FME_only 1-2 settu

Fundamental of management for engineers & SM504MS
Course Content
SYLLABUS
Hours/
Course Code Category Credits Maximum Marks
Week
L T P CIA SEE TOTAL
3
3 1 0 25 75 100
Contact Classes: Tutorial Classes: Practical Classes: Nil Total Classes:
CourseObjective:
To understand the Management Concepts, applications of Concepts in Practical aspects of

businessand developmentofManagerial SkillsforEngineers.
CourseOutcome:
The students understand the significance of Management in their Profession. The
variousManagement Functions like Planning, Organizing, Staffing, Leading, Motivation and
Controlaspects are learnt in this course. The students can explore the Management Practices in
theirdomainarea.
UNIT-I:
Introduction to Management: Definition, Nature and Scope, Functions, Managerial Roles,
Levels ofManagement, Managerial Skills, Challenges of Management; Evolution of
Management- ClassicalApproach- Scientific and Administrative Management; The Behavioral
approach; The
Quantitativeapproach;TheSystemsApproach;ContingencyApproach,ITApproach.
UNIT–II:
PlanningandDecisionMaking:GeneralFrameworkforPlanning-
PlanningProcess,TypesofPlans,Management by Objectives; Production Planning and Control.
Decision making and Problem Solving -Programmed andNon Programmed Decisions,Stepsin
ProblemSolvingand Decision
Making;BoundedRationalityandInfluencesonDecisionMaking;GroupProblemSolvingandDecisi
onMaking,Creativityand Innovationin ManagerialWork.
UNIT-III:
OrganizationandHRM:PrinciplesofOrganization:OrganizationalDesign&OrganizationalStruct
ures;Departmentalization,Delegation;Empowerment,Centralization,Decentralization,Recentrali
zation;OrganizationalCulture;OrganizationalClimateandOrganizationalChange.
HumanResourceManagement&BusinessStrategy:JobSatisfaction,JobEnrichment,JobEnlargeme
nt, Talent Management, Strategic Human Resource Planning; Recruitment and
Selection;Trainingand Development;Performance Appraisal.
UNIT-IV:
Leading and Motivation: Leadership, Powerand Authority, Leadership Styles; Behavioral
Leadership, Situational Leadership, Leadership Skills, Leader as Mentor and Coach,
EEE,NRCM Page 1 ARCHANA R KOLLUR

Leadership during adversity and Crisis; Handling Employee and Customer Complaints,Team
Leadership.
Motivation - Types of Motivation; Relationship between Motivation, Performance and
Engagement, Content Motivational Theories-Needs Hierarchy Theory,Two Factor
Theory,TheoryX and TheoryY.
UNIT-V:
Controlling: Control, Types and Strategies for Control, Stepsin Control Process, Budgetary
and Non-Budgetary Controls. Characteristics of Effective Controls, Establishing control
systems, Control frequency and Methods.
TEXTBOOKS:
1. Management Essentials, AndrewDuBrin,9e,CengageLearning,2012.
2. FundamentalsofManagement,StephenP.Robbins,PearsonEducation,2009.
REFERENCEBOOKS:
1. EssentialsofManagement,KoontzKleihrich,Tata Mc-GrawHill.
2. ManagementFundamentals,RobertNLussier,5e,CengageLearning,2013.
3. IndustrialEngineeringandManagement:IncludingProductionManagement,T.R.Banga,S.
C.Sharma,Khanna Publishers.
INTRODUCTION TO MANAGEMENT
A business develops in course of time with complexities. With increasing complexities

managingthe business has become a difficult task. The need of existence of management has
increasedtremendously.Managementisessentialnotonlyforbusinessconcernsbutalsoforbanks,schools,
colleges, hospitals, hotels, religious bodies, charitable trusts etc. Every business unit hassome
objectives of its own. These objectives can be achieved with the coordinated efforts ofseveral
personnel. The work of a number of persons are properly coordinated to achieve
theobjectivesthrough the processofmanagement isnota matterof pressing a button, pullingalever,
issuing orders, scanning profit and loss statements, promulgating rules and regulations.
"PeterF.Druckerhasstatedinhisfamousbook"ThePracticeofManagement"that,"theemergence of
management as an essential, a distinct and leading social institution is a pivotaleventin social
history.
Managementisavitalaspectoftheeconomiclifeofman,whichisanorganizedgroupactivity.It is
considered as the indispensable institution in the modern social organization marked

byscientificthoughtandtechnologicalinnovations.Oneortheotherformofmanagementisessential
wherever human efforts are to be undertaken collectively to satisfy wants through someproductive
activity, occupation or profession. It is management that regulates man's productiveactivities
through coordinated use of material resources. Without the leadership provided
bymanagement,theresourcesofproductionremainresourcesandneverbecomeproduction.Management
is the integrating force inall organized activity. Whenever two or more peoplework together to
attain a common objective, they have to coordinate their activities. They alsohave to organize and
utilize their resources in such a way as to optimize the results. Not only inbusiness enterprises
where costs and revenues can be ascertained accurately and objectively butalso in service
organizations such as government, hospitals, schools, clubs, etc., scarce resourcesincluding men,
machines, materials and money have to be integrated in a productive relationship,and utilized
efficiently towards the achievement of their gals. Thus, management is not unique
tobusinessorganizationsbutcommontoallkindsofsocialorganizations.Managementhasachievedan
enviableimportancein recent times.
DEFINITIONSOFMANAGEMENT
Henry Fayol, "To mange is to forecast and plan, to organize, to compound, to co-ordinate and
tocontrol."
Harold Koontz says, "Management is the art of getting things done through and within
formallyorganizedgroup."
Peter F. Druckerdefines, "management is an organ; organs can be described and defined

onlythroughtheirfunctions".
Terry, "Management is not people; it is an activity like walking, reading, swimming or

running.People who perform Management can be designated as members, members of Management
orexecutiveleaders."
Ralph C. Davis has defined Management as, "Management is the function of

executiveleadershipanywhere."

NATURE OF
MANAGEMENTOR
FEATURESOFMANAGEMENT
1) Management is a social process:-Social process refers to the series of activities that

areperformedinthesociety.Theseactivitiesarecarriedoutby administrators,politicians,economists,
house wives, businessmen and so on. Management helps everyone to carry outtheactivities in
thesocietyeffectively.
2) Bodyofpeople:-Managementalsodenotesa‗bodyofpeople‘involvedindecision-making.
3) Managementisomnipresent:-Managementprinciplesareappliedtoeverykindoforganizationand
also to everylevel in it.
4) It is an inexact science:- Management principles are not like those in sciences or mathswhere
things are fairly clear or exact. Management deals with people ad it is difficult topredict their
behavior accurately. It falls in area of social science. Its principles are situationbound,so their
applicabilitydoes notgive sameresult everytime.
5) It is complex:- Management functions call for a fairly professional approach to manage

agivensituation. Businesses are operatingin complexenvironments.
6) Management is situational in nature:-The same style of management cannot work for

thesame situationeverytime.
7) Management is an art and also a science:- An art is personal skill. The management skillsare
highly individual oriented and can be sharpened with more training and practice. It is
asystematic body of knowledge, its principles are universally acceptable. Science
establishescauseandeffectrelationshipbetweenvariables.Italsoestablishescause-and-
effectrelationship between the given factors. It explains what happens if the employees are not
paidsalarieson time.
8) Managementisaprofession:-
Professionreferstovocationorabranchofadvancedlearningsuchasengineeringor medicine.
Managersareprofessional intheir approach.
9) Management is inter-disciplinary:- The subject of management is heavily dependent

onotherdisciplinessuchaseconomics,operationsresearch,statistics,sociology,Psychologyandmath
ematics etc.
10) Manager has 4 types of resources:- The 4 M‘s Men, Money, Materials and Machines
tomanage.
SCOPEOFMANAGEMENT
Management is an all pervasive function since it is required in all types of organized

Endeavour,Thus,itsscopeisverylarge.Thefollowingactivitiesarecoveredunderthescopeofmanagement
:
1. ProductionManagement:
Production means creation of utilities. This creation of utilities takes place when raw
materialsareconvertedintofinishedproducts.Productionmanagement,then,isthatbranchofmanagement
‗which by scientific planning and regulation sets into motion that part of
enterprisetowhichhasbeenentrustedthetaskofactualtranslationofrawmaterialintofinishedproduct.‘
Plantlocationandlayout,productionpolicy,typeofproduction,plantfacilities,materialhandling,
production planning and control, repair and maintenance, research and development,simplification
and standardization, quality control and value analysis, etc., are the main problemsinvolvedin
production management.
2. MarketingManagement:
Marketing management refers to the planning, organizing, directing and controlling the activitiesof
the persons working in the market division of a business enterprise with the aim of achievingthe
organization objectives. Market analysis, marketing policy, brand name, pricing, channels
ofdistribution, sales promotion, sale-mix, after sales service, market research, etc. are the
problemsofmarketingmanagement.
3. FinancialManagement:
Financeisviewedasoneofthemostimportantfactorsineveryenterprise.Financialmanagementisconcerne
dwiththemanagerialactivitiespertaining totheprocurementandutilizationof funds or financefor
business purposes.
Themainfunctionsoffinancial managementinclude:

a. Estimationofcapitalrequirements.
b. Ensuringafairreturntoinvestors.
c. Determiningthesuitablesourcesof funds.
d. Layingdown theoptimumand suitablecapital.
4. PersonnelManagement:
Personnel Management is that phase of management which deals with the effective control anduse
of manpower. Effective management of human resources is one of the most crucial
factorsassociatedwiththesuccessofanenterprise.Personnelmanagementisconcernedwithmanagerialan
d operativefunctions.
Functionsofpersonnelmanagementinclude:
a) Personnelplanning.
b) Organizingbysettingupthe structureofrelationship amongjobs,personnel.
c) Directingandcontrollingtheemployees
d) Procurementof rightkind andnumberofpersons
e) Traininganddevelopmentofemployees
f) Determinationofadequateandequitable compensationofemployees
g) Integrationoftheinterests ofthepersonnelwith thatoftheenterprise
h) Providinggoodworkingconditionsandwelfareservicestotheemployees.
5. OfficeManagement:
Theconceptofmanagementwhenappliedtoofficeiscalled‗officemanagement‘.Officemanagement is
the technique of planning, coordinating and controlling office activities with aview to achieve
common business objectives. One of the functions of management is to organizethe office work in
such a way that it helps the management in attaining its goals. It works as aservice department for
other departments. The success of a business depends upon the efficiencyof its administration. The
efficiency of the administration depends upon the information suppliedto it bytheoffice.
HarryH.Wyliedefinesofficemanagementas―themanipulationandcontrolofmen,methods, machines
and material to achieve the best possible results—results of the highest possible
qualitywiththeexpenditureofleastpossibleeffectandexpense,intheshortestpracticabletime,andinamann
eracceptable to thetopmanagement.‖
FUNCTIONSOFMANAGEMENT
AccordingtoHenryFayol,―Tomanageistoforecastandplan,toorganize,tocommand,&to

control‖.WhereasLutherGullickhasgivenakeyword‘POSDCORB‘wherePstandsforPlanning, O for
Organizing, S for Staffing, D for Directing, Co for Co-ordination, R for
reporting&BforBudgeting.ButthemostwidelyacceptedarefunctionsofmanagementgivenbyKOONTZ
andO‘DONNELi.e.Planning,Organizing,Staffing,DirectingandControlling.
1) Planning: Planning is the conscious determination of future course of action. This involveswhy
an action, what action, how to take action, and when to take action. Thus, planningincludes
determination of specific objectives, determining projects and programs, settingpolicies
andstrategies, setting rulesandproceduresandpreparingbudgets.Planninginvolves
essentially four stages: 1. Identifying the goal to be achieved 2. Exploring the courses ofaction
available to reach this goal 3.Evaluating each course of action 4.Selecting the
bestcourseofaction for implementation.
2) Organizing: Organizing is the process of dividing work into convenient tasks or

duties,groupingofsuchdutiesintheformofpositions,groupingofvariouspositionsintodepartments
and sections, assigning duties to individual positions, and delegating authority toeach positions
so that the work is carried out as planned. It is viewed as a bridge
connectingtheconceptualideadevelopedincreatingandplanningtothespecificmeansforaccomplish
menttheseideas.
3) Staffing: Ascertain how many positions are there in the organization and at what level.
Oncethis information is available, the next task is to collect details such as what type of
candidatesare required for each level and accordingly fill these positions with right people.
Staffing isprocess which includes recruitment, selection, training, placement, appraisal,
promotion andcareerplanning.
4) Directing: when people are available in the organization, they must know what they
areexpectedtodointheorganization.Superiormanagersfulfillthisrequirementbycommunicatingtosu
bordinatesabouttheirexpectedbehavior.Oncesubordinatesareoriented, the superiors have
continuous responsibility of guiding and leading them for betterwork performance and
motivating them to work with zeal and enthusiasm. Thus,
directingincludescommunicating,motivatingandleading.Organizingasaprocessinvolves:a)Identifi
cation ofactivities.b)Classification of groupingofactivities.c)Assignmentof duties.
d)Delegationofauthorityandcreationofresponsibility.e)Coordinatingauthorityandresponsibilityrel

ationships.
5) Controlling:Controlling involvesidentificationofactualresults,comparisonofactualresults with

expected results as set by planning process, identification of deviations betweenthe two, if any,
and taking of corrective action so that actual results match with expectedresults.
6) Reporting: The Managers are the coordinators and leaders of the organization. And
thecoordinators hold the responsibility of reporting status and position of the organization
beforetheinterestedgroupsofpeople,suchasshareholders,stakeholders,TopManagement,Administr
ators, Board of Directors, Employees, Trade unions, Customers, Financiers and soforth. So, the
management informs and inspires the relevant groups about their objectives,statusand
reputation.
7) Budgeting: A budget is a financial plan for a defined period of time, usually a year. It mayalso
include planned sales volume and revenues, resource quantities, costs and expenses,assets,
liabilities and cash flows.Budgeting is a process of preparing estimates of futuresales, expenses,
revenues, cash flows, etc. Some authors say the budgeting is include inplanningfunction,
butLutherGullick considered this asaseparate function.
MANAGERIALROLES
Likewe performdifferentrolesinour family (suchasfather,son,brother, mother, sister,daughter and so

on), the manager also performs several roles though officially they are given onejob title (such as
trainer, monitor, leader, counselor, mentor, coach, advisor, controller etc.).
Dr.HenryMintzberghasexplainedtenrolesofmanagerinhisreport―Managerialwork:Analysis From
Observation‖.
1. InterpersonalRoles
a) Figurehead: Manager as a figurehead, performs all symbolic legal and social duties
anddischarges all social, legal and ceremonial obligations. He inspires the employees
andshareholders with vision, mission and action plans. He plans, organizes and controls
thebusiness.
b) Leader :As a leader, every manager must motivate and encourage his employees.
Hemustalso tryto reconciletheirindividual needs withthegoals of theorganization.
c) Liaison :He forms relationship with outside the department or organization to

obtaininformationuseful forhis organization.

2. InformationalRoles
a) Monitor:Asamonitor,themanagerhastoperpetuallyscanhisenvironmentforinformation,
interrogate his liaison contacts and his subordinates, and receive
unsolicitedinformation,much ofit as result ofthenetworkofpersonalcontacts he hasdeveloped.
b) Disseminator: In the role of a disseminator, the manager passes some of his
privilegedinformationdirectlyto his subordinates whowould otherwisehaveno access to it.
c) Spokesman :In this role, the manager informs and satisfies various groups and
peoplewhoinfluencehisorganization.Thus,headvisesshareholdersaboutfinancialperformance,
assuresconsumergroupsthattheorganizationisfulfillingitssocialresponsibilitiesandsatisfies
governmentthat theoriginationis abidingbythe law.
3. DecisionalRoles
a) Entrepreneur :In this role, the manager constantly looks up for new ideas and seeks
toimprovehis unit byadaptingit to changing conditions inthe environment.
b) Disturbance Handler (Trouble Shooter) :In this role, the manager has to work like
afirefighter.Hemustseeksolutionsofvariousunanticipatedproblems–astrikemayloom large a
major customer may go bankrupt; a supplier may renege on his contract, andso on.
c) Resource Allocator :In this role, the manager must divide work and delegate
authorityamonghis subordinates.Hemust decidewhowill get what.
d) Negotiator :The manager has to spend considerable time in negotiations. Thus, thechairman
of a company may negotiate with the union leaders a new strike issue, theforeman may
negotiate with the workers a grievance problem, and so on. In addition,managers in any
organization work with each other to establish the organization‘s long-range goals and to
plan how to achieve them. They also work together to provide oneanother with the accurate
information needed to perform tasks. Thus, managers act aschannelsofcommunication with
theorganization.
LEVELSOFMANAGEMENT
An enterprise may have different levels of management. Levels of management refer to a line
ofdemarcation between various managerial positions in an enterprise. The levels of
managementdependuponitssize,technicalfacilities,andtherangeofproduction.Therealsignificanceof

levels is that they explain authority relationships in an organization. Considering the hierarchy
ofauthorityandresponsibility, onecan identifythreelevelsof management namely:
1. Toplevelmanagement:Toplevelmanagementofacompanyconsistsofowners/shareholders,Board
ofDirectors,itsChairman,ManagingDirector,ortheChiefExecutive,or theGeneralManager
orExecutiveCommitteehavingkeyofficers.
Top management is the ultimate source of authority and it lays down goals, policies and plans
forthe enterprise. It devotes more time on planning and coordinating functions. It is accountable
tothe owners of the business of the overall management. It is also described as the policy
makinggroup responsible for the overall direction and success of all company activities. The
importantfunctionsof top managementinclude:
a) Toestablishtheobjectivesor goalsofthe enterprise.

b) Tomakepoliciesandframeplans toattaintheobjectiveslaid.
c) Tosetupanorganizationalframe worktoconduct theoperationsasperplans.
d) Toassembletheresourcesofmoney,men,materials,machinesandmethodstoputtheplansinto
action.
e) Toexerciseeffective controloftheoperations.
f) Toprovideoverallleadershiptotheenterprise.
2. Middle level management : Middle levelmanagement of a company consists of heads

offunctionaldepartmentsviz.PurchaseManager,ProductionManager,MarketingManager,Financial
controller, etc. and Divisional and Sectional Officers working under these FunctionalHeads.
Thejobofmiddlemanagementistoimplementthepoliciesandplansframedby thetopmanagement. It
serves as an essential link between the top management and the lower level oroperative
management. They are responsible to the top management for the functioning of
theirdepartments.Theydevotemoretimeontheorganizationandmotivationfunctionsofmanagement.Wit
hout them the top management's plans and ambitious expectations will not befruitfullyrealized.
Thefollowingarethe main functions of middlemanagement:
a) Tointerpretthepolicies chalkedout bytopmanagement.
b) Topreparetheorganizational setupin theirowndepartments.

c) Torecruit andselect suitable operativeand supervisorystaff.

d) Toassignactivities,dutiesandresponsibilitiesfortimelyimplementationof theplans.
e) Tocompileall theinstructionsand issuethem tosupervisorundertheircontrol.
f) Tomotivatepersonneltoattainhigherproductivityandtoreward themproperly.
g) Tocooperatewiththeotherdepartmentsforensuringasmoothfunctioningoftheentireorganization
.
h) Tocollectreportsandinformationonperformance intheirdepartments.
i) Toreporttotopmanagement
j) Tomakesuitablerecommendationstothetopmanagementforthebetterexecutionofplansand
policies.
3. Lower level management: It is placed at the bottom of the hierarchy of management, andactual
operations are the responsibility of this level of management. It consists of foreman,supervisors,
sales officers, accounts officers and so on. They are in direct touch with the rank andfile or workers.
Their authority and responsibility is limited. They pass on the instructions of themiddlemanagement
to workers.
They interpret and divide the plans of the management into short-range operating plans. They
arealso involved in the process of decisions-making. They have to get the work done through
theworkers. They allot various jobs to the workers, evaluate their performance and report to
themiddle level management. They are more concerned with direction and control functions
ofmanagement.Theydevotemoretime in the supervision oftheworkers.

MANAGERIALSKILLS
A skill is an individual's ability to translate knowledge into action. Hence, it is manifested in

anindividual's performance. Skill is not necessarily inborn.It can be developed through practiceand
through relating learning to one's own personal experience and background. In order to beable to
successfully discharge his roles, a manager should possess three major skills. These
areconceptualskill, human relations skill and technical skill.
1. Conceptual skill: The Conceptual Skill which deals with ideas refers to the ability of amanager
to take a broad and farsighted view of the organization and its future, his ability to thinkin abstract,
his ability to analyze the forces working in a situation, his creative and innovativeability and his
ability to assess the environment and the changes taking place in it. In short, it ishis ability to
conceptualize the environment, the organization, and his own job, so that he can
setappropriategoalsforhisorganization,forhimselfandforhisteam.Thisskillseemstoincreaseinimportan
ceasmanager movesup to higher positions ofresponsibilityinthe organization.
2. Technical Skill: The technical skill which deals with things is the manager's understanding ofthe
nature of job that people under him have to perform. It refers to a person's knowledge
andproficiency in any type of process or technique. In a production department this would mean
anunderstanding of the technicalities of the process of production. Whereas this type of skill
andcompetenceseemstobemoreimportantatthelowerlevelsofmanagement,itsrelativeimportanceasapar
tofthemanagerialrolediminishesasthe managermovestohigherpositions.
3. Human relations skill: The Human Relations Skill which deals with people is the ability
tointeracteffectivelywithpeopleatalllevels.Thisskilldevelopsinthemanagersufficientability
(a) to recognize the feelings and sentiments of others; (b) to judge the possible actions to,
andoutcomes of various courses of action he may undertake; and (c) to examine his own
conceptsandvalues which mayenable himto developmore usefulattitudesabout himself.

CHALLENGESOFMANAGEMENT
In the present scenario it is difficult for the organizations to survive. The challenges and
thecompetitionbringorganizationsmoreopportunities.
1. Economic Pressure: During difficult economic times, effective management is often at

apremium. Anybody can run a company when business is booming. The difference between a
badmanagement and a good management reflects the difference between making a lot of money
andmaking a lot more money.In tough times the difference between a good and a bad
managementcanbethe differencebetween profit or loss orultimatelybetweensurvivaland failure.
2. Globalization: Globalization refers to the free movement of goods, services and people
acrossthe world. Today we are living in a global village. We are now not just national citizens but
wehave become a global citizen. Globalization in its literal sense is the process or transformation
oflocal or regional phenomena into global ones. Globalization is often used to refer to
economicglobalization, that is, integration of national economies into the international economy
throughtrade,foreigndirect investment,capitalflows, migration,and thespreadoftechnology.
Globalization makes it possible for companies to find economies with cheaper costs and
buycomponent parts at a reduced price. Companies can benefit through outsourcing and off-
shoring.Italso meansfirms wouldhaveaglobalreach thusincreasingthe potentialcustomers.
3. Change:Businessesshouldembracechange.Changeisimportantforanyorganizationbecause,
without change, businesses would likely lose their competitive edge and fail to meet theneeds of
what most hope to be a growing base of loyal customers. Today the organizations haveto adapt
themselves to the changing business environment. If the organization continues with itsold business
methods and do not adopt the new strategies then it is likely that the business mightcometoan
end.Changecanbeinview oftechnology,culture,growthopportunities etc.
4. Innovation: Innovation refers to the process of translating an idea into a good or service
thacreatesvalueforwhichcustomerpaymoney.Innovationdiffersfrominventioninthatinnovation refers
to the use of a better and, as a result, novel idea or method, whereas
inventionrefersmoredirectlytothecreationoftheideaormethoditself.Organizationsarefinding

innovativewaysofmakingtheirexistenceintheworld,beittheadvertisementoftheirproduct,theirservices,
theirsocial messageetc.
5. Customer Service: Organizations can‘t exist without customers. Meeting the required needsand
demands of the customers has become a challenge for the organization. In the Internet era,
achallenge has been to maintain and/or enhance the personal experience while making use of
theefficiencies of online commerce. Many organizations are trying to target their customers
throughwebportalsandallowingthemaconvenientapproach totheirservices attheir homesonly.
6. Employee Satisfaction: Employee satisfaction is a measure of how happy workers are withtheir
job and working environment. Keeping morale high among workers can be of tremendousbenefit to
any company, as happy workers will be more likely to produce more, take fewer daysoff, and stay
loyal to the company. Companies are trying new management techniques to
keeptheiremployeessatisfiedinordertoderivemaximumproductivityfromthem.Keepingemployees
motivated, help improving their skills, providing assistance in case of crisis, are someofthe practices
followedbytheorganizations.
7. OrganizationEthics:Simplyspeaking,ethicsmeansbeinggoodanddoinggood.Organizational
Ethics is the ethics of an organization, and it is how an organization ethicallyresponds to an internal
or external stimulus. Behaving ethically in business is widely regarded asgoodbusiness practice.
8. SocialResponsibility:Socialresponsibilityincludesaccountability,transparency,ethicalbehavior,
respect to stakeholders interest, respect for human rights and respect to law. Socialresponsibility
isadutyofevery individualororganizationwhichhastoperformsoastomaintain a balance between the
economy and the ecosystem. Businesses can use decision makingto secure their businesses by
making decisions that allow for government agencies to minimizetheirinvolvement with the
corporation.
9. Pressure from World Organizations: Many world organizations such as WTO, GATT,
IMP,World Bank etc. has a great influence on the working of the multinational organizations as
wellas on national organizations. The organizations have to follow the rules, principles and
variousarticles laid down bytheseWorldorganizations.

EVOLUTIONOFMANAGEMENT
The origin of management can be traced back to the days when man started living in groups.History
reveals that strong men organized the masses into groups according to their
intelligence,physicalandmentalcapabilities.Evidenceoftheuseofthewellrecognizedprinciplesofmanag
ement is to be found in the organization of public life in ancient Greece, the
organizationoftheRomanCatholicChurchandtheorganizationofmilitaryforces.Thusmanagementinso
me form or the other has been practiced in the various parts of the world since the dawn
ofcivilization. With the onset of Industrial Revolution, however, the position underwent a
radicalchange. The structure of industry became extremely complex. At this stage, the development
of aformal theory of management became absolutely necessary. It was against this background
thatthe pioneers of modern management thought laid the foundations of modern management
theoryandpractice.
Theclassicaldevelopmentofmanagementthoughtscanbedividedinto-thescientificmanagement, the
administration/organizational management, the behavioral management andthe quantitative
management. The first two (scientific management school and organizational)emerged in late
1800s and early 1900s were based on the management belief that people wererational, economic
creatures choose a course of action that provide the greatest economic gain.Theseschools of
management thoughts areexplained as below:
1. TheScientificManagement:
F.W.Taylor (1856-1915): Frederick Winslow Taylor well-known as the founder of
scientificmanagementwasthefirsttorecognizeandemphasistheneedforadoptingascientificapproachto
thetaskofmanaginganenterprise.Hetriedtodiagnosethecausesoflowefficiency in industry and came
to the conclusion that much of waste and inefficiency is due tothe lack of order and system in the
methods of management. He therefore, suggested that thoseresponsible for management should
adopt a scientific approach in their work, and make use of"scientific method" for achieving higher
efficiency. The scientific method consists essentiallyof(a)Observation(b) Measurement
(c)Experimentation and(d)Inference.

CharacteristicsofScientificManagement
i. Science,notaruleof thumb
ii. Harmonybetween management andworkers
iii. Monitorworkersperformance
iv. Wagesarepaid accordingto piecerate
Divisionofwork
ElementsofScientificManagement:
ThetechniqueswhichTaylorregardedasitsessentialelementsorfeaturesmaybeclassifiedas
under:
1. Work Study: Work study may be defined as the systematic, objective and
criticalexaminationofallthefactorsgoverningtheoperationalefficiencyofanyspecifiedactivityin
order to effectimprovement. Work studyincludes.
a) Methods Study: It is the systematic investigation of the existing method of doinga

job. The management should try to ensure that the plant is laid out in the bestmanner
and is equipped with the best tools and machinery. The possibilities ofeliminatingor
combining certain operations maybestudied.
b) Motion Study:It is a study of the movement, of an operator (or even of amachine)
inperforminganoperationwiththepurpose of eliminatinguselessmotions.It means
examiningthe necessarytime toperform a job.
c) TimeStudy(workmeasurement):Thebasicpurposeoftimestudyistodeterminetheprop
ertimeforperformingtheoperation.Suchstudymaybeconducted after the motion
study.Both time study and motion study help indeterminingthe best methodof doing
ajoband thestandardtimeallowed forit.
d) FatigueStudy:If,astandardtaskissetwithoutprovidingformeasurestoeliminate fatigue,
it may either be beyond the workers or the workers may overstrain themselves to
attain it. It is necessary, therefore, to regulate the workinghoursand provide forrest
pauses atscientificallydetermined intervals.
e) Rate-setting:Taylorrecommendedthedifferentialpiecewagesystem,underwhich
workers performing the standard task within prescribed time are paid amuch higher rate per unit than

inefficient workers who are not able to come up tothestandard set.
2. Planning the Task: Having set the task which an average worker must strive toperform
to get wages at the higher piece-rate, necessary steps have to be taken to plan
theproductionthoroughlysothatthereisnobottleneckandthe work goesonsystematically.
3. SelectionandTraining:Scientific Managementrequiresaradicalchange inthemethods and
procedures of selecting workers. It is therefore necessary to entrust the taskof selection to a
central personnel department. The procedure of selectionwill also haveto be systematized.
Proper attention has also to be devoted to the training of the workersinthecorrect methods
ofwork.
4. Standardization:Standardizationmaybeintroducedinrespectofthe following.
a) Tools and equipment: By standardization is meant the process of bringing
aboutuniformity. The management must select and store standard tools and
implementswhich will benearlythebest or the best of theirkind.
b) Speed: There is usually an optimum speed for every machine. If it is exceeded,
itislikelytoresult in damageto machinery.
c) ConditionsofWork:Toattainstandardperformance,themaintenanceofstandard
conditions of ventilation, heating, cooling, humidity, floor space, safetyetc., is
veryessential.
d) Materials: The efficiency of a worker depends on the quality of materials and
themethod ofhandlingmaterials.
5. Specialization: Scientific management will not be complete without theintroductionof
specialization. Under this plan, the two functions of 'planning' and 'doing' are separatedin
the organization of the plant. The `functional foremen' are specialists who join theirheads to
give thought to the planning of the performance of operations in the
workshop.Taylorsuggestedeightfunctionalforemenunderhisschemeoffunctionalforemanship.
a) TheRouteClerk:Tolaydownthesequenceofoperationsandinstructtheworkers
concerned aboutit.
b) TheInstructionCardClerk:To
preparedetailedinstructionsregardingdifferentaspectsof work.
c) TheTimeandCostClerk:Tosendallinformationrelatingtotheirpaytotheworkers and to
secureproperreturns of workfrom them.

d) TheShopDisciplinarian:Todealwithcasesofbreachofdisciplineandabsenteeism.
e) TheGangBoss:Toassembleandsetuptoolsandmachinesandtoteachtheworkersto
makeall their personal motions inthe quickestand bestway.
f) TheSpeedBoss:Toensurethatmachinesarerunattheirbestspeedsandpropertools
areusedbythe workers.
g) TheRepairBoss:Toensurethateachworkerkeepshismachineingoodorderandmaintains
cleanlinessaroundhim and hismachines.
h) TheInspector:Toshow to theworkerhowto dothework.
6. Mental Revolution: At present, industry is divided into two groups – management

andlabour. The major problem between these two groups is the division of surplus.
Themanagement wants the maximum possible share of the surplusas profit; theworkerswant,
as large share in the form of wages. Taylor has in mind the enormous gain thatarises from
higher productivity. Such gains can be shared both by the management andworkersin the
form ofincreased profits andincreased wages.
CriticismonScientificManagement
a) Speedingupofworkers:ScientificManagementisonlyadevicetospeeduptheworkerswithout
much regard fortheirhealth andwell-being.
b) Lossofindividualworker'sinitiative:ScientificManagementreducesworkerstoautomaticmac
hine bytakingawayfrom them thefunction ofthinking.

c) Problem of monotony: By separating the function of planning and thinking from that
ofdoing,ScientificManagement reduceswork tomereroutine.
d) Reduction of Employment: Scientific Management creates unemployment and hits
theworkershard.
e) Weakening of Trade Unions: Under Scientific Management, the important issues
ofwagesandworkingconditionsaredecidedbythemanagementthroughscientificinvestigationan
d the tradeunions mayhavelittle sayin thematter.
f) Exploitationofworkers:ScientificManagementimprovesproductivity throughtheagency of
workers and yet they are given a very small share of the benefit of suchimprovement.
g) Heavy Investment: It requires too heavy an investment. The employer has to meet theextra
cost of the planning department though the foreman in this department do not
workintheworkshop and directlycontributetowards higher production.
h) Loss due to re-organization: The introduction of Scientific Management requires avirtual
reorganization of the whole set-up of the industrial unit. Work may have to besuspendedto
completesuch re-organization.
i) Unsuitable for small scale firms: various measures like the establishment of a
separatepersonnel department and the conducting oftime and motion studies aretoo
expensiveforasmall or modest sizeindustrial unit.
AdvantagesofScientificManagement
1. Scientificmanagementimprovedworkingmethodsandbroughtenormousincreaseinproducti
vity.
2. Piecerate wagesystem wasintroducedandincentivesystemswereevolved.
3. Itlaiddownfoundation forworkstudyandotherrelatedtechniques.
4. Scientificselectionandtrainingof
employeesleadstobetterworkforcewhichensuresincreasein efficiency.
5. Harmoniousrelationship betweenthe workersand themanagement.
6. Opportunityforscientific trainingand
developmenttoincreaseskillsknowledgeandcompetency.

7. Applicationofscientificmethodsandtechniquesinbetterworkingconditions toreducefatigue.
8. Higherwagestotheworkersforhigherproductivity.
DisadvantagesofScientificManagement
1. Itisbasedupononebestwayandisapplicableforsimpleorganizationsthanthatfortoday‘sdynamica
ndcomplexorganization.
2. Itfocusesonindividualperformancethangroupeffortsanddividestheworkersintoefficientand
inefficient categories.
3. Itisfocusedonspecializationandrepetitionofjobstoincreasetheproductivitywhichreducesinnova
tion and creativityand promotes monotony.
4. Itneglectshumanfactorbecauseitmotivatesworkerstoworkformonetarybenefitsratherthan
human resourcedevelopmentand resources.
Thereisnoscopeforcreativityofemployeesbecausetheyaredevelopedbymanagerwhichpromote
s frustration.
2. TheAdministrativeManagement:
Henry Fayol is generally regarded as the founder of administrative management and
heprovided the bases for art of management. Fayol found that industrial activities could
bedividedinto sixgroups as shown in figure.
1. Technical(Production)
2. Commercial(buying,Sellingandexchanging).
3. Financial(Searchfor,andoptimumuseofcapital).
4. Security(Protection ofpropertyand persons).
5. Accounting(including Statistics).
6. Managerial(Planning,
organization,command,contributionandcontrol).HenriFayolpointed outthat
theseactivities existin everysizeofbusiness.

Also,Fayolidentified14principlesofmanagemnet.Theyare:
Principlesof Management (DADUSEEUSSR?.OISEE…)
1. Division of Work: According to this principle, work should be divided into small tasksand
each task is performed by a person who is specialist in that area. This will save thetime and
energy needed to complete a taskandalsoincrease the speed,accuracy andefficiency of work.
According to Fayol, this principle is applicable to both technical andmanagerialwork.
2. Authority and Responsibility: Authority is the poweror right to give orders.
Fayolproposed that for every authority there should be a corresponding responsibility.
Thenonly, a person can work effectively and get efficient results. In the same way, if a
personis given a responsibility without an adequate authority, he will not be effective in
gettingtherequiredresults.
3. Discipline: A good discipline is required at all levels for he smooth functioning
ofanorganization. It includes respect of authority, obedience, proper conduct, fair clear
rulesand regulations careful use of penalties. According to Fayol, a good supervision at
alllevelshelps to maintain discipline in an organization.
4. Unity of Command: Unity of Command employs that there should only one boss for
anemployee i.e., an employee should be answerable to only one superior and receive
ordersonly from him. This helps to avoid confusion regarding what task is to be done, when
it istobe donehow it is to bedone.
5. Centralization: It means the extent to which authority should be concentrated in
thehandsoftoplevelmanagement.Itmaybecentralizedordecentralized.Therearelimitationsofco
mpletecentralization&completedecentralization.Therefore,thereshouldbeproper
balancebetween this two.

6. Unity of Direction: This principle says that there should be one head and one plan.
Allsimilar activities should be grouped together, be supervised by one and have one plan
ofaction.Theeffortsofallthemembersofagroupmustbedirectedtowardstheachievementof
commongoals.
7. Subordination:Inanorganizationindividualinterestshouldnotbegivenanyimportance.Theman
agershouldalwayskeeporganizationalinterestbeforehim&should determine such policies
which will be beneficial to entire group & not just fewpersonnel. It is responsibility to
management to create common understanding betweenall.Individual interestis subordinated
toorganizational interest.
8. Scalar Chain: Under this principle, Fayolemphasized on having a formal chainofcommand
and communication from the top level management to lower level. The chainshould be
strictly followed by all managers and subordinators except in situations ofemergency. Such
emergency is referred to by Fayol as Gang Plank. Under Gang Plank
,Samelevelmanagerscantalktoeachotherwithoutfollowingtheregularchainofsequences for any
decision making in order to avoid any delay in communication . Itshowsthestraight lineof
authorityfrom highestlevelto lowerlevel forcommunication.
9. Remuneration: According to this principle, employees should be fairly compensated
fortheir efforts in achieving organizational objectives. The remuneration should be just
andequitable for both the employees and employer, it should be determined based on
thework allocated, cost of living, market wage rate for similar work and financial position
ofanorganisation.
10. Order: This principle stresses on the orderliness ofeverything and everyone. This meansthat
every one working in an organization should be allocated a particular place of workand he
should be at that place during working hours. It means keeping the right man orrightthing at
theright timein therightplace.
11. Initiative: Fayol suggested that employees should be allowed to take initiative in
workrelatedmatterswithout beingundisciplined.
12. Stability of Tenure of Personnel: Retaining productive employees should always be ahigh
priority of management. This indicates avoiding frequent transfers of the employeesmuch
beforetheysettlein theirjobs.

13. Equity: According to this principle, everyone in an organization should be equal in theeyes
of management. The managers should neither favour any subordinate nor neglectthem; they
should give them a fair treatment without discriminating on the basis ofgender, religion,
nationality and language. This will make employees more devoted towork.
14. Esprit De Corps (Unity is strength): This is a French term. It means manager is like
acaptain of a team who is responsible to maintain high moral in all workers. It may
bepossiblebyeffectivecommunicationamongallpersonsinorganization.Hisunderstanding &
differences in opinions should not be harmful. The best way of takingsuch situation is to
establish dialogue between parties. Participation of workers in theprocess of decision
making is important. The principle states that an organization
mustmakeeveryefforttomaintaingroupcohesionintheorganization.Thisprincipleemphasizeson
team work. Unityof staffis thefoundation ofsuccess.
3. BehavioralApproach
Elton Mayo’s Human Relations Approach: Scientific management theory focused
onphysical resources rather than human resources. This theory concentrated on
economicneeds of workers but not social needs because it concentrated on improvement of
theworking methodsbutnoton the working men.The human
relationsapproachisoftencalledthebehavioralmanagementtheory.ThecriticismoftheScientifican
dAdministrative Management as advocated by Taylor and Fayol, respectively, gave birth
toHuman Relation Approach. The behavioural scientists criticized the early
managementapproaches for their insensitiveness to the human side of organization. The
behaviouralscientists did not view the employees mechanically in work situation, but tried to
show thatthe employees not only have economic needs but also social and psychological
needs likeneed for recognition, achievement, social contact, freedom, and respect. Human
relationsschoolregards business organization asa psycho-social system.
Professor George Elton Mayo (1880-1949)andhis associates conducted a famous studyon
human behaviour at the Hawthorne plant of the Western Electric Company from 1924
to1932and thisstudyformed thefoundation ofthisschool ofmanagement thoughts.

HawthorneExperiments:
1. LightingExperiments
These experiments were performed to find out the effect of different levels of lighting
onproductivity of labour. The brightness of the light was increased and decreased to find
outtheeffectontheproductivityofthetestgroup.Surprisingly,theproductivityincreasedeven when
the level oflighting was decreased.It wasconcluded that factors other thanlightwerealso
important.
2. RelayAssembly TestRoomStudy
Under this test, two small groups of six female telephone relay assemblers were selected.Each
group was kept in separate rooms. From time to time, changes were made in workinghours,
rest periods, lunch breaks, etc. They were allowed to choose their own rest periodsand to give
suggestions. Output increased in both the control rooms. It was concluded thatsocial
relationship among workers,participation in decision-making, etc. hadagreatereffecton
productivitythan working conditions.
3. MassInterviewingProgramme
21,000 employees were interviewed over a period of three years to find out reasons
forincreased productivity. It was concluded that productivity can be increased if workers
areallowed to talk freelyabout matters that areimportant to them.
The basic hypotheses of this study as well as the basic propositions of the Human
RelationApproacharethefollowing:
1. The social and psychological factors are responsible for workers' productivity and
jobsatisfaction.Onlygoodphysicalworkingconditionsarenotenoughtoincreaseproductivity.
2. The informal relations among workers influence the workers' behaviour and
performancemorethan theformal relations in the organisation.
3. Employeeswillperformbetteriftheyareallowedtoparticipateindecision-makingaffectingtheir
interests.
4. Employees will also work more efficiently, when they believe that the management
isinterestedin their welfare.
5. Whenemployeesaretreatedwithrespectanddignity,theirperformancewillimprove.
6. Financial incentives alone cannot increase theperformance. Social
andPsychologicalneedsmust also be satisfied in order toincreaseproductivity.

7. Good communication between the superiors and subordinates can improve the relationsand
the productivityof the subordinates.
8. Special attention and freedom to express their views will improve the performance of
theworkers.
The human relations approach is concerned with recognition of the importance of

humanelement in organizations. It revealed the importance of social and psychological factors
indetermining worker‘s productivity and satisfaction. It is instrumental in creating a
newimageofmanandtheworkplace.However,thisapproachalsodidnotgowithoutcriticism. It was
criticized that the approach laid heavy emphasis on the human side asagainst the
organizational needs. However, the contribution of this approach lies in the factthatit advises
managersto attach importancetothehuman side ofan organization.
CriticismsonHumanRelationsApproach
1. Lacks Validity : The Hawthorne experiments were conducted under controlled situations.These
findings will not work in real setting. The workers under observation knew about
theexperiments. Therefore,theymayhaveimprovedtheir performance onlyfor theexperiments.
2. More Importance to Human Aspects : This approach gives too much importance to
humanaspects.Humanaspectsalonecannotimproveproduction.Productionalsodependsontechnolog
icaland other factors.
3. More Emphasis on Group Decision-making : This approach places too much emphasis
ongroupdecision-making.Inrealsituation,individualdecision-makingcannotbetotallyneglected
especiallywhen quickdecisions arerequired andthereisnotime toconsult others.
4. Over Importance to Freedom of Workers : This approach gives a lot of importance
tofreedomoftheworkers.Itdoesnotgiveimportancetotheconstructiveroleofthesupervisors. In reality
too much of freedom to the workers can lower down their performanceorproductivity.
Maslow’s Need Hierarchy Approach:-Abraham. H. Maslow developed a need hierarchy

toexplain human bevaviour within an organization. According to his writings, the humans
workattitude depends on their needs. His theory states that the human beings work according to
theirneeds. One may work for food, while other for status. Thus a good manager will extract the
workformhis subordinate byprovidingandfulfillingthesuitableneed.

McGregor’s Theory X and Theory Y:-McGregor classified the people into two categories
asTheory-Xtype(workavoiders)andTheory–Ytype(workacceptors).Theessenceofmanagement
according to his theory is that the leader should identify the type of behavior of hissubordinate and
accordingly. A manager has to use a carrot approach (pat the employees) fortheoryY peoplewhile a
stick (punish theemployees) for theoryX people.
4. TheQuantitativeApproach:
Thequantitativeapproachtomanagement,sometimesknownasoperationsresearchormanagement
science, uses quantitative techniques to improve decision making. This approachincludes
applications of statistics, optimization models, information models, and computersimulations. The
quantitativeapproach originated during World War II as mathematical andstatistical solutions to
military problems were developed for wartime use. The relevance ofquantitative approach today
is that it has contributed most directly to managerial decisionmaking, particularly in planning and
controlling. The availability of sophisticated computersoftware programs has made the use of
quantitative techniques more feasible for managers.Techniques such as linear programming,
simulation, queuing theory, network analysis, etc. areextensively use mathematical symbols,
relationships and models in analyzing the managementproblems such as cost minimization, profit
maximization, resource optimization,
etc.Thisapproachfocusesattentiononthefundamentalsofanalysisanddecisionmaking.TheQuantitativ
eSchoolquantifiestheproblem;generatesolution,teststhesolutionfortheiroptimality and then it
recommends. The decisions are optimum and perfect as distinguishedfrom the human behavioral
approach, in which decisions are ‗satisfying‘. This approach isdevoid of any personal bias,
emotions,sentiments, and intuitiveness. The main postulates ofthequantitative
approachareasfollows:
a) Management is a series of decision making. The job of a manager is to secure the

bestsolutionout of aseries ofinterrelated variables.
b) These variables can be presented in the form of a mathematical model. It consists of
asetoffunctionalequationwhichsetoutthequantitativeinterrelationshipofthevariable.
c) If the model is properly formulated and the equations are correctly solved, one
cansecurethebest solution to the model.

d) Organizationsexistfortheachievementofspecific andmeasurableeconomicgoals.
e) Inordertoachievethesegoals,optimaldecisionsmustbemadethroughscientificformalreasoni
ngbackedbyquantification.
f) Decisionmakingmodelsshouldbeevaluatedinthelightofsetcriterialikecostreduction,return
on investment, meetingtime schedulesetc.
g) Thequalityofmanagementisjudgedbythequalityofdecisionsmadeindiversesituations.
AsHaroldKoontzobserved,mathematicsisjustatoolanditcannotbeviewedasschooloraseparatea
pproach tomanagement theory.
4. The Systems Approach: A system is a set of interrelated but separate parts workingtowards a
common purpose. In the 1960s, a new approach to management appeared
whichattemptedtounifytheearlierschoolofthoughts.Thisapproachiscommonlyreferredtoas
‗SystemApproach‘.Thissystemisoneofthemodernapproachestounderstandmanagement. The
system approach is based on the generalization that an organization is
asystemanditscomponents(departments)areinter-relatedandinter-dependent.―Asystem is
composed of related and dependent elements (departments) which, when in interactions,form
a unitary whole. On other words, a system may be defined as an organized andpurposeful
entity of inter-related, inter-dependent and inter-acting elements. Our humanbody is system.
In human body, each part of the body is viewed as a sub-system. Thesesub-
systemsarefunctionallyrelated to each otherand to thetotal system.
Themanagersmustintertwinetheirdepartmentwiththetotalorganizationandcommunicatewith all
otherdepartments, employees andwitheach other.
ThefeaturesofSystems Approach
a. Anorganizationisasystemconsistingofseveralsubsystems.Forexample,inabusinessenterpri
se production, sales and otherdepartmentsarethesubsystem.

b. A system consists of interacting elements. It is set of inter-related and inter-

dependentpartsarranged in a manner that produces a unifiedwhole.
c. The various sub-systems should be studied in their inter-relationships rather, than
inisolationfrom each other.
d. An organizational system has a boundary that determines which parts are internal
andwhichare external.
e. A system does not exist in a vacuum. It receives information, material and energyfrom
other systems as inputs. These inputs undergo a transformation process within
asystemand leavethe system as output to othersystems.
f. An organization is a dynamic system as it is responsive to its environment. It
isvulnerableto changein its environment.
Systems can be open or closed. A closed system is not affected by its environment.
Forexample, a chuck of iron ore is not substantially affected by its environment. An
opensystem isasystemthatisaffectedby
itsenvironment.Asimpleexampleisalivingorganism,suchasananimal.Mosttheorists
treatanorganization asanopen system.
Theopensystemconsistingoffourbasicelements
1. Inputs: These are ingredients required to initiate the transformation process.

Theyincludehuman, financial, material andinformation resources.
2. Transformation Process: The inputs are put through a transformation process
thatappliestechnology,operating methodologies,administrative
practicesandcontroltechniquesin order to producethe output.
3. Outputs: The output may be products and/or services, the sale of whichcreatesprofits or
losses. This process also has by-product outputs such as worker
behaviour,information,environmental pollution, communityservicesand so on.
4. Feedback: A feedback loop is used to return the resultant environmental (public
orcustomers) feedback to the system as inputs. A negative feedback loop indicates
aproblem that should be corrected. For example, the failure of product design
indicatedby the need to recall the product. A positive feedback loop can identify
outputs thathave worked well. For example, a successful marketing campaign that yields
highsales.

If the environment is satisfied with the output, business operations continue. If it is

not,changes are initiated within the business systems so that requirements of the customers
arefullymet. Thisishow anopen systemresponds tothe forcesofchangein theenvironment.
5. TheContingency orSituationalApproach:
AnotherimportantapproachwhichhasarisenbecauseoftheinadequacyoftheQuantitative,Behaviou
ralandSystemApproachtomanagementistheContingencyApproach. Pigors and Myers
propagated this approach in 1950. Other contributors
includeJoanWoodward,TomBurns,G.W.Stalker,PaulLawrence,JayLorschandJamesThompson.
They analyzed the relationship between organization and environment. Theyconcluded that
managers must keep the functioning of an organization in harmony with
theneedsofitsmembersandtheexternalforces.Managementissituationalandliesinidentifyingtheim
portantvariables in a situation.
The basic theme of contingency approach is that organizations have to cope with
differentsituations in different ways. Organizations behave as situation demands. In other
words,decision making is contingent on situations. As situation changes, the solutions also
differ.Management problems vary with situation and require to be handled differently as
situationdemands. No two situations are absolutely identical. Therefore, each situation
requires itsown unique situation. For example, you may have chosen to construct building in
acertain way with certain strategies, but that same approach may not work for
differentbuildingsbecausetheyrequireacompletelydifferentapproach.Thefunctioningofmanager
s is not a manager‘s choice. It is contingent on external or internal environment
orboth.Therecannotbeparticularmanagementactionwhichwillbesuitableforallsituations. The
management must keep the functioning of an organization in harmony withtheneeds of its
membersand the external forces.

According to Kastand Rosenzweig, ―The contingency view seeks to understand the

interrelationships within and among sub-system as well as between the organization and
itsenvironmentandtodefinepatternsofrelationshipsorconfigurationsofvariables.Contingency
views are ultimately directed towards suggesting organizational designs andmanagerial
actions most appropriate for specific situations‖. The approach has been used inimportant sub
systemsof management likeorganization, design,leadership, behaviourchange and operation.
Featuresofcontingencyapproach
a) Managementisentirelysituational.Theapplicationandeffectivenessofanytechniquesis
contingenton the situation.
b) Management action is contingent on certain action outside the system or subsystem
asthe casemaybe.
c) Management should, therefore, match or fit its approach to the requirements of
theparticular situation. To be effective management policies and practices must
respondtoenvironmental changes.
d) Organizational action should be based on the behaviour of action outside the
systemsothat organization should beintegrated with theenvironment.
e) Management should understand that there is no one hard way to manage. They
mustnotconsidermanagement principles andtechniques universal.
In order to operationalise the contingency approach, managers need to know the alternativesfor
different situations. It may be operationalized as a ‗if then‘ approach to management.
Theenvironment (If) is an independent variable where as management (when) is a
dependentvariable. In this model,amanager hasto takefour sequential steps:
a) Analyzeandunderstandthesituation,
b) Examinetheapplicabilityorvalidityofdifferentprinciplesandtechniquestothesituationat
hand,
c) Maketheright choicebymatchingthe techniquesto thesituations,
d) Implementthechoice.

6. TheITManagement Approach:
IT managers focuses on the information technology resources in accordance with its needs
andpriorities. The resources include tangible investments like computer hardware, or
intangiblesoftware,data,networks and datacentrefacilities, as wellasthestaff hiredtomaintainthem.
Moreover, the IT manager use the important terminology, facts, concepts, principles,
analytictechniques,andtheoriestoapply whenanalyzing
complexactualsituationsandintegrateswhendevelopingsolutionstoITmanagementmultifacetedprobl
emsofthesecomplexsituations.
Of course,the basic management functions, like budgeting, staffing, change

management,organizing and controlling are inherently embedded in this style of management, but
the beautyof this style is that the management uses software design, network, planning, tech
support, etc.thatrequires little manpower.
Examples:
 Business/ITalignment:Thebusinessesmaintainthedatabaseoftheircustomerstoalertthemasandwh
ena serviceisrequired forthem.
 E-
Governance:Thegovernmentcanperformregistrationsandissuecertificates.Theservicesofgovern
ment tothe people canbe made available attheirdoorsteps.
 ITfinancialmanagementandservicemanagement:Thetaxmanagement,complaintresolutions,prop
ertydealings, financialservices,bankingactivitiesaresome examples.
 SourcingandITenabledservices:Transportservices,insuranceservices,healthservicescanbemana
gedeasilybycouplingthe sourceand destinationpoints withIT enabled services.
FeaturesofITManagementApproach
1. Togeneratevaluetothethroughtechnology.
2. Togeneratevalue,businessstrategiesandtechnologyarealigned.
3. Theorganizationalrelationshipbetweeninternalandexternalenvironmentsisnetworkedthrought
echnologyto improvingthe overallvaluechain of anorganization.
4. Thetechnologyprovidersbuildproduct-

centricinfrastructureandmanagementofferingswithconvergedinfrastructure environments.

Fundamental of management for engineers &SM504MS
INTRODUCTIONTOPLANNING
Planning is the most fundamental function of management. An organization can succeed

ineffectiveutilizationofitshuman,financialandmaterialresources.Planninginvolvesdetermination of
objectives of the business, formation of programs and courses of action for theirattainment,
development of schedules and timings of action and assignment ofresponsibilitiesfor their
implementation. Planning thus precedes all efforts and action, as it is the plans andprograms that
determine the kind of decisions and activities required for the attainment of thedesired goals. In the
absence of planning, it will be impossible to decide what activities arerequired, how they should be
combined into jobs and departments, who will be responsible
forwhatkindofdecisionsandactions,andhowvariousdecisionsandactivitiesaretobecoordinated.
DefinitionofPlanning
Planning is the process of deciding in advance what is to be done, who is to do it, how it is to
bedone and when it is to be done.It is the process of determining a course of action, so as toachieve
the desired results. It helps to bridge the gap from where we are, to where we want to go.It makes it
possible for things to occur which would not otherwise happen. Planning is a higherorder mental
process requiring the use of intellectual faculties, imagination, foresight and soundjudgment.
AccordingtoKoontzO‟Donnell-"Planningisanintellectualprocess,theconsciousdetermination of
courses of action, the basing of decisions on purpose, acts and consideredestimates".
PlanningElements
1. Whatwillbedone – whataretheobjectives of businessin the shortand inthe longrun?

2. What resources will be required – This involves estimation of the available and
potentialresources, estimation of resources required for the achievement of objectives, and
filling thegapbetween the two, if any.
EEE,NRCM Page 33ARCHANA R KOLLUR

3. How it will be done – This involves two things : (i) determination of tasks, activities,projects,
programs, etc., required for the attainment of objectives, and (ii) formulation
ofstrategies,policies, procedures,methods, standard and budgets fortheabovepurpose.
4. Who will do it – It involves assignment of responsibilities to various managers relating
tocontributions they are expected to make for the attainment of enterprise objectives. This
ispreceded by the breaking down of the total enterprise objectives into segmental
objectives,resultinginto divisional, departmental, sectionaland individual objectives.
5. When it will be done – It involves determination of the timing and sequence, if any, for
theperformanceof variousactivities andexecution ofvariousprojects andtheir parts.
NATURE/CHARACTERISTICSOFPLANNING
1. Goal oriented: Planning centers around the corporate mission and goals. So planning is saidto
be goal oriented. It contributes positively to achievement of mission and goals. It
identifiesthemeasures tobetakento achievethe targeted results efficientlyand economically.
2. Intellectual process: Not everybody can be good at planning. Planning is not guessing.
Oneshould be capable of thinking in a systematic manner. It is so because planning
demandsintellectual skills such as vision, farsighted outlook, imagination and analytical skills to
takerationaldecisions.
3. Involves choice:There are alternatives available to achieve a particular target. The

managerhastoselect thebest alternativebased onthemeritsand demeritsof eachalternative.
4. Basis for other functions: Since planning is first function of the manager, the results
ofplanningform thebasis forall othermanagerial functions.
5. Pervasive in nature: Planning is essential for all organizations – small or big, domestic
orforeign, profit-making or non-profit making oriented. Managers at the top, middle an d
lowerlevels in any organization have to systematically plan for the future. Thus, planning is said
tobeall pervasive.
6. Continuousanddynamic:Businessenvironmentiscomplexandkeepschanging.Consequently,plan
salsoneedtobedynamic.Theyhavetobeworkedoutforagiven

timeframeattheendofwhichtheymustbereviewedandnewplanspreparedforthenextyear.Thus,
planningis acontinuous process.
7. Flexibleinnature:Plansshouldnotberigid.They shouldbeflexibleinnatureandaccommodate
achangein circumstances.
8. Intends to enhance efficiency: the aim of planning is to achieve the maximum targets
atminimum cost and quickly. So all plans should be cost effective and worth their
investments.Thebenefits from a planshould bemorethan its costs.
IMPORTANCEOFPLANNING
1. Helps to achieve targets:Plans are expressed in terms of budgets. Budgets act as targets.Every
manager strives hard to achieve a given target. Thus, planning contributes to targetachievement.
2. Minimizes uncertainty and risk: Business environment is uncertain and risky. Planning isthe
onlywayto movetowards certaintyand confidence.
3. Guideforaction:Plansdirectpeopletowardsachievinggoals.Aspartofplanning,organizations keep
a list of supporting plans, policies, procedures, programs, strategies, rulesandbudgets to guide
their people towards thegoals.
4. Ensures order: Organizations walk into chaos if they don‟t plan properly. The only way
toensureorderistothinkofprobableproblemsinadvanceandcreatethenecessaryinfrastructureto sort
them out.
5. Improves efficiency: Efficiency means doing things correctly and at minimum cost.
Everydepartment has a budget. It means all possible activities have been considered while
framingthe budget. Clear plans leave only one task for mangers – their implementation.
Planning isboundto improveefficiency.
6. Facilitate control: Plan is a means of control.The actual performance of the

organizationandalso its members canbeevaluated basedon plans.

7. Promotesinnovationandcreativity:Progressiveorganizationsinvolvetheirstaffinorganizational
planning. Planning is considered a means to promote innovation and creativityamongthe staff.
8. Coordination made easy: Plans indicate what the employees have to do to attain their
goals.Plansmakeit easierformangers to coordinatethe efforts oftheirstaff.
GENERALFRAMEWORKFORPLANNING
1. Definepresentsituation:Definethepresentsituation(includesexamininginternalcapabilitiesand
externalthreats and opportunities).
2. Establish goals and objectives:Establishgoals that cancontinue to focus onwhat thebusinesscan

do best
3. Analyze environment: Analyze the environment in terms of aids and barriers to goals
andobjectives: Predict which internal and external factors will foster or hinder attainment of
desiredgoals
4. Develop action plans: Develop action plans for reaching goals and objectives (without
actionplans, goals may not be attained).Develop budgets (most action plans require money, so
realisticbudgetshavetobedeveloped).Implementtheplans (plansareoftendevelopedthenforgotten).
5. Developbudgets:Amongthe expenseswouldbelargeradvertisingandpromotionbudgets
6. Implement the plans: If the plans developed in the previous five steps are to benefit the
firm,theymust beput to use.
7. Control the plans: Control the plans (evaluate progress and make any necessary adjustmentsfor
lack of progress).Make contingency plans (develop an alternative in case the original plancannot be
implemented successfully or at all; an exit strategy might be part of the contingencyplan).

Fig: General Frame Work for Planning
PLANNINGPROCESS
Thefollowingeight mainsteps areinvolved inthe planningprocessofanorganization.
1. Identifying Opportunities: Real planning starts with knowing the availability of

differentopportunities. For each opportunity, assess carefully the size of markets, type of markets,
type ofcustomers, degree of competition, needs of customers, finances required and the strengths
andweaknessesof thefirm.Then, identifythe right opportunity.
2. Defining goals: Once the opportunity is identified, define the goalsyou want to achieve forthe
entire organization. Goals, in turn, will throw light on what objectives, strategies,
policies,procedures, rules, budgets and programs you should follow. This is to be done for the long
termas well as for the short range. Goals specify the expected results and indicate the end points
ofwhatistobedone,wheretheprimaryemphasisistobeplacedandwhatistobeaccomplishedbythe various
types of plans.
3. Considering Planning Premises: After determination of organizational goals, the next step
isestablishing planning premises that is the conditions under which planning activities will
beundertaken. Planning premises refers to the assumptions about the environment in which
planshave to be carried out. Correct assumptions about markets, completion, product
technology,prices, volume of sales, costs, tax rates etc. are essential for business planning.
Governmentpolicies, annual budgets, economic indicators, survey of specific industries etc. provide
valuableinsightsonthebasisofwhich„premises‟ canbe workedout.

Thus planning premises are external and internal. External premises include total factors in
taskenvironment like political, social, technological, competitors, plans and actions,
governmentpolicies. Internal premises include organization‟s policies, resources of various types,
and theability of the organization to withstand the environmental pressure. The plans are formulated
inthelight of both externaland internal factors.
4. Identifying Alternatives: The fourth step in planning is to identify the alternatives.

Variousalternatives can be identified based on the organizational goals and planning premises.
Theconcept of various alternatives suggests that a particular goals can be achieved through
variousactions.
For example, if an organization has set its goals to grow further, it can be achieved in severalways
like expanding in the same Field of business or product line diversifying in other areas,joining
hands with other organizations, or taking over another organization and so on. Withineachcategory,
theremaybeseveral alternatives.
5. Evaluating Alternatives: The various alternative courses of action should be analyzed in

thelight of premises and goals. There are various techniques available to evaluate alternatives.
Theevaluation is to be done in the light of various factors. Example, cash inflow and outflow,
risks,limited resources, expected pay back etc., the alternatives should give us the best chance
ofmeetingourgoals at thelowest cost and highest profit.
6. ChoosingtheBestAlternative:Thebestalternativeischosenonthegivensituation.Normally, it
involves optimum utilization of resources. At times, an analysis and evaluation
ofalternativecourseswilldisclosethattwoormorealternativesareadvisableandbeneficial.Thefitoneis
selected.
7. Formulating Supporting Plans: After formulating the basic plan, various plan are derived soas
to support the main plan. In an organization there can be various derivative plans like planningfor
buying equipment, buying raw materials, recruiting and training personnel, developing newproduct
etc. These derivative plans are formulated out of the basic or main plan and
almostinvariablyrequired to support thebasic plan.

8. Making Budgets: After formulating basic and derivative plans, the sequence of activities
isdetermined so those plans are put into action. After decisions are made and plans are set,
budgetsfor various periods and divisions can be prepared to give plans more concrete meaning
forimplementation.
Budget is “numerical expression” of a plan. The overall budgets of an enterprise represent thesum
total of income and expenses, with resultant profit or surplus, and budgets of major balancesheet
items such as cash and capital expenditures. Each department or program of a business orother
enterprisecan have its own budgets, usually of expensesand capital expenditures, whichtieinto the
overall budget.
MANAGEMENTBYOBJECTIVES(MBO)
The term Management By Objectives (MBO) has been popularized by Peter Drucker in his
1954book “The Practice of Management” and George S. Odiorne gave depth to the meaning
andusageofMBOthroughhisbook“ManagementByObjectives:ASystemofManagerialLeadership”.
It is the process of defining objectives within an organization so that managementand employees
agree collectively to the objectives and understand what they need to do in theorganization. It
suggests that objectives should not be imposed on subordinates but should bedecided collectively
by a concerned with the management. This provides not only supports buteasesandquickness
theachievement ofsuch objectives.
It concentrates on the achievement of objectives through participation of all concerned

throughteamspirit and trust on oneanother. This not onlysupports butalsoeasesand speeds
upreaching

the goals. Thus, MBO has become the most widely accepted philosophy of management todaydueto
its demandingandrewardingstyle.
The principle behind Management by Objectives (MBO) is to make sure that everybody withinthe
organization has a clear understanding of the aims, or objectives of that organization, as
wellasawareness of their own roles andresponsibilities in achievingthose aims.
Definitionof MBO
George S. Odiorne defines “MBO is a process whereby superior and subordinate managers of
anorganizationjointlydefineitscommongoals,defineeachindividual‟smajorareasofresponsibility in
terms of results expected of him and use these measures as guides for operatingtheunit and
assessingthecontribution of each of its members”.
FeaturesofMBO
1. Management byObjectives is a philosophyorasystem, andnot merelytechnique.

2. Itemphasizesparticipativegoalsetting.
3. Itclearlydefineseach individualresponsibilityintermsof results.
4. Itfocusesattentiononwhatmustbeaccomplishedgoalsratherthanonhowitistobeaccomplished.
5. Itconvertsobjectiveneedsintopersonalgoals ateverylevelinthe organization.
6. Itestablishesstandardsoryardsticks(goals)asoperationguidesandalsoasbasisofperformanceevaluatio
n.
7. Itisasystemintentionallydirectedtowardeffectiveandefficientattainmentoforganizationalandperson
algoals.
TheSixStepsin MBOProcess

1. Define Organizational Goals: Goals are critical issues to organizational effectiveness, andthey
serve a number of purposes. Organizations can also have several different kinds of goals,
allofwhich must be appropriatelymanaged.
And a number of different kinds of managers must be involved in setting goals. The goals set bythe
superiors are preliminary, based on an analysis and judgment as to what can and what
shouldbeaccomplished bythe organization within acertain period.
2. Define Employees Objectives: After determining the organizational goals, the next thing todo is
to know the individual‟s goals or more clearly employees‟ goals. It is the responsibility
ofthemanagertoaskemployeesaboutwhatgoalstheycanaccomplishwithinaspecifictimeperiod and
what resources will they use to achieve the goal.Get specific and clear about whatyou wan to
achieve (I want to be a rich), make your goal measureable-quantify what you want
(IwanttohaveRs.10lakh),Makeyourgoalachievablewithinyourresources(Iworkhardashell), make your
goal relevant-is it worthwhile (I want to keep her happy), your goal needs to betimed-set a start and
finish date (One year time)> Also, if needed, then managers and
employeescanclassifythegoalsfromthemostimportanttotheleastoneinordertomakethegoalachievingpr
ocess moreeasilyand in favor of theorganization.

3. Continuous Monitoring Performance and Progress: The process of MBO is not just set
forproviding additional effectiveness to managers across the organization, but it is also
equallyimportant for constantly monitoring the progress and performance of the employees. There
arecertainthingsstatedbelowthatcanhelp managers tomonitorperformance andprogress.
 Checkingless-effectiveorineffectiveprogramsbyperformingacomparisonofperformancewith
alreadyprepared objectives.
 UsingZBB(ZeroBased Budgeting)
 Definingshortand longtermplans andobjectives
 Installingefficientand effectivecontrols
 Eventually,composingcompletelysoundstructureoftheorganizationwithallthingsatappropriate
places such as responsibilities,decision makingand soon.
4. Performance Evaluation: MBO is designed to improve performance at all levels of

theorganization. To ensure this happens, you need to put a comprehensive evaluation system
inplace. As goals have been defined in a specific, measurable and time-based way, the
evaluationaspect of MBO is relatively straightforward. Employees are evaluated on their
performance withrespecttogoalachievement(allowingappropriatelyfor changes intheenvironment.)
5. Providing Feedback:The psychologically influential factor of MBO is constantly

providingfeedbacktoemployeesregardingtheirperformanceandindividualgoals,sothattheycanmonitor,
correct and extra improve their skills and mistakes. Mostly, the feedback is provided inperiodic
meetings where supervisors and their subordinates review the performance and progresstowards
achievement of goals. At one point, feedback helps individuals know their weakness.While on the
other hand, it also motivates already potential individuals to enhance and developtheir performance
additionally. This continuous feedback is supplemented by periodic formalappraisal meetings
which superiors and subordinates can review progress toward goals, whichleadto further feedback.
6. PerformanceAppraisal:Inthisstep,theworthofemployeeisexaminedandjudged.Performance
appraisals are a regularreview ofemployee performancewithinorganizations.When you reward goal
achievers you send a clear message to everyone that goal attainment
isvaluedandthattheMBOprocessisnotjustanexercisebutanessentialaspectofperformance

appraisal.Theimportanceoffairandaccurateassessmentofperformancehighlightswhysettingmeasurabl
e goalsand clearperformanceindicatorsareessentialtothe MBOsystem.
Merits/Benefitsof MBO
1. Goalssetupthemotivationlevels:Ifachievable,albeithigher,goalsaresetinconsultation with
the subordinates and keeping to mind their strengths and weaknesses,employeesget
highlymotivated to put in theirbest.
2. Result oriented management: The management focuses the attention of mangers on

theresultsto beachieved rather than on activities.
3. Clarity in organizational structures: Everyone in an organization knows the purposeand

mission of the company and is aware of its objectives. This helps managers toperformbetter
withgreatercommitment and accountability.
4. Superior subordinates relationships are reinforced: Since mangers at different levelsare

consulted and senior mangers counsel the juniors, there is greater understandingbetween
them. Communication gaps are eliminated and subordinates develop a sense
ofinvolvementwhich enhances their productivity.
5. Monitoring is made easy: It facilitates self evaluation and feedback which improves
theefficiencyof mangers. Thereis less need formonitoringfrom above.
6. Improved planning: managers at all levels are compelled to think ahead.

Interactionamongmanagersresultsinbetterideasand,consequentlytherewillbeimprovedplannin
gandcontrol.
7. More objective appraisal: The element of subjectivity can be minimized. There is

noscopeforpersonal bias,feeling, sentiments and emotions.
8. Self check: MBO is a tool for self control and self direction that helps mangers to turninto
professionals. There is no need for any advice or memo to an employee from the
topmanagement on whether or not he has completed his targets. He can push himself in
areashelags behind byfiguringout thepossible correctingmeasures.

9. Reviewofobjectives:Businessenvironmentisverydynamic.Theremaybechangesinitwhich
maycall forreview and resettingof objectives,if necessary.
Demerits/LimitationsofMBO
1. Inadequate commitment from top management: MBO could not take off in
manyorganizations for want of a clear cut policy from the top management. MBO requires
agreat deal of appreciation and commitment on the part of mangers who implement
it.Theyshouldexplaintotheirsubordinatesaboutitsoperationaldetailsandutility.Otherwise, they
cannot win them over and that is vital for the successful implementationofMBO.
2. Goal setters are not given any orientation: Goal setting is the primary task in MBO.Goal
setter should be given a total orientation about corporate goals, planning premises,broad
policies of the company and how these, in turn, are likely to affect their ownobjectives.
Anyfailureto give suchguidelines maylimit theutilityof MBO.
3. Setting goals is complex process: Setting realistic and achievable goals for subordinatesis
not an easy task. If the objectives are not reasonable, behavioural implications are notclearly
stated, and ethical bevariour is not given high priority, people will use unethicalmeansto
achievegoals.
4. Emphasisonshort-termgoals:MBOcenterstheaccomplishmentofmutualsetobjectives which
are more short-term in nature. In a majority of the cases, short-termgoals are not well
integrated into long-term objectives and consequently, undue emphasisonshort-termgoals
marginalizes thelong-termgoals.
5. Inflexibility: Objectives for every manger or subordinate are set after much
interaction,debate, discussion and understanding of individual aspirations. Managers tend to
hesitatein changing the objectives worked out in such a detailed effort even when there is
achangein corporategoals andplanningpremises.
6. Problemsofstatusandauthority:MBOfocusesonpersonalinteractionamongmangers.Inreality
,organizationsarecharacterizedmorebypeopleconsciousoftheir

authorityandstatus.Theyseldomliketointeractfreelywiththeirsubordinates,leavealoneassessing
thelatter‟s strengthsandweaknesses.
7. Lower levels are deprived of freedom and interaction: If MBO philosophy does
notspreadrightdown, itwillnotbe successful.Butmangers atlower levelhavelittlefreedom to
react to even organizational goals, to speak nothing of the freedom to set
theirownobjectives.In suchan environment,settingof objectives jointlyis merelyadream.
8. Limited time horizon: MBO may be useful in a limited time horizon. In reality,
businessenvironment is not so stable that objectives once set will hold good till they are
achieved.Objective get revised frequentlyin view ofhostileand volatileenvironment.
TYPESOFPLANS
Plans commit individuals, departments, organizations, and the resources of each tospecificactions
for the future. Effectively designed organizational goals fit into a hierarchy so that
theachievementofgoals at lowlevels permits theattainment ofhigh‐level goals.
Three major types of plans canhelp managersachieve their organization'sgoals:strategic,tactical, and

operational. Operational plans lead to the achievement of tactical plans, which inturn lead to the
attainment of strategic plans. In addition to these three types of plans, managersshouldalso develop
a contingencyplan incasetheir original plans fail.
1. Operational plan: Operational plan covers the day-to-day operations of business such
asfacilities, inventory management, production plan, supply and distribution etc. An operationalplan
is like a map that can help to navigate your business towards specific goals.Operationalplan is one
that a manager uses to accomplish his or her job responsibilities. Supervisors, teamleaders develop
operational plans to support tactical plans. Operational plans can be a single‐useplan oran
ongoingplan.
a) Single‐use plans apply to activities that do not recur or repeat. A one‐time occurrence,such
as a special sales program, is a single‐use plan because it deals with the who,
what,where,how,andhowmuchofanactivity.Abudgetisalsoasingle‐useplanbecauseit

predicts sources and amounts of income and how much they are used for a specificproject.
b) Continuing or ongoing plans are usually made once and retain their value over a periodof
years while undergoing periodic revisions and updates. The following are examples
ofongoingplans:
 Policies: Policies are statements of understanding that specify „what can be done orwhat
cannot be done‟ to achieve the given objectives. Policies guide the behavior orthinking
of people in an organization. They define the framework within which adecision is to be
made. Policies provide a broad guideline for managers to followwhen dealing with
important areas of decision making. For example, address suchmatters as employee
hiring, terminations, performance appraisals, pay increases, anddiscipline.
 Procedures:Proceduresoutlineindetailthemethodofcarryingoutatask.A procedure is a set
of step‐by‐step directions that explains how activities or tasks areto be carried out in a
given sequence. The employees are trained in organizationalprocedures. The top
management is concernedwith the laying down ofproceduresandthe middleand the lower
levels with their implementation.
Policies and programs are closely related to each other.Acompany may have apolicy of
expansion by 10% every year. To attain this, it has to carefully developproceduresto
raisefinances, manpower and production.
 Rules: A rule is an explicit statement that tells an employee what he or she can
andcannot do. Rules are “do” and “don't” statements put into place to promote the
safetyof employees and the uniform treatment and behavior of employees. Observe
theserules:No credit, No smoking, Comein queue etc.
 Programs: These specify what is to be done. They reflect goals, policies, proceduresand
rules to be followed, steps to be taken, resources to be employed and even minordetails
necessary to execute a task. Every program is supported by budget.
Programsmaybemajoror minor based on theirpurpose, scopeand time duration.
 Budgets: When plans are expressed in numbers, they become budgets. A budget maybe
expressed in financial terms or any other measurable form such as machine
hours.,laborhours,orunitsofproduction.Itcanalsobeexpressedintermsofenterprise

activities such as sales budget, advertisement budget, purchases budget, cash budgetetc.
Abudgetprovidesmeansofcontrollingtheorganization‟sperformance.Whilemaking budget
is a part of planning, controlling employee performance is part of thecontrolling function
ofmanager.Budgets are prepared for a clearly defined period,sayaweek, month oryear.
2. Tacticalplan: A tactical plan is concernedwith what the lower level units within eachdivision
must do, how they must do it, and who is in charge at each level. Tactics are the meansneeded to
activate a strategy and make it work. Tactical plans are concerned with shorter timeframes and
narrower scopes than are strategic plans. These plans usually span one year or
lessbecausetheyareconsideredshort‐termgoals.Thetacticsneededtoachievethegoalsdefinedina
strategic plan. For example, if a company‟s strategic plan is to become a market leader, itstactical
plan might be to double the amount spent on advertisement and marketing.
8/Tacticalplanninginvolves:
 Productsorservicestobeaddedor deleted.
 Sizeofcapitalinvestmentsrequired.
 Pricingtheproductsand servicestobeprovided.
 Withdrawinginvestmentsfromprojects.etc.
3. Strategic plan: Strategic planning includes plans made by the top management to pursue
longterm goals with the resources with likely to be available. Strategic plan is an outline of
stepsdesigned with the goals of the entire organization as a whole in mind, rather than with the
goalsof specific divisions or departments. Strategic planning begins with an organization's
mission.Strategic plans look ahead over the next two, three, five, or even more years to move
theorganization from where it currently is to where it wants to be. Top management's strategic
planfor the entire organization becomes the framework and sets dimensions for the lower
levelplanning.Strategic planninginvolves:
 Formulatingamissionfortheentireorganization.
 Identifyingthebusinessthathelpstomeeta mission.
 Determinationoffinancialrequirements.

 Allocatingresourceseffectively. etc.
4. Contingency plan: Contingency planning involves identifying alternative courses of actionthat

can be implemented if and when the original plan proves inadequate because of
changingcircumstances. Keep in mind that events beyond a manager's control may cause even the
mostcarefully prepared alternative future scenarios to go awry. Unexpected problems and
eventsfrequently occur. When they do, managers may need to change their plans. Anticipating
changeduring the planning process is best in case things don't go as expected. Management can
thendevelop alternatives to the existing plan and ready them for use when and if circumstances
makethesealternatives appropriate.
DEVELOPINGABUSINESSSTRATEGY
Theprocessofdeveloping,formulatingandimplementingthestrategyinvolvesthefollowingstages:
1. Developavisionstatement:Thisstatementshoulddescribethefuturedirectionofthebusiness and its

aims in the medium to long term. It‟s about describing the organization‟spurpose for being and its
values. Business gurus have debated long and hard about what comesfirst – the vision, or the
mission statement. But, in practice, you could develop both at the sametime.
2. Develop a mission statement: Like the vision statement, this defines the organization‟spurpose,
but it also outlines its primary objectives. This focuses on what needs to be done in theshort term to
realize the long term vision. So, for the vision statement, you may want to answerthe question:
“Where do we want to be in 5years?”. For the mission statement,you‟ll want toaskthequestions:
 What dowedo?
 Howdo wedo it?
 Whomdowedoitfor?
 Whatvaluedowebring?

3. Goals: The first step in the development of any business strategy is the determination of thegoal,
its desired endpoint. The goal sets the stage for the development of measures and specificactions
that the company takes to achieve these goals. So, for instance, the goal might be to"increasemarket
share"or to "improve customer satisfaction."
4. Objectives:Objectivesarethemeasurableelementofastrategy.Objectivesindicate,specifically, what
outcomes are desired. While goals set a broad direction ("increase
marketshare"),objectiveswillprovidethedetailthatensurestheteamknowswhenitachievessuccess.
5. Situation Analysis: Once a goals and objectives areestablished and the planning team
knowswhat to do, information needs to be gathered so that the decisions are based on solid facts
anddata. The situation analysis involves a review of information internal to the organization
(aboutemployees, sales, customers) as well as external information (about competitors, the industry,
theeconomicclimate).
6. SWOT Analysis: A SWOT analysis is a brainstorming process used by strategic planningteams

to identify the organization's strengths and weaknesses, which are internal environment;and
opportunities and threats, which are external environment. Based on the data gathered duringthe
situation analysis and by brainstorming and prioritizing these items, the team gets a bettersenseof
themost important areas to focus on.
7. GenerateStrategyAlternatives:Genericstrategyalternativesrefertoidentifyingthealternatives of
strategies. After the nature of business is defined, the next task is to focus on thetype of strategy
alternative, in general, the firm will pursue. Given the information from theenvironmental scan, the
firm should match its strengths to the opportunities that are identified,andat thesametime address
itsweaknessesand external threats.
8. Strategy Variations: The generic strategy alternatives can have a numerous variations
everystrategy can have variations as internal or external, related or unrelated, horizontal or vertical
andactive or passive. For example, if we choose expansion, it can be either internal or
externalexpansions. Internal expansions can be achieved through penetrating existing markets,
addingnew products. External expansion can be achieved through mergers and acquisitions,
developingsubcontracts,developingsubsidiaries, etc.

9. Strategic Choice: Once the strategy is formulated and variations are evaluated, then the nextstep
of strategist is to choose the exact strategy. Thus strategic choice involves the decisionmaking to
select the best strategy among the alternatives which can effectively contribute to
thebusinessobjectives.
10. Allocation of Resources: The operating strategy of the firm is framed by the
resourceallocation decisions (budgeting) – such as, „which department is to be sanctioned how
muchmoney,materials, manpowerand otherresources‟.
11. DevelopmentofOrganizationalStructure:Anappropriateorganizationstructurecandemonstrate
an effective co-operation and efficient division of labour. The best organizationstructure is one that
fits into the organizational environment. Suitable changes may be initiated intheorganization
structure to ensurestrategicimplementation.
12. Formulation of Policies, Plans and Programs: The next step is to see that the resources
arewell utilized and properly maintained as desiredby the organization. This is possible only ifthere
is a perfect monitoring mechanism and correct basis for evaluation of effectiveness.
Thismonitoringmechanism can bebuilt up bysuitablyformulatingitspolicies,plans andprograms.
13. Strategy Implementation: The selected strategy is implemented by means of

programs,budgets and procedures. Implementation involves organizing the resources and
motivating
thestafftoachievingobjectives.Theimplementationofthestrategymustbemonitoredandadjustedmadeas
needed.
14. Strategy Evaluation and Control: Evaluation and control is the final phase of the
strategicmanagement process and consists of these steps: 1) Define parameters to be measured, 2)
Definetargetvaluesforthoseparameters,3)Performmeasurements,4)Comparemeasuredresultstothepre-
determined standards and 5)Makenecessarycorrections.

DECISIONMAKINGANDPROBLEMSOLVING
Decision making is one of the most important functions of the management process. In fact, it
isthemanager‟sprimarydutytotakerightdecisionsatrighttime.Decisionmakingisdefinedas
„selecting a course of action from among alternatives.At every moment, the
managementprocessneeds a manager‟sdecision.
Problem solving and decision-making are important skills for business and life. Problem-
solvingoften involves decision-making,and decision-making isespecially important for
managementand leadership. Problem solving is a process in which we perceive and resolve a gap
between apresent situation and a desired goal, with the path to the goal blocked by known or
unknownobstacles. In general, the situation is one not previously encountered, or where at least a
specificsolution from past experiences is not known. In contrast, decision making is a selection
processwhere one of two or more possible solutions is chosen to reach a desired goal. The steps in
bothproblem solving and decision making are quite similar. In fact, the terms are sometimes
usedinterchangeably.
Most of the models of problem solving and decision making include at least four phases. 1)
anInputphaseinwhichaproblemisperceivedandanattemptismadetounderstandthesituationor problem;
2) a Processing phase in which alternatives are generated and evaluated and asolution is selected; 3)
an Output phase which includes planning for and implementing thesolution; and 4) a Review phase
in which the solution is evaluated and modifications are made, ifnecessary. Most researchers
describe the problem-solving/decision-making process as beginningwith the perception of a gap and
ending with the implementation and evaluation of a solution tofill that gap. Each phase of the
process includes specific steps to be completed before moving tothenext phase.
StepsinDecisionMakingandProblemSolving
1. Identification of the Problem: This is the first step of decision making and problem solvingto
indentify the problem. A managerial problem may take birth at any level of the
organization.Butmostoftheproblemsgounidentifiedtilltheygrowbig.Ifitisstillneglectedtheyultimately

flareupintoemergency.Agoodmanagerpredictswellinadvancetothegenerationoftheproblemsand tries to
preventit as hebelieves thatastitch in time savesnine.
2. GatherCompleteInformation:Inthesecondstep,themanagercollectsthecompleteinformation
regarding the problem. The information should contain the answers to the followingquestions:
 Whereand whendid itgenerate?.

 Whatarethe causesand triggers?.
 Whatwould be theeffects?. Who aremost affected?.
 Isit recurringproblem or onetimeproblem?.
 Whois responsible forthis problem?.\
 Doesitbelongtoprogrammeddecision ornon-programmeddecision?.
3. Generate Alternative Courses of Action:Third step is concerned with the generation of aset of
alternative courses of action. Based on the relevant information, the manager has toindentify
alternative courses of action that lead to desirable solution. The manager may rely onhis own
expertise, may talk to his staff or may even conduct a brains storming with experts.
Newalternativesor options havetobegenerated through creativethinking.
4. Choose the Appropriate Alternative: The manager at this stage selects the best of
thealternatives. Here, the best decision generally infers effectiveness. The best decision means
theone that maximizes the factors such as sales, profits, or units produced. In some other cases,
theeffective decision may be one that minimizes the factors as customer complaints,
employeeturnover, oroperatingcosts.
5. Implement the Course of Action: After choosing the appropriate alternative, appropriateaction
plans must be established and implemented. Often implementation suffers resistance fromthe work
forces. So it is suggested that the merits of the decision have to be explained to at leastsomecritical
or influencingpersons if not all people involved.
5. Evaluate results: The decision making process is not complete until results are
evaluated.Thisevaluationisaformofmanagerialcontrol.Thefeedbackisveryimportantaspectto

determine if the decision is implemented in the desired manner. If the desired results are
notachieved,theprocessmust berenewed toallow for correctiveaction.
PROGRAMMEDANDNON-PROGRAMMEDDECISIONS
ProgrammedDecisions:
Decisions related to structured situations (planned or organized situations), where the problem
ismore or less routine and repetitive in nature are known as programmed decisions.
Programmeddecisions are those that a manager has encountered and made in the past. The decision
themanager made was correct because he/she used the assistance of company policies,
computationsor a set of decision-making guidelines. For example, problems related to leave are
solved bypolicy relating to leave rules. Employees who take leave according to leave rules are
grantedleave andthosewho donotfollow the leave rulesmay notbe granted leave.The
routineproblemsmaynotalways be simple.
There may be complex routine problems. For example, production department follows a
routinethatmanagersorderforinventorywhenitreachesthere-
orderpoint.Ifthereissuddenincreaseindemand for the product,managers cannotwaitfor inventory
toreach the re-order pointtomake fresh orders. Orders are placed before this level is reached.
Ordering inventory is, thus, aproblem of routine nature but ordering inventory beforethe re-order
point is a routine butcomplexproblem.
In either situation, managers depend on pre-established criteria for taking decisions.

Variouspolicies, schedules and procedures guide these decisions and, therefore, policies and
proceduresshould be as clear as possible. Since decisions are based on pre-defined standards, they
do notrequiremuch of brainstormingand aretaken normallybymiddle and lower-levelmanagers.

Managers do not think of innovative ways to solve the routine problems. Therefore, they
canconcentrate on important and crucial activities. These decisions also involve some amount
ofcertainty,i.e., outcomesofthesedecisions are, byandlarge, known.
Varioustypesofprogrammeddecisionsare:
(1) Organizational decisions
(2) Operationaldecisions
(3) Researchdecisions,and
(4) Opportunitydecisions.
Non-ProgrammedDecisions:
These decisions are taken in unstructured situations (unplanned or unorganized situations) andthese
decisions are new and different from situation to situation. The problems are non-
recurringorexceptionalinnature.Sincetheyhavenotoccurredbefore,theyrequireextensivebrainstorming
.Managersuseskillsandsubjectivejudgmenttosolvetheproblemsthroughscientificanalysis and
logicalreasoning.Non-programmed decisionsareunique.
Subjective judgment is based on assessment of the situation. In objective judgment (in case
ofprogrammed decisions), past experience forms the basis for decision-making. These
decisionsinvolve fair degree of uncertainty since outcomes of decisions are not always known.
Thesedecisions are based on partial ignorance as the alternatives and their outcomes cannot be
knowninadvance. Theyaretaken in thecontext of changing,dynamicenvironmental conditions.
For example, increase in advertising expenditure, effective salesmanship, upgraded

technology,quality controls, brand image and reasonable prices are expected to increase sales and
profits. If,inspiteofallthese,profits aredeclining,itrequiresimmediatedecision-
makingandsuchdecisionsarenon-programmed decisions.
These decisions are taken by top-level managers. As we move up the organizational

hierarchy,theneed for takingnon-programmed decisions increases.

Differenttypesofnon-programmeddecisionsare:
(1) Personaldecisions,
(2) Strategicdecisions,
(3) Crisisintuitivedecisions,and
(4) Problem-solvingdecisions.
Differencesbetweenprogrammedandnon-programmeddecisions
There is no clear line of demarcation between programmed and non-programmed

decisions.Decisions are neither totally programmed nor non-programmed. They are a
combination ofboth and lie on continuum of decision; between totally programmed decisions at
one end ofthecontinuum and totallynon-programmed decisions at theotherend.
BOUNDEDRATIONALITYANDINFLUENCEONDECISIONMAKING
Decision making is the most important part of administration and the outcome of
decisionsdependon the process that is used in makingdecisions.
There are two primary models or theories for decision-making: the Rationality model
(optimizes)and the Bounded rationality model (satisfices).In the former, a decision-maker attempts
tooptimizethedecisionbyselectingthebestpossiblealternative.Inthelatter,rationality ofindividualsis
limitedbytheinformation theyhave, cognitive limitationsand timeconstraints.

Boundedrationality
Herbert Simon propounded the bounded rationality model to explain why limits exist to
rationaldecision within decision – making environment. He defined decision – making as “the
alternativecourses of action”. He states that, decision – making pervades the entire organization that
isdecisions are made at all level of organizations. Hence, he said an organization as structure
ofdecision – makers. According to him, decision is an all – embracing activity subsuming all
theadministrativefunctionsdescribedas„POCCC‟byFayoland„POSDCORB‟byGullick.Boundedratio
nalityistheconceptthatdecisionmakers(irrespectiveoftheirlevelofintelligence)haveto work under
theunavoidableconstraints.
TheSimon‟ssatisfyingmodelstatesthatfirmscarryouttheiroperationsunderboundedrationality and they

can only attain a satisfactory level of profit, sales and growth. Simon carriedout a research and
found that modern businesses don‟t have adequate information and they
areuncertainaboutfuturedueto whichit isverydifficultto optimizetheirprofit,sales and growth.
Hearguedthat in real situations people take decisions on the basis of

heuristics(amethodofteachingtolearnbydiscovering things
themselvesand learning from their
own experiences rather than by telling them things) rather than rule
basedoptimizationmethods.Heargued that decision-makingis bounded bythefollowinglimitations.
Thedecisionmakers(irrespectiveoftheirlevelofintelligence)havetoworkunderthreeunavoidableconstra
ints.
1. Lack of Information: Lack of information or incomplete information leads to sub
optimaldecisions as the decision-maker is not fully aware of the pros and cons of a decision due to
lackof information. Hence, lack of information creates a boundary and hinders the rational choice
ofthedecision-maker.
2. Limited Intellectual Ability/Cognitive Ability/Mental Ability: The capacity of the

humanmind to perceive, retain and retrieve complete knowledge and information on past, present
andfutureeventsisnotunlimited.Humanmindhasonlylimitedcapacitytoevaluateandprocessthe
information that is available. The problem at hand may be so complex that the decision-

makermaynotbeabletocomprehendthetruenatureandcomplexityoftheproblem,leadingto

a sub optimal decision. If the problem would have been comprehensible, the decision-makerwould
have made a rational choice. This creates a boundary on the otherwise rational choice
ofthedecision-maker.
3. Lack of Time to take Decisions: The lack of time may also lead to suboptimal decisions as
inthis case the decision-maker does not have time to evaluate all the choices and come to a
rationalchoice.Onthecontrary,lackoftimeleadstoimproperandsuboptimaldecisions,asonedoesnothave
the required time to processtheinformation available.
Therefore even individuals who intend to make rational choices/decisions are bound to
makesatisficing (rather than maximizing or optimizing) choices/decisions in complex situations.
Theselimits (bounds) on rationality also make it nearly impossible to draw upcontracts that
covereverycontingency, necessitating relianceon rulesofthumb.
Hence, Bounded rationality (satisfying model) suggests that managers seek alternatives until
theyfind one that is satisfactory, not optimal. The concept suggests that the ability of decision
makersto be rational is limited by numerous constraints, such as complexity, time and money, and
theircognitivecapacity,values,skills,habits,andunconsciousreflexesknownasboundedrationality.
Allthethreefactorswhichareillustratedinthediagramwillinfluencethehumanororganizationaldecisionb
yboundedrationalityleadingto „satisficingdecisions‟ asagainstmaximizingdecisions
(optimizingdecisions).

GROUPPROBLEMSOLIVINGANDDECISIONMAKING
A problem may be defined as the difference between the desired situation and actual situation.So,
awareness of the problem means understanding the gap between the two (desired and
actual)situations.Problemsolving istheprocessofidentifyingandfilling the“gap”orfinding
adiscrepancy and initiating a corrective action. A problem solving is a multi-step procedure inwhich
a group develops a plan to move from an unsatisfactory state to a desired goal. Groupproblem
solving is the process of bringing together stakeholders who through their analyticaldecision
making abilities can influence the outcome of the problem. The useof groups in
problemsolving isencouragedas groups tendtoevaluatediversesolutionsandactionplans.
Thetasksarebecomingmoreinterdisciplinaryandinterdependent;hencemodernbusinessdemands a
comprehensive and integrated perspective of the business. Particularly in this context,group
decisions are considered more relevant and worth pursuing. Hence, group problem solvingbecomes
prominent and is necessary to understand how problem can be solved in groups
andtherebycontributemoreeffectivelyto decision-making.
Manykeyproblemsaresolvedingroupsorteamsinorganizations.Thoughhigh-
levelinterpersonalskillsareimportantformangers,moreimportantarethecapabilitiestoworkcloselywitho
thersinsolvingproblemsandmakingdecisions.Therearemanyexecutivedevelopment programs offered
by premier business schools in India and abroad to strengthenproblemsolvingskills in groups.
Asapartofleveragingthecollectivewisdom,theproblemsarepresentedtogroupsandthegroup members
are advised to arrive at decisions which are more rational and feasible. In
groupdecisionmaking,thefeedbackfrommorethanoneindividualisevaluatedlogicallyandscientifically
beforeanoptimumresultisidentifiedthatisbasedonaneconomicviewofdecision-makingwhereinpeople
hopeto maximizegain and minimizeloss.
GroupProblemSolvingProcess
Typically, the team members hold a discussion about the problem on hand and explore all
thewaysandmeansariseoutofbusinessorsocialsituationsanddeveloptheabilitytogeneratea

widevarietyofpotentialsolutionstoagivenproblem.Thebelowprocessinvolvesgroupproblemsolving.
1. Define the Problem: Define the problem by considering the three elements shared by
everyproblem: the current undesirable situation, the goal or more desirable situation, and obstacles
inthe way.At this stage, group members share what they know about the current situation,
withoutproposing solutions or evaluating the information. Here are some good questions to ask
duringthis stage: What is the current difficulty? How did we come to know that the difficulty
exists?Who/what is involved? Why is it meaningful/urgent/important? What have the effects been
sofar? What, if any, elements of the difficulty require clarification? At the end of this stage,
thegroup should be able to compose a single sentence that summarizes the problem called a
problemstatement.
2. Analyze the Problem: During this step a group should analyze the problem and the
group‟srelationship to the problem. Whereas the first step involved exploring the “what” related to
theproblem, this step focuses on the “why.” At this stage, group members can discuss the
potentialcausesofthedifficulty.
3. Develop Alternative Solutions: During this step, group members generate possible
solutionstotheproblem.Again,solutionsshouldnotbeevaluatedatthispoint,only proposedandclarified.
The question should be what could we do to address this problem, not what should wedoto address
it.
4. Evaluate All Solutions: During this step, solutions can be critically evaluated based on
theircredibility, completeness, and worth. Solutions can be evaluated based on how well they fit
withthe group‟s charge and the abilities of the group. To do this, group members may ask, “Does
thissolution live up to the original purpose or mission of the group?” and “Can the solution
actuallybe implemented with our current resources and connections?” and “How will this solution
besupported,funded,enforced, andassessed?”
5. Implement and Assess the Solution: Implementing the solution requires some
advancedplanning,anditshouldnotberushedunlessthegroupisoperatingunderstricttimerestraintsor

delaymayleadtosomekindofharm.Althoughsomesolutionscanbeimplementedimmediately,others
maytakedays, months, oryears.
Methodsof GroupProblemSolving
1) Brainstorming: Before groups can make a decision, they need to generate possible solutionsto
their problem. The most commonly used method is brainstorming. Brainstorming is acreative
art of generating the greatest number of ideas in the shortest possible time. Here,members in the
group are encouraged to present their ideas that can contribute to problemsolving. It is popular
method of finding alternatives to real life problems and for creativitytraining. The group size is
restricted to five to seven members. Everyone is given
reasonabletimeandopportunitytopresenttheirideasoralternativesolutions.Thepurposeofbrainstorm
ingistogenerateasmanyasideaspossibleandexploredifferentdimensionsofthe given problem. The
members can combine some of the ideas and offer improved versionoftheirearlierideas.
2) Nominal Group Technique: The Nominal Group Technique is a form of brainstorming, whereina
structured meeting is held among the group members where they are required to
findsolutionstotheproblemidentifiedforthediscussion.Theobjectiveofnominalgrouptechnique is
to resolve the opinion conflicts among the group members by enabling eachindividual to pen
down his/her thoughts about the problem and later discuss it with the entiregroup to reach the
consensus solution. Generally, the nominal group training is comprised ofthefollowingsteps:
1. First of all, the facilitator welcomes all the participants and then briefs about
theproblemrequiringdecision.
2. The participants are given time to pen down their ideas that come to their minds
inreference to the problem being discussed. During this period, each member
writeshis/herideas silentlywithout discussinganythingwitheach other.
3. Once all the members have written, their ideas are required to share them in front ofall
the group members. At this stage, the facilitator chalks down the ideas of eachgroup
member on the flip chart, thereby giving all the members equal opportunity tosharewhat
theyfeel.

4. Once the key points are written on the chart, the members are asked to discuss thepoints
which they feel requires an explanation. Each member explains his/her mind
totheothermembersandinthemeanwhile,thefacilitatortriestomaintainthediscussionas
neutral as possible,therebyavoiding the criticismandjudgment.
5. Once all points are explained, the members are asked to give vote or rank variousideas
by prioritizing these in relation to the basic problem, for which the meeting isheld.
Ifthegroupdoesnotreachaconsensusdecision,thenagaintheranksareassignedtotherecordedideas
andthis process continuestill the finaldecision isarrived.
3) Stand-upMeetings:Considering thatsitting posture willmake members lessalertandinvolved.

Meetings are conducted while standing up instead of sitting down to solve theproblems and
make decisions. It is considered that people are more alert when standing, anddon‟twantto
standfor toolongsotheyreachadecision quickly.
4) Majority rule: It is a commonly used decision-making technique in which a majority (one-

halfplus one)must agreebeforeadecision is made.
5) Consensus rule:This is a decision-making technique in which all members of the

groupmustagreeon the samedecision.
CREATIVITYANDINNOVATIONINMANAGERIALWORK
The growth and survival of the business in the dynamic environment as of today depends
uponthedevelopmentofnewproducts.Organizationsmustbealwaysinthelookoutfornewopportunitiesan
dexploitingthembycreatingnewproductsandservices.Therefore,itisneedless to say that new product
development holds the key for the survival of an organization.New products do not come about on
their own. They are the result of the ingenuity of creativitypeople in the organization. As such, it is
obvious that new product development is the function oforganizational creativity. In other words, it
depends upon how creative an organization is
inrespectofnewideas.Itmaybeunderstoodthatanyorganizationcanbeascreativeasitspeople.

Having understood the importance of creativity in the organizational context, let us

understandthemeaningand processofcreativity.
CreativityandInnovation
Creativity is an essential part of problem solving and decision making. To be creative is to seenew
relationships and produce imaginative solutions. Creativity can be defined simply as theprocess of
developing novel ideas that can be put into action. By emphasizing the application ofideas,
creativity is closely linked to innovation. To be innovative, a person must produce a newproduct,
service, process, or procedure. Innovation can be regarded as the commercialization
orimplementationof creativeideas.
Creativity involves a departure from conventional thinking to non-conventional thinking. A

closeexamination of many products enables us to understand how apparently unrelated things
arerelated to produce a new product. The ubiquitous wet grinder found in many of the kitchens
maybe cited as a best example where a relationship is established between the electric motor and
theconventional stone used in the Indian homes for grinding purposes since times
immemorial.Similar is the case with the electric bulb and the lens that are combined to develop the
overheadprojector used in the classrooms. The same logic holds good for many products that we
seearound.
Though, at times creativity and innovation are usedinterchangeably, it is appropriate to

knowthatbotharedifferent.Creativityandinnovationgohandinhand.Whilecreativity isthegeneration of
a new idea, innovation is the translation of such an idea into a product, service ormethod of
production. According to Lawrence B. Mohr “creativity implies bringing somethingnew into
being while innovation implies bringing something new into use”. According toRosabethKanter,
“Innovation is the generation, acceptance and implementation ofnewideas, processes,
products or services”.Sucha distinction isnecessary because the skillsrequired to generate new
ideas (creativity) are not the same as those required to make the ideastake the shape of products or
services. Since both creativity and innovation are two
differentfunctions,organizationsneedpeoplegoodatboththefunctions.Further,creativityalonedoesnotc
ontributefororganizationaleffectivenessunlessthecreativeideascaninsomewaybeused

or implemented. A new idea, however good it is, must be capable of implementation and
mustactuallybeimplementedforthe organization to benefit from it.
ConditionsNecessaryforCreativity
Certainindividualandorganizationalconditionsarenecessaryfor,oratleastenhancetheproductionof,creat
iveideas.Themostconsistentoftheseconditionsaredescribedhere.Creativitytakes placewhen
thesecomponents jointogether.
1. Expertise: Expertise refers to the necessary knowledge/skills in a particular field to put

factstogether. The more ideas floating around in your mind, the more likely you are to
combinethemin someuseful way.
2. Creative Thinking Skills: Thinking how to make solutions differently leads to creativity. Ifyou
know how to keep digging for alternatives and how to avoid getting stuck in the statusquo, your
chances of being creative multiply. Preserving, or sticking with a problem to
aconclusion,isessentialfor finding creative solution.A fewrestbreakstogainafreshperspective may
be helpful, but the creative person keeps coming back until a solutionemerges.
3. InternalMotivation:Therighttypeofmotivationisthethirdessentialingredientforcreative thought.
A fascination with the task or passion for the task is more important thansearchingfor external
rewards.
4. Environmental Need: In addition to the internal conditions that foster creativity, the
factorsoutside the person have a significant effect. An environmental need must stimulate the
settingofagoal, which is another wayof saying.“Necessityis themother ofinvention”.
5. ConflictandTension:Enoughconflictandtensiontoputpeopleonedgealsofostercreativity. A
practical way to create this conflict is for people to challenge each other‟sthinking, such as
saying, “Offering construction workers rents as temporary housing won‟tattractenoughofthemto
comedownhere.Let‟stryharderfor ahousingsolution.”
6. EncouragementfromOthers:Anotherexternalfactorincreativityisencouragement,includingaper
missiveatmospherethatwelcomesnewideas.Amanagerwhoencourages

imaginativeandoriginalthinking,anddoesnotpunishpeopleformakinghonestmistakes,islikelyto
receivecreativeideas form employees.
TheCreativityProcess
Inbusinessjargon,creativepeoplecanthinkoutsideofthebox,orgetbeyondtheusualconstraints when
solving problems. Yet another way of characterizing creative thinkers is thatthey break the rules. As
such, creative people are often mavericks. They are unconventional andoff-the-wall. A key part of
being creative is to think laterally. Lateral thinking spreads out to
findmanyalternativesolutionstoaproblem.Lateralthinkingisthusdivergent,whileverticalthinking is
convergent. Creative people think divergently and they can expand the number ofalternatives to a
problem, thus moving away from a single solution. Let us acquaint with theprocessofcreativity.
1. Idea generation: The individual selects a problem to work on or more likely become awarethat
a problem or need exists. This is the starting point for the new product
developmentindeed.Thisreferstothe awarenessaboutthe„gaps‟inthemarket.
2. Preparation:Theindividualbecomesobsessedwiththeidea/problem,recallingandcollecting
information that seems relevant and dreaming up hypothesis without
evaluatingthem.Opennesstoexperience,toleranceforambiguityandwillingnessandcouragetoredefi
ne the existing concepts, beliefs are the important psychological attributes required atthestage.
3. Incubation:Afterassemblingtheavailableinformation,theindividualrelaxesandthesubconsciousmi
ndbecomesactive.Inthisnotmuchunderstoodbutcrucialstep,theindividual often appears to be idle
or day dreaming, but the subconscious is in fact trying toarrangethefacts intoapattern.
Psychologicalfreedomand safetyareimportantatthis stage.
4. Illumination:Thisissomethingwhichweexperiencequiteoften.Often,whenleastexpected – while
eating, falling asleep or walking- the new integrative idea will flash into theindividual‟s mind.
Such insights must be recorded quickly, because the conscious mind mayforgetthem in the
courseof other activities.
5. Verification and Application: The individual sets out to prove by logic or experiment
thattheideacansolvetheproblemandcanbeimplemented.Tenacitymayberequiredatthis

point. It is at this state the individual switches over to the logical, analytical or
convergentthinking. The practical implications are examined what is known as feasibility
assessment-
bothtechnicalandeconomicforcommercializationoftheidea/concept.Thisisalsoknownasassessingt
he scalability.
OrganizationalProgramsforImprovingCreativityand Innovation
1. CreativityTraining:Astandardapproachtoenhancingindividualandorganizationalcreativityistoof
fercreativitytrainingtomanyworkersthroughouttheorganization.Muchof creativity training
encompasses the ideas such as learning to overcome traditional thinkingandengagingin some
typeof brainstorming.
2. Brainstorming:thebest-knownmethodofimprovingcreativityisbrainstorming.Thistechnique is a
method of problem solving carried out by a group. Brainstorming is standardpractice for solving
real problems facing a company, and is also a creative training technique.Group members
spontaneously generate numerous solutions to a problem, without beingdiscouraged or
controlled. By brainstorming, people improve their ability to think creativity.Brainstorming
produces many ideas; it is not a technique for working out details during thefirst meeting. Some
types of businesses problems are well suited to brainstorming, such asidentifyingways
toattractnewcustomers and makingcost-cuttingsuggestions, etc.
3. SystematicallyGatheringIdeas:Themajornewthrustindevelopinganinnovativeorganizationsis
tosystematicallygatherideas frompeopleinsideand outsidethefirm.
4. AppropriatePhysicalSurroundings:creativityisfacilitatedwhenthephysicalenvironment allows
for the flow of ideas, including the room with natural lighting andconduciveatmosphere.

Fundamental of management for Engineers & SM504MS
ORGANIZINGANDORGANIZATION
Organizing: Organizing is one of the functions of management. Organizing is the means toachieve
the plans. If planning involves making a road map for the chosen destination, thenorganization is
the means by which you reach your chosen destination. Organizing is a processof;
 Determining, groupingandstructuringthe activities
 Creatingrolesforeffectiveperformanceatwork
 Allocatingnecessaryauthorityandresponsibilityforresults
 Determiningdetailedproceduresandsystemsfordifferentproblemsareassuchascoordination,
communication, decision-making, motivation, conflictresolution, and soon.
Organizing function ends with creating a structure of relationships. It explains who is

responsibleforagiven task.
Organization:Organizationreferstotheinstitutionwhereinthemanagementfunctionsareperformed. A
social unit of people that is structured and managed to meet a need or to pursuecollective goals. All
organizations have a management structure that determines
relationshipsbetweenthedifferentactivitiesandthemembers,andsubdividesandassignsroles,responsibil
ities, and authority to carry out different tasks. Organizations are open systems--theyaffectand
areaffected bytheirenvironment.
Organizationmaybeformal,informal, orboth.
The formal organization is basically goal oriented entity that exists to accurate the efforts
ofindividuals and it refers to the structure of jobs and positions with clearly defined
functions,responsibilitiesand authorities.
According to Chester Bernard, an organization is formal when the activities are coordinatedtowards
acommon objective.

Informalorganizationreferstonetworkofpersonalandsocialrelationships(alliances,friendships)that
arise aspeople associatewith others peoplein aworkenvironment.
The chief executive calls his staff for a meeting at a given time and when the staff meets, it
isformalorganization.
On the other hand, after the meeting is called off, when some staff stay back to discuss
theirpersonalproblems with the chief executive,it is said to beaninformal organization.
BASICCONCEPTS OFORGANIZATION
Organizational Hierarchy:Hierarchy is system/structure in which members in an organizationare

ranked according to their status and authority. The hierarchy in a business refers to the layersof
management from the top management down to managers or superiors of the lowest
rank.Numberoflayers dependupon the sizeof theorganization.
Employees in a hierarchy have varying degrees of authority. Higher levels in the hierarchy
arecharacterizedbyhigherresponsibilityand authority.
AuthorityandResponsibility:
Authority is the power or right to give orders/commands and to use discretion vested in
thatparticularpositionorjob.Ifthepersonisremovedfromthejob,heorshelosesthe authority.
Responsibility is the obligation/duty on the part of subordinates to complete the given ob. If
amanager has only authority, he may misuse it. As a control measure, the employee is
heldresponsiblefortheresultsalso.Authoritycanbetransferredtolowerpositionsbutnotresponsibility.
DelegationofAuthority:Theprocessoftransferringauthorityfromthetoptothelowerlevelsin the
organization is called delegation. Although a task maybe delegated or passed down thechain of
command form a manager to a subordinate, the manager continues to be responsible formaking sure
that his/her instructions are carried out. The organization is said to be centralizedwhen the
authority to take decisions is held by the corporate office. Ifthe authority is delegatedtotheregional
offices, thenthe organization is saidto bedecentralized.

Span of Management: It is also called span of control. It refers to the number of subordinatesthat
can be effectively controlled by the manager at a given point of time. If the productionmanagerhas,
say, five employees under hisdirect control, itmeans his spanis five.
V.A.Graicunasmentioned threetypes ofSuperior-Subordinaterelationships,viz.,
1. DirectSingleRelationships,
2. DirectGroupRelationships,and
3. CrossRelationships.
According to V.A. Graicunas, as the number of subordinates increases arithmetically (like 1,2,3, 4,
5, 6, etc.) the number of relationships which the superior has tocontrol also increasesalmost
geometrically (like 1, 6, 18, 44, 100, 222, etc.). Therefore, a superior can only control
alimitednumber ofsubordinates, and anythingbeyond this limit is veryhardto control.
V.A.Graicunas Theorycan beexplained with thehelpof this simpleexample.
For example, consider Gaurav(G) is a superior (boss) and Manoj(M) and Sameer (S) are
hissubordinates(juniors or lower-gradeemployees).
According to V.A. Graicunas, Gaurav (G) has to control following three types of
relationships,withor amongManoj (M) and Sameer (S):-
(a) DirectSingleRelationships:-
GwithM, andG withS, i.e.atotalof 2directsingle relationships.
(b) DirectGroupRelationship:-

G with M in presence of S, and G with S in presence of M, i.e. a total of 2 direct grouprelationships.
(c) CrossRelationships:-
Mwith S,and Swith M,i.e. againa totalof2cross relationships.
Therefore, total number of relationships which Gaurav (G) has to control are:- 2 + 2 + 2 =
6relationships.
Thus, when the number of subordinates is 2, the number of relationships, which the superior(boss)
has to control is 6. Similarly, when the number of subordinates is 3, the number ofrelationshipsto
control will be 18.
V.A.Graicunashasexplainedhisprinciplewith thehelp ofthethis formula:-
Here,r=No.ofrelations
n =No. ofsubordinates
FlatandTallOrganizations:
FlatOrganizationalStructure(HorizontalOrganizationalStructure)
Flat structures have fewer management levels. Flat organizations are known by their wider spanof
control. In other words, each manager controls more number of employees at a given point
oftime.These organizations focus on empowering employees in greater decision making
ratherthanadheringtothechainofcommand.Byencouragingautonomyandself-
direction,flatstructuresattempttotapintoemployees‘creativetalentsandtosolveproblemsbycollaboratio
n.

In this structure, there are few or no levels of management between staff and executives.
Topmanagementhasdirectcontactwithfrontlineemployees.Itisusefultosmallorganizations.
TallOrganizationalStructure(VerticalOrganizational Structure)
Large,complexorganizationsoftenrequireatallerhierarchy.Initssimplestform,atallstructure results in
one long chain of command similar to the military.As an organization grows,the number of
management levels increases and the structure grows taller. In a tall structure,managers form many
ranks and each has a small area of control. Generally, the greater theheightof the
organizationchart, thesmalleris thespanof control, andvice versa.

Tallorganizationshavemanylevelsofhierarchy.Spanofcontrolisnarrow.Linesofcommunication are
long. There are many level of middle management between top managementandemployees.
PRINCIPLESOFORGANIZATION
1. Principle of Objective: The enterprise should set up certain aims for the achievement ofwhich
various departments should work. A common goal so devised for the business as a wholeand the
organization is set up to achieve that goal. In the absence of a common aim, variousdepartments
will set up their own goals and there is a possibility of conflicting objectives
fordifferentdepartments. Sotheremust bean objectiveforthe organization.
2. Principle of Specialization: The organization should be set up in such a way that

everyindividual should be assigned a duty according to his skill and qualification. The person
shouldcontinue the same work so that he specializes in his work. This helps in increasing
production intheconcern.
3. PrinciplesofCo-ordination:Theco-ordinationofdifferentactivitiesisanimportantprinciple of the
organization. There should besome agency toco-ordinate the activities ofvarious departments. In the
absence of co-ordination there is a possibility of setting up differentgoals bydifferent departments. .
4. Principle of Authority and Responsibility: The authority flows downward in the line.
Everyindividualisgiven authority togetthe workdone.Thoughauthority canbe
delegatedbutresponsibility
lieswiththemanwhohasbeengiventhework.Ifasuperiordelegateshisauthoritytohissubordinate,thesuper
iorisnotabsolvedofhisresponsibility,thoughthe

subordinatebecomesliabletohissuperior.Theresponsibilitycannotbedelegatedunderanycircumstances.
5. Principle of Definition: The scope of authority and responsibility should be clearly

defined.Every person should know his work with definiteness. If the duties are not clearly assigned,
thenit will not be possible to fix responsibility also. The relationship between different
departmentsshouldalso be clearlydefined to makethe workefficient and smooth.
6. Span of Control: Span of control means how many subordinates can be supervised by
asupervisor. The number of subordinates should be such that the supervisor should be able tocontrol
their work effectively. If the span of control is disproportionate, it is bound to affect theefficiencyof
theworkersbecause of slow communication with thesupervisors.
7. Principle of Balance: The principle means that assignment of work should be such that
everyperson should be given only that much work which he can perform well. Some person is
overworked and the other is under-worked, then the work will suffer in both the situations. The
workshould bedivided in such awaythateverybodyshould be able togive hismaximum.
8. Principle of Continuity: The organization should be amendable according to the

changingsituations. Everyday there are changes in methods of production and marketing systems.
Theorganization should be dynamic and not static. There should always be a possibility of
makingnecessaryadjustments.
9. Principle of Uniformity: The organization should provide for the distribution of work in sucha
manner that the uniformity is maintained. Each officer should be in-charge of his respectiveareasoas
to avoid dual subordination and conflicts.
10. PrincipleofUnityofCommand:Thereshouldbeaunityofcommandintheorganization.A person

should be answerable to one boss only.Ifa person is under the control of more thanone person then
there may be confusion and conflict. He gets contradictory orders from differentsuperiors.This
principlecreates a senseof responsibilityto one person.
11. Principle ofException:This principle states that top managementshould interfere

onlywhensomethinggoeswrong.Ifthethingsaredoneasperplansthenthereisnoneedforthe

interference of top management. The management should leave routine things to besupervisedby
lower cadres. Principle of exception allows top management to concentrate on planning
andpolicyformulation.Important timeofmanagement isnotwasted onavoidablesupervision.
12. Principle of Simplicity: The organizational structure should be simple so that it is

easilyunderstood by each and every person. The authority, responsibility and position of every
personshould be made clear so that there is no confusion about these things. A complex
organizationalstructure will create doubts and conflicts among persons. There may also be over-
lapping andduplication ofefforts which mayotherwisebeavoided.
13. Principle of Efficiency: The organization should be able to achieve enterprise objectives at
aminimumcost.Thestandardsofcostsandrevenuearepre-
determinedandperformanceshouldbeaccordingtothesegoals.Theorganizationshouldalsoenabletheatta
inmentofjobsatisfactionto various employees.
14. Scalar Principle: This principle refers to the vertical placement of supervisors starting fromtop
and going to the lower level. The scalar chain is a pre-requisite for effective and
efficientorganization.
ORGANIZATIONDESIGNANDSTRUCTURES
An organization can be classified on the basis of authority relationship or on the basis of

itsdepartments.
I. Organizationstructures basedonauthorityrelationships
1. Line Organization:Line organization is the simple and oldest type of organizationfollowed
in an organization. Under line organization, each department is generally acompleteself-
containedunit.Aseparatepersonwilllookaftertheactivitiesofthedepartment and he has full
control over the department.The same level executives do notgive or receive orders amongst
themselves. But they receive orders from their immediateboss and give orders to their
subordinates. Hence, all the heads are responsible to thegeneral manager, the general
manager, in turn, is responsible to the shareholders who
aretheowners.Thistypeoforganizationisfollowedinthearmyonthesamepattern.So,it

iscalledmilitaryorganization.Under thistypeoforganization,theline ofauthorityflowsfromthetop

to bottomvertically. So it iscalled lineorganization
2. Line and Staff organization: In this organization, we have both the line managers
andthestaffmanagers.Thestaffmanagersarespeciallyappointedtoadvise,suggest,orassist the
line managers in their day to day matters. The word ‗staff‘ means a stick forsupport. The
line officers have authority to take decisions and implement them to achievethe objectives
of the organization. The line officers may be assisted, advised, suggested intheir day to day
matters by the staff officers while framing the policies and plans andtaking decisions
organization. The authority flows from top level to the lower level of
theorganizationthroughthelineofficerswhilethestaffofficersattachedtothevarious

departments advise the departments. The staff officers are not in a position to compel theline
officers to follow the advice by them. Each department is headed by a line
officerwhoexercises full authorityregardingthe planning.
3. Functional organization: Under line organization, a single person is in charge of all

theactivities of the concerned department. The person in charge finds it difficult to
superviseall the activities efficiently.Taylor observed that one single foreman was
overburdenedwithalltheoperationssuchastasksetting,timerecording,qualityinspection,

disciplinary jobs and so on. He divided this job into eight functional foremen-four
dealingwiththeplanningtask and four dealingwith theimplementation task.
Theforemeninvolvedin theplanningtask are:

 Routeclerk (identifytherouteformaterials topass on)
 Instructionclerk
 Timeandcostclerk
 Shopdisciplinarian
Theforemeninvolvedintheimplementationtaskare:
 GangBoss (Assembles themachineryneeded forwork)
 SpeedBoss
 RepairBoss
 Qualityinspector
Under functional organization, various specialists are for various functions performed inan
organization. These specialists will attend to the work which is common to
differentfunctionsofvariousdepartments.Workers,underfunctionalorganization,receiveinstruc
tions from various specialists. From this, it can be noted that the functional type
oforganizationviolates the principle ofoneemployee, onesuperior.

4. Committeeorganization:Acommitteemaybedefinedasagroupofpeopleperformingsomeaspec
ts of Managerial functions.
Definitions:
―A committee consists of a group of people specifically designated to perform some

administrativework‖ -W.H.Newman
― A committee is a body of persons appointed or elected to meet on an organized

basisforthe considerationofmattersbroughtbeforeit‖.-Allen
A committee is formed when two or more persons are appointed to work as a team toarrive
at a decision on the matters referred to it. It is intended to utilize the knowledge,skills, and
experiences of all the concerned parties. Particularly, in large organizations,problems are too
high to be handled by onesingle expert. The committee studies
thenatureoftheproblembycarefullyscrutinizingtheofficerecords,ruleposition,analysisofpreced
ence(how suchcases havebeen dealt with in thepast), and so on.

5. Matrix organization: This is also called as project organization. Matrix

organizationstructure is essentially a violation of unity of command A matrix organization is
definedas an organization where people have to report to more than one boss. The first boss
willbe their functional manager and the other can be a project manager. Personnel are
drawnfrom their respective functional departments. Each functional staff has two bosses
hisadministrativehead andhis project manager.
The main objective of matrix organization is to secure higher degree of coordination

thanwhat is possible from the conventional organization structures such as the line and
staff.Inmatrixorganizationtherearetwochainofcommandonealongfunctionallines(vertically)
and the other along the project line (horizontally). The figure shows that thepresident has
three vice presidents for various departments and two project managers fortwo locationsA
and B. The figure reveals that both functional manager and projectmanager exercise
authorityover theworkers.

6. Virtual organization: Virtual organizations facilitate competitiveness particularly

whenthese organizations are part of the global economy. Here, there can be alliances
andpartnerships with other organizations almost all over world. It is a flexible
Organizationstructurethatremovesthetraditionalboundaries.Itallowseasyreassignmentandreall
ocationofresourcestotakequickadvantageofshiftingopportunitiesinglobalmarkets.ThevirtualO
rganizationisatemporarynetworkofcompaniesthatcometogether quickly to exploit fast
changing opportunities. VirtualOrganizations appear
tobebiggerthantraditionalorganizations.Asvirtualorganizingrequiresastrong

information technology (IT) platform. The boundaries that traditionally separate a

firmfromitssuppliers,customersand even competitorsarelargely eliminated, temporarilyand
in respect to a given transaction or business purpose. Virtual Organizations come intobeing
'as needed' when alliances are called into action to meet specific operating needsand
objectives. When the task is complete, the alliance rests until next called into action.Each
partner in the alliance contributes to the virtual Organization what it is best at-
itscorecompetence
7. Cellular Organization: Organization structured around the units/cells that complete
theentire assembly processes are called cellular organizations. In the modem
organizations,cellularOrganizationshavebeenreplacingthecontinuouslineorlinearproductionp
rocesssystems.Incellularorganizations,workersmanufacturetotalproductorsubassemblies in
teams (cells). Every team (cell) of workers has the responsibility
toimproveormaintainthequalityandquantityofitsproducts.Eachteamisfreetoreorganize itself to
improve performance and product quality. These cells comprise self-managed teams. They
monitor themselves and also correct where necessary on their own.Cellular Organizations
are characterized by much smaller staff all over the Organizationwith middle management
positions reduced and lean management members at the top. Itisboth alean and flat structure.
II. Organizationstructuresbasedonitsdepartments
1. Functional departmentation: The process of classifying the organization on the basis

ofdepartments or similar activities in it is called departmentation. This is similar to
themodern view of functional structure of organizations. Marketing, Production,
Finance,Salesetc.arethebasicfunctionsofmanufacturingorganization.Itfollowsthespecializatio
nprinciple. Everydepartment is viewed as a separate entitybyitself.

2. Productorganization:Theprocessofclassifyingtheorganizationonthebasisofproducts is
called product organization. The grouping of the production and sales effortsof a business
according to a particular line of goods or services.The departments
arebasedontheproductsmanufacturedorservicesrendered.Theproduct-basedorganization
offers scope to strengthen the manufacturing facilities, skills and knowledgeforeveryproduct
orservice.It can beusedfor growth anddiversification.

3. Regional or Geographical organization: The process of classifying the organization onthe

basis of regions is called geographical organization. Organization is divided
intoterritoriesorregionscommonlyusedforthedecentralizationofresponsibilityovercertain
areas. This method is popularly used in sales and production function.This typeof structure
allows an organization's offices to operate individually while adhering tocompany policies
and values. Office locations can be local, national or international.Geographic
organizational structure allows for each business unit or office to operate asitsown
entitybased on whereit's located.

4. Customer organization: The process of classifying the organization on the basis

ofcustomer profile is called customer organization. All the activities of the enterprise
aregrouped on the basis of the profile of its customers. Each group is managed by
onedepartment head. This type of organization is designed to cater to the requirements
ofclearlydefined customergroups.

MODERN TRENDS IN ORGANIZATIONAL STRUCTURES
DESIGNSVIRTUAL ORGANIZATION STRUCTURE
This new form of organization, i.e., ‗virtual organization‘ emergedin 1990 and is also known
asdigital organization, network organization or modular organization. Simply speaking, a
virtualorganization is a network of cooperation made possible by, what is called ICT, i.e.
InformationandCommunicationTechnology,whichisflexibleandcomestomeetthedynamicsofthe

market.VirtualOrganization:Avirtualorganizationisonewhoseemployeesarespreadgeographicallyand
communicateviaphone,email,andtheinternet.Theconceptexplorestechnologiesandissuessurroundingv
irtualorganizationsfromaknowledgemanagementperspective.Virtualorganizationsfacilitatecompetiti
venessparticularlywhentheseorganizations are part of the global economy. Virtual organization
structure does not physicallyexist,butits effect is felt.
Virtualorganization is onethatit
(1) doesnot haveaphysical(bricks and mortar) presence but exists electronically (virtually)
ontheinternet.
(2) isnot constrained bythe legal definition ofacompany, or
(3) isformedinaninformalmanner asanallianceofindependentlegal entities.
CELLULARORGANIZATIONSTRUCTURE
Organizations structured around the units/cells that complete the entire assembly process arecalled
cellular organizations.In cellular organizations, workers manufacture total product orsub-assemblies
in teams (cells). Every team (cell) of workers has the responsibility to improveor maintain the
quality and quantity of its products.These cells comprise self-managed teams.Theymonitor
themselvesand also correct wherenecessaryon theirown.
Example: A system of hyper market such as BIGBAZAR is composed of many diversified sub-
systems, say, electronic goods, good court, grocery etc. all these will be located and operatedunder
one roof under the control of one coordinator, while each subsystem will report to
itsmotherconcernalso.Forexample,anelectronicgoods(sayaPHILIPSTV)sellerhastoabideby the
regulations of Big Bazaar for selling function and reports to his company (Philips
India)forotheraspects.
BOUNDARYLES ORGANIZATIONSTRUCTURE
An organization has external boundaries that separate it from its suppliers and customers,
andinternalboundariesthatprovidedemarcationtodepartments.Thisrigidityisremovedin

boundarylessorganizations,wherethegoalistodevelopgreaterflexibilityandresponsivenessto change
and to facilitate the free exchange of information and ideas. It is made up of self-managing and
cross-functional teams that are organized around core business processes.
Theteamsincludeemployeesfromdifferentfunctionalareas aswellascustomersandsuppliers.
TEAMORGANIZATIONSTRUCTURE
Astructureinwhichtheentireorganizationismadeupofworkgroupsorteamsisknownasteamstructure.Tea
mstructuresarebothpermanentandtemporaryinnatureassituationdemands.‗We report to each other‘ is
the main feature of team structure.A cross functionalteam comprises members from different
functional departments such as marketing, finance,
HR,productionetc.Projectteamsareconvenedforaparticulartaskorprojectandthesegetdissolvedoncetas
k is completed.
DEPARTMENTATION
The first task in designing an organization structure is the identification of activities and to
groupthem properly. The process of grouping the activities is known as Departmentation. The
processof grouping of activities into units for the purpose of administration is called
departmentation.
Itcanbedefined"astheprocessbywhichactivitiesorfunctionsofenterprisearegroupedhomogeneously
into different groups." The administrative units are called divisions, units ordepartments.
Thefollowingsarethebasisofdepartmentation:
a) WhendepartmentationisdoneonthebackoffunctionsthedepartmentscreatedareProduction,mark
eting,accounting,andfinanceand personneldepartments.
b) Whendepartmentationisdoneonthebasisofgeographicalarea,thedepartmentsareknownaseaster
n department,westerndepartment, northernandsoutherndepartment.
c) Departmentationcanbe doneonthebasisofcustomers.
d) Departmentationcanbe doneon thebasisofproducthandled.

DELEGATIONOFAUTHORITY
The process of transferring authority form the top to the lower levels in the organization is
calleddelegation. Although a task maybe delegated or passed down the chain of command form
amanager to a subordinate, the manager continues to be responsible for making sure that
his/herinstructions are carried out. The organization is said to be centralized when the authority to
takedecisions is held by the corporate office. If the authority is delegated to the regional offices,
thentheorganization is said to bedecentralized.
EMPOWERMENT
Empowerment means authority orpower given to someone to do something. A managementpractice

of sharing information, rewards, andpower with employees so that they can takeinitiativeand
makedecisions to solveproblemsandimproveservice andperformance.
Empowermentisbasedontheideathatgivingemployeesskills,resources,authority,opportunity,
motivation, as well holding them responsible and accountable for outcomes of theiractions,will
contributeto their competenceand satisfaction.
Strategiestoempower:
1. Fosteropencommunication:bottom-upopencommunicationismuchpowerfulwhencompared to
top-down communication. In open communication, employees can present theirthoughts, feelings
and observations known easily and regularly. Use the feedback effectively andconstructively. Never
thing of antagonizing employees for their criticism. Appreciate and
rewardthenewideas.Focusoncreativityandinnovationsothattheorganizationbecomesabuoyantonewith
higher degreeof new thinkingand different perspectives.
2. Reward self-improvement: To overcome complacency and stagnation among the

employees,encourage and reward them for self-improvement, have budget and time in place for
personaldevelopment and training. Motivate employees to set a plan for growth and reward them as
theyadvance.This is onesure wayof creatingleadership opportunities.
3. Lettheemployeesexperimentiononacontinuousbasis.Evenifthey
fail,keeponencouragingthemtomoveforward.Theyshouldnotfeelthatfailurewillcosttheirfuture.This

makes them more risk averse. Promote an environment where they can try new things
whileprotectingtheinterestsoftheorganization.Developlaboratoryenvironmenttotestnewideasand
learn from the failures, if any.Unless the employees willgain understanding and feelcomfortable,
they cannot focus on testing their new ideas on the field and bring innovation in theorganizational
perspectives. Exhibit high degree of trust and support in the employees‘ ability toaccomplisha
workassignment.
4. Provide sufficient authority: Delegate adequate authority so that the employees can developthe
feeling of ― I can do my job‖ and then address every problem in their work front. Further,give them
ideas to experiment. Give them every opportunity to clearly understand the corevalues, purpose and
direction of the company so that they can easily make consistent decisionsand take appropriate
action at any junction. Promote share vision to develop leadership acrosscadres.
5. Encourage to work beyond the given role:the vision of each job needs to bearticulated.The
employees need to think beyond their job roles and description within their functional
areassothattheybringdynamismintotheirownwelldefinedroles.Alsosupporttheirindependencein
thejob roles byprovidingnecessaryskills andresources.
6. Fix accountability for results: To understand the consequences of failures and need formaking
an extra effort, every employee need to be held accountable for results. Also
keepappreciatingandrewardtheireffortsthroughconsistentanddiligentmeasurementofperformance
fortheirhigh morale.
CENTRALIZATION
Centralization is the degree to which decision-making is concentrated at upper levels of

theorganization.Centralization is a process where the concentration of decision making is in a
fewhands; All the important decisions and actions at the lower level, are subject to the approval
oftopmanagement.
Benefits:
1. Centralizationoffersasimple,easier-to-managesystem.

2. Itimprovesefficiencybytakingadvantageofpotential economiesofscale.
3. Itbringsgroupstogethertocreateorderandenforceuniformityinthepolicies,practices,proceduresa
ndprocess.
4. Itavoidsthewasteofmoneyonduplicatesystems, extrawork,and manualprocesses.
5. Directand closecontrolonoperations.
DECENTRALIZATION
Decentralization is the degree to which lower-level employees are givenauthority to

makedecisionsexcept that which can only be exercised at central points. Decentralization is simply
amatter of dividing up the managerial work and assigning specific duties to the various
executiveskills. Decentralization is a systematic delegation of authority at all levels of management
andthroughout the organization. Authority is retained by the top management for taking
majordecisions andframing policies concerning the whole concern. ―Everything thatincreasing the
roleofsubordinatesisdecentralizationandthatdecreasesthe roleiscentralization‖.
Benefits:
1. Itpromotesefficiencyasaresultoffasterdecisionmaking.Thebranchesareempoweredtotakedecis
ions within thegiven framework.
2. Itimprovesspeedandflexibilitybyreorganizingtoincreaselocalcontrolandexecutionofaservice.
3. Itbreaksawayfromfrustratingbureaucratic waysoftraditionalsystems.
4. Incaseofadversityorcrisis,thedamagecanbeconfinedtoagivenzone.Theoperationsofotherzones
arenot affected.
5. Improvesscopeforcustomization.
RECENTRALIZATION
Recentralizationis the process oftaking back the authority from the divisions or departmentswhere
the purpose of decentralization is not achieved. Ifthe situation so demands, the topmanagement may
hold back the power or authority from the lower level managers which
wereearlierdecentralized.Sincebusinessconditionsarevolatileanduncertain,theprocessofdecentralizati
onmaynotyieldtheexpectedresults.Incaseswheretherearemanycomplaints

from the customers or vendors, the head office may roll back the authority delegated to
thebranchoffices.Wheredecentralizationhasfailed,theheadofficeinstitutesadetailedenquiry,call for al
the reasons of failure, analyze how it can be corrected and identify who has to betrained further to
improve the service quality. Once the corporate office feels that situation
isundercontrolandthedivisionalofficeisfullygeareduptohandlethesituationcompetently,thentheauthori
tycan bedelegated back.
Benefits:
1. Itoffersscopeforthemangerstocorrectthesituationinstantly.
2. Itimprovesthe confidencelevelofthestakeholders.
3. Theheadoffice cantakestockofthe situationand decidethe nextbestcourseofaction.
4. It is quick response tool to uphold service quality by improving leadership
competence,staffmotivation,improveservicedeliverybyaddressingthedelaysandincreasedbure
aucracy.
ORGANIZATIONALCULTURE
To understand the meaning of organizational culture, we must first understand the meaning
ofculture.―Cultureisthesetofimportantunderstandingsthatmembersofacommunitysharein common‖. It
consist of a basic set of values, ideas, perceptions, preferences, concept of morality,code of conduct
etc, which create a distinctiveness among human groups.In simple words,
wecansaythat―cultureisacombinationoffactorsthatarelearnedthroughourinteractionwiththe
environment duringourdevelopmental andgrowthyears‖.
Organizational culture is the set of assumptions, beliefs, values, customs, traditions and normsthat
are shared by the members of an organization. It may be consciously created by its keymembers, or
it may have simply evolved over time. It represents a key element of the
workenvironmentinwhichemployeesperformtheirjobs.Aculturemayexistacrossanentireorganization,
or itmay referto theenvironment within a singledivision, branch,plant, ordepartment. The idea of
organizational culture is somewhat intangible, for we cannot see it
ortouchit,butitispresentandpervasive.Liketheairinaroom,itsurroundsandaffectseverythingthathappens
inanorganization.Becauseitisadynamicsystemsconcept,cultureis

alsoaffectedbyalmosteverythingthatoccurswithinanorganization.Theygiveanorganizational identity
toemployees– a defining vision of what the organization represents.They are also an important
source of stability and continuity to the organization which provides asenseof securityto its
members. Also called corporate culture, it'sshown in:
1) Thewaystheorganizationconductsitsbusiness,treatsitsemployees,customers,andthewidercom
munity,
2) Theextenttowhichfreedomisallowedindecisionmaking,developingnewideas,andpersonalexpr
ession,
3) Howpower andinformationflowthroughitshierarchy, and
4) Howcommittedemployeesaretowardscollectiveobjectives.
It affects the organization's productivity and performance, and provides guidelines on customercare
and service, product quality and safety, attendance and punctuality, and concern for
theenvironment.
Characteristicsof OrganizationalCulture
1. Individual Autonomy: The degree of responsibility, freedom and opportunities of

exercisinginitiativethat individualshavein theorganisation.
2. Structure: The degree to which the organisation creates clear objectives and
performanceexpectations. It also includes the degree of direct supervision that is used to control
employeebehaviour.
3. ManagementSupport:Thedegreetowhich,managersprovideclearcommunication,assistance;warm
th and support to their subordinates.
4. Identity: The degree to which, members identify with the organisation as a whole rather
thanwiththeir particular work groupor field ofprofessional expertise.
5. Performance Reward System: The degree to which reward system in the organisation
likeincrease in salary, promotions etc. is based on employee performance rather than on
seniority,favouritismand so on.

6. Conflict Tolerance: The degree of conflict present in relationships between colleagues andwork
groups as wellas the degree to which employees are encouraged to air conflict andcriticismsopenly.
7. Risk Tolerance: The degree to which, employees are encouraged to be innovative,

aggressiveandrisk taking.
8. Communication Patterns: The degree to which, organisational communications are

restrictedtotheformal hierarchyof authority.
9. Outcome Orientation: The degree to which, management focuses on results or

outcomesratherthan on thetechniques andprocesses used toachievetheseoutcomes.
10. People Orientation: The degree to which, management decisions take into consideration
theimpactof outcomes on people within theorganisation.
ORGANIZATIONALCLIMATE
Beforeunderstandingthemeaningoforganizationalclimate,wemustfirstunderstandtheconcept of
climate. Climate in natural sense is referred to as the condition of the weather at
aplaceinaparticularperiodoftimeanditconsistsoftemperature,wind,velocityandprecipitation‖.
The concept of organisational climate was formally introduced by the human relationists in
thelate1940s.Somepersonshaveusedorganisationalcultureandorganisationalclimateinterchangeably.
But there are some basic differences between these two terms. According toBowditch and Buono,
―Organisationalculture is connected with the nature of beliefs and expectations about organisational
life, while climate is an indicator of whether these beliefs andexpectations are being fulfilled.‖
Climate of an organisation is somewhat like the personality of aperson. Just as every individual has
a personality that makes him unique and different from otherpersons. Each organisation has an
organisational climate that clearly distinguishes it from otherorganisations.

Basically, the organisational climate reflectsa person‘s perception of theorganisation to whichhe

belongs. It is a set of unique characteristics and features that are perceived by the
employeesabouttheir organisationswhich servesas amajorforcein influencingtheirbehaviour.
The term, ‗Organisational climate‘ is defined as a relatively enduring quality of the

internalenvironment of an organisation as perceived and experienced by its members, which can
bedescribed in terms of specific dimensions or characteristics and which influences the patterns
ofbehavior and work performance of members. Organisation climate evolves over a fairly
longperiod of time and is relatively stable. Since the dimensions of climate are internal, they can
bemeasured, controlled and changed by the organisation, if it so decides. Organisational climate
isthe major frame of reference for the member‘s interpretation of organisational decisions
andactionsas also theirown attitudes, behaviour andperformance.
AccordingtoForehandandGilmer,―Climateconsistsofasetofcharacteristicsthatdescribean
organisation,distinguishitfromotherorganisationsarerelativelyenduringovertimeandinfluencethe
behaviourof people init.‖
Characteristics
a) Organisational values, goals and priorities which are pursued in practice as against
thosewhichareprofessed.
b) Managerialvaluesystemsandlifestyles.
c) Competence,character, commitmentanddynamismofmanagement.
d) Thecomplexionoforganisationalpoliciesandpracticesandthe consistency.
e) Thepowerstructure-Theextentofconcentration ordispersalof authority.
f) General organisational structure-hierarchy, rigidity vs. flexibility, clarity of the
structure,communicationandcontrolsystems,superior-
subordinaterelations,informalsocialrelationships,etc.
g) Nature of jobs – degree of skill required, relation between effort and productivity, varietyin
the tasks, perceived importance of the job, rewards associated with the job, relationwith
otherjobs, securityand so on.
h) Degreeoffreedomandcontrol–
requirementsofconformityandcompliancetoorganisationalnorms and the extentto which

behaviourofemployeesis structured.

i) Supervisorystyle–
attitudesandbehaviourofsupervisorsandmanagerstowardstheirsubordinatesand
towardsperformancerequirements.
j) Reward structure–rewardlevelsandinterrelations,equityinreward structures,monetaryandnon-
monetaryrewards.
k) Organisationalapproachtoconflictanddissent,amicableresolutionorsuppressionofconflict.
l) Thephysicalworkingconditions intheorganisation.
FactorsAffectingOrganisationalClimate
Factorsaffectingorganizationalclimatedifferfromorganizationtoorganization.Insomeorganizations
certain factors like structure, or process plays a major role and in some otherorganizations,
technology might be the major factor influencing the climate. However the majorfactors, according
to Lawrence James and Allan Jones affecting the organizational climate can begroupedunder
thefollowingheads:
1. Organizationalcontent:Thereactionsoftheemployeesandthedegreetowhichtheywelcome and
accept the managerial philosophy is very crucial to the development of sound
andfavorableorganizationalclimate.
2. Structure: Structure is the framework that establishes formal relationship and

delineatesauthority and functional responsibility. It is generally believed that decentralized structure
resultsinsound climate.
3. Process: In every organization certain processes are vital so that it functions.

Communication,decision making, motivation and leadership are some of the important processes
through whichmanagementachievesthetasks.Forinstance,ifweconsiderleader-
followerrelationship,leadership process, it is leader‘s choice whether to allow subordinates in
decision-making, giveassignments, etc. A leader has to be aware of the possible influence of his
actions on the climatewhiledecidingabout the most appropriate supervisorytechnique for
agivensituation.
4. Physical Environment: the external conditions of environment, the size, location of the
workplaceetc.,willalsoaffectorganizationalclimate.Anemployeeperforminghisjobinrelatively

clean, quiet, safe environment will undoubtedly have a favorable perception of the
organizationalclimate.
5. SystemValuesandNorms:Every organizationhasdiscernibleandfairly formalvaluesystem where

certain kinds of behaviors are rewarded and encouraged and certain kinds ofbehavior forces an
individual to formal sanctions. The formal value system is communicated toemployees through
rules, regulations and policies. But informal value system is very difficult toascertain.But both
exertinfluenceon organizational climate.
ORGANIZATIONAL CHANGE
Changes are taking place all around without exception. It is but natural that everything changesover
time. Whatremainsconstantischange itself?Therefore,it‘s theresponsibility of themanager to
appreciate the change, assess its impact on the organization and prepare to adopt it,
ifnecessary.Dependingonthemagnitudeofchange,itmayimpactanindividual,agroup,structure, process
and subsystems. By scanning the environment and deciphering how changes inthe environmentare
likely towiden thegap between desiredand actual state of affairs oforganization such as productivity,
customer and employer satisfactions ,the degree and impact ofchange could be gauged. Manager
can be a change agent by introducing planned changes in theorganization.
Meaning
The term change in the organization context refers to any alteration that occurs in the
workenvironment. Planned changes mean those changes which are effected in a planned manner
afterassessingtheneedforchangeandworkingoutthedetailsastowhenandhowtheywillbecarried out. A
planned change is also called proactive change. In contrast, reactive change is theone which takes
place in random fashion as a crisis situation develops. For proactive or plannedchange to be
initiated, manager shall be sensitive to the environmental changes affecting theorganizationso that
organizationalcrisissituations can beaverted.
Organizationalchange isthe processby which organization move fromtheir presentstate

tosomedesiredfuturestatetoincreaseeffectiveness.Whenanorganizationsystemisdisturbedby

some internal or external forces, change frequently occur or any alteration which occur in
theoverallworkenvironment of an organization.
Organizationalchange
isboththeprocessinwhichanorganizationchangesitsstructure,strategies,operationalmethods,technolog
ies,ororganizationalculturetoaffectchangewithinthe organization and the effects of these changes on
the organization. Organizational change canbecontinuous or occur for distinct periods of time.
Characteristics
a) Changehappenforthepressureorbothinternaland externalforcesintheorganization.
b) Changeinanypartoftheorganizationaffect thewholeorganization.
c) Changemayaffectpeople, structure, technologyand otherelementsof the organization.
d) Change alsoaffectsthe rateofspeedand degreeofeffectivenessoftheorganization.
e) Changemaybereactiveorproactive.
StepstoOrganizationalChange management
1) Clearly define the change and align it to business goals: It is one thing to articulate
thechangerequiredandentirely another toconduct a critical review
againstorganizationalobjectives and performance goals to ensure the change will carry your
business in the rightdirection strategically, financially, and ethically. Here key questions are:
What do we need tochange?. Whyis this changerequired?.
2) Determine impacts and those affected: Once you know exactly what you wish to achieveand
why, you should then determine the impacts of the change at various levels. Review
theeffectofchangeoneachbusinessunitandhowitcascadesthroughtheorganizationalstructure to the
individual. Here key questions are: What are the impacts of the change?. Whowillthe
changeaffect most?. Howwillthe changebereceived?.
3) Develop a communication strategy: Determine the most effective means of communicationfor
the group or individual that will bring them on board. The communication strategy
shouldinclude a timeline for how the change will be incrementally communicated, key
messages,andthecommunicationchannelsandmediumsyoutouse.Herekeyquestionsare:Howwill

thechangebecommunicated?.Howwillfeedbackbemanaged?.Whoaretobemostcommunicated?.W
hatisthecommunication process?.
4) Provide effective training: With change message out in the open, it is important to
providetraining to the employees regarding the changes made in the organization. Training may
befor skills and behavior. Here key questions are: What behaviors and skills are required
toachievebusinessresults?. Whattrainingdeliverymethods willbemosteffective?.
5) Implementasupportstructure:Providingasupportstructureisessentialtoassistemployees to
emotionally and practically adjust to the change and to build proficiency ofbehaviors and
technical skills needed to achieve desired business results. Here key
questionsare:Whereissupport most required?.What typesofsupport willbemosteffective?.
6) Measure the change process:Throughout thechange management process, a
structureshouldbeputinplacetomeasurethebusinessimpactofthechangesandensurethatcontinued
reinforcement opportunities exist to build proficiencies. Here key questions are:Did the change
assist in achieving business goals?. Was the change management processsuccessful?What could
havebeen donedifferently?.
PressuresforChange
The need for change exists when the manager finds that the goals are not being achieved.
Thus,tension points in the organization are identified when the gap between the desired and the
actualresultsisnoticed.Suchgapscouldoccurduetocertainchanges.Inotherwords,thesechangesareprecu
rsors fororganizational change, whichareexplainedin below.
1. Labor market Environment: The work force composition is fast changing with
increasingproportion of the woman, minorities, physically challenged. For instance, in India the
work forcediversity, of late is something unseen before. Human resource management policies will
have tochange to attract, maintain a diverse work force. Increasing participation of woman means
dual-career couples. So organizations have to change their transfer and promotional policies as well
asprovidechild and elder carefacilities.
2. Technologicaldevelopments:Changesintechnology bring intheir wake correspondingchanges in

the nature of the work. Computers, telecommunication systems, robotics, and
flexiblemanufacturingsystemsaresomeofthe21stcenturychangesthathavebroughtunimaginable

changes at work place with respect to the time, comfort required for the execution of tasks.
Withchangingtechnologies employeesskills becomeobsolete.
3. Economicconditions:Thisisanageofdiscontinuity.Tomentionafew,oilshocks,accelerated inflation
and interest rates, the stock market crashes, currency devaluation, etc., hitsome industries and firms
much harder than others. Globalization of markets is yet anothersignificant change. The problem
with these shocks is that it is impossible to predict what thefutureshocks will beandfrom
wheretheycomefrom.
5. Work place diversity: Emergence of global markets, mobility of factors of production acrossthe
globe, integration of economic systems imposes certain demands on employees who have tointeract
with people in other countries and work with persons brought up in different cultures.Business
organizations, therefore, have to preparethe work force which could perform and
feelathomeregardless oftheplaceof workand thecompositionofwork teams.
6. Competition: Competition is intensifying by the day in every product category. Businessesalso

in line with the changed realities and compulsions need to address themselves to the globalcontext.
HUMANRESOURCEMANAGEMENT
Human resources are the people who work for the organization. It is an asset to the
organizationlikefactory,machineryandcash.HRMisconcernedwithmanagementofpeoplefromrecruitm
ent to retirement. Human Resource management is the body of knowledge and a set ofpractices that
define the nature of work and regulate the employment relationship. HRM is thefunction within an
organization that focuses on recruitment, management and providing directionforthe peoplewho
workin theOrganization.
HRM refers to the process of acquiring, training, appraising and compensating employees and
ofattending to their labour relations, health and safety and faireness concerns. The HRM
processconsists of planning, attracting, developing, and retaining the human resources (employees)
of anorganization.

According to Flippo――Personnel management is the planning, organizing,

compensation,integrationandmaintainanceofpeopleforthepurposeofcontributingtoorganizational,indi
vidual and societalgoals.‖
Objectives:
1) Tohelptheorganisationtoattainitsgoalseffectivelyandefficientlybyprovidingcompetentand
motivatedemployees.
2) Toutilizetheavailablehumanresourceseffectively.
3) Toincreasetothefullesttheemployee‗sjobsatisfactionandselfactualization.
4) To developandmaintainthe qualityof worklife(QWL)
whichmakesemploymentintheorganizationadesirablepersonal and social situation.
5) Tohelpmaintain ethicalpoliciesandbehaviorinsideandoutsidetheorganization.
6) Toestablishandmaintaincordialrelationsbetweenemployeesand management.
7) Toreconcileindividual/groupgoalswithorganizationalgoals.

TALENTMANAGEMENT
What is talent?: According to Mckinsey, talent is the sum of person‘s ability, intrinsic gifts,skills,
knowledge, experience, intelligence, judgment, attitude, character, ability to learn andgrow.
Talent Management, as the name itself suggests is managing the ability, competency and
powerofemployeeswithinanorganization.Theconceptisnotrestrictedtorecruitingtherightcandidate at
the right time but it extends to exploring the hidden and unusual qualities of youremployees and
developing and nurturing them to get the desired results. Hiring the best talentfrom the industry
may be a big concern for the organizations today but retaining them and mostimportantly,
transitioning them according to the culture of the organization and getting the bestoutof them is
amuch bigger concern.
Talent Management in organizations is not just limited to attracting the best people from
theindustry but it is a continuous process that involves sourcing, hiring, developing, retaining
andpromoting them while meeting the organization‘s requirements simultaneously. For instance,
ifan organization wants the best talent of its competitor to work with it, it needs to attract
thatpersonandofferhimsomethingthatisfarbeyondhisimaginationtocomeandjoinandthenstick to the
organization. Only hiring him does not solve the purpose but getting the things donefrom him is the
main task. Therefore, it can be said that talent management is a full-fledgedprocess that not
onlycontrols theentryof anemployeebut also his or herexit.
We all know that it‘s people who take the organization to the next level. To achieve success
inbusiness, the most important thing is to recognize the talent that can accompany you in
achievingyour goal. Attracting them to work for you and strategically fitting them at a right place in
yourorganization is the next step. It is to be remembered that placing a candidate at a wrong place
canmultiply your problems regardless of the qualifications, skills, abilities and competency of
thatperson. How brilliant he or she may be, but placing them at a wrong place defeats your
solepurpose. The process of talent management is incomplete if you‘re unable to fit the best talent
ofthe industryat theplacewhereheor sheshould be.

The concept, Talent Management (TM) refers to the forecasting and planning of required
humancapitalforanorganization.ThetermwascoinedbyMcKinsey&Company.TMisanorganization‘s
ability to recruit, retain, and produce the most talented employees available in thejob market. Talent
consistently uncovers benefits in the critical areas such as revenue, customersatisfaction,quality,
productivity,cost, cycletime,and market capitalization.
Talent Management isthe process of creatinga high quality, highly engaged workforce byhiring,
retaining, deploying, and engaging talent at all cadres and it has been the source ofgenerating
inimitable competitive advantage for the organization. Since the talent is a scarceresource,it must
bemanaged effectivelyand efficiently.
According to Bersin, TM is defined as the implementation of integrated strategies or

systemsdesigned to improve processes for recruiting, developing, and retaining people with the
requiredskillsand aptitude to meet current and futureorganizational needs.
MeritsofTalentManagement
1) Employee Motivation: A survey conducted by Chandler and Macleod revealed that about90%
of employees wanted more than just money to feel engaged and motivated. And TM
canmotivatesuchpeople as it recognized the talent.
2) Higher level business performance as it attracts top talent: The very reason of existenceof
TM is attracting the top talent. So it is obvious to result in higher level of businessperformance.
3) No problem in critical roles: An organization will have a continuous flow of employees tofill
critical roles if TM is adapted. This ensures smooth running of operations and clients
andstakeholdersaresatisfied.
4) No burden to employees: Since the roles are fixed, the employees are not overburdened,which
eventuallylead to happyemployment.
5) Increased employee performance: Identified ‗good fit‘ employees, exhibition of talents
areembeddedinorganizationalstrategy.Thisreducesperformancemanagementissuesandgrievances.
6) Lessemployeeturnover:Aslongastalentisrecognized,thetoptalentwithintheorganizationtends to
staylonger.Thence, it willensureless employeeturnover.

7) Engaged employees: As there is fair process for development, employees feel more
engagedwhichinturnincreasesretentionratesandtherewillnotbeanyfearofemployeeretrenchments.
8) Reduced cost of recruitment: The employee retention leads to reduced requirements so,
anorganizationsaves onrecruitment and performancemanagement costsin the longrun.
9) Higher client satisfaction: When systems are more integrated, client satisfaction rates
areusuallyhigher, sincetheyaredealingwith less people and theirneeds aremet faster.
10) Strong and trusted organization culture: The successful organizations like Apple,
Googlehave a strong organization cultures whose employees do not just work for a pay-cheque,
butforsharingandcaringoftheirtalents.
TALENTMANAGEMENTMODEL
Talent management can include; talent acquisition (and recruitment), learning and
development,organizational values and vision, performance management, career pathways and
successionplanning.
Whiletherearemanytalentmanagementmodels,theelementsoftalentmanagementcangenerallybecatego
rizedintofiveareas;planning,attracting,developing,retainingandtransitioning.

1. Planning: Prior to developing the workforce plan, an evaluation of previous initiatives,

anassessment of the workforce profile and talent performance and the behaviors to date, are
carriedout.A workforce plan is then developed based on the current workforce situation and the
futuredesired state. Theworkforce planensures that the right people, at the right time and with
theright skills are employed and working towards the strategy.In other words, the workforce
plantranslatesbusinessstrategyintoorganisationaltalentneeds.Theplanningstageoftalentmanagementis
comprised of 3keyareas.
1. Understandingtheorganisational/businessstrategy
2. Evaluationandmeasurement/analytics
3. DevelopingaWorkforce Plan
2. Attracting: Organizations that understand what their value is to potential employees, willoften
develop an Employee Value Proposition (EVP).The EVP articulates to employees arealistic, yet
aspirational statement of the value the organisation can offer to an employee. AnexampleEVP from
Hubspot is:
―We‘rebuilding acompanypeoplelove.Acompanythatwillstandthe test oftime.Sowe invest in

ourpeople,and optimize foryour longtermhappiness‖.Attracting Involves:
1. EmployeeValueProposition
2. Marketing
3. Talentacquisition
4. Consultants/Freelancers
3. Developing: Development of talent can include; leadership development, emerging

leaders,technical development, team building or team development days, project work and on the
jobdevelopment.DevelopingInvolves:
1. On-boarding
2. PerformanceAppraisals/Management
3. Learningand Development
4. Capabilityframeworks

5. Careerpathways
4. Retaining: Culture is a continuous commitment and can be changed over time. This then tiesinto
how attractive an organisation is to potential candidates, and retention rates of currentemployees as
well as to how well the organization‘s clients are dealt with and therefore
businessperformanceoverall.
Based on the workforce plan, an organisation can identify what their remuneration strategy
mustbe,inordertoattractandretainthetalenttheyrequiretoachievebusinessgoals.Talentmanagementinvo
lvesthestrategicuseofrecognitionandrewardsandisusuallytiedtoidentification of high performers and
high potentials, as well as critical and highly specializedroles.
The importance of retaining top talent is critical because it can save on additional recruitmentcosts
associated with hiring new employees, it can also save on the time it takes for a newemployeeto
learn thejoband start performing.Retaining Involves:
1. Culture
2. Remunerationstrategy
5. Transitioning: Succession planning is part of the workforce plan, and can take place prior
totalent acquisition, however it can also be done when there have been unexpected changes in
theworkforce. Succession planning is a proactive measure and takes into account the amount of
timerequired to develop talent for a particular role, or to bring someone in externally. It will
usuallyinvolve the assumption that a particular role will become vacant within the next few years,
eitherbecause of retirement, the nature of the role having high turnover, or it being a stepping
stonetypeofrole.
During the analysis of the workforce profile, if an ageing workforce is identified,

appropriatemeasures would be put in place to plan ahead for retirement of such talent. This could be
in theform of transition contracts, such as working part-time for several years, or taking on
differentresponsibilities for health reasons (ifrequired).Again, having this knowledge in advance
totalentretiring,meansthatasanemployer,anorganisationcanbeproactiveandplanaheadfor

gaps in critical roles that will become available and can also support their employees in
planningaheadfor their future. TransitioningInvolves:
1. Successionplanning
2. Internalmobility
3. Retirement
4. Knowledgemanagement
5. Exitinterviews
STRATEGICHUMANRESOURCEPLANNING
Inordertoimprovethestrategicalignmentofstaffandotherresources,it‘sessentialtounderstand how a
strategic HR planning process works. At its most basic level, strategic
humanresourcesplanningensuresadequatestaffing
tomeetyourorganization‘soperationalgoals,matchingtheright people with theright skills at theright
time.
It‘s important to ask where your organization stands currently and where it is going in order
toremain flexible. Each company‘s plan will look slightly different depending on its current
andfutureneeds,butthereisabasicstructurethatyou canfollowtoensureyou‘reontherighttrack.

1. Mission: A mission statement defines what business the organization is in, including
whyitexists and who its customers are.
2. Strategicgoals/objectives:Setbyseniormanagementtoestablishtargetsfortheorganizationto
achieve.Generallydefined forthenext 5-20years.
3. AssesscurrentHR:GaporSWOT(Strengths-Weaknesses-Opportunities-
Threats)analysisdetermineswhatisneededtomeetobjectives.HRMdetermineswhatknowledge,s
killsandabilitiesareneeded bythe organization‘shuman resources.
4. Determining the Demand for Labor: A human resource inventory can be developed
toproject year-by-year estimates of future HRM needs for every significant job level
andtype.Forecasts mustbemadeof theneedforspecificknowledge, skillsand abilities.
5. Predicting the Future Labor Supply: A unit‘s supply of human resources comes
fromnewhires -contingent workers transfers-individuals returningfrom leaves.
6. MatchingLaborDemandandSupply:Foremploymentplanning,compareforecastsfordemand
and supplyof workers.
7. Recruitment or Removal: if demand exceeds supply, recruit the employees. If
supplyexceedsdemand, removethe employees.
RECRUITMENT
It is the process of finding and attracting capable applicants for employment. The process
beginswhen new recruits are sought and ends when their applications are submitted. The result is
poolofapplicants from whichnew employeesareselected.
Priortoinitiatingarecruitment procedure,thefollowingmattersshould be considered:
1. Clarification of the scope and skill sets required to successfully perform the duties of
theposition
2. Review of the Job Fact Sheet or Position Description to ensure that the skills and
abilitiesrequired coincide with the current expectations of the position. If they do not, then
apositionevaluation should be undertaken.
3. Reviewof thecompensation availableto the position(i.e. salaryand benefitplans, etc.)

4. Analysisoftheimpactthatthehiringwillhaveonthebudget.
SELECTION
The process of identifying the most suitable persons for the organization is called selection.
Themain purpose of selection is to choose the right person for the right job. The job analysis,
jobdescription, and job specifications are carried out before the position is advertised. These
provideadequate insight about nature of the job, its description, and its specifications, and further
focuson what type of person is to be selected for a given position.The selection of a candidate with
theright combination of education, work experience, attitude, and creativity will not only
increasethe quality and stability of the workforce, it will also play a large role in bringing
managementstrategiesand planningto fruition.
Selectionprocessinvolvesthefollowingstages:
1. Initialscreening/Shortlisting
2. Comprehensiveapplication/biodatascreening
3. Aptitudeor writtenrests
4. Groupdiscussion
5. Personalinterviews
6. Medicalexamination
7. Employmentofferletter

TRAININGANDDEVELOPMENT
Meaning of Training: Training is short-term process of utilizing systematic and

organizedprocedure by which the staff acquires specific technical knowledge and functional skills
for adefinite purpose.The focus of training is the job or task.Training means organized
activityaimedat impartinginformation/instructions toimprovethe recipients‘performance.
Methodsof Training:
A) On-thejobtrainingmethods:Itislearningbyphysicallydoingthework.Thefocushereis to
provide specificskills in areal situation. Thesemethods include:
1) Job instruction training: This is a method used for such jobs which can be performedwith
relatively low skill. Here, the trainees systematically acquire skills by following
routineinstructionsin keyprocesses from aqualified instructor.
2) Experiential learning (Learning By Doing): This is a modern approach to the

learningprocess. This method is more used for training the senior executives. It is a technique,
whichempowers the manager-trainee with the freedom of choice to act upon and the capacity
toinitiate,ratherthan simplyrespond, to circumstances.
3) Demonstration: Here, the work procedures are demonstrated to the trainees. Each of
thetrainees is asked to carry out the work, on a sample basis, based on his/her observation
andunderstandingof thedemonstration.
4) Apprentice training:It is a combination of on the job and class-room training whereinthe

workers get the knowledge about job in the class-room and then they are required toperform the
same in the work place for a brief period ranging from three months to one year,dependingupon
the complexityof thetraining.
B) Off-the job training methods: provide a relatively broad idea relating to a given job or
task.These are meant for developing an understanding of general principles, providing
backgroundknowledge,orgeneratinganawarenessofcomparativeideasandpractice.Thesemethodsinclu
de:

1) Lectures/talksandclassroominstructions:Thesetechniquesaredesignedtocommunicatespeci
ficinterpersonal,technical,orproblem-
solvingskills.Here,thetrainercanmaintainatightcontroloverlearning.However,thismethodrestrictst
hetrainee'sfreedomto develop his/herown approaches to learning.
2) Conferences: Conferences refer to get-together of the experts from different areas of agiven
topic. These experts present their views based on their work experience and
researchresults.When employeesparticipate insucheventstheygetafeelof thereal world.
3) Seminars: Seminars are held periodically by the professional organisations for the
benefitofallthepracticingmanagersbytakingintoconsiderationtherecentadvancesinaspecializedare
a.
4) Teamdiscussions:Thistechniquedevelopsteamspiritamongtheexecutivesfromdifferentdepart
ments.Italsoenablesthemtounderstandandappreciateeachother'sproblems.
5) Casestudy:Thistechniquehelpstoprovideanunderstandingofwhathasgonewrongina particular
case, such as Kingfisher Airlines(Vijay Malya) case. Similarly, what are thefactors responsible
for the success of organizations such as Reliance or Hindustan Lever.Casestudytechnique is
averygood method oflearningthe principles andconcepts.
6) Role-playing: The participants are assigned roles and are asked to react to one another,
astheywould do in their managerial jobs. Theseroles areeventuallyexchanged.
7) Programmed instruction:It is a system of instruction within which pre-

establishedsubjectmatterisbrokenintosmall,discretestepsandcarefullyorganizedintologicalsequen
ce in which, it can be learned by the trainee. Each step is built upon the previous one.The
programmed instruction techniques can be in the form of programmed tests and
manuals,orvideo displays.
Forinstance,withdrawalofmoney throughautomatictellermachines(ATMs)involvesresponding to
programmed instructions; working on a personal computer or internet
involvesrespondingtoaseries ofprogrammed instructions.

8) Simulation exercises: Simulate means to do or make something that looks real but is notreal.
Simulation is the process of designing a model of a real system and conducting a seriesof
repeated trial and error experiments with this model for the purpose of understanding thesystem.
These exercises include interactive exercises in which trainees practice their skills
onworkingmodels or in mock situations based on real-lifesituations.
9) Groupdecision-making:Groupdecision-makingreferstotheprocessofmakingdecisions based
on the opinions expressed by all the concerned — may be
subordinates,peers,oroutsideconsultants.
MeaningofDevelopment:Lotoftime,trainingisconfusedwithdevelopment;botharedifferentincertainr
espectsyetcomponentsofthesamesystem.Developmentimpliesopportunities created to help
employees grow. It is more of long term or futuristic in nature asopposed to training, which focus
on the current job. It also is not limited to the job avenues in thecurrentorganisationbutmay
focusonotherdevelopmentaspectsalso.Many
organisationschoosecertainemployeespreferentiallyforprogramstodevelopthemforfuturepositions.Th
isis done on the basis of existing attitude, skills and abilities, knowledge and performance of
theemployee. Most of the leadership programs tend to be of this nature with a vision of creating
andnurturingleadersfortomorrow.
The major difference between training and development therefore is that while training
focusesoften on the current employee needs or competency gaps, development concerns itself
withpreparingpeople forfutureassignments and responsibilities.
PERFORMANCEAPPRAISAL
Performanceappraisalistheprocessofmeasuringandevaluatingtheperformanceoraccomplishments."Pe
rformanceappraisalisthesystematicdescriptionofanemployee'sjobrelevantstrengths
andweaknesses.―
InaPerformanceappraisal,theemployee'smeritssuchasinitiative,regularity,loyalty,personality, etc.,
are compared with others. Then each employee is rated or ranked. That is, he isgiven a particular
rank such as First Rank, Second Rank, etc. So if an employee has the bestattendancethen heisgiven
First Rank inattendanceand so on.

Whyshouldweappraisetheperformance?.-
1. Toassesstheemployee'spresentlevelofperformance
2. Toidentifythe strengths or weaknesses ofindividualemployee
3. Toprovidefeedbacktotheemployeesothathe canimprovehis/herperformance
4. Toprovidean objectivebasisforrewardingthe employees fortheirperformance
5. Tomotivatethoseemployeeswhoperform
6. Tocheckandpunishthoseemployeeswhofailtoperform
7. Toidentifythe gapsinperformance,and thus,assesstraininganddevelopmentneeds
8. To provide a basis for many other decisions such as fixation of incentives or

increment,regularizationorconfirmationoftheservicesoftheemployee,promotion,transferordemoti
on.
MethodsofPerformanceAppraisal
1. Ranking method: Ranking Method is simplest, oldest and most conventional method of
meritrating. In this method, a list is prepared for ranking the workers in order of their performance
sothat an excellent employee is at the top and the worst at the bottom. This technique is used
inenterpriseswherethere arefew workers.
Example:Iftherearetenworkersintheworkinggroup,themostefficientworkerisrankedasnumberoneand
the leastefficient worker isranked as number ten.
2. Paired comparison method: Here, every employee is compared with all others in a
particularcadre in the department. By comparing each pair of employees, therater can decide which
of theemployees is more valuable/better to the organization. The maximum number of pairs is
obtainedbythebelow formula:
WhereN =Total No. ofemployees to beevaluated.

Forexample, if thereare4 employees,the total numberofpairs will be4(4-1)/2 = 6.
Example:Ifthereare4employeestobecompared,A‘sperformanceisfir
stcomparedwithBtodetermine who
hasbetterperformance,then,AiscomparedwithCandDandperformanc
e is recorded. Later, B is compared to C and D
sincehehasbeenalreadycomparedwithA.Afterwards,Cis
compared with D. These comparison results are tabled and rank is assigned to each
employee.Thereare6comparisons(orpairs) amongA,B,C,D employees.
3. Ratingscale:Aratingscaleisasetoffactorsdesignedtoelicitinformationabouta quantitative or a
qualitative attribute. Under rating scale, certain features like analytical ability,cooperativeness,
dependability, job knowledge etc are selected for evaluation. The employees aregiven grades
according to the judgment of the rater. The grades may be such as A-Outstanding,B-Very good, C-
Good, D-Average etc. The actual performance of every employee is rated withvariousgrades in
themind of therater.
4. Forced distribution method: Some evaluators suffer from a constant error i.e., either theyrate
all workers as good, average are poor. They don‘t evaluate the employees properly. Thissystem
minimises rater‘s bias so that all employees are not equally rated. This system is based onthe
presumption that all employees can be divided into 5 categories i.e., Poor, Below average,Average,
Good and Excellent. The main aim in this system is to spread ratings in a number ofgrades. It is
useful only when the group of employees is large. The rater may be asked to rate alltheemployees
as follows:
Poor10%,Belowaverage20%,Average40%,Good20%,Excellent 10%.
5. Narrative or essay method: In this method, the supervisor writes a detailed description aboutthe
employee‘s performance, output, behaviours and traits etc. according to his perception.
Hemayincludein his reportthe strengths,weaknesses, andpotential ofthe employee.

6. Managementbyobjectives(MBO):Managementbyobjectives(MBO)isatoolforperformance
management. The MBO technique requires the supervisor and the employee todevelop and agree on
realistic, achievable and measurable objectives; to determine how thoseobjectives will be met; and
to agree on how results will be measured. In a true MBO plan,strategic objectives are established
for the organization and are then broken into divisional
anddepartmentalobjectives,andfinallyintoindividualobjectives.Inthismethod,actualperformanceis
evaluated.
JOB EVALUATION
Job evaluation is an assessment of the value of various jobs on the basis of qualifications andskills
required. It is the process of establishing the value/worth of jobs in a job hierarchy. Theobjective of
job evaluation is to determine which jobs should get more pay than others. Jobevaluation begins
with job analysis and ends at that point where the worth of a job is
ascertainedforachievingpayequitybetween jobs.
Theprocess of job evaluation maybedivided intothe followingstages:
1. Job Analysis: What is a job?:- A job is described as a collection of tasks assigned to

apositionin an organization structure.
What is Job Analysis?:- Job Analysis is the process of studying and collecting informationrelating
to the operations and responsibilities of a specific job. The immediate products of thisanalysisarejob
description and job specification.
Job analysis is the systematic study of jobs to determine what activities and responsibilities
theyinclude, their relative importance in comparison with other jobs. The personal
qualificationsnecessaryforperformanceof thejobsand the conditions under whichtheworkis
performed.
2. JobDescription:JobDescriptionisalistofjob‘sduties,responsibilities,reportingrelationship,workin
g conditions, and supervisoryresponsibilities.

JobDescriptioncontents:
 JobTitle
 Location
 Jobsummary
 Duties
 Machinetoolsetc
 Materialetc
 Supervision
 Workingcondition
 Hazards
3. WhatisJobSpecification:Jobspecificationisalistofjob‘s―humanrequirements‖thatis, therequisite
education, skills, personalityand soon.
JobSpecificationcontents:
 Education
 Experience
 Training
 Initiative
 Physicaleffort
 Responsibilities
 Communicationskills
 Emotionalcharacteristics
 Attitude
LABOURTURNOVER
What is Labour Turnover?:- It refers to the number of employees leaving the organization
asagainst the total number of employees on the pay roll per year. It is measured in terms
ofpercentageasfollows:

INDUCTION(ORIENTATION)
The main idea of this function is to share the information about the facts of the company with
thenew employee so that they feel proud of their association with the company. At the time
ofgetting inducted into the organization, the personnel manager provides orientation to the
newemployees about the profile of the organization, its business, its departments, and their job.
Thisprocess is also called orientation or indoctrination because the new recruits are taught a
particularbelieforattitudewiththeaim thattheywould onlyacceptthat beliefor attitudeexclusively.
PLACEMENT
What is Placement?:- After training, the employee is placed in his/her position under the
chargeofamanager.Placementisaprocessofassigningaspecificjobtoeachoftheselectedcandidates. It
involves assigning a specific rank and responsibility to an individual. It
impliesmatchingtherequirements of ajob with the qualifications ofthecandidate.
The personnel manager is to administer promotion/demotion or transfer among the workforce asper
theneeds of theorganization.

LEADERSHIP
Leadership is a process of influencing, encouraging, motivating and helping an individual or agroup

towards organizational goals. Effective leadership is necessary for inspiring the people towork for
the accomplishment of objectives. It provides a cohesive force which holds the groupintact and
develops a spirit of cooperation. Chester Bernard viewed leadership as the quality ofbehavior of
individuals whereby they guide people and their activities. A leader interprets theobjectives of the
people working under him and guides them towards achievement of
thoseobjectives.Healsocreatesandsustainsenthusiasmamongthemforsuperiorperformance.Leadership
is agroupphenomenon which meansaninteraction between twoormorepeople.
InthewordsofLouisA.Allen,―Aleaderisonewhoguidesanddirectsotherpeople.Hegives the
effortsofhisfollowersadirection andpurposebyinfluencingtheirbehavior‖.
John C.Maxwelldefines ― a leader is one who knows the way, goes the way, and shows theway‖.
Leadershipistheprocessofinfluencingthesubordinatessothattheycooperateenthusiasticallyintheachiev
ementofgroupgoals.Inotherwords,leadershipistheprocessby whichanexecutiveimaginatively
directs,guides,andinfluencestheworkofothersinchoosing andattaining specified goals by mediating
between the individuals and the organization in such amannerthat both will obtain maximum
satisfaction.
CharacteristicsofLeadership
An analysis of the above definitions reveals that leadership as a managerial process has
thefollowingcharacteristics:
1. Leadership is a process of influence: Leadership is a process whose important ingredient isthe

influenceexercisedby theleader onthegroupmembers. A personissaidtohaveaninfluence over others
when they are willing to carry out his wishes and accept his
advice,guidanceanddirection.Successfulleadersareabletoinfluencethebehavior,attitudesandbeliefsoft
heirfollowers.

2. Leadership is related to a situation: When we talk to leadership, it is always related to

aparticular situation at a given point of time and under a specific set of circumstances. That
meansleadershipstyles will bedifferentunder differentcircumstances.
3. Leadership is the function of stimulation: Leadership is the function of motivating people

tostrivewillinglytoattain organizational objectives.
LEADERSHIPSTYLES
Leaders can be differentiated into good or bad based on the styles they adopt or how they chooseto
influence their followers. A leader is not only to plan, organize, lead and control but alsoconsider
human element in the followers. A good leader has to adopt such a style of working thattakes care
of people around him. There are alsosome leaders who do not care for people andwho care more for
the task completion. Based on use of authority the leadership styles can beclassifiedas follows:
1. Autocratic or Authoritarian Leadership Style: Under the autocratic leadership style,

alldecision-making powers are centralized in the leader, as with dictator leaders. They do
notentertain any suggestions or initiatives from subordinates and almost top-down approach
isseen.
 Leadersaremoredogmaticandpositive.
 Theydon‘tallowanyparticipation.
 Theyareauthoritarianintheirapproach.
 Theyareconcernedwiththetaskand tellfollowers whatto doand howtodoit.
 High degreeof dependencyon theleader.
 Thereis onewaycommunication.
 Maybevaluableinsometypesofbusinesswheredecisionsneedtobemadequicklyanddecisivel
y.
Advantages Disadvantages
1.Peopleintheorganizationdislikeitespecially
1.It provides strongmotivationand
whenitisstrictandthe
rewardtomanager.
motivationalstyleisnegative.
2. Employeeslackmotivationfrustration,
2.Itpermitsveryquickdecisions. lowmoraleandconflictdevelopsintheorgani
zation.
3.Lesscompetentsubordinatesalsohavescope 3.Thereismoredependenceandlessindividualit
to workin theorganization. yin theorganization.

2. Democratic or Participative Leadership Style: It is also called as democratic, consultativeor

idiographic leadership style. In this style the manager decentralizes his decision-makingprocess.
Instead of taking unilateral decision he emphasizes consultation and participation ofhis
subordinates. He can win the cooperation of his group and can motivate them
effectivelyandpositively.
 Leadersconsultsubordinatesandinvolvethemindecisionmaking.
 Theyencouragediscussionwithgroup.
 Theybelieveintwo-waycommunication.
 Theylisten to followers
 Followersareinvolved intheprocess ofplanning andexecutionofthework.
Advantages Disadvantages
1. Complex nature of organization requires
1.Employeesarehighlymotivated. asthroughunderstandingofitsproblemswhic
hlower-levelemployeesmaynotbe
ableto do.
2.Theproductivityofemployeesisveryhigh. 2.Somepeopleintheorganizationwantminimu
minteraction with their
3. 3.Someleadersmayusethisstyleasawayof
Subordinatessharetheresponsibilitywit avoidingresponsibility.
h thesuperiorand tryto
3. Free-rein Leadership: A free-rein leader does not lead, but leaves the group entirely to itselfas
shown in the following figure. In this style, manager once determines policy,
programmes,andlimitationsfor actionandtheentire
processislefttosubordinatesgroupmembersperform everything and the manager usually
maintains contacts with outside persons to bringtheinformation and materials which
thegroupneeds.
Thefollowingfigureshowsthespectrumofawidevarietyofleadershipstylesmovingfroma very
authoritarian style at one end to a very democratic style at the other end, as
suggestedbyTannenbaum andwarren H.schmidt.
 Alsocalled Laissez-Fairleadershipstyle.
 Theseleadersexerciselittleauthorityandgivemaximumfreedomtosubordinateswhilemaking
decisions.
 Itisbottom-upapproach.
 Theygivehighfreedomofindependenceto thesubordinatesin their operations.
 Suggestionsfrom thefollowersareencouragedandrewarded.

 Here,the roleoftheleaderis toaidthe operationsof thefollowers.

THEORIESOFLEADERSHIP
TraitLeadership
According tothistheory, people areeither bornor are made withcertainqualitiesthat makethem excel
in leadership roles. Traits such as vision, confidence, resilience, agility, hard
work,physicalandmentalendurance,empathy,creativity,intelligence,accountability,senseofresponsibil
ity, values, flexibility and adjustment, extraversion, conscientiousness, openness toexperience, self-
efficacy (confidence to excel) etc, determine who is a leader. Since
personalitytraitmeasurementwasnotreliableacrossstudies,therewasalwayssearchforbetterandmeasure
ableapproachtoleadership.Thisgaverisetobehavioral theoryof leadership.
BeviouralLeadership
The study of the actions, or behaviors, that define a leader is known as behavioral
leadership.FirstdevelopedbyRobertBlakeandJaneMoutonin1964,thistheoreticalapproachtounderstan
ding leaders creates categories of styles, which are aligned with the actions the leadermaytake, or
themethodstheyuse toreach theirgoals.
In this approach, the emphasis is on the actual behaviour and action of the leadersand not ontheir
traits or characteristics. In other words, this approach emphasises that strong leadership istheresult
of effectiverolebehaviour.
This approach states that the leader uses three skills to lead his followers. These skills
are:technical(referstoaperson'sknowledgeoftheprocessoftechnique),human(referstoabilityto

interact with people and conceptual (refers to manager's ideas which enable a manager to set
upmodelsand design plans).
This approach assumes that a particular behaviour of a manager will make him a good leaderwhile
its opposite would discard him as a leader. Determining goals, motivating employees forachieving
the goals, effective communication ability to interact effectively, building team spirit,etc.arethe
functional behaviour ofasuccessful leader.
This theory emphasises the point that the favourablebehaviour of a leader provides
greatersatisfaction to the followers and they recognise him as their leader. However, one limitations
ofthis approach is that a particular behaviour and action of a leader may be relevant and effective
ata particular point of time while at another, it may be irrelevant and ineffective. Thus, in
thisapproach,the'time'factorwhich is avital elementhas notbeen considered.
Severalattemptshavebeenmadetoidentify thedimensionsofleaderbehavior.Themostsystematic and

comprehensive studies in this direction were conducted in USA at Ohio StateUniversityand
UniversityofMichigan during1945-47.
OhioStateStudies:In1945theBureauofBusinessResearchatOhioStateUniversityinitiateda series of
studies on leadership. The main objective of the studies was to identify the majordimensions of
leadership and to investigate the effect of leader‘s behavior on employee behaviorandsatisfaction.
Michigan Studies: These empirical studies were conducted slightly after WORLD WAR II bythe
institute of Social Research at the university of Michigan.The purpose of these studies wasto
identify styles of leadership behavior that results in higher performance and satisfaction of agroup.
SituationalLeadership
According to this theory, leadership is affected by a situation from which a leader emerges and
inwhich he works. In other words, the situation — the group, the problem and its environment —
willaffectthetypeofleadership.Animportantaspectofthistheoryistheinteractionbetween

the group and its leader and the people tend to follow the person who is capable of fulfilling
theirdesires.
Theleaderrecognizeshisfollowers'desiresandfollowssuchmethods(dependingonthesituation) which
satisfy them. The main trust of the situational theory is that the leadership stylemay be effective
under one situation and ineffective under the other. In other words, situationaltheory emphasizes
that there is no one best style of leadership universally applicable to allsituations and that the leader
has to change his style of leadership from situation to situation. Ifthe leader adopts the same style
under all situations, he may not be successful. For example,Winston Churchill was the most
effective and successful Prime Minister of Britain during theperiodoftheSecondWorld War,but
hewas a flop afterwardswhen thesituation changed.
Though this theory states leadership ability of an individual in a given situation and measures
hisleadershippotentialities,itissilentonthe pointwhether thisindividualwillfitinanothersituation.
LEADERSHIPSKILLS
1. Communication: As a leader, you need to be able to clearly and succinctly explain to

youremployees everything from organizational goals to specific tasks. Leaders must master all
formsof communication, including one-on-one, departmental, and full-staff conversations, as well
ascommunicationvia thephone, email,and social media.
2. Motivation: Leaders need to inspire their workers to go the extra mile for their organization;just
paying a fair salary to employees is typically not enough inspiration (although it is importanttoo).
There are a number of ways to motivate your workers: you may build employee self-esteemthrough
recognition and rewards, or by giving employees new responsibilities to increase theirinvestmentin
the company.
3. Delegating: Leaders who try to take on too many tasks by themselves will struggle to
getanythingdone.Theseleadersoftenfearthatdelegatingtasksisasignofweakness,wheninfactitisasignof
astrongleader.Therefore,youneedtoidentify theskillsofeachofyouremployees, and assign duties to
each employee based on his or her skill set. By delegating taskstostaffmembers, hecanfocus on
other importanttasks.

4. Positivity: A positive attitude can go a long way in an office. You should be able to laugh
atyourself when something doesn't go quite as planned; this helps create a happy and healthy
workenvironment, even during busy, stressful periods. Simple acts like asking employees about
theirvacation plans will develop a positive atmosphere in the office, and raise morale among
staffmembers. If employees feel that they work in a positive environment, they will be more likely
towantto beat work,andwill thereforebemore willingto putin thelonghours when needed.
5. Trustworthiness: Employees need to be able to feel comfortable coming to their manager

orleader with questions and concerns. It is important for you to demonstrate your integrity —
employees will only trust leaders they respect. By being open and honest, you will encourage
thesamesort of honestyinyour employees.
6. Creativity: As a leader, you have to make a number of decisions that do not have a
clearanswer;you thereforeneed to be able tothink outside ofthe box.
Learning to try nontraditional solutions, or approaching problems in nontraditional ways, willhelp

you to solve an otherwise unsolvable problem. Most employees will also be impressed
andinspiredbyaleaderwhodoesn'talwayschoosethe safe,conventional path.
7. Feedback: Leaders should constantly look for opportunities to deliver useful information
toteammembersabouttheirperformance.However,thereisafinelinebetweenofferingemployees advice
and assistance, and micromanaging. By teaching employees how to improvetheir work and make
their own decisions, you will feel more confident delegating tasks to yourstaff.
8. Responsibility: A leader is responsible for both the successes and failures of his or her
team.Therefore, you need to be willing to accept blame when something does not go correctly. If
youremployees see their leader pointing fingers and blaming others, they will lose respect for
you.Acceptmistakesand failures, andthen deviseclear solutionsforimprovement.
9. Commitment: It is important for leaders to follow through with what they agree to do.
Youshould be willing to put in the extra hours to complete an assignment; employees will see
thiscommitmentandfollowyourexample.Similarly,whenyoupromiseyourstaffareward,suchas

an office party, you should always follow through. A leader cannot expect employees to
committotheir job and theirtasks if heor shecannot do thesame.
10. Flexibility: Mishaps and last-minute changes always occur at work. Leaders need to beflexible,
accepting whatever changes come their way. Employees will appreciate your ability toaccept
changes in strideand creativelyproblem-solve.
LEADERASAMENTORANDCOACH
Mentoring is most often defined as a professional relationship in which an experienced person(the

mentor) assists another (the mentee) in developing specific skills and knowledge that
willenhancethe less-experienced person‘sprofessional and personal growth.
Coaching is a form of development in which a person called a coach supports a learner inachieving
a specific personalor professionalgoalby providing training andguidance.Thelearneris sometimes
called acoachee.
In today‘s fast-changing world a command and control leadership style willnot sustain theadaptable,
fast-developing and creative workforce needed for success. Instead, the leader whomentors and
coaches, both on-the-job and formally, empowers, develops and supports others tosucceed.
Everyone deserves a great leader. And great leaders are great mentors and coaches.Without great
leader (mentor & coaches), employee performance and therefore organizationalperformance
fails.It‘s true on any scale, from individual employees, to high-performance teams,to business units
or functions, even entire organizations. All rely on mentoring and coaching tooptimize
performance. Leaders have a vastly influential role to play in optimizing employees‘performance.
To a very large extent, leaders‘ mentoring and coaching skills can help employees‘performance
flourish or erode.
Aleader‘s role asamentorand acoach isas below:
1. Mentorhelpsprotégéthroughtutoring,coaching,guidance,emotionalsupport.
2. Coachinghelpsimproveperformance.
3. Manypeoplecan playroleofmentor.

4. Mentorcan beinformal relationshipor withmentor assignedbythecompany.

5. Shadowing(following around)canbe good formentoring.
6. AMentorwillopenlysharepersonalexperiencesthatcontributedtotheirgrowthanddevelopment.
7. Investthetime tolisten to theplansofthe Mentee.
8. Developa planto worktogether duringaset periodof time.
9. MentoroftenassumestheroleofAdvocatefortheMenteeasMentoringcanhelpimprovecareer
development.
10. Coachinghelpsemployeesmakethemostoftheirpotentialandperformancecapabilitiesbydevelop
ingskills competence
LEADERSHIPDURINGADVERSITY ANDCRISIS
An important role of the leader is to help the group deal with adversity and crisis. Adversity
andcrises may take such forms as a downturn in business, a sudden surge in workload that
workersperceive as overwhelming, hurricanes, fire damage, a massive product recall, and
workplaceviolence.
The accompanying management in action gives an example of leading during crisis created by
anatural disaster. Almost all the principles and techniques of leadership would be helpful
duringdifficult times, but here I am pinpointing ten behaviors and actions that are particularly
relevantforaleaderdealingwith adversityand crisis.
1. Make tough decisions quickly: the best accepted principle of crisis leaderships that theleaders
should take decisive actions to remedy the situation. Ran Sargent became CEO ofoffice supplies
retailer Staples one week before the September 11, 2001, terrorist attacks
andinthemidstofarecession.
2. Serve as a model by being resilient: Effective managerial leaders are resilient. They
bounceback quickly from setbacks such as budget cuts, demotions, and terminations.
Leadershipresiliency servesasa positive model for employees atall levels when the
organizationconfronts difficult times. During such times, effective leaders sprinkle their speech
withclichéssuchas―Toughtimesdon‘tlast,buttoughpeopledo‖or―whentimesgettough,the

toughgetgoing‖.Deliveredwithsincerity,suchmessagesareinspirationaltomanyemployeesand
mayhelpstabilizemorale.
3. Present a plan for dealing with adversity or crisis: a key part of managing a crisis well isto
present a plan for dealing with the crisis while at the same time behaving in a calm
andreassuringmanner.
4. Appearconfidentandtrustworthy:Groupmembersmusttrustthattheleaderorleaderscan deal with

the crisis. Trust can be attained by communicating openly, honestly, and oftenabout the crisis.
In dealing with a crisis, it is helpful for the leader to project confident bodylanguage,suchas
appearingrelaxed whiledeliveringthe crisis plan.
5. Focus on the future: Part of being visionary is focusing on the future when the present isfilled
with difficulty. The leader of a software company might tell the group that
technologyinvestment has dipped for the present but that companies will soon recognize that
they cannotcompete well in the long run if they don‘t upgrade their information technology
soon. A boldmoveto focus on thefutureis to get into thescavenger mode.
6. Communicatewidelyabouttheproblem:whentoughtimeshit,itpaystoincreasecommunication
about the problems facing the company or unit and discuss what might bedone to improve the
situation. Communicating with workers throughout the organizationgives them an opportunity
to provide leadership. In one company, a technician suggestedfocusing more on servicing
existing equipment than on attempting to sell news equipmentduring the recession.
Communicating with customers and their customers can bring
forthusefulinformationabouthowlongthetoughtimeswillremain.Thebusinesscanbereconfiguredto
meet thenewreality, such asfindingtheleast painful waystocut costs.
7. Change to meet changing circumstances: A bold leadership move is to change the thrust
ofacompany‘sactivitiesto adapt to changingcircumstances.
8. Stick with constructive core values: leaders who keep their company or division focused
oncore values are likely to endure difficult times. Neglecting core values to help
overcomeadversity can create permanent damage. For example, A well known underwear

companydecidedtocopewithlowersalesvolumebycuttingcostsonthemanufacturingofmen‘s
The lower cost briefs looked fine but they tore apart at the waistband after severalwashings. Word
spreadquickly about the defective briefs, and company lost accountablewith several major retail chains.
The core value compromised here was offering only highqualitygoods to thepublic.
9. Divide major problem into smaller chunks: Giver workers bits of the major problem towork
on so they feel less overwhelmed by the adversity facing them and the company.
Forexample,ifthecompanyishurtingforcash,onegroupofemployeesmightsearchforitemsin the
office or factory that could be sold on an auction website. Another group of workersmight
search for ways to reduce shipping costs by 10%. Other groups would be
assigneddifferentadversity-fightingtasks.
10. Lead with compassion: crises can take a heavy emotional toll on workers.
Compassionateleadership encompasses two related sets of actions. The first is to create an
environment inwhich affected workers can freely discuss how they feel, such as group meeting
to talk aboutthe adversity, crisis, or disaster. The second is to create an environment in which
the workerswho experience or witness pain can find a method to alleviate their own suffering or
that ofothers.
TEAMLEADERSHIP
A team is a small number of people with complementary skills who are committed to a
commonpurpose,performancegoals, and approach for whichtheyaremutuallyaccountable.
Leadership is a process whereby an individual influences a group of individuals to achieve

acommongoal.
A teamleader issomeonewho providesguidance,instruction,directionand leadership toagroup of

individuals (the team) for the purpose of achieving a key result or group of alignedresults.The
teamleader reportstoa manager(overseeing severalteams).The teamleadermonitors the quantitative
and qualitative result that is to be achieved. The leader often workswithinthe team,asa member,
carrying outthe same rolesbutwiththe additional'leader'responsibilities -asopposedtohigherlevel
management whooftenhaveaseparate

jobrolealtogether.Inorderforateamtofunctionsuccessfully,theteamleadermustalso motivate
the team to "use their knowledge and skills to achieve the shared goals.". When a team
leadermotivates a team, group members can function in a goal oriented manner. [1]A "team leader"
isalsosomeone whohas thecapability todriveperformancewithinagroupofpeople.Teamleaders utilize
their expertise, their peers, influence, and/or creativeness to formulate an effectiveteam.
SkillsforTeamLeader
1. Ability to lead: The leaders should be trained on understanding salient issues related
toorganizational vision, how to share it with this team members, inspire them to work in
thatdirection and there by achieve the same. They should be also be trained on how to
motivatetheir workforce so as to achieve the given targets. Since employees contribute better if
theyare aware of their job responsibilities, instilling these insights among the employees is
theprimaryresponsibilityofthe team leader.
2. Effective communication: Leaders need to be very strong and effective at

communication.Theyneedtolearnhowtoputtheirpointsacross,sharethecompanyvisiontotheiremplo
yees, ensure that the daily targets are completed, see that office related issues are
dulyfocused,conduct meetings as per schedule.
3. Createandfosternetworkingandinterpersonalrelationships:Today,thenetworkisoften viewed
as real strength of a team leader. Building and maintaining good relationshipswith employees
and other stakeholders including clients,investing time, emotion and efforttomaintain
everlastingrelationships is important.
4. Industryexpertise:Theteamleaderstrainedtobeavoiceofauthoritythateverystakeholder expects.
This expertise drives all key decisions. The team leaders should be goodat evaluating thegiven
alternativesand analyze the feasibility andwhich alternative is abettersolution.
5. Understanding the team needs: The team leader should be clear about the vital skills whichthe
team members need to perform at their best. Empower them to depute for training onthese
skills. If necessary, the leaders should undergo training and certifications as requiredandalso
encourageeverymember ofthe team to learn ona continuingbasis.

6. Trustworthiness:Theteamleadersshouldbetrainedtodisplayintegrity,honestyandfairness. This is
the only way of gaining the trust and respect from every stakeholder of theorganization. In turn,
every member of the team should be very serious and display highdegreeof commitment.
7. Adherencetoschedules:Theteamleadersneedtoadheretotimeschedulesandthisisoneof the
parameters to judge the efficiency of the team leaders. The team leaders should knowtheir how
and where they are spending time, and to eliminate wasting time. They also need
toguidetheirteammemberswheretoinvestthetimeandresourcesandcontributetoprofitability.
8. Commitment:Teamleaderswithhighsenseofcommitmenttobusinessphilosophy,organizational
vision can inspire their team members to perform better and demonstrate
highdegreeofcommitmenttocustomerservice.Empathyandpatiencearetwomilestonestoshow
whether the team members and team leaders are committed or not. Successful teamleaders are
those who often interact with their stakeholders, listen to customers, note
theircomplaintsandsuggestionsandcontributetoinnovationandhigherlevelsofcustomersatisfaction.
9. Confidence and trust: Confidence begets trust and helps team leaders present themselvesand
their company well. The team leaders should be trained to be decisive and confidence
onthetasktheytakeupparticularlywhenthereishighdegreeofuncertainty.Ifnot,experimentation at
everystagemaypull down theconfidencelevels amongthe team leaders.
10. Problem solving: The team leader must know how to solve problems for their team
andorganization. The team leaders should focus more of their time to solve the problems
andinspire their members to involve themselves in handling issues of higher complexity
andquality.

POWER
Power
There is no universally accepted meaning of power. Power has more diverse meanings than
anyother concept in organizational behavior. In general, it refers to a capacity that one has
toinfluence the behavior of another so that the other person does something which would not
bedoneotherwise.Powerissocialtraitthatimpactseveryoneinanorganizationorsociety.Poweris a special
kind of ability to make others to do what one wants them to do. Power enables one
todosomethingwhich oneotherwisecannot do.
MaxWeber,thefamousSociologist,definespoweras―theprobabilitythatoneactorwithina social
relationshipwill beinapositiontocarryouthisownwilldespiteresistance‖.
SourcesofPowers
1. Legitimate Power :Legitimate power comes from position in an organizational

hierarchy.Legitimatepowerempowersthemanagerstorewardorpunish.Themanagersdirectemploye
es as to what tasks they should perform, whom to work with, what resources can bemade use of,
etc. like managers, the employees also have a legitimate power over their bossand co-workers
through legal and administrative rights. The employee may say no to hs bossifheperceives that
the workgivenis outsideof theofficialresponsibilities.
2. Reward Power :Senior managers have power to dispense organizational rewards such aspay,
promotion, time off, vacation, schedules, work assignments or benefits to those
whoachievetargets andcomplywith organizational rules andregulations.
3. Coercive Power :Thiscomes from ability to punish others who fail toreach targets, whofail to
comply with organizational rules and regulations. The managers at higher levels havepower to
punish those who violate organizational norms. At times, this punishment may evenextendto
dismissal. Thepoorperformerswill beweeded out.
4. Referent Power :Role model possesses this type of power. It is based on the charishma,virtues,
values, ethics and interpersonal skills of the power holder. They can influence thepeople.
Example: Soldiers fight in wars to defend the honour of the country; cinema
stars,politicians,etc.

5. Expert Power :Because of the expertise one possesses, one can exercise expert power. Onecan
suggest solutions to the given problems. This type of power comes from knowledge,skills,
experience and information one possesses and accumulate over a long period of time.For
example adoctor has expert power on his patients.
HANDLINGEMPLOYEE COMPLAINTS
Whenacomplaintis made,amanagershouldfollow thesefive steps:
1. Asktheemployeetodetailthecomplaint:
Listentothecomplaintcarefullyandobjectively.Getasmuchspecificdetailaspossible.Forexample,ift
heemployeeiscomplaining about sexual harassment, you would need to know exactly what
happened,
whowasinvolved,thedateandtimeoftheoccurrence,whereitoccurred,underwhatcircumstances, and
if were there any witnesses. If the employee is very vague, the problemmay be different from
what is initially stated. Active listening and probing will often get atthereal concerns.
2. Get agreement on the substance of the complaint: An employee‘s complaints may

containboth facts and opinions. Try to separate the facts (what actually occurred) from opinions
(theperson‘s belief about what happened). For example, John may complain that he is
unfairlybeingassignedadisagreeabletask;that‘shisopinion.Todeterminethefacts,youwillhaveto
review the work assignments to find out how many times John was given that assignmentand
how many times others were. Make as clear and simple a statement of the problem
aspossibleand havethe employeeagreethatyou understand hisconcern.
3. Ask the employee for suggested solutions: When it is clear exactly what the problem reallyis,
ask the employee how he or she thinks the problem could be resolved. The remedysuggested
may not be realistic or appropriate, but you need to be clear about what theemployeewants.
4. Agree on a solution, or set up a schedule for further investigation: Sometimes a solutionwill

be obvious. In other cases, you will need to check on the facts and on your companypolicies.
You may need to check on company records, schedules, union contracts,
personnelrulesandpolicies,previous decisions,and conductfurtherfact-finding conversations.

5. Schedule a follow-up meeting:Agree to meet after a suitable interval to check on

theemployee‘s satisfaction with the solution. Once an agreement has been made, follow
throughon corrective action promptly and see that the employee carries out his or her part of
thebargain, too. If you delay in taking action, you may lose all the goodwill you've built
insettlingthe complaint orgrievance.
HANDLINGCUSTOMERCOMPLAINTS
Complaints happen every day. When a customer complains, it is usually for a good reason
orgenuine concern. They usually have made a purchase that did not meet their expectation—
aproduct, service, or maybe a combination of the two. In the customer service industry, we
cannotavoid complaints. We must take care of the customer by listening to the complaint, and
resolvingit, to ensureahappycustomer.
Herearefewstrategiesthatwillhelpyouhandleacustomercomplaintinasmoothandprofessionalmanner:
1. Listen to the customer: The customer complaints must be properly listened in order
tounderstand what makes the customer upset. The policies of the company with which
thecustomer is not comfortable should be analyzed. Listening should be done to understand
theproblembeforeexploring how to sort out theproblem.
2. Understand from the customer perspective: See from the customer point of view and
lookintothe problem with empathy.
3. Involve the senior manager:Attimes,the complaintcouldbe thatthe frontline salesexecutive has

not responded correctly. In such a case, the senior managers need to interfereandexaminehow
the complaint can besorted out.
4. Never fight with customer: Fighting with the customer may worsen the issue. So, discusswith
the customer in a calm and friendly manner and conduct an open discussion regardingthe issues
complained of an d how they will be responded to. Defendyour policies calmlyandseethat
neverallow theconversation erodeinto an argument.

5. Reach a solution: Some suggestions can be offered to solve the problem such as refund
orpartial refund, discount coupons or offering an amicable solution so that the customer is
fullyhappy with the outcome. Most of the complaining customers will be loyal customers
andhencedeal withthe problem andoffer them some compensation fortheir trouble.
6. Improve the service quality: Ensure that the complaints become a source of learning
toimprove the service quality. Draft the terms and conditions more professionally and train
theemployees to comply with all these provisions. Keep track of customer complaints and
howthese are resolved over a period of time. If the complaints are less, it is an indication that
thequalityofgoods and services is satisfactory.
7. Thankthecustomerforcomplaining:Customerswithcomplaintsarealwaysseenastroublemakersa
ndinrealitythisisnotso.Infact,organizationsshouldthanksuchcustomersfor givingyou
valuableinsightintohowtobetterserveallcustomersinthefuture.
8. Institute complaint handling teams: Keep complaint handling teams in place, discuss
thedetails of complaints in team meetings and make changes or adjustments in company
policiesor customer service where needed. Institute a formal mechanism such as complaint
handlingteamssothatemployeeslearnfromthe experienceandfurtherimprovethe servicequality.
MOTIVATION
The word ‗motivation‘ has been derived from the word ‗motive‘ which means any idea, need
oremotion that prompts a man into action. Whatever may be the behavior of a man, there is
somestimulus behind it. Stimulus is dependent upon the motive of the person concerned. Motive
canbe known by studying his needs and desires. Generally, different motives operate at
differenttimesamongdifferentpeopleandinfluencetheirbehavior.Themanagementshouldtry
tounderstandthe motives of individuals whichcausedifferent types ofbehavior.
Motivation is an effective instrument in the hands of a manager for inspiring the workforce
andcreating a confidence in doing things effectively. By motivating the workforce,
managementcreates ‘will to work’ which is necessary for the achievement of organizational goals.
Motivationinvolves getting the members of the group to perform effectively, to give their loyalty to

thegroupand to carryout properlythepurpose of theorganization.
Thefollowingresults maybeexpected if the employees areproperlymotivated:
1) Theemployeeswillcooperatevoluntarilywiththemanagementandwillcontributetheirmaximumtow
ards thegoals of the enterprise.
2) Theywillimprovetheskillsandknowledgesothattheyareabletocontributetothegrowthoftheorganisat
ion. Thiswillalso result inincreasedproductivity.
3) Therates oflaborturnover andabsenteeism amongthe workerswillbelow.
4) Therewillbegoodhumanrelationsintheorganisationasfrictionamongtheworkersandthemanagemen
twill decrease.
5) Thenumberof complaints andgrievanceswillcome down.Accidentrate will alsobelow.
6) Contributesfortheimprovements in qualityof products.
Definitions
McFarland hasdefined motivation as, ―Motivation refers to the way in which urges,drives,
aspirations,strivingsor needswilldirect,controlorexplainthebehaviourofhumanbeings‖.
Dubinhasdefinedmotivationas―thecomplexofforcesstartingandkeepingapersonatworkin an
organisation. Motivation is something that moves the person to action, and continues him inthe
courseofaction alreadyinitiated‖.
TYPESOFMOTIVATION
1. Achievement Motivation: This motivation is driven by a desire to attain certain goals.

Anindividual with achievement motivation wishes to achieve objectives and advance up on
theladderofsuccess.Here,accomplishmentisimportantforitsownsakeandnotfortherewardsthataccompa
nyit.Itissimilarto‗Kaizen‘approachofJapaneseManagement.Thismotivationismoreimportant
forprofessionals.
2. AffiliationMotivation: It is a drive to relate to people on a social basis. Persons withaffiliation

motivation perform work better when they are appreciated and complimented for theirfavorable
attitudes and co-operation. This motivation is of greater use where money cannot beusedto
motivate, especiallyminimum-wageemployees andcontingent professionals.

3. Competence Motivation: It is the drive to be good at something, allowing the individual

toperformhighqualitywork.Competencemotivatedpeopleseekjobmastery,takeprideindeveloping and
using their problem-solving skills and strive to be creative when confronted withobstacles. They
learn from their experience. Specialists, like heart surgeons would feel motivatediftheyget chances
to operate upon uniquecases.
4. Power Motivation: Some people are motivated by power. It is the drive to influence peopleand
change situations. Power motivated people create an impact on their organization and arewillingto
takerisk to doso.Oxygen maynot keepthemalive, but power can.
5. AttitudeMotivation:Attitude motivationis how people thinkandfeel.Itistheir self-

confidence,theirbeliefinthemselves,andtheirattitudetolife.Itishowtheyfeelaboutthefuture and how
they react to the past. Good words and appreciation may motivate positiveattitudepeople but these
maynot motivate negativeattitudepeople.
6. IncentiveMotivation:Itiswhereapersonorateamreapsarewardfromanactivity.Itis
―youdothisandyougetthat‖,attitude.Itisthetypeofrewardsandprizesthatdrivepeopleto work a little
harder. Most of the unorganized job workers get motivated when they are
offeredmoremoney.Ex:Afathersystohisson,―Ifyougetfirstrank,Iwillbuyabikeforyou‖.A manager says
to his workmen, ―If you achieve your target, you would be rewarded with an incentive‖.
7. Fear Motivation: This motivation is driven by fear. Fear motivation coercions a person to
actagainst will. It is instantaneous and gets the job done quickly. It is helpful in the short
run.Managers following Theory x come into this category. In Indian army, this kind of motivation
isverypopular.

RELATIONSHIPBETWEENMOTIVATIONANDPERFORMANCE
Motivated employees are the need of any organization for our changing work place.
Motivatedemployees are more productive so they always help organization to survive in every field.
For aeffectivemanagersitmusttounderstandwhattypeofmotivatesemployeeswithinthecontextthe
perform in role. Motivating employees is most complex for example research suggested thatas
employees‘ income increases money becomes less of a motivate also as employees get
olderexcitingwork becomemoreof amotivator.
Mostoftheorganizationbelievestomotivatetheiremployeesbecauseitinfluencestheemployee‘sperforma
ncebyfollowingway:-
1. HigherProductivityLevels
2. LowerLabourTurnover
3. LowerAbsenteeism
4. ImproveQualitywithleeswastage
5. GreaterWillingnesstoacceptratherthanresist change
6. GreaterWillingnesstocontributeideaandtake onresponsibility
7. EmployeesLoyalty
It is seen that a employees performance has an impact on the organization's objective. And it
isthusimperativethateveryemployee‘sperformanceshouldbemanaged.Thisprocessofperformanceman
agementincludesgroupassessmentsandpeerreviews.Inrecenttimeperformance management systems
have become more essential because managers are underconstant pressure to get better progress and
performance of their organization by motivating theiremployee.
Despite the motivation, it is necessary to briefly highlight the barriers that might affect
theperformanceofemployee.Thesebarriersmaybeimproperestimationofcompetencies,inappropriate
performance goals, or lack of feedback about performance. There are some factorswhichaffect
overall employees‘performance.

1. InternalFactors:-
Thosefactorswhicharecontrolledandinfluencedbyanyorganizationarecalledinternal factors likejob
description and selection.
2. ExternalFactors:-Inexternalfactors,anorganizationhaslittlecontrolornocontrolsuchasdemandforjob
orgradingsystems.
RELATIONSHIPBETWEENMOTIVATIONANDENGAGEMENT
In general, motivation describes the force that compels people to act, or decide to take a
specificcourseofaction.Motivationisaninternalstatethatinstigates,describesandmaintainsbehaviour.H
owever,accordingtoaUniversityofRochesterstudypublishedin AmericanPsychologist, not all
motivation is the same. For example, when employees are intrinsicallymotivated, they‘re passionate
about their work because they either really enjoy doing it , or theyenjoythe prideand satisfaction
that comes fromajob well done.
Ontheotherhand,whenemployeesare extrinsically motivated(Intrinsicmotivationisthemotive that

keeps individuals at tasks through its own inherent qualities), they‘re spurred toaction by external
forces, which can be either positive or negative in nature. These employeestypically act in order to
gain certain rewards (like time off or a bonus) or to avoid unpleasantcircumstances(like
anangryboss or beingterminated).
An―engagedemployee‖is one whois fullyabsorbed byand enthusiastic abouttheirworkandso

takespositiveaction to furtherthe organization‘s reputation and interests.
Employee engagement is actually the level of enthusiasm and dedication an employee feelstoward
his or her job. To these engaged employees, it is far more than a pay cheque – it is theeagerness
towards their task that makes them passionate in their work, and this passion is oftenreflectedin
theirindividual outcomes.
An engaged employee cares about their work and about the performance of the company, andthey
want to feel that their efforts could make a difference. It is generally seen as an internal stateof
mind; physically, mentally and emotionally that binds together the work effort,
commitmentandsatisfaction in an employee.

Typically, engaged employees are intrinsically motivated (Extrinsic motivation is created

byexternal factors such as rewards and punishment, etc). They love what they do, strive to
masternew skills and are enthusiastic about applying their talents. And there is a lot to be said for
howanengaged workforcecan boost anycompany‘s bottom line.
Conversely, if your employees are extrinsically motivated, they more than likely need
constantprodding in order to produce. This approach may work for a short time, but it‘s
unsustainable inthe long run. Not every task or project can be rewarded with cash or perks. In
addition, ifemployees‘ sole source of motivation is fear-based – like fear of displeasing their
manager orlosing their jobs – they can burn out quickly. In that case, what‘s left is a group of
disillusioned,disengagedemployeeswho canimpact thebottom line,too, but negatively.
THEORIESOFMOTIVATION
1. EltonMayo’sHumanRelations Theory
Thebehaviouralscientistsdidnotviewtheemployeesmechanicallyinworksituation,buttriedto show that

theemployees not only have economic needs butalso social and
psychologicalneedslikeneedforrecognition,achievement,socialcontact,freedom,andrespect.Humanrel
ationsschool regardsbusinessorganization as a psycho-socialsystem.
Professor George Elton Mayo (1880-1949)and his associates conducted a famous study onhuman
behaviour at the Hawthorne plant of the Western Electric Company from 1924 to 1932andthis
studyformed thefoundation ofthis school ofmanagementthoughts.
HawthorneExperiments:
1. LightingExperiments:Theseexperimentswereperformedtofindouttheeffectofdifferentlevelsofl
ightingonproductivityof
labour.Thebrightnessofthelightwasincreasedanddecreasedtofindouttheeffectontheproductivity
ofthetestgroup.Surprisingly, the productivity increased even when the level of lighting was
decreased. Itwasconcluded that factors otherthan light werealso important.
2. Relay Assembly TestRoom Study: Under this test, two smallgroups of sixfemaletelephone
relay assemblers were selected. Each group was kept in separate rooms.
Fromtimetotime,changesweremadeinworkinghours,restperiods,lunchbreaks,etc.They

were allowed to choose their own rest periods and to give suggestions. Output increased
inboththecontrolrooms.Itwasconcludedthatsocialrelationshipamongworkers,participation in
decision-making, etc. had a greater effect on productivity than workingconditions.
3. Mass Interviewing Program: 21,000 employees were interviewed over a period of
threeyears to find out reasons for increased productivity. It was concluded that productivity
canbeincreasedif workers areallowedto talkfreelyabout mattersthat areimportant tothem.
The basic hypotheses of this study as well as the basic propositions of the Human
RelationApproacharethefollowing:
1. The social and psychological factors are responsible for workers' productivity and
jobsatisfaction.Onlygoodphysicalworkingconditionsarenotenoughtoincreaseproductivity.
2. Theinformalrelationsamongworkersinfluencetheworkers'behaviourandperformancemoret
han theformal relations in theorganisation.
3. Employees will perform better if they are allowed to participate in decision-
makingaffectingtheir interests.
4. Employees will also work more efficiently, when they believe that the management
isinterestedin their welfare.
5. Whenemployeesaretreatedwithrespectanddignity,theirperformancewillimprove.
6. Financialincentivesalonecannotincreasetheperformance.SocialandPsychologicalneedsmus
t also be satisfied in order toincreaseproductivity.
7. Goodcommunicationbetweenthesuperiorsandsubordinatescanimprovetherelationsand the
productivityof thesubordinates.
8. Specialattentionandfreedomtoexpresstheirviewswillimprovetheperformanceoftheworkers.
The human relations approach is concerned with recognition of the importance of

humanelement in organizations. It revealed the importance of social and psychological factors
indetermining worker‘s productivity and satisfaction. It is instrumental in creating a
newimageofmanandtheworkplace.However,thisapproachalsodidnotgowithoutcriticism. It was
criticized that the approach laid heavy emphasis on the human side asagainst the
organizational needs. However, the contribution of this approach lies in the factthatit advises
managersto attach importancetothehuman side ofan organization.
2. NeedsHierarchyTheory

This is the most widely known theory of motivation and was proposed by American
psychologistAbraham Maslow in his 1943 paper "A Theory of Human Motivation" and his
subsequent book"Motivation and Personality‖.Maslow put forward the idea that there existed a
hierarchy ofneeds consisting of five levels in the hierarchy. These needs progressed from lower
order needsthrough to higher level needs. People will try to satisfy their most important needs first.
When aperson succeeds in satisfying an important need, he will then try to satisfy the next
importantneed.Human behavior ismotivatedin order to achievecertainneeds.
A. PhysiologicalNeeds:Physiologicalneedsarethoserequiredtosustainlife,suchas:Air,Wate
r, Food, Sleep,Clothing, Fire,etc.
According to Maslow's theory, if these fundamental needs are not satisfied then one
willsurely be motivated to satisfy them. Higher needs such as social needs and esteem are
notrecognizeduntil one satisfies the needsbasic to existence.
B. Safety Needs: Once physiological needs are satisfied, one's attention turns to safety
andsecurity in order to be free from the threat of physical and emotional harm. Such
needsmightbe fulfilled by:
 Livingina safearea
 Medicalinsurance
 Job security
 Personalsecurity
 Financialreserves
According to the Maslow hierarchy, if a person feels threatened, needs further up

thepyramidwill not receive attention until thatneed has beenresolved.

C. Social Needs: These are also known as affiliation needs. Once a person has met the
lowerlevel physiological and safety needs, higher level needs awaken. The first level of
higherlevel needs are social needs. Social needs are those related to interaction with others
andmayinclude:
 Friendship
 Affection
 Family
 Intimacy
 Belongingness
 Belongingtoa group
 Givingandreceivinglove
D. Esteem Needs: Once a person feels a sense of "belonging", the need to feel importantarises.
Esteem needs may be classified as internal or external. Internal esteem needs arethose
related to self-esteem such as self respect and achievement. External esteem
needsarethosesuchas socialstatus and recognition. Someesteem needs are:
 Self-respect
 Respectfromothers
 Achievement
 Attention
 Recognition
 Reputation
 Independence
 Status
 Dominance
 prestige
E. Self-actualizationNeeds:Self-actualizationisthesummitofMaslow'shierarchy ofneeds. These
needs indicate strong desire to achieve something. Suppose your desire is tobecome an
engineer in Google Company. This desire works as motivator to achieve
yourgoal.Itisthequestofreachingone'sfullpotentialasaperson.Unlikelowerlevelneeds,
thisneedisneverfullysatisfied;asonegrowspsychologicallytherearealwaysnewopportunitiesto

continueto grow.Self-actualizedpeople tendto haveneedssuch as:

 Self-fulfillment
 Peakexperiences
 Reachingfullpotential
 Seekingpersonal growth
3. Two-FactorTheory
Frederick Herzberg was a psychologist interested in the correlation between employee attitudeand
workplace motivation. He wanted to find out what made people feel satisfied and unsatisfiedwhen it
came to the workplace. After spending countless hours interviewing employees aboutwhat made
them feel both good and bad about their jobs, Herzberg developed a theory
ofworkplacemotivationcalledthe two-factortheory.Thetwo-factortheoryisbasedontheassumption that
there are two sets of factors that influence motivation in the workplace by eitherenhancing
employee satisfaction or hindering it. He identified two factors. Such as 1) HygieneFactors2)
Motivators.
1) HygieneFactors(Dissatisfiers):-No,Iamnottalkingaboutthepersonalhygieneofyour co-
workers, though that can certainly be questionable at times. Rather, Herzbergused the term
'hygiene' to describe factors that cause dissatisfaction in the workplace,
areextrinsic(orindependentofthework itself),andarelinked to thingssuchas
 Compensation/Salary–should bereasonable
 Job security
 Organizational/companypolicies–shouldbeflexible
 Workingconditions(breaks,hours,vacation)
 Qualityof leadership
 Relationshipsbetweensupervisorssubordinatesandpeers(no
conflict,nohumiliation)
 Fringebenefits(medical reimbursementetc.)
According to Herzberg,these factors do not motivate employees. However, when theyare

missing or inadequate, hygiene factors can cause serious dissatisfaction. Just
thinkabouthowunhappyyouwouldbeinajobwhereyouwereunderpaid,wereinfearof

losingyourjob,dealtconstantlywithgossip,lackedeffectiveleadership,andweresurrounded by
co-workers whom you despised. Hygiene factors are all about making anemployee feel
comfortable, secure, and happy. When hygiene factors are not fulfilled, itfeels like
something is missing or not quite right, kind of how you would feel if youcouldn'tshower,
brushyourteeth,or washyour handsafter usingthe bathroom.
2) Motivators(Satisfiers):-
Thesearelinkedtoemployeemotivationandarisefromintrinsic,ordependent, conditionsof
thejobitself. Factorsforsatisfactioninclude
 Responsibilityofwork
 Jobsatisfaction
 Recognition
 Achievement
 Opportunitiesforgrowth
 Advancement/Improvement
 AwardsandRewards
Lookatthisscenario.
Imaginethatyouareworkinginanorganizationwhereyouareprovidedpoorworkingconditions like a
computer isnot working properly,no ventilation, no AC, roof is leakingconstantly etc. when the
working conditions are like this, you never seem to be able to catch upon your work because of

these conditions. You may feel dissatisfied with these conditions. Theseconditionswillde-
motivateyoutowardswork.Meanwhile,youareinformedthatyouhavebeen
selected for an award for your best performance which you will be receiving in the annual
daymeeting. However, you might be happy for a short a moment with this award which is a
satisfierbut when you return to your office, these working conditions will demotivate you and you
areunhappy.Accordingto Herzberg,hygienefactors areimportant to employees.
A manager must be sure to provide sufficient hygiene factors while at the same time
buildingsatisfiers or motivators into employee jobs. In essence, hygiene factors are necessary to be
sure asubordinateisnotdissatisfied,andsatisfiersareneededtomotivateanemployeetoworktowards
higher level of performance.
4. TheoryXand TheoryY
Theory X and Theory Y were first explained by McGregor in his book, 'The Human Side
ofEnterprise,'andtheyrefertotwostylesofmanagement–
authoritarian(TheoryX)andparticipative(TheoryY).
Ifyou believe thatyour team members dislike their work andhave little motivation, then,according
to McGregor, you'll likely use an authoritarian style of management. This approach isvery
"hands-on" and usually involves micromanaging people's work to ensure that it gets
doneproperly.McGregorcalled this TheoryX.
Ontheotherhand,ifyoubelievethatyourpeopletakeprideintheirworkandseeitasa challenge , then

you'll more likely adopt a participative management style. Managers who
usethisapproachtrusttheirpeopletotakeownershipoftheirworkanddoiteffectivelybythemselves.Mc
EEE,NRCM
Gregorcalled this TheoryY. Page 146 ARCHANA R KOLLUR
The approach that you take will have a significant impact on your ability to motivate your
teammembers. So, it's important to understand how your perceptions of what motivates them
canshapeyour managementstyle.
DouglasMcGregorclassifiedemployeesintotwotypes.
1. Xtypeofemployees
2. Ytypeofemployees
TheoryX
Theory X (Labeled as Negative Theory) assumes that employees are naturally unmotivated
anddislike working, and this encourages an authoritarian style of management. According to
thisview, management must actively intervene to get things done. This style of management
assumesthatworkers:
 Employees areinherentlylazy.Dislikeworking.
 Avoidresponsibilityandneed tobe directed.
 Havetobe controlled,coerced,forced,andthreatenedtodeliverwhat'sneeded.
 Needtobesupervised ateverystep,with controlsputinplace.
 Needtobeenticedtoproduceresults;otherwisetheyhavenoambitionormotivationtowork.
 preferto beled
 Areself centeredanddoesnotcareaboutorganizationalgoals.
TheoryY
Theory Y (Labeled as Positive Theory) shows a participation style of management that is de-
centralized. It assumes that employees are happy to work, are self-motivated and creative,
andenjoyworkingwith greater responsibility.Itassumes that workers:
 Peoplearewillingto work; work canbeas natural as playandrest
 Takeresponsibilityand aremotivated to fulfillthe goals theyare given.

 Seekandacceptresponsibilityanddonot needmuchdirection.
 arecapable ofself-direction andcreativity
 Arecommittedtothe objectivesoftheorganization
 Considerworkasanaturalpartoflifeandsolveworkproblemsimaginatively.
5. Vroom’sExpectancyTheory
Victor Vroom developed the expectancy theory of motivation. This has been an alternativeapproach
to the above needs theory disapproves the need-based behaviour of individuals. On theother hand, it
suggeststhat individuals are motivated to act in a certain way because theystronglyexpect
thatparticularactionwill leadto a desirable result. Accordingto thistheory,
Motivation=ValencexExpectancy
Where,
Valence is strength of an individual‘s desire for a particular outcome. Valence may vary from -1to
+1. Valence is negative if the individual has no strong preference to the outcome. Valence
ispositive, if the individual has the strong preference to the outcome. Valence is zero, if
theindividual is indifferent to the outcome. The valence ofthe individual must be positive,
ifmotivationwereto takeplace.
Expectancy is the probability that a particular action will lead to a desired result. Expectancyrefers
to the belief that an effort will lead to completion of a task. The value of expectancy variesbetween
0 to 1.If an employee sees no chance that effort will lead to the desired performance,the expectancy
is zero. On the other hand, if the employee is confident that the task will
becompleted,theexpectancyhasavalue of 1.
6. Alderfer’sERGTheory
ClaytonAlderfer proposedanextensionof Maslow‘s theory of hierarchicalneedscalledtheERG theory.

The five typesof needsgiven by Maslow are merged into threegroups of coreneeds whose first
letters are abbreviated to form an acronym ERG. The three types of core needare:

a)ExistenceNeeds:Existenceneedsareconcernedwithbasicmaterialexistencerequirements.Thephysic
alandsafetyneedsofMaslow‘stheoryaregroupedupandconsideredas existence needs. These needs
are most essential that everyhuman beingrequires. Alderfer considers both the fundamental
needs such as food water, shelter and thesafety needs such s safety of assets, personal safety,
job security etc. Are essential needs forexistence.
a) Relation Needs:Relation needs, the second group of need are concerned with
behaviouralneeds such as the desires, relationships, friendships and affiliations etc. The social
and status(ego) needs of Maslow‘s theory are considered as relational needs. People need to
interactwith others if they are to be satisfied. According to Alderfer, these have alignment
withMaslow‘s theory with internal component of social needs and external component
esteemneeds.
b) Growth Needs: Alderfer considers growth needs as an intrinsic desire and are directed
topersonal development. To describe these needs he broke down Maslow‘s need into
differentparts and generated lot of needs. These need include the intrinsic component from
Maslow‘sesteemneedsand the self-actualization needs.
According to Alderfer, as a person grows, the existence, relatedness, and growth for all desiresalso
continue to grow. All these needs should be fulfilled to greater wholeness as a humanbeing.
FINANCIALANDNON-FINANCIALINCENTIVES
Thepersonalmanagerhastoformulaterewardsorincentiveswhichadequately satisfy
theemployees,theserewards can beof two types:
FinancialIncentives
1) Compensation based on performance: When the performance exceeds the given standard,the
employee is said to be better in terms of piece rate, sharing profits, or bonus. Theincentives the
individual employee receives from time to time reflect some performancemeasures such as
individual productivity, team or group productivity or overall organizationprofitforgiven period.

2) Compensation based on competency: Under this method, the pay and rewards are
designedbased on the competency of the employees. Competency is judged based on one‘s
leadershipskills,trouble-shootingstrategies etc.
3) Stock options: Under this method, employees are given shares in the company in which
theywork.Thepotentialgrowthinthemarketpriceoftheshareistheincentivetokeepemployeesworkin
ginthecompany.Thispracticeisperceivedtodevelop,amongtheemployees,a senseof loyaltyto their
organization.
4) Rewards: Rewards are individual incentives intended to reward individual
performance.Theseincludemerit pay,time savingbonus, andcommission.
5) Group bonus: Where the employees tasks are interdependent and thus require
cooperation,groupincentives such asgroupbonus makealot of difference.
Non-FinancialIncentives
1) Consultation:Today,mostofthesuccessfulcompaniesarethosewhichinviteparticipationfromtheir
employees on strategic issues such as working environment, introduction of changes, and so
on.Whenmanagement consults theemployeesfor theiropinions,the employeesfeelmotivated.
2) Team work: Here the work force is organized into small groups or teams who work together. A
linemanager may have one or more such groups and brief them regularly. There is a spirit of
competitionamong the groups. Each group tries to outperform the other. In the process, the
employees feel highlymotivated.
3) Quality circles:Quality circle is abody ofemployeeswho meetfrom timeto
timeundertheguidance of a supervisor to discuss way and means to improve the quality of the
product and servicesofthe organization.
4) Job security: When the employee is assured of the security of his job, he feels safer and this
provideshimadequate incentive to performbetter.
5) Job enrichment: Here, the employees are given grater scope in deciding how the tasks should
beperformed. In other words, they are allowed to assume increased responsibility for planning
and self-evaluation.
6) Job rotation: Doing the same job for year together may create boredomfor the employee.
Toovercome this problem, the employee is given a different job, may be in the same department
or in adifferentone.
7) Flexi-time:Flex-timeisamethodoforganizingtheworkinghoursfortheemployeesinsuchawaysoasto
provide greaterflexibilityin choosingtheir ownworkinghours.
INTRODUCTIONTO CONTROL
Control is any process that guides activity towards some predetermined goals. Thus control canbe
applied in any field such as price control, distribution control, pollution control, etc.
However,control as an element of management process can be defined as the process of analyzing
whetheractions are being taken place as planned and taking corrective actions to make these to
conformto planning. Thus control process tries to find out deviations between planned performance
andactualperformanceandto suggest correctiveactions wherever theseare needed.
Definitions:
Terrydefinescontrolas“Controllingisdeterminingwhatisbeingaccomplished,thatisevaluatingtheperfo
rmanceand,ifnecessary,applyingcorrectedmeasuressothattheperformancetakes placeaccordingto
plan.”
KoontzandO’Donneldefinecontrolas“Controlismeasurementandcorrectionoftheperformance of
activities of subordinates in order to make sure those enterprise objectives andplansdevised to attain
them arebeing accomplished”.
CHARACTERISTICSOFEFFECTIVE CONTROL SYSTEM
1. Accuracy: Effective controls generate accurate data and information. Accurate information
isessential for effective managerial decisions. Inaccurate controls would divert management
effortsand energies on problems that do not exist or have a low priority and would fail to alert
managerstoserious problems that do require attention.
2. Timeliness: There are many problems that require immediate attention. If information aboutsuch
problems does not reach management in a timely manner, then such information maybecome
useless anddamage may occur.Accordingly controls must ensure that informationreachesthe
decision makerswhen theyneed itso that ameaningful responsecanfollow.
3. Flexibility:Thebusinessandeconomicenvironmentishighlydynamicinnature.Technological
changesoccur very fast. A rigidcontrol system wouldnot be suitable for
achangingenvironment.Thesechangeshighlighttheneedforflexibilityinplanningaswellasin
control.Strategicplanningmustallowforadjustmentsforunanticipatedthreatsandopportunities.
Similarly, managers must make modifications in controlling methods, techniquesand systems as
they become necessary. An effective control system is one that can be updatedquicklyas the
needarises.
4. Acceptability: Controls should be such that all people who are affected by it are able
tounderstand them fully and accept them. A control system that is difficult to understand can
causeunnecessary mistakes and frustration and may be resented by workers. Accordingly,
employeesmust agree thatsuch controls are necessary andappropriate and will not have any
negativeeffectson theirefforts toachievetheir personalaswellas organizationalgoals.
5. Ease of understanding: Guidelines, standards and information systems must be simple

tocomprehend so that they are easily understood by one and all. This ease of understanding
helpstheconcernedemployeestofollow guidelinesandstandardswithout difficultyandambiguity.
6. Economic feasibility: The cost of a control system must be balanced against its benefits.
Thesystem must be economically feasible and reasonable to operate. For example, a high
securitysystem to safeguard nuclear secrets may be justified but the same system to safeguard
officesupplies in a store would not be economically justified. Accordingly the benefits received
mustoutweighthecost of implementingacontrol system.
7. Strategic placement: Effective controls should be placed and emphasized at such critical
andstrategic control points where failures cannot be tolerated and where time and money costs
offailures are greatest. The objective is to apply controls to the essential aspect of a business wherea
deviation from the expected standards will do the greatest harm. These control areas
includeproduction,sales, financeand customer service.
8. Corrective action: An effective control system not only checks for and identifies deviationbut
also is programmed to suggest solutions to correct such a deviation. For example, a
computerkeepingarecordofinventoriescanbeprogrammedtoestablish―if-thenguidelines.Forexample,
if inventory of a particular item drops below five percent of maximum inventory athand,then
thecomputerwill signal forreplenishment forsuch items.
9. Emphasis on exception: A good system of control should work on the exception principle,
sothat only important deviations are brought to the attention of management, In other
words,management does not have to bother with activities that are running smoothly. This will
ensurethat managerial attention is directed towards error and not towards conformity.This
wouldeliminate unnecessary and uneconomic supervision, marginally beneficial reporting and a
wasteofmanagerialtime.
10. Forward looking: Control system should provide early information regarding the
futurechangesandshouldforecast what wouldhappen inthecomingmonth oryear.
TYPESANDSTRATEGIESFORCONTROL
1. Feed Forward Controls: Feed forward controls, sometimes called preliminary or

preventivecontrols,attempt to identifyand prevent deviations in thestandards before theyoccur.
 Feedforwardcontrolsfocusonhuman,material,andfinancialresourceswithintheorganization.
 These controls are evident in the selection and hiring of new employees. For
example,organizationsattempttoimprovethelikelihoodthatemployeeswillperformuptostandar
ds by identifying the necessary job skills and by using tests and other screeningdevices to
hirepeople with thoseskills.
2. Concurrent Controls: Concurrent controls monitor ongoing employee activity to

ensureconsistency with quality standards. These controls rely on performance standards, rules,
andregulations for guiding employee tasks and behaviors. Their purpose is to ensure that
workactivitiesproducethe desired results.
 As an example, many manufacturing operations include devices that measure whether

theitems being produced meet quality standards. Employees monitor the measurements;
ifthey see that standards are not being met in some area, they make a correction
themselvesorlet amanager know that a problem is occurring.
3. Feedback Controls: Feedback controls involve reviewing information to determine

whetherperformancemeets established standards.
 For example, suppose that an organization establishes a goal of increasing its profit by
12percent next year. To ensure that this goal is reached, the organization must monitor
itsprofitona monthly basis.After three months,ifprofithasincreasedby
3percent,managementmight assume that plans aregoingaccordingto schedule.
Fig: Types of
controlSTEPSINCONTROLPROC
ESS
Control is a continuous process. It is not applied when be everything else is done. There may
besome in-built controls in the exercise of managerial techniques. In spite of this, there may be
adifference in standards to be achieved and actual performance. This may be due to
humanlimitations.Some control methods mayhaveto beappliedto improveperformance.
Therearefourstepsincontrol process:
1. Setting of Control Standards: Every enterprise plans its activities in advance. On thebasis
of plans, the objectives and goals of every department, branch, etc. are fixed. These, goalsare
converted into quantity, value, man hour etc. These are to be/achieved in future. There
mayalsobequalitativegoals.Theachievementofvarioustargetsismadetheresponsibility ofspecific
persons. The levels of achievement are also decided in advance. Whether a particularresult is to be
taken as satisfactory, average or poor should be pre determined so that the
personsresponsibleforthat workshould beableto assesstheirperformance.
2. Measurement of Performance: The second step in controlling process is the measurement

ofperformance. The actual performance is measured against the standards set. This will
enablemanagementtodeterminewhethertheworkisbeingdoneaccordingtoplansornot.Themeasurement
of quantitative objectives is easy since figures of work done will be available.
Thequalitativeperformancesuchashumanrelations,employeemorale,etc.canonlybemeasured
through psychological tests and surveys. If measurement is such that deviation is detected at
theearliest then it will enable appropriate action well in time. If that is not possible then
deviationsshouldbedetectedas earlyas possible.
3. Comparing Actual and Standard Performance: The next step in control process is
thecomparisonof actual performancewith thestandards set.
Thepurposeof thiscomparison is:
(a) Tofindoutdeviationsifany,and
(b) Todeterminethe reasonsforsuchdeviation.
While comparing actual performance with the standard, some permissible limits are also
fixed.When the deviations are within the prescribed limits then there is no cause for worry. But if
thedeviationsaremorethanthe allowable limitsthenitcallsforurgentaction.Thisisalsoknown as
„management by exception.‟ When things are going as per plans or within the allowable limitsthen
top management is not required to take any note of it. But on the other hand if performanceis not up
to the level then it is brought to the notice of top management for taking correctiveaction. If the
manager gives attention to every deviation then he will not be able to give enoughtimeforimportant
things.
When the actual performance is not up to the level then causes for it should be pin-
pointed.Necessary steps are taken so that performance is not adversely affected once again. If no
effortsare made to rectify the weak areas then the whole control process will be futile. Whenever
theperformanceis low thanthestandards, thereasonsforit should immediatelybefound.
4. TakingCorrectiveAction: Thelastbutmostimportantstep incontrolling processisoftaking

corrective action. Whenever the performance is less than the standards, efforts should bemade to
rectify it. Whatever the reasonsfor low performance, effortsare made to achieveorganizational
goals. No control process can automatically rectify the mistakes in a system. It isthe action which is
required to set the things right, sometimes the targets are not achievable evenwith more efforts then
these will have to be revised. The control action may involve review
ofplansandgoals,changeinthemethodsofwork,changeintheassignmentoftask,changein
existing techniquesof directionandchange inorganizationstructure.The corrective

actiongenerallyinvolves top management.
Fig: Steps in control
processBUDGETARYANDNON-
BUDGETARYCONTROLS
Budget
A budget is a plan expressed in quantitative and money terms. Budgets need to be prepared
andapproved in advance of the period in which they are to be used. Budgets can include some or
allof income, expenditure, and the capital to be employed. Moreover, a budget can be drawn up
foran entire organization, any segment of the organization such as a department or sales territory
ordivision, or for a significant activity such as the production and sale of a
specificproduct.Inmostcasesbudgetsarepreparedfortheforthcomingfinancialyearandfurtherforthecon
venience these are usually divided into shorter intervals (mostly in months). This facilitates tocheck
the actual results with the prepared budget, and any deviations between the two can beevaluatedand
corrected.
BUDGETARYCONTROL
Budgeting is the process of preparing budgets and „budgetary control‟ is the technique
ofmanagerial control through budgets. Budgetary control is the process of determining
variousactualresultswithbudgetedfiguresfortheenterpriseforthefutureperiodandstandardssetthen
comparing the budgeted figures with the actual performance for calculating variances, if any.Firstof
all, budgets areprepared and thenactual resultsarerecorded.
Thecomparisonofbudgetedandactualfigureswillenablethemanagementtofindoutdiscrepancies and
take remedial measures at a proper time. The budgetary control is a continuousprocess which helps
in planning and co-ordination. It provides a method of control too. A budgetisa means and
budgetarycontrol is the end-result.
Budgetarycontrolinvolves thefollows:
(a) Theobjectives areset bypreparingbudgets.
(b) Thebusinessis dividedinto variousresponsibilitycenters forpreparingvariousbudgets.
(c) Theactualfiguresarerecorded.
(d) Thebudgetedandactualfiguresarecomparedforstudyingtheperformanceofdifferentcostcenters.
(e) Ifactualperformanceislessthanthebudgetednorms,aremedialactionistakenimmediately.
Typesof Budgets
There are many types of budgets.Budgets are formulated based on the purpose and what
wewanttoplanand control.Here arethetypesofbudgets.
1) Production Budget: This budget explains how much volume of each type of product
isproduced for the given period. This becomes the base for the production manager to plan
hisoperations.
2) Sales Budget: The organization may have sales mix of different products and how much
willbethesalesforeach productorserviceis outlined here.
3) AdvertisementBudget:Thisbudgetspeaksaboutthefundsallottedforprintmedia,electronicmedia,s
alespromotionsthroughhoardings,directsales,etc.Themarketingmanagerhasto
planhissalespromotionactivities withintheframeworksetbythisbudget.
4) Labour Hours Budget: How may labour hours are required for a product to be finished?.How
may hours are required from skilled labour, unskilled labour and semi-skilled labour?.This
budget is a bible for the production manager and he plans his production schedulesaccordingly.
5) Machine Hours Budget: Different machines may be required to be coordinated to produce

afinished product. This budget specifies the number of hours required to be utilized from
eachmachine. This budget is a bible for the production manager and he plans his
productionschedulesaccordingly.
6) OverheadBudget:Fixedoverheadsandvariableoverheadsareplannedfordifferentdepartmentshere.
7) Space Budget: The space is a costly issue and it is necessary to use the limited space in
anoptimum way. Which department requires what space, which facility requires what area
areoutlinedhere.
8) Materials Budget: There could be different types of materials used in the factory.
Thisbudgetspecifiestherequirementsofdifferentmaterialsanditispurchasemanager‟sresponsibilityt
o provideforthequantities as outlined in this budget.
9) Cash Budget: This is a statement of receipts and payments for a given future period.Itshows
clearly during what period there is deficit or surplus. Accordingly, the manager
canplanforinvestingthesurplusfundsorborrowingfrom bank when thereis adeficit.
10) CapitalExpenditureBudget: Thisshowshowmuchfundsare allocatedfor acquiringdifferent long

term investment proposals such as purchase of plant and machinery, land andbuildingsetc.
11) MasterBudget:Thisisanoverallbudgetwhichsummarizesandintegratesdifferentindividualbudgets
within theorganization.
12) Flexible Budget: For different levels of capacity of production, the flexible budget showswhat
expenses change in proportion to the volume of production and what expenses
remainfixedthroughout. Thisbudget is alsocalled variable budget.
13) Zero Based Budgeting: Budgets are more or less a marginally to moderately to
significantlyrevised version of the last year budgets and more often there is tendency to take
forward theprevious years‟ assumptions and presumptions. In zero based budgeting, the current
year‟srequirementsareseenfromthefreshperspective.Iftheyareimportant,theywillbeconsidered or
otherwise, they are dropped. In other words, the budget for each item startsfrom zero, costs are
calculated afresh based on the requirements for the budget period. Itavoids the tendency of
taking the previous data as base to work for the future. If there isrequirement, then only
provisions are made otherwise, they are not considered. This makesthe managers to plan each
program package afresh. The mistakes, if any, in the previousbudgetsarenot
broughtforwardhere.
NON-BUDGETARYCONTROL
Non-
budgetarycontroldevicessupportthesuccessfulfunctioningofthebudgetarycontrolsystem.Theseinclude
thefollowing:
1) Statistical data: Statistical analyses of innumerable aspects of a business operation and theclear
presentation of statistical data, whether of a historical or forecast nature are, of course,important
to control. Some managers can readily interpret tabular statistical data, but mostmanagersprefer
presentation ofthe data on charts.
2) Special reports and analysis: Analytical reports and industry trends and patterns need to
beprepared in advance to provide a direction and guidance with the help of industry experts
andspecialistsengagedforthespecific task.
3) Break- even point analysis: An interesting control device is the break even chart. This
chartdepicts the relationship of sales and expenses in such a way as to show at what
volumerevenuesexactlycoverexpenses.
4) Internal audit: Another effective tool of managerial control is the internal audit or, as it isnow
coming to be called, the operational audit. Operational auditing, in its broadest sense, isthe
regular and independent appraisal, by a staff of internal auditors, of the accounting,financial,and
other operations of abusiness.
5) Network analysis: The Program (or Project) Evaluation and Review Technique,
commonlyabbreviatedPERT,isaisamethodtoanalyzetheinvolvedtasksincompletingagiven
project, especially the time needed to complete each task, and identifying the minimum
timeneededto completethe total project.
6) Standardcostingandvarianceanalysis:Standardcostingisprocessofformulatingmaterialstandard
s,labourstandardsandoverheadsstandardsandverifyingwhethertheactual expenses are within the
given standard are not. Where there is difference between theactual and standard expenses, it is
called variance. The manager‟s job is to ensure that thevariancesarereduced tominimum.
7) Ratio analysis: Ration analysis shows the relationship between two factors. Ratio analysis isa
financial analysis tool used to examine whether the liquidity,solvency or profitability
oftheenterprisearewithin the acceptablestandards or not.
8) Personalobservation:Managersneedtospendtimebygoingaroundthedepartment,speakingtotheem
ployeessothattheycangetfirst-handinformationaboutwhatishappening around.By going around
the departments, senior managers may come acrossmanyissues which cannot beput on paper but
criticalin nature can besorted out on time.
ESTABLISHINGCONTROLSYSTEMS
The purpose of controlsystems is to achieve the goalsand objectives of an organization withease and
at least cost. The ultimate purpose of any system is that it should be „in control‟ insteadof
controlling people. It also aims at assisting management in the coordination of the parts of
anorganization and the steering of those parts toward the achievement of its overall purposes,
goalsandobjectives.
1. Well-defined Objectives and Goals: The objectives and goals of the organisation should
becrystal clear and well-defined in the process of control. The organisational goals should be
splitintosub-goalsatdepartmentallevel.Theoperationofthevariousfunctionsandtheircoordination
should be vested in the hands of the executives who are armed with sufficientauthority or power to
fulfill their responsibility. The planned goals of the enterprise or of aparticulardepartment serveas a
standard forperformancemeasurement.
2. Determination of Strategic Point of Control: The responsibility centers and strategic pointsof
control should be selected and fixed. To make the control process effective, the
managementshouldconcentrateuponstrategic points only.
3. Establishment of Control Standards: These standards are established criteria against

whichactual performance can be compared and measured in terms of money, time, physical units
orsome other index. The object of predetermined standards is that comparison between
actualperformance and targets performanceis madepossible.
4. Determination of Controllable Costs and Control Period: Optimum control does not
meanexcessive control. Sometimes good results are achieved only if critical points are
identified.Secretofgoodcontrolistoestablishstrategicpointswherecorrectiveactionswillbethecheapesta
nd most effective.
5. StrengtheningtheOrganisation:Thecompleteframeworkofcontrolisaimedatstrengthening the
organisation. Planning is a prerequisite. Control should be tailored to fit theorganisation. There
should be a system of checks on the managerial activity of subordinates. Theorganisation should be
strengthened first to overcome the weaknesses of deviations. Controlsshould incorporate sufficient
flexibility in them so as to remain effective despite the failure ofplan.
6. Measurement of Performance: The evaluation of performance is very necessary. It involvesthe

measurement of performance in respect of work and in terms of control standards. In theopinion of
Peter F. Drucker, the measurement of performance must be clear, simple, rational,relevant and
reliable. The effectiveness of a control system depends upon the prompt reporting ofpast results to
the persons who have power to produce changes. The next step is to compare theperformance with
the planned standards. It is important to determine the limits within which thevariations can be held
and still to be regarded within control when performance is measuredaccurately. To assess whether
actual performance is in accordance with the target comparisonwith the standard has to be made
and the variation is properly analysed to understand the
reasonforthevariation.Thecomparisonshouldbedoneatfrequentintervalssothatimmediatecorrectiveact
ion could be taken.
7. ControlPeriod:Thepropercontrolperiodistheshortestperiodoftimeinwhichmanagement can
usefully intervene and in which significant changes in performance are
likely.Theperiodisdifferentfordifferentresponsibilitycentresandfordifferentitemswithinresponsibility
centres.Spoilageratesinaproductionoperationmaybemeasuredhourlyoroften.
The key cost element of the centre may be measured daily. Reports on overall
performance,particularly those going to the levels of management are often on a monthly basis and
sometimesfor quarterly or longer intervals, since top management does not have either the time or
theinclination to explorethe local temporaryproblems.
CONTROLFREQUENCYANDMETHODS
Itisunderstoodthattheorganizationalobjectivesareaccomplishedwiththehelpofcontrols.But,now the
question is:
Howfrequently,thesecontrolsareto beemployed?.
To answer this question, the manager should understand the controlling frequency and
varioustechniques based the frequency. With reference to control frequency, the control methods
may beclassified into three categories as constant, periodic and sporadic control, which can be
furtherdividedas shown in thefollowingfigure.
I. ConstantControls
Constantcontrolsarecontinuouscontrols whicharefoundto bethreewaysas follows:
1) Self-
control:Employeestaketheadvantageifthemanagementisnotobservingandmonitoringthep
erformance.So,thereischancethatemployeemaynotperformtheir
jobtothe desiredlevel.But,ifaculture ofself-controlisestablished,then thecontroller‟s job

becomes a cakewalk. The management controlling techniques such
asCCcameras,programmedinstructions,andstrictimpositionoftherulesandregulations or
fines/penalties/disciplinary action, etc. may inculcate the self-control intheemployees.
2) Clan control: Clan control also referred to as group control is a form of humanresources
control in which firms will depend largely on their norms and culture
toensurespecifichehaviour. Organizationsthathave teams dependon clancontrol.
3) Standing plans: Under this control, the organizations will develop and frame,
rules,procedures and policies in order to influence the employee behavior continual
andpredictablesituations. Standards aresimilar to standingplans that arein constant use.
II. PeriodicControl
Periodic controls are used on a regular schedule basis such as once in a day, week or
everyfortnight or at the end of the month or a quarter or year. Periodic control includes
regularmeetingsandreports, budgets andaudits.
1) Regular meeting and reports: These can be in the form of written or oral.
Allorganizations will have regularly scheduled meetings with one or more workers in
theorganization to address and discuss various issues like problems and progress.
Thefrequencyof thesemeetings maybedaily,weekly, or monthly.
2) Budgets: At the end of the every year, it is reworked for the next year. If any
changesoccur such as overspending due to an increase in final cost, then a budget may
requiredamagecontrol.
3) Audits: There are two major types of audits: accounting auditing and
managementauditing.Theaccountsdepartmentissupposedtomaintainrecordsoftheorganizat
ion‟s transactions and assets. Internal auditors will check the accountingrecords
periodically. The management audit examines the organization‟s
planning,organizing,leadingandcontrollingfunctions forimprovement.
III. SporadicControl
Sporadic control means occasional control. Occasional controls are used on intermittent
basiswhereverrequired.
1) Observation:Inthiscontrol,mangerspersonallyobserveandinteractwiththeemployees as
they perform their jobs. Management by walking around is a provenmethodofpersonal
observation to improve performance.
2) Control by exception: In this principle, the control is left to the employees. If
theemployees found any problems, they approach the manager for help. In order to
reachtheperformanceas pertheschedule,correctiveactions aretaken.
3) Special reports: If any problems are identified, then special reports are compiled by
acommitteewithinthedepartment/organization,oroutsideconsultantswhoarespecializedint
hatarea.Suchreportsaredesignedtoidentifythecauseofaproblemaswell as solution.
4) Project controls: These controls are applied to unique and non-recurring projects. inthis
controlling method, the manager develops a control system in order to make surethat the
project is completed on time. The planning tools such as PERT and GanttChartscan
beused as project control method.

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Fundamental of management for engineers & SM504MS

To understand the Management Concepts, applications of Concepts in Practical aspects of

EEE,NRCM Page 1 ARCHANA R KOLLUR

A business develops in course of time with complexities. With increasing complexities

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Peter F. Druckerdefines, "management is an organ; organs can be described and defined

Terry, "Management is not people; it is an activity like walking, reading, swimming or

Ralph C. Davis has defined Management as, "Management is the function of

EEE,NRCM Page 3 ARCHANA R KOLLUR

1) Management is a social process:-Social process refers to the series of activities that

5) It is complex:- Management functions call for a fairly professional approach to manage

6) Management is situational in nature:-The same style of management cannot work for

9) Management is inter-disciplinary:- The subject of management is heavily dependent

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Management is an all pervasive function since it is required in all types of organized

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2) Organizing: Organizing is the process of dividing work into convenient tasks or

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5) Controlling:Controlling involvesidentificationofactualresults,comparisonofactualresults with

Likewe performdifferentrolesinour family (suchasfather,son,brother, mother, sister,daughter and so

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obtaininformationuseful forhis organization.

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a) Toestablishtheobjectivesor goalsofthe enterprise.

2. Middle level management : Middle levelmanagement of a company consists of heads

a) Tointerpretthepolicies chalkedout bytopmanagement.

b) Topreparetheorganizational setupin theirowndepartments.

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c) Torecruit andselect suitable operativeand supervisorystaff.

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A skill is an individual's ability to translate knowledge into action. Hence, it is manifested in

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1. Economic Pressure: During difficult economic times, effective management is often at

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a) Methods Study: It is the systematic investigation of the existing method of doinga

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inefficient workers who are not able to come up tothestandard set.

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6. Mental Revolution: At present, industry is divided into two groups – management

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The human relations approach is concerned with recognition of the importance of

Maslow’s Need Hierarchy Approach:-Abraham. H. Maslow developed a need hierarchy

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a) Management is a series of decision making. The job of a manager is to secure the

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b. A system consists of interacting elements. It is set of inter-related and inter-

1. Inputs: These are ingredients required to initiate the transformation process.

EEE,NRCM Page 28 ARCHANA R KOLLUR

If the environment is satisfied with the output, business operations continue. If it is

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