Management Eee

7/29/2019 Management Eee

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Management


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Three Waves That Changed the World

Agriculture

Until the late nineteenth century, all economies wereagrarian.

Industrialization From the late 1800s until the 1960s, most developed

countries moved from agrarian societies to industrialsocieties.

Information Information technology is transforming society from

its manufacturing focus to one of service.


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The Changing Economy

Old Economy

National borders serve to limit

competition

Job opportunities are for blue-

collar industrial workers

Population is relatively

homogeneous

Customers get what business

chooses to give them

New Economy

National borders no longer define

an organizations operating

boundaries

Job opportunities are forknowledge workers

Population is characterized by

cultural diversity

Customer needs drive business


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The Industrial Revolutions Influence On

Management Practices Industrial revolution

Machine power began to substitute for human power

Lead to mass production of economical goods Improved and less costly transportation systems

became available

Created larger markets for goods.

Larger organizations developed to serve largermarkets

Created the need for formalized management practices.


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Taylors scientific management sought efficiency in jobperformance.

Administrative principles describe managerial duties andpractices.

Webers bureaucratic organization is supposed to be efficientand fair.

CLASSICAL MANAGEMENT


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Classical approach The term used to describe the hypotheses of the

scientific management theorists and the general

administrative theorists.

Scientific management theorists

Fredrick W. Taylor, Frank and Lillian Gilbreth, and

Henry Gantt

General administrative theorists

Henri R. Fayol and Max Weber

Classical Contributions

Emphasis is on:

a. rationality

b. making organizations and workers as efficient as possible.


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Scientific Management

Frederick W. Taylor

The Principles of Scientific Management (1911)

Advocated the use of the scientific method to define the

one best way for a job to be done

Believed that increased efficiency could be achieved

by selecting the right people for the job and training

them to do it precisely in the one best way.

To motivate workers, he favored incentive wage plans.

Separated managerial work from operative work.

Also known as Taylorism, an adaption study in globalization.

Taylors model being utilized by firms around the world.

Scientific Management:

The systematic study of the relationships between people and tasks for

the purpose of redesigning the work process for higher efficiency.


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Frederick W. Taylor

Common Objective of Increasing Productivityfor both Management and Workers

Both should focus on increasing Production

Increased Production to lead to IncreasedProfits

Breaking job into components and devising s

quicker n best way of doing the same Differential Rate System


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Taylors Four Principles of Management

1. Develop a science for each jobrules of motion,standard work tools, proper work conditions.

2. Hire workers with the right abilities for the job.3. Train and motivate workers to do their jobs according to

the science.4. Support workers by planning and assisting their work by

the job science.

Common Objective of Increasing Productivity for bothManagement and Workers

Both should focus on increasing Production Increased Production to lead to Increased Profits

Breaking job into components and devising s quicker n best wayof doing the same

Differential Rate System


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Elements of Scientific Management: The

techniques which Taylor regarded as itsessential elements or features are:

Scientific Task and Rate-setting, workimprovement, etc.

Planning the Task.

Vocational Selection and Training

Standardization (of working conditions, material

equipment etc.) Specialization

Mental Revolution.


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The positive view of Principles of scientific

management described by Taylor

Science, not the rule of thumb;

Harmony, not discord;

Co-operation, not individualism;

Maximum output in place of restricted output.

Equal division of responsibility The development of each man to his greatest efficiency and

prosperity.

Mental revolution

Contributions of Scientific Management

Modern Assembly Line

Efficiency Techniques application to wide range of servicesector industries like Fast Food


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Problems of Scientific Management

Managers often implemented only theincreased output side of Taylors plan.

They did not allow workers to share in increasedoutput.

Specialized jobs became very boring, dull.

Workers ended up distrusting ScientificManagement.

Workers could purposely under-perform Management responded with increased use

of machines.


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Criticism from Employers

Huge investment required

Sudden change may disturb existing working

arrangements

Unsuitable to small units

Benefits after a long period

Huge overhead expenses required


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Criticism from Workers and Trade Unions

Heavy burden on workers

Reduces initiative among workers

Possibility of unemployment

Exploitation of workers

Possible adverse effects on workers unity


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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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Frank and Lillian Gilbrethrefined Taylors methods and suggested

1. Breaking d own each act ioninto individual components.

2. Find better waysto perform the action.

3. Reorganize each actio nto be more efficient.

4. Eliminate wasteful act iv i t ies.to be more productive.

Taylor: What is a fair days work for a fair day wages?

Gilbreth: How can a fair days work be utilised in the mostproductive manner?

How managers today apply scientific management?

Managers analyze basic work task that must be performed- use time-and-motion study to eliminate wasted motions.

- hire best-qualified workers for a job.

- designed incentive systems based on output.


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Administrative Management

General administrative theorists Writers who developed general theories of what

managers do and what constitutes goodmanagement practice

Guidelines for managing complex organizations

Henri Fayol (France) Fourteen Principles of Management: Fundamental or

universal principles of management practice

Max Weber (Germany)

Bureaucracy: Ideal type of organization characterizedby division of labor, a clearly defined hierarchy,detailed rules and regulations, and impersonalrelationships


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Henri Fayol (France)

Identify the principles and skills that underlie

effective management

Blueprint for cohesive doctrine of Management

Focus on Total Organization and Management

Most Frequent Applied Management principles

Focus to break the misconception Managers are

born, not made

Advocated Management was a skill like any other----once that could be taught

G l Ad i i t ti Th


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Henri Fayol (France) All Industrial activities classified:

Technical (relating to production)

Commercial (buying, selling & exchange)

Financial (search of Capital and its optimum use)

Security (of persons & property)

Accounting (recording transactions) Managerial (Planning, Organising, Commanding, Coordinating &

Controlling)

Fayol divided his approach of studying management into:

Managerial Qualities & Training

Five Elements of Management (Foyal):

Fourteen Principles of Management: Fundamental or universal

principles of management practice

General Administrative Theory


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Managerial Qualities Physical Qualities (appearance, health, etc)

Mental qualities (judgement, adaptability, etc)

Moral Qualities (firmness, initiative, loyalty, etc)

Educational Qualities (general acquaintance with

background of management)

Technical Qualities (related to functions to be performed) Experience (arising from work itself)

Managerial Qualities

Technical Skills: Knowledge & proficiency in activities involving methods, processes

and procedures.

Human Skills: Ability to work with people. It is the cooperative effort creating an

environment in which people feel secure and free to express their opinion

Conceptual Skills: Ability to see the big picture to recognise significant elements

in a situation and to understand relationships among elements.

Design Skills: Ability to solve problems in ways that will benefit the enterprise.


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Five Elements of Management (Foyal):

To FORECAST to PLAN

To ORGANISE

To COMMAND To COORDINATE

To CONTROL


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1. Division of Work- Specialization increases output by making employees more

efficient.

2. Authority

- Managers must be able to give orders, and authoritygives them this right.

3. Unity of command

- Every employee should receive orders from only one

superior.

4. Unity of direction- Organization have single plan of action to guide managers and

workers.

Henri Fayols 14 Principles of Management


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5. Discipline- employees must obey and respect the rules that govern

the organization.

6. Subordination

- of individual interest to the general interest.

7. Remuneration

- workers must be paid a fair wage for their service.

8. Centralization

- the degree to which subordinates are involved in decisionmakings.

Fayols Fourteen Principles of Management


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9. Scalar chain

- line of authority from top management to lowest rank

10. Order

- people and materials should be in the right place at the right

time.

11. Equity

- managers should be kind and fair to their subordinates.

12. Stability of tenure of personnel

- orderly personnel planning - human resource management.



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13. Initiative

- employees allowed to originate and carry out plans that

will exert high levels of effort.

14. Espirit de corps

- promoting team spirit will build harmony and unity within

the organizations


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DIFFERENCE BETWEEN MANAGEMENT AND ADMINISTRATION

MANAGEMENT ADMINISTRATION

Nature of work

It puts into action the policies and plans

laid down by the administration

It is concerned about the determination

of objectives and major policies of an

organization

Type of function It is an executive function. It is a determinative function

ScopeIt takes decisions within the framework

set by the administration.

It takes major decisions of an enterprise

as a whole.

Level of authority It is a middle level activity. It is a top-level activity.

Nature of status

It is a group of managerial personnel,

who use their specialized knowledge tofulfill the objectives of an enterprise.

It consists of owners who invest capital in

and receive profits from an enterprise

Nature of usageIt is used in business enterprises. It is popular with government, military,

educational, and religious organizations

Decision making

Its decisions are influenced by the

values, opinions, and beliefs of the

managers.

Its decisions are influenced by public

opinion, government policies, social, and

religious factors

Main functionsMotivating and controlling functions are

involved in it.

Planning and organizing functions are

involved in it.

AbilitiesIt needs administrative rather than

technical abilities.

It requires technical activities

Handles

Management handles the employers. Administration handles the business

aspects such as finance.


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Though they are different from one other they are dependent on each other. Unity of direction is

a prerequisite for unity of command.

Basis Unity of command Unity of direction

Meaning It implies that a sub-ordinate

should receive orders &

instructions from only one boss.

It means one head, one plan for a

group of activities having similar

objectives.

Nature It is related to the functioning of

personnels.

It is related to the functioning of

departments, or organization as a

whole.

Necessity It is necessary for fixing

responsibility of each

subordinates.

It is necessary for sound

organization.

Advantage It avoids conflicts, confusion &

chaos.

It avoids duplication of efforts and

wastage of resources.

Result It leads to better superior sub-

ordinate relationship.

It leads to smooth running of the

enterprise.


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Henri Fayol Identify the principles and skills that underlie

effective management

Blueprint for cohesive doctrine of Management

Focus on Total Organization and Management

Most Frequently Applied Management principles

Focus to break the misconception Managers are

born, not made

Advocated Management was a skill like any other-- one that could be taught.


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General Administrative Theories

How managers today apply GMT?

Functional view of the managers job Fayol

Fayol 14 principle framework for current management concepts.

FEATURES OF PRINCIPLES OF MANAGEMENT

1. Principles of Management are Universal

2. Principles of Management are Flexible

3. Principles of Management have a Cause & Effect Relationship

4. Principles of Management -Aims at Influencing Human Behavior

5. Principles of Management are ofEqual Importance


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Taylorism vs Fayolism

Both attempted to overcome managerial problems in a

systematic manner Both developed some principles which can be applied to

solving managerial problems

Both emphasized that management actions can beeffective if they are based on sound management principles

Both expressed that managerial qualities can be acquiredthrough training and development

Both emphasized harmonious relationship betweenmanagement and workers to achieve organizationalobjectives

Both have advocated division of labour and specialisation

Basis Taylor Fayol


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Basis Taylor Fayol

Human aspect Taylor disregards human elements

and there is more stress on

improving men, materials and

methods

Fayol pays due regards on

human element. E.g. Principle

of initiative, Espirit De Corps

and Equity recognizes a needfor human relations

Status Father of scientific management Father of management

principles

Efficiency &

administration

Stressed on efficiency Stressed on general

administration

Approach It has micro-approach because it is

restricted to factory only

It has macro-approach and

discuses general principles of

management which are

applicable in every field of

management.

Scope of principles These principles are restricted to

production activities

These are applicable in all

kinds of organization regarding

their management affairs

Achievement Scientific management Administrative management


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Taylorism Fayolism

Employees performance vs Management performance

Taylors Scientific Management focuses more on the

performance of the worker

Fayols principles of management place more emphasis

on the performance of management

Approach

Taylor followed bottom-upward approach, as he

mainly focused on shop and factory management

Fayol followed top-down approach as his main focus

was on functions and qualities of managers

Applicability

Taylors principles and techniques have narrow

applicability. They are focussed on production units.

Fayol put forth general principles of management which

can be applied to any type of organization or activity

Nature

Taylors techniques are more specific and rigid Fayols techniques are general and flexible in nature

Popularity

Taylor is popularly known as the father of Scientific

management

Fayol is popularly known as the father of Functional

Management

Mechanistic vs Humanistic approach:

Taylors approach is mechanistic as he mainly

emphasizes increase in productivity and efficiency

Fayols approach is humanistic as he considers human

elements like equity, stability of tenure, unity etc.

Individual vs Group performance

Taylors scientific management gives more importance

to the individual performance

Fayols functional management gives more stress on

group performance of managers

Functional foremanship vs Principle of Unity of Command

Taylor introduced the concept of functional

foremanship, whereby workers have to report toseveral functional heads

Fayol strongly advocates the principle of Unity of

Command i.e., one subordinate should report to only

one superior.


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Functions of Management

Luther Gulick in 1937 asked the question:

What is the work of the chief executive? What

does he do? Gulick summarized his answer in

the acronym POSDCoRB, which stands for:

Planning, Organizing, Staffing, Directing,COordinating, Reporting, and Budgeting.


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POSDCoRB1. Planning: This essentially refers to establishing a broad sketch of the work to becompleted and the procedures incorporated to implement them.

2. Organizing: Organizing involves formally classifying, defining and synchronizing thevarious sub-processes or subdivisions of the work to be done.

3. Staffing: This involves recruiting and selecting the right candidates for the job andfacilitating their orientation and training while maintaining a favorable workenvironment.

4. Directing: This entails decision making and delegating structured instructions andorders to execute them.

5. Coordinating: This basically refers to orchestrating and interlinking the variouscomponents of the work.

6. Reporting: Reporting involves regularly updating the superior about the progress orthe work related activities. The information dissemination can be through records orinspection.

7. Budgeting: Budgeting involves all the activities that under Auditing, Accounting,Fiscal Planning and Control.

Different experts have classified functions of management. Butthe most widely accepted are functions of management given byKOONTZ and ODONNEL i.e. Planning, Organizing, Staffing,Directing and Controlling.


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Functions of Management Contd.

1. Planning

Planning is decision making process. It is making decisions on future course of actions.

Planning involves taking decisions on vision,mission, values, objectives, strategies and policiesof an organization.

Planning is done for immediate, short term,medium term and long term periods.

It is a guideline for execution/implementation. It is a measure to check the effectiveness and

efficiency of an organization.


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2. Organizing

Organizing involves determination and grouping of theactivities.

Designing organization structures and departmentationbased on this grouping.

Defining the roles and responsibilities of thedepartments and of the job positions within thesedepartments.

Defining relationships between departments and jobpositions.

Defining authorities for departments and job positions.


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Functions of Management Contd.3. Staffing

It includes manpower or human resourceplanning.

Staffing involves recruitment, selection, inductionand positioning the people in the organization.

Decisions on remuneration packages are part ofstaffing.

Training, retraining, development, mentoring andcounseling are important aspects of staffing.

It also includes performance appraisals anddesigning and administering the motivationalpackages.


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4. Directing

It is one of the most important functions of management totranslate company's plans into execution.

It includes providing leadership to people so that they workwillingly and enthusiastically.

Directing people involves motivating them all the time to

enthuse them to give their best. Communicating companies plans throughout the

organization is an important directing activity.

It also means coordinating various people and theiractivities.

Directing aims at achieving the best not just out of anindividual but achieving the best through the groups orteams of people through team building efforts.


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Functions of Management Contd.5. Controlling

It includes verifying the actual execution against the plans to ensurethat execution is being done in accordance with the plans.

It measures actual performance against the plans.

It sets standards or norms of performance.

It measures the effective and efficiency of execution against these

standards and the plans.

It periodically reviews, evaluates and monitors the performance.

If the gaps are found between execution levels and the plans, controlling

function involves suitable corrective actions to expedite the execution to

match up with the plans or in certain circumstances deciding to makemodifications in the plans. Controlling has got two basic purposes

It facilitates co-ordination

It helps in planning


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Planning

Planning is fundamental function ofmanagement preceding all other functionsof management .

To Govern is to foresee. Process throughwhich a manager looks into the future.

Though future is uncertain, planning helpsinstead of leaving things to chance.

It involves developing goals, strategies,policies, procedures and programmes


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Planning is deciding in advance what to do, how to do it,when to do it and who is to do it. Planning bridges the gap

from where we are to where we want to go. Koontz andODonnell

Planning is a continuous process of making presententrepreneurial decisions systematically, with best possible

knowledge of their futurity and organising systematically the

efforts needed to carry out these decisions and measuringthe results of these decisions against the expectations

through organised, systematic feedback. George Terry


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Planning

Is goal-oriented

Is future-oriented

Is the primary function

Is an intellectual process Is all-pervasive

Is both short range and long range

Is Continuous

Is actionable Is flexible

Is an integrated system


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ESSENTIALS OF SOUND PLANNING

Plan should be easy to understand and execute Must be based on clear-cut objectives

Must be suitable to the needs of an organization

Must be comprehensive and integrated

Must be flexible Should be based on rational forecast

Should be consistent with the environment

Must be realistic and not idealistic

Must be efficient and economical Should be time bound

Must win employees favour and confidence


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NEED & IMPORTANCE OF PLANNING:

Planning is complimentary to all management functions It helps management to face the future with confidence

It focuses its attention on objectives

It leads to optimum utilization of resources

It increases overall efficiency It provides premises for effective control

It guides decision making

It facilitates coordination

It helps in performance evaluation It makes provisions for contingencies


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LIMITATIONS OF PLANNING:

Egoistic planning Wastage of resources

Expensive

Limits individual freedom

Not an end Dynamic environment

Non-availability of authentic and accurate data

Unsuitable for small units

Time consuming

Delayed action due to deliberation

Rapidly changing business environment / unrealistictargets


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COMPONENTS OF PLANNING:

Standing Plans:

Mission:

Objectives:

Strategies:

Policies:

Procedures:

Rules:


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Single use plans: Programmes

Budget

Schedule

Forecast

Project


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DECISION-MAKING

Decision-making is a conscious human process involvingboth individual and social phenomenon, based upon factual

and value premises, which concludes with a choice of one

behavioural activity from among two or more alternatives

with the intention of moving towards some desired state of

affairs. Shull

Decision-making is the selection based on some criteria

from two or more possible alternatives George Terry


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PROCESS OF DECISION-MAKING

Identification of a problem

Diagnosing the problem

Analysis of the problem

Collecting information Identifying alternate courses of action

Evaluation of alternatives

Choice of best alternative

Conversion of decision into action

Progressive review

ORGANISATION


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ORGANISATIONOrganising involves grouping of activities necessary toaccomplish goals and plans, the assignment of these activities

to the appropriate departments and the provisions forauthority delegation and coordination. Koontz and

ODonnell

Organising is the process of identifying and grouping the

work to be performed, defining and delegating responsibilityand authority and establishing relationships for the purpose ofenabling the people to work most effectively together in

accomplishing objectives. Louis A Allen

The term organisation is used in two senses:

Organisation as a process

Organisation as a structure


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The Logic of Organizing Process

EnterpriseObjectives

Supportingobjectives,policies &

plans

Identification &classification of

required activities

Grouping ofactivities in lightof resources and

situations

Delegationof authority

Horizontal & verticalcoordination of authority &information relationships

1. Establishing enterprise objectives

2. Formulating supporting objectives, policies and plans

3. Identifying and classifying the activities necessary to

accomplish these objectives

4. Grouping these activities in the light of the human and

material resources available and the best way, under thecircumstances, of using them

5. Delegating to the head of each group the authority necessary

to perform the activities

6. Tying the groups together horizontally and vertically, throughauthority relationships and information flows


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Nature & Characteristics of Organisation

Organizing is the basic function of

management

Organizing is always related to objectives

Organizing is an entity

Organizing as a group of people

Organizing as a process

Organizing as a structure


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Importance of Organisation

Organization promotes specialization, creativity and

division of labour It avoids omissions, overlapping and duplication of

efforts

It clarifies authority-responsibility relationships

It aids in division of work and clarity in job description provides for effective delegation of authority

It facilitates staffing

It facilitates coordination

It establishes communication links

It increases efficiency of management

Helps growth and diversification


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Importance of Organisation (contd.)

It facilitates management by exception

Effective location of responsibility Quick achievement of organizational goals

Quick decision making

Provides facility for training, testing anddevelopment

Prevents growth of intrigues and corruption


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PRINCIPLES OF ORGANISATION

1. Principle of delegation

of authority

2. Principle of

coordination

3. Principle of continuity

4. Principle of definition

5. Principle of explanation

6. Principle of equilibriumbalance

7. Principle of flexibility

8. Principle of unity ofobjectives

9. Principle of responsibility

10. Principle of specialization


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11. Principle of span ofcontrol

12. Principle of scalar chain

13. Principle of simplicityand homogeneity

14. Principle of unity of

command

15. Principle of unity ofdirection

16.Principle of uniformity

17.Principle of efficiency

18.Principle of leadership

19.Principle of exception

20.Principle of jointdecision

PRINCIPLES OF DIRECTION


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PRINCIPLES OF DIRECTION

1. Principle of maximum individual

contribution

2. Principle of harmony of objectives

3. Principle of efficiency

4. Principle of direct supervision

5. Principle of unity of command

6. Principle of follow through

7. Principle of communication

8. Principle of leadership

Importance of Directing:

1. Initiates action

2. Integrates efforts

3. Means of motivation

4. Provides stability and balance5. Coping with changes

6. Efficient utilization of resources

Characteristics of directing are:

1. All pervasive

2. Continuous activity

3. Human factor

4. Creative activity

5. Executive and delegating function

Important elements of Directing are:1. Supervision

2. Motivation

3. Leadership

4. Communication

CONTROLLING


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CONTROLLING

Controlling: Comparing operating results with plans and taking

corrective actions when results deviate from plans. Results of operation should be measured in some way

Measured at some key points in operation at key times andtransmitted to the executive at proper time

Efficient control systems helps to predict deviations before they

occur

Characteristics: last phase of

management process.

1. End function

2. Pervasive function

3. Forward looking4. Dynamic process

5. Related with planning

Process of Control:

1. establishment of standards

2. Measurement of performance

3. Comparison of actual and

standard performances4. Taking remedial actions

h i


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Authority

Authority may be defined as the power to make decisions

which guide the actions of another..

Characteristics of Authority:

a) Authority is a legitimate right to command & control

subordinates

b) Authority is granted to achieve the cherished goals of the

enterprise

c) Authority is a right to direct others to get things done

d) Authority is a commanding force binding individuals

together

e) Authority is delegated downwards.

ibili


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Responsibility

Responsibility may be defined as the obligation of a

subordinate to whom a duty has been assigned to perform.

Characteristics of Responsibility:

a) Responsibility is to assign duty to human beings only.b) Responsibility is the result of duty assigned to a human

being

c) Responsibility is the obligation to complete the assigned

taskd) Responsibility can never be delegated

e) Responsibility always flows upward from juniors to

seniors

Relationship between Authority and


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Relationship between Authority and

Responsibility

a) Parity in authority and responsibility

b) Authority and responsibility flow in opposite

direction

c) Responsibility cannot be delegated

Authority Responsibility

It is the legal right of a person or a superior to

command his subordinates.

It is the obligation of subordinate to perform the

work assigned to him.

Authority is attached to the position of a superior

in concern.

Responsibility arises out of superior-subordinate

relationship in which subordinate agrees to carryout duty given to him.

Authority can be delegated by a superior to a

subordinate

Responsibility cannot be shifted and is absolute

It flows from top to bottom. It flows from bottom to top.


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Elements of Organisation

Defining responsibility

Delegating Authority, and

Establishing relationships between authority andresponsibility

Three significant elements of organising:

1. Line authority

2. Staff authority

3. Functional authority

LINE AUTHORITY


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LINE AUTHORITY Line authority flows down the chain of

command.

STAFF AUTHORITY Staff authority is the right to advise or counsel

those with line authority.

Functional Authority

Functional authority of staff departments tocontrol the activities of other departments.

Line and Staff

Delegation vs Decentralisation


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Basis Delegation Decentralization

MeaningManagers delegate some of their function and authority to

their subordinates.

Right to take decisions is shared by top management and other level of

management.

ScopeScope of delegation is limited as superior delegates the

powers to the subordinates on individual bases.Scope is wide as the decision making is shared by the subordinates also.

ResponsibilityResponsibility remains of the managers and cannot be

delegatedResponsibility is also delegated to subordinates.

Freedom of WorkFreedom is not given to the subordinates as they have to

work as per the instructions of their superiors.

Freedom to work can be maintained by subordinates as they are free to

take decision and to implement it.

Nature It is a routine function It is an important decision of an enterprise.

Need on purpose Delegation is important in all concerns whether big orsmall. No enterprises can work without delegation. Decentralization becomes more important in large concerns and itdepends upon the decision made by the enterprise, it is not compulsory.

Grant of Authority The authority is granted by one individual to another.It is a systematic act which takes place at all levels and at all functions in a

concern.

Grant of

ResponsibilityResponsibility cannot be delegated Authority with responsibility is delegated to subordinates.

DegreeDegree of delegation varies from concern to concern and

department to department.

Decentralization is total by nature. It spreads throughout the

organization i.e. at all levels and all functions

ProcessDelegation is a process which explains superior

subordinates relationship

It is an outcome which explains relationship between top management

and all other departments.

Essentiality Delegation is essential of all kinds of concerns Decentralization is a decisions function by nature.

Significance Delegation is essential for creating the organizationDecentralization is an optional policy at the discretion of top

management.

Withdrawal Delegated authority can be taken back.It is considered as a general policy of top management and is applicable

to all departments.

Freedom of Action Very little freedom to the subordinates Considerable freedom

Factors influencing Span of Control


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Factors influencing Span of Control

Managerial abilities- In the concerns where managers are capable, qualified and

experienced, wide span of control is always helpful.

Competence of subordinates- Where the subordinates are capable and competent and

their understanding levels are proper, the subordinates tend to very frequently visit the

superiors for solving their problems. In such cases, the manager can handle large

number of employees. Hence wide span is suitable.

Nature of work- If the work is of repetitive nature, wide span of supervision is more

helpful. On the other hand, if work requires mental skill or craftsmanship, tight control

and supervision is required in which narrow span is more helpful.

Delegation of authority- When the work is delegated to lower levels in an efficient and

proper way, confusions are less and congeniality of the environment can be maintained.

In such cases, wide span of control is suitable and the supervisors can manage and

control large number of subordinates at one time.

Degree of decentralization- Decentralization is done in order to achieve specialization in

which authority is shared by many people and managers at different levels. In suchcases, a tall structure is helpful. There are certain concerns where decentralization is

done in very effective way which results in direct and personal communication between

superiors and subordinates and there the superiors can manage large number of

subordinates very easily. In such cases, wide span again helps.

Factors influencing Span of Management (Narrow or Wide)


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g p g ( )

Factors NARROW WIDE

Clarity of Delegation Inadequate/unclear

authority or delegation

Clear delegation to

undertake well defined tasksClarity of

Plans/Procedures

Unclear plans for non-

repetitive operations

Well defined plans for

repetitive operations

Objectives & standards If non-verifiable Objectives

and standards

Verifiable objectives used as

standards

Ext. and Int.environment

Fast changes in external &internal environment

Slow changes in external &internal environment

Training of subordinates If little or no training Through subordinate

training

Communications/

Instructions

Use of poor or inappropriate

communication techniques

Use of appropriate techniques

like Orgn. Structure, oral &written comm

Task Complex task Simple task

Maturity of subordinate Immature subordinates Mature subordinates

Subordinate attitude Subordinate unwilling to

assume responsibility & risks

Subordinate willing to

assume responsibility & risks

Span of Management (Wide or Tall)


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Span of Management (Wide or Tall)

A wide span of management exists when a manager has a largenumber of subordinates. Generally, the span of control may be

wide when The manager and the subordinates are very competent.

The organization has a wellestablished set of standard operatingprocedures.

Few new problems are anticipated.

A narrow span of management exists when the manager hasonly a few subordinates. The span should be narrow when Workers are located far from one another physically.

The manager has a lot of work to do in addition to supervising workers.

A great deal of interaction is required between supervisor and workers.

New problems arise frequently.

Keep in mind that the span of management may change fromone department to another within the same organization.

Formal Structure


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Formal Structure

The organizational structure is defined as

The set of formal tasks assigned to individuals and departments The formal reporting relationships, including lines of authority, decision

responsibility, number of hierarchical levels, and span of managerial control

The design of systems to ensure effective coordination of employees across

departments


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Informal Structure

Informal Structure Unofficial but important working relationships

between members.

Types of Internal Organisation


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yp g

1. Formal Organisation

2. Informal Organisation

Features of Formal Organisation Features of Informal Organisation

It is the result of deliberate managerial

planning

Informal organisations do not appear on

the formal chart of the enterprise

It is based on the principle of division of

labour and specialisation

Informal organisations are based on

personal attitudes, likes and dislikes,

understanding, customs, traditions, etc.

It is based on the activities to be performed

and not on the individuals who perform such

activities

Informal organization exists at all levels of

organization from top to bottom

It is formally proclaimed by the top

management and hence, shown on the

organization charts

Although, there is no specific channel of

communication, informal channel is much

more powerful than formal channel

It sets up the boundaries and specific part of

actions, which must be strictly followed.


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Informal Structure

Informal Structures have good andbad points Social network analysis identifies

communication relationships Good points include problem solving,support, friendship and fill gaps in theformal structure

Bad points include rumors, inaccurateinformation and resistance to change

Organizational Charts


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Organizational ChartsWhat You Can Learn from an Organization Chart The organizational structure provides a framework for the hierarchy, or vertical structure, of

the organization. An organizational chart is the visual representation of this verticalstructure.

Positions and titles show work responsibilities.Division of work

Lines between positions show who reports to whom in the chainof command.Supervisory relationships

The number of persons reporting to a supervisor.Span of control

Lines between positions show routes for formal communicationflows.Communication channels

Which job titles are grouped together in work units,departments, or divisions.Major subunits

Staff specialists that support other positions and parts of theorganization.Staff positions

The number of management layers from top to bottom.Levels of management

A manager should determine the vertical (decisionmaking) and horizontal (coordinating)

relationships of the organization as a whole. Next, using the organizational chart, a

manager should diagram the relationships.


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Common Types of Structures

Functional structures group together peopleusing similar skills

Divisional structures group together people

by products, customers or locations Matrix structures combine the functional and

divisional structures

Team structures use many permanent andtemporary teams

Network structures extensively use strategic

alliances and outsourcing

Departmentation


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p Functional departmentation:

Product departmentation

Territorial departmentation

Customer departmentation

Process or equipment departmentation

Matrix organisation

Departmentation enables an organization to avail the benefits ofspecialisation. When every department looks after one major function,

expertise is developed and efficiency of operation increases. Expansion

Fixation of responsibilities

Appraisal

Administrative control

COMMON ORGANIZATIONAL STRUCTURES


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Functional Structures

Common functional structure

Functional Organisation grouping


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g g p g

ADVANTAGES DISADVANTAGES

Is logical reflection of functions Deemphasis of overall company

objectivesMaintains power & prestige of major

functions

Overspecializes and narrows viewpoints

of key personnel

Follows principle of occupational

specialization

Reduces coordination between functions

Simplifies training Responsibility for profits is at the top

only

Furnishes means for tight control at the

top

Slow adaptation to changes in

environment

Limits development of general managers


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Divisional Structures

Common divisional structures


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Product Orgnisation groupingADVANTAGES DISADVANTAGES

Places attention and effort on product line Requires more persons with generalmanagerial abilities

Facilitates use of specialized capital, facilities, skills

and knowledge

Tends to make maintenance of

economical central services difficult

Permits growth and diversity of products and

services

Presents Increased problem of top

management controlImproves coordination of functional activities

Places responsibility for profits at the division level

Furnishes measurable training ground for general

managers

Territorial or Geographic Orgnisation grouping


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Territorial or Geographic Orgnisation grouping


Places responsibility at lower level Requires more persons with general managerial

abilities

Places emphasis on local markets

and problems

Tends to make maintenance of economical central

services difficult and may require services such as

personnel or purchasis at the regional level

Improves coordination in theregion

Increases problem of top management control

Takes advantage of economies of

local operations

Better face-to-face communicationwith local interests

Furnishes measurable training

ground for general managers


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Customer Departmentation


Encourages concentration of customer

needs

May be difficult to coordinate

operations between competing

customer demands

Gives customers a feeling that they

have an understanding supplier

Requires managers and staff with

expertise in customers problems

Develops expertise in customer area Customer groups may not always be

clearly defined


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Process Orgnisation grouping


Achieves economic

advantage

Coordination of

departments is difficultUses specialized

technology

Responsibility for profit is at

the top

Utilizes special skills Is unsuitable for developing

general managers

M t i St t


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Matrix Structures

Matrix Structures combine functional anddivisional structures

uses permanent cross functional teams to try

to gain the advantages of both the functionaland divisional approaches


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Matrix Structures


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Matrix Orgnisation


Is oriented towards end

results

Conflict in organization

authority exists

Professional identification is

maintained

Possibility of disunity of

command exists

Pinpoints product-profit

responsibility

Requires manager effective in

human relations


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Team Structures

Team Structures

Make use of permanent and temporary crossfunctional teams

Improved problem solving and projectmanagement



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Team Structures

Team structure example



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Team Structures

Possible advantages of Team structures Team assignments improve communication,

cooperation, and decision-making.

Team members get to know each other aspersons, not just job titles.

Team memberships boost morale, andincrease enthusiasm and task involvement.

Direction has got following characteristics:


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Pervasive Function - Directing is required at all levels of organization.Every manager provides guidance and inspiration to his subordinates.

Continuous Activity - Direction is a continuous activity as it continuousthroughout the life of organization.

Human Factor - Directing function is related to subordinates and thereforeit is related to human factor. Since human factor is complex and behaviouris unpredictable, direction function becomes important.

Creative Activity - Direction function helps in converting plans intoperformance. Without this function, people become inactive and physicalresources are meaningless.

Executive Function - Direction function is carried out by all managers andexecutives at all levels throughout the working of an enterprise, asubordinate receives instructions from his superior only.

Delegate Function - Direction is supposed to be a function dealing withhuman beings. Human behaviour is unpredictable by nature andconditioning the peoples behaviour towards the goals of the enterprise iswhat the executive does in this function. Therefore, it is termed as havingdelicacy in it to tackle human behaviour.

A supervisor plays multiple roles at one time like:


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A supervisor plays multiple roles at one time, like:

A Planner - A supervisor has to plan the daily work schedules in the factory. At thesame time he has to divide the work to various workers according to their abilities.

A Manager - It is righty said that a supervisor is a part of the management team ofan enterprise. He is, in fact, an operative manager.

A Guide and Leader - A factory supervisor leads the workers by guiding them theway of perform their daily tasks. In fact, he plays a role of an inspirer by tellingthem.

A Mediator - A Supervisor is called a linking pin between management andworkers. He is the spokesperson of management as well as worker.

An Inspector - An important role of supervisor is to enforce discipline in thefactory. For this, the work includes checking progress of work against the timeschedule, recording the work performances at regular intervals and reporting thedeviations if any from those. He can also frame rules and regulations which have

to be followed by workers during their work.

A Counselor - A supervisor plays the role of a counselor to the workers problem.He has to perform this role in order to build good relations and co-operation fromworkers. This can be done not only by listening to the grievances but also handlingthe grievances and satisfying the workers.

Staffing


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Staffing

Staffing involves: Manpower Planning (estimating man power in

terms of searching, choose the person and givingthe right place).

Recruitment, Selection & Placement.

Training and Development

Remuneration.

Performance Appraisal.

Promotions & Transfer.

Staffing Process - Steps in Staffing


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g p g 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 anddetermining the future manpower needs of the concern.

Recruitment- Once the requirements are notified, the concern invites and

solicits applications according to the invitations made to the desirable

candidates.

Selection- This is the screening step of staffing in which the solicitedapplications are screened out and suitable candidates are appointed as

per the requirements.

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 puttingright man on the right job.

St ffi P St i St ffi


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Staffing Process - Steps in Staffing Contd.

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 givenaccording to the nature of activities and scope of expansion in it. Along with it, theworkers are developed by providing them extra benefits of indepth knowledge oftheir functional areas. Development also includes giving them key and important

jobsas a test or examination in order to analyse their performances.

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 orunskilled, physical or mental, etc. Remuneration forms an important monetaryincentive for the employees.

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 regularassessment is done to evaluate and supervise different work units in a concern. Itis basically concerning to know the development cycle and growth patterns of the

employeesin a concern.

Promotion and transfer- Promotion is said to be a non- monetary incentive inwhich the worker is shifted from a higher job demanding bigger responsibilities aswell as shifting the workers and transferring them to different work units andbranches of the same organization.

Characteristics of Controlling function of management


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Characteristics ofControlling function of management

Controlling is an end function- A function which comes once the

performances are made in conformity with plans. Controlling is a pervasive function- which means it is performed by

managers at all levels and in all type of concerns.

Controlling is forward looking- because effective control is notpossible without past being controlled. Controlling always look tofuture so that follow-up can be made whenever required.

Controlling is a dynamic process- since controlling requires takingreview methods, changes have to be made wherever possible.

Controlling is related with planning- Planning and Controlling are

two inseparable functions of management. Without planning,controlling is a meaningless exercise and without controlling,planning is useless. Planning presupposes controlling andcontrolling succeeds planning.

H th St di


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Hawthorne Studies

A series of studies done during the 1920s and1930s that provided new insights into group

norms and behaviors

Hawthorne effect Social norms or standards of the group are the key

determinants of individual work behavior.

Changed the prevalent view of the time that

people were no different than machines.

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Hawthorne Studies

Two Experiments: Lighting Variation

Wages and Rest Periods Variation

h


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Hawthorne experiments

A Western Electric factory, late 1920sexperiment to find optimal level of lighting

work groups of 6, in separate rooms

Experimental group & control group

no change in lighting for control group

Findings:

increasing brightness raises productivity

reducing brightness raises productivity members of the control group also increased

productivity

H h i


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Hawthorne experiments

Outcome of first experiments: puzzledengineers

Next round of studies: try to

understand whats going on in thesegroups change work schedules: length & timing

of breaks

production kept going up, even whenback to the original (no rest break)schedule

H h E i


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Hawthorne Experiments

Further investigation showed that work teams regulated the pace of work of

their members

the foremen (not in the room most of the

time) had no idea of the extent of thisself-regulation

the group raised its productivity

because it felt involved in the project, and

listened to because the experimental conditions

presented it with a challenge


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Hawthorne experiments Lessons

For managers, the importance of Teams, not just individuals

Workers arent machines, they make choices, and theirchoices are affected by how others treat them

Expert-specified tasks still have a lot of room for

improvement (slack), and workers often know wherethat slack is

These findings contributed to the development of the humanrelationsapproach to management

For researchers people participating in an experiment are likely tobehave differently than they do at other times

(Hawthorne effects)

Conclusions

Review Questions - Assignment


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1. Define Management. Discuss the nature, significance and thechallenges of management.

2. What are the characteristic features of Industrial Revolution

period?3. Discuss the contributions of F.W. Taylor and Henri Fayol to

management theory?

4. Mention the various steps in planning and decision-makingprocess.

5. Briefly discuss the functions of management.6. Discuss the contributions of Hawthorne studies to management

thought?

7. Define the role of primary groups in organizations. Differentiatebetween formal and informal" organization.

8. What are the factors to be considered in the design oforganization structures?

9. What is departmentation? Evaluate Line and staff organisation.

10. Differentiate between tall and flat structure.

Management Eee

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