Definition of Management

It is very difficult to give a precise definition of the term management. Different management authors have viewed
management from their own angles moreover, during the evolutionary process of management different thinkers
laid emphasis on different expects. For example, F.W. Taylor emphasized engineering aspects, Elton Mayo laid
emphasis on human relations aspects, E.F.L, Brech, George R. Terry emphasis on, decision making aspect, Ralph
Davis stresses leadership aspect and some other like Barry Richman etc. emphasized integration or coordination
aspect.
Some Important Definition of Management
1. Harold Koontz
Management is the art of getting things done through and with people in formally organized groups.
2. George R. Terry
Management is a disconnect process consisting of planning organizing activating and controlling performed to
determine and accomplish the objectives by the use of people and resources.
3. Donald J. Cough
Management is the art and science of decision making and leadership.
4. Mary Cushing Nile
Good Management, or scientific management, achieves a social objective with the best use of human and material
energy and time, and with satisfaction for the participants and the public.
5. Henry Fayol
To manage is to forecast, to plan, to organize, to command, to coordinate, and to control.
6. Theo Haimann and William Scott
Management is a social and technical process which utilizes, resources, influences, human action and facilitates
changes in order to accomplish organizational goals.
Thus, the above definitions bring out that
 Management us a social and technical process
 It consists of planning, organizing staffing, leading decision making coordinating and controlling.
 It is concerned with getting done i.e. accomplished pre-determined objective by the use of people and
resources.
 It helps in the creation, direction, maintenance and operation of organization.
 It secures maximum benefits for the employer, the employees, and the community.
Management
Management simply means a specific process of planning, organizing, staffing directing and controlling the efforts
of the people who are engaged in activities in business organization in order to attain predetermined objective of
such organizations.
Introduction
Modern age is an era of management resolution. There was a time when economic development depended mainly
on scientific and mechanical inventions. However, in the modern world good management is necessary for efficient
and effective working of organization, along with technological advancements.

Meaning of Management
Management is a wide term carrying several meanings, depending in the context in which it is used. Usually, the
term management assumes three meanings, when it is used in three different senses as follows:
1. Management as a Noun
When used as a noun, management refers to managerial personnel, i.e. all those persons are concerned with
getting things alone, through other people. Such persons are charged with some responsibility and are given some
authority – responsibility of executing the policies and programs of an organization, and authority in order to

1
discharge their responsibilities. In this sense, management include the Board of Directions, Chairman and
Managing Director, Functional Directors like Marketing Director and Finance Director, General Managers, and First
Line Supervisors. The task of such business management is executory and supervisory in nature.
2. Management as a Process
When used as a process, management refers to what the management body or management committee or
management council or managers do, or what a manager does. In other words, in this sense, management means
the set of functions performed by the managers. These managerial functions broadly include – Planning organizing
staffing, directing and controlling. Such functions are performed in order to get things done, through and with
other people in an effective and efficient manner. This is why that management has been said to be the ordering
and coordinating of functions and of the men fulfilling these functions in order to achieve a given purpose. Henry L.
Sisk has also said.
Management is the coordination of all resources through the process of planning, organizing, directing and
controlling in order to attain stated objectives.
3. Management as a Discipline (i.e. Subject)
When used in the sense of a discipline or subject, it refers to a branch or body of knowledge and practice is other
words, here management means the set of principles, concepts theories and practices as a subject of study for
those who intend to be good managers in various areas. Here, the management also denotes a code of conduct for
managers and does prescribe the techniques and methods of managing things.
It may be noted that management has also been analyses as an economic resource, a factor of production, a
system of authority, a technique of leadership and a means of coordination or decision making.
Simply stated management means getting things done through and with the individuals and groups by effective
and efficient use of available resources.

Levels of Management
A level of management means the positions of managers in the organizational hierarchy. The number of level is
question, which is related to several important elements, such as costs, status, working styles, etc. It depends on
such factors as organization’s size, technology and degree of diversity in its work activities.
Three levels have been generally recognized in organizational hierarchy as follows:
1. Top Management
It includes the top managers or management committees, such as board of directors, management council,
chairman, general managers etc.
2. Middle Management
It includes departmental heads and sectional heads, which are below top managers, out above lower managers.
3. Supervisory Management
It is also known as lower management and includes managers, such as foreman, salesman, assistants, head clerk
and supervisors.
Functions of Managers at Different Levels
At different levels in the management hierarchy, the managers perform different functions as follows.
1. Top Management
Top managers functions relate mainly to designing of plans, policies and organization structure. They deal with
environmental process and provide leadership to the organization.
2. Middle Management
In many cases the job of the middle manager is that of intermediary between top management and supervisory or
operating management. They coordinate inputs production and outputs. They are responsible for executing the
plans and policies framed by the top managers.

2
3. Supervisory Management
At this level, managers get down to the most specific and detailed aspects of the organizational task. They are
responsible for getting the technical guidance, help and solve the obstacles, doubts and inconveniences of the
workers and remove their dissatisfaction. They make recommendations for providing proper working conditions
etc.
Managerial Skills and Levels of Management
These are four types of managerial skills, which are required in different degrees of importance at various
managerial levels as follows:
1. Technical Skill
It is the ability to use tools, procedures or techniques of a specialized field. It is relatively more important and
required at supervisory level then its importance goes on reducing at middle and top levels. For example, a
supervisor must have full knowledge as to how the plastic molding machine works. However, the President of a
company does not need to know much of the technical details of drilling for oil or how to refine the oil.
2. Human Skill
It is the ability to work with understand and motivate other people. This skill is essential at every level of
management because all managers whether at high or at low level have to deal with their subordinates.
3. Conceptual Unit
It is the mental ability to coordinate the organization’s interests and activities and to see the organization in its
enlarged form as one whole system. This type of skill is primarily required at the top level and then at the middle
and lower levels, its importance keeps on diminishing.
4. Design of Problem Solving Skill
It is the ability to see a problem and then also to workout a solution to it. This skill is required at all levels because
every manager without reference to this level makes decision strategic, or routine ones. However, its significance
lies more at higher levels.
Management has a dynamic nature. It means that management is an organizing and unceasing element or
concept. Management does not occur by rigid formula or fixed pattern. It is ever-present reality of organizational
life. Management does not carry out the work himself, but the managers get the work done through other people
by pioneering, leading, motivating and controlling their activities, efforts and Behavior. The following important
characteristics of features of management clearly indicate toward its nature.
1. Management is a Complex and Continuous Social Process
Management deals with human phenomenon about which too little is known. The structure and Behavior of
groups of people are very complex. It is a process because its comprises a series of actions that lead to
achievement of objectives. It is a social process because these actions are primarily concerned with relations
between people. It is a continuous process because new problems crop up as the old ones are solved.
2. Management is an Independent Skill
Management has emerged as an essential, a distinct and a leading independent institution, which is a central event
in the social history. It is a new basic and dominant institution or social group.
3. Management is a Science
Science is a systemized knowledge about a phenomenon ascertained by observation and experiment. It means that
under science, general truths are discovered and critically tested, and then underlying principles are established.
As science, management has developed and provides a body of principles, theories, laws, techniques and practices,
which are capable of universal application. It has developed certain generalizations, which are applicable to any
group activity.
Management is growing as science due to the following reasons:
(a) Quantitative Tools under the name and style of Operations Research have been introduced in the field of
managerial decision-making.

3
(b) Researches have been conducted which have provided better insight into the nature and Behavior of man.
(c) Certain Principles theories and practices have been identified to the name and style of International
Management or Contemporary Management or Global Management.
(d) Different Case Studies undertaken in various countries unfold the correct and the same results. Thus, the
degree of predictability is being properly identified and ascertained.
4. Management is an Art
Art is the answer to the query how it tells about the way to accomplish the desired results. It is behavioral
knowledge. Art is the applied science i.e. application of knowledge for the solution of organizational problems. The
meaning of art is the bringing about of a desired result through the application of skill. Management, in this sense
is an art. It provides to the enterprise the ability to compromise with the least of undesired consequences – which
is the essence of art. Management leads, motivates and influences the people to be on the right, desired track by
effecting various kinds of adjustments and how compromises through artful handling of conflicts and dissentions. It
tells as to how to solve various problems in the field of production marketing, finances, personal technology,
research and development, human resource development, competition etc.
5. Management is a System of Authority
Management is the system of authority which is represented by vertical and horizontal dispersal of authority
positions resulting in what is properly known as management hierarchy or chain of command. Under the authority
system well defined lines of command and delegation of suitable positional powers along with specified
responsibilities at all levels, are established. System of authority creates discipline and order and avoids chaos.
6. Management is Universal
Managers perform the same functions regardless of their place in the organization, structure of the type of
enterprise in which they are engaged. Acting in their managerial capacity, presidents / chairmen, directors,
department heads, supervisors/foremen, college principles, bishops and heads of governmental agencies all do the
same thing i.e. perform the same functions. They are all engaged in setting things done through and with people.
As managers each must at one time or another perform all the duties. Characteristics of managers irrespective of
their level in the organization or their place or ratio of working, this is the principle of universality of managerial
functions or management.
7. Managerial knowledge and experience are transferable
By implication of the principle of universality of management, managerial knowledge and experience are
transferable from department to department, from enterprise to enterprise, and from nation to nation. Executives
can employ their skill as well in one occupation as in another, to the extent that their tasks are managerial and not
technical, and with the proper motivation and orientation to environment of managing.
8. Management is a Profession
Profession is defined in many ways. Any occupation by which a person earns livelihood is called profession. It is
also in restricted sense, and then it includes certain specified occupation only. All occupations are not included in
professions. Thus, clear definition of profession is not possible.
9. Management is an Integrating Force
Management is a force that is well recognized the integrating human and physical resources through its proper
direction, designing of organization structure, job positions, delegation and decentralization of authority and
responsibility, consultative and participative processes and influencing. It establishes congruence (i.e., balance)
between organizational interests and goals on one hand and the individual interest and goals on the other hand.
10. Management is Intangible
Managements intangible in that
 The process of management cannot be seen, and

4
  The principles, theories, techniques, concepts and practices of management are also invisible.
Management is said to be good or bad on the basis of results. However, when management is referred to
manageerial personnel, it can be seen.
11. Management Utilities Multi-Disciplinary Approach
Management relies for its vast body of knowledge on various other fields, such as economics, anthropology,
sociology, psychology, mathematics, engineering etc.

Definition of Scientific Management

Frederick Taylor
Scientific management means knowing exactly what you want men to do and seeing that they do it in the best and
the cheapest way.
Kimball and Kimball
An attitude that aims to replace (I think with I know). It points out the method of intelligently directing the
construction and arrangement of factory buildings, the character of methods and processes, the organizations of
departments, the elimination of wastes and increase of efficiency in all phases of industrial administration where
experience and date are applicable.
Peter F. Drucker
The operational study of work, the analysis of work into its simplest elements and the systematic improvement of
worker’s performance of each element.
In a nutshell, scientific management represents a body of knowledge that is concerned primarily with the discovery
of casual relationships (i.e. cause and effect relationships) i.e. cause and effect relationship between the efforts
expended for a given objective, and the results of these efforts, with special emphasis on the discovery of the best
method in the light of the available man-power, materials, and technology.
Frederick W. Taylor
Taylor started his career as an apprentice (labourer) in a small machine shop in Philadelphia in 1876. Owing to his
sincerity of purpose and devotion to duty, he joined the Midvale Steel Works in 1878 as a machinist and then
became a foreman and later rose to the position of the chief engineer. He wrote five books and four papers Shop
Management is his important book. In the later part of his career, he worked as management consultant of a steel
company.
Principles of Scientific Management
Taylor’s concept of scientific management consisted especially of a scientific approach to management. Its primary
objective was to replace methods based on trail and error and rule of thumb (i.e., practical sense and experience
rather than exact rules or calculations). The principles of scientific management may be listed as follows.
1. Development of a true science for each element of a man’s job to replace the old rule of thumb method.
2. The scientific selection, education, training and development of workers for every job.
3. An almost equal distribution or work and responsibility between management and workmen, management
entrusted with the planning of work and workmen to look after the execution of plans.
4. Intimate, friendly cooperation between management and workers to ensure that work is done in accordance
with the principles of the science which have been developed in accordance with the planned jobs and tasks.
The aims of concepts of scientific management may be summed up as follows:
 Science, not rule of thumb (i.e., not methods based no practical sense and experience rather than exact
rulers or calculations).
 Harmony, not discord.
 Cooperation, not individualism.
 Maximum output in place of restricted output.
 Development of each individual to his greatest efficiency and prosperity.

5
In addition to the above principles and concepts, Taylor developed several techniques or elements, which provide
the mechanism for implementing his principles. Some important of these techniques or elements may be listed as
follows:
1. Time Study
Time study or work measurement is designed to establish the standard time required to carry out a job under
specified conditions. It involves analysis of a job into its constituent elements and recording the time in performing
each element. Taylor suggested the use of time study to lay down a fair day’s work so as to avoid guesswork and
uncertainty in the effort and productivity expected of each worker.
2. Motion Study
It is systematic and critical study of the movements of both the worker and the machine so as to identify and
eliminate unnecessary and wasteful movements, and decide on the best way of doing the job.
3. Standardization and Simplification
Under scientific management the third element of technique is to lay down the predetermined standards
regarding the task, materials, equipments, method, time, quality and cost and working conditions standardization
helps to simply work, ensure interchangeability to parts to ensure uniformity of operations and facilitate
comparisons of efficiency.
4. Scientific Task Planning
It is the technique of forecasting and designing ahead or in advance every step in a long series of separate
operations. Each step is to be taken in the right place of the right degree and at the right time. Each operation is to
be performed at the optimum efficiency. Scientific task planning provides answer to the questions like what work is
to be done, how is to be done, where it is to be done and when it is to be done. More efficient routing systems and
works scheduling were developed for effective planning of work.
5. Functional Foremanship
According to Taylor one supervisor cannot be an expert in all aspects of work supervision. He suggested the system
of functional foremanship in which eight supervisors supervise a worker’s job. Four of them i.e., route clerk,
instruction card clerk, time and cost clerk and shop disciplinarian, are concerned with the planning of work in the
factory office. And the other four, i.e., gang boss, speed boss, repair boss and inspector are involved in the
execution of work at the shop flour.
6. Incentive, Wage Plan with Differential Piece Rate System
Taylor emphasized the need for scientific determination of remuneration for workers. For this purpose, he
suggested that a direct link should be created between remuneration and productivity for motivating workers. In
this connection, he developed the differential piece rate system of wage payment. Under this system, two piece
rates are laid down – one, low rate for those who fail to achieve the standard output and the second higher rate
for those who achieve or exceed the standard output.
7. Adoption of Exception Principle
Taylor recommended adoption of exception principles which means that the management reports should be
condensed into comparative summaries giving in detail only the exception to the past standards or average – both
the especially good and the especially had exceptions.
Taylor testifies that in order for the principles of scientific management to succeed, a complete mental revolution
on the part of the management and workers was required.
The basic philosophy of Taylor’s scientific management lies in the need for a fundamental change of attitudes on
the part of both managers themselves as partners in the joint endeavor rather than adversaries. Rather than
quarrel over profits, they should try to increase production. He believed that the management and labour had a
common interest in increasing productivity – which he called mutuality of interest.

6
Taylor pleaded for double mental revolution. He writes that in its essence, scientific management involves a
complete mental revolution on the part of the workingmen engaged in any particular establishment or industry.
Such a revolution should be brought about concerning their duties towards their work, toward their fellowmen
and toward their employers.
He pleaded for equal mental revolution on the part of management – the owner of the business and the board of
directors. Such a revolution should be brought about concerning their duties toward their fellow workers in the
management toward their workmen and toward all of their daily problems.
Taylor believes that without this complete mental revolution on both sides scientific management does not exist.
Scientific management exist when the management cares for the interest and goals of the workers and on the
other hand, the workers trust the managers and cares for the interests and goals of the organization.
Taylor says that the great revolution that takes place in the mental attitude of the two parties under scientific
management is that both sides take their eyes off i.e., away from the division of the surplus as the all-important
matter and they together turn their attention towards increasing the size of the surplus.
Critical Evaluation
Taylor’s scientific management may be critically examined as follows:
(a) Contribution to Management Thought
Taylor was the first person to develop a systematic and scientific study of management. Hence he is known as the
father of scientific management. He presented his ideas as a systematic body of thought. His main contribution to
management practices included the following aspects.
 To emphasize the importance of applying scientific methods of enquiry, observation, experimentation and
inferences to the problems of the management. He exhorted against the use of trial and error approach
to industrial problems.
 Stressing the separation of planning of work from its execution so as to enable workers to perform at his
best and earn accordingly.
 Emphasizing the aim of management to the maximum prosperity of the employer along with the
maximum welfare of each employee.
 Laying emphasis on the necessity of a complete mental revolution on the part of the both workmen and
management in order to derive the benefits of scientific management through harmony and cooperation
rather then individualism and discord.
The primary benefit of scientific management was criticized and proper use of energy ounce of energy. Moreover,
specialization and division of labour or work have bought about the second industrial revolution. It has also
facilitated professionalization of management.
(b) Criticism Or Limitation
In spite of its great contributions, the scientific management approach has been criticized for its various limitations
as follows:
1. It is mechanistic approach ignoring human element in the organization – it is concerned with the efficiency of
workers in the technical sense emphasizing production only and attaching no importance to the social and
psychological need of the workers. In this context it has called unfair and undemocratic.
2. Trade unions have opposed scientific management on the ground that it leads to autocratic management and
also raises the workload of workers with a corresponding adverse impact on employment of men.
3. It assumes that workers are inherently lazy and they require strict supervision and exercise of authority by
management. It is also its wrong assumption that workers are motivated by material gains, i.e. money only.
4. It has been called by some critics as narrow, impracticable and titled toward exploitation of workers.
5. It is said that this approach is primarily concerned with problems at operating level only and it hardly
emphasizes the managerial organization and processes.

7
6 Some say that there is no one best way of doing a job as pleaded by Taylor, because what is the best way, it shall
depend on different circumstances of each case.
Conclusion
Despite all criticism of Taylor’s scientific management, his techniques continue in the name of work study in India
and elsewhere.
Systems Approach to Management
Classical and neo-classical theories of management considered only partial aspects of an organization for paying
special attention on the individual aspect or part. Classical theorists emphasized work and technical aspects,
whereas neo-classical theorists laid stress on worker aspect or human element in the organization. In this sense,
these theories were incomplete or insufficient for managers to guide them in the management of organization.
Hence there was felt a need for some more exact and comprehensive theory of management.
Defining Systems
In simple words, a system may be defined as a set a interrelated and interdependent parts forming an organized
unit or entity. These parts are known as sub-systems which interact with each other and are subject to change.
They are interrelated as well as interdependent. Hence, changes in any sub-system lead to changes in others.
Any working organization may be said to have three sub-systems as follows:
1. Technical Sub-System
It represents the formal relationships among the members of an organization.
2. Social Sub-System
It provides social satisfaction to members through informal group relations.
3. Power Sub-System
It reflects the exercise of power or influence by individuals and groups.
The whole or total system emerges as a result of interaction between and among the various sub-systems. It is
important to note that the system and its sub-systems also interact with the environment, which may influence or
be influenced by the system or sub-systems. (Environment is the sun total of the factors and forces outside an
organization, such as customers, competitors, suppliers, investors, regulatory government agencies etc)
Features or Concepts of Systems Approach
Ludwig Van Bertalanffy and Kenneth E. Boulding has been the pioneer of systems approach. Katz and Kahn,
Stafford Beer, Foresster, Hertz, Norbert Wiener, McCloskey and Morse, etc have also contributed to this story.
Drawing on the work from many fields including biology, the systems approach analysis the functions of the total
enterprises in terms of systems – inputs, processing, and outputs – with a view to improving their operations.
The significant features or concepts of systems approach may be outlined as follows:
1. Sub-Systems
These are the parts that make up the whole. Each system may also be a sub-system of still larger whole. For
example an electronic goods company is a system, but it becomes a sub-system of the electronic goods industry,
which is a larger whole.
2. Interrelatedness of Sub Systems
It is probably the distinguishing characteristics of a system, which means that a manager cannot change on sub-
system without affecting the rest because the sub-systems interact with each other and therefore are dependent
on each other. For example, the solution to a problem of the Production Department (a subsystem) will have an
impact on other departments (subsystems) such as Marketing and Finance – say, if it is decided to increase the
production by 50% of the present output, then marketing efforts will have to be further geared to sell the
enhanced production and more finances will have to be arranged for additional production.
3. Synergy
It means that the whole is greater than the sum of its part. In other words, systems approach results in synergic
effect which means that 2 + 2 – More than 4.

8
4. Open System
Open system means that which interacts which its environment and closed system is that which does not interact
with its environment being self-sustained. The emphasis of systems approach is an open system. It believes that
most of the organizations are open systems because they depend for their inputs (i.e., money, materials, men,
information etc.) on the society. In addition, the organization sells their outputs (i.e. goods and services) to the
customers in the society. Thus, if an organization wishes to survive, it must respond to its environment –
customers and suppliers.
5. System Boundary
Each system has its boundary that separates it from the environment.
6. Environment
All systems operate, within an environment, which, for an organization, might include customers or clients,
competitors, suppliers, investors, government and regulatory government agencies, unions etc. Environment
includes things that are significant to the organization, but are largely beyond its control.
7. Flows
A system has flows of information, methods and energy including human energy. These enter the system as inputs,
undergo transformation process and exit as outputs.
8. Feedback
It is the assessment of work done, identification of deviations and taking of corrective action.
9. Central Functions or Purpose
There is always a central function or purpose of a system against which the efforts of the organization and its
subsystem can be evaluated or measured.
In a nutshell, systems approach attempts to view organization as a unified, purposeful system composed of
interrelated parts. It gives manager a way of looking at the organization as a whole and as a part of the larger,
external environment. The organizations are viewed as procuring and transforming inputs into outputs. The
organizations are also viewed as extremely complex entities subject to changes from within and outside. In order
to meet the various needs of such as organizations, a balanced and integrated approach to management is
required.
At the heart of the system approach lays the following:
 Management information system (MIS)
 Communicating network for collection, analysis and flow of information and quantitative data so as to
facilitate planning and control.
 Decision making system as the primary means of balancing the different parts of the organization.
 Integration of activities and departments with a view to making the best use of scare resources.
 Sub-System of management – the managers should try to adapt and cope with environmental changes.
Critical Evaluation
The systems approach may be critically evaluation as follows:
(A) Contributions (Advantages)
Systems theory has made the following contributions.
1. It provides a manager a way of thinking about the job of managing and unfolds an opportunity to him for looking
it the organization as a whole and for achieving overall effectiveness.
2. It provides a unified focus to organizational efforts – a direction towards which people should strive.
3. It draws attention of managers to an important factor and that is the environment in which an organization
works. The interaction with the environment is dynamic.
4. It includes within it focus both micro and macro aspects of the organizations. Hence it serves a multi-level and
multi-dimensional approach.

9
5. It implies that the modern manager should have analytical orientation should be expert in motivating to achieve
goals and open mandate to receive and respect new ideas, i.e. creativity and innovation.
6. It also implies that management education must seek to develop the ability to work with and motivate others.
7. The feed back mechanism provides and opportunity to rearrange organizations part according to the change in
the environment.
(B) Limitations
The system theories have been criticized on the following grounds.
1. Systems theory is not a complete explanation of the whole organizational system. It does not explain how the
sub-system of the specific organization is uniquely related in a given environment.
2. The conceptional framework for understanding organization provided by system theory is too abstract.
3. It does not really offer any new thing. Managers do understand interrelationship between different parts and
the influence of environment on organization and it sub-systems. What is necessary for a manager to know as to
how the sub-system of a specific organization are uniquely related in a given environment and thus how best to
deal with a particular problem? This is not answered by the system approach.
Conclusion
Though facing several criticisms, the system theory provides a framework for integrating much, if not all, of
knowledge of management thought. It provides a unified focus to the organizational efforts. Its major contribution
results from its strong emphasis on the interrelatedness are mutuality of the part of an organization. It has really
opened new vistas for managers of today’s world.
Henri Fayol – Father of Management
Fayol was a French mining engineer in his early thirties, but after that he switched over to general management
and was Managing Director from 1888 to 1918. He wrote his book General and Industrial Management in 1916 in
French, which was translated in English in 1949, only when American Management writers came to know about his
ideas.
Fayol is known as the father of management or the founder of the classical management. Not because he was
first to investigate managerial behavior, but because he was the first to systematize it. He was contemporary to
Taylor. Taylor was basically concerned with organizational functions, whereas Fayol was interested in the total
organization. It may be noted that Taylor is known as the father of scientific management, i.e. supervisory or
lower management, while Fayol is recognized as the father of management, i.e. the higher management or the
general management.
Division of Business Activities
According to Fayol, business activities in any organization consist of six interdependent operations as follows:
1.  Technical – activities concerning production.
2.  Commercial – activities concerning buying, selling and exchange.
3. Financial - activities concerning optimum use of capital.
4. Security – activities concerning protection of property.
5. Accounting – activities concerning final accounts, costs and statistics. And
6. Managerial – activities concerning planning, organizing, commanding, coordinating and controlling.
According to him, the first five activities were well known and as such to devoted his attention to the description
and explanation of the managerial activities. Also he analyzed the nature of such activities and skill requirements,
which were so far given little scattered attention by thinkers.
Universality of Management: (Elements of Management)
Fayol considered the process of management to be of universal application and distinguished between five
elements of the process. He regarded these elements of management as the function of management, which were
being performed by all managers universally and at all the levels of organization. He divided management
functions into five parts as follows:

10
  Forecasting and planning
 Organizing
 Command
 Coordination
 Control
Thus, according to Fayol, management means to forecast and plan, to organize, to command, to co-ordinate and to
control. The management was defined as the process of performing these functions. It may be noted that the
present pattern of management functions follows broadly the lines set by Fayol.
Fayol emphasized that management involved the application of certain skills, which could be acquired by persons
on the basis of systematic instructions and training. Once acquired the skills could be applied to all kinds of
institutions including church, schools, and political as well as industrial organization.
Principles of Management
Fayol made a distinction between “elements of management” and “general principles of management”. Besides a
systematic analysis of the management process and management functions, Fayol formulated a set of fourteen
principles as guidelines for implementing the process of management.
These principles may be listed as follows:
1. Division of Work
In any organized situation, work should be divided into compact jobs to be assigned to individuals. This applies to
managerial work and non-managerial work. Division of labour facilities specialization and improves efficiency, if it
is done within reasonable limits.
2. Authorities and Responsibility
The authority is the official right to a manager to manage people and things. Authority of a manager goes hand in
hand with the responsibility for effective results. In other words, there should be parity or balance between
authority and responsibility vested in a managerial position.
3. Discipline
Discipline is defined as observance of diligence and respect for seniors and rules and regulations. Managers as
leaders of their work groups should enforce discipline throughout the organization. Fayol declares that discipline
requires good superiors at all levels. He emphasized the need of discipline among the personnel for the smooth
running of organization. He advocated penalties to prevent in violation.
4. Unity of Command
It means that a subordinate in an organization should be under direct supervision of a single from whom he should
get instructions and to whom be should be accountable. In other words, every employee should have only one
boss. If a subordinate has more than one boss, to that case conflict and condition in authority and instructions of
general bosses would result.
5. Unity of Direction
Fayol advocates one head, one plan for a group of activities having same objective. In other words, a set of
activities having the same objective should be under the direction of a single manager. Similarly, there should be
one plan of action for such a set of activities because the objective is the same. This principle promotes smooth
coordination of activities, efforts and resources.
6. Subordination of Individual Interest to Group Interest
The collective good and common interest of the organization should prevail over the narrow, sectional and self-
interest of its members of an organization for the welfare of both the organization and the members.
7. Remuneration of Personnel
Remuneration as well the methods of payment in an organization should be fair so as to afford maximum
satisfaction both to the organization and its employees.

11
8. Centralization
According to Fayol, every thing which reduces the importance of subordinates role is centralization and that which
increases it, is decentralization. In his opinion, the question of centralization and optimum degree in particular
case. There should be a proper combination and decentralization in an organization based on a consideration of
several internal and external factors.
9. Scalar Chain
Fayol defines the scalar chain as the chain of superiors ranging from the ultimate authority (i.e. top authority) to
the lowest ranks. It is also known as hierarchy of management. Every communication should follow the prescribed
route, i.e. the proper channel. Authority relationships are said to be scalar when subordinates report to their
immediate superiors and when their superiors, in turn, directly report as subordinates, to their superiors.
10. Order
Order relates to both persons and things. It means a systematic arrangement of materials and systematic
placement of people in the organization. In material order, everything should be in its proper place and there
should be a place for everthing. For social order there should be a place assigned to each employee, and each
employee should be in the place assigned. The right man in the right place is the ideal here.
11. Equity
Equity means combination of fairness, kindliness and justice. Equity motivates the workers to perform their duties.
Besides, it promotes a friendly atmosphere between superiors and subordinates.
12. Stability of Tenure of Personnel
Management should strive to minimize employee turnover (i.e. changes in staff). In other words efforts should be
made to achieve relative stability and continuity of tenure of the personnel. This could be achieved by attractive
remuneration and honourable treatment of personnel. Stability and continuity of personnel promote teamwork,
loyalty and economy.
13. Initiative
It refers to the freedom to propose a plan and execute it. Management should encourage subordinates to take
desirable initiative in thinking out plans and executing them. Entending opportunities and freedom to contribute
their best could do this.
14. Esprit de corps
Esprit de corps means the spirit of loyalty and devotion, which unites the members of a group or society. It is a
sense of respect and belongingness to one’s organization. This principle stresses the need for team spirit, cordial
relations, and co-operations among the personnel.
It is to be noted that Fayol made is clear that he had no intention to close the list of principles or make them
inflexible.
Critical Evaluation
Fayol’s administrative or process or functional theory of management may be evaluated as follows:
(A) Contribution of Fayol’s Work
Fayol’s major contribution was to identify management as a separate set of skill or functions performed by
managers in the organizations. The skills and abilities required for effective management were stated to be
dependent on the manager’s positions at different levels of organization. Fayol pointed out that administrative or
managerial skills were more essential for higher-level manager, whereas technical skills and abilities were required
more of the lower levels.
Fayol was the first thinker who emphasized, for the first time the necessity of formal education and training in
management. He was the person who provided a set of means (i.e. planning, organizing, commanding,
coordinating and controlling) for understanding the management process.) He also provided principles for
implementing this process.

12
He provided conceptual framework for analyzing the management process and emphasized that management was
a separate, distinct activity.
Management as a body of knowledge gained immediately from Fayol’s analysis of management skills of universal
relevance and the analysis of the principles of general management.
(B) Limitations or Weaknesses
Fayol’s administrative theory of management is criticized on the following grounds.
1. It is too formal as Fayol divides “business activities” into six categories, and their management into five functions
and the implementation of these functions with the help of fourteen principles.
2. Some critics call this theory as inconsistent, vague and inadequate.
3. It does not pay adequate attention to workers. It has pro-management bias.
4. Jernert Simon calls Fayol’s principles as proverbs, comparable to folklore and folk wisdom.
Conclusion
In spite of several criticisms of Fayol’s work, his theory of managerial functions still exerts considerable influence
on the practice of management as well as the teaching of this subject world over.
It may be also noted that when combined together the scientific management approach and the functional
approach are called classical school or classical theory of management or classical approach to management.
Meaning of Management Principles
Management principles may be defined as fundamental truths of general validity. They are helpful in predicting
and understanding the results of managerial actions. The principles have been derived from the experience of
managers in different fields of activity. Primarily members of the classical management school have developed
them.
Management principles are intended to improve the practice of management by providing guidelines for
managerial actions in the management process. They become the basis of scientific process of management.
Flexibility of Management Principles (Nature)
As indicated above, management principles are not rigid, absolute truths like rules and laws. In fact, they are
flexible guides to managerial actions. Hence, while applying these principles, due attention must be given to varied
and changing, circumstances because human beings who are subject of such principles are different and
changeable and moreover other concerned factors are also not stable. At times it has been found in practice that
the same principles are seldom applied twice in exactly the same way.
Like other social sciences, management science is also not very exact and rigid. Certain kind of flexibility is always
necessary to accommodate new thinking, new demands and newly emerging circumstance. Hence the
management principles are flexible and should be adopted to meet the specialty of every situation. However as a
precaution management principles should be guarded against unnecessary frequent modifications and alterations
based on pure whims and frenzies of individual user so that they are not distorted unwarrantedly.
In sum, it may be said that the nature of the principles of management suggests that they should be applied with
fair judgment and interpretation of the available facts in a given situation.
Characteristics of Management Principles
The characteristics of management principles may be examined as follows:
1. Management principles are derived from analysis of management functions and processes.
2. There are two types of principles:
Descriptive which attempt to explain and predict the behavior of organizational members and managerial
decisions and their relationships.
Normative which attempts to prescribe and evaluate the behavior of organizational members including the
managers. They prescribed what ought to be, what is good, right and desirable.
3. The principles known today have their origin in the works of classical writers and thinkers like Taylor, Fayol and
Mooney and Reiley.

13
4. They are universal in the sense that they are valid for most organizational under most circumstances.
5. They are flexible in nature and change with the changes in the environment in which an organization exists. It is
to be noted that nothing is permanent is the landslide of management, because of the complex and unpredictable
nature of human behavior.
Need and Importance of Management Principles
Proper use of management principles will probably improve organizational performance. According to George R.
Terry, Principles of management are to a manager as a table of strengths of materials is to a civil engineer. The
value of the principles lies in the foundation they provide for efficient conduct of management practice. By means
of principles, a manager can avoid fundamental mistakes in his job and foretell the results of his actions with
confidence.
Principles help in several ways – increasing the managerial efficiency, increasing the productivity of workers,
enhancing managerial knowledge and thinking, improving research in management, serving as aid to training
enhancing social welfare by helping in improving the quality of life of people and community resources to best
advantage of organizational members, etc.
The main purpose of management principles is to make available useful elements of a systematic theory of
management, so as to improve the management practice. They provide a means of organizing knowledge and
experience in management.
The above discussion clearly brings out that it is due to all the above facts that management principles have
become a permanent need in today’s management world.
Various Management Principles
A number of management thinkers have formulated various management principles. Taylor and Fayol has
enunciated the most important principles.
Human Relations Approach Historical Perspective
Scientific management remained concerned tithe the efficiency and productivity of workmen at the shop floor.
Fayol’s functional approach to management aimed as improving the managerial activities and performance at top
level in the organization. Between 1925, opinion of many experts was directed towards the human element or
aspect of the organization. They drew their attention from “work” emphasis to “worker” emphasis. It was clearly
felt that earlier approaches to management were incomplete and insufficient in that there was little recognition of
the importance of workers as human beings, their attitudes, feelings, needs and requirements. In fact, the
technical approach to work methods in scientific management did not produce durable and desirable results in all
cases. Individual and group relationships in the work place often prevented maximum benefits to be derived from
planning and standardization of work or monetary rewards offered for efficiency. Elton Mayo is the founder of this
theory.
Hawthorne Experiments
The human relations approach to management developed as a result of a series of experiences (in all four)
conducted by Elton Mayo and his associates F.J. Reothlisherger and W.J. Dickson at the Hawthrone plant of the
Western Electric Company at Chicago in United States. The Hawthrone studies were aimed at finding out what
factors really influenced the productivity and work performance of workers. These experiments were made with
respect to – different levels of illumination in the work place changing in working conditions like hours of work,
lunches, test periods and how group norms affect group effort and output.
Human Relations Concepts: Findings of Hawthorne Studies
The main findings of Hawthrone studies were as follows:
1. Physical environment at work place (i.e., working conditions) do not have any material effect on the efficiency of
work.
2. Social or human relationship influenced productivity more directly than changes in working conditions.

14
3. Favourable attitudes of workers and work-teams towards their work were more important factors determining
efficiency.
4. Fulfillment of workers social and psychological needs have a beneficial effect on the morale and efficiency of
workers.
5. Employee groups formed on the basis of social interactions and common interest exercised a strong influence on
workers, performance. In other words, informal organization controlled the norms established by the groups in
respect of each member’s output.
6. Workers cannot be motivated solely by economic reward. More important motivators are job security,
recognition by superiors and freedom to take initiative and to express their individual opinions as matters of their
own concern.
Behavioral Or Social Science Approach
Historical Perspective
The Behavioral or social science approach developed as a corollary to the human relations approach.
Social scientists and organization theorists are of the opinion that best results can be obtained by building theories
of management and organization based on findings of the Behavioral sciences, such as psychology, sociology,
psychiatry, economics, cultural anthropology and philosophy.
Behavioral approach reflects the findings of intensive carried out by Behavioral scientists like Chester I Bernard,
Douglas McGregor, Chris Argyris, A.H. Maslow, Herzberg, Rensis Likert etc. many of the conclusions of the
Hawthorne studies have been reaffirmed by subsequent research studies. Moreover, certain ideas have been
refined, extended and these behavior scientists have highlighted other important ideas. These scientists have tried
to eliminate the exaggeration of the importance of informal relations. The focal point of management action is the
behavior of human being in the organization – management as a technical process only, was given up.
Behavioral scientists conduct research to answer the question.
“Why a person or a group of persons behaves or acts in a particular manner? They try in answer in any problems
faced by the managers by explaining the behavior of the people”.
Elements Or Concepts or Features Of Behavioral Approach
The Behavioral approach concerns itself with the social and psychological aspects of human behavior in
organization. The behavior of members of an organization clearly affects both, its structure and its functioning as
well as the principles on which it can be managed. Behavioral researches have provided sufficient evidence that
human element is the key factor in the success are failure of an organization. In several experiments, it has been
observed that people prefer to be consulted rather than receive order or information. Less reliance on the use of
authority is preferred.
Some of the more important elements or concepts of Behavioral approach may be outlined as follows:
1. Individual Behavior
Individual Behavior is closely linked with the Behavior of the group to which he belongs. The group dictates
changes in his Behavior. Individuals observe those work standards which are prescribed by the group.
2. Informal Leadership
Informal leadership, rather than formal authority of managers is more important for setting and enforcing group
standards of performance. A a leader, a manager may be more effective and acceptable to subordinates, if he
adopts the democratic style of leadership.
3. Participation
If the subordinates are encouraged and allowed to participate in establishing goals, there will be positive effect on
their attitude towards work. If employees are involved in planning, designing the jobs and decision-making, there
will be least resistance to changes effected in technology and work methods.
4. Motivation by Self-Control and Self-Development
Behavioral scientists maintain that by nature most people enjoy work and are motivated by self-control and self-

15
development. Managers should try to identity and provide necessary conditions conducive to the proper and
sufficient use of human potential. The manager’s attitude towards human behavior should positive. They should
know that average man is not lazy by nature. But he is ambition. Every man likes to work and prefers to assume
responsibilities. MacGregor maintains that employees favour self-direction and self-control. Behavioralists believe
that in place of the concept of social man the concept of self-actualizing man would be more appropriate to
explain human motivations.
Chester I Bernard pointed out that material reward is of crucial signification only upto a definite point. The
incentives of status, power, good physical conditions opportunities of participation and good social (i.e., cultural
interrelationships) are very important.
5. Informal Organization
Behavioralists particularly Bernard, consider informer organization as an essential part of the formal organization.
Informer organization must always be taken into account while determining managerial behavior.
6. General Supervision Not Close One
As regards supervision of subordinates, Behavioralists particularly Likert, are not in favour of close supervision.
They advocate general supervision, which tends to be associated with high productivity.
Basic Assumptions (Are Propositions) Of Behavioral Scientists
The Behavioral science approach is based on certain assumptions about man and organization, which my be looked
upon as their prepositions (statements of opinion or judgment) also. Those may be outlined as follows
1. Organization is socio-technical system involving people and technology as their primary components.
2. The behavior of the members of an organization clearly affect both its structure and its functioning, as well as
the principles on which it can be managed.
3. Individual’s behavior is closely linked with a greatly influenced by the behavior of the group to which he belongs.
4. A wide range of factors influences work and interpersonal behavior of people in the organization.
5. Congruence (agreement) between organizational goals and individual goals organizations members would be
established.
6. Several individual differences in perceptions, aspirations, needs, feelings, abilities and values of people excite in
the organization, such difference along with their changing nature over periods of time have to be recognized.
7. Informal leadership rather than the formal authority of supervisors is more important for increase in employee
performance.
8. Democratic leadership style and participative managerial style encourage positive attitude of employee towards
work and faster’s high moral and initiative among them.
9. By nature most people enjoy work and are motivated by self-direction, self-control and self-development.
10. Conflict in organization may to some extent inevitable and at times even desirable for development, innovation
and creativity in certain cases. Conflicts and cooperation coexist in organizations. Conflicts are not to be
suppressed, but are to be resolved and not always coordinated in vital for achievement of organizational goals.
The above prepositions are important elements of Behavioral science thinking. Thus the Behavioral approach
represents a significant advance over the human relations approach.
The major areas of research and analysis by the Behavioral scientists are interaction between organizational
structure, work performance and employees behavior, consequences of traditional, coercive controls on humans,
influence of technological advances and changes on group behavior, human needs and aspirations, theories of
motivation and leadership, developmental aspects of human resources, organizational behavior aspects, group
dynamics, patterns of communication and their importance in the organization, managerial styles and their impact
on employee behavior, organizational climate, culture and politics, organizational development, change and
conflict, organizational rules and status, and so on.

16
Distinction Between Human Relations and Behavioral Approaches
As indicated earlier, Behavioral science approach is an improvement over the human relations thinking. This may
be explained in the following ways.
1. Areas of Study
The human relations movement kept it limited to the study of psychological needs of people, supervision styles,
working conditions, interpersonal relations, communication etc. On the other hand Behavioral scientists have gone
very far and wide in the study of organizational and managerial aspects covering the areas as mentioned in the
previous paragraph.
2. Human Nature Assumptions
Human relation theorists have made some general, unverifiable assumption about human nature holding “social
man” view. In contrast, Behavioral scientists have understood the factual nature of individuals and of their
Behavior-holding “self-actualizing man” model.
3. Human Needs
Human relations thinkers presume that people have only social needs, whereas the Behavioral scientists regard
individuals as different from one another and dynamic with respect to their needs and attitudes and emphasize
both social and psychological needs.
4. Organization Nature
Human relations approach believes organizations to be purely social systems, while Behavioral science approach
views organizations as socio-technical systems which are required to accomplish a set of individual, social and
corporate (economic) goals.
5. Employee Satisfaction
Human relations theorists advocate that employees satisfaction is achieve through economic and other incentives
and then it automatically leads to higher employee productivity. On the other hand, Behavioral scientists assert
that employee satisfaction is a matter of a set of factors including fulfillment of social and self-actualization needs
and high morale is also necessary for achieving higher employee productivity, which is a composite thing made by
different factors including participative management.
6. Conflict Treatment
Human relation thinkers proposed that conflict, competition and disagreement is to be avoided or should always
be resolved, whereas Behavioral scientists concede that conflict is not always bad, it may be constructive too, it is
inevitable and may not always be resolved.
7. Manager’s Role
Under human relations model, manager’s traditional role of controller is modified to include responsibility for
maintenance of the human system. On the other hand, under the Behavioral science model, the manager’s basic
role is rather dramatically redefined and he is no longer viewed as a controller but rather as a developer and
facilitator of the performance of the socio-technical system to which he is assigned.
8. Nature of Approaches
Human relations approach is criticized for being unscientific (i.e. vague and simplistic and for patting forth broad
conclusions having personal bias. On the other hand, Behavioral scientists have made their propositions based on
extensive researches and its sub discipline organizational Behavior also has a strong research orientation.
Contribution
The contribution of Behavioral science to management thought and practice consists primarily of creating new
insights rather than new techniques. It has developed a useful way of thinking about the role of a manager, the
nature of organizations and the Behavior of individuals with organizations.

17
Management Science or Operations Research Or Approach
Quantitative Approach
A quantitative approach to management thought is known as management science or operations approach.
“C.West Churchman. Russell Adoff and E.Leonard Arnoff” define the management science or operations research
OR approach as an application of the scientific method to problems arising in the operation of a system and a
solving of these problems by the solving of mathematical equations representing the system. (Introduction to
Operations Research. New York Willey. 1957).
The management science approach suggests that managers can best improve their organization by using the
scientific method and mathematical techniques to solve operational problems.
The Beginning of the Management Science Approach
During the World War II, in Great Britain and in America, some mathematicians, physicists and other scientists
were called to help solve complex, operational problems that existing in the military. They were able to achieve
significant technological and tactical breakthroughs. The scientists were organized into teams that eventually
became known as operations research or groups. When the war was over the applicability of or to problems
industry gradually became apparent, particularly in the wake of new industrial technologies being put into use or
specialists were called to help managers come up with answers to the new problems. With the invention of
electronic computer system or procedures were formalized into what is now called “management science school”
or “quantitative school”.
The early or groups typically included physicists and other “hard” scientists, who used the problem solving method
known as scientific method which involves.
(i) Observing the problem system.
(ii) Constructing a model, i.e. a generalized framework from which consequences of changing the system can be
predicted.
(iii) Deducting (inferring) from the model how the system will behave it changes were made in existing conditions.
(iv) Testing the model by performing an experiment on the actual system to see whether the effects of changes
predicted using the model, actually occur when the changes are made.
The Operations Research groups were very successful in using the scientific method to solve their operational
problems.
Now, the management science approach is being used in many companies in India and other countries and applied
to many diverse management problems, such as production scheduling, plant location product packaging etc.
Characteristics of Management Science Applications
Four primary characteristics are usually present in situations in which management science techniques are applied.
These are as follows:
1. Large Number of Variables
The management problems studied is so complicated that managers need help in analyzing a large number of
variables.
2. Use of Mathematical Model
The use of mathematical models the investigate the decision situation in typical in management science
applications. Models are constructed to represent reality and then used to determine how the real world situation
might be improved.
3. Use of a Computer
A management science application makes use of computers. There are two factors that make computers extremely
valuable to the management science analyst.
Today, managers are using such management science tools as inventory control methods, network models and
probability models as aid in decision making process. Since management science thought is still evolving, more and
more sophisticated analytical techniques can be expected.

18
Critical Evaluation of Management Science Approach
Management science team presents management with an objective basis for making a decision. Management
science techniques increase the effectiveness of the manager’s decision making. They are best suited analyzing
quantifiable factors, such as expenses, sales and units of production. They are used in such activities as capital
budgeting management, cash flow management, production scheduling, development of product strategies,
planning for human resource development programs, maintenance of optional inventory levels and aircraft
scheduling.
However, is special widespread use for many problems, management science of today has not developed to a
point where it can effectively deal with an important aspect of the organization, that is the human side of an
enterprise. But no doubt that it has marvelously contributed to the solving of planning and control problems and
to the progress in the areas of organizing, staffing and the leading the organization. Anyhow some managers
complain about the complicated nature of the concepts, language and techniques of management science, which
are not readily understandable and not easily implemental. Some other managers indicate about the drawback of
management science in that if fails to address to the psychological and Behavioral components of workplace
activities because the managers are not sufficiently involved with management scientists at the initial level of
developing decision making techniques and as a result the later implementation of these techniques remain often
unsuccessful. There exits a lack of awareness among the management scientist regarding the problems and
constraints actually faced by the managers in organization, particularly because of their remoteness from the
actual some of the workplace activities.
Growth and Development of Management Thought
The management thought has grown and developed gradually in the following stages:
1. Early Era
The is known as pre-scientific management era. During this era the management finally came into being as a
separate field of study and research.
2. Scientific Management Era
During this era some principles of scientific management were developed. This era saw great advances in
management practice by application of empirical studies to determine faster and better methods of production.
3. Processes or Functional or Administrative Era
During this era, a clear distinction was made between technical activities and managerial activities. Planning,
organizing, command, coordination and control were recognized as managerial activities. The organization was
recognized as a rational-legal structure.
4. Human Relations Era
During this era, special emphasis was laid on “worker” aspect of the organization. It was pleaded that workers
should be cared as human assets of the enterprise.
5. Behavioral Or Social Sciences Era
During this era, the individual, the work groups and the participative management aspects were emphasized.
6. Management Science Or Quantitative Era
This era saw the scholars to lay emphasis on rational decision-making and use of mathematical techniques for
managing the organizations.
7. Modern Era
During this era, emphasis is being laid on treating the organization as a system composed of interrelated and
interdependent parts, working in its specific environment. Moreover, it has been experienced and advocated that
there is no one best way of dealing with a situation. The manager has to find a best way in each specific situation
depending on the different circumstances of the individual case.

19
Definition of Production Management
In modern competitive world, if an enterprise and master its production and marketing, it will be able to acquire
and maintain a considerable market share.
Production may be defined as the conversation of the raw material into finished goods and services through
transforming process for purposes of supplying them into the market. Thus, it is process of creation of goods and
services. The terms “production and manufacturing” are generally used as synonyms. Production activities are vital
for the survival, growth and development of every enterprise.
Production to be successful has to be managed. Hence production management assumed great importance in
every organization.
Some important definition of production management may be given as follows:
Elwood Buffa
Production management deals with decision-making related to production process so that the resulting goods and
services are produced according to the specifications in the amounts and by the schedule demanded and at
minimum cost.
A.W.Field
Production management is the process of planning and regulating the operations of that part of enterprise which is
responsible for actual transformation of materials into finished products.
Major Activities of Production Management
Production management deals with manpower and physical resources and facilities for transforming inputs into
outputs. Production Management involves three major activities or functions:
1. Planning of Production Inputs
It includes determining of necessary inputs including raw materials, labour, electrical power, machines and
equipments, facilities etc., required for production work.
2. Installation of the Necessary Inputs
It includes taking decisions with regard to designing of the plant, choice of the best machines and arrangement of
other necessary facilities so that the production work can be started.
3. Co-Ordination and Control of the Production Process
An effective production system involves co-ordination among the various activities and affairs within the
production department itself and also integration of its activities and decisions with other departments of the
enterprise, such as finance, marketing, purchases, personnel, according and research and development. It also
includes determining the necessary sequence of operations, preparing work schedules and assigning work to
specific employees, so as to ensure smooth production operations. Control includes ensuring that the actual
production performance meets the predetermined production plans and goals and also providing for proper
feedback for taking corrective action.
Nature and Importance of Production Management
Production management has become an important now a day that it is treated to be a separate, independent
functional area of management.
Production management has assumed its importance because of the following reason:
1. It is the foundation for earning profits – by producing goods or services and selling them into the market.
2. It ensures that produced goods or services are of desired quality, in required quantity and according to time-
schedules.
3. It facilitates optimum inventory level.
4. It ensures proper co-ordination and necessary control, which are required for adequate, time and cost-conscious
production.
5. It ensures coping with the changes in demands in the market and maintains stability in the production
department.

20
Production Planning and Control
Production Planning, Planning is deciding in advance what to do, how to do it, when to do it, who is to do it. Then,
production planning involves decision making in various production aspects, such as designing of production plans,
programs and goals, selection of production process, plant layout, provision of physical facilities (like material,
tools, machines, equipments etc.) and preparation of time-schedules.
“Lawrence Bethel Observes” Production planning takes a given product or line of products and organizes in
advance the manpower materials, machines and money required for a predetermined output in a given period of
time. It starts with a product concept capable of being manufactured, a general idea of the process by which it can
be made and a sales forecast for the discernible future.
Production Control
Control means ensuring that actual performance meets the predetermined standards. Then, “production control”
refers to a set of steps for verifying whether production operations occur in conformity with the production plan
adopted. It guides and directs the flow of production so that the goods of desired quality are manufactured at the
right time and it maximum possible economic manner. It may be noted that “production control” is frequently
used synonymously with “production planning and control” with planning being implied.
Spriegel and Lansburgh define production control as
the process of planning production in advance of operations, establishing the exact route of each individual item,
part or assembly, setting, starting and finishing dates for each important item, assembly, and the finished products
and releasing the necessary orders as well as initiating the required follow-up to effective the smooth functioning
of the enterprise.
James Lundy says
Basically, the production control function involves the co-ordination and integration of the factors of production
for optimum efficiency. The principal objective of production control is to facilitate the task of manufacturing and
see that everything is being done strictly in accordance with the plan. It co-ordinates and integrates the factors of
production for optimism and directs and checks the course and progress of work.
Advantages of Production Planning and Control
Production planning and control yields the following main advantages,
1. Avoidance of Rush Orders
Production is well planned and its time aspects are well controlled. Therefore, production control reduces the
number of risk-orders and overtime works on plant.
2. Avoidance of Bottlenecks
The incomplete work does not get accumulated because production control maintains an even flow of work.
3. Cost Reduction
Production control programs minimizes the idleness of men and machines, keeps in process inventories at a
satisfactory level, leads to a better control of raw materials inventory, reduces costs of storage and materials
handling, helps in maintaining quality and containing rejection and thus reduces unit cost of production.
4. Effective Utilization of Resources
It reduces the loss of time by the workers waiting for materials and makes most effective use of equipments.
5. Co-Ordination
It serves to co-ordinate the activities of plant and results in a concerted effort by workmen.
6. Benefits to Workers
Adequate wages, stable employment, job Security, improved working conditions, increased personal satisfaction,
high morale.
7. Efficient Service to Customers
It ensures better service to the customers by enabling production to be conducted in accordance with the time
schedules and therefore deliveries are made on promised dates.

21
Basic Functions of Marketing
The marketing process performs certain activities as the goods or services move from producer to consumer. Every
firm does not perform all these activities or jobs. However, any company that wants to operate its marketing
system successfully must carry them out. The following marketing tasks have been recognized for a long time.
1. Selling
It is core of marketing. It is concerned with the persuasion of prospective buyers to actually complete the purchase
of an article. Setting pays an important part in realizing the ultimate aim of earning profit. Selling is enhanced by
means of personal selling, advertising, publicity and sales promotion.
2. Buying
It involves what to buy, what quality, how much, from whom, when and at, what price. People in business buy to
increase sales or to decrease costs. Purchasing agents are much influenced by quality, service and price. The
products that the retailers buy for resale are determined by the need and preferences of their customers.
3. Transportation
Transport is the physical means whereby goods are moved from the places where they are produced to those they
are needed for consumption. Transportation is essential from the procurement of raw materials to the delivery of
finished products to the customers places. Marketing relies mainly on railroads, tracks, waterways, pipelines and
air transport. The type of transportation is chosen on several consideration such as suitability, speed and cost.
4. Storage
It involves the holding of goods in proper condition from the time they are produced until they are needed by
consumers (in case of finished products) or by the production department (in case of raw materials and stores).
Storing protects the goods from deterioration and helps in carrying over surplus for feature consumption or use in
production. Goods may be stored in various warehouses situated at different places. Storing assumes greater
importance when production is seasonal or consumption may be seasonal. Retail firms are called “stores”.
5. Standardization and Grading
The other activities that facilitate marketing are standardization and grading. Standardization means establishment
of certain standards or specifications for products based on intrinsic physical qualities of any commodity. This may
involved quantity (weight or size) or it may involve quality (colour, shape, appearance, material, taste, sweetness
etc). Government may also set some standards e.g., in case of agricultural products. A standard conveys a
uniformity of the products.
“Grading means classification of standardized products into certain well-defined classes or groups.” It involves the
division of products into clauses made up of unit processing similar characteristics of size and quality. Grading is
very important for “raw material” (such as fruits and cerials), mining products” (such as coal, iron-ore and
mangenese) and “forest products” (such as timber). Branded consumer products may bear grade levels, – A B C.
6. Financing
It involves the use of capital to meet financial requirements of the agencies dealing with various activities of
marketing. The services of providing the credit and money needed to meet the cost of getting merchandise into
the hands of the final user is commonly referred to as finance, function in marketing. In marketing, finances are
needed for working capital and fixed capital, which may be secured from three sources – onward capital, bank
loans and advances, and trade credit (provided by the manufactures to wholesaler and by the wholesaler to the
retailers).
7. Risk Taking
Risk means lose due to some unforeseen circumstances in future. Risk-bearing in marketing refers to the financial
risk inherent in the ownership of goods held for an anticipated demand, including the possible losses due to a fall
in price and the losses from spoilage, depreciation, obsolescence, fire and floods or any other loss that may occur
with the passage of time. From production of goods to its selling stage, many risks are involved due to changes in

22
marker conditions, natural causes and human factors. Changes in fashions or interventions also cause risks.
Legislative measures of the government may also cause risks.
8. Market Information
The only sound foundation, on which marketing decisions may be based, is correct and timely market information.
Right facts and information reduce the aforesaid risks and thereby result in cost reduction. Business firms collect,
analyze and interpret facts and information from internal sources, such as records, sales people and findings of the
market research department. They also seek facts and information from external sources, such as business
publications, government reports and commercial research firms. Retailers need to know about sources of supply
and also about customers buying motives and buying habits. Manufacturers need to know about retailers and
about advertising media. Firms in both these groups need information about competitor’s activities and about
their markets. Even ultimate consumers need market information about availability of products, their quality
standards, their prices, and also about the after-sale service facility Common sources for consumers are sales
people, media advertisements, colleagues etc.
It may be noted that in addition to the mentioned jobs, the marketing manager is also involved in product
planning, pricing of products, selection of distribution channels, framing of marketing objectives, environmental
scanning, target market selection, market programming and developing marketing strategy.
Stages or Steps in Marketing Research Process
Marketing research exercise may take many forms but systematic enquiry is a feature common to all such forms.
Being a systematic process, though, it is not necessary that all research processes would invariably follow a given
sequence, yet marketing research often follows a generalized pattern, which can be broken down and studied as
sequential stages. The various stages or steps in the marketing research process may be discussed as follows:
1. Identification and Defining of the Problem
The market research process begins with the identification of a problem faced by the company. The clear cut
statement of problem may not be possible at the very outset of research process because often only the symptoms
of the problems are apparent at that stage. Then, after some explanatory research, clear definition of the problem
is of crucial importance in marketing research because such research is a costly process involving time, energy and
money. Clear definition of the problem helps the researcher in all subsequent research efforts including setting of
proper research objectives, the determination of the techniques to be used and the extent of information to be
collected. It may be noted that the methods of explanatory research popularly in use are : survey of secondary
data, experience survey or pilot studies i.e. studies of a small initial sample. All this is also known as preliminary
investigation.
2. Statement of Research Objectives
After identifying and defining the problem with or without explanatory research, the researcher must make a
formal statement of researcher objectives. Such objectives may be stated in qualitative or quantitative terms and
expressed as research questions, statement or hypothesis. For example, the research objective. “To find out the
extent to which sales promotion schemes affected the sales volume” is a research objective expressed as a
statement. On the other hand, a hypothesis is a statement that can be refuted or supported by empirical findings.
The same research objective could be stated, “To test the proposition that sales are positively affected by the sales
promotion schemes undertaken this winter.” Example of another hypothesis may be. “The new packaging pattern
has resulted in increase in sales and profit.” Once the objective or the hypothesis are developed, the researcher is
ready to choose the research design.
3. Planning the Research Design or Designing the Research Study
After defining the research problem and deciding the objectives, the research design must be developed. A
research design is a master plan specifying the procedure for collecting and analyzing the needed information. It
represents a framework for the research plan of action. The objectives of the study are included in the research
design to ensure that data collected are relevant to the objectives. At this stage, the researcher should also

23
determine the type of sources of information needed, the data collection method (e.g. survey or interview), the
sampling methodology and the timing and possible costs of research.
4. Planning the Sample
Sampling involves procedures that use a small number of items or parts of the population (total items) to take
conclusion regarding the population. Important questions in this regard are; who is to be sampled as a rightly
representative lot? Which is the target – population? What should be the sample size – how large or how small?
How to select the various units to make up the sample?
5. Data Collection
The collection of data relates to the gathering of facts to be used in solving the problem. Hence, methods of
marketing research are essentially methods of data collection. Data can be secondary, i.e. collected from
concerned reports, magazines and other periodicals, especially written articles, government publications, company
publications, books etc. Data can be primary i.e. collected from the original base through empirical research by
means of various tools. There can be broadly two types of sources – (i) Internal sources – existing within the firm
itself, such as accounting data, salesmen’s reports etc. (ii) External sources – outside the firm.
6. Data Processing and Analysis
Once data have been collected these have to be converted into a format that will suggest answer to the initially
identified and defined problem. Data processing begins with the editing of data and its coding. Editing involves
inspecting the data collection – forms for omission, legibility and consistency in classification. Before tabulation,
responses need to be classified into meaningful categories. The rules for categorizing, recording and transferring
the data to “date storage media” are called codes. This coding process facilities the manual or computer
tabulation. If computer analysis is being used the data can be key-product and verified.
7. Formulating Conclusions, Preparing and Processing the Report
The final stage in the marketing research process is that of interpreting the information and drawing conclusion for
use in managerial decision. The research report should clearly and effectively communicate the research findings
and need not include complicated statement about the technical aspect of the study and research methods. Often
the management is not interested in details of research design and statistical analysis but instead in the concrete
findings of the research. If need to the researcher may bring out his appropriate recommendation or suggestions in
the matter. Researchers must make the presentation technically accurate, understandable and useful.

Meaning and Definition of Management by Objectives (MBO)

Management by Objectives (MBO) has become a widely used slogan. It is a basic mentality that a high-
performance manager brings to the job of managing. Peter Drucker coined the term “Management by Objectives”
in 1954. He profounded Management by Objectives concept and emphasized it and than it developed as a
management philosophy. Some authors has used the term “management by results” interchangeable with
Management by Objectives.
Management by Objectives is an overall philosophy of management that concentrates on goals and end results.
Management by Objectives is based on the presumption that people perform better when they know what is
expected of them and can relate their personal goals to organization goals. It also assumes that people are
interested in the goal setting process and in evaluating their performances against the target.
Some important definitions of Management by Objectives may be given as follows:
George S. Odiorne
The system of management by objectives can be described as a process whereby the superior and subordinate
managers of an organization jointly identify its common goals, define each individual’s major ares of responsibility
in terms of the results expected of him and use these measures as guides for operating the unit and assessing the
contribution of each of its members.

24
Peter Drucker
He says that management by objectives and self-control is a philosophy of management, resting on a concept of
human action, human Behavior and human motivation. Management by objectives applies to every manager at
any level and to all business enterprises whether large or small. He says the Management by Objectives “ensures
performance by converting objective needs into personal goals”
Heinz Weihrich and Harold Koontz
“Management by objectives is a comprehensive managerial system that integrates many key managerial activities
in a systematic manner and that is consciously directed toward the effective and efficient achievement of
organizational and individual objectives.”
Essential Characteristics of Features of Management by Objectives
A careful study of the above definitions brings out the following features of Management by Objectives:
1. Management by Objectives is a philosophy or a system and not merely a technique.
2. It emphasizes participative goal setting.
3. It clearly defines each individual’s responsibilities in terms of results.
4. It focuses attention on what must be accomplished (goals), rather than on how it is to be accomplished
(methods).
5. It converts objectives needs into personal goals at every level in the organization.
6. It establishes standards or yardsticks (goals) as operating guides and also as basis of performance evaluation.
7. It is a system intentionally directed toward effective and efficient attainment of organizational and personal
goals.
Management by Objectives Process
There are four important and essential steps or elements in the Management by Objectives process as follows:
1. Setting Objectives
Goal setting or objective-setting is a multistage process. It starts with the examining of the current state of affairs,
level of efficiency, threats and opportunities. Then the key result areas are identified, such as product markets,
improved services, lowered costs, work simplification, employee motivation, profitability, innovation and social
responsibility. The performance of these areas is critical for organization in the sense that failure in these areas my
result in failure of the organization and this is why they are known as “key” results areas. Peter Drucker says,
“Objectives are important in every area where performance and results directly affect the survival and prosperity
of business.”
Therefore interacting or joint goal setting takes place. Subordinates are actively involved in formulating goals at
every level is the organization. Such goals are finished with reference to the overall objectives of the organization.
Care is to taken establish goals that are measurable and contribute to the accomplishment of corporate objectives.
Proper attention is given to “time” element also. Such goals may be long-range, medium-range or short-range.
Further, resources availability also becomes an important consideration in goal setting. There is always need to
decided priorities among the different objectives keeping in view the environment which business operates as well
s possible future changes in it.
2. Developing Action Plans
Set objectives must be translated into action plans. It requires assignment of specific responsibilities to different
departments, divisions and individuals. It also requires allocation of necessary resources needed to perform the
assigned responsibilities. Time dimensions are also to be decided in order that targets are reached without any
unwarranted delays.
3. Periodic Review or Monitoring the Progress
After setting objectives and developing action plans, it is necessary to establish a proper monitoring system with a
view to regularly keeping the activities and efforts on a prescribed path leading to the ultimate objectives. The
progress is monitored without day-to-day interference in subordinates functioning. At agreed intervals, results are

25
measured in terms of quantity, quality, time and cost against the set objectives. It is ensured that the deviations
found, if any are thoroughly discussed and immediate corrective actions are taken to set them right on the course.
Such a regular monitoring and periodic review not only provide feedback, which is essential for completion of work
in time, but also motivates the managers accountable for performance. Periodic review and monitoring are done
at departmental levels generally.
4. Performance Appraisal
This is the last phase of Management by Objectives program that evaluates performance annually. The annual
review or appraisal is comprehensive and is done at the organizational level. The actual annual results are
evaluated against the set objectives. Such assessment is also used for determining targets for next year for
modification in standards (goals) if needed and for taking corrective actions in order to avoid deviations from
predetermined objectives.
Management by Objectives Cycle and Recycling Objectives
When all the four steps or phases in the Management by Objectives as mentioned above are completed then one
Management by Objectives cycle is said to be over. The last phase or the fourth step in the Management by
Objectives cycle is used as an input for recycling objectives and other actions. Objectives are changed or modified
in the light of the environmental changes and the experiences gained over the year. Then, revised action plans are
developed as per needs, periodic review is done. And performance is gain evaluated. Thus goes on the recycling.
Benefits of Management by Objectives
1. Balanced Stress on Objectives
Management by Objectives forces managers to set objectives with balanced stress on key result areas. Thus, crisis
conditions are avoided to take place in the organization.
2. Better Managing
Management by Objectives forces managers to think about planning for results, rather than merely planning
activities or work. Managers are required to ensure that the targets are realistic and needed resources are made
available to subordinates to achieve the targets. Clearly set objectives for the subordinates serve as evaluation
standards as well as motivators for them. Thus, Management by Objectives results in improvement in managing.
3. Better Organizing
The positions in the enterprise can be built around the key result areas. Managers are required clarifying
organizational roles and structures. Hence better organizing.
4. Greater Employee Involvement and Commitment
If Management by Objectives program is installed in an organization, people are not just doing work, following
instructions and waiting for guidance and decisions from “above” and the superiors do not dictate things. They are
now individuals with clearly defined goals, which have been formalized through their own participation in the
process. Moreover, they fully well understand the areas of their discretion – their authority. They are also
confident of getting needed help from their superiors. There is clarity of roles. These elements together make for a
feeling of greater personal commitment on the part of the subordinates. They become more enthusiastic in
attaining the targets. There is high motivation; there is high morale too.
5. Orderly Growth of Organization
Management by Objectives provides for the maintenance and orderly growth organization by means of
predetermined set of objectives for everyone involved. It is also provides in measurement of what is actually
achieved. The progress and even the tenure of all responsible managers are dependent upon their producing the
results. Management by Objectives emphasizes the ability, skill and achievement of managers rather than their
personality. Thus, the orderly growth and development of the organization is ensured.
6. Development of Effective Controls
Management by Objectives not only sharpens the planning, but also develops effective controls. It specifically
provides for periodic reviews and annual performance appraisals serving as the needed feedback for further

26
streamlining the objectives or targets. It makes possible for a manager to control his own performance, high
degree of self-control resulting in stronger motivation. Control from “above” is substituted by control from “self”
Management by Objectives facilitates coordinated effort and teamwork.
7. Generating of an Ideal Atmosphere
Douglas McGregor says. “The motivations, the potential for development, the capacity for assuming responsibility,
the readiness to direct Behavior toward organization goals are all present in people. Management does not put
them there. The essential task of management is to arrange organizational conditions and methods of operations
so that people can achieve their own goals best by directing their own efforts towards organizational objectives.”
This is an ideal atmosphere suitable for better industrial relations and ensured success of the enterprise.
8. Objective Appraisal
Management by Objectives provides a scientific basis for evaluating a subordinate’s performance, because goals
(standards) are jointly set by the superior and the subordinates.
Limitations of Management by Objectives
In spite of its many advantages, the Management by Objectives has some weaknesses as follows:
1. Unfavourable Attitude of Managers
Some managers have an attitude that the regular attention required of them by Management by Objectives
system, draws heavily on their busy time-schedule and is not consistent with their roles. They feel that it is not so
effective a way as some other approaches. Some managers view their roles as principally involving policy-making,
budget formulation etc.
2. Excessive Paper Work
Management by Objectives program involves a huge amount of newsletters, instruction booklets, training
manuals, questionnaires, performance date, review and appraisal reports to be prepared by the superiors and
subordinates. Thus, Management by Objectives is said to have created one more “paper mill” in the organization
added to the already existing large amount of paper work.
3. Problems about Goal Setting
Management by Objectives require issuance of proper, exhaustive guidelines to goal-setters. However, managers
responsible for practicing Management by Objectives do not themselves understand and appreciate a good deal
about it, especially about the concept of self-control and self-direction which is basic to Management by
Objectives. Similarly, there are several other difficulties in goal setting:
 Positive and active participation from subordinates is not easily forthcoming.
 Truly verifiable goals are not easy to formalize.
 Emphasis is put on short-range goals; where as long-range goals are avoided, though long-range goals are
vital for growth and development of the organization.
 Goals remain inflexible and rigid. For example, changes desirable in annual budgets are not easily
accepted in the middle of the year.
 Over-use of quantitative goals jeopardizes the qualitative aspect which may even more important the
quantification is some case.
 Goals tend to take precedence or priority over the person who uses them. Any action is acceptable if it
serves in the attainment of goals, without caring of its impact on people. Thus, all these difficulties come
in the way of making management by objectives operational in an organization. Further, managing
involves more than goal setting.
4. Time-Consuming Nature of Management by Objectives
Management by Objectives system is time-consuming especially in the early phases of its introduction when
employees are unfamiliar with its process. Since managers also have to learn the necessary skills it is commonly
estimated that it takes 2 years to take an management by objectives program working smoothly. A few

27
management by objectives program work smoothly. A few management by objectives programs have failed
because managers could not spare adequate time needed for its various phases.
5. Difficulties in Making Organizational Changes
Management by Objectives system requires to be integrated with other systems in the organization, such as
budgeting, forecasting, communication, control etc. Sometimes current practices may have to be changed. Thus,
greater decentralization may become a necessity. Moreover, some systems may required to be changed, for
example, control system, data processing system etc. Managers feel such changes as time-consuming, distributing
there “status quo” (or as it is) facilities and difficult in different other ways.
6. Failure to Teach Management by Objectives Philosophy
Management by Objectives as a concept is simple but it is deceptively so. It is much easier to explain this principle
than to introduce it to an organization, especially in a very dynamic and changing environment. Moreover,
management by objectives is still building toward achieving a fully institutionalized system of management to be
used by the entire key manager. Sometimes managers fail to use objectives as a constructive force, even with the
full participation and assistance of their superiors. In order to understand the philosophy of management by
objectives, managers have to make themselves professionals.
Steps for Improving the Prospects Or Effectiveness of Management by Objectives Application
1. Top Management Support and Commitment
Management by Objectives should be used by a strong power and authority structure, i.e. by the top management,
so that “planning for work” may be rightly shifted to “planning for goals or results”. David Hampton says, “If you
want to make Management by Objectives work, you must integrate it into the real systems of work and influence.”
Management by Objectives must be considered a way of managing and not to an addition to the managerial job.
Harold Koontz points out. “An effective program of managing by objectives must be woven into an entire pattern
and style of managing. It cannot work as a separate technique standing alone.” In this whole content, top
management support and commitment to management by objectives program is essential and vital.
2. Other Important Steps
 Managers should be given adequate training in management by objectives philosophy and procedures
before installing the system. For this purpose, adequate time and resources are required and therefore be
arranged.
 Necessary mechanism for making management by objectives program a success should devised and for
this purpose the administrators of management by objectives program must be endowed with sufficient
authority to punish and reward at their own levels.
 Feedback should be made effective the more specific timely the feedback the more positive the effect.
 Employee Participation should be made real and committed by properly motivating them.
 Management by Objectives must be carried all the way down to the first line or supervisory level.
 It should be seen that conflicting objectives are not set at any level and important non-quantifiable
objectives are not brushed aside.
 During the course of implementation of management by objectives the required redistribution of powers
and status should be seriously considered so as to avoid all kinds of unnecessary infighting and negative
conflicts.
Most of the limitations or weaknesses of management by objectives are not of formidable (uncontrollable) nature.
Some minor adjustments in attitudes, initiative and determination on the part of the managers may overcome all
the difficulties and pitfalls, which come in the way of management by objectives program. It appears from the
widespread discussions and adoption of management of objectives concept in private and public enterprises that it
has come to stay in the field of management.

28
Meaning and Definition of Decision Making
Decision making may be reviewed as the process of selecting a course of action from among several alternatives in
order to accomplish a desired result. The purpose of decision making is to direct human Behavior and commitment
towards a future goal. If there are no alternatives, if no choice is to be made, if there is no other way-out, then
there would be not need for decision making. It involves committing the organization and its resources to a
particular choice of course of action thought to be sufficient and capable of achieving some predetermined
objective.
Managers at all level in the organization make decision and solve problems. In fact, decision-making is the process
of reducing the gap between the existing situation and the desired situation through solving problems and making
use of opportunities. A decision is a course of action consciously selected from available alternatives, with a view
to achieving a desired goal. It is an outcome of the judgment and represents a choice and commitment to the
same. It is a final resolution of a conflict of needs, means or goals made are the face of uncertainty, complexity and
multiplicity. A decision is conclusion reached after consideration it occurs when one option is selected to the
exclusion of others – it is rendering of judgment.
Different management scholars have defined Decision making as follows:
George Terry
Decision making is the selection based on some criteria from two or more alternatives.
Heinz Weihrick and Harold Koontz
Decision making is defined as the selection of a course of action among alternatives, it is the care of planning.
Louis Allen
Decision making is the work a manager performs to arrive at conclusion and judgment.
Nature Or Characteristics of Decision Making
Decision making is globally thought to be selection from alternatives. It is deeply related with all the traditional
functions of a manager, such as planning, organizing, staffing, directing and controlling. When he performs these
functions, he makes decisions. However, the traditional management theorists did not pay much attention to
decision making. In fact, the meaningful analysis of decision making process was initiated by Chester Bernard
(1938) who commented, The process of decision are largely techniques for narrowing choice.
The nature of decision-making may be clearly understood by its following characteristics features:
1. Decision making is an intellectual process, which involves imagination, reasoning, evaluation and judgment.
2. It is a selection process in which best or most suitable course of action is finalized from among several available
alternatives. Such selected alternative provides utmost help in the achievement of organizational goals. The
problems for which there is only one selection are most decision problems.
3. Decision making is a goal oriented process. Decisions are made to attain certain goals. A decision is rated good
to be extent it helps in the accomplishment of objectives.
4. It is a focal point at which plans, policies, objectives, procedures, etc., are translated into concrete actions.
5. Decision making is a continuous process persuading all organizational activity, at all levels and in the whole
universe. It is a systematic process and an interactive activity.
6. Decision making involves commitment of resources, direction or reputation of the enterprise.
7. Decision making is always related to place, situation and time. It may be decision not act in the given
circumstances.
8. After decision making it is necessary and significant to communicate its results (decisions) for their successful
execution.
9. The effectiveness of decision-making process is enhanced by participation.
Elements of Decision Making
There are following elements in decision making.
 The decision maker.

29
  The decision problem or goal.
 Attitudes, values and personal goals of the decision maker.
 Assumption with regard to future events and things.
 The environment in which decision is to be made.
 Available known alternatives and their estimated or imagined outcomes.
 Analytical results in the whole perspective.
 The constraints.
 The act of selection or choice.
 Timing of decision.
 Proper communication of decision for its effective execution.

Theories of Decision Making

The most common bases upon which decisions are made are, fact experience, intuition and authority. The decision
itself is concerned with the achievement of an objective. Bridging the gap between the basis for the decision and
the decision itself is the theory (or technique) used to arrive at the decision. Theories of decision making stem from
the manner in which decisions are made.
Ernest Dale has suggested a comprehensive list of theories of decision making as follows
1. Traditional Economic Theory
2. Psychological Theory
3. Mathematical Theory.
1. Traditional Economic Theory Or Marginal Theory
The simplest theory of business decision making is that the decision makers try to maximize profits and that key
consider all courses of action open to them in attempting to do. This is the theory held by traditional economists.
Although it may be partially true that the decision makers generally have the effect of profits on mind, they may
not always attempt to maximize profits. Marginal theory is based on the law of diminishing return. According to
this law, with the additional units of inputs (labour and capital), the marginal contribution of each unit is at a
decreasing rate. There comes a stage when the marginal return is zero. This is marginal point. A number of
decisions in the area of production, sales, marketing, advertising, recruitment, etc are taken by the management
on the basis of marginal theory.
2. Psychological Theory
This theory is designed to identify what actually goes on in the decision maker’s mind when he makes a decision.
Several factors leave an impact on the mind of the decision maker, such as nature, size and purpose of the
organization, manager’s aspiration, attitude, habits, personally temperament, political learning’s, social and
organizational status, technological skill, domestic life, education, experience, level of satisfaction and so on
Psychology of a manager has an important bearing on the quality of decisions he makes. As decision making is an
intellectual process, these psychological factors cannot be avoided altogether.
One of the best-known psychological theories is Herbert Simon’s theory, which explain that the decision maker
attempts to satisfies rather maximize. In other words, a manager finds an answer that is good enough. What
consequences the manager considers good enough, will depend on what has been achieved in the past.
3. Mathematical Decision Theory
It is not designed to show how decisions are actually made. Rather, it is designed to help the decision maker who is
interested in maximizing profits in a given situation, to lay out the alternatives in such a way that he sees the risks
and the consequences more clearly. With the development of operations research and computers for handling
complex mathematical models, this approach is commonly used by large organizations where decision making
problem is very complex. The linear programming, venture analysis, game theory, queuing theory, probability
theory, etc are some of the examples of widely used Operations Research technique. Although these techniques

30
provide a good deal of analysis, yet the rational and psychological aspects of decision making cannot be ignored
totally. The attitude, intelligence and wisdom of the decision maker shall always have an important impact on the
quality of decisions made by him.

Meaning and Definition of Policy

A policy is a general statement that guides thinking, action and decision making of managers for the successful
achievement or organizational objectives Policies define the limits within which decisions are to be made. This
ensures consistent and unified performance and exercise of discretion by managers.
The top managers generally frame the policies. However, a manager at any other level may low down policies
within the limits of his authority and also within boundaries set by policies of his seniors.
A policy is not static and may be modified or reviewed in the light of changes in the environment. A policy may be
verbal, written or implied.
A well defined policy helps the manager to delegate authority without undue fear, because the policy lays down
the limits for decisions by the subordinates. Moreover, policies operate objectives, speed up decision making,
ensure coordination, help in training and orienting employees and ensure proper administrative control.
Different scholars have defined the term policy as follows:
Heinz Weihrich and Harold Kountz
Policies are plans in that they are general statement or understanding that guide or channel thinking in decision
making. Not all policies are statements they are often merely implied from the actions of managers.
F.T. Hanker
A policy is a statement, verbal, written or implied of those principles and rules but are set by managerial leadership
as guidelines and constraints for the organization’s thought and action.
E.F.I Brech
Policy is a patter of direction for the guidance of those who carry responsibility for the management of the
activities of the enterprise.
Dalton McFarland
Policies are planned expressions of the company’s official attitudes towards the range of Behavior within which it
will permit or desire its employees to act.
George Terry
Policy is a verbal, written or implied overall guide setting up boundaries that supply the general limits and direction
in which managerial action will take place.
Characteristics Or Features of Policy
Policy has the following important features:
1. A policy is a standing, repeat-use plan for answering the recurring problem of the similar nature.
2. It is a guide thinking in decision making. It is not an exact order in which things are done. It provides the
framework within which decisions should be taken. It unfolds the broad guidelines for achieving organizational
objectives.
3. It allows some amount of judgment or discretion on the part of the executives.
4. It prescribes the course of action selected to guide and determine present and future decisions.
5. It lays down the limits within which decisions are to be made. This ensures consistent and unified performance
and exercise of discretion on the part of the executives.
6. Policies are generally framed by top-level management, however, managers at other levels also can frame
necessary policies to deal with recurring problems of similar nature, such as departmental policies, divisional
policies – formulated at the level of department or division.
7. Departmental or divisional policies are formulated within the limits of the authority of the respective in charge
and also within the limits set by the organizational policies.

31
8. A policy is not static. Policies are reviewed and modified from time to time as per requirements or demands of
the changing environment.
Classification of Policies
A number of policies are used in an enterprise in order to attain the organizational objectives. Policies may be
classified as follows:
(A) On the Basis of Source
According to their source, origin or emergence, policies may be of the following kinds:
1. Originated Policy
It is also known as formulated policy. It is a policy deliberately formulated by top management to guide decision-
making at lower levels, board of directors, the chief executive, the executive committee of the board or heads of
the major departments or divisions. Such policies are broad in scope and affect usually the whole organization or
its major segments. These policies are often written ones, typically in the form of a policy manual of the
organization and flow down.
2. Appealed Policy
It is a policy formulated on the appeal or request of subordinates for filling the gaps left by originated policies. In
other words, when a subordinates refers an exceptional problem of recurring nature not covered by existing
policies, to his superior and appeals for a policy decision. When the superior makes decision in such a case, it
becomes a precedent (policy) for future action. Such policies may be formulated at any level and are in the nature
of flowing upward policies.
3. Imposed Policy
It is a policy, which an organization is compelled to adopt due to some outside forces, such as the government and
its regulatory agencies, trade association, trade unions.
(B) On the Basis of Functions
Policies are needed in all areas of business of an enterprise. These may be classified on the basis of different
managerial functions as follows:
1. Production Policy
Raw material, purchase policy, repairs and maintenance policy, technology adoption and development policy,
quality control policy, inventory policy and research and development policy are some examples in the category.
Indent for the purchase of raw materials should be made at least a week in advance is an example of Raw
Materials Purchase Policy.
2. Human Resource Policy
Examples in this category are recruitment policy, training policy, employee career development policy, wages and
salary policy, placement policy, promotion policy and transfer policy, employee participation policy. Any vacancy
shall be filled first by promotion from within the organization and then, if need be, from outside sources Is an
example of Recruitment Policy.
3. Marketing Policy
Capital structure policy, packaging policy, distribution policy, advertising policy, customer service policy, credit
policy, market research policy and important examples in this category. Customer’s complaint must be responded
within the next day is an example of Customer Service Policy.
4. Finance Policy
Capital structure policy, fixed capital policy, working capital policy, investment policy, research policy, dividend
policy are some examples in this category. Excess capital, if any should be invested for short term only, preferably
in limited company shares registered in stock exchange is an example of Investment Policy.
5. Accounting Policy
Inventory valuation policy, depreciation policy, provisions policy (for bad debts etc) deferred revenue expenditure
policy etc. are examples in this category. Deferred revenue expenditure (e.g., a huge amount spent on

32
advertisement) should be spread over the years of its benefit generation and written off every year accordingly, is
an example of Deferred Revenue Expenditure Policy.
Process of Policy Formulation
Policy formation is a creative and analytical phase of planning. It is based on the underlying objectives of the
organization. Policy formulation process involves various steps or activities and their analysis in order arrive at a
decision. The important steps involved in policy formulation may be briefly described as follows:
1. Understanding of Corporate Objectives
Organizational objectives are the starting point for policy formulation. They are ultimate results, which an
organization tries to achieve. They provide the foundation for policy formulation.
2. Analysis of the Environment
The basic purpose of policies is to integrate the organization with its environment; hence the policy makers must
know the nature and other feature of the organization environment. This requires a comprehensive analysis of the
environment – its opportunities and threats.
3. Internal Analysis
The policy makers should be fully conversant with the strengths and weaknesses of the organization. They should
clearly identify the factors which are critical for the success of the organization.
4. Definition of Policy Area
Policy makers should then specify clearly the areas, which require policies to be made.
5. Choice Or Selection of Policy
After evaluation of different policy alternatives, the most appropriate or suitable policy alternative is selected. This
is the stage where the manager arrives at the right policy in the concerned area.
6. Communication and Implementation of Policy
The selected policy is communicated in clear words to those who are supposed to implement it. Implementation of
policy is the operative aspect of policy whereby it is put into action. The concerned people apply the policy when
problematic situations arise or when they normally do their jobs.
7. Review and Modification of Policy
The correctness of a policy is perceived when it is put into practice. On the basis of feedback from the executors of
the policy, a periodical review is carried out and wherever necessary, desired modifications are made in the policy
from time to time. Sometimes outdated or obsolete policies are reconstituted or reframed.

Meaning and Definition of Leadership

Simply stated, leadership is the process of influencing the Behavior of others towards the attainment of desired
goal or purpose in given circumstances. Leadership is a tool to get the desired work done through employees or
subordinates. Leadership is majorly explained on the basis of influence relationships and motivational
considerations. One method of solving the problem of motivation is the effort to provide inspiring and effective
leadership to the employees. The success of a manager is largely decided by the fact as to how much effective he is
as a leader. Leadership is the ability to make people act the way the manager or leader wants. It is the process of
influencing others to become what they are capable of becoming in the view of the leader. Leadership, in essence
is carrying the people with the leader by their consent.
Different scholars have defined leadership in the following ways:
Rober Tannenbaum
Leadership is interpersonal influence, exercised in situations and directed, through the communication process,
towards the attainment of goals.
George Terry
Leadership is the leadership in which one person or the leader influences others to work together willingly on
related tasks to attain that which the leader desires.

33
Theo Haimann
Leadership can be defined as the process by which an executive imaginatively directs, guides and influences the
work of others on choosing and attaining specified goals by medicating between the individual and the
organization in such a manner that both will obtain maximum satisfaction.
E.B. Reuter
Leadership is an ability to persuade or direct men without use of the prestige or power of formal office or external
circumstances.
Weihrich and Koontz
Leadership is defined as influence that is the art or process of influencing people so that they will strive willingly
and enthusiastically inward the achievement of group goals.
Peter Drucker
Leadership is lifting of a man’s vision to higher sights, the raising of a man’s performance to a higher standard and
the building of a man’s personality beyond its normal limitation.
Characteristics or Features of Leadership (Nature)
The important characteristics of leadership, which indicate its nature, may be described as follows:
1. Leadership is an influence process stimulating group members.
2. It is a relational concept in which two sides are included, influencing agent and the persons influenced. The first
side is called leader the second side is called followers.
3. Leadership is a complex relationship which exists between the leader, the followers, the organization, the social
values and the economic and political condition. Each of these ingredients or factors has its own peculiarities which
are the cause of the complexity of this relationship.
4. Leadership required aptitude and basic attitudes with regard to Behavior pattern, tolerance, human psychology
and achievement.
5. Leadership depends on the properties of the situation and the persons to be led. In other words, these two
factors especially affect the effectiveness of leadership. Generally, it is the function of the leader, the followers and
other situational variables.
6. The leader’s role and the degree of its acceptance by the group members, condition the leadership. In other
words right person’s right role proves him to be a good leader.
7. Th core of leadership is to motivate the employees by integrating their individual goals with those of the
organization.
8. A leader leads he does not push. It means that a leader takes his followers and their achievements to such a
height where they do not believe to reach. When a leader leads, he serve also, i.e., he fully cars for the satisfaction
of his followers.
9. Leadership appears to be more of an emotional than an intellectual or rational process, because its direct
concern is with man whose both emotional and rational powers are to be stimulated or incited. Such powers can
be had by means of dedication not only by use of knowledge. Leadership is a rational to the extent that is is goal
directed.
10. Persons capable of exercising effective leadership in organizations are in critically short supply in relation to
their tremendous demand.
11. Leadership is part of management, but not all for it.
12. Leadership is a nebulous, not fully clear accept even after so research done in this field. In other words, still
there is no simple answer to the riddle.
Theories of Leadership
Leadership styles focus on the Behavior pattern exhibited by a leader during supervision of the subordinates. On
the other hand, who will emerge an effective leader? Or how effective a leadership style will be? such questions
are answered by leadership theories. Simply stated, theories focus on various approaches to successful leadership.

34
The theories of leadership may be classified into three categories, Trait theories, Behavioral theories and
situational theories.
1. Tratist Leadership Theory
In its early stage, this theory was called great man theory of leadership, which says that leaders are born and not
made. Ancient people thought that certain natural qualities of leadership exist in a person. Ultimately, the great
man theory gave way to a more real theory the Trait approach.
Trait theory views leadership as a conglomerate (or a large set) of different traits or qualities. The great man theory
believed that traits were inherited. Whereas, trait theory holds that traits are not always inborn but can be
acquired through education, training and experience. Trait theory holds that leadership is largely a matter of
personality, a function of specific traits. It suggests that there are certain unique qualities or traits clearly
identifiable in leaders. The greater the degree of such traits possessed by a person the better and more successful
will be proved as a leader. It further suggests that leaders differ from followers with respect to certain key traits
and these traits remain unchanged across time. The trait theory attempts to isolate the attributes of successful and
unsuccessful leader and using such a list of traits, it predicts the success of failure of persons as leaders. It is to be
noted that these traits are not measurable.
Various thinkers have differed on the package of traits. Many studies of traits have been made. Ralph Stogdill
found (1974) that various researchers have identified specific traits related to leadership ability as follows:
a. Physical Traits
Five in all, such as energy, appearance and height.
b. Intelligence and Ability Traits
Four in all, such as high level of intelligence and judgment.
c. Personality Traits
Sixteen in all, such adaptability, aggressiveness, enthusiasm and self-confidence.
d. Task-Related Characteristics
Six in all, such as achievement drive, persistence and initiative
e. Social Characteristics
Nine in all, such as cooperativeness, interpersonal skills and administrative ability.
It may be noted that the discussion of the importance of traits still goes on. More recently (1991). Shelly
Kirkpatrick and Edwin Locke have identified the following key leadership traits.
i. Drive
Including achievement, motivation, energy, ambition, initiative and tenacity (i.e. firmness).
ii. Leadership Motivation
The aspiration to lead but not to seek power as such.
iii. Self-Confidence
Including motional stability.
iv. Cognitive Ability
The ability of knowing, including consciousness of things and judgment about them.
v. An Understanding of the Business
According to them, less clear is the impact of creativity, flexibility and charisma (i.e. strong personal charm to
attract and influence) on the leadership effectiveness.
In general the study of leaders traits has not been a very fruitful approach to explaining effectiveness of leadership.
Not all leaders possess all the traits and many followers (non-leaders) may possess most or all of them. Further,
the trait theory does not indicate as to how much of any trait a person should have to be an effective leader. Also,
most of these so-called traits are really patterns of Behavior. Furthermore, the list of traits is not uniform. Effective
leadership is not a function of some traits only. Situation also plays an important role in making someone a
successful leader.

35
2. Behavioral Theories of Leadership
Dissatisfaction with the results of the trait approach has caused a significant change in the emphasis of leadership
research and the focus shifted in the actual Behavior and actions of leaders from the traits or characteristics of
leaders. Thus, Behavioral theories attempt to describe leadership in terms of what leaders do rather than what
they are. According to Behavioral approach, leadership is the result of effective role Behavior. This approach holds
that an effective leader is one who performs these acts which help the group to attain its goals.
The most popular models of leadership based on the Behavioral approach may briefly be discussed as follows:
Likert’s for systems of management. Rensis Likert has studied the patterns and styles of leaders and manager for
three decades (1961). He has developed a continuum of our systems of management or leadership styles as
follows:
a. System 1 Management
It is described as exploitative authoritative. Its managers are higher autocratic have little trust in subordinates and
motivate people through fear and punishment and only occasionally reward. They engage in downward
communication and limit decision making to them.
b. System 2 Management
It is called benevolent – authoritative. Its managers have a patronizing confidence and trust in subordinates. They
motivate with rewards and some fear and punishment. They permit some upward communication and solicit some
ideas and opinions from subordinates. They allow some delegation of decision making but with close policy
control.
c. System 3 Management
It is referred to as Consultative. Its managers have substantial but not complete confidence and trust in
subordinates. They usually try to make use of subordinates ideas and opinions. They use reward for motivation
with occasional punishment and some participation.
Leadership Styles
Simply stated, the term Leadership style refers to the pattern of Behavior, which a leader adopts in directing
Behavior of the followers towards the attainment of organizational goals. From another viewpoint, leadership style
is the position that a leader usually takes with regard to how much decision making freedom he allows to his
followers to have. Similarly, the Behavior exhibited by a leader during supervision of his followers is known as
leadership style. The nature and form of leadership style is affected by the following factors, existing
circumstances, time period, personality of the leader, his experience, attitude and orientation, nature of followers,
external environmental and so on. Most of the managers use several styles at one or the other point of time, but in
which category a manager falls, is decided by the style that is mostly used by him. Basically and broadly, there are
three important leadership styles as follows:
1. Autocratic Or Authoritarian Style
It is also known as directive style. It is basically treated as a traditional method of leadership. An autocratic leader
centralize power and decision making in him and exercise complete control over the subordinates. He dominates
and drives his group through coercion and command. He uses both positive and negative motivations, for example,
reward, praise, fear of criticism or punishment. When he uses positive motivations that is called benevolent
autocratic style and when he uses negative motivations that is known as dictatorial or oppressive autocratic style.
The autocratic leader likes, Theory X-undemocratic thinking, he emphasizes work only.
The autocratic leder himself decides all policies. He gives orders to the subordinates and expects them to follow
such orders completely without any grudge or question. Under this style, subordinate are thought to be
inexperienced and wisdom less and therefore they are given no freedom – the autocratic leader decides the
technicalities and modalities of the work and the course of action. Hence any one except the leader does not know
the future action.

36
Autocratic style permits quick decision making provides strong motivation and satisfaction to the leader centralize
power and dictates terms, yields positive results when great speed is required and needs less competent
subordinates at lower levels. Its major disadvantages are, It leads to frustration, low morale and conflict among
subordinates are induced to avoid responsibility, initiative and innovative Behavior. Full potential of subordinates
and their creative ideas are not utilized. In the absence of the leader, organizational continuity is threatened
because subordinate gets no opportunity for development.
This style may be appropriately used where subordinates are uneducated, unskilled, unwise, inexperienced, where
the company endorses fear and punishment as accepted disciplinary techniques and where the leader prefers to
be active and dominate to decision making.
2. Democratic Or Participative Styles
The democratic leader decentralizes power. He involves subordinates in the decision making. Decision is made in
consultation and participation with the subordinates. The style emphasizes group-discussion and group decision
making. The democratic leader like Theory Y-fairness, equity and human relation. He emphasizes both work and
worker. The subordinates are encouraged to utilize their full talent potential and capacities and assume greater
responsibilities. The democratic leader shares power with subordinates, delegate adequate authority to them,
keeps them well informed about matters of their interest and concern and allow adequate freedom for thinking,
discussing, expressing and making suggestions. He has faith in the subordinates and their wisdom, skills and
capacities. He holds objective approach. Communication pattern is multi-dimensional.
The major advantages of this style are, It improves job satisfaction and moral, develops positive attitude, reduces
resistance to change, generates self-motivation due to participative decision making and freedom of thought and
impression, increases productivity and develops better subordinates.
The major disadvantages of this style are, It is time consuming and causes delays in decision making; may fail when
the communication pattern and skill are not strong enough is not workable where subordinates do not want to
take extra responsibility of sharing in decision making and becoming part of every decision decreases productivity
in some cases especially when decisions are diluted to appease or please everybody.
Democratic style is more appropriate where subordinates are educated, skilled, wise, creative and enthusiastic,
where the company endorses self-direction and self-control and rewards and involvement as prime means of
motivation and control and where leader desires to hear subordinates before making decisions and to develop a
strong and capable force of followers.
3. Free Rein Or Laissez-Faire Or Permissive Style
There are several forms of this style. For example, in some cases the subordinates are given a goal to achieve in
their own way, whereas in some other cases they themselves decide their group goals. In fact, there is almost
complete delegation of authority and the path leading to the goals is decided by the subordinates themselves. The
leader behaves primarily as a member of the group and plays the role of a member only. He give his opinion or
suggestion only when it is demanded from him. Under this style, the group members are educated and motivated
by themselves, the leader is not required to educate but he acts, as a link primarily for arranging adequate
resources needed for attaining the goals, for establishing contact between employees and the outside world, for
collecting necessary information from external sources and for establishing coordination. The concept of
management by exception promotes this type of style. Subordinates themselves plan, control, evaluate and
decide.
The major advantages of this style are, It increases subordinates, freedom, develops their expression, compels
them to work as group members, increases job satisfaction and moral, utilities subordinates potential to the
maximum possible extent and promotes creativity or innovation.
The free-reign style is appropriate where subordinates themselves are well trained and highly knowledge about
their tasks and unhesitatingly ready to assume extra responsibility, where the company has a wide and effective
communication network acceptable to the subordinates and it endorses complete freedom and full involvement as

37
means of motivation and control and where the leader is ready to compromise with the status in the group and is
interested in delegating the whole authority to the subordinates. It is mostly used in circumstances where the
leader feels him in a position to leave the alternative or selection fully on the group’s choice.
Choosing a Leadership Style
Which leadership style is best or which to choose? Different scholar makes different suggestions in this regard.
However, widely known for their effective management practices the Japanese favour participative leadership
style. In actual practice it is difficult to hold my one style, is the best leadership style. As discussed above, each
style has got its merits and demerits. Hence the choice of a style will depend upon several factors, such as
suggested by Tannenbaum and Schmidt.
1. Forces in the Manager
Manager’s value system, confidence in subordinates, own leadership inclination and feeling of security in an
uncertain situation.
2. Forces in the Subordinates
Their need for independence, readiness to assume responsibility for decision making, tolerance, for ambiguity (or
strangeness), interest in problem at hand, understanding and identification with the goals of the organization,
knowledge and experience to deal with the problem and learned expectation of sharing in decision making
process.
3. Forces in Situation
The type of organization, group effectiveness, the complexity of the problem itself, pressure of time on the
situation etc.
Effective manager should be expert enough to adapt or modify their leadership style as per the need of the
moment. Sticking to one best considered style at all times in all situations with all people may not work well to be a
good leader. Most suitable leadership style is that which fits with the situation the followers and the leader.
Meaning and Definition of Planning
Planning is thinking in advance or before doing something. All kinds of organization do planning. Planning helps us
in looking into the future. Planning establishes goals or objectives and identifies the ways to achieve them. A plan
is a predetermined course of action to be taken in future.
George Steiner
Planning is a process that begins with objectives, defines strategies, policies and detailed plans to achieve them.
Peter Drucker
Planning is the continuous process of making present entrepreneurial (risk taking) decisions systematically and
with best possible knowledge of their futurity.
Nature of Characteristics of Planning
There are a number of features or characteristics of planning that indicate towards its nature. These may be
outlined as follows:
1. Goal-Oriented
Planning is goal-oriented in the sense that plans are prepared and implemented to achieve certain objectives.
2. Basic to all Managerial Functions
Planning is a function that is the foundation of management process. Planning logically precedes all other function
of management, such as organizing, staffing etc because without plan there is nothing to organize nothing to
control. Every managerial action has to be properly planned.
3. Pervasive
Planning is a function of all managers, although the nature and extent of planning will vary with their authority and
level in the organization hierarchy. Managers at higher levels spend more time and effort on planning than do
lower level managers.

38
4. Interdependent Process
Planning affects and is affected by the programs of different departments in so far as these programs constitute an
integrated effort.
5. Future Oriented
Planning is forward looking and it prepares an enterprise for future.
6. Forecasting Integral to Planning
These essence of planning is forecasting. Plans are synthesis of various forecasts. Thus, planning is inextricably
(inseparably bound up with planning).
7. Continuous Process
Planning is an ongoing process. Old plans have to be revised and new plans have to be prepared in case the
environment undergoes a change. It shows the dynamic nature of planning.
8. Intellectual Process
Planning is a mental or conceptual exercise. It therefore involves rational decision making, requires imagination,
foresight and sound judgment and involves thinking before doing thinking on the basis of facts and information.
9. Integrating Process
Planning is essential for the enterprise as a whole. Newman and others have drawn our attention towards this
feature of planning, without planning, an enterprise will soon disintegrate the pattern of its actions would be as
random as that made by leaves scampering (running quickly in short steps) before an autumn wind and its
employees would be as confused as ants in an upturned anthill. If there are no plans action will be a random
activity in the organization instead there will be chaos.
10. Planning and Control are Inseparable
Unplanned action cannot be controlled, without controlled, planned actions cannot be executed. Plans furnish
standards of control, In fact Planning is meaningful without control and control is aimless without planning.
Planning is measuring rod of efficiency.
11. Choice among Alternative Courses of Action
The need for planning arises due to several ways available for an action. If there is only one way-out left, there is
no need for planning.
12. Flexible Process
The principle of navigational change (i.e. change according to changes in environment) applies to planning. In other
words, effective planning requires continual checking on events and forecasts and the redrawing of plans to
maintain a course towards desired goals. Thus, plans have to be adaptable to changing circumstances.
Planning Process
The process of planning involves the following steps:
1. Analyzing Environment
At the outset, the internal and external environment is analyzed in order to identify company’s strengths and
weaknesses (in internal environment) and opportunities and threats (existing int the external environment). This is
also known as SWOT (strengths, weaknesses, opportunities and threats) analysis.
2. Establishing Objectives Or Goals
In the light of the environmental scanning (study), clear or probable opportunities that can be availed are
identified. In order to avail them, objectives or goals are clearly defined in specific term along with priorities in all
the key areas of operations. Major problems associated with such objectives are also identified and defines, so that
there may be special emphasis on their planned solutions.
3. Seeking Necessary Information
All relevant facts and data are collected from internal and external sources. For example, availability of supplies,
physical and human resources of the company, finances at disposal, relevant government policy, general economic
conditions and relevant specific market situation. Then such investigated and collected information and factors are

39
analyzed. Such information analysis is used in two ways – first, to make necessary modifications in objectives or
goals and secondly to take help from them in premising (considering) assumptions.
4. Premising Or Establishing the Planning Premises
In order to develop consistent and coordinated plans, it is necessary that planning is based upon carefully
considered assumptions and predictions. Such assumptions and predictions are known as planning premises. The
assumptions under which plans are supposed to operate should be clearly brought out. Such presumptions and
forecasts are prepared for various areas, such as sales, prices, wages, taxes, changes in fashions and habits,
purchasing power, standards of living, population competitors and so on.
5. Identifying and Developing Alternative Courses of Action
After establishing objectives or goals and taking other related steps, feasible alternative programs or courses of
action are seached out. Impossible or highly difficult propositions are left out.
6. Evaluating the Alternatives
Probable consequences of each alternative course of action in terms of its pros and cons (e.g. costs, benefits, risks,
etc) are assessed and than relative importance of each of them is found out by looking at their overall individual
strengths and limitations especially in the light of the present objectives and the environment of the company.
7. Choosing the Most Appropriate Alternative Or Course of Action
After weighing the pros and cons of each of the alternative courses of action and realizing their individual relative
importance, the most appropriate alternative in the light of the overall consideration is selected to be followed. In
other words, the alternative which appears to be most feasible and conducive to the accomplishment of
company’s predetermined objectives, is chosen as a final plan of action – as strategy.
8. Preparing the Derivative Plans
Derivative plans involve short range, operating plans that are useful in day-to-day operation and provide a working
basis for such operations. Such plants are developed in the form of schedules, budgets, programs, procedures,
methods, rules, policies etc. The derivative plans are prepared in different departments and their timing and
sequence are also specified. Such plans are prepared in concrete terms showing specific results to be attained
within specified time limit and by utilizing the allocated resources. An integrative mechanism has also to be
provided for effecting coordination between and among different derivative plans being executed by different
departments.

Environment
Organizations are not island in themselves they function neither in isolation nor in vacuum. They are part of a
society and exist in association with their environment, i.e., certain facts surrounding various situations.
Organization’s profitability is not determined by what the products look like, nor whether it embodies high or low
technology; it is rather determined by the environment within which it operates. Thus, organizations are affected
by environment. If an organization is to remain successful and prosperous, it must regularly adapt to its
environment, which is uncertain and changing. Failure adequately adapt to the environment may be a major cause
of organization’s failure. However, organizations also affect the environment.
Although William Starbuck has identified some 20 different uses of the work environment in order to perform an
efficient and effective environmental analysis the environment of an organization is generally divided into two
distinct levels; external or general and internal or specific environment.
External or general environment is a set of those factors that affect and organization from outside is boundaries.
The external environment contains elements that have broad and long-term implications for managing the
organization. Such environment has both direct action and indirect action elements. Direct action element of
external environment include various stakeholders lie shareholders, customer, suppliers, competitors, employees,
community (or society), special interest groups, government and international issues. They are also designated as

40
economic environment or task environment. Indirect action elements of external environment include political-
legal socio-cultural and technological components.
Internal or specific or organizational environment is a set of those factors that affect an organization from inside its
boundaries. It contains elements that exist within the organization and normally have immediate and specific
implications for managing organization. Broadly speaking, internal environment includes organizational objectives,
organizational resources, organizational structures, processes and techniques. Organizational resources include,
financial and physical or material resources and human technological capabilities. Organization structures,
processes and techniques include; marketing, production, finance and accounting. From a more specifically
management viewpoint, internal environment includes planning, organizing, staffing, directing and controlling.
Environment Analysis
Organizations are open system of management that constantly interacts with their environment. Environmental
analysis is the study of organizational environment to identify and indicate those environmental factors that can
significantly influence organizational operations and manager’s strategic decision making. It is thinking about the
unthinkable, and it is seeing new insights rather than extrapolation. Environmental analysis is the discerning
(seeing and understanding well) of those aspects of the environment, which shall have the greatest influence on
the organization’s ability to achieve its objectives. Such a discerning is made within and with the help of a
framework provided by the knowledge of the organization’s goals and the existing strategy of the organization.
Environment Diagnosis
Environment diagnosis is an exercise attempted to identify the factors of causes in the environment that affect the
function of an organization and use such identification as a base for developing plans or strategic to improve or
maximize the dynamism and effectiveness of the organization. Environment analysis is a tool of environmental
diagnosis.
Environmental Diagnosis Analysis and Diagnosis
The purpose of environment analysis and diagnosis is to identify the ways in which changes in various
organizational factors may directly and indirectly influence the organization and management. Managers
commonly perform environment analysis in order to understand different activities and happenings inside and
outside their organization and thereby increase the chances of framing sound and effective organizations and
managerial strategies by coping with the probable demands of the environment.
Environmental analysis is required due to its needs and importance for the following reasons:
1. Environmental factors are primary impact makers on corporate strategy of organizations.
2. Such analysis helps in anticipating opportunities and to plan alternative responses to those opportunities.
3. It helps in determining threats and developing an early warning system to prevent threats to the organization or
to determine the risks that may be faced by organization in its future operations.
4. It helps to identify those adjustments or adaptations, which are required for greater accomplishment of
organizational objectives.
5. It is sort of SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis which helps in deciding about the
rights course of action for managerial to successfully negotiate with the prevalent circumstances around the
organization in order to ensure its survival, growth and development.
6. Environmental information strengthens the planning process and strategy formulation.
Environmental analysis is well accepted and recognized as an essential ingredients of strategic management. It
may, however be noted that the Behavior of the environment may be predictable, partially predictable or
unpredictable. Further, the predictable or partially predictable Behavior may be controllable, partially controllable
or uncontrollable. Moreover the environment may be homogeneous or diversified and stable or changing.
Environmental Influences on Organization and Management
Environmental factors affect an organization in two ways (i) they set the limits or constraints over its functioning,
(ii) they provide opportunity and challenges. The factors themselves act as limits, which are sometimes visisble and

41
at other moments, invisible. The environment provides opportunities by way of markets for new products, etc and
challenges in the form of competitors etc. We daily find in newspaper headlines about government’s new
regulations, competitors, new schemes, consumer revolts, anti pollution activities of the community, trade union,
strikes and so on. To deal with these groups is an integral part of all manager’s job. Such a job becomes more
important the higher a manager rises in managerial hierarchy.
The Internal Environment
The part or level of an organization’s total environment that exists inside the organization and usually has
immediate and specific implications for managing the organization is called the internal environment. It consists of
those factors inside an organization that affect the management of the organization. In broad terms, the aspects
included in the internal environment are, objectives, resources and facilities (human and physical), informal
organization (or group), other divisions or units of the organization, unions, marketing and accounting. It may be
notes that employees and unions of an organization have such a nature as they are to be included both in external
and in internal environment. From a more specifically management viewpoint, internal environment includes the
state of planning, organizing, staffing, directing and controlling with the organization.
Matching the Internal Environment with the External Environment
It is clear from the above discussion that on organization (internal environment) must be suited to its external
environment. The management develops its organizational strategies through an environment analysis. On the
basis of the results of such environmental analysis, proper organizational strategy may be systematically developed
by means of the following special tools and techniques.
1. Critical Questions Analysis (CQA)
Several contemporary management writers suggest that an appropriate organizational strategy is a process of
answering some critical or basic question as follows:
(a) What are the purposes and objectives or goals of the organization?’
The answer to this question unfolds the desination where the organization wants to go. Appropriate strategy must
reflect organizational purpose and objectives in order to minimize inconsistencies in strategy.
(b) Where is the organization currently heading?
The answer to this question tell about the state of achievement of organizational goals and also whether the level
of present progress is satisfactory or not. Managers come to now the gaps in their performance. In fact, this
question focuses on where the organization is actually going – whether on desired path or in wrong direction.
(c) What is the present environment in which the organization exists and what changes are expected in it in
relevant future?
The answer to this question brings out the special features of the current environment and its future trends.
However, it may be noted that this question focuses on factors both inside and outside the organization. For
example, lack of technically qualified personnel in the organization and a sudden arrival of latest computerized
technology in the market are the factors that exist respectively in the internal and the external environment.
(d) What steps are essential to better accomplish the objective in future?
In fact, the answer to this question focuses on the requirements of the actual strategy of the organization in order
to remove all inconsistencies and gaps in the currently adopted strategy. However, it may be noted that correct
answer to this question depends on the opportunity provided to the managers to reflect on he previous three
questions.
Thus, managers can have appropriate strategy to match internal environment with external environment only if
they have a clear understanding of three things, (i) Where the organization intends to go, (ii) Where the
organization is currently going, (iii) What is the environment in which it exists and is expected to exist.
2. SWOT analysis
Strategic thinking tends to focus on analysis of the strengths and weaknesses of the firm and opportunities and
threats of the external environment. Only after completing a comprehensive appraisal of the internal and external

42
situations (strengths, weaknesses, opportunities and threats) of the firm, managers could consider the viable
strategic options. Such options could only be broadly classified as, for instance, growth (to increase the amount of
business), diversification (to reallocate resources to new attractive products in order to exploit new market
segments), harvest (to maximize the short term cash flow from the business), retrenchment (to strengthen or
protect the amount of business being currently generated) and divestiture (to eliminate an organization segment,
commonly known as Strategic Business Unit (SBU), that is not generating a satisfactory amount of business and
that has little hope of doing so in the near future). Good strategic option (selected out of the aforesaid strategic
options) should build on strengths and exploit opportunities.
The logic of this analysis indicates that as each firm will be facing a different set of opportunities and threats (Os
and Ts), and each will have differing strength and weaknesses (Ss and Ws), the strategies that result will be unique
to the firm. However, a precaution has to be taken in selecting the managers who conduct the SWOT analysis,
because if it is given to inexperienced hands, then it may tend to generate long lists of points and the longer the
list, the cloudier will be the emerging strategic picture.
It may be noted that they may be two ways to superior performance of the organization (i) either the organization
should become the lowest-cost producer in its industry, (ii) it should differentiate its products or services in such
respects as are valued by the customers so high that they will pay a premium price to get and enjoy such edging
benefits. Thus, organizations can choose to apply either of these two general strategies.
3. Business Portfolio Analysis
Under this type of analysis, sound and unsound business activities are separately identified in relation to market
share of business and the growth of markets in which business exists. Sound activities are then continued,
supported and emphasized, while unsound activities are discarded, discontinued and de-emphasized.
4. Competitor Analysis
Managers should know quite a lot about their competitors because it is essential to stay in competition in order to
capture a lion’s share of the market. Organizations should devote the time and effort required to gain a deep
understanding of their competitors. If they know their enemy, it will help them to anticipate the strategic moves
that the rivals might make. For purposes of making a systematic examination of the competitors and their
strategies the following steps are required to be taken:
(i). To examine the existing and potential (future) competitors by close scrutiny of the needs that organization’s
products or services are satisfying.
(ii). To examine the competitor’s current activities, capabilities, drives, expected moves and vulnerabilities
(weaknesses).
(iii). To concentrate on four main areas with a view to establishing a comprehensive profile of the competitors
their future goals, assumptions, current strategy and capabilities.
Meaning of Span of Management
The term Span of Management is also known as Span of Control or Span of Authority or Span of Supervision.
Simply stated Span of Management means the number of subordinates that a manager can effectively manage.
This concept implies that the number of subordinates directly reporting to a superior should be limited so as to
make supervision and control effective, because executives have limited time and ability. It is an accepted
proposition that the larger the number of subordinates reporting directly to a manager, the more difficult it will be
for him to supervise and coordinate their activities effectively.
What is an Ideal Span?
It is sometimes suggested that the span of management should neither be too wide nor too narrow. Then, the
question arises as to how many persons a supervisor can manager effectively. Some experts tell that the ideal span
is 4 at higher levels and 8 to 12 at lower levels. But the number of subordinates cannot be easily determined
because the nature of jobs and capacity of individuals vary from organization to organization.

43
Classical View of Span of Management
The first person to draw attention to the principle of span of management was a British General, Sir Iaan Hamilton
(1920) who said that the average human brain can be effective in handling from 3 to 6 other brains. After a lengthy
study of military organizations, he concluded that the span should be smaller at the top of the organization, where
thought processes were more complicated and that it should set progressively larger toward the lower levels,
where thought processes were less complicated and more routine.
V.A. Graicunas (1933) suggested that as the number of subordinates increases arithmetically, the number of
potential relationships, between the superior and subordinates increases geometrically. For example, Graicunas
indicates that if a superior manages 2 subordinates, there are actively 6 different relationships. Thus, he pointed
out that an increase in the number of subordinates causes almost an explosive growth in the number of possible
relationships. Hence, only number of bodies in a span should not be counted, but the multifarious relationships
generated by the numbers must also be recognized while deciding for the span of individual manager.
Classical writers advocated a span of control ranging from 3 to 7 or 8 persons at the higher levels and a span of 20
to 30 persons at the lowest level.
Modern View of Span of Management
Contingency or Situational Approach (Factors Determining Span of Management
The evidences indicate that spans of control cannot be stated in absolute terms as done by the classical scholars.
There is no correct span for all situations. The predominant current view is to look for the causes of limited span in
individual situations, rather than to assume that there is a given numerical limit generally applicable to all.
Pragmatically speaking, a really proper span of control is one that is not improper.
Modern Approach has shifted away from trying to find out a universal formula of span of management. Instead of
emphasizing absolute spans (specific numbers), the current view is that span is more flexible thing, and there is no
one correct span for all situations. The appropriate number of span of control for a particular manager is
contingent on several factors that may be discussed as follows:
1. The Capacity and Ability of the Superior
The personal abilities and influence of the superior (manager) play an important role in determining the number of
subordinates that can be effectively supervised by him. If the superior possesses qualities of leadership, decision-
making ability, communication skill, motivating strength and time management expertise, in greater degree, that
the span of control may be wider. In other words, if the superior (executive) can comprehend problems quickly,
can get along well with people and can command loyalty and respect from the subordinates, then he can supervise
a large number of subordinates effectively.
2. The Capacity and Skill of Subordinate
In case the subordinates are competent, well trained, experienced and have good judgment, initiative and a sense
of obligation, then they seek less guidance from their superior and therefore the superior manager will be in a
position to supervise a large number of subordinates. On the other hand, if the manager has no confidence in the
capacity and caliber of his subordinates, then the span will be restricted to be narrow.’
3. Nature and Importance of Work Supervised
If the work is simple and repetitive, the span of management may be wider, because it does not require much
attention and time on the part of the superior. On the other hand where the subordinate’s job is complex requiring
close supervision by the superior, then the number of persons under him should be narrow or small. Such
characteristics generally indicate whether jobs are easy or complicated, dissimilarity of jobs assigned the number
of new problems that may be encountered, the need for frequent consultations and communication, the physical
dispersal of jobs, geographically location of members, nature of decision making by the subordinates and so on.
The more a subordinate’s job involves unpredictability, variety, discretion and responsibility, the smaller span is
likely to be.

44
4. Clarity of Plans and Responsibility
If the plans and policies are clear and easily understandable and if the functions and responsibilities are laid down
in as definite terms as possible, the task of supervision is easier and the span of management can be wider because
the subordinates need not go to superior frequently for orders, instructions and guidance.
5. Degree of Decentralization
If there is proper delegation and decentralization of authority, then the superior can successfully supervise a large
number of subordinates, because in that case he has not to take any decisions himself and merely provides
encouragement and occasional direction. In case of centralization of authority, the span will be narrow.
6. Staff Assistants
When staff assistants (experts) are employed to advise and serve the superiors and the subordinates, then contract
between the superior and the subordinates may be reduced and the span be broadened.
The Impact of the Span of Organization
The actual span of supervision affects the organization in different ways. The structure of organization produced by
the narrower span is called tall organization, and the wider span produce what is known as flat organization. The
narrow span requires multiple levels of supervision and hence longer time for communication. Tall organization is
more expensive and complicates the process of communication and integration. A narrow span results in harassed
subordinates and frustrated superiors. However, a narrow span enables managers to exercise close supervision
and control and wherever these are needed, the narrow span is better suited.
Conversely, a wider span results in fewer levels of supervision. The flat organization facilitates better
communication and coordination, but it permits only general supervision due to the limited availability of time.
The wide span results in harassed superiors and frustrated subordinates.
Robert House and John Miner (1969) have summarized the entire question of span of management as follows:
1. Under most circumstances the optional span is likely to be in the range of 5 to 10.
2. The larger spans (say 8 to 10) are most often appropriate at the highest policy making levels of an organizations.
3. The number of effective spans of first-line supervisors is contingent upon the technology of organization.
4. Appropriate span for specific situations depends on a set of local factors (for example, task, interdependencies
and leadership skills).

Meaning and Definitions of Control

Control is necessary function to make all other managerial functions effective. Its ensures that the corporate goals
are achieved effectively and efficiently. Controlling is the process that the corporate goals are achieved effectively
and efficiently. Controlling is the process by which management regulates that work activities according to
designed plans, policies, procedures and programs so as to ensure the accomplishment of the organizational
resources and people in a direction leading to organizational goals.
some important definitions of control may be given as follows:
Henri Fayol
Control consists in verifying whether everything occurs in confirmatory with the plan adopted, the instruction
issued and principles established. It has for object to point our weaknesses and errors in order to rectify them and
prevent recurrence. It operates on everything, things, people, action.
Theo Haimann and William Scott
Controlling is the process which check the performance against standards. It makes sure that organization goals
and objectives are being met.
Robert Anthony
Management control is the process by which managers assure that resources are obtained and used effectively
and efficiently in the accomplishment of an organization’s objective.

45
Weihrich and Koontz
Controlling is the measurement and correction of performance in order to make sure that enterprise objectives
and the plans devised to attain them are being accomplished.
Characteristic Or Features of Control
Controlling has the following important features, which clearly bring out its nature:
1. Control is a Continuous Process
Control is not a single step activity. Rather, it is a dynamic process that involves constant analysis of actual and
planned performance and the resultant deviations as well as the revision of objectives, plans, policies, procedures,
positions, incentives etc in the light of such deviations.
2. Purpose of Control is Positive
George Terry says, the function of controlling is positive – it is to make things happen, i.e. to achieve the goal
within stated constraints, or by means of the planned activities. Controlling should never be viewed as being
negative in character – as a hurdle in getting objectives won. Controlling is a managerial necessity and a help, not
an impediment or a hindrance.
3. Controlling is a exercise at all levels in the Management Hierarchy
Control is a function of every manager, from Chairman and Managing Director to a supervisor, though it may vary
in scope among managers. For example the top managers are concerned with administrative control, which is
exercised through broad policies, plans and other directives. The middle level managers are concerned with the
executor control for the purpose of getting the plans, policies, and programs executed. At the lower level,
supervisors exercise operational control to ensure successful performing of actual operations or production
activities by their close monitoring.
4. Control Guides Behavior of People and use of Resources and Facilities
Control guides the action and the Behavior of the people who are responsible for carrying out different activities or
operation, and also guide the use by them of different organizational resources and facilities in order to effectively
and efficient, contribute toward accomplishment objectives.
5. Control is mainly Forwarding Looking
Control mainly aims at the future because future is a head and past in gone. However, the experience about the
criterion for future standards, but it may be noted that control may also be past control and current control. Thus
it is not full correct to say that control is looking back.
6. Control Measures and Evaluate Performances
Controlling involves measurements of the actual results in order to facilitate other evaluation or comparison
against the planned results. It also suggests guidelines for future course of action.
7. Control Facilities Coping with Environment
Effective controlling system foresees the likely changes in consumer preferences and demands and therefore
guides the members of the organization to modify the products or services to meet the anticipated needs and
requirements of the consumers in the future market.
8. Control Closely Related to Planning
Planning is the basis of controlling. Control implies the existence of certain standards or yardsticks against which
actual results are to be evaluated. Planning provides such standards, if there is no plan; it means that there is no
basis for control. Planning sets the course of action and controlling monitors the operation or activities to follow
such course of action. In fact, planning initiate the process of management and control completes this process.
Without a plan control is blind because it does not know where to go and weather it is going on a right path or not.
Control looks active in the company of a plan because then it seeks to compel events to confirm to the plan.
Without a plan is handicapped. H.G. Licks comments, Planning is clearly a pre-requisite for controlling, it is utterly
foolish to think that controlling could be accomplished without planning. Without planning there is no

46
predetermined understanding of the desired performance. In fact planning without corresponding control is likely
to be a hollow hope.
On the other hand, planning without control is not a reality. In the absence of a control system, best designed
plans may go astray and thus will fail to reach their destination. Control ensures to the organizational activities and
the functions on the right track and aligned with plans and goals. Standards for evaluation of performance are the
beginning point of the control process. Controlling indicates the need for revision of plans in case the standards are
not achievable or if the environment has changed. The information collected by the control system is also useful
for planning in future. Without control planning will be a futile exercise remaining on the papers only. Control
makes plans meaningful and effective, similarly controlling is effective only when it is specially tailored to plans.
Thus, it is correct to comment that planning is manning less without control and control is aimless without
planning. Weihrich and Kortz comments, planning and controlling may be viewed as the blades of a pair of scissors,
the scissors cannot work unless there are two blades. Without plans and objectives, control is not possible because
performance has to be measured against some established criteria. Similarly, without control, realization of plans
is not possible be guided on the right path leading to the accomplishment of plans. This is why that Weihrich and
Koontz has commented as follows. Planning and controlling are inseparable the Siamese twins of management.
Any attempt to control without plans is meaningless, since there is no way for people to tell whether they are
going where they want to go (the result of the tusk of control) unless they first know where they want to go (part
of the task of planning). Plans thus furnish the standards of control. Thus, there is complete interdependence
between planning and controlling.
Importance of Control
The major benefits of a good control system may enlist as follow:
1. Stimulates Action
A good control system stimulates action by spotting the significant deviations from the original plan and by
highlighting them for the people who set thing right i.e., who can take corrective action. Thus, it guides and keeps
the organization’s operations on the right back.
2. Facilities Decentralization and Coordination
Control encourages top management to delegate authority to subordinates throughout the organization without
completely losing their grip over it. In the context of predetermined goals, control keeps all activities and efforts
within their specified limits and makes the operations to move towards organizational goals through coordinated
efforts.
3. Facilities other Managerial Functions
Control and planning are closely related to each other. Control points out the deficiencies in plans and policies by
verifying their quality and correctness. It helps to review, revise and update the plans and policies in order to cope
with changes in the environment. By doing so, control also indicates the limitations and drawbacks of organizing
staffing, motivation, leadership and decision-making.
4. Enhances Employee Morale
Control is vital to the strength and moral of company employees because it prevents the individuals form going
astray from plans and thus prevents anarchy to develop. Employees do not like a situation that goes out control
because in that case they may become victims to any within and cannot predict what will happen to them. Thus
without control their morale may be lowered. The tremendous complexity of modern organization and certain
psychological dependencies of the employees on order and stability, make the control system a necessity.
5. Creates Psychological Pressure to Work
If there exists a sound control system in an organization, employees have psychological pressure to work hard and
perform well. Efficient control system provides order and discipline in activities and helps to minimize dishonest
Behavior on the part of employees. Employees remain alert in their efforts.

47
6. Other Benefits
Several other benefits from good control system may be as follow:
 Control is necessary for the optimum use of organization’s scarce resources.
 It helps in organization’s growth and change
 It helps in forecasting and thus provides basis for future action.
 Control techniques like rules, procedures, budgets etc stand as effective guides to managers.
 In the absence of control, the plans will remain but mere pipedreams.
 Control helps in judging the accuracy of standards.
 In the area of their responsibility, if managers do not control events, they will be at the mercy of the
events.

Requirements of Effective Control System

A control system is a deliberate creation, not an automatic phenomenon. Through different organizations may
design their control systems according to their unique and special characteristics or conditions, yet in designing a
good and effective control system the following basic requirements must be kept in mind:
1. Focus on Objectives and Needs
The effective control system should emphasis attainment of organizational objectives and therefore it should be
designed in accordance with practical needs of the enterprise. For example, the marketing department may use
pre-controls for introduction of new products into the market, and current control for specific advertisements.
Similarly, more sophisticated and broad ranging controls may be developed for production managers than for a
shop floor supervisor. Thus, controls should be tailored to plans and positions.
2. Prompt Indicator
An ideal control system could detect and report significant deviation as promptly as possible so that necessary
corrective action may be taken adequately in time. This needs an efficient system of appraisal and flow of
information. Rapid reporting of variations of the core of control.
3. Forward Looking
Control should be future-oriented, marketing valuable forecasts to the managers so that they become aware of the
problems likely to confront them in the future.
4. Understandable and Economical
Control tools and techniques adopted should be such as are clearly understandable by the managers. They must
know all the details and critical points in the control device as well as its usefulness. If developed and complex
statistical and mathematical techniques are adopted, then proper training should be imparted to the persons who
are supposed to execute such control system. Besides the control system should be worth its costs. Expensive and
elaborate control system will not suit, for example to small enterprise.
5. Control by Functions and Factor
Control should emphasis function, such as production, marketing, finance, human resources, etc it should also
focus on four factors, quality, quantity, time use and costs. Not one but multiple controls should be adopted.
6. Strategic Points Control
Every detail or thing is not be controlled in order to save time, cost and effort. Certain strategic or vital points in
the functioning of an enterprise must be identified and appropriate control devices should be designed and
imposed at those stages. Thus, only critical, major deviations should be attended to and control should
concentrate on exceptional problems only. Control should be selective and concentrate on key result areas of the
company.
7. Flexible
It means that the control system should be able to accommodate such modifications or revisions as are made
necessary in the wake of rapidly changing and complex organizational environment. Control must not become

48
ends in themselves. They must be suited to the environment in which an organization finds itself. Flexibility in
control system is generally achieved by the use of alternative plans or flexible budgets.
8. Objective
To the maximum possible extent, controls, i.e., standards of performance should be objective (unbiased) and
specific. For this purpose control measures should be verifiable or quantified. Standards should be determined
based on facts and participation.
9. Indicative as well as Suggestive
Controls should not only be able to point to the deviations, but they should also suggest corrective action that is
supposed to check the recurrence of variations or problems in future.
10. Correct Action at Correct Time
A significant test of the effectiveness of a control system is whether correct action is taken at correct time.
11. Attention to Human Factor or Emphasis on Self-Control Aspect
It is said that excess control causes corruption. Control system should be designed is such a way, as it does not
arouse negative reactions among organizational people. Good controls are designed to develop positive feelings in
the members by focusing on work and not on worker. It facilities creative action within properly laid down limits.
The aim of control should be to create self-control among members. For this purpose, the tendency over the years
has been toward such techniques as participative budgeting and human resources accounting.

Meaning and Definition of Motivation

Success at work is not a matter of only technical expertise but also dependent on the interest of the worker.
Creating interest in people to give their best to the work and the workplace is the key to motivation. For this
purpose, the managers should know why people act as they do and what will make them to give their best on their
jobs.
Some important definitions of motivation may be given as follows:
Carroll Strartle
Motivation is a reported urge or tension to move in a given direction or to achieve a certain goal.
Micheal Jucius
Motivation is the art of stimulating someone or oneself to set a desired course of action or push the right button to
get the desired action.
E.F.I. Brech
Motivation is a general inspirational process which gets the members of the team to pull their weight effectively,
to give their loyalty to the group, to carry out properly the tasks that they have accepted and generally to play an
effective to play an effective part in the job that the group has undertaken.
Weihrich and Koontz
Motivation is a general term applying to the entire class of drives, desires, needs, wishes and similar forces. To say
that managers motivate their subordinates is to say that they do those things which key hope will satisfy these
drives and desires and induce the subordinates to act in a desired manner.
In sum, motivation is a psychological process which is related to human side and through which the desires, needs
or tensions of the employees are understood and they are inspired in such a way that they proceed in a desired
direction, provide maximum help in the achievement of specified goals, keep on the drive to work, continue to
cooperate with each other, develop and maintain the sense of belongingness towards the enterprise, feel satisfied
and their morale remains high. Thus, motivations are the process of steering a person’s inner drives and actions
towards certain goals and committing his energies to achieve these goals.
Characteristics Or Features of Motivation
Some important features of motivation may be brought out as follows:

49
1. Personal and Internal Feeling
Motivation is a psychological phenomenon, which is generated within an individual in the form of an energetic
force that drives him to behave or not to behave in certain ways. These are some environmental and other forces
that trigger these drives.
2. Art of Stimulating Someone Or Oneself
A manager can use motivation to inspire not only his subordinates, but to motivate himself also. For self-
motivation, he has to take following steps
 He should set a goal for himself and should not close sight of it.
 He should supplement his long term objectives with short-term goals.
 He should learn a challenging task every year.
 He should make his job a different one with a view to improving objectives for his position and increasing
his productivity.
 He should develop an area of expertise by building on his strengths and developing his weaknesses into
strengths.
 He should give himself the feedback and reward himself by celebrating his accomplishment.
3. Produces Goal – Directed Behavior
Motivation is closely intertwined with Behavior. As a Behavioral concept, it directs human Behavior toward certain
goals.
4. Motivation can be either Positive or Negative
Positive motivation is also known as Carrot Approach and includes use of additional pays, incentives, praise
possibility of becoming a permanent employee etc. Negative motivation is also called Stick Approach and implies
punishment, such as reprimands, threat of demotion, threat of termination, etc.
5. The Central Problem of Motivation is HOW
Motivation is necessary for successful achievement of goals. However, it is a complex process because different
employees have different needs, their motives are varied and needs and motivates change from time to time.
Moreover, motivation is partly logical and partly emotional. Further, people satisfy their needs in many different
ways. Hence, the central problem of motivation is how to inspire such a typical group of individuals towards
attainment of goals in a concerned manner.
6. Motivation is System Oriented
Motivation is the result of interplay among three sets of different factors:
 Influences operating within an individual, for example, his needs, tensions, motives, values, goals etc.
 Influences operating within the organization for example, its structure, technology, physical facilities,
various processes, the nature of job, advancement avenues etc.
 Forces operating in the external environment, for example, society is culture, norms, values, customs,
government policy regarding the business of the enterprise etc.
7. Motivation is a Sort of Bargaining
Inducements from the side of the enterprise and contributions from the side of the employees.
8. Motivation is different from Satisfaction
Motivation refers to the drive and effort to satisfy a want or goal. Satisfaction refers to the contentment
experienced when a want is fulfilled. In other words, motivation implies a drive toward an outcome and
satisfaction is the outcome already experienced.
Theories of Motivation
Different management scholars to explain how Behavior is energized, gets started, sustained, directed or stopped
have propounded several theories.

50
Maslow’s Needs Hierarchy Theory
Maslow’s need priority model is one of the most widely referred to theories of motivation. Abraham Maslow, a
clinical psychologist, thought (1943) that a person’s motivational needs could be arranged in a hierarchical manner,
starting in an ascending order from the lowest to the highest needs and concluded that once a given level of needs
(set of needs) was satisfied, if ceased to be a motivator. The next higher level of need is to be motivated in order to
motivate the individual. Although the hierarchical aspects of Maslow’s theory are subject to question and often not
accepted, his identification of basic needs has been fairly popular.
The five categories of needs may be described as follows:
1. Physiological Needs
These are the basic needs for sustaining human life itself: needs for food, drink, shelter, clothing, sleep, sex etc.
Man can live on bread alone, if there is no bread. But once these basic needs are satisfied, they no longer
motivate.
2. Safety Needs
Safety or securing needs are concerned with freedom from physical or psychological (mental) harm, danger,
deprivation or threat, such as loss of jobs, property, food, clothing or shelter.
3. Social Or Affiliation Or Acceptance Needs
These are belongingness needs emanating from human instinct of affiliation or association with others. These
include owners, love and affection, needs of mutual relations, identification with some group etc. These are the
needs more of mind and spirit than of physique.
4. Esteem Needs
This set of needs represents higher level needs. These needs represent needs for self-respect, respect of others a
general feeling of being worthwhile, competence, achievement, knowledge, independence, reputation, status and
recognition.
5. Self-Actualization Needs
This set of higher order needs concerns with reaching one’s potential as a total human being. It is the desire to
become what one is capable of becoming, i.e. to maximum one’s capacity and abilities in order to accomplish
something appreciable and self-fulfilling. It is a need for being creative or innovative, for transforming self into
reality.
Salient features of Maslow’s Needs Model
1. The urge to fulfill needs is a prime factor in motivation of people at work. Human beings strive to fulfill a wide
range of needs. Human needs are multiple, complex and interrelated.
2. Human needs form a particular hierarchy or priority structure in order of importance.
3. Lower-live needs must be at least partially satisfied before higher-level need emergy. In other words, a higher-
level need does not become an active motivating force until the preceding lower-order needs are satisfied. All
needs are not felt at the same time.
4. As soon as one need is satisfied, the individual discovers another need which is still unfulfilled.
5. A satisfied need ceases to be a motivator, i.e., does not influence human Behavior. Unsatisfied needs are
motivators, i.e., they influence human Behavior.
6. Various need levels are independent and overlapping. Each higher-level need emerges before the lower-level
need is completely satisfied.
7. All people to a greater or lesser extent; have the identified needs.
Critical Evaluation of Maslow’s Model
1. Human needs cannot be classified into clear and only specified categories, i.e. their hierarchy cannot be
definitely specified. The determination of higher and lower levels is dependent on people’s cultural values,
personalities and desires. For example, the higher-level need of an Indian worker may be the lower-level need of
an American worker.

51
2. It is not necessary that a time only one need be satisfied. In other words, needs of more than one levels may be
fulfilled jointly, for example: physical and esteem needs, Maslow’s model does not explain this multi-motivation
fact.
3. Some of the assumptions of Maslow’s theory are not always found in practice.
4. It has been found by some scholars like Lawler and Suttle that physical and safety needs may be probably
satisfied, but high-level needs do not appear to be rather satisfied.
Though Maslow may not be the final answer in motivation, yet his model does make a significant contribution in
terms of making management aware of the diverse needs of human beings at work, their diverse motives. Needs
may not be the only determinants of human Behavior but they are definitely important for understanding such
Behavior.

Meaning and Definition of Organization

We live in the age of organizations. Modern civilization requires large aggressions of people working together to
produce the goods and services efficiently. Organizations are grand strategies created to bring order out of chaos
when works together. The structure resulting from three things is known organization. (i) Identifying and grouping
of work, (ii) defining and delegating authority and responsibility, and (iii) establishing relationships among those
who are engaged in performing group activities. Without defined relationships, there will be no organization. Peter
Drucker rightly says, An institution (organization) is like a tune it is not constituted by individual sounds but by the
relating between them. Organization is a dynamic tool for interweaving six M’s, Men, Money, Machines, Materials,
Methods and Markets. People work for organization’s objectives and manage its affairs for achieving them
effectively and efficiently.
Some important definitions of organization may be given as follows:
Hodge and Johnson
An organization can be thought of as a complex relationships among human and physical resources and work,
cemented together into a network of system.
James Mooney
Organization is the form of every human association for attainment of a common purpose.
J.L. Massie
Organization is the structure and process by which a cooperative group of human beings allocates its tasks among
its members, identifies relationship and integrates its activities towards common objectives.
George Terry
Organizing is the establishing of effective Behavioral relationships among persons so that they may work together
efficiency and gain personal satisfaction in doing selected tasks under given environmental conditions for the
purpose of achieving some goal or objectives.
Organization Concepts
Every scholar has defined organization from his own perception. But in all, there are three concepts of organization
as follows:
1. Structure
2. Process
3. System
1. Organization as a Structure
Weihrich and Koontz point out, Organization implies a formalized intentional structure of roles or positions.
Organization structure may be defined as the established pattern of relationships among the component parts of
an enterprise. In this sense, organization structure refers to the network of relationships among individuals and
positions in an enterprise. It is the network of horizontal and vertical relationships among the members of group
designed to accomplish some common objectives. This network governs the activities of people in the form of a

52
social group. The horizontal dimension shows differentiation of job into departments, divisions or sections. The
vertical dimension reflects what is known as hierarchy or chain of command, of authority. The organization
structure is the skeleton framework of business enterprise. Thus, the organization structure implies the following
things.
(a). Division of labour into group activities under departments, divisions or sections and also into various positions.
(b). Assignment of tasks and activities to different persons and departments.
(c). The formal relationships with well-defined responsibilities.
(d). The hierarchical relationships with allocation of authority between superior and subordinates – delegation and
decentralization of authority.
(e). Span of control with defined number of subordinates under a superior.
(f). Coordination among different departments and people.
(g). A set of policies, procedures, standards (goals) and methods of evaluation of performance, all formulated to
guide the people and their activities.
However, the actual operations and Behavior of people are not always governed by the formal structure of
relations. Hence, the formal structural arrangements are affected and modified by social and psychological forces
combined known as informal organization.
2. Organization as a System
Organization as a system implies the component parts, each of which has its unique properties, capabilities and
natural relationships and thus all are interrelated and interdependent. Hence, system implies an arrangement and
set of relationships among multiple parts operating as a whole, each part being called a sub-system. Every sub-
system is itself a system composed of smaller interrelated parts of sub-system. The system produce synergic effect
which means that the sum of all the parts is greater then the whole i.e., 2 + 2 = more than 4. Organization as a
system also implies that it is an open system, which means that it interacts with its environment for its survival,
growth and development. An organization as a socio-technological system consists of the following components or
elements:
(a). Inputs
The system takes certain inputs from its environment. These inputs are human resources, physical resources and
facilities, energy, supplies, technology and information.
(b). Processing or Transformation
Processing or transformation involves the utilization of the inputs through some specified technique to convert
them into outputs. A number of sub-systems are created for processing or transformations purpose, such as
production, finance, personnel and research and development. Interrelatedness and interdependence of all these
sub-systems is kept in mind.
(c). Output
The processing or transformation technique results in output that may be intended and unintended. Intended
outputs are usually called objectives or goals. For example, high productivity and efficiency we intended objectives.
The output may consist of goods and services. An unintended output may be informal relation among the group
members.
(d). Distribution
For distributing the output to the target market or consumers, several sub-systems may be created, such as sales,
marketing, advertising, etc. Distribution may be done directly or through intermediaries known as wholesalers,
semi-wholesalers and retailers.
(e). Management
The management component of the organization system is concerned with the determination and implementation
of processing and distribution activities in order to achieve system’s goals. It involves planning, organizing, staffing,
directing and controlling.

53
(f). Feedback
For effective managing, feedback of information with regard to the quality, quantity, cost and time of system
outputs is necessary. It also helps in establishing and enforcing standards for desired results. It facilities corrective
action wherever needed in the system.
(g). Environment
The management components helps in coping with the environment, which is complex and fast changing in the
modern world. Management takes adequate steps needed for availing the opportunities and averting the threats
in the environment. If the organization system intends to survive, grow and develops, it has to interact properly
and successfully with its environment.
3. Organization as a Process
Organization as a process is known as organizing. Weihrich and Koontz point out, Organizing is (1) the identification
and classification of required activities, (2) the grouping of activities of activities necessary to attain objectives, (3)
the assignment of each grouping to a manager with the authority (dilatation) necessary for coordination
horizontally (on the same or a similar organizational level) and vertically (for example, corporate, headquarters,
division, and department) in the organization structure.’
Organization is needed in order to avert the havoc of disorganization. It may be briefly illustrated as follows: A
short sentence is disorganized like this, riirggnagesnoiztlsuse. In this form it is nonsense. If we reorganize it
substantially, it will look like this: Organizing gets results now it is workable, but difficult. By a slight change, it
reads: Organizing gets results. Hence organization becomes important for management by results – for
accomplishing our goals.
A sound organization contributes greatly to continuity, growth and development of an enterprise in the following
ways:
1. Facilities Administration
A properly designed organization facilitates both management and operation of the enterprise by helping in its
smooth functioning through various factors, such as well-defined areas of work for employees; effective delegation
and decentralization of authority; clear mutual relationships; good communication network; coordination of the
activities of individuals, groups and units, adequate and control.
2. Facilitates growth, expansion and diversification
A sound organization structure is flexible enough to accommodate future changes with regard to growth expansion
and diversification of enterprise’s activities. Besides, certain organization practices are developed which lead the
business enterprise to expand and diversify.
3. Permits Optimum Utilization of Resources
Sound organization permits optimum use of technological improvements and human resources and efforts (right
persons being placed in right positions on the basis of their skills, knowledge and experience). It develops
competent people through the facility of appropriate effective training and promotion opportunities.
4. Stimulates Creativity
Specialization provides individuals with well-defined duties, clear lines of authority and clearly defined
responsibilities. Delegation and decentralization makes it possible for superiors to assign routine and repetitive
jobs to their subordinates and to concentrate themselves on important issues in order to better exploit their own
potential and encourage the creative thinking and innovative skills of the people.
Organization Charts
Organization structure is represented primarily by means of a graphic illustration called an organization chart. An
organization chart is a diagram depicting organization’s formal positions and formal lines of authority. In fact, it is
structural skeleton of an enterprise’s hierarchy of management. Organization charts are a means of avoiding
conflict by clarification. With their familiar pattern of boxes and connecting lines, these charts are used as a
management tool for deploying human resources.

54
An organization chart shows two dimensions of the structure: (a) the vertical authority structure, such as official
positions, span of management, hierarchy of command, etc and (b) the horizontal differentiation of work activities
such as work units or departments. It reflects the pattern of authority flow from top management to the lower
levels. It also shows managers, ranks and jurisdictions, types of authority relationships, line, staff or functional –
communication lines throughout the organization, the number of levels in the managerial hierarchy, the span of
management and the relative status of different managerial positions and departments. Organization charts also
help in reflecting as to who reports to whom – who is superior and who is subordinate, how many subordinates are
accountable to a superior and what are the avenue, open for advancement of a manager holding a particular
position in the chart.
The organization structure can be diagrammed into an organization chart in three different ways:
(a). The traditional or conventional vertical chart shows the position of the chief executive at the top of a pyramid
form, from where the authority flows downward. The managers towards the top of the pyramid have more
authority than those who are towards the bottom.
(b). The horizontal chart originates from its left and proceeds to the right, depicting the chief executive’s position
at the extreme left and placing the successively lower managerial positions towards the right end.
(c). The circular or concentric chart places and shows the chief executives position at its center and other middle
and lower level managerial position radiate from the center in concentric circles, the lowest managerial positions
being placed on the outermost circle.
The horizontal and circular charts represents a healthy departure to the extent that they de-emphasize the
hierarchical, i.e., bureaucratic nature of organization structure. However, vertical charts are still common in
practice. Normally, the greater the height of a vertical chart, the smaller the span of management and the lower
the height, the greater the span of management. Organization charts with little height are usually referred to as
flat and those with much height as tall.
Advantages of Organization Charts
They are useful in several ways as follows:
 Organization chart is a means to indicate graphically how the managerial positions fit into the total
organization and how they relate to each other.
 It shows at a glance the lines of authority and reporting pattern.
 It provides a conceptional background to identify inconsistencies and deficiencies and thereby helps in
deciding for further improving modifications to cope with future demands of the changing environment.
 It serves as a reliable blueprint for newly recruited personnel who may understood the structure of the
organization and the interrelationships among its various work units.
 It provides a framework of personnel classification and evaluation systems.
Limitations of Organization Charts
 Organization chart depicts only a static view of the organization, while the organization is a dynamic
concept.
 It shows only the formal relationships and fails to describe informal relationships in the organization,
though informal relationships are equally important and significantly affect the functioning of the
organization.
 It does not show the quality and content of the managerial relationships that actually exist in the
organization, but shows only the ’supposed relationships’. Thus, it fails to tell about the effectiveness of
various elements, processes, and other structural dimensions within the organization.
 Organization charts become quickly outdated because they fail to incorporate into them the frequent
changes or alternations taking place in the organization structure and in the patters of authority and
activity relationships.

55
Decentralization of Authority
Decentralization of authority means dispersal of decision – making power to the lower levels of the organization.
According to Allen, decentralization refers to the systematic effort to delegate to the lowest level all authority
except that which can only be exercised at central points. Thus decentralization means reservation of same
authority (power to plan, organize, direct and control) at the top level and delegation of authority to make decision
at points as near as possible to where action takes place.
Decentralization is not same thing as delegation. Delegation means entrustment of responsibility and authority
from one individual to another. But decentralization means scattering of authority through the organization. It is
the diffusion of authority with in the enterprise. Delegation can take place from one person to another and be a
complete process. But decentralization is complete only when the fullest possible delegation is made to all or most
of the people.
Decentralization is distinct from dispersion
Dispersion occurs when plants and offices are located at different place with physical distance between them.
Performance of work in dispersed plants and offices does not necessarily lead to decentralization. A company may
be highly centralized although its physical facilities and employees are widely dispersed and company may be
highly decentralized even through all physical facilities and employees are located in a single building.
Distinction between Delegation and Decentralization
The points of distinction between and decentralization are given below:
1. Delegation is a process of devolution of authority where as decentralization.
2. Delegation takes place between a superior and a subordinate and is a complete process. It may consist of certain
tasks alone. But decentralization involves spreading out the total decision – making power.
3. In delegation control rests entirely with the superior or delegator but in decentralization, the top management
may exercise control only in a general manager and delegate the authority for control to the departmental
manager.
4. Delegation is a must for management. Subordinates must be given sufficient authority to perform their
assignments otherwise they will come to the superior time and again even for minor decisions. However,
decentralization is optional in the sense that the top management may or may not decide to disperse authority.
Meaning and Scope of Staffing
Early definition of staffing focused narrowly on hiring people for vacant positions in an enterprise. Today, staffing is
termed as human resource management and defined more broadly. Staffing may be defined as a managerial
function of attracting, acquiring, developing and retaining human resources in order to provide the talent
necessary for work activities leading to accomplishment of organizational objectives. This definition emphasizes
that people are vital and valuable resources requiring proper care and attention. Thus, staffing involves: filling up
various managerial and non-managerial positions created in the organization structure with qualified persons,
upgrading the quality and usefulness of the members of organization for its success and its retaining the members
by providing adequately for their welfare and career advancement.
The staffing process involves job analysis, human resource planning, recruitment, selection, placement,
orientation, training and development, compensation performance appraisal, career development, promotion,
transfer and separation. In many organizations most of the aforesaid activities are handled by the Personnel
Department, now popularly known as Human Resource Management Department. It may be noted that staffing
decisions and initiatives are the basic responsibility of line managers. However, the personnel management
department provides necessary specialist services as well as supportive and administrative services to line
managers for effective management of human resources
Staffing is a continuous function of management because human resources continue to be a significant factor in
organizational success and therefore the organization always needs to acquire and retain in proper form its
personnel. Moreover, employee welfare and development, expansion and diversification, promotion and transfers,

56
demotions and separations, retirement and death, modernization and change etc are common events continually
taking place in an organization, rendering staffing a never ending process. Managers have to keep a regular watch
on the number and composition of people required by the organization. The continuous nature of staffing is self-
evident, as employees need regular care, balance and development to be effective for contribution towards
achievement of expected results. Establishing and maintaining congruence between organizational goals and
employees, personal goals is also an important regular aspect of organization’s working. To keep a proper working
climate is an ongoing responsibility of personnel department.
Need and Importance of Staffing
Progressive and successful organizations treat all employees as valuable human resources. Productivity and the
resultant financial reward are dependent solely on the quality and skill of people. Some organizations make up for
their lack of natural resources by their dedication to the maximum possible development of their human
resources. If employees are put first, they help the enterprise to prosper. Staffing function provides proper
mechanisms for efficient handling of personnel matters, including workers, grievances. Filed research indicates
that employees tend to return the favour when they are treated with dignity and respect. Specially, it is reported
that professional employees kept higher organizational commitment when their employer’s human resource
practice were perceived to be fair and just. Staffing is responsible for creating such practices.
Activities
Staffing activities, though all derived from organization strategy and structure, in turn activate the strategic
management and the structure. Strategic orientation in staffing function increases the chances of organizational
success.
Process
Staffing process and policies play a considerable role in acquiring right people at right time on right positions.
Effective staffing function strives to establish cost-benefit relationship while manning the positions in the
organization structure – people are acquired at lower outflows for providing greater efforts, optimal contribution
and higher commitment.
Relationship
Staffing is important in its relationship with other managerial functions, because without their human resources,
organizations would remain empty skeletons that cannot move to achieve their goals. The functions of planning,
organizing, directing and controlling become nonstarters without people n the organization. It is clear that the
effectiveness of other managerial functions depends on the degree of efficiency with which the staffing function is
done. An organization is healthy, strong and successful to the extent that its people are capable, skillful and
committed. Further, the attitudes, orientations and performance of people partly depend on how efficiently the
staffing function is handled by the enterprise and how much attention top management gives to it.
Need
Staffing function takes care of the need for building a sound organization. In a sense, organization widely differs in
their quality and competence due to large variations in their human resources.
Principles
Staffing not only helps in acquiring right talent, but also strives for nurturing. There are no universally accepted
staffing principles. However, Heinz Weihrich and Harold Koontz have identified certain useful major principles or
guidelines for understanding and performing more effective staffing function.
1. Principle of the Objective of Staffing
The objective of managerial staffing is to ensure that those qualified personnel who are able and wiling to occupy
them fill organization roles. There is considerable evidence of failure to achieve results when these qualities are
lacking.
2. Principle of Staffing
The clearer the definition of organization roles and their human requirements and the better the techniques of

57
manager appraisal and training employed, the higher the managerial quality. Those organizations that have no
established job definitions, no effective appraisals and no system for training and development, will have to rely on
coincidence or outside sources to fill positions with able managers. On the other hand organizations applying the
systems approach to staffing and human resource management, will utilize the potentials of individuals in the
enterprise more effectively and efficiently.
3. Principle of Job Definition
The more precisely the results expected of managers are identified, the more the dimensions of their positions can
be defined. Since organizational roles occupied by people with different needs, these roles must have many
dimensions – such as pay, status, power, direction and possibility of accomplishment – that induce managers to
perform.
4. Principles of Managerial Appraisal
The more clearly variable objectives and required managerial activities are identified, the more precise can be the
appraisal of managers against these criteria. This principle suggests that performance should be measured both
against verifiable objectives (as in an appraisal approach based on management by objectives) and against
standards of performance as managers. The appraisal of managers as manager considers how well the key
managerial activities within the functions of planning; organizing, staffing, directing and controlling are carried out.
5. Principle of Open Competition
The more an enterprise is committed to the assurance of quality management, the more it will encourage open
competition among all candidates for management positions. Violation of this principles has led many firms to
appoint managers with inadequate abilities. Although social pressures strongly favour promotion from within the
enterprise, these forces should be resisted whenever better candidates can be brought in from the outside. At the
same time, the application of this principle obligates the enterprise to appraise its people accurately and to
provide them with opportunities for development.
6. Principle of Management Training and Development
The more management training and development are integrated with the management process and enterprise
objectives, the more effective the development programs and activities will be. This principle suggests that in the
systems approach, training and development efforts are related to the managerial functions, the goals of the
enterprise and the professional needs of managers.
7. Principle of Training Objectives
The more precisely the training objectives are stated; the more likely are the chances of achieving them. The
analysis of training needs is the basis for training objectives that give direction to development and facilitate the
measurement of the effectiveness of training efforts. This principle brings into focus the contribution that training
makes to the purpose of the enterprise and the development of individuals.
8. Principles of Continuing Development
The more an enterprise is committed to managerial excellence, the more it requires that manager practice
continuing self-development. This principle suggests in a fast-changing and competitive environment, that
managers cannot stop learning. Instead, they have to update their managerial knowledge continuously, revaluate
their approaches to managing and improve their managerial skills and performance to achieve enterprise results.
Selection Process Or Elements of Selection Process
The major steps involved in the selection process may be discussed as follows:
1. Filling in Application Form
This may be regarded as the first step of selection process. Candidates are supposed to provide complete
information about them in a prescribed printed form. It may require information regarding a candidate’s name,
father’s name, address, nationality, sex, marital status, religion, education qualifications, work experience, fields of
extra-curriculum activities, and references of two eminent persons and so on. The application of the candidates
provides the basis for further analysis of the candidature and examination of his suitability for employment. The

58
specific type of information required in an application blank may vary from firm to firm any by positions within the
organization. However, there is high degree of similarity with regard to general information sought in the
application blanks of various organizations. If properly used application blanks can be an effective aid in selection.
However, their usefulness is largely dependent on the accuracy of data and information furnished by the
candidates. In their eagerness to obtain work, some applicants may be tempted to stretch the truth concerning
matters such as past experience, responsibilities, salary and reasons for bearing the previous job. For this reason,
many human resource managers make it a point to query applicants further regarding these matters during the
employment interview.
2. Preliminary Screening
This refers to initial assessment of basic suitability of candidates for the job positions. The human resource manage
sees whether the applicants meet the basic academic and other minimum requirements as to age, work
experience, etc. Such screening may be done by going through the data and information supplied in the application
blanks or by holding preliminary screening interviews. The basic objectives of preliminary screening are (i) to
eliminate the unsuitable candidates at an early stage, (ii) to reduce the overall cost of selection.
3. Employment Tests
Candidates, who are filtered through the initial screening, submit themselves to certain tests, formal or informal.
Test is a means of evaluating candidates knowledge, skills, experience, attitudes, aptitudes, personality, interest,
capacity, physical characteristics, level of mental ability, likes and dislikes and soon. In some cases, such as typing
and shorthand, computer knowledge and efficiency, etc., tests are the only way to determine the suitability of
candidates for the job.
There are several types of tests, which are widely used for selection purposes. They include; intelligence tests,
aptitude tests, personality tests, performance tests and so on. Written tests are found to be most popular in many
cases.
Tests provide a more objective, authentic and consistent basis for selection of right candidates. They help the
organization in arriving at a judgment on the likely work Behavior and performance of candidates. However,
certain conditions should be met if tests are to be used for employee selection. First, the tests should be reliable.
In other words, they should provide consistent results. Secondly, tests should be valid. In other words, they should
measure what they are designed to measure. If a test is designed to predict job performance, prospective
employees who score well on the test, should prove to be objective when different scorers interpreting the results
of the same test, arrive at similar interpretations. Finally, tests should be standardized. This requires them to be
administered under standard conditions to a large group of persons. The purpose of standardization is to obtain
norms; therefore specific test scores will be meaningful when compared to other scores in the group. If a test
cannot indicate the ability to perform the job, it must not be used.
Testing helps in achieving the most efficient matching of applicants with jobs. From a social standpoint, testing that
is job-related, serves the objective of equal employment opportunity, to which modern societies are increasingly
committed. Thus, it is vital that organizations have a thoughtful process for validating any selection tests they use.
No doubt, testing is a complex, time consuming and expensive process.
4. Employment Interview
Although employment tests provide a lot of valuation information and insight about the candidate, they do not
provide a complete set of information and knowledge required about a candidate. The interview helps in
evaluating information obtained from the application blank and tests. It provides an opportunity to the interviewer
to integrate different pieces of information through his personal impressions and observations of the interviewee
so as to such a decision regarding the suitability of the applicant for employment. Thus, the combination of tests
and in view provides better results in selection. It allows applicants to obtain additional information about the
prospective employer.

59
An employment interview is part of almost every selection process. It is the most important step in selection. This
is because an interview enables the selectors to get a first hand idea of the personality of the candidate, their
gestures, communication skills, general skills, mannerisms, reactions, presence of mind and confidence. Further
more an interview presents an opportunity for both the organization and the job applicant to “sell” themselves to
one another and to establish their mutual expectations. However, for such expectations to be accurately
established, it is essential that employment interview he as realistic as possible. In order to prevent unrealistic
expectations, disillusionment and feelings of being misled in new employees, which may result in lack of job
commitment and early turnover (leaving the organization), interviewees, should be told negative as well as
positive aspects of a position, so that the applicants who view such negative aspects as unacceptable, can remove
themselves from further consideration. Those who remain will represent a recruitment pool with accurate job
expectations. Research by John P. Wanous (1980) suggests that such “realistic recruitment” contributes
significantly to reducing employee turnover.
Types of Interviews
In general, there are several types of interview’s, which may be briefly discussed as follows:
1. Unstructured Or Non-Directive Or Informal Or Traditional Interview
In an unstructured interview, there are no predetermined questions or prearranged sequence of topics for
discussion. Consequently, by design unstructured interviews are highly flexible and informal – no fixed questions
format or systematic scoring procedure. Interviewers are free to probe into those areas seeming to deserve further
investigation and to adapt (alter) their approach to the prevailing situation, as well as to changing stream of job
applicants. Spontaneity characterizes this type of interview. Its direction is large determined by a job applicant’s
answers. To be effective, an unstructured interview requires highly skilled and trained interviewers. Experience
shows that, if properly conducted, an unstructured interview can lend to significant job-related insights. However,
such interview is highly susceptible to distortion, bias, inconsistency and difficult verification of its results.
2. Structured Or Patterned Interview
Structured interviews are recommended as alternative to traditional unstructured or informal interview. A
structured interview may be defined as a series of job-related questions with standardized answers that are
consistently applied across all interviews for a particular job. In this interview standardized questions are asked
from all applicants for certain jobs and a standard form is used for recording responses. Standardization permits
easy comparison of candidates. It also helps in achieving and proving validity. Of Course, no interview can be
completely unstructured or nondirective and it is hard to conceive of an interview that is totally structured or
patterned.
Generally, structured interviews are constructed, conducted and scored by a committee of three to six members so
as to try to eliminate bias. The structured interviews are more likely to provide consistent and reliable information
from the various interviewers. Furthermore, if the specific interview questions in a format are drawn from an
accurate job analysis, then structured interviews are also more likely to be valid. However, such interviewers have
limited flexibility. The unstructured interview format (form) restricts adaptation (alteration) to unusual
circumstances or unusual interviews. Such interviews do not afford the opportunity to the applicants to
demonstrate their job knowledge, communication skills, etc.
3. Stress Interview
Most interviews try to place interviewees at ease. However, the opposite is true in the stress interview. It is
specifically intended to determine a job applicant’s interviewer purposefully attempts to create a climate of
intimidation (threat), criticism and ridicule (mockery or making some one appear foolish or worthless). The
purpose is to deserve the interviewee’s reaction to stress and tension. This approach is based on the theory that
certain personal traits, for example, emotional stability, can be deserved only when an individual is placed in
stressful surroundings. Thus, an interviewer may deliberately interrupt an applicant in his midsentence, cast

60
aspersions on an applicant’s character, remain silent for protracted (longer) periods of time and adopt a hostile
posture in an attempt to create a pressurized situation.
The extent which stress interviews are useful is debatable. Some justify its use when the concerned job position is
particularly stressful, for example, law enforcement officer, airline pilot, sales representative, or fire fighter.
However, some critics contend that the kind of stress created in an interview is rarely similar to that found on a
job. Moreover, there are not very many positions in which the ability to cope with stress in a primary
characteristics.
4. Group Interview
Interview also differs according to how many interviewers and applicants are involved. Normally, job applicants
meet with interviewers one-on-one, i.e., individually. However, in the group interview, several applicants
questioned together by one or more interviewers. A small group of fine or six candidates is observed and
evaluated in group discussions and interactions, by the selectors.
5. Series Interview
For certain types of jobs, especially managerial jobs candidates may be required to go through a series of
interviews of a progressively rigorous nature.
6. Board Interview
For important jobs, especially those of a political nature the board interview may be used. Here several
interviewers, often members of a government board or committee, quiz one or more candidates.

61