps him to improve his performance in the future.
Barriers to Effective Performance Appraisal:
These barriers have been grouped into three categories:
1. Faulty assumptions.
2. Psychological blocks.
3. Technical pitfalls.
1. Faulty Assumptions:
The germinating faulty assumptions between the superior and the subordinate create problems during the appraisal.
i) The managers naturally wish to make fair and accurate appraisal of their subordinates. Both superior and the
subordinate show tendencies to avoid formal appraisal processes, as well as to heed them in their respective work roles.
Their assistance lies partly in their psychological characteristics, partly in their organizational roles and partly in technical
deficiencies and the unwise management of appraisal policies and procedures.
ii) The managers consider that the method they have selected for appraisal is the best one and shall work for years. They
expect too much from it and rely too much on it. It should be recognized that no system can provide perfect, absolutely
defensible appraisals devoid of subjectivity.
iii) Sometimes managers believe that personal opinion is better than formal appraisal and they find little use of systematic
appraisal and review procedures. However, this ‘management by instinct’ is not valid and leads to bias, subjectivity and
distorted decisions based on partial or inaccurate evidence.
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iv) Some managers feel that it is not valid to tell subordinates frankly about their performance and how can it be
improved. As such they tend to defeat the basic purpose of appraisal by providing camouflaged information as far as
possible.
2. Psychological Blocks:
The value of any tool lies on the skills of the user. Therefore the utility of performance appraisal depends upon the
psychological characteristics of the managers. However research tells us more about the inhibiting characteristics rather
than facilitating characteristics of people. There are several psychological blocks, which hinder the effectiveness of the
performance appraisal.
These are like:
i) Feeling of insecurity.
ii) Considering appraisal as an extra burden.
iii) Being excessively modest or skeptical.
iv) Feeling to treat subordinates failures as their deficiency.
v) Disliking of resentment by subordinates.
Because of these psychological barriers, managers do not tend to become impartial or objective in evaluating their
subordinates thereby defeating the basic purpose of appraisal.
3. Technical Pitfalls:
The main technical, difficulties in appraisal fall into two main categories the criterion problem and distortions
a) Criterion problem:
A criterion is the standard of performance the manager desires of his subordinates and against which he compares their
actual performance. Criteria are hard to define in measurable term or objective term. Ambiguity, vagueness and generality
of criteria are difficult hurdles for any process to overcome.
b) Distortions:
Distortions occur in form of biasness and errors in making the evaluation.
An appraisal system has the following distortions:-
i) Halo effect:
This distortion occurs when the rater is influenced by rate’s one or two outstanding good or bad performances and he
evaluates complete performance accordingly. The ‘Halo’ effect refers to the tendency to rate an individual consistently
high or low or average on the various traits, depending upon whether the rater’s overall impression of the individual is
favorable or not. This means that the halo effect allows one characteristics, observation or occurrence (good or bad) to
influence the rating of all performance factors.
(ii) Central Tendency:
This error occurs when the rater marks all the rate’s as average. He fails to discriminate between superior and inferior
persons. The reason behind this may be lack of knowledge about the behaviour of individuals, carelessness, lack of time
or to avoid chaos.
(iii) First Impression (Primacy effect):
The appraisers first impression of a candidate may affect his evaluation of all subsequent behaviour. In a positive primacy
effect, the employee can do nothing wrong and in negative primacy effect, employee can do nothing right.
(iv) Horn effect:
The rater’s bias is in the other direction, where one negative quality of the employee is being rated harshly. For E.g, the
rate rarely smiles; therefore he cannot work in teams.
(v) Constant errors:
Every evaluator has his own value system, which acts as a standard against which he makes his appraisals. There are easy
raters and tough raters. Relative to the actual performance some raters have the tendency to give ‘high values’ to their
employees while some assign ‘low values’ The former is called as Positive leniency error and later is known as ‘Negative
leniency error’. In such a situation, the results of two raters are hardly comparable.
Holding meetings or training sessions for raters so that they may understand what is desired from them can avoid the
tendency.
(vi) Raters liking and disliking:
Managers being human beings have strong liking or disliking for people, particularly close associates.
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The rating is influence by personal factors and emotions and raters may weigh personality traits more heavily than they
realize. Raters give higher rating to whom they like and vice versa.
Overcoming Barriers to Appraisal:

1. Turn the confrontation into discussion:
In most cases when an employee received poor rating, then it is obvious that he will be a bit agitated. However, if you
keep on giving him feedback on his performance from time to time, then he will be aware of his performance as per
company standards. If someone is lagging in performance, then don’t wait till the end of the year to tell him or her where
they are lagging, instead inform them right away, so that they have the time to overcome it.
2. Link between the salary and performance:
If you perform well, then your salary will be increased accordingly. It is a fact that we all are aware of, but the appraisal
discussion is not all about salary, instead it is about how the employee has performed and how much he has developed
since the last time. Therefore, no matter how much the employee shows interest in discussing his or her salary, you must
keep it aside and focus on the performance instead.
3. The appraisal must link to the job:
This is one of the most important things in the appraisal procedure. The performance rating must directly relate to the job
of the employee, nothing else matters. It must be strictly about his daily performance and how it affected the business
goals in a positive or negative manner.
4. Development plans put into place:
If you do not put in a learning plan or a development plan, in front of the employee, then how will you assess the
performance? In order to achieve a result or enhance performance, a proper plan is very important. You must include
development of skills in your plan along with the long term action and short term action plan with specific objectives and
goals.
5. Keep a note:
Note down the performance of the employee all throughout the year. This way you will be able to discuss the
shortcomings and the achievement of the employee during the appraisal discussion. If you are not keeping a note of that
and when an employee asks you the basis on which the rating has been provided, you will be in a big soup. Therefore,
track the performance on a daily basis.
Methods of Performance Appraisal:

Traditional Methods:
1. Ranking Method:
It is the oldest and simplest formal systematic method of performance appraisal in which employee is compared with all
others for the purpose of placing order of worth. The employees are ranked from the highest to the lowest or from the best
to the worst.
2. Paired Comparison:
In this method, each employee is compared with other employees on one- on one basis, usually based on one trait only.
The rater is provided with a bunch of slips each coining pair of names, the rater puts a tick mark against the employee
whom he insiders the better of the two. The number of times this employee is compared as better with others determines
his or her final ranking.
3. Grading Method:
In this method, certain categories of worth are established in advance and carefully defined. There can be three categories
established for employees: outstanding, satisfactory and unsatisfactory. There can be more than three grades. Employee
performance is compared with grade definitions. The employee is, then, allocated to the grade that best describes his or
her performance.
4. Forced Distribution Method:
This method was evolved by Tiffen to eliminate the central tendency of rating most of the employees at a higher end of
the scale. The method assumes that employees’ performance level confirms to a normal statistical distribution
5. Forced-Choice Method:
The forced-choice method is developed by J. P. Guilford. It contains a series of groups of statements, and rater rates how
effectively a statement describes each individual being evaluated. Common method of forced-choice method contains two
statements, both positive and negative.
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6. Check-List Method:
The basic purpose of utilizing check-list method is to ease the evaluation burden upon the rater. In this method, a series of
statements, i.e., questions with their answers in ‘yes’ or ‘no’ are prepared by the HR department
7. Critical Incidents Method:
In this method, the rater focuses his or her attention on those key or critical behaviours that make the difference between
performing a job in a noteworthy manner
8. Graphic Rating Scale Method:
The graphic rating scale is one of the most popular and simplest techniques for appraising performance. It is also known
as linear rating scale. In this method, the printed appraisal form is used to appraise each employee.
9. Essay Method:
Essay method is the simplest one among various appraisal methods available. In this method, the rater writes a narrative
description on an employee’s strengths, weaknesses, past performance, potential and suggestions for improvement. Its
positive point is that it is simple in use. It does not require complex formats and extensive/specific training to complete it.
10. Field Review Method:
When there is a reason to suspect rater’s biasedness or his or her rating appears to be quite higher than others, these are
neutralised with the help of a review process. The review process is usually conducted by the personnel officer in the HR
department.
11. Confidential Report:
It is the traditional way of appraising employees mainly in the Government Departments. Evaluation is made by the
immediate boss or supervisor for giving effect to promotion and transfer. Usually a structured format is devised to collect
information on employee’s strength weakness, intelligence, attitude, character, attendance, discipline, etc. report.
Modern Methods:
Que: 1. Management by Objectives (MBO):
Most of the traditional methods of performance appraisal are subject to the antagonistic judgments of the raters. It was to
overcome this problem; Peter F. Drucker propounded a new concept, namely, management by objectives (MBO) way
back in 1954 in his book.
The Practice of management. The concept of MBO as was conceived by Drucker, can be described as a “process whereby
the superior and subordinate managers of an organization jointly identify its common goals, define each individual’s
major areas of responsibility in terms of results expected of him and use these measures as guides for operating the unit
and assessing the contribution of each its members”.
In other words, stripped to its essentials, MBO requires the manager to goals with each employee and then periodically
discuss his or her progress toward these goals.
Limitation of MBO:
MBO is not a panacea, cure for all organisational problems.
As with other methods, it also suffers from some limitations as catalogued below:
(i) Setting Un-measurable Objectives:
One of the problems MBO suffers from is unclear and un-measurable objectives set for attainment. An objective such as
“will do a better job of training” is useless as it is un-measurable. Instead, “well have four subordinates promoted during
the year” is a clear and measurable objective.
(ii) Time-consuming:
The activities involved in an MBO programme such as setting goals, measuring progress, and providing feedback can take
a great deal of time.
(iii) Tug of War:
Setting objectives with the subordinates sometimes turns into a tug of war in the sense that the manager pushes for higher
quotas and the subordinates push for lower ones. As such, goals so set are likely to be unrealistic.
(iv) Lack of Trust:
MBO is likely to be ineffective in an environment where management has little trust in its employees. Or say,
management makes decisions autocratically and relies heavily on external controls.
2. Behaviourally Anchored Rating Scales (BARS):
The problem of judgmental performance evaluation inherent in the traditional methods of performance evaluation led to
some organisations to go for objective evaluation by developing a technique known as “Behaviourally Anchored Rating
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Scales (BARS)” around 1960s. BARS are descriptions of various degrees of behaviour with regard to a specific
performance dimension.
3. Assessment Centres:
In business field, assessment centres are mainly used for evaluating executive or supervisory potential. By definition, an
assessment centre is a central location where managers come together to participate in well-designed simulated exercises.
They are assessed by senior managers supplemented by the psychologists and the HR specialists for 2-3 days.
4. 360 – Degree Appraisal:
Under 360 – degree appraisal, performance information such as employee’s skills, abilities and behaviours, is collected
“all around” an employee, i.e., from his/her supervisors, subordinates, peers and even customers and clients.
5. Cost Accounting Method:
This method evaluates an employee’s performance from the monetary benefits the employee yields to his/her
organisation. This is ascertained by establishing a relationship between the costs involved in retaining the employee, and
the benefits an organisation derives from Him/her.
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UNIT IV
Syllabus: Controlling, nature & scope of control, types of control, control process, management by exception,
effective control system, control techniques- Traditional & Modern.
Controlling:
Que: Define control functions of management? Explain the steps in control process. Also suggest free techniques of
control which are used by modern organization? Or
Ans: Concept of Control:
Control means measurement and correction of performance to ensure that organization’s objectives and plans devised to
attain them are being accomplished. Control, it is the last function of any management. The controlling function will be
unnecessary to the management if other function of management are performed properly.
According to Knootz & O’Donnell, “Controlling is the measurement of accomplishment against the standards and the
correction of deviations to assure attainment of objectives according to plans.”
G.R.Terry state that – “ Controlling is determining what is being accomplished, that is, evaluating the performance and
if necessary, applying corrective measure so that the performance takes place according to plans.”
Henry Fayol, “Control consists in verifying whether everything occurs in conformity, is with the plans adopted the
instructions issued and principles established. It has for its object to point out weaknesses and errors in order to rectify
them and prevent recurrence.”
According to Mc Farland, “The presence in a business of that force which guides it to a pre-determined objective by
means of pre-determined policies and decisions.”
“It is the process of monitoring performance and initiating corrective action is described as managerial control.”
Control is a management process to aim at achieving defined goals within an established timetable, and comprises of three
components: (1) setting standards, (2) measuring actual performance, and (3) taking corrective action.
Nature/ Characteristics of Control:
1. Control is a Managerial Process:
Management process comprises of five functions, viz., planning, organizing, staffing, directing and controlling. Thus,
control is part of the process of management.
2. Control is forward looking:
Whatever has happened has happened, and the manager can take corrective action only of the future operations. Past is
relevant to suggest what has gone wrong and how to correct the future.
3. Control exists at each level of Organization:
Anyone who is a manager, has to involve into control – may be Chairman, Managing Director, CEO, Departmental head,
or first line manager. However, at every level the control will differ – top management would be involved in strategic
control, middle management into tactical control and lower level into operational control.
4. Control is a Continuous Process:
Controlling is not the last function of management but it is a continuous process. Control is not a one-time activity, but a
continuous process. The process of setting the standards needs constant analysis and revision depending upon external
forces, plans, and internal performance.
5. Control is closely linked with Planning:
Planning and controlling are closely linked. The two are rightly called as ‘Siamese twins’ of management. “Every
objective, every goal, every policy, every procedure and every budget become standard against which actual performance
is compared.
Planning sets the ship’s course and controlling keeps it on course. When the ship begins to veer off the course, the
navigator notices it and recommends a new heading designed to return the ship to its proper course. Once control process
is over its findings are integrated into planning to prescribe new standards for control.
6. Purpose of Controlling is Goal Oriented and hence Positive:
Control is there because without it the business may go off the track. The controlling has positive purpose both for the
organization (to make things happen) and individuals (to give up a part of their independence for the attainment of
organizational goals).
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The main scope of control is as follows –

1. Control over organization structure.
2. Control over policies of the concern.
3. Control over production.
4. Control over public relations.
5. Control over research & development.
6. Control over tools & equipments.
7. Control over costs
8. Control over personnel
9. Control wages and salaries
10. Control over foreign Operations
11. Control over line of products
12. Control over Methods and Manpower
13. Overall control
Need and Objectives:

1. Maximum utilization of human resources
2. Knowing differences between standards and actual performance
3. Checking avoidable expenses and cost control.
4. Performing work according to pre determined plans.
5. Keeping worker’s morale high by controlling their operations.
Process of Control:
1. Establish the Standards:
Within an organization’s overall strategic plan, managers define goals for organizational departments in specific, precise,
operational terms that include standards of performance to compare with organizational activities Standards, against
which actual performance will be compared, may be derived from past experience, statistical methods and benchmarking
(based upon best industry practices).
Standards may be tangible (clear, concrete, specific, and generally measurable) – numerical standards, monetary, physical,
and time standards; and intangible (relating to human characteristics) – desirable attitudes, high morale, ethics, and
cooperation.
2. Measure Actual Performance:
Most organizations prepare formal reports of performance measurements both quantitative and qualitative (where
quantification is not possible) that the managers review regularly. These measurements should be related to the standards
set in the first step of the control process.
3. Compare Performance with the Standards:
This step compares actual activities to performance standards. When managers read computer reports or walk through
their plants, they identify whether actual performance meets, exceeds, or falls short of standards.
Typically, performance reports simplify such comparison by placing the performance standards for the reporting period
alongside the actual performance for the same period and by computing the variance—that is, the difference between each
actual amount and the associated standard.
4. Take Corrective Action and Reinforcement of Successes:
The corrective action may be to maintain status quo (reinforcing successes), correcting the deviation, or changing
standards. The most effective course may be prescribed by policies or may be best left up to employees’ judgment and
initiative. The corrective action may be immediate or basic (modifying the standards themselves).
Importance of Control:
1. Guides the Management in Achieving Pre-determined Goals:
The continuous flow of information about projects keeps the long range of planning on the right track. It helps in taking
corrective actions in future if the performance is not up to the mark.
2. Ensures Effective Use of Scarce and Valuable Resources:
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The control system helps in improving organizational efficiency. Various control devices act as motivators to managers.
The performance of every person is regularly monitored and any deficiency if present is corrected at the earliest.
Controls put psychological pressure on persons in the organization. On the other hand control also enables management to
decide whether employees are doing right things.
3. Facilitates Coordination:
Control helps in coordination of activities through unity of action. Every manager will try to coordinate the activities of
his subordinates in order to achieve departmental goals.
Similarly the chief executive also coordinates the functioning of various departments. The control acts as a check on the
performance and proper results are achieved only when activities are coordinated.
4. Leads to Delegation and Decentralization of Authority:
A decision about follow-up action is also facilitated. Control makes delegation easier/better. Decentralization of authority
is necessary in big enterprises. The management cannot delegate authority without ensuring proper control.
The targets or goals of various departments are used as a control technique. Various control techniques like budgeting,
cost control; pre action approvals etc. allow decentralization without losing control over activities.
5. Spares Top Management to Concentrate on Policy Making:
For control processes management’s attention is not required every now and then. The management by exception enables
top management to concentrate on policy formulation.
Que: Elaborate the types of control on the basis of elements to be controlled.

Ans: Types of Control:
Controls can be numerous in kind. These may be classified on the basis of (a) timing, (b) designing systems, (c)
management levels, and (d) Responsibility
On the basis of timing:
Control can focus on events before, during, or after a process. For example, a local automobile dealer can focus on
activities before, during, or after sales of new cars. Such controls may be respectively called as Preventive, Detective, and
Corrective.
On this basis the control may be:
(i) Feed forward Control
(ii) Concurrent Control
(iii) Feedback Control
1. Feed forward Control:
The objective of feed forward control or preliminary control is to anticipate the likely problems and to exercise control
even before the activity has started or problem has occurred or been reported. It is future directed.
2. Concurrent Control:
Concurrent control monitors ongoing employee activity to ensure consistency with quality standards takes place while an
activity is on or in progress. It involves the regulation of ongoing activities that are part of transformation process to
ensure that they conform to organizational standards.
3. Feedback Control:
The control takes place after the job is over. Corrective action is taken after analysing variances with the planned
standards at the end of the activity. It is also known as ‘post action control’, because feedback control is exercised after
the event has taken place.
On the basis of designing Control Systems:
Three approaches may be followed while designing control systems, viz., Market Control, Bureaucratic Control, and Clan
Control. However, most organisations do not depend only on just one of them.
1. Market Control:
Control is based upon market mechanisms of competitive activities in terms of price and market share. Different divisions
are converted into profit centres and their performance is evaluated by segmental top line (turnover), bottom line (profit)
and the market share.
Using market control will mean that the managers in future will allocate resources or create departments or other activities
in line with the market forces.
2. Bureaucratic Control:
Bureaucratic control focuses on authority, rule and regulations, procedures and policies. Most of the public sector units in
India go in for bureaucratic control.
3. Clan Control:
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The control systems are designed in a way that give way to shared vision, shared values, norms, traditions and beliefs,
etc., part of the organisational culture.
On the basis of Levels:
People at different level have different planning responsibilities, so do they undertake controlling. On the basis of levels
controls, can be categorised as Operational, Structural, Tactical, and Strategic.
1. Operational Control:
Its focus remains upon the processes used by the organisation for transforming the inputs (resources) into outputs
(products/services). Operational controls are used at the lower management. It is exercised almost every day. Quality
control, financial controls are part of operational controls.
2. Structural Control:
Are the different elements of organisation structure serving their intended aims? Is there overstaffing? Is the ratio of staff
to line increasing? Necessary action is to be undertaken.
Two important forms of structural control can be bureaucratic control and clan control, about which we have already
talked. Structural control is exercised by top and middle management.
3. Tactical Control:
Since tactical control deals with the departmental objectives, the controls are largely exercised by middle management
levels.
4. Strategic Control:
Strategic controls are early warning systems. Strategic control is the process to determine whether the effectiveness of a
corporate, business and functional strategies are successful in helping organisations to meet its goals. Strategic controls
are exercised by top level management.
On the basis of Responsibility:
Who has the responsibility of controlling? The responsibility may rest with the person executing the things or with the
supervisor or manager. This way control may be internal and external.
Requirements of Effective Control System:

1. Focus on Objectives and Needs:
The effective control system should emphasise on attainment of organizational objectives. It should function in harmony
with the needs of the enterprise..
2. Immediate Warning and Timely Action:
Rapid reporting of variations is at the core of control. An ideal control system could detect, not create bottlenecks and
report significant deviation as promptly as possible so that necessary corrective action may be taken well in time. This
needs an efficient system of appraisal and timely flow of information.
3. Indicative, Suggestive as well as corrective:
Controls should not only be able to point to the deviations, but they should also suggest corrective action that is supposed
to check the recurrence of variations or problems in future.
4. Understandable, Objective, and Economical:
Controls should be simple and easy to understand, standards of performance are quantified to appear unbiased, and
specific tools and techniques should be comprehensive, understandable, and economical for the managers.
5. Focus on Functions and Factors:
Control should emphasise the functions, such as production, marketing, finance, human resources, etc and focus on four
factors – quality, quantity, timely use and costs. Not one, but multiple controls should be adopted.
6. Strategic Points Control:
Control should be selective and concentrate on key result areas of the company. Every detail or thing cannot and is not to
be controlled in order to save time, cost and effort.
7. Flexibility:
Control must not become ends in themselves. It must be environment friendly and be able to make modifications or
revisions necessitated by the rapidly changing and complex business environment. Flexibility in control system is
generally achieved by the use of alternative plans or flexible budgets.
8. Attention to Human Factor:
Excess control causes corruption. It should not arouse negative reactions but positive feelings among people through focus
on work, not on people. The aim of control should be to create self-control and creativity among members through
enmeshing it in the organisational culture. Employee involvement in the design of controls can increase acceptance.
9. Suitability:
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Controls have to be consistent with the organization structure, where the responsibility for action lies, position,
competence, and needs of the individuals who have to interpret the control measures and exercise control. The higher the
quality of managers and their subordinates, the less will be the need for indirect controls.
Que: Compare the modern and traditional control techniques

Ans: Control Techniques:
Traditional Techniques:
These are the techniques which were commonly used by various companies. Although in present environment these have
become outdated but still many companies are using these:
A. Personal Observations: This is the most traditional and most popular method of control. Under this manager observe
the subordinates while they are performing jobs. They generally note down their observations. With the help of these
observations they can easily analyze the performance of employees. By comparing the performance chart of current year
with the previous year the managers can know the progress of their performance.
B. Statistical Reports: Various concepts of stats such as graphical presentation, correlation, average, percentage, ratios
etc. are very useful in analyzing the performance of employees. By converting performances report into statistical chart or
table you can easily point out the progress or deviation of performance.
C. Break Even Analysis: Break even analysis is a useful technique to study relationship between costs and profit, break
even point is a point of no profit no loss. When sales reach break even point, it refers to sale amount at which company is
neither earning profit nor incurring loss. With the help of break even analysis technique manager can estimate profits at
levels of cost and revenue.
D. Budgetary control: Budget is a statement of expected results and expected cost expressed in numerical terms. Budget
helps us to know the future results and to achieve these results how much we will have to spend. There are different types
of budgets which can be prepared by an organization such as sales budget, production budget, financial budget, cash
budget etc.
Modern Techniques:
These are the techniques which are generally preferred by the large scale businesses in this modern era as these are
common control techniques such as:
A. Return On Investment (ROI): This technique is also known as return on capital employees. The essence of this
approach is that profit is not taken as an absolute figure but it is considered in relation to capital invested. With this
method we can compare the earnings of one company with other even when they have invested different capital because it
determines the ratio of earning and not the absolute earning.
B. Ratio Analysis: It refers to evaluation and analysis of financial statements by calculating some important ratios. The
common ratios which help to draw important conclusions from the financial statements are:
a. Liquidity Ratio: This ratio helps to measure the ability of businessmen to pay the amount due to various stakeholders.
These also helps to know the short term solvency of firms.
b. Solvency Ratio: This ratio is calculated to find out the long term solvency of firms. It helps to find the ability of firm to
pay back its debts.
c. Profitability Ratio: These ratios are calculated to find out the profitability position of the firm. These ratios measure
the relationship between profit and sales.
d. Turnover Ratios: These ratios are calculated to determine the efficient utilization of resources. Higher turnover
indicate efficient utilization whereas lower turnover means inefficient utilization of resources.
C. Responsibility Accounting: This technique of controlling organization is divided into various responsibility centres
and head of each centres are generally various sections or departments of an organization and the head of the department
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is considered as “Responsibility Head” as he is responsible for the overall growth and achievement of his department or
centre. Following are the various types of centres:
a. Cost Centre
b. Revenue Centre
c. Profit Centre
d. Investment Centre
D. Management Audit: This control technique helps to measure the efficiency level of managers. Financial audit has
been used by firm from long time but the management audit is a new concept. Management audit is a comprehensive and
constructive review of the performance of management team of any organization. It reviews overall plan and policies of
managers. It would highlight possible opportunities for the organization. It ensures updating of existing managerial
policies and strategies in the light of environment changes.
E. Network Techniques (PERT & CPM): Progamme Evaluation and Review Technique provides managers with the
information they need in planning and controlling schedules and cost in development projects. Under Critical Path
Method the project is analysed into different operations or activities and their relationships are determined and shown on
the network diagrams.
F. Management Information System (MIS): This technique provides information and support for effective managerial
decision making. Right decision can be taken at the right time only when managers receive accurate and timely
information. MIS is a communication tool for managers by which they can take timely actions from the standards.
Que: What do you mean by principle of controlling by exception? How will you apply the principle of controlling
by exception in your organization in the area of cost control? Or Explain the concept of management by exception
& Highlight and benefit.
Ans: Principles of Management by Exception:

Management by exception (MBE) is a practice where only significant deviations from a budget or plan are brought to
the attention of management. The idea behind it is that management's attention will be focused only on those areas in need
of action.
Definition: Management by exception can be defined as a management mode that provides the objectives for employees
and only concentrate on significant deviations from the set objectives or task which will reduce the energy and time lost
on unnecessary monitoring and evaluation procedures.
Management by Exception is an employee empowerment and management style, policy or philosophy wherein
managers intervene only when their employees fail to meet their performance standards or when things go wrong. If the
personnel are performing as expected, the manager will take no action. Time and effort should not be wasted focusing on
employees or parts of the organization where things are going smoothly.
MBE normally involves substantial delegation by the manager to his team.
The idea behind management by exception is that managers should only spend their limited and valuable time to
important, more tactical or even strategic activities.
Management by Exceptions states that Top Levels of Management should keep itself involved with the policy strategies &
decisions.
Advantages :
(1) It saves the time and energy of senior executives and enables them to concentrate on more important problems and
issues.
(2) It even provides the key to automation, for ordinary, routine matters can be handled by an automatic machine while
cases of exceptional nature can be left for human judgment.
(3) It facilitates the engagement of specialised staff for high-routine jobs.
(4) It reduces the frequency of decision making.
(5) It leads to the identification of critical problem areas.
(6) It stimulates communication
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MBE has its disadvantages too:
1. Mistakes in calculations the budgets can lead to higher variances and finding the root causes can be a time-
consuming task.
2. Dependency on accounting department is too high, and the probability of accurate forecasting is questionable.
3. Important decisions will be with senior management and participation of employees is less. This can be a
demotivating factor.
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What are the different types of management control techniques discussed?

What are the different types of management control techniques discussed?

What is management by exception and what are its advantages?

What is management by exception and what are its advantages?

BBA SEM I (106 Principles of Management) Bora Institute of Management Sciences

Management has three different meanings:

Que: Comment on nature of management

Que: Discuss the role, importance and functions of management in detail.

Formal Authority and status Personal skills and characteristics

Interpersonal Roles Informational Roles Decisional Roles

1) Interpersonal roles include figurehead, leadership, and liaison activities.

The main objectives of management:-

 To increasing organizational effectiveness.

Que: Management v/s Administration:

→management is not a pure science but a social science

→management is a separate discipline which includes research, observations and practice

→management requires formal education and training with updates of professionalism.

Que: Managerial skills:

Que: Levels of Management:

1. Administrative or Top Level of Management.

Top Level of Management:

Que: Management process and co-ordination:

Definition of Management Process

Elements of Management Process

Que: Development of Management Thought:

Principles of Scientific Management

Benefits / Advantages of Scientific Management

1. Application and use of scientific methods.

F. W. Taylor’s Contribution to the Development of Management Thought / Science

The contribution of F. W. Taylor to management thought is as explained below:

Criticism of Scientific Management or Opposition to Scientific Management

c) Structural theory/ Weber’s Bureaucratic Model:

Features of Human Relations Approach

Limitations of Human Relations Approach

2. Behavioral Science Approach

III. MODERN MANAGEMENT THEORIES

a. Quantitative / Mathematical Approach to Management,

1. Systems Approach to Management Thought

Features of Systems Approach to Management

Que: Contingency Theory:

Features of the Contingency / Situational Approach

Merits of Contingency Approach

Limitations of Contingency Approach

Main contributors – Taylor, Gilbreths, Gantt, Newman &Joel Dean.

Nature of Business Environment:

Components of Business Environment:

The SWOT Analysis

Process of Decision Making:

7. Monitoring and feedback:

7. Planning is a mental exercise:

5. Planning Facilitates Decision Making:

External Limitations of Planning:

(iv) Change in technologies:

Que: Fundaments/Elements/Components/ Scope of Planning:

5. It is realistic, hence can be translated into actions in every department.

Benefits/ Advantages of Policies:

Limitations/ disadvantages of Policies:

Kinds/ Types of Policies:

Que: III. Strategy:

Que: Rule and Policy