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B.

COM- I SEMESTER-PRINCIPLES OF MANAGEMENT – BCMCMC 10

CHAPTER I: NATURE AND FUNCTIONS OF MANAGEMENT


MEANING:
The term management refers to the process of managing the activities of an enterprise. In short, it is used to
refer to a process, function or activity. It is an essential activity in every sphere of organized activity. It is the
process of taking certain decisions and putting them into action.

DEFINITION:
Prof. Harold Koontz: “Management is the art of getting things done through and with the people in formally
organized manner.”

George R Terry: “it is a distinct process consisting of activities of planning, organizing, actuating and controlling,
performed to determine and accomplish stated objectives with the use of human beings and other resources.”

Henry Fayol: “to manage is to forecast and plan, to organize, to command, to coordinate and to control.”

Management is the process for utilization of minimum input for the production of maximum output. It utilizes
human material resources to achieve organizational objectives. It includes Men, Materials, Machines, Methods,
Money and Markets. The organizational objectives include reasonable profit, satisfaction of customers’ needs.

NATURE OR FEATURES:
1. Organized work: Management is the process of organized activities of people working towards particular
purpose. It comes into existence where a group of people are involved in working towards a common
objective.

2. Goal oriented: It coordinates the efforts of the workers to achieve the goals of the organization. The success
of the management is measured by the extent to which the organizational goals are achieved.

3. Distinct process: it is a distinct or separate process consisting of functions such as planning, organizing,
staffing, directing and controlling for the achievement of company objectives.

4. Integration of resources: The process of management aims at integrating human and other resources
towards the achievement of common objective. It is concerned with the proper utilization of organizational
resources.

5. System of authority: Management as a team of managers represents system of authority a hierarchy of


command and control. Authority is needed to accomplish the work from others. Authority is considered to
be the basis for performance of management functions.

6. Multi disciplinary: Although management is separate discipline, it draws knowledge and concepts from
various disciplines such as psychology, economics, statistics, engineering, sociology, ecology etc.

7. Universal application: management is present not only in business undertakings but also in political, social,
religious and educational institutions. In fact management is present wherever there is human activity.

8. Decision making: management involves decision making at various levels. Decision making basically involves
selecting the most appropriate alternative out of the several alternatives available. The quality of decision
judges the success of failure of management.

SCOPE OF MANAGEMENT:
Management is a science as well as art
Earlier years, the knowledge of the practices of management was not systematically organized and experience
was the only way to acquire the skills of managing. But now management has been given the shape of organized
body of knowledge by the management scholars.
 Management is science: science is the systematic body of knowledge based on certain principles and
techniques which have universal applications. The following features will prove management as a science:
1) Management has systematic body of knowledge consisting of well defined concepts, principles and
techniques to collect and analyse data.
2) Several principles of management establish cause and effect relationship
3) Management principles are verified on various occasions.
4) Management is widely applied in different types of organizations.
5) Management science is concerned with developing and applying models to solve managerial problems
6) The techniques of management science are not restricted to business applications but may be applied to
military, medical, public administration etc.

REF: Mgt text books by T.N CHHABRA, B.S.RAMAN & K.S.ADIGA Prep. By: ANANTH ROHITH Page 1
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However management is not pure science like chemistry or physics. It is behavioral science. It deals with
human behaviour which is always changing and difficult to predict. Therefore its principles may not lead to
the same results every time under different situations. It is an inexact science or Soft Science.
 Management is Art: Art is about achieving goal through the application of skills. it is concerned with the
understanding of how a particular work can be accomplished and the application of knowledge and skills.
The ultimate aim of management is to achieve desired results. The application management principles
require specialized knowledge and skills on the part of the manager. Therefore management also viewed as
an art.
Management uses both scientific knowledge and art in managing the organization. Hence, management is both
science as well as art. Science provides the knowledge and art teaches to do things by application of knowledge
and skills. For example a doctor acquires the knowledge in chemistry, biology and anatomy. But the knowledge
does not make him good physician. He has to apply his knowledge intelligently. The manager should be an
applied scientist. He should possess not only the specialized knowledge but also the skill to apply his managerial
knowledge into practice.

Management as a profession:
The professions enjoy high status in every society. There has been a growing trend towards professionalization
of management because of the desire of business leaders for social status and recognition.
Profession is an occupation for which specialized knowledge, skills and training are required. The use of these
skills is meant for larger interest of the society. The success of use of these skills is not measured in only in terms
of money. Management satisfies many of the requirements of a profession.
It has a systematic body of knowledge, professional schools of management, growing emphasis on ethical
behaviour of managers and increasing number and use of management consultants, recognizing social
responsibilities and formation of management associations.

FUNCTIONS OF MANAGEMENT:
1. Planning: It is intellectual and continues process. Planning is deciding in advance the future course of
operations for a given period. it is determining the set of activities to be conducted in future to achieve
organizational goals. It helps the management to have clear picture of the future course of events well in
advance and to make the necessary provision for future eventualities.

2. Organizing: It is the process of identification of activities required to achieve the objectives of the enterprise,
grouping of those activities into manageable units, assignment of grouped activities to various personnel and
fixing responsibilities on them for performance of the assigned duties, delegation of sufficient authority to
the people to carry out their responsibilities. It helps in increasing the efficiency of the workers and reduces
the operating cost of the enterprise.

3. Staffing: It involves recruitment, selection, training, development and appraisal of personnel to attain goals
of the firm. It ensures right type of personnel available to man and execute the various activities to attain
the objectives of the organization. It also ensures that the various positions created in the organization
structure are filled up by qualified and competent persons.

4. Directing: It is responsible for effective execution of the plans. It deals with guiding, supervising and
motivating the subordinates for the accomplishment of pre determined objectives. It consists of
communication, leadership and motivation. It makes the workers to work efficiently for the implementation
of the plans and attainment of the pre determined goals.

5. Co-coordinating: it is not considered as one of the functions of management. It harmoniously synchronizes


the efforts of different departments and different specialists for the achievement of desired goals.

6. Controlling: It is the process of measuring and correcting the performance of subordinates. It involves
determination of standards, measurement of actual performance, comparing of performance with the
standards and correction of deviations to ensure attainment of objectives. It ensures that everything is
undertaken according to the plans.

REF: Mgt text books by T.N CHHABRA, B.S.RAMAN & K.S.ADIGA Prep. By: ANANTH ROHITH Page 2
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ADMINISTRATION AND MANAGEMENT:


The use of 2 terms Administration and Management has been a controversial issue in the management
literature.
a) Administration and Management are 2 different functions:
The classical thinkers held that administration related to the overall determination of the institutional
objectives and policies of the necessary to be followed in achieving those objectives. It is concerned with
policy formation. Management is an executive function concerned with carrying out broad policies laid
down by the administration. Administration is superior to management.
Administration
Top management – policy formation- thinking function

Management
Lower management- policy execution- doing function
b) Management includes administration:
The term management embraces the entire process of planning, policy making, co-ordination of
activities, maintaining of morale and discipline as well as controlling the operations to attain
organizational goals. Management is social process imposing responsibility for effective and economical
planning and regulation of operations. Administration is concerned with execution of the plans to
achieve the objectives.

c) Administration and management are same:


According prominent writers, there is no difference between administration and management. Both
involve same functions, principles and objectives. The term management is used for higher executive
functions like determination of policies, planning organizing etc. The term administration is used for the
same set of function is government circles.

Conclusion: The distinction between management and administration may be of academic interest. Some
people classify management functions as policy formulation functions and execution functions. In both functions
the manager performs administrative functions and executive functions. The manager at higher level spends
more time on planning whereas manager at lower level spends more time on execution. Every manager
performs all managerial functions.
Top level management Board of directors Administration
President
Middle level General manager
management Work manager
Lower level or Superintendent Management
first line management foreman

SCIENTIFIC MANAGEMENT:
Before scientific management, organizational decisions were made without any scientific study or
collection of information. Nothing was standardized. Every worker was doing the work in his own way with
different methods using different tools. It led to the decrease in productivity and led to the advent of scientific
management. Scientific management is the application of scientific principles and methods to the management.
It is the art of knowing exactly what is to be done and doing it in the best possible way.
Scientific management has the following aims.
a) Application of science in the place of rule of thumb method
b) Securing the atmosphere of harmony in the place of discord
c) Replacing individuality by co-operation.
d) Maximizing the output instead of restricting it.

Scientific management has basic principles or elements or features. They are:


1) Replacement of old ‘rule of thumb method’: The first principle is ‘develop a science for each element of
work’, which replaces the old rule of thumb methods. Scientific management implies the application of
scientific investigations and knowledge for taking managerial decisions instead of casual decision, opinion,
intuition or rule of thumb.
2) Scientific task setting: Under traditional system, management was ignorant as to what actually constitutes a
day’s work, capacity of workmen and the time required for completing a job. This ignorance led to the
restriction of output by the workers. Under scientific management the standard task or day’s work for an

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average worker under certain definite conditions is determined by the management. The scientific task is set
by the conducting the scientific investigations. It should not be higher than the capacity of an average
worker.
3) Work improvement: Effecting the improvement in the methods of doing work, through time study, motion
study and fatigue study.
4) Separation of planning and doing: Taylor emphasized that planning function should be separated from the
actual doing of the work. Management has to determine the work standard for each worker. Workers have
to work according to the plans prescribed. In other words planning is done by planning department and it is
executed by the workers.
5) Improvement in methods of work: In order to make the workers complete the task, there is need for
improvement in the methods of work. It involves standardization of tools and equipment, speed, condition
of work, materials and symbols.
6) Scientific selection and training of workers: Under scientific management, personnel department has to take
the responsibilities for selecting the workers. Workers should be selected on scientific basis. Proper
emphasis is given to the training of the employees.
7) Development of workers: Scientific management aims at development of all workers to the fullest extent
possible for their own and for the company’s highest prosperity.
8) Functional foremanship: Taylor evolved the concept of functional foremanship based on specialization of
functions. 8 persons are to direct the activities of workers. All of them give directions to workers on different
aspects of work. Out of these 4 persons, namely, route clerk, instruction card clerk, time and cost clerk and
disciplinarian, are concerned with planning. The remaining 4 persons, namely, speed boss, inspector, repair
boss and gang boss are concerned with doing aspect of the work.
9) Mutual co-operation: the mutual co-operation between employees and management is the foundation of
scientific management. The basic idea is to change the mental attitudes of the workers and management
towards each other.
10) Harmony in group action: scientific management attempts to obtain harmony in group action. It requires
proper understanding so that group as a whole contributes to the maximum.
11) Incentive system of wage payment: Taylor introduced the differential piece rate system of wage payment to
motivate the workers. According to this the worker who completes the normal work gets higher pay
comparing to the worker who unable to complete the work.
12) Maximum output: it involves continues increase in production and productivity instead of restricted
production either by the management or by the worker.
13) Mental revolution: it holds that there should be thorough change in the mental outlook of both the
employees and employers. Scientific management depends on mutual co-operation between management
and workers.

FREDRICK WINSLOW TAYLOR:


F.W. Taylor has worked for long time in industries in different capacities and positions. He did experiment on
various aspect of doing the job and find out the best way of doing the job. His experiments were based on
various scientific methods. Because of his significant contributions to the development of the scientific
management, he came to be regarded as “father of scientific management”
Taylor’s contributions to the development of scientific management were as follows:
1. He emphasized that the best management is a true science. He advocated the application of scientific
principles to the solution of management problems.
2. He laid great emphasis on time and motion studies to determine the best way of doing each job
3. He recognized the need to separate the planning work from the execution work.
4. He introduced the concept of functional foremanship to secure benefits of division of labour. The concept of
functional foremanship based on specialization of functions. 8 persons are to direct the activities of workers.
All of them give directions to workers on different aspects of work. Out of these 4 persons are concerned
with planning. The remaining 4 persons are concerned with doing aspect of the work.
Planning department:
a) Route clerk: He sets the order of the work and lays down the route which the raw material has to take
from machine to machine inside the factory during the process of manufacture.
b) Instruction card clerk: He gives detailed instructions as to how the work is to be done, the tools to be
used etc. he lays down the exact method of doing the work.
c) Time and cost clerk: He lays down the standard time for completion of each operation and keeps proper
records of time taken and cost of each operation.
d) Shop disciplinarian: This foreman maintains discipline in the factory. He deals with cases of breach of
discipline and absenteeism.
Executive department:
a) Gang boss: he makes all preliminary preparations necessary to commence the work. He assembles and
sets up various machines and tools required for each job.
b) Speed boss: he ensures that work is done at the proper speed.

REF: Mgt text books by T.N CHHABRA, B.S.RAMAN & K.S.ADIGA Prep. By: ANANTH ROHITH Page 4
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c) Repair boss: he ensures that tools, implements and machines are in proper working order. When there is
any breakdown anywhere, he arranges for immediate repairs.
d) Inspector: he ensures the quality of work done
5. He advocated standardization of tools and equipments, machine speed, working conditions and materials to
secure greater efficiency and production.
6. He advocated mental revolution on the part of both employer and employees. He emphasized onco-
operation between employers and employees in the organization.
7. He introduced differential piece rate of wage payment to encourage the efficient workers
8. He also advocated scientific selection, training and development of workers.

Criticisms of scientific management:


a) It emphasizes more on production department. It did not emphasis other essential areas of
management like finance, marketing and personnel etc.
b) It encourages aggressive mechanical view rather human aspect during the production.
c) The work is done under strict supervision. No worker was allowed to raise their voice even for genuine
grievances.
d) The concept of functional foremanship lacks feasibility as it violates principle of unity of command.
e) It undermined human factor in the industry.
f) No scope for innovation or creativity as workers have perform according to their pre determined rules.

HENRY FAYOL
Henry Fayol was a mining engineer in 1860. Later he got promoted as manager and served for 22 years. When
the company was almost bankrupt, he was appointed as managing director. He served as M.D. for 30 years and
retired in 1918. At that time, the company expanded into large coal-steel combine with strong financial position
and record of profits and dividends over a long period. He argued that the success of enterprise depends much
more on the administrative ability of its leaders than on their technical ability. He is regarded as the pioneer of
general administration. He is considered as the “father of modern operational management theory”
Contributions:
He divided the industrial activities into 6 groups
1) Technical activities- related to production
2) Commercial activities- relating to buying selling and exchange
3) Financial activities- relating to source of capital and its use
4) Security activities- relating to the protection of property and persons
5) Accounting activities- relating to stock taking, preparation of financial statements etc
6) Managerial activities- related to planning, organizing, commanding, coordinating and controlling.
He sub-divided the managerial functions or activities into 5 groups
1) Forecasting and planning: it means foreseeing the future and preparing plan of action accordingly.
2) Organizing: it means securing the various factors of production such as materials, men, machines etc.
3) Commanding: it means putting the factors of production into action
4) Coordinating: it means unifying the activities of different groups of personnel
5) Controlling: it means ensuring that everything occurs in conformity with plan adopted.

Management principles:
1. Division of labour or specialization: he advocates division of work to reap the benefits of specialization. It
allows the workers and managers to acquire ability and accuracy that will increase output.

2. Authority and responsibility: it implies that authority and responsibility should be related to each other.
When the work is divided and different workers are made responsible for different jobs, they must also
be provided with necessary powers to do those jobs.

3. Discipline: it is obedience, application, energy, behaviour and outward marks of respect shown by
employees. It requires good superiors at all levels, clear and fair agreements and judicious application of
penalties.

4. Unity of command: it means that an employee should receive orders from one superior only.

5. Unity of direction: it implies that each group of activities having common objective must have one head
and one plan.

6. Subordination of individual interest into group interest: it emphasises the necessity for protecting group
or common interest as against individual interest. This will facilitate unity and avoid clashes among the
different workers.

REF: Mgt text books by T.N CHHABRA, B.S.RAMAN & K.S.ADIGA Prep. By: ANANTH ROHITH Page 5
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7. Remuneration to personnel: it means that the method of employee remuneration should be just and fair
and should afford the maximum satisfaction to both employees and employer.

8. Centralization: it implies that the degree of concentration of authority should vary according to the
needs of the individual situation.

9. Scalar chain: this is the chain of superiors running from highest rank to the lowest rank. The line of
authority should be followed normally. Managers are links in the chain. The communication should be
there from highest to lowest. Sometimes in certain circumstances the chain can be short circuited.

10. Order: it is relating to the arrangement of things and people. There should be place for everyone and
everything in its place. The right man should be there in right place. The objective of this principle is to
avoid waste and loss.
11. Equity: it is the combination of kindness and justice. Manager must enlist loyalty and devotion from the
employees by showing kindliness and justice in dealing with them.

12. Stability of tenure of personnel: it implies that every employee must be assured of security of service.
When the employee is assured of security of service he will take keen interest in giving best
performance. So unnecessary labour turnover should be avoided.

13. Initiative: it implies that managers of an undertaking should permit their subordinates to take some
initiative in thinking out and executing plans. This will give them much satisfaction.

14. Espirit de corps: It means union is strength. So there must be team work and proper communication
among the members of the team.

Comparison of contributions of Taylor and Fayol:


Similarities:
1) Both have attempted to overcome managerial problems in systematic way
2) They have developed principles which can be applied in solving the managerial problems
3) They have emphasised that management actions can be effective if these are based on sound principles.
4) The have emphasised managerial qualities as acquirable and can be acquired through training. So
organizations should make attempts to develop these qualities
5) They emphasised harmonious relationships between management and workers for the achievement of
organizational objectives.

Dissimilarities:
1) Taylor used the expression scientific management. Fayol termed it as General Theory of Administration.
2) Taylor’s main concern was tasks, workers and supervisors. Fayol’s main concern was efficiency of
administrators and mangers.
3) Taylor concentrated more on production and engineering and neglected principles of management.
Fayol’s orientation was managerial functions
4) Taylor concentrated on lower level management. Fayol concentrated more on top level management.
5) Taylor wanted to improve efficiency of employees in lower level and then to move upwards. Fayol began
from top level and proceeded downward with emphasis on quality of direction and unity of command.
6) Taylors philosophy had undergone a great change under the influence of modern developments. Fayol’s
principles stood the test of time and are accepted even at the present days

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Chapter 2- PLANNING AND DECISION MAKING


PLANNING:
Definition:
Koontz and O’Donnell: Planning is deciding in advance what to do, how to do, when to do it and who is to do it.
It bridges the gap from where we are and where we want to go. It makes it possible for things to occur which
would not otherwise happen.

Need for Planning:


 Growing complexities of modern business.
 Rapid technological changes
 Growing competition
 Fluctuation in demand for products
 Scarcity of resources
 Changes in consumer tastes and preferences

Nature or features of planning:


1. Intellectual Process: it is mental exercise. It requires thinking, reflection, analysis of information and
judgment.
2. Primary function: it decides policy, procedures, programme and projects for the future. It is to be
performed before any other managerial function. Without planning all other functions will become mere
activities producing nothing.
3. Goal Oriented: it is linked up with goals and objectives. Plans must contribute to the accomplishment of
group objectives. Otherwise it will be an empty mental exercise.
4. Pervasiveness: planning pervades in all levels of management. Every manager whether he is in top level,
middle level or lower level has to do planning.
5. Decision Making Process: it is the process of deciding the objectives and future course of actions.
6. Integrated Process: it facilitates and integrates all other functions of management
7. Selective process: it involves the selection of the best course of action after careful analysis of various
alternatives.
8. Formation of premises: it is only on the basis of premises or assumptions regarding the future. Planning
is formulated based on assumptions.

Importance/ Merits/ Advantages:


1. Management by Objectives (MBO): it makes the management to formulate the objectives of the
organization in clear-cut terms and take the right course of action to achieve the specific objectives.
2. Improves adaptability: planning improves the ability to cope with change. It cannot prevent change
from happening. But it can help in reducing the severity of uncertainty and complexity of future.
3. Facilitates unity of direction and coordination: through its well defines objectives, policies, procedures,
planning facilitate co-ordination of all inter connected activities and avoids duplication of activities.
4. Facilitates control: planning determines the future course of action. This makes it easy to compare the
actual performance with planned performance. In case there are deviations corrective actions are taken
to remove the deviations. Thus it facilitates controlling.
5. Minimizes the costs: it emphasises activities directed towards achieving efficient operations to cut cost
and increase efficiency. It eliminates unproductive work and encourages effective utiisation of facilities
to achieve the goals at lowest cost.
6. Improves competitive strength: by anticipating technological changes and changes in consumer taste
and preferences, planning improves competitive strength by discovering new opportunities to expand
business.
7. Improves motivation: it ensures participation of all managers in the determination of goals, polices,
programmes of the organization. Thus it improves motivation and morale of the managers.
8. Encourages innovation and creativity: it encourages innovation and creativity among managers with a
view that many new ideas may come to the minds of the managers during planning which will decide the
future course of action of the company.
Limitations/ Demerits/ Disadvantages:
1. Limitation of forecast: the success of planning depends on forecasts. The accuracy of forecasts depends
on reliable facts and figures. If the facts and figures and inaccurate, forecasts will be wrong and plans will
fail to achieve the organizational goals

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2. Expenses: planning involves collection of relevant information for forecasting and testing of alternatives.
Many times they are costly. Small and medium size companies may not bear the expenses incurred in
planning
3. Time consuming: sometimes advance planning might delay the action and result in loss of opportunities.
Time cannot be devoted when on spot decisions are needed.
4. Inflexibility: planning makes the managers and workers to work on pre determined course of actions. It
may lead to rigidity and inflexibility and restricts the individual freedom and desire for creativity.
5. Resistance to change: sometimes companies become so committed to goals that they fail to see that
their plans are not working or their goals need to change. They may not get any time to make changes in
their in their plans based on changing business scenario.
6. Mental ability: planning is mental exercise. It required high level of imagination, analytical ability and
creativity. But the managers with such high level mental ability are limited.
7. External constraints: there are many external constraints like government policies, tax laws,
technological changes, labour strikes, natural disasters, breakout of war over which the management
has no control. It makes execution of plans very difficult.
8. Failures of people in planning: lack of commitment to plan, establishing clear cut objectives, lack of co-
operation, lack of support from the top level management and subordinates makes it difficult to execute
the plans successfully.

Steps in Planning Process:


1. Identifying the problem: the problem which calls for planning should be identified with respect to
market, competition, customer preferences, strength and weaknesses of the organizations. It helps the
business enterprise to identify present and future opportunities which it can exploit or may have to
tackle.
2. Setting up the objectives: after identifying the problems, objectives must be determined. The objectives
must be set for both the enterprise as a whole and for every section of the enterprise. They provide
answers to the questions like what is be done, where to give importance, what is to be accomplished
etc. Objectives motivate the employees as it guides their activities.
3. Collection and analysis of information: sufficient information must be collected in order to make the
plans sub plans. It should be done in terms of external and internal environment. It serves as an
important basis for planning.
4. Development of Planning Premises: it is essential to identify the assumptions on which the plans will be
based. Forecasting is important in premising. It helps in making realistic assumptions which are the basis
for planning. Premises are external and internal. External premises include political, social, technological,
competitor’s plans and actions, government policies etc. Internal premises include organisation’s
policies, resources etc.
5. Identification of alternative courses of action or alternative plans: There are several alternatives for
any plan. The planner must find out all the possible alternatives. The determination of alternative plans
can be time consuming task because objectives which have been established initially may be found to be
inflexible. After finding the alternatives, most important ones among them are selected for detailed
analysis.
6. Evaluation of alternatives: the strength and weakness of selected alternatives must be evaluated with
regard to the organizational goals. The alternatives must be evaluated by using various quantitative
techniques. The alternatives must be evaluated in terms of factors like cost, risk, availability of funds etc.
the manager has to decide two or more alternatives and combine them to suit the requirement of the
situation.
7. Selection of the plan and development of derivative plans: the final step is to select the most feasible
plan and develop its sub plans. The plans must include the feedback mechanism. They must be flexible
to meet the changing environment.
The derivative plans are required to support the basic or main plan. They are developed within
the framework of main plan.
8. Deciding the planning period: the planning period may be one year or more than one year. It can be
decided after considering the period in future that can be anticipated, lead time involved in
development of new product, time required to recover the capital invested.
9. Implementation of plan: After the formulation, the plans must be put into action. It requires policies,
procedures, budgets and standards. It also requires delegation of authority and responsibility to the
subordinates.

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10. Monitoring: Its is necessary to measure the effectiveness of the planning. The progress of the plan must
be checked at each stage to make the plan work or to change the original plan.

Types of plans:
1. Standing plans and single use plans
A. Standing plans: these are designed to be used over and over again. They are prepared to guide
managerial decisions and recurring problems and issues of the enterprise. They include
a) Objectives: these are the goals and aims that the organization wishes to achieve over different
periods of time. They must be broad and specific respective of different level of management. An
organization may have multiple objectives.
b) Policies: it is the guideline to the thinking and action of those who make decisions. A policy is
generally qualitative, conditional or general. It should be clear and consistent. It should be flexible.
c) Procedures: these are the specific manners in which particular activity is to be performed. They
prescribe chronological sequences of the action required to achieve an objective. Time limits are
placed on each step of procedure.
d) Methods: it is the way of performing a given task or operation. It defines the technology of
individual operations in work situation. They are scientific and standardized. The determination of
methods depends on experience, knowledge and creativeness of the manager.
e) Rules: these are specific guides for conduct or action. They are the directives to people to do or not
to do things or behave in particular ways. They are precise and clear. It facilitates the process of
management and control of people and events.
f) Strategies: it is the determination of the basic long term goals and adoption of course of action to
achieve those goals. It is developed at the high level of management. It depends on opportunities,
crisis, new ideas and management initiatives.
B. Single use plans: these are the plans to be used only in specific situations and for tackling specific
matters. They are the plans for handling non-repetitive and specific problems. They cannot be used in
any other situations.
2. Formal and informal plans:
a) Formal plan: these are the plans which specify in writing the specific objectives to be achieved and
steps to be taken to achieve those objectives.
b) Informal plans: these are mere thinking of individuals. They are not in writing. They may be useful
for shorter period of time and if the numbers of actions are less. They may be the basis for formal
plans.
3. Short range and long range plans:
a) Short range plans: these plans generally cover a period of one year. It is concerned with
determination of short term activities to accomplish long term objectives. They are specific,
quantitative and action oriented. They are consistent with the long range plans.
b) Long range plans: these plans cover a period of 5 years or more or even 20 years.. The length of
plans varies from one concern to another concern based on nature of business, government policies,
competitors’ actions etc. These plans set the goals for the company and specific strategies, policies
to attain these goals. They cover all the functional areas of the business. They deal with manpower
planning, financial resources, product planning, organization structure, profitability and so on. It
involve analysis of environmental factors and attempt to anticipate, analyse and make decisions
about long term problems and issues.
4. Strategic plans and tactical plans:
a) Strategic plans: these are designed to achieve overall objectives of the company. These are
formulated by the top level management. It is concerned with determination of objectives,
formulation of policies and determination of strategies to be adopted and other steps to be taken to
accomplish the objective. It determines the manner in which the resources of the enterprise are to
be employed to realise strategic goals of the company. They precede operational plans. They
contain less details and less specific. These plans are prepared keeping in mind the strength and
weakness of the company, the resources currently available in the future, moves of the competitors,
consumer preferences, market forces, expansion plans, economic, political and social environment.
b) Tactical Plans: these are concerned with planning of detailed operations needed to achieve
organizational goals. They are intended to support the implementation of strategic plans. It is
concerned with what each of the major organizational sub-systems must do, how they do it, when
things must be done, where activities will be performed, what resources are to be utilized and who

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will have the authority needed to perform each task. It is created and implemented by middle level
managers. They have more details, shorter time frames.
5. Administrative and operative plans:
a) Administrative plans: it determines the basis of action for the whole organization as well as for the
various segments of the organization for particular period. They are prepared by middle level
managers and provide guidelines for operative plans. They are flexible.
b) Operative plans: they are concerned with actual execution of day-to-day operations of the concern.
They are shorter period. They are prepared by lower level of management. It covers aspects such as,
preparation of sales programme, planning of production activities etc.

6. Functional plans: they are prepared for each major function of the organization like production, marketing,
finance and human resource etc. all functional plans are to be integrated and co-ordinated with corporate
plans.

7. Physical plans: they are concerned with physical location and arrangement of buildings and equipments.
Plant layout plans, inventory layout plans are some of the examples of physical plans.

DECISION MAKING:
Definition:
George R Terry: decision making is the selection based on some criteria from 2 or more possible alternatives.
Features:
 It is the process of selecting best course f acton among the alternatives
 It is always goal oriented.
 It may be expressed in words or implied from behaviour.
 It is a blend of thinking, deciding and action.
 It is rational.
Importance/ significance of decision making:
It is a complex mental exercise. It involves the entire process of establishing goals, defining tasks,
searching for alternatives and developing plans in order to find the best answer to the problem. Management is
defined as decision making process. Whatever manager does, he does through decision making. Decision making
is essential in each of the management activity.
It is at the core of planning. It is necessary in each area of business, like production, marketing,
administration etc. no business concern can survive without effective decision making.
It is important in organization, relating to the nature and structure of the organization, division of work
and so on
In direction, decision making is helpful in deciding the type of motivation, the deciding of the orders and
instructions to be given etc.
In control decision making relates to deciding the standards, control points, procedures etc.

Decision making process:


1. Diagnosing and defining the problem:
Correct diagnosis of the real problem is utmost important. It is also said that a problem well defined is half
solved. The problem should be diagnosed by the analytical methods. The problem is to be defined in clear
terms so as to identify the scope and subdivisions.
2. Analyzing the problem:
After clearly recognizing the problem, the next phase of decision making is the analysis of problem which
involves classifying the problem and gathering information. Classification is necessary to know who should
take decisions and who should be consulted in taking it. Without proper classification, the effective decision
making is not possible. The problem must be analysed based on nature of decisions, its impact, futurity and
periodicity and limiting factors.
3. Collection of data:
For analyzing the problem, the manager should collect relevant facts and data and classify them.
Effectiveness of the decision depends on quality of the information on which it is based. Collection of right
type of information is very important in decision making. The manager has to decide the type of information
required, sources, adequacy and reliability of information, time and money spent to gather the information.
4. Developing alternatives:
After analyzing problem and collecting data, the manager has to develop alternative, potential and possible
course of action that could solve the problem. Alternatives exist for every decision problem. It is necessary to
make sure that the best alternative is considered before a course of action is selected. For developing
alternatives, original and independent thinking is needed. The manager may consult other members of the
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team and staff specialists. Group participation and brain storming techniques can be effectively used in
developing alternatives.
5. Review of key factors:
Alternative solutions are to be developed by considering the key factors. A key factor or limiting factor is one
which influences the performance of the organization. It limits the volume of output and will have direct
impact on the profitability of the organization. These factors are to be properly identified to enable the
selection of the most favourable alternative.

6. Evaluation of alternatives:
After various alternative solutions have been developed the next step should be to evaluate these
alternatives. It can be evaluated based on different criteria like contribution to the objective, costs, feasibility,
degree of risk against expected gains, economy of efforts, limitations of resources, time, undesirable social
effects etc. on the other hand, the alternatives can be evaluated by manager based on his experience, the
experimentation of alternatives and research and analysis.

7. Implementing the decision:


After evaluating best alternative, the decision must be implemented. The manager has to take necessary
steps to implement the decision. Authority and responsibility for implementing the decision have to be
specifically assigned. Necessary financial resources have to be allocated. The employees must be associated
with the decision making process in order to reduce resistance. Adequate controls have to established to
ensure the successful implementation of the decision.

8. Feedback and control:


After implementing the decision, the manager must evaluate the results of implemented decisions. If
necessary he should modify the problem definition, goals and strategies and should take proper follow up
action. The management should devise efficient system of feedback information. This will be very useful for
taking the corrective measures and taking right decisions in future.

Guidelines for effective decision making:


1. Every decision is goal oriented. Therefore specific goals should be established for every decision. It should
be ensured that the decisions contribute to the attainment of the organizational objectives.
2. Every problem must be properly analysed to take effective decisions. Analytical methods to be used to
analyse the problems. While analyzing, main problem must be divided into sub problems and each
element of problem must be properly investigated.
3. The risk of every alternative course of action must be weighed against the expected gains to select the
best course of action.
4. Organizational levels must be set up and assigned with clear responsibilities and sufficient authority for
decision making.
5. Organizational objectives, policies and procedures which could serve as guidelines and rules for decision
making should be communicated to the managers in charge of different decision making centers.
6. An efficient information and control system should be set up to provide the necessary information to the
decision makers in time.
7. Required training for decision making must be provided for the managers for taking and implementing
decisions.
8. Subordinates must be involved in decision making process. This is necessary not only to get their views
for decision making but also to get their commitment to the implementation of the decision taken
9. Managers as well as subordinates should be motivated for effective decision making through proper
incentives.
10. Creative and innovative initiatives should be encouraged among managers and others through various
incentive schemes.
11. The decision must be implemented at right time to make the action more effective. A delay in decision
making may lead to loss of opportunities in changing world.
12. Expert advisory staff must be established to provide intellectual and professional inputs for decision
making
13. Follow up actions must be taken based on feedback received. The factors responsible for deviations must
be identified and analysed

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Types of decisions:
1. Programmed decisions and Non- Programmed decisions:
a) Programmed Decisions: these decisions are taken to meet routine and repetitive problems. Already
designed Standard and systematic procedures are followed for taking decisions. They have short run
impact. They are taken at lower level management. Examples: Handling of an employee who is absent
regularly, handling of regular order received from customer etc.
b) Non- Programmed decisions: these decisions are taken to meet the non-repetitive problems. There is no
pre-determined standard or procedure to deal with these non-repetitive problems. Therefore these
problems require thorough study of the causes of the problem and its factors. These decisions taken by
the top level management. Example: handling of strike from employees, huge export order etc.
2. Strategic decisions and Routine decisions:
a) Strategic or basic decisions: these decisions are of crucial importance. They directly contribute to the
achievement of organizational objectives. They are relatively more difficult decisions. They require
deliberation and scientific decision making process. Examples: decisions regarding plant location,
entering new market, channels of distributions, capital expenditure etc.
b) Routine Decisions: these decisions are repetitive in nature. They are related to the day to day operations
of the concern. They are taken with less deliberation and with established policies and procedures. They
are decided by the middle or lower level mangers. Examples: decisions regarding selecting the supplier
who has given favourable quotation, placing order for goods etc.
3. Policy decisions and operating decisions:
a) Policy decisions: these decisions affect the entire organization. They influence the behaviour and work of
the subordinates. They are taken after lengthy deliberation. Examples: decisions regarding encashment
of leave by the employees of the organization.
b) Operating decisions: these decisions taken by the lower level management to execute the policy
decisions taken by the top management. These decisions influence behaviour and work of only decision
makers. Examples: decision regard to grant of casual leave to an employee
4. Major decisions and minor decisions:
a) Major decisions: these decisions are taken by top management after detailed deliberations. Example:
decision to open new branches. Purchase of costly machine etc.
b) Minor decisions: these are taken in day to day administration of the organization. They are taken by
lower level managers. Examples: decisions to purchase pens, paper for office.
5. Organizational decisions and personal decisions:
a) Organizational decision; these decisions are taken by executive manager in his official capacity. They can
be delegated to others. They reflect the policy of the company.
b) Personal decisions: these decisions are taken by an executive in his personal capacity. They cannot be
delegated to others. Example: the decisions regarding opting for voluntary retirement

6. Individual decisions and group decisions:


a) Individual decisions: these decisions are taken by individual managers of the organization. These
decisions are taken on routine matters
b) *Group decisions: these are taken by group of individuals. They are taken by the managers in
consultation with the subordinates. They have certain advantages:-
 Group knowledge is superior to individual knowledge
 They contribute to the more creative decisions.
 They ensure different points of view
 They permit representation of different groups
 They encourage co-operation among the participants
 They provide excellent training ground for young executives
Criticisms:
 They are often slow and time consuming process.
 They involve high cost
 They encourage managers to shift their responsibilities
 They are likely to be influenced by emotions

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CHAPTER 3: ORGANISING
Definition:
Koontz and O’Donnell: Organising involves grouping of activities necessary to accomplish the goals and plans,
assignment of these activities to appropriate departments and the provision for authority, delegation and co-
ordination.
Principles of Organisation:
1. Principles of objectives: It stresses the need for setting the objectives of the enterprise. The objective of
the enterprise must be clear and specific. It must be set in general and in particular according to the
requirement of the each department
2. Principle of unity of objectives: It implies that objectives of the departments must be integrated with the
overall objective of the organization. They should not conflict with each other.
3. Principle of division of work and specialization: The total work in the organization should be divided into
various groups. It is known as departmentation. The work should be assigned to the right person
according to the ability and aptitudes. This is known as specialization. It enables to understand the work
thoroughly and to perform efficiently.
4. Principle of functional definition: The functions, duties, responsibilities and authorities of every position
should be clearly defined.
5. Principle of delegation of authority: The organization should provide for delegation of authority to the
subordinates. It also implies that authority delegated should be equal to the responsibility assigned to
the subordinates. In short there should be parity between authority and responsibility.
6. Principle of unity of command: It suggests that each subordinate should have only one superior. More
than one superior may results in confusion, conflicts and lack of action.
7. Principle of unity of direction: There should be one plan of action for different acts having the same
objective. There should be no duplication of plans.
8. Principle of balance of various matters: there should be proper balance between various elements of
the organisation. For example, balance in the size of the departments, balance between centralization
and decentralization, span of control, chain of command etc.
9. Principle of communication: A good communication system is essential for smooth flow of
communication and for effective business performance.
10. Principle of continuity: The organisation structure should serve the enterprise for longer period of time
in spite of changes taking place outside the organization.
11. Principle of flexibility: The organization structure should have ability to change with the needs of
changing environment. It must permits growth, expansion and contraction without disrupting basic
work.
12. Principle of facilitation of leadership: The organizational structure should have enough opportunities for
management to provide effective leadership to the enterprise.
13. Principle of simplicity: The organisation structure should as simple as possible. The departmentation,
delegation of authority and assignment of responsibilities should be simple to understand easy to
operate.
14. Principle of coordination: Organisation involves division of work among the people whose efforts must
be coordinated to achieve the common goals.
15. Principle of efficiency: It implies that the organisation should permit maximum utilization of resources
and talents.
Types of Organisation Structure:
The important types of Organisation are:
1. Line or Military or Scalar or Vertical Organisation
2. Functional Organisation
3. Line and staff Organisation.
1. Line Organisation:
It is the oldest and simplest form of internal organisation. It represents the direct flow of superior –
subordinate relationship in vertical form. It connects positions at each level. Line departments are under the
direct control and supervision of line managers.
Line manager enjoys line authority. Line authority includes right of a manager to give orders to his
immediate subordinates in his unit, to supervise, to evaluate their actions and to reward or punish them.
The quantum of authority is highest at the top and reduces at each successive level down the hierarchy. Line

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manager makes an implement the decisions with regard to the acquisition, allocation and control of
resources concerning line activities.

Features/ characteristics:
1. It forms a vertical line relationship from the top to the bottom of the organisation
2. There is authority relationship between superior and subordinates. Each position in the organisation
structure has authority over its subordinates and is accountable to his superior.
3. In this structure, authority flows from top to its bottom step by step through downward delegation of
authority. The responsibility flows upwards from the bottom to the top step by step.
4. There is no provision for experts or specialists to offer advice to the line officers
5. At each level, the executive makes decisions within the scope of his authority.
6. Each member knows from whom he has to receive orders and to whom he has to give orders.
7. All the persons in same level of organisation structure are independent of each other. The workers will
receive orders from their superior. They will not give or take orders from any person in the same level.
8. Line managers have direct responsibility for accomplishing the objectives of the enterprise.

Advantages of line organisation:


1. Simplicity: The line organisation is very simple to understand and implement.
2. Clarity: The authority-responsibility relationship is clearly identified and defined. Every employee knows
to whom he has to report and who has to report to him.
3. Unity of command: It facilitates unity of command. The subordinates receive orders from only one
superior and are responsible for only one superior.
4. Discipline: It ensures excellent discipline because of unity of command and unity of direction. Every
employee knows to whom he is responsible.
5. Quick decisions: It facilitates quick decision making. The unified authority and responsibility facilitates
quick decision making.
6. Easy communication: It facilitates easy, quick and orderly communication.
7. Co-ordination: As all the activities relating to one department are managed by one executive, there can
be effective co-ordination of activities.
8. Flexible: As each executive has sole responsibility in his own position and sphere of work, he can easily
adjust the organisation to changing condition. So line organisation is flexible.
9. Economical: As there are no staff specialists or experts to advise the line managers, the line organisation
is less expensive.
Disadvantages of line organisation:
1. Lack of specialization: Under this system, as only line managers manages all activities in his department,
there is scope for specialization.
2. Overloaded work: With the growth of the company, it makes the top executives too much overloaded
with volume and variety of work. This will adversely affect their efficiency.
3. Lack of talents: it requires men with capacity, training and adaptability. In practice it is very difficult to
get such men.
4. Concentration of authority: There is concentration of authority at the top. If top executives are not able,
enterprise will not be successful.
5. Lack of co-operation: only one executive takes all decisions and the importance of other people in the
department is not recognized. Therefore, there may be lack of co-operation and team spirit.

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6. Lack of Communication: There may not be any upward communication from bottom because of
concentration of authority at higher levels. Subordinates may not show courage to point out wrong
decisions taken by superiors.
7. Discourage initiative: Under this structure, superiors take decisions and subordinates execute the
decisions. Hence subordinates at lower level lose their initiative and interest.
8. Self interest: departments may work for their self interest and may sacrifice the general interest of the
company.
2. Functional organisation:
F.W. Taylor recommended functional foremanship or functional organisation of activities at the shop
floor level. It is also known as staff organisation. It is very old concept. In this structure, business activities
are generally divided into different functions like production, marketing, finance etc. these functions are
put under the charge of functional specialists or experts. The functional head is expert I his respective
area. Each functional specialist is given authority over the people concerning his function. This authority is
limited to functional guidance of different departments. Subordinates receive orders from different
functional experts for performance of different functions. Thus they are accountable for different
functional experts.
Characteristics / features:
1. The organizational functions are divided into specified functions such as production, marketing, finance,
personnel etc.
2. Each functional area is put under the charge of functional expert. A group of experts will supervise the
activities of the workers instead of one superior
3. The functional experts have the authority to give orders to their subordinates regarding their particular
functions. But it is limited to the functional guidance.
4. The functional expert is decision maker and not mere advisor.
5. More importance is given to functional experts. Any decision regarding particular function must be taken
in consideration with concerned functional experts.

Advantages:
1. Since this structure ensures maximum use of principle of specialization, the company can enjoy the
benefits of specialization of functions.
2. As the worker has to perform limited number of functions, it contributes to the higher efficiency of the
worker.
3. It ensures cooperation and team-work among the workers.
4. Functional experts look after the technical problems of their areas. So line managers are freed from such
problems.
5. Since functional experts look after different functions, it reduces the burden of top management.
6. Any change in the organisation can be made without disturbing the whole organisation.

Disadvantages:
1. Unity of command is violated. A subordinate has to serve several different bosses. It weakens the
discipline.
2. It creates friction among functional experts and confusion in the minds of worker.
3. There is lack of coordination among functional experts. This may lead to conflicts among them.
4. It is difficult to locate responsibility for unsatisfactory work. Each worker may try to shift responsibility
on others for the failures.
5. It is very expensive as company has to appoint large number of functional experts.
6. This structure develops experts byt fails to develop executives with general and all-round skill of
management.

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3. Line and staff organisation:


It is a structure where there are line departments and also functional experts attached to the line
managers. In other words, the work of the organisation divided into 2 broad divisions. They are
1) Staff function- concerned with planning or giving advice and is performed by functional experts such
as finance expert, personnel manager etc. and
2) Line function- concerned with actual execution of the plan or work and is performed by line officers
like production manager, marketing manager, finance manager etc.

Characteristics / features:
1. Under this structure, there are line officers who have command over the subordinates and are accountable
for the tasks given to them, and there are functional experts to offer expert advice to the line officers to
perform their tasks efficiently.
2. This structure makes clear distinction between 2 aspects of administration, i.e. planning and execution. The
experts prepare plans and line officials execute the plans
3. This structure based on the principle of specialization. Functional experts specialised in their concerned
functions and line officials specialised in execution of plans
4. The functional experts don’t have command over subordinates for strict following of their advice

Advantages:
1. Functional experts specialise in the planning decision making process in their respective functional areas.
Line officers specialise in execution of the plan. Therefore this system ensures specialization.
2. This structure has greater flexibility as new specialised activity can be added to the line activity without
disturbing the line activity.
3. The experts’ advice to the line managers benefits the entire organisation.
4. There will sound managerial decisions under this system because of expert advise
5. The line officers will get more freedom as staff experts will look after the detailed analysis of managerial
activities.
6. This structure will provide more opportunities for the advancement of the workers.

Disadvantages:
1. The pattern of authority relationship between staff and line officers are not clearly indicated. It will lead to
confusion among staff and line officers.
2. The subordinates may ignore the advice given by the staff experts as staff experts do not have authority to
make workers strictly follow their advice.
3. The staff experts are cont concerned with the execution of the plan. They may not take any advice from the
line officials while formulating plans. Thus, this structure may encourage carelessness on the part of staff
experts.
4. It is very expensive as company has to appoint large number of functional experts.
5. As it is expensive, small concerns cannot afford it.

DELEGATION OF AUTHORITY:
 AUTHORITY: It is the power to command others to act or not to act in a manner deemed by the possessor
of the authority to attain enterprise objectives. In other words it is the power to give orders to subordinates
and to secure the necessary compliance to get the work done.
 RESPONSIBILITY: It is the obligation of a subordinate to perform the duty assigned to him. It may be
general or specific.
 DELEGATION OF AUTHORITY:
Definition: F.G.MOORE:- Delegation means assigning the work to others and give them authority to do it.
It is the process by which a superior gives his subordinate the necessary authority to discharge the work
assigned to him.

Features of Delegation:
1. It is granting of certain authority by a superior to his subordinate to discharge the work assigned to him.
2. Subordinates receive the authority from the superior and at the same time superior can retain his original
authority.
3. A superior cannot delegate the authority which he does not possesses
4. Authority once delegated can be withdrawn or reduced by the superior
5. The delegation may be general or specific. It is general when the courses of action are not specified in the
delegation. It may be specific when the courses of action to achieve the objectives are specified.
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6. It may be written or unwritten. But it is better to have written delegation of authority to avoid conflicts.
7. Only authority can be delegated but accountability of the performance cannot be delegated by the
superior.

Steps in delegation:
1. Assigning duties to the subordinates: First the superior must assign the duties or task to the subordinates.
The superior must indicate what work the subordinate must perform.
2. Granting of Authority: The superior must grant the necessary authority to the subordinate so as to enable
him to perform the responsibility or duty assigned to him.
3. Creation of accountability: it means making the subordinate accountable or answerable for the
performance of the work assigned to him.

Importance:
1. Through delegation, different authority relationships are established and authority is shared among the
various individuals who work in the company.
2. It relieves managers from the load of the work. It enables the manager to assign the routine work to his
subordinate and concentrate on more important functions.
3. It helps the concern from the specialised knowledge and expertise of subordinates at lower levels of
management.
4. It helps in achieving the coordination of various activities towards the accomplishment of company
objectives.
5. It helps in maintaining the healthy relationship between superior and subordinates.
6. It promotes job satisfaction and motivates the subordinates to improve their performance.
7. It provides continuity of operations in the sense that, in absence of superior, the subordinate can carry
on the duties.
8. It promotes decentralization. The amount of delegation shows the extent of decentralization.
9. It helps the executive to extend the area of operation.
10. It enables the subordinates to develop their potentialities to undertake more challenging tasks.

Obstacles/ Barriers:
a) On the part of manager:
1) If the manger is autocrat, he may not delegate the authority
2) If the manager feels that he can do the job better than others then he may not delegate the
authority.
3) If he feels that subordinates are not capable of doing the work in the way he wants, he may not
delegate.
4) If the manager does not have good relationship with his subordinates
5) If the manager fails to divide the tasks to be assigned and tasks to be retained
6) If the managers lacks accountability to superiors
7) If the manager lacks the ability to direct the subordinate
8) If the manger has the passion for power
9) if manager does not want to take the risk of wrong decisions taken by the subordinates
10) if the manager is conservative and more cautious
11) if he is inefficient, he may fear that his inefficiency will be exposed, so he may not delegate
12) if he feels that subordinate may perform better than him, he may not delegate
13) if the organisation lacks the arrangements for delegation like effective communication and control
system, a clear set of policies etc.

b) on the part of subordinate:


1) if subordinates lacks confidence
2) if he has the fear that he may take wrong decisions
3) if he wants to avoid to take responsibility
4) if he feels that adequate resources are not available to discharge duties
5) if there is personal gains for the subordinate
6) If he is already overburden with the duties.

Principles of Effective Delegation:


1. Establish Goals: before delegation, it must be ensured that subordinates know the objectives of the
company and how they should contribute to the attainment of the objectives.
2. Results oriented: the assignment of responsibility and granting of authority to the subordinates should be
in the light of results desired.

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3. Clarity of limits of authority: there must be clear definition of responsibility and authority of the
subordinates. The subordinates must know what their work is and how much authority is given to them
to perform the task.
4. Parity of authority and responsibility: the authority given to the subordinates must enable them to
discharge the duties assigned to them.
5. Unity of command: it must be ensured that the subordinates receive orders from and are accountable to
only one superior.
6. Selection of people: the superior must select right and capable subordinates depending on the task to be
performed for delegation. There should m=be match between aptitude and abilities.
7. Accountability: only duty can be delegated not accountability. Superior cannot escape from the liability
for the duty delegated to his subordinates.
8. Suitable environment: there should be favourable management climate for fuller delegation and
effective assumption of authority.
9. Scalar principle: the delegation must be based on scalar principle. The delegation must flow in the chain
from the manager to deputy manager, deputy manager to superintendent, from superintendent to
deputy superintendent.
10. Motivation: there must be effective motivation to the subordinates to take initiatives and hold
responsibilities through incentives.
11. Training: proper training should be given to the subordinates in handling the authority given to them.
12. Communication: there should be adequate communication in the organisation between superior and
subordinates. It will help them to interpret the authority properly delegated to them and making
decisions.

Guidelines for effective delegation:


1. Creation of proper environment for delegation: Proper organisation environment or climate must be
created for delegation. Managers must feel that delegation will not only help them but also to the
subordinates and organisation as a whole. The manager must feel secure that delegation of authority
will not undermine their position and importance.
2. Clear defining of the tasks to be assigned: The task to be assigned to the subordinates must be clearly
defined. It should be definite in terms of goals and results expected.
3. Proper selection of subordinates: The subordinates must be selected in the lights of jobs to be done, the
qualification and capabilities of the subordinates. It is necessary because once the authority is delegated
to the subordinates they must be aware of exercising their authority. Otherwise the purpose of
delegation will be failed.
4. Provision of necessary training to subordinates: the subordinates selected for delegation should be
given necessary training to accept the assignments and authority.
5. Clear defining the authority and responsibility: the authority and responsibility must be clearly defined
to avoid the confusion or misunderstanding between managers and subordinates.
6. Proper communication between the managers and subordinates: for effective delegation, the
communication between the managers and subordinates must be proper. The subordinates must feel
free to get in touch with their managers as and when they want to seek clarifications and guidance.
7. Ni interference in routines by the superiors: Superiors should not interfere in the routine duties of the
subordinates. The subordinates should be relatively independent and free to carry on their routine
activities without interference of their superiors.
8. Strict adherence of principles of delegation: for effective delegation, the principles of delegation such as
parity of authority and responsibility, unity of command, scalar principle etc should be clearly followed.
9. Motivation of managers and subordinates: there should be motivation of both the managers and
subordinates. There should be proper rewards for both for effective delegation. The managers must be
rewarded in terms of recognition and promotion etc. The subordinates must be rewarded in terms of
financial and non financial incentives.
10. Establishment of proper controls: delegation of authority must be accompanied by adequate controls
over the activities of the subordinates. The manager must set up proper standards for assessing the
performance of the subordinates. The performance must be assessed regularly. There must be frequent
review of use of authority by the subordinates.

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REF: Mgt text books by T.N CHHABRA, B.S.RAMAN & K.S.ADIGA Prep. By: ANANTH ROHITH Page 18
B.COM- I SEMESTER-PRINCIPLES OF MANAGEMENT – BCMCMC 10

CHAPTER 4: STAFFING
DEFINITION:
Koontz & O’Donnell: Staffing is filling positions in the organisation structure through identifying workforce,
requirements, inventorying the people available, recruitment, selection, placement, promotion, appraisal,
compensation and training of needed people.
In other words staffing is the function concerned with the recruitment, selection, placement, training,
growth and development of all those members of the organisation who are required to mann the organizational
structure of an undertaking.

Features:
1. It is concerned with assessment of man power requirements, recruitment, selection, training and
development of personnel
2. It aims at selecting the right people for the right jobs at right time.
3. It is the responsibility of line managers. The personnel department will perform only service function of
helping line managers.
4. It is performed by every manager right from the board of directors down to the superintendent.
5. It includes the process of developing the personnel and providing fair compensation to them.
6. It is continues process throughout the life of the organisation.
7. The magnitude of this function depends on size of the company, nature, type of management practices
etc.
Need for staffing:
1. In order to accommodate the changes in technology, the appointment of right personnel is necessary.
Therefore staffing is needed.
2. The increase in size of the organisation calls for appointment of adequate and competent personnel.
3. In order to develop the existing personnel for promotion staffing is important
4. Big companies spend huge amount on recruitment and selection, training and development of
employees. This investment makes it necessary for the organisation to get best from the personnel.
5. In order to motivate the workers, molding the behaviour of workers staffing is necessary.
6. In order to develop proper system of evaluating the human resources, staffing is needed
Advantages:
1. It ensures that all positions of the organisation occupied by right persons
2. It ensures quality and efficient personnel to achieve the goals of the company.
3. Proper selection, training and development of personnel ensures efficiency and productivity of the
organisation.
4. Efficient staffing function ensure increase in the earning capacity of the workers.
5. It will help in assessment of performance of the employees
6. Performance appraisal system of staffing helps in solving the problems of promotions, transfers,
remuneration etc
7. It helps in discovering talented personnel and developing them to move upward in the organizational
ladder.
Sub-functions of staffing:
a) Manpower planning

REF: Mgt text books by T.N CHHABRA, B.S.RAMAN & K.S.ADIGA Prep. By: ANANTH ROHITH Page 19
B.COM- I SEMESTER-PRINCIPLES OF MANAGEMENT – BCMCMC 10
b) Recruitment & Selection
c) Induction and orientation
d) Training and development
e) Performance appraisal

A. MANPOWER PLANNING:
It is the process of determining the quantity and quality of manpower required for an organisation and
ensuring the supply of the required type of manpower in right quantity at the right place and at the right
time for the achievement of the goals of the organisation.
Features:
 It is conducted when there is scarcity as well as surplus of manpower.
 It ensures right personnel in right numbers at right place at the right time
 It takes into consideration the work environment
 It is a continuous process.
Process:
1) Job Analysis: it is the preparation of up-to-date descriptions that list the duties and skills required for each
jobholder. For this purpose companies appoint job analysts. Job analysis consists of job description and job
specification. Job description shows the job title and purpose of the job. It lists major work activities,
equipments and materials jobholder must use. Job specification lists the human dimensions like education,
experience, skills, training and knowledge required for particular job.
2) Human resource inventory: it is the catalogue of skills, abilities, interests and qualifications of each member
of its current work force.
3) Human resource forecasting: the company must forecast the human resource requirements considering its
strategic plans. A long term plan to stabilize the company at its current employment level will mean the
need to replace those who leave.
4) Inventory and forecast comparison: by comparing the inventory and forecast, managers determine who in
the organisation is qualified for the projected job openings and which personnel must be met externally.

B. RECRUITMENT AND SELECTION:


 RECRUITMENT: It is the process of identifying the sources from where the job seekers can be employed and
stimulating them to apply for the jobs in the organisation. It is the process of finding qualified job
applicants. It is the process of finding sufficient number of qualified and potential candidates an stimulating
them to apply for jobs in the organisation.

Sources of recruitment:
The sources of recruitment may be divided as internal sources and external sources.
1. Internal sources: it refers to recruitment of personnel among the existing personnel of the organisation.
They include Transfers and Promotions.
Transfer: it refers to shifting of a person from one job to another. It does not involve any drastic change in
the status, responsibility and emoluments of the person. Before transfer, the management must ensure
that the person to be transferred to the new job is capable of performing it.
Promotion: it refers to the shifting of a person from a lower position to the higher position. Promotion
carries higher status, better facilities, greater responsibilities and more emoluments.
Advantages of internal sources:
1. It creates sense of securities among the personnel
2. It builds loyalty among the personnel towards the company
3. It is very effective device to motivate the employees.
4. It reduces the labour turnover.
5. It contributes better employee-employer relations.
6. It inspires the worker to increase their knowledge and skills.
7. It ensures continuity of employment and organizational stability
8. It is quite economical as it does not involve cost in way of advertisement, recruitment, induction
programme etc.
9. It is reliable source of recruitment
10. It keeps the employee happy and in good morale.
Disadvantages of internal sources:
1. It cannot be useful for the jobs at entry level.
2. The organisation has to choose a person among the existing personnel who may not be qualified for
the new job.
3. It may encourage favouritsm and nepotism in the recruitment and selection of personnel.

REF: Mgt text books by T.N CHHABRA, B.S.RAMAN & K.S.ADIGA Prep. By: ANANTH ROHITH Page 20
B.COM- I SEMESTER-PRINCIPLES OF MANAGEMENT – BCMCMC 10
4. It prevents innovations and fresh ideas required for the growth of the organisation.
5. It denies opportunities to the outsiders to prove their talents
6. It narrows down the choice of selection
7. It may lead to conflicts among the employees aspiring for promotions or transfers.
2. EXTERNAL SOURCES:
It is the process of developing a pool of qualified job applicants from outside the company. If internal
sources not sufficient then outside sources may have to be tapped. The important external sources are
the following:
1) Advertisement: Advertisements in newspapers, television and direct mail are most effective and
common means to search potential employees from outside the organisation.
2) Employment Agencies: Organisation may collect information through public or private employment
agencies. Public agencies provide candidates for lower positions. The private consultancies provide
employment services to higher level or middle level executives. They also undertake recruitment
and selection function on behalf of various companies.
3) Campus Recruitment: Organisations conduct interviews at the campuses of various institutes,
universities and colleges for selecting people to the posts of management trainees, technical
supervisors etc.
4) Deputation: many organisations take people on deputation from other organisations. Such people
are given the choice either to return to their original organisation after a certain time or to opt for
the present organisation.

5) Employee Recommendations (referrals): Recommendations of present employees may be


considered to employ personnel particularly at the lower executive levels. Companies may give
preference to the person recommended by employees because something about his background is
known.
6) Labour unions: The labour unions are used as source of recruitment for supply of manpower at
lower levels. Unions are asked to make recommendations for employment.
7) Trade associations: companies may collect information about person interested in the firm from
trade associations or business friends.
8) Unsolicited applications or walk-ins: companies receive unsolicited applications at factory gates or
by mails for employment. They may select the people who approach on their own. It is common in
case of semi skilled and unskilled workers.
9) Other sources: it include special events like conferences, job fairs and internet job sites etc. in last
few years biggest changes in external recruiting has been the increased use of the internet. It
generate huge number of job applicants at low costs, wide reach and ability to communicate and
receive unlimited information.
Advantages of external sources:
a) They assure wide choice in the matter of recruitment. The company can select personnel from large
number of applicant
b) It enable the company to get benefit of new blood and fresh viewpoints
c) It helps the concern to appoint personnel with varied and wider experience.
Disadvantage of external sources:
a) When people get recruited through external sources, the existing workers may get demoralized
particularly when important positions are filled.
b) There may not cooperation between existing employees and worker hired through external sources
c) There may be chances of losing sense of security among existing employees.
d) Recruitment from external sources is lengthy and costly process.
 SELECTION:
It is the process of choosing the person among those who have applied or the jobs in the
organisation on the basis of educational qualification, training, skills and personality of the
applicants.
SELECTION PROCESS:
a) Receipt and scrutiny of application
b) Preliminary interview
c) Selection tests
d) Checking references
e) Employment interview
f) Physical examination
g) Placement

REF: Mgt text books by T.N CHHABRA, B.S.RAMAN & K.S.ADIGA Prep. By: ANANTH ROHITH Page 21
B.COM- I SEMESTER-PRINCIPLES OF MANAGEMENT – BCMCMC 10
a) Receipt and scrutiny of application:
The applications contain information about an applicant such as name, address, educational and job
history etc. they are screened based on the information therein. All the applicants may not be qualified
for the job so screening is necessary. The manager should verify the information collected via resumes
and application forms. Based on screening only those applicant who are suitable for the interview are
called for the further process of selection.
b) Preliminary Interview:
The preliminary interview is carried out to know whether the applicant is physically and mentally fit for
the job or not. Generally much time is not spent on this interview.
c) Selection tests:
The basic idea of selection test is to have applicants take a test that measures something directly or
indirectly related to the job. Different kinds of tests like performance test, intelligent tests, aptitude
tests etc are conducted to know more about the candidates or to reject the candidates who cannot be
called for interview etc.
 Proficiency test: these tests try to measure the skills and abilities which are already possess by
the candidate
 Aptitude test: these tests try to measure the ability and skills that the candidate can develop
later which may help him to perform his job well in future.
Advantages:
1. It is unbiased method of assessing the suitability of candidates
2. These tests are more objective and reliable comparing to other assessment techniques
3. It is possible to get accurate representation of mental ability of the candidate through these tests.
4. It provide uniform basis for comparing candidates.
5. It measures the potential ability of the candidate in quantitative terms
6. It is helpful in establishing the standards of job performed.
Disadvantages:
1. It will be useful only when there are large number of candidates
2. They do not provide accurate measure of motivation and ability of the candidates to deal efficiently
3. There may be chances of selection of less qualified candidates by the dishonest employees.
4. There is requirement of trained and competent people for conducting the tests.
5. They are not suitable for selecting candidates for higher posts.
d) Checking References:
Some organisations ask the candidates to provide names of references from whom more information
about the candidates can be collected. The usual referees are the previous employers, persons
associated with the educational institutions from where the candidates have received education or
other prominent persons who are aware of candidate’s behaviour and ability. Requests may be sent to
provide specific information about the candidate.

e) Employment Interview:
It is one of the most widely used techniques of selection. Interview is a purposeful exchange of ideas,
answering of questions and communication between the interviewer and the candidate. It enables the
interviewer to view the total individual and to appraise him and his behaviour.
Objectives:
1. To know about the applicant and to know whether the candidate can be suitably employed.
2. To inform the applicant about the concern and his job.
3. To promote goodwill for the company through courteous treatment of the interviewee, even if he is
not selected.
Types:
1. Direct interview: under this type, face to face question answer session between candidate and
interviewer is conducted. It is intended to assess the candidate’s knowledge of the job, motivation
and other personal characteristics.
2. Non-direct or free interview: in this type, no direct questions are asked to the candidates. The
candidate is asked to express his view on any topic of his liking. Here interviewer plays the role of
listener. It helps in making better assessment of the personality of the candidate.
3. Patterned or structured interview: in this type, a series of standard questions are framed and
answers are determined in advance. Then the answers given by candidates to those questions are
compared and assessment is made.
4.

REF: Mgt text books by T.N CHHABRA, B.S.RAMAN & K.S.ADIGA Prep. By: ANANTH ROHITH Page 22

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