PRINCIPLES OF

MANAGEMENT(MG8591)

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SYLLABUS

1–2
 UNIT

1
OVERVIEW OF
MANAGEMENT

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 What Is Management?
• Management is art of getting things done by others.
• Knootz and Weirich define management in a simple
form as “management is the process of designing and
maintaining an environment in which individual
working together in groups, efficiently accomplish
selected goals.”
• According to Henry Fayol “to manage is to forecast
and to plan, to organize, to coordinate and to control”.

1–4
What Is Management?

• According to Harold Koontz, “Management is an art

of getting things done through and with the people in
formally organized groups.”
• According to F.W. Taylor “management is art of
knowing what you want to do and then seeing that is
it done in the best and cheapest way”

1–5
Who Are Managers?
• Manager
 Someone who coordinates and oversees the work of
other people so that organizational goals can be
accomplished.

1–6
Classifying Managers
• First-line Managers
 Individuals who manage the work of non-managerial
employees.
• Middle Managers
 Individuals who manage the work of first-line
managers.
• Top Managers
 Individuals who are responsible for making
organization-wide decisions and establishing plans
and goals that affect the entire organization.

1–7
Managerial Levels

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1. TOP LEVEL
• Ultimate source of authority
• Board of directors, chief executive or managing
director
2. MIDDLE LEVEL
• Responsible to the top management
• The branch managers and departmental managers
3. BOTTOM LEVEL
• Supervisory / operative level of management
• Supervisors, foreman, section officers,
superintendent etc 1–9
Functions of Management
• According to Henry Fayol, “To manage is to forecast
and plan, to organize, to command, & to control.”
• Whereas Luther Gullick has given a keyword
POSDCORB where P stands for Planning, O for
Organizing, S for Staffing, D for Directing, Co for
Co-ordination, R for reporting & B for Budgeting.
• But the most widely accepted are functions of
management given by KOONTZ and O‘DONNEL
i.e. Planning, Organizing, Staffing, Directing and

1–10
Functions of Management
Planning
According to KOONTZ, Planning is
deciding in advance “what to do, when to
do & how to do.” It bridges the gap from
where we are & where we want to be‖.
Organizing

• It is the process of bringing together physical,

financial and human resources and developing
productive relationship amongst them for achievement
of organizational goals.
Staffing
• It is the function of manning the organization
structure and keeping it manned
• The main purpose o staffing is to put right man
on right job
Directing

• Monitoring, comparing, and correcting

work.It has 4 elements:-
• Supervision • Motivation • Leadership •
Communication
Controlling
• The purpose of controlling is to ensure that
everything occurs in conformities with the standards
• Therefore controlling has following steps:
(i)Establishment of standard performance.
(ii)Measurement of actual performance. 8
(iii)Comparison of actual performance with the
standards and finding out deviation if any.
(iv)Corrective action
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ROLE OF MANAGER

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Interpersonal Roles

• Leader: Responsible for staffing, training, and

associated duties.
• Figurehead: The symbolic head of the organization.
• Liaison: Maintains the communication between all
contacts and informers that compose the
organizational network.
Informational Roles
• Monitor: Personally seek and receive
information, to be able to understand the
organization.
• Disseminator: Transmits all import information
received from outsiders to the members of the
organization.
• Spokesperson: On the contrary to the above
role,here the manager transmits the
organization’s plans, policies and actions to
outsiders.
 Decisional Roles
• Roles that revolve around making choices
• Entrepreneur: Seeks opportunities. Basically they search
for change, respond to it, and exploit it.
• Negotiator: Represents the organization at major
negotiations.
• Resource Allocator: Makes or approves all significant
decisions related to the allocation of resources.
• Disturbance Handler: Responsible for corrective action
when the organization faces
MANAGERIAL SKILLS
• TECHNICAL SKILLS
• HCONCEPTUAL SKILLS

• HUMAN OR INTER PERSONAL SKILLS

1–21
Management – science or art?
• Science because it is an organised body of
knowledge which contains universal truth
• Art because managing requires certain skills

• Science provides the knowledge and art deals with

the application of knowledge and skills
• Management is a judicious blend of science as well as
an art

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THE END

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What Is An Organization?
• An Organization Defined
 A deliberate arrangement of people to accomplish
some specific purpose (that individuals independently
could not accomplish alone).
• Common Characteristics of Organizations
 Have a distinct purpose (goal)
 Composed of people
 Have a deliberate structure

1–24
Exhibit 1–9 Characteristics of Organizations

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What Managers Do?
• Skills Managers Need
Technical skills
 Knowledge and proficiency in a specific field
Human skills
 The ability to work well with other people
Conceptual skills
 The ability to think and conceptualize about
abstract and complex situations concerning the
organization

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Skills Needed at Different Management Levels

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How The Manager’s Job Is
Changing
• The Increasing Importance of Customers
 Customers: the reason that organizations exist
 Managing customer relationships is the responsibility of all
managers and employees.
 Consistent high quality customer service is essential for
survival.
• Innovation
 Doing things differently, and taking risks
 Managers should encourage employees to be
aware of and act on opportunities for innovation.

1–28
Why Study Management?
• The Value of Studying Management
 The universality of management
 Good management is needed in all organizations.
 The reality of work
 Employees either manage or are managed.
 Rewards and challenges of being a manager
 Management offers challenging, exciting and creative
opportunities for meaningful and fulfilling work.
 Successful managers receive significant monetary rewards
for their efforts.

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Universal Need for Management

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1–31
1–32
Principles of Scientific Management
• Replacing Rule of Thumb with science
• Harmony, not discord
• Co-operation, not individualism
• Maximum output, in place of restricted
output
• The development of each man to his
greatest efficiency.

1–33
Management
as
or
???
Management as an Art
• Art refers to creative skills and talent
which people require to conduct certain
activities effectively.

• Art is an Inborn talent. However it can be

refined through Learning and Practice.
Management is an Art due to the following
reasons:
1. Intelligence 2. Initiative

3. Innovative
4. Individual Approach

5. Application & Dedication

6. Result Oriented
 Comparison :
Management as

As An art As a Science

• Based on Practice and • Based on Experimentation.

creativity.
• It is a systematized body of
• It is a theoretical body of knowledge.
knowledge.
• Has Universal Application.
• Has Personalized
Application.
II. Modern Operational Management
Theory
14 Principles of Henri Fayol
 DIVISION OF WORK OR SPECIALIZATION
 AUTHORITY AND RESPONSIBILITY
 DISCIPLINE
 UNITY OF COMMAND
 UNITY OF DIRECTION
 SUBORDINATION OF INDIVIDUAL TO GENERAL
 REMUNERATION
 CENTRALIZATION
 LINE OF COMMAND/SCALAR CHAIN
 ORDER
 EQUITY
 STABILITY OF TENURE
 INITIATIVE
 ESPRIT DE CORPS
 1. DIVISION OF WORK or SPECIALIZATION

Division of work makes a man specialist. The reason is that

division of work helps to specialize in an activity which increases
the output with perfection. It also avoids wastage of time.
Division can be applied to both technical and managerial kind of
work.
 Authority & Responsibility.

 Managers must be able to give orders. Authority

gives them this right. Note that responsibility
arises wherever authority is exercised.
 Discipline.

 Employees must obey and respect the rules that

govern the organization.
 Unity of command.

 Every employee should receive orders from only one

superior.
 Unity of direction.

 Each group of
organizational
activities that have the
same objective should
be directed by one
manager using one
plan.
Subordination of individual
• The individual should
subordinate self-
interest to the general
good. It is incumbent
upon management to
reduce conflict
between the
individual and the
general well being
wherever possible.
 Remuneration

 Workers must be paid a fair

wage for their services.
 Means the wages and salaries paid
to employee. It should be fair &
must be paid on time.
 It satisfy both employee &
employer
 It should be decided on-Work
allotted.
 cost of living.
  CENTRALIZATION

 Fayol thought centralization of authority to be

desirable, at least for overall control. Certainly, both
formulation of policy and the generation of basic rules
and procedures ought to be centralized
 Scalar chain

 The line of authority from

top management to the
lowest ranks represents the
scalar chain.
Communications should
follow this chain.
 Order

 People and materials

should be in the right
place at the right time.
 Equity

 Managers should be kind

and fair to their
subordinates.
 Stability of tenure of personnel

 High employee turnover is inefficient. Management

should provide orderly personnel planning and ensure that
replacements are available to fill vacancies.
 Initiative.

 The power of
thinking out,
proposing and
executing.
Management should
encourage
employees to
originate and carry
out plans.
 Esprit de corps

 It means that create a team

spirit or union is strength.
 Developed an atmosphere
of mutual trust and
understanding.
 Create a sense of belonging
employees
 It bring a loyalty,
dedication and commitment
to the group.
Behavioral theory
Organizational Behavior
• Human behavior in organizations is complex.
• The field of organizational behavior draws from
a broad, interdisciplinary base of psychology,
sociology, anthropology, economics, and
medicine.
• There are two theories on how employees
behave:

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Behavioral Theory on How
Employees Behave Toward
Work
Theory X Assumptions:
Employees dislike work.
Employees are
irresponsible.
Employees lack
ambition.
Employees resist
change.
Another Theory on How
Employees Behave
Theory Y Assumptions:
Employees are willing to
work.
Employees are self
directed.
They accept
responsibility.
Employees are creative.
They are self-controlled.
Difference between
Administration and
Management

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 Objectives
Management Administration
• Stated as broad • Stated in general
strategic aims terms and reviewed or
changed infrequently
 Success Criteria
Management Administration
• Performance mostly • Mistake avoiding
measurable • Performance difficult
to measure
 Ressource Use
Management Administration
• Primary task • Secondary task
 Decision Making
Management Administration
• Many decisions • Few decisions
• Decisions affect few • Decisions affect many
• Decisions must be • Decisions take time to
made quickly be made
 BUSINESS
ORGANIZATION
BUSINESS
• A business (also called a company,
enterprise or firm) is a legally
recognized organization designed to
provide goods and/or services to
consumers.

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Forms of Business Organization

• sole proprietorship or sole trader

• partnership
• corporation
• share of stock
• board of directors
• dividends

Slide 66
Sole Proprietorship/ sole trader

It is a type of business entity which is

owned and run by one individual
Advantages of a Sole Proprietorship

• Easy to get established

• Full control over all business decisions
• Owners keep all profit
• Flexibility
 Disadvantages of Sole proprietorshi

• It can be difficult to raise money for the

business.
• Responsible for every aspect of the
business
• Unlimited liability
– Personally liable for business debts
• Limited skills and knowledge
Partnership
a business owned by two or more
people
Disadvantages of a partnership:

Responsibilities, profits, and losses are

shared
can be held liable for errors of partners
unlimited liability for business expenses
responsible for all money or services
owned.
business income is taxed as personal
income
Advantages of a partnership :

easy to establish
multiple sources of capital
risks are spread among partners

Slide 72
Corporation

a business that has the legal rights of a

person but is independent of its owners
 Organization & the
environmental factors

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External and Internal Environment

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The External Environment

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 Internal & External Environment classification:
Internal Environment
1.Resources
2.Capabilities
3.Culture
External Environment:
4.specific environment
a. Customers b. Suppliers
c. Competitors d. Pressure Groups
2. General Environment
a. Economic conditions b. Political/Legal Conditions
c. Socio-cultural Conditions d. Demographic
Conditions
e. Technological Conditions f. Global conditions
 External environment
 External environment refers to force
and institutions outside organization
that potentially affect an organizations
performance

 General and Specific Environment

 External environment-
Specific Environment
 Specific Environment that is directly
relevant to achievement of an org’s goal
 Customers,competitors,suppliers,pressure
groups
 Economic conditions,political/legal
conditions,socio cultural conditions,
demographic conditions,technological
and Global conditions
Specific Environment
Customers

Customers:customers who absorbs

organizational outputs
They represent potential uncertainty to an
organization,Their taste can
change,they can become dissatisfied
with organization’s product or service
Specific Environment
Competitors:

 Competitors: Organizations cannot

afford to ignore its competitors.
Managers must be prepared to
respond to competitors policies
regarding pricing new
products,services offered and other
incentives it is giving to customers
 Specific Environment-
Suppliers
 Suppliers:Any party that provides input for
the business. E.g financial institutions are
provider of money, colleges are suppliers of
human resources
 Managers need to have steady and and
reliable flow of inputs to meet the goals
Specific Environment-
Pressure groups
 Pressure groups: Managers must
recognize the special interest groups
that attempt to influence organization
General Environment
Economic conditions:
 Economic conditions: It includes the
impact of economic factors like Interest
rates, changes in disposable income
and the stage of general business cycle
 e.g : when consumer’s incomes fall
their confidence about job security
declines,they will postpone
purchasing any thing that is not
necessary
General Environment
Political/legal conditions:
 Political/legal conditions:
Federal,state and local government
influence what org can and cannot do
 Managers must adapt their practices to
the changing expectations of the
society and their life style
General Environment
Demographic Conditions:
 Demographic Conditions: Trends in
the physical characteristics of
population such as gender,age,level of
education,income,geographical location
 Technological:It is changing the ways
the org are operating,so businesses
must address this issue and its impact
on performance of org.
General Environment-
Socio-cultural Conditions
 Managers must adapt their practices
to the changing expectations of the
society in which they operate.

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General Environment-
Technological Conditions
 The whole area of technology is
radically changing the fundamental
ways that organizations are structured
and the way that managers manage.

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General Environment-
Global conditions
 Globalization is one of the major
factors affecting managers and
organizations

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 TRENDS AND CHALLENGES
OF MANAGEMENT IN GLOBAL
SCENARIO

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 Workforce diversity
 Changing employee expectation
 International environment
 Building organizational capabilities
 Job design & organizational structure
 Changing psycho-social system
 Technological advance
 Management of human relations
 Changes in legal environment
 Expanding globalisation
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1.Workforce diversity
Changing the Way You Do Business
 It refers to the way in which people in a
workplace are similar & different from
one another. in addition to the
characteristics protected by law, other
similarities & differences commonly
cited include background, education,
language skills, personality & work role.

92
Advantages of Workforce
diversity
 IMPROVE DECISION MAKING
 IMPROVE TEAM PERFORMANCE
 BETTER CONSUMER SERVICES
 ENHANCE COMMUNICATION SKILLS
 CREATIVITY & INNOVATION

93
2.Changing employee expectation

 The managers has then to redraw new

methods of motivation such as job
design.
 Ex: motivation of workers to deliver
their contribution towards the
accomplishment of organizational goals.

94
 3.INTERNATIONAL ENVIRONMENT

The Environment which

includes all the factors
and forces which are
external to the Business
organization such as
economic, socio-cultural,
legal demographic etc.
are known as
International
environment.
95
 In simple word International
Environment means the growth and
expansion of business to a larger
extent.
i.e. global all over the world.

96
4. Building organizational
capabilities
 To acquire new skills, knowledge & to
evaluate environmental changes to
evaluate business strategies.

97
5. Job design & organizational
structure
 Design with foreign concepts ex: quality
circle,TQM etc
i. Task Approach
ii. People Approach

98
6.Changing Psycho-Social
System
 Management designed to perform its
work function.
 But in future Human Participation will
be required.

99
7.Technological Advance
 New jobs will be created and many old
jobs will become redundant

100
8.Management of human
relations
 New generation of workforce
comprising educated will ask for higher
degree of participation.

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9.CHANGING IN LEGAL
ENVIRONMENT
 Increases changes in legal environment
necessary adjustments have to be
made.

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10. Expanding Globalisation

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Strategies for
International
Business

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International Management
 Focuses on the operations of
international firms in host countries.
 International businesses engage in
transactional across national
boundaries.

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Multinational Corporation (MNC)
 Multinational Corporations have their
headquarters in one country but
operate in many countries.

106
Orientations
 Ethnocentric Orientation – The style of the foreign
operations is based on that of the parent company.
 Polycentric Orientation – The foreign subsidiaries are
given a great deal of managerial freedom.
 Regiocentric Orientation – The foreign operations are
staffed on a regional basis.
 Geocentric Orientation – The entire organization is
viewed as an interdependent system operating in many
countries.

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Strategies
 Multinational corporations must give
weightage to two important factors
 The need to make optimum
economic decisions on a global basis
 Responsive to host country
differences

108
In order to fulfil the above two criteria the
MNCs may opt for any of the four strategy
 Worldwide integration / Globalisation
Strategy
 National responsiveness strategy
 Regional responsiveness strategy
 Multifocal strategy

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Forms of International Business
 Exportation – Exportation of goods and
services from parent country to host country.
 Licensing agreement – Licensing agreement
for producing goods in another country.
 Management contracts – The company
can engage in management contracts for
operating in foreign companies.
 Joint Venture and Strategic Alliances
o One form of interaction is a joint venture with
the firm in the host country.

1–110
Wholly Owned Subsidiaries
o A wholly owned subsidiary is an operation on
foreign soil that is totally owned and controlled
by a company with headquarters outside the
host country.
o In wholly owned subsidiary, the production
facilities are totally owned by one company.

1–111
Challenges of Management in
Global Scenario
 Language barriers
 Selling and Marketing in foreign markets
 Attitudes of host governments
 Communication and coordination between
subsidiaries
 UNIT

2
PLANNING

1–113
What is Planning?
• Deciding in advance what to do, how to do it ,
when to do it and who has to do it.
• Planning is the pre-selection of objectives and
outlines the action before starting any
business.
• Planning is decision making in advance.
• Choosing the alternatives and making the
decision is called planning.

114
Nature of Planning
• Goal oriented: Every plan must contribute in some
positive way towards the accomplishment of objectives.
• Primacy of Planning: Planning is the first of the
managerial functions
• Efficiency, Economy and Accuracy
• Co-ordination
• Limiting Factors: money, manpower etc
• Flexibility
• Planning is an intellectual process: The quality of
planning will vary according to the quality of the mind
of the manager.

115
Importance of Planning
• Provides direction
• Leads to economical utilization of resources
• Reduces the risks
• Facilitates decision making
• Encourages Innovation & Creativity
• Improves morale
• Facilitates control
Planning Process
(or)
Steps in Planning

1–117
 Steps in planning
Being Aware of opportunities
Market, competition, Customers, Strengths Weakness

Establishing objectives
Where we want to be, what to achieve and when

Developing premises
In what environment ( I & E), scenarios

Determining alternative courses

How many and which are most promising

Evaluating alternative courses

In the light of objectives

Selecting a course

Formulating derivative plans

Quantifying plans by budgeting

1. Being aware of opportunities
• All managers should take look at future
opportunities and see them clearly and
completely.
• They should know their strengths and
weakness, understand what problems they
wish to solve and why, and know what they
expect to gain.
• Setting realistic objectives depends on
(i) About market
(ii) About expected competition
(iii) What customers wants
2. SETTING OBJECTIVES
• The second step in planning is to establish or
set objectives
• Objectives specify the expected results and
indicate the end points of
(i) What is to be done
(ii) Where the primary emphasis is to be placed
(iii) What is to be accomplished by the
strategies, policies, procedures, rules, budgets
and programs.

1–120
3. DEVELOPING PREMISES
• It is important for all the managers
involved in planning to agree on the
premises.
• Forecasting is important in premising:
What kind of markets will be there?
What volume of sales? What prices? What
products? What technical developments?
What cost? Etc

1–121
4. INDENTIFYING ALTERNATIVE COURSES OF
ACTION
• to search and examined alternative
courses of actions.
• The planner must usually make
preliminary examination alternative
courses to accomplish the goal.

1–122
5. EVALUATING ALTERNATIVE COURSES
• After determining alternative courses and
examining their strong and weak points,
the next step is to evaluate the
alternatives.

1–123
6.SELECTING A COURSE
• Selecting an alternative is the real point of
decision making. This is the point at which
the plan is adopted.
• the manager has to decide one best alternative
or several alternative courses of action.

1–124
7.FORMULATING DERIVATIVE PLANS
• The seventh step in planning is
formulating derivative plans.
• When a decision is made next step is
to formulate a supporting plan, such
as to buy equipment, materials, hire
and train workers and develop a new
product.

1–125
8. Quantifying Plans by Budgeting
• the final step in planning is to quantify them
by converting them into budgets.
• The overall budgets of an enterprise represent
the sum total of income and expenses with
resulting profit.

1–126
 Types of Plans
• Long range Vs Short range

• Strategic Vs Operational

• Corporate Vs Functional

• Proactive Vs Reactive

• Standing Vs Single Use

127
 Long range Vs Short range
Long range plan Point of Short range plan
distinction
Covers many years & Meaning Covers less than one
affects many year and is more
departments of an specific & detail
organization
5 yrs or more Time Up to one year
Mission ,long term Deals Current operations of
goals and strategies with organization
Top management Prepared Lower level executives
by

128
 Strategic Vs Operational
Strategic Plan Point of Operational Plan
distinction

5 years or more Time Under one year

horizon

Adapt to external Purpose Implement internal goals

environment based on
internal strengths
Top management Level Middle & lower level
involved

Primarily judgmental Basis for Exact data & Standards

planning used

129
 Corporate Vs Functional
• Corporate Plan:
– A comprehensive plan that outlines the broad
objectives of a company as a whole and
develops plans to achieve those objectives
– Focus on organizational performance

• Functional Plan:
– Is unit planning and deals with different
departments.
– Focus on departmental performance
 Proactive Vs Reactive
• Proactive Planning:
– Managers challenge the future,
anticipating future contingencies
• Reactive Planning:
– Organizations react to events as and when
they arise

131
 Standing Vs Single Use

• Standing Plans • Single Use plans

– Developed for – Developed to carry
activities that recur out a course of
action that is not
regularly over a
likely to be
period of time repeated in future
• Ex: • Ex:
– Objectives, Policies, – Programmes,
Procedures, Methods, Schedules, Projects,
Rules Budgets
132
Types of Plans – Key Point
• Strategic Plans
Apply to the entire organization.
• Operational Plans
Specify the details of how the overall
goals are to be achieved.

7–133
Types of Plans – Key Point
• Long-Term Plans
Plans with time frames extending 5 years
• Short-Term Plans
Plans with time frames of one year or less
• Specific Plans
Plans that are clearly defined and leave no
room for interpretation
• Directional Plans
Flexible plans that set out general guidelines
and provide focus,
7–134
Types of Plans – Key Point
• Single-Use Plan
one-time plan specifically designed to
meet the need of a unique situation.
• Standing Plans
Ongoing plans that provide guidance
for activities performed repeatedly.

7–135
TYPES OF PLANS/ Hierarchy of Plans
 Mission or purposes
 Objectives or goals
 Strategies
 Policies
 Procedures
 Rules
 Programs
 Budgets
Mission or purpose
The basic purpose or function
or tasks of an enterprise or
agency or any part of it

Objectives or goals
The end towards which
activity is aimed
Strategies
The determination of the basic long term
objectives of an enterprise and the
adoption of courses of action and allocation
of resources necessary to achieve these
goals

Policies
General statements or understanding
that guide or channel thinking in
decision making
1–138
Procedures
Plans that establish a required
method of handling future
activities

Rules
Rules spell out specific
required actions or non actions
allowing no discretion
Programs
A complex of goals, policies,
procedures, rules, task assignments,
steps to be taken, resources to be
employed, an other elements necessary
to carry out a given course of action

Budgets
A statement of expected results
expressed in numerical terms

1–140
Cascading of Objectives
Management by Objectives
(MBO)

1–142
Management by Objectives (MBO)
• Is a method whereby managers and
employees define goals for every
department, project, and person and use them
to monitor subsequent performance.

4 major activities:
1. Set goals
2. Develop action plans
3. Review progress
4. Appraise overall performance
Step 1: Set Goals Step 2: Develop Action Plans
• Corporate
Action Plans
Strategic Goals
• Departmental
Goals
• Individual Goals
Review
Progress
Step 3:
Review
Take Corrective Progress
Action
Appraise
Performance

Step 4: Appraise
Overall Performance
 Benefits of MBO Problems with MBO
1. Improvement of 1. Danger of inflexibility
management

2. Performance can be 2. An environment of poor

improved at all company employer-employee relations
levels. reduces MBO effectiveness.
3. Employees are motivated. 3. Strategic goals may be
displaced by operational goals.
4. Departmental and 4. Mechanistic organizations and
individual goals are values that discourage
aligned with company participation can harm the
goals. MBO process.
5. Too much paperwork saps
MBO energy.
Strategic Management
The set of managerial decisions and
actions that determines the long-run
performance of an organization.

146
Strategic management process
a six-step process that encompasses
strategic planning, implementation, and
evaluation.

1–147
FORMATION OF CONSIDERATION
SWOT
MISSION & OF STRATEGIC
ANALYSIS
OBJECTIVES ALTERNATIVES

EVALUATION IMPLEMENTATION CHOICE OF

AND CONTROL STRATEGY

STRATEGIC MANAGEMENT PROCESS

1.Mission and Goals
• Mission
 a statement of the purpose of an
organization
• Major goals
 the foundation for further planning
• Secondary goals
 Are objectives to be attained that lead to superior
performance.
2.SWOT(Identifying Organizational
Opportunities)

Strengths Weaknesses

Opportunities Threats

a. External Analysis
b. Internal Analysis
a. External Analysis
• Identify strategic opportunities and threats in
the operating environment.

Immediate (Industry)

Macroenvironment National

1-151
b. Internal Analysis
• Identify strengths
 Quality and quantity of resources available
 Distinctive competencies
• Identify weaknesses
 Inadequate resources
 Managerial and
organizational deficiencies

1-152
Step 4: Formulating strategies
Develop and evaluate strategic alternatives
Select appropriate strategies for all levels in
the organization that provide relative
advantage over competitors
Match organizational strengths to
environmental opportunities
Correct weaknesses and guard against
threats

8–153
• Step 5: Implementing strategies
Implementation: effectively fitting
organizational structure and activities to the
environment.
The environment dictates the chosen
strategy; effective strategy implementation
requires an organizational structure matched
to its requirements.
• Step 6: Evaluating results
How effective have strategies been?
What adjustments, if any, are necessary?
8–154
Strategic Managers for All Levels

1-155
 LEVELS
LEVELS OF
OF STRATEGIC
STRATEGIC MANAGEMENT
MANAGEMENT
 Corporate-Level Managers
 Oversee development of strategies for whole organization
 CEO is principle general manager who consults with other
senior executives
 Business-Level Managers
 Responsible for business unit that provides
product/service to particular market
 Functional-Managers
 Supervise particular function/operation (e.g. marketing,
operations, accounting, human resources)
Types of Organizational Strategies

8–157
1.Corporate Strategies
• Corporate Strategies
 Top management’s overall plan for the entire
organization and its strategic business units
• Types of Corporate Strategies
 Growth: expansion into new products and markets
 Stability: maintenance of the status quo
 Renewal: examination of organizational weaknesses
that are leading to performance declines

8–158
a. Growth Strategy
 Seeking to increase the organization’s business by
expansion into new products and markets.
• Types of Growth Strategies
 Concentration
 Vertical integration
 Horizontal integration
 Diversification

8–159
a. i. Concentration
 Focusing on a primary line of business.

a. ii. Vertical Integration

attempting to gain control of inputs (become a
self-supplier).
attempting to gain control of output through
control of the distribution channel or provide customer
service activities (eliminating intermediaries).

8–160
iii. Horizontal Integration
 Combining operations with another competitor in the
same industry to increase competitive strengths and
lower competition among industry rivals.
iv. Diversification
 Expanding by combining with firms in different, but
related to field of operation

8–161
The BCG Matrix

8–162
• Renewal Strategies(re-establish)
 Developing strategies to counter organization
weaknesses that are leading to performance declines.

8–163
2.Competitive Strategies

• Competitive Strategy
 A strategy focused on how an organization will
compete in each of its SBUs (strategic business
units).

8–164
DECISION MAKING
PROCESS

1–165
 Decisions and Decision Making

• Decision = choice made from available

alternatives

• Decision Making = process of identifying

problems and opportunities and resolving
them

166
Six Steps in Decision Making

Figure 7.4
Decision Making Steps

Step 1. Recognize Need for a Decision

Managers must first realize that a decision must
be made.
Step 2. Generate Alternatives
Managers must develop feasible alternative courses
of action.
If good alternatives are missed, the resulting
decision is poor.
It is hard to develop creative alternatives, so
managers need to look for new ideas.
Step 3. Evaluate Alternatives
 What are the advantages and disadvantages of
each alternative?
 Managers should specify criteria, then evaluate.
Step 4. Choose Among Alternatives
 Rank the various alternatives and make a decision
Step 5. Implement Chosen Alternative
 Managers must now carry out the alternative.

Step 6. Learn From Feedback

 Managers should consider what went right and
wrong with the decision and learn for the future.
 Without feedback, managers do not learn from
experience and will repeat the same mistake over.
CASE Study: Which is Best
Cool Drink

1–172
Step 1: Identifying the problem
Step 2: Identification of decision criteria

1) Brand
2) Taste
3) Color
4) Packaging
5) Price
Step 3: Allocation of weights to criteria

Criteria Abhi Bj Amit Too Total

Brand 9 10 10 8 37
Taste 10 8 10 10 38
Color 6 5 7 6 24
Packaging 9 8 6 5 28
Price 8 9 9 8 34

Criteria Weight
Taste 10
Brand 9
Price 8
Packaging 6
Color 4
Step 4: Development of alternatives
• Coca Cola
• Sprite
• Pepsi
• Fanta (orange)
• Lipton (ice tea)
• Tipco (fruit juice)
• Ichitan (green tea)
Step 5: Analyzing alternatives

Packagin
Drink Taste Brand Price g Color
Coca Cola 10 10 7 6 7
Sprite 8 9 8 7 6
Pepsi 9 10 6 8 6
Fanta (Orange) 6 7 8 8 10
Lipton (Ice Tea) 10 9 8 5 5
Tipco (Fuit
Juice) 10 9 7 8 8
Ichitan (Green
Tea) 10 8 8 6 5
 Step 6: Selecting an alternative
Criteria*Weight

Drink Taste Brand Price Packaging Color Total

Coca Cola 100 90 56 36 28 310
Sprite 80 81 64 42 24 291
Pepsi 90 90 48 48 24 300
Fanta
(Orange) 60 63 64 48 40 275
Lipton (Ice
Tea) 100 81 64 30 20 295
Tipco (Fuit
Juice) 100 81 56 48 32 317
Ichitan
(Green
Tea) 100 72 64 36 20 292
Step 7: Implementing the
decision
Step 8: Evaluating the decision’s effectiveness
1–181
Decision Making Process
A) Define the Problem
B) Consider Your Value:
C) List Your Options
D) Weigh the Consequences:
E) Decide and Act
It is also a powerful strategic planning tool
used to evaluate a project in business venture
or in an organization or individual requiring a
decision in pursuit of an objective
CASE STUDY
• How to choose a education after +2
 FACTORS
• Marks
• Interest
• Economy
• Job opportunities
• Family Background
• No of years(3,4,5)
THREE FRIENDS

• Palani, Mani and Arun studying in a same school

• They are average students
• Let us take a decision on their future education .
PALANI
• Likes adventure and sports
• Hails from poor family
• He had two elder brother who works in their
home town
MANI
• Mother and Father are teachers
• They desire to make his son to acquire higher
degree
• Mani is interested in vehicles and machines
ARUN

• Hails from an average family

• He is good in maths.
• He had a younger sister and it is his responsibility to
educate him.
DECIDE

• Take a decision on
all three friends by
considering the
factors and
situation given
above
CASE STUDY
• TRAIN TRACK AND CHILDREN
WHAT TO DECIDE
• A group of children were playing near 2 railway tracks,
one still in use while the other disused. Only one child
played on the disused track, the rest on the operation
track
WHAT TO DECIDE
• The train came and you were just beside the
track interchange.
• It was not possible to stop the train but you
could make the train change its course to the
disused track and save most of the kids
WHAT TO DECIDE
• However, that would also mean the
lone child playing in the disused
track would be sacrificed. Or would
you rather let the train go way.
Let us take a pause to think what
kind of decision we would make
WHAT TO DECIDE

• Analyze the
situation
• Thick and reflect
• Decide
• Now go ahead
WHAT TO DECIDE
Most people might choose to divert the
course of the train, and sacrifice only one
child.
To save most of the children at the
expense of only one child was rational
decision most people would make morally
and emotionally
WHAT TO DECIDE
• But, have you ever thought that the child
choosing to play on the disused track
had in fact made the right decision to
play at a safe place.
• Nevertheless, he had to be sacrificed
because of his ignorant friends who
choose to play in the used track which is
dangerous.
WHAT TO DECIDE
• This kind of dilemma happens around us
everyday. In the office community, in politics
and especially in a democratic society the
minority is often sacrificed for the interest of
the majority. No matter how foolish or
ignorant the majority are and how farsighted
and knowledgeable the minority are.
WHAT TO DECIDE
• The child who choose not to play
with the rest on the operational
track was side lined. And in the
case he was sacrificed, no one
would shed a tear for him
WHAT TO DECIDE
• To make the proper decision is not try to
change the course of the train because the kids
playing on the operational track should have
known very well that track was still in use and
that they should have run away if they heard
train sirens.
WHAT TO DECIDE
• If the train was diverted, that lone
child would definitely die because he
never thought the train could make
over to that track.
• Notably that track was not in use
probably because it was not safe.
WHAT TO DECIDE
• If the train was diverted to the unused
track, we would put the lives of all
passengers on board at stake. And in
your attempt to save a few kids by
sacrificing one child, you might end up
sacrificing hundreds of people to save
these few kids
WHAT TO DECIDE
• While we are all aware that life is full of
tough decisions that need to be made, we
may not realize that hasty decisions may
not always be the right one.
• Remember that What’s right is not
always popular and what’s popular isn’t
always right.
CASE STUDY: Buying a CAR

1–209
BUYING A CAR
• Price
• Model
• Options
• Style
• Fuel Efficiency

1–210
CASE STUDY: Buy a MOBILE

1–211
LAPTOP

1–213
Criterion Weight
Memory and Storage 10
Battery life 8
Carrying Weight 6
Warranty 4
Display Quality 3

6–214
Evaluation of Laptop Alternatives Against Weighted Criteria

6–215
 Decision-Making Approach
• Rationality
• Bounded Rationality
• Intuition

Types of Problems and

Decisions Decision
• Well-structured • Choose best
- programmed Decision-Making alternative
• Poorly structured - maximizing
- nonprogrammed
Process - satisficing
• Implementing
• Evaluating
Decision-Making
Conditions
Decision Maker Style
• Certainty
• Directive
• Risk
• Analytic
• Uncertainty
• Conceptual
• Behavioral
Types of Decisions

Programmed decision:
 A decision that is fairly structured
or recurs (occur again)with some
frequency (or both).
Non-programmed decision:
 A decision that is relatively
unstructured and occurs much
less often than a
PROGRAMMED DECISION.
Rational Decision Making(logical)

1–218
1.Recognize the need for a decision
• Manager recognize the need for a decision
in the form of a problem or opportunity.

1–219
2.Definition of the problem
• A problem is the gap between present and
the desired state of affairs on the subject
matter of the decision.

1–220
3.Search and develop alternatives
• The alternative course of action can be
developed by collecting more information,
thinking creatively, consulting experts and
undertaking research.

1–221
4.Evaluate Alternatives
• After identifying alternative courses of action,
they must be compared and evaluated. This
step determines the relative cost of each
alternative.

1–222
5.Implement chose alternative
• The decision taken by the management will not
serve the purpose if it is not executed properly.

1–223
6.Learn from feedback
• Feedback is important because decision making
is a continuous and never ending process
• Feedback information is very much useful in
taking the corrective measures and in taking
right decisions in the future

1–224
Decision-Making Conditions

The decision
maker faces
conditions of:

Certainty Risk Uncertainty

Level of ambiguity and chances of making a bad decision

Lower Moderate Higher

1.Certainty:
A condition in which the
decision maker knows with
reasonable certainty what
the alternatives are and
what conditions are
associated with each
alternative.
2. Risk:
A condition in which the
availability of each
alternative and its potential
payoffs and costs are all
associated with probability
estimates. 9 - 226
3.Uncertainty
• A condition in which
the decision maker
does not know all the
alternatives, the risks
associated with each,
or the likely
consequences of each
alternative.

9 - 227
 UNIT-3
ORGANIZING

1–228
What Is Organizing?
• Deciding how best to
group organizational
activities and resources.
• Organizing: the process
by which managers
establish working
relationships among
employees to achieve
goals.

11 - 229
 NATURE OF ORGANIZING:

1. Group of Persons
2. Common Objectives
5. Communication
3. Division of Work
6. Central Authority
4. Co-ordination
7. Rules & Regulations
8. Environment
 Common Objectives: Every organization has a
common objectives. The common goal is the
basis of cooperation among the members.

 Group of Persons: An organization is a group of

people working together for the achievement of
common objectives.
 Division of Work: total task is divided into the members of
the group. Division of work is necessary not only because
one individual cannot do all the work but specialization
results in efficiency and effectiveness.

 Co-ordination: The members of an organization are

willing to help each other for the achievement of desired
goals.
 Communication: People who form an organization
communicates with each other in order to integrate or
coordinate there efforts. People can perform together
efficiently.

 Authority: In an organization, there is a central directing

authority which controls the concerted efforts of the
group. The chain of authority- responsibility relationships
is known as the chain of command.
 Rules and Regulations: For the orderly and systematic
working of the members, rules and regulations are laid
down and enforced by the central authority.

 Environment:
Economic,social,political and legal factors.
 IMPORTANC
E OF
ORGANIZING
7.
Coordinati
on

6. Ensures 1. Facilitates
Continuity of Administrat
Enterprise ion

5. Encourages 2. Encourages
Good Human Growth &
Relations Diversification

4. Stimulates 3. Optimum
Innovation & Use of
Technology Technology
 PURPOSE / IMPORTANCE OF organizing:
 Facilitates Administration: Achievement of the objectives
of an enterprise by providing a framework of coordination
and control. Individual goals can be coordinated towards
group goals. A properly balanced organization facilitated
both management and operation of the enterprise.

 Encourages Growth & Diversification: It has enabled

organizations to grow and expand to giant sizes. It provides
flexibility for growth without losing control over various
activities.
 Optimum Use of New Technology: Optimum use of
technology permits optimum utilisation of human
resources. Sound organization ensures that every individual
is placed on the job for which one is best suited.

 Stimulates Innovation & Creativity: It stimulates creative

thinking and initiative on the part of employees. It provides
recognition for the professional and the specialist in terms
of their achievement.
 Encourages Good Human Relations: The assignment of
right jobs to right person improves job satisfaction and
inter-personal relations. Well-defined jobs and clear lines of
authority and responsibility ensure good human relations.

 Ensures Continuity of Enterprise: It provides scope for

the training and development of future management.

 Coordination: Division of labor, better utility of

technology and human talent helps to improve the
efficiency and quality of work.
Organisation Process

1–239
 Process of organizing:
1. Determination of objectives:It is the first step in
building up an organization. Organization is always
related to certain objectives. Therefore, it is essential
for the management to identify the objectives before
starting any activity. Organization structure is built on
the basis of the objectives of the enterprise
2. Enumeration of Objectives: If the members of the
group are to pool their efforts effectively, there must be
proper division of the major activities. The first step in
organizing group effort is the division of the total job
into essential activities. Each job should be properly
classified and grouped
3. Classification of Activities: The next step will be to
classify activities according to similarities and common
purposes and functions and taking the human and material
resources into account. Then, closely related and similar
activities are grouped into divisions and departments and
the departmental activities are further divided into sections.
4. Assignment of Duties: The assignments of activities
creates responsibility and ensures certainty of work
performance. The process should be carried down to the
lowest levels.
5. Delegation of Authority: Every individual is given the
authority required to carry out the responsibility assigned
to him. Every individual must know to who are his
subordinates.
 Organizational Structure
It is a framework within which an Organization
arranges it’s lines of authorities and
communications and allocates rights and
duties.
 Formal and Informal Organization

Formal structure is defined as the relationships

among organizational resources as outlined by
management.

Informal structure is defined as the patterns of

relationships that develop because of the
informal activities of organization members.

9
1–244
 DEPARTMENTATION
The basis by which jobs are grouped together.
Forms (or) Types
• Departmentation by Function
• Departmentation by Geography
• Departmentation by Customer Group
• Departmentation by Product
• Departmentation by Process

1–245
 Functional/Divisional Structures
• A division is a collection of functions working
together to produce a product.

– Product structure: divisions created according to the

type of product or service.
– Geographic structure: divisions based on the area of
a country or world served.
– Market structure: divisions based on the types of
customers served.
 Product Structure
CEO
C o r p o r a tio n

C o rp o ra te
M a n a g e rs

W a s h in g M a c h in e L ig h tin g T e le v is io n
D iv is io n D iv is io n D iv is io n
 Geographic
Organization
• Geographic Organization – The categorization of
organizational units by geography.

• Advantages :

 Allows for the use of local employees or salespeople.

• Disadvantages :

• Having multiple locations can be costly.

 Geographic Structure
CEO
C o r p o r a tio n

C o rp o r a te
M a n a g e rs

N o rth e rn W e s te rn S o u th e rn E a s te rn
R e g io n R e g io n R e g io n R e g io n
 Customer Organization
• Customer Organization – The categorization of organizational units by
customers served.

• Advantages :
 Allows employees to identify with a particular customer type.

• Disadvantages :

• Possible duplication of facilities and equipment.

 Market Structure
CEO
C o r p o r a tio n

C o rp o ra te
M a n a g e rs

L a r g e B u s in e s s S m a ll B u s in e s s E d u c a tio n a l In d iv id u a l
C u s to m e rs C u s to m e rs In s titu tio n s C u s to m e rs
 Hybrid Organization
• Hybrid Organization – An organizational structure that uses
multiple types of departmentalization within the organization.

• A small organization may have no organization at first. As it

grows, it may organize first on one basis, then another, and
then another.

• Hybrid organizations share the same advantages and

disadvantages as the organization types being used within it.
 Line Authority
• An organizational structure in which authority originates at
the top and moves downward in a line
• It is the simplest organizational structure.
Advantages :
• It is a clear authority structure that promotes rapid
decision making.
Disadvantages :
• May force managers to perform too broad a range of
duties.
• May cause the organization to become too dependent on
key employees who are capable of performing multiple
duties.
Line VS Staff

1–260
 Matrix Structure
• Matrix Structure – A hybrid organizational structure in which
individuals from different functional areas are assigned to work on a
specific project or task.

• Advantages :

• Employees are challenged constantly, interdepartmental cooperation

develops along with expanded managerial talent.

• Disadvantages:

• A role conflict can develop if the authority of the project manager is

not clearly delineated form that of a functional managers.
 Matrix Organization
Functional Control

Project A

Project-
based Project B
Control
Project C

Engineering Production Logistics Design

 Team Organization
Functional Control
Team Leader

Member A

Member B

Member C

Member D

Engineering Production Logistics Design

 Span of Control
The number of subordinates a manager can efficiently and
effectively direct

Concept
Concept
Wider
Widerspans
spansofofmanagement
managementincrease
increase
organizational
organizationalefficiency
efficiency

Narrow
NarrowSpan
SpanDrawbacks
Drawbacks
••Expense
Expenseofofadditional
additionallayers
layersofofmanagement
management
••Increased
Increasedcomplexity
complexityofofvertical
verticalcommunication
communication
••Encouragement
Encouragementofofoverly
overlytight
tightsupervision
supervisionand
and
discouragement
discouragementofofemployee
employeeautonomy
autonomy
Contrasting Spans of Control
 Determination of Span of Control
• Direct single relationship
SUPERVISOR
A

B C SUBORDINATES
• Direct group relationship
A

B C

• Cross relationship 1–267

 Factors that Determine an Effective Span
• Capacity of supervisor
• Capacity of subordinates.
• Nature of Work
• Type of Technology
• Delegation of Authority
• Clarity of plans
• Communication Techniques
• Using of objective standards
• Geographical closeness of employees
• Direction and Coordination

1–268
 Tall Structure
• Large, complex organizations often require a
taller hierarchy.
• In its simplest form, a tall structure results in
one long chain of command similar to the
military.
 Flat Organizational Structure
• Flat structures have fewer management levels,
with each level controlling a broad area or
group.
• Flat organizations focus on empowering
employees rather than adhering to the chain
of command.
Centralization & Decentralization
Centralization
The degree to which decision making is concentrated at a
single point in the organization.

Decentralization
The degree to which decision making is spread
throughout the organization.
CENTRALIZATION

1–274
1–275
1–276
Advantages & Disadvantages Centralization

ADVANTAGES: DISADVANTAGES:
• Provide Power • less motivated
• Minimal extensive • Neglected functions
controlling procedures for mid. Level
and practices
• Minimize duplication
of function

1–277
Advantages & Disadvantages Decentralization

ADVANTAGES: DISADVANTAGES:
• Quicker Decisions • Loss of Control
• Motivation of Local • Duplication of
Managers Services
• Reduces workload

1–278
Delegation of
Authority
1–279
Delegation of Authority (Distributing Authority)

• Authority:
 Power that has been
legitimized by the
organization.
• Delegation:
 The process by which
managers assign a
portion of their total
workload to others.

11 - 280
 PROCESS OF DELEGATION

Define
Determining the MOTIVATION to
RESPONSIBILITY
GOAL and AUTHORITY subordinates

Holding TRAINING to Establishing

ACCOUNTABILITY subordinates CONTROL
IMPORTANCE OF
DELEGATION
Relief to top managers.
Development of managers.
Development of subordinates.
Better decision-making.
Specialization.
Job satisfaction.
 BARRIERS TO
DELEGATION
Insecurity.
Lack of confidence in subordinates.
Fear of making mistakes.
Lack of initiative.
Absence of access to various resources.
WAYS TO OVERCOME
BARRIERS TO DELEGATION
Develop confidence
Communication.
Motivation.
Choose the right person for the right job.
Freedom to subordinates.
Clarity of task.
Matching the jobs with abilities of
subordinates.
STAFFING
 Job Analysis
 Human Resource
Planning
Tasks Responsibilities Duties
 Recruitment
 Selection
 Training and
Development
Job
 Performance
Descriptions Appraisal
Job
 Compensation and
Analysis
Job Benefits
Specifications  Safety and Health
 Employee and Labor
Relations
 Legal Considerations
Knowledge Skills Abilities  Job Analysis for
Teams 286
 "Staffing means filling
and keeping filled,
positions in the
organisation structure."

Harold
Koontz
 Importance Of
Staffing Function
IMPORTANCE OF STAFFING

FILLING ORGANISATIONAL POSITIONS:

Concerned with filling of good systematic staffing.

DEVELOPING COMPETENCIES:
Right job according to right person.

RETAINING PERSONNEL:
Continuing them in the organization.
Staffing ELEMENTS
ELEMENTS OF STAFFING
Manpower planning
Job analysis
Recruitment and selection
Training and Development
Performance appraisal
SCOPE OF STAFFING

Hiring
Remuneration
Motivation
Employee maintenance
Human relations
MANPOWER PLANNING
“ Manpower planning is the process by which an
organization ensures that it has the right number
and the kind of people, at the right place, at the
right time, capable of effectively and efficiently
completing those tasks that will help the
organization achieve its overall objectives”.
Features of manpower planning :

 To ensure right people at right place at

right time.
 To ensure future needs of manpower in
the light of organizational planning and
structure.
 Making the current manpower inventory
suitable for future managerial positions.
 Importance of manpower planning
 DEFINING FUTURE PERSONNEL NEED.
(Basis of recruiting and developing personnel)

COPING WITH CHANGES.

(Future changes can be cope up with
effective planning)

PROVIDING BASE FOR DEVELOPING TALENTS.

(Setting up the priorities before recruiting)

INCREASING INVESTMENT IN HUMAN

RESOURCES.
(Provides the way for effective utilization of
talents)
Job analysis
“Job analysis is the process of studying and
collecting information relating to the
operations and responsibilities of a specific
job. The immediate products of this analysis
are job descriptions and job specifications”.
Recruitment
Process of locating,
identifying, and attracting
capable candidates
Can be for current or future
needs
Critical activity for some
corporations.
What sources do we use for
recruitment
selection

Selection is the process of

differentiating between applicants
in order to identify and hire those
with a greater likelihood
of success in a job.
Sources of Recruitment
School
Placement Employee
Referrals

Internal
Searches
Recruitment Voluntary
Sources Applicants

Employment
Agencies Advertisements
 Difference : Recruitment &
selection
RECRUITMENT SELECTION

 To attract maximum number To choose best out of the

of candidates. available candidates.

 It creates application pool It is a rejection process

as large as possible. where few are selected.

 Techniques are not very Highly specialized techniques

intensive. are required.

 Outcome is application Outcome is the candidate who

pool. is offered job.
Recruitment & selection process
RECRUITMENT SELECTION
Advertisement Screening of
applications
Employment agencies Selection tests
On campus recruitment Interview
Deputation Checking of
references
Employee recommendations Physical
examination
Labor unions Approval by
authority
Gate hiring Placement
Training & development
TRAINING :
“Training is a short term process utilizing a systematic
and organized procedure by which non managerial personnel
learn technical knowledge and skills for a definite purpose.

 DEVELOPMENT:
“Development is a long term educational process utilizing a
systematic and organized procedure by which managerial
personnel learn conceptual and theoretical knowledge for
general purpose”.
Role of training & development
 INCREASE IN EFFICIENCY

 INCREASE IN MORALE OF EMPLOYEES

 BETTER HUMAN RELATIONS

 REDUCED SUPERVISION

 INCREASED ORGANIZATIONAL VIABILITY &

FLEXIBILITY
Performance appraisal

 Major key to managing itself

 Basis of determining who is promotable to higher
position
 Determines strengths and weaknesses of a
manager
 Measures performance in accomplishing goals and
plans
 Integral part of organization
 Recognize legitimate desire of employees for
progress
 Essential for effective management
Appraisal Methods
Graphic Rating Scale
Critical Incidence method
BARS
Self Appraisal
180 Degree Appraisal
360 Degree Appraisal
Management by Objective
Balance Score Card
Conclusion
Staffing is the most vital asset with an
organization, without which it cannot move
ahead in the competitive world. It can be
equated with HR management as both have
same sort of objectives. Staffing is an open
system approach. It is carried out within the
enterprise but is also linked to external
environment.
 UNIT

4
DIRECTING
1–307
 Directing
• Involves motivating subordinates, influencing
individuals or teams as they work, selecting
the most effective communication channels
or dealing in any way with employee behavior
issues.

1–308
www.ReadySetPresent.com

Page 309
Creativity - Defined

Creativity is the development of ideas about

products, practices, services, or procedures
that are novel and potentially useful to the
organization
What Is Creativity?
Creativity Needs:
 Skill: Learned capacity or talent to
carry out pre-determined results.

 Talent: Natural endowments of a

person.

 Personality: Patterns of relatively

enduring characteristics of human
behavior.
Intellectual Skills:
Humans have intellectual skills that
allow them to have creativity . . .

 Choosing  Translating
 Predicting  Recalling
 Interpreting  Manipulating
 Choosing: To select from a number
of possibilities and pick by
preference.

 Predicting: To state, tell about, or

make something known in advance,
on the basis of special knowledge.

 Interpreting: To explain and

understand the meaning of
something and to conceive the
significance of it.
 Translating: To transform something
from one state to another.

 Recalling: To remember and bring

back to mind a previous subject or
situation.

 Manipulating: To handle, manage, or

use (sometimes with skill) an object
in a process or performance.
Use Your Own Process:
With these skills we are able to . . .
 select knowledge and use it toward a
specific goal.
 interpret communication and share it.
 remember previous knowledge and
use it skillfully.
Use 1 or more of the 6 intellectual
skills to come up with a creative idea
Creativity can come in different forms . . .

 Scientific: inventions or medical cures.

 Artistic/Musical: beautiful paintings,

sculptures, or songs.

 Creative Writing: novels, short stories,

and poems.
 Innovation - Defined
Innovation is the implementation of new
ideas at the individual, group or
organizational level
ELEMENTS OF DIRECTION

Communication
Leading
Motivation
Supervision
Coordination
COMMUNICATION
Communication and Management

• Communication
– The sharing of information between two or
more individuals or groups to reach a
common understanding.

16-320
Communication and Management

• Importance of Good Communication

– Increased efficiency in new technologies
– Improved quality of products and services
– Increased responsiveness to customers
– More innovation through communication
 The Communication Process

• Phases of the Communication

Process:
– Transmission phase in which information
is shared by two or more people.
– Feedback phase in which a common
understanding is assured.

16-322
The Communication Process
Most Common Way to Communicate

Writin
g
Speak
ing

Visual
images

Body
language
 The Communication Process

• Sender – person wishing to share

information with some other person
• Message – what information to
communicate
• Encoding – sender translates the
message into symbols or language
• Noise – refers to anything that hampers
any stage of the communication process
 The Communication Process

• Receiver – person or group for which

the message is intended
• Medium – pathway through which an
encoded message is transmitted to a
receiver
• Decoding - critical point where the
receiver interprets and tries to make
sense of the message
Verbal & Nonverbal Communication

• Verbal Communication
– The encoding of messages into words,
either written or spoken
• Nonverbal
– The encoding of messages by means of
facial expressions, body language.

16-327
 Communication Media

• Face-to-Face
– Has highest
information
richness.
– Can take
advantage of
verbal and
nonverbal signals.

16-328
 Communication Media

• Spoken Communication
Electronically Transmitted
– Has the second highest information
richness.
– Telephone conversations are information
rich with tone of voice, sender’s emphasis,
and quick feedback, but provide no visual
nonverbal cues.

16-329
 Communication Media

• Personally Addressed Written

Communication
– Has a lower richness
– Personal addressing helps ensure receiver
actually reads the message—personal
letters and e-mail are common forms.

16-330
 E-Mail Dos and Don’ts

• E-mail allows telecommuting employees to

work from home and keep in contact.

– Pay attention to spelling and treat the message like

a written letter.

16-331
 Communication Media

• Impersonal Written Communication

– Has the lowest information richness.
– Good for messages to many receivers
where little or feedback is expected (e.g.,
newsletters, reports)

16-332
 Communication Networks in
Groups and Teams

Type of Network
Wheel Network Information flows to and from one central
member.

Chain Network Members communicate only with the people next

to them in the sequence.

Wheel and chain networks provide little interaction.

Circle Network Members communicate with others close to them

in terms of expertise, experience, and location.

All-Channel Networks found in teams with high levels of

Network communications between each member and all
others.

16-333
Communication
Networks in
Groups and
Teams

16-334
 Technological Advances in
Communication
• Internet
– Global system of computer networks that is
easy to join and is used by employees to
communicate inside and outside their
companies
• World Wide Web (WWW)
– “Business district” with multimedia
capabilities

16-335
 Technological Advances in
Communication
• Intranets
– A company-wide system of computer
networks for information sharing by
employees inside the firm.
• Advantages of intranets
– Can be used for a number of different
purposes by people who may have little
expertise in computer software and
programming

16-336
 Technological Advances in
Communication
• Groupware
– Computer software that enables members
of groups and teams to share information
with each other and improve
communication.

16-337
New Technologies
for Communication

 Informational databases
 Electronic mail systems
 Voice mail systems
 Fax machine systems
 Cellular phone systems
 Barriers to Effective
Communication

– Messages that are unclear, incomplete, difficult

to understand
– Messages with no provision for feedback
– Messages that are misunderstood
– Messages delivered through automated
systems that lack the human element

16-339
 Movie Example: The Terminal

Is there communication
between Viktor and
Frank?
Why or why not?

16-340
FOUR BASIC DIRECTIONS
Downward Communication

Travels from superior to subordinates.

To give specific task directives about job

instruction

To give information about organization

procedures and practices
To tell subordinates about their
performance

To provide ideological-type information

to facilitate the goals
Upward Communication

Travels from subordinate to superior. The

most common purpose of this
communication is to provide feedback on
how well things are going.
It provides also the middle level
managers the opportunity to represent their
subordinates to the upper level managers.
Lateral Communication

Takes place between people in the same

level of the management hierarchy. The
most common reason for this
communication flow is to provide
coordination and teamwork
Diagonal Communication

Occurs between people who are neither

in the same department nor in the same
level of management hierarchy. In this case,
someone communicate either downward or
upward with someone in another functional
area.
OVERCOMING BARRIERS TO
COMMUNICATION
Use feedback to facilitate understanding
and increase the potential for appropriate
action

Repeat message in order to provide

assurance that they are properly received
Use multiple channels so that the
accuracy of the information may be
enhanced

Use simplified language that are easily

understandable and which eliminates the
possibility of people getting mixed-up
with meanings
MOTIVATION
“Motivation is the work a manager
performs to inspired, encourage,
people to take required action”
 Need Theory
People are motivated to obtain outcomes at work to
satisfy their needs.
1)Managers must determine what needs worker wants
satisfied.
2)Ensure that a person receives the outcomes when
performing well.
◦ Several needs theories exist.
 Maslow’s Hierarchy of Needs.
 Alderfer’s ERG.
 Maslow’s Hierarchy of Needs
Need Level Description Examples
Self-
Self- Realize
Realizeone’s
one’s Use
Useabilities
abilities
Actualization
Actualization full
fullpotential
potential to
tothe
thefullest
fullest

Feel
Feelgood
good Promotions
Promotions
Esteem
Esteem about
aboutoneself
oneself &&recognition
recognition

Social
Social Interpersonal
Interpersonal
Belongingness
Belongingness interaction,
interaction,love
love relations,
relations,parties
parties

Job
Jobsecurity,
security,
Safety
Safety Security,
Security,stability
stability health
healthinsurance
insurance

Food,
Food,water,
water, Basic
Basicpay
paylevel
level
Physiological
Physiological shelter
shelter to
tobuy
buyitems
items

Lower level needs must be satisfied before higher needs are

addressed.
 Alderfer’s ERG
Highest Need Level Description Examples

Self-development,
Self-development, Worker
Workercontinually
continually
Growth
Growth creative
creativework
work improves
improvesskills
skills

Interpersonal
Interpersonal Good
Goodrelations,
relations,
Relatedness
Relatedness relations,
relations,feelings
feelings feedback
feedback
Lowest

Food,
Food,water,
water, Basic
Basicpay
paylevel
level
Existence
Existence shelter
shelter to
tobuy
buyitems
items

After lower level needs satisfied, person seeks higher needs. When
unable to satisfy higher needs, lower needs motivation is raised.
 Maslow’s Hierarchy of Needs

SA
Esteem
r
e
rd
to
es
gh

Love (Social)
hi
o t
st
we
Lo

Safety & Security

Physiological
 Motivational Theories X & Y

SA Theory Y - a set of
assumptions of how to
Esteem manage individuals
motivated by higher
Love (Social) order needs
Theory X - a set of
Safety & Security assumptions of how to
manage individuals
Physiological motivated by lower
order needs
 Alderfer’s ERG Theory

SA Growth
Esteem

Love (Social)
Relatedness
Safety & Security
Existence
Physiological
 Herzberg’s Two-Factor Theory

Hygiene Factor - work condition related to

dissatisfaction caused by discomfort or pain
 maintenance factor

 contributes to employee’s feeling not dissatisfied

 contributes to absence of complaints

Motivation Factor - work condition related to the

satisfaction of the need for psychological growth
 job enrichment

 leads to superior performance & effort

Nature and Characteristics Motivation

Isan internal feeling

Motivation is related to needs
Motivation lead to goal oriented
behaviour
Motivation can be positive or negative
Importance of Motivation

1.Puts human resources into action

Every concern requires physical,

financial and human resources to
accomplish the goals.
2. Improves level of efficiency of
employees

The level of a subordinate or an

employee does not only depend upon his
qualifications and abilities.
3. Leads to achievement of organizational
goals

The goals of an enterprise can be

achieved

4. Builds friendly relationship

Motivation is an important factor which

brings employees satisfaction.
Organizational
Culture

1–363
Definition
• The general pattern of behaviour, shared beliefs
and values that organization members have in
common.

1–364
ELEMENTS
six elements are:

Stories: The past events and people

talked about inside and outside the
company.
Rituals and Routines: The daily
behavior and actions of people that signal
acceptable behavior.

1–
365
Symbols: The visual representations of the
company including logos
Organizational Structure: This includes
both the structure defined by the
organization chart, and the unwritten lines
of power.
Control Systems: The ways that the
organization is controlled.
Power Structures: involve one or two key
senior executives, a whole group of
executives, or even a department
1–
366
MANAGING CULTURAL
DIVERSITY
Setting a good example
Communicate in writing
Training programs
Recognize individual differences
Differences in cultural background
Flexible work environment
Continuous monitoring

1–
367
LEADERSHIP
Leadership Is…

- Process of directing the behaviour of

others toward the accomplishments of
objectives.

- Is one of the important parts of direction.

LEADING IN TIMES OF CRISIS

Stay calm
Be visible
Put people before business
Tell the truth
Know when to get back to business
Leadership
Theories
1–
371
Behavioral Theories (LEADERSHIP
STYLES)
1.Autocratic Leadership

Under the autocratic leadership style, all

decision-making powers are centralized in the
leader, as with dictators.
The autocratic management has been
successful as it provides strong motivation to the
manager. It permits quick decision-making.
2.Participative Leadership

consists of the leader sharing the

decision-making abilities with group
members by promoting the interests of the
group members and by practicing social
equality.
3.Free- rein Leadership

A person may be in a leadership position

without providing leadership, leaving the
group to fend for itself. Subordinates are
given a free hand in deciding their own
policies and methods.
4.Toxic leadership

A toxic leader is someone who has

responsibility over a group of people or an
organization.
Importance of Leadership
Initiates action- Leader is a person who
starts the work by communicating the
policies and plans to the subordinates
from where the work actually starts.

Motivation- He motivates the employees

with economic and non-economic rewards
and thereby gets the work from the
subordinates.
Providing guidance- Guidance here
means instructing the subordinates the
way they have to perform their work
effectively and efficiently.

Creating confidence- Confidence is an

important factor which can be achieved
through expressing the work efforts to the
subordinates,
Building morale- Morale denotes willing
co-operation of the employees towards
their work and getting them into
confidence and winning their trust.

Builds work environment- An efficient

work environment helps in sound and
stable growth. He should treat employees
on humanitarian terms.
Co-ordination- This synchronization can
be achieved through proper and effective
co-ordination which should be primary
motive of a leader.
 UNIT-5
CONTROLLING

1–381
Controlling
Process
 The Purpose of Control

Adapt to Limit the

environmental change accumulation of error

Control helps
the organization

Cope with organizational

Minimize costs
complexity

20 - 383
 Levels of Control
• Operational control:
 Focuses on the processes used to transform
resources into products or services.
• Financial control:
 Concerned with financial resources.
• Structural control:
 How the elements of structure are serving the
intended purposes.
• Strategic control:
 How effective are the functional strategies helping the
organization meet its goals.

20 - 384
Levels of Control

20 - 385
Who Is Responsible for Control?

• Control rests with all

managers.
• Large corporations
have a controller.
• What does a
controller do?
 Helps line managers
with their control
activities.

20 - 386
Process of
controlling
1–387
Steps in the Control Process
• Establish standards.
• Measure performance.
• Compare performance against standards.
• Determine need for corrective action.
• The sub-steps:
Maintain status quo.
Correct deviation.
Change standards.

20 - 388
Steps in the Control Process

20 - 389
1. Establishing Standards
Measurable or tangible(Output Standards)
• Standards can be measured and expressed
quantitatively are called as measurable standards.
They can be in form of cost, output, expenditure,
time, profit, etc.
Non-measurable or intangible(Input Standards)
• There are standards which cannot be measured
quantitatively. For example- performance of a
manager, deviation of workers, their attitudes
towards a concern. These are called as intangible
standards.
 2. Measuring Actual Performance
• Measurements must be accurate enough to spot
deviations or variances between what really
occurs and what is most desired.

• Without measurement, effective control is not

possible.
3.Comparing Actual with Standard
• Deviation is as the gap between actual
performance and the planned targets.

• For example, if stationery charges increase

by a minor 5 to 10%, it can be called as a
minor deviation.
• On the other hand, if monthly production
decreases continuously, it is called as
major deviation.
Acceptable Range of Deviation
4.Correction of Deviation

• Taking any action necessary to correct or

improve things.

There are two types of exceptions:

Problems - below standard
Opportunities - above standard
Types of Control
BUDGETARY CONTROL
The establishment of budgets, relating
the responsibilities of executives to the
requirements of a policy

1–397
Salient features:
a. Objectives: Determining the objectives
b. Activities: Determining the variety of
activities
c. Plans: Drawing up a plan
d. Performance Evaluation: Laying out a
system of comparison of actual
performance
e. Control Action: Ensuring that when the
plans are not achieved, corrective
actions are taken
1–398
CLASSIFICATION OF BUDGETS

1–399
• Long Term Budget: prepared for periods longer
than a year ex: R&D Budget
• Short Term Budget: less than year
ex:cash budget
• Basic Budget: remains unaltered
• Current Budget: related to the current conditions
• Fixed Budget: remain unchanged
• Flexible Budget: various budgets for different
levels of activity
• Functional Budget: the individual functions in an
organization
• Master Budget: Profit & Loss Account
1–400
BUDGETARY CONTROL
TECHNIQUES

1–401
1. Revenue and Expense Budgets:
• budgets spell out plans for revenues and
operating expenses in rupee terms.

1–402
2.Time, Space, Material, and
Product Budgets:
• Many budgets are better expressed in quantities
rather than in monetary(money) terms.

1–403
3. Capital Expenditure Budgets
• capital expenditures for plant, machinery,
equipment, inventories, and other items.

1–404
4. Cash Budgets
• cash budget is simply a forecast of cash receipts

1–405
5. Variable Budget
• analysis of expense items to determine how
individual costs should vary with volume of
output

1–406
6. Zero Based Budget
• By starting the budget of each package from
base zero, budgeters calculate costs

1–407
NON-BUDGETARY CONTROL
TECHNIQUES
• many traditional control devices not connected
with budgets, although some may be related to,
and used with, budgetary controls.

1–408
i) Statistical data:
• Analysing the numerical data

1–409
ii) Break- even point analysis

• chart depicts the relationship of sales and

expenses

1–410
iii) Operational audit:
• internal audit

1–411
iv) Personal observation
• one should never overlook the importance of
control through personal observation.

1–412
v) PERT(Program (or Project)
Evaluation and Review Technique):

• one should never overlook the importance of

control through personal observation.

1–413
vi) GANTT CHART:
• a type of bar chart that illustrates a project
schedule
• Gantt charts illustrate the start and finish dates
of the terminal elements and summary elements
of a project.
 PRODUCTIVITY

• Productivity refers to the ratio between the

output from production processes to its input.
Typical Productivity
Calculations
a) Physical Productivity
This is a ratio of the amount of product to the
resources consumed.
b) Functional Productivity
This is a ratio of the amount of the functionality
delivered to the resources consumed
c) Economic Productivity
ratio of the value of the product produced to
the cost of the resources used to produce it.
 COST
CONTROL
• Cost control is the measure taken by
management to assure that the cost objectives
set down in the planning stage are attained
Steps involved in designing
process of cost control system:
• Establishing norms: To exercise cost control it
is essential to establish norms, targets or
parameters
• Appraisal: The actual results are compared with
the set norms.
• Corrective measures: The variances are
reviewed and remedial measures or revision of
targets, norms, standards etc., as required are
taken.
Advantages of cost control
• Better utilization of resources
• To prepare for meeting a future competitive
position.
• Reasonable price for the customers
• Improves the image of company for long-term
benefits.
• Improve the rate of return on investment.
 PURCHASE CONTROL
• Purchase control is an element of material
control.
• The advantages derived from a good and adequate
system of the purchase control are as follows:
a) Continuous availability of materials
b) Purchasing of right quantity
c) Economy in purchasing
d) Works as information centre
e) Development of business relationship
f) Finding of alternative source of supply
g) Fixing responsibilities
MAINTENANCE CONTROL
• Maintenance department has to excercise effective cost
control, to carry out the maintenance functions in a pre-
specified budget
• First line supervisors must be apprised of the cost
information of the various materials
• A monthly review of the budget provisions and
expenditures actually incurred in respect of each
center/shop
• The total expenditure to be incurred can be uniformly
spread over the year
• The controllable elements of cost such as manpower
cost and material cost can be discussed
 QUALITY
CONTROL
• Quality control refers to the technical process
that gathers, examines, analyze & report the
progress of the project & conformance with the
performance requirements
steps involved in quality control process are
1) Determine what parameter is to be controlled.
2) Establish its criticality
3) Establish a specification for the parameter to be
controlled
4) Produce plans for control
5) Organize resources to implement the plans
6) Install a sensor at an appropriate point
7) Collect and transmit data to a place for analysis
8) Verify the results and diagnose the cause of variance.
9) Propose remedies and decide on the action
10) Take the agreed action and check that the variance
Advantages and disadvantages
• Advantages include better products and services
• Disadvantages include needing more man
power/operations to maintain quality control
 PLANNING
OPERATIONS
• An operational planning is a subset of strategic
work plan. It describes short-term ways of
achieving milestones and explains how, or what
portion of, a strategic plan will be put into
operation during a given operational period, in
the case of commercial application
 Like a strategic plan, an operational plan
addresses four questions:
• Where are we now?
• Where do we want to be?
• How do we get there?
• How do we measure our progress?
Operational plans should contain:
• clear objectives
• activities to be delivered
• quality standards
• desired outcomes
• staffing and resource requirements
• implementation timetables
• a process for monitoring progress.
References
• www.slideshare.net
• www.docstoc.com
• www.slideworld.com
• www.nptel.ac.in
• www.scribd.com
• http://opencourses.emu.edu.tr/
• http://engineeringppt.blogspot.in/
• http://www.pptsearchengine.net/
• www.4shared.com
• www.eazynotes.com
Book References & PPT
materials
1. Stephen P. Robbins and Mary Coulter,
'Management', Prentice Hall of India.
2. Charles W L Hill, Steven L McShane,
'Principles of Management', Mcgraw Hill
Education
3.Hellriegel, Slocum & Jackson, ' Management - A
Competency Based Approach

1–429