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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.
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.
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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.
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.
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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.
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.
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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.
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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.
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.
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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.
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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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.
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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.
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.
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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
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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.
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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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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.
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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.
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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
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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.
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.
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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.
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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.
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