INTEGRAL UNIVERSITY, LUCKNOW

DIRECTORATE OF DISTANCE EDUCATION

BBA-104/ BCA-201 Paper Code: POM/B

PRINCIPLES OF MANAGEMENT

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original content writers/authors/publishers.

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CONTENTS

UNIT-1 INTRODUCTION

UNIT-2 PLANNING

UNIT-3 ORGANIZING

UNIT-4 MOTIVATING AND LEADING PEOPLE AT

WORK
UNIT-5 MANAGERIAL CONTROL

UNIT-6 MANAGEMENT OF CHANGE

BIBLIOGRAPHY

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 UNIT-1 INTRODUCTION Introduction

Notes
CONTENTS
 Concept and nature of management
 Development of management thought
 Review Questions
 Further Readings
Various Concept of Management
Quite often the term management is used to refer to both the persons who
occupy managerial positions as well as to the activities which managers
perform. In fact, there can be five different concepts of management:
1. Management as an economic resource:
According to an economist, management is one of the factors of
production, the other factors being land, labor, capital and
entrepreneurship. In a small enterprise, the owner may himself act as the
manager. But in large corporations, there is a divorce between ownership
and management.
Management is the most active factor of production because it assembles
and integrates the other factors. The efficient use of land and capital
depends upon labor which is in turn governed by management.
Management coordinates the other Ms (manpower, methods, markets,
materials, machinery and money) of an organization and, therefore, it
occupies a unique place among the productive factors as can be seen.
The efficiency of management factor can be improved through training
and development of executives. The importance of management
increases with the tempo of industrialization.
The economic and social development of mankind since the Second
World War has occurred as a result of systematic and purposeful work
on developing managers.
We no longer talk of capital and labor but of management and labor. As
an economic resource, management makes a productive enterprise out of
physical and human resources.
Efficient management is the most important input in the success of an
organization. The inputs of manpower, materials, machinery and money
do not by themselves ensure growth; they become productive through the
catalyst of management.
2. Management as a class or elite:
Sociologists look upon management as a distinct class in society with its
own status system. With the growing importance of organizations and
the need for their efficient management, managers have become a very
powerful or elite group in society.
In the words of Peter Ducker, the professional executive has become the
key leadership figure in modern industrial society. As a team or group of
persons, management consists of all those who are responsible for the
establishment and accomplishment of objectives through the direction of
others.
These people are individually known as 'managers'. Any person who
performs the managerial job is a manager. Managers have the required

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Principles of
knowledge and skills. The managerial class exercises leadership and
coordinates the efforts of human beings.
management
This class includes various types of managers e.g., family managers,
Notes professional managers, civil servants who manage public enterprises, etc.
The management team of an organization is comprised of all executive
right from the chief executive unto the supervisor.
For instance, the statement that the management of X company is very
good refers to the managers of that company. As a competent class,-
managers strike a balance among diverse interest.
3. Management as a system of authority:
Experts in the field of administration consider management as a system
of authority. According to Her bison and Myers, "management is a rule-
making and rule- enforcing body, and within itself it is bound together by
a web of relationships between superiors and subordinates".
There is a hierarchy of authority among people operating in an
organization. Managers at different levels possess varying degrees of
authority. In general, the higher level managers have the authority to lay
down the goals and policies of the enterprise while those at the lower
level are authorized to execute the plans and policies to achieve the
desired goals.
There should be well defined superior subordinate relationships at all
levels of decision making. Management is "a multipurpose organ that
manages a business and manages managers and manages worker and
work".
Over the decades there have been different approaches to management
authority, e.g., authoritarian, humanitarian, constitutional and par-
deceptive approach.
4. Management as a separate discipline:
As a field of study or academic discipline, management is an organized
body of knowledge. It is comparatively a new field of learning and is
being taught in universities and institutes of management. Several
specialized courses have been developed in different branches of
management.
Management discipline is a part of social sciences and humanities. It
provides the principles and practices and a person must learn them in
order to become a successful manager.
Today, management is a very popular subject and there is great rush for
admission into management courses. The growing importance of
management discipline has been described as 'Managerial Revolution'.
Management is a young and growing discipline and its status is likely to
increase in the times to come,
5. Management as a process:
As a process, management is a series of inter-related activities by which
managers determine and accomplish goals in organized Endeavour. It is
a rational, intellectual, dynamic and continuous process, common to all
organizations. Management is an important process of coordinating and
integrating specialized activities of several persons for the achievement
of common objectives.
It is the process through which all the resources are organized and
utilized to attain maximum output and efficiency through minimum in

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out. The process of managing consists of planning (preparing for future), Introduction
organizing (combining resources), staffing, directing (guiding and
supervising people) and controlling (keeping on the right track) of Notes
human efforts in order to achieve common objectives.
This is the most popular interpretation of the term management because
it describes what managers do. The true character of management can be
seen as a process composed of several elements or functions.
Management is what managers do.
The different concepts of management described above are not
contradictory to one another. They are merely different ways of looking
at management. In fact, management is a synthesis of alt these view -
points.
Definitions of Management
It is very difficult to give a precise definition of the term 'management'.
Different scholars from different disciplines view and interpret
management from their own angles. The economists consider
management as a resource like land, labour, capital and organisation. The
bureaucrats look upon it as a system of authority to achieve business
goals. The sociologists consider managers as a part of the class elite in
the society.
Management and leadership author Stephen Covey describes the Seven
Habits model of management and leadership for personal and business
growth. The Seven Habits are: be proactive, begin with the end in mind,
put first things first, think win-win, seek first to understand and then to
be understood, synergize, and learn from previous experience.
According to George R. Terry, ''Management Is a distinct process
consisting of planning, organising, actuating and controlling; utilising in
each both science and art, and followed in order to accomplish pre-
determined objectives."
Management is a multipurpose organ that manage a business and
manages Managers and manages Workers and work.
—Peter Drucker
According to Peterson and Plowman, "Management may be defined as
the process by means of which the purpose and objectives of a particular
human group are determined, clarified and effectuated"
According to Harold Koontz, "Management is the art of getting things
done through others and with formally organised groups."
One popular definition is by Mary Parker Follett. Management, she
says, is the "art of getting things done through people."
According to F.W. Taylor, "Management is the art of knowing what you
want to do and then seeing that they do it in the best and the cheapest
may."
Main Characteristics or Salient Features or Nature Of
Management
1) Management is Universal:
Management is required in every form of group activity whether it is a
family, a club, a government, an army or a business enterprise. The

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Principles of
approach and style of management may differ from one organanisation
to another. But in each case it involves marshalling of human and
management
physical resources towards the attainment of common objectives.
Notes 2) Management of is purposeful
Management exists for the achievement of specific objectives It is a
means towards the accomplishment of predetermined goals. All
activities of management are goal oriented.
3) Management is a unifying force
The essence of management lies in the co-ordination of individual efforts
into a team. Management reconciles the individual goals with
organizational goals. As a unifying force, management creates a whole
that is more than the sum of individual parts. It integrates human and
other resources.
4) Management is a social process
Management is done by people, through people and for people. It is a
social process became it is concerned with interpersonal relations.
Human factor is the most important element in management.
5) Management is multi disciplinary
Management has to deal with human behavior under dynamic conditions.
Therefore, it depends upon wide knowledge derived from several
disciplines like engineering, sociology, psychology, economics,
mathematics, anthropology… etc.
6) Management is a continuous process
Management is a dynamic and an on-going process. The cycle of
management continues to operate so long as there is organized action for
the achievement of group goals.
7) Management is intangible
Management is an unseen or invisible force. It cannot be seen but its
presence can be felt everywhere in the form of results. However, the
managers who perform the functions of management are very much
tangible and visible.
8) Management is situational
Efficient management is always situational or contingency management
because there is no one best way of doing things. Management is all
about the application of knowledge to realities in order to attain derived
results.
9) Management is essentially an executive function
It deals with the active direction and control of the activities of people to
attain predetermined objectives. Management is a technique by means of
which the objectives of human group are determined, clarified and
accomplished.
10) Management is an art as well as a science
Management contains systematic body of theoretical knowledge on well
as the practical application such knowledge.
Functions of Management
Management has been described as a social process involving
responsibility for economical and effective planning & regulation of
operation of an enterprise in the fulfillment of given purposes. It is a
dynamic process consisting of various elements and activities. These
activities are different from operative functions like marketing, finance,

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purchase etc. Rather these activities are common to each and every Introduction
manger irrespective of his level or status.
Different experts have classified functions of management. According to Notes
George & Jerry, “There are four fundamental functions of management
i.e. planning, organizing, actuating and controlling”.
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 Controlling.
For theoretical purposes, it may be convenient to separate the function of
management but practically these functions are overlapping in nature i.e.
they are highly inseparable. Each function blends into the other & each
affects the performance of others.

1. Planning
It is the basic function of management. It deals with chalking out a
future course of action & deciding in advance the most appropriate
course of actions for achievement of pre-determined goals.
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”. A plan is a future course of actions. It is an
exercise in problem solving & decision making. Planning is
determination of courses of action to achieve desired goals. Thus,
planning is a systematic thinking about ways & means for
accomplishment of pre-determined goals. Planning is necessary to
ensure proper utilization of human & non-human resources. It is all
pervasive, it is an intellectual activity and it also helps in avoiding
confusion, uncertainties, risks, wastages etc.
2. Organizing
It is the process of bringing together physical, financial and human
resources and developing productive relationship amongst them for
achievement of organizational goals. According to Henry Fayol, “To
organize a business is to provide it with everything useful or its
functioning i.e. raw material, tools, capital and personnel’s”. To
organize a business involves determining & providing human and
non-human resources to the organizational structure. Organizing as a
process involves:

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Principles of
 Identification of activities.
 Classification of grouping of activities.
management
 Assignment of duties.
Notes  Delegation of authority and creation of responsibility.
 Coordinating authority and responsibility relationships.

3. Staffing
It is the function of manning the organization structure and keeping it
manned. Staffing has assumed greater importance in the recent years
due to advancement of technology, increase in size of business,
complexity of human behavior etc. The main purpose o staffing is to
put right man on right job i.e. square pegs in square holes and round
pegs in round holes. According to Kootz & O’Donell, “Managerial
function of staffing involves manning the organization structure
through proper and effective selection, appraisal & development of
personnel to fill the roles designed un the structure”. Staffing
involves:
 Manpower Planning (estimating man power in terms of
searching, choose the person and giving the right place).
 Recruitment, Selection & Placement.
 Training & Development.
 Remuneration.
 Performance Appraisal.
 Promotions & Transfer.
4. Directing
It is that part of managerial function which actuates the
organizational methods to work efficiently for achievement of
organizational purposes. It is considered life-spark of the enterprise
which sets it in motion the action of people because planning,
organizing and staffing are the mere preparations for doing the work.
Direction is that inert-personnel aspect of management which deals
directly with influencing, guiding, supervising, motivating sub-
ordinate for the achievement of organizational goals. Direction has
following elements:
 Supervision
 Motivation
 Leadership
 Communication
Supervision- implies overseeing the work of subordinates by
their superiors. It is the act of watching & directing work &
workers.
Motivation- means inspiring, stimulating or encouraging the sub-
ordinates with zeal to work. Positive, negative, monetary, non-
monetary incentives may be used for this purpose.
Leadership- may be defined as a process by which manager
guides and influences the work of subordinates in desired
direction.
Communications- is the process of passing information,
experience, opinion etc from one person to another. It is a bridge
of understanding.

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 5. Controlling Introduction
It implies measurement of accomplishment against the standards and
correction of deviation if any to ensure achievement of organizational Notes
goals. The purpose of controlling is to ensure that everything occurs
in conformities with the standards. An efficient system of control
helps to predict deviations before they actually occur. According to
Theo Haimann, “Controlling is the process of checking whether or
not proper progress is being made towards the objectives and goals
and acting if necessary, to correct any deviation”. According to
Koontz & O’Donell “Controlling is the measurement & correction of
performance activities of subordinates in order to make sure that the
enterprise objectives and plans desired to obtain them as being
accomplished”. Therefore controlling has following steps:
a. Establishment of standard performance.
b. Measurement of actual performance.
c. Comparison of actual performance with the standards and
finding out deviation if any.
d. Corrective action.
Interaction of Functions and The Management Process
The elements in the management process are actually the basic functions
of management these functions constitute the management process in
practice. Management process is in fact, management in practice. This
process suggests what a manager is supposed to, do or the basic
functions that he has to perform while managing the job assigned to him.
Luther Gullic gave a new formula to suggest the elements of
Management Process i.e. basic functions of management. According to
him, management process may be indicated by the word "PODSCORB”.
Here, ‘P' states for 'planning'. "O" for 'organising', "D" for 'directing', "S"
for 'Staffing', "CO" for 'Coordinating, "R" for 'Reporting' and "B" for
'Budgeting'. Gullic coined the word "PODSCORB" to suggest seven
functions of management.
The following figures show the management process and the elements
involved:
Management Process

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Principles of
management
Elements of Management Process
1. Planning: Planning is the primary function of management. It
Notes involves determination of a course of action to achieve desired
results/objectives. Planning is the starting point of management process
and all other functions of management are related to and dependent on
planning function. Planning is the key to success, stability and prosperity
in business. It acts as a tool for solving the problems of a business unit.
Planning plays a pivotal role in business management It helps to
visualize the future problems and keeps management ready with possible
solutions.
2. Organising: Organising is next to planning. It means to bring the
resources (men, materials, machines, etc.) together and use them
properly for achieving the objectives. Organisation is a process as well as
it is a structure. Organising means arranging ways and means for the
execution of a business plan. It provides suitable administrative structure
and facilitates execution of proposed plan. Organising involves different
aspects such as departmentation, span of control delegation of authority,
establishment of superior-subordinate relationship and provision of
mechanism for co-ordination of various business activities.
3. Staffing: Staffing refers to manpower required for the execution of a
business plan. Staffing, as managerial function, involves recruitment,
selection, appraisal, remuneration and development of managerial
personnel. The need of staffing arises in the initial period and also from
time to time for replacement and also along with the expansion and
diversification of business activities. Every business unit needs efficient,
stable and cooperative staff for the management of business activities.
Manpower is the most important asset of a business unit. In many
organisations, manpower planning and development activities are
entrusted to personnel manager or HRD manager. 'Right man for the
right job' is the basic principle in staffing.
4. Directing (Leading): Directing as a managerial function, deals with
guiding and instructing people to do the work in the right manner.
Directing/leading is the responsibility of managers at all levels. They
have to work as leaders of their subordinates. Clear plans and sound
organisation set the stage but it requires a manager to direct and lead his
men for achieving the objectives. Directing function is quite
comprehensive. It involves Directing as well as raising the morale of
subordinates. It also involves communicating, leading and motivating.
Leadership is essential on the part of managers for achieving
organisational objectives.
5. Coordinating: Effective coordination and also integration of
activities of different departments are essential for orderly working of an
Organisation. This suggests the importance of coordinating as
management function. A manager must coordinate the work for which he
is accountable. Co-ordination is rightly treated as the essence of
management. It may be treated as an independent function or as a part of
organisms function. Coordination is essential at all levels of
management. It gives one clear-cut direction to the activities of
individuals and departments. It also avoids misdirection and wastages

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and brings unity of action in the Organisation. Co-ordination will not Introduction
come automatically or on its own Special efforts are necessary on the
part of managers for achieving such coordination. Notes
6. Controlling: Controlling is an important function of management. It
is necessary in the case of individuals and departments so as to avoid
wrong actions and activities. Controlling involves three broad aspects:
(a) establishing standards of performance, (b) measuring work in
progress and interpreting results achieved, and (c) taking corrective
actions, if required. Business plans do not give positive results
automatically. Managers have to exercise effective control in order to
bring success to a business plan. Control is closely linked with other
managerial functions. It is rightly treated as the soul of management
process. It is true that without planning there will be nothing to control It
is equally true that without control planning will be only an academic
exercise Controlling is a continuous activity of a supervisory nature.
7. Motivating: Motivating is one managerial function in which a
manager motivates his men to give their best to the Organisation. It
means to encourage people to take more interest and initiative in the
work assigned. Organisations prosper when the employees are motivated
through special efforts including provision of facilities and incentives.
Motivation is actually inspiring and encouraging people to work more
and contribute more to achieve organisational objectives. It is a
psychological process of great significance.
8. Communicating: Communication (written or oral) is necessary for
the exchange of facts, opinions, ideas and information between
individual’s and departments. In an organisation, communication is
useful for giving information, guidance and instructions. Managers
should be good communicators. They have to use major portion of their
time on communication in order to direct, motivate and co-ordinate
activities of their subordinates. People think and act collectively through
communication. According to Louis Allen, "Communication involves a
systematic and continuing process of telling, listening and
understanding"
Management as a Profession
Over a large few decades, factors such as growing size of business unit,
separation of ownership from management, growing competition etc
have led to an increased demand for professionally qualified managers.
The task of manager has been quite specialized. As a result of these
developments the management has reached a stage where everything is
to be managed professionally.
A profession may be defined as an occupation that requires specialized
knowledge and intensive academic preparations to which entry is
regulated by a representative body. The essentials of a profession are:
1. Specialized Knowledge - A profession must have a systematic body
of knowledge that can be used for development of professionals. Every
professional must make deliberate efforts to acquire expertise in the
principles and techniques. Similarly a manager must have devotion and
involvement to acquire expertise in the science of management.

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Principles of
2. Formal Education & Training - There are no. of institutes and
management universities to impart education & training for a profession. No one can
practice a profession without going through a prescribed course. Many
Notes institutes of management have been set up for imparting education and
training. For example, a CA cannot audit the A/C’s unless he has
acquired a degree or diploma for the same but no minimum
qualifications and a course of study has been prescribed for managers by
law. For example, MBA may be preferred but not necessary.
3. Social Obligations - Profession is a source of livelihood but
professionals are primarily motivated by the desire to serve the society.
Their actions are influenced by social norms and values. Similarly a
manager is responsible not only to its owners but also to the society and
therefore he is expected to provide quality goods at reasonable prices to
the society.
4. Code of Conduct - Members of a profession have to abide by a code
of conduct which contains certain rules and regulations, norms of
honesty, integrity and special ethics. A code of conduct is enforced by a
representative association to ensure self discipline among its members.
Any member violating the code of conduct can be punished and his
membership can be withdrawn. The AIMA has prescribed a code of
conduct for managers but it has no right to take legal action against any
manager who violates it.
5. Representative Association - For the regulation of profession,
existance of a representative body is a must. For example, an institute of
Charted Accountants of India establishes and administers standards of
competence for the auditors but the AIMA however does not have any
statuary powers to regulate the activities of managers.
From above discussion, it is quite clear that management fulfills several
essentials of a profession, even then it is not a full fledged profession
because:
1. It does not restrict the entry in managerial jobs for account of one
standard or other.
2. No minimum qualifications have been prescribed for managers.
3. No management association has the authority to grant a certificate of
practice to various managers.
4. All managers are supposed to abide by the code formulated by
AIMA,
5. Competent education and training facilities do not exist.
6. Managers are responsible to many groups such as shareholders,
employees and society. A regulatory code may curtail their freedom.
7. Managers are known by their performance and not mere degrees.
8. The ultimate goal of business is to maximize profit and not social
welfare. That is why Haymes has rightly remarked, “The slogan for
management is becoming - ’He who serves best, also profits most’.”

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Professional Management in India Introduction
The challenges faced by the professional managers in the contemporary
Indian industrial set up Notes
1. Unrealistic deadlines - Many project managers lament the fact that
they are assigned projects and given deadlines. Of course, there are
absolute deadlines for projects such as regulatory compliance or
marketing events, but many dates are tied to factors unrelated to a
project's scope (i.e., end of quarter, budget cycle, boss's vacation).
For projects that do not have "absolute" time constraints, there are ways
to manage the schedule. First, manage the stress of the project deadline
and the project issues with creative planning, alternatives analysis, and
communication of reality to the project stakeholders. Then, determine
what deadlines are tied to higher-level objectives, and establish links to
schedules of other projects in the organization.
2. Scope changes - One of the rules of project management is that change
is inevitable. What does not have to be inevitable is uncontrolled change,
also known as scope creep. Project managers should analyze each
request and then communicate the impact of each change and the
alternatives, if any exist. You can't eliminate change, but you can make
your stakeholders understand how the change affects the schedule, cost,
scope, and quality of the project.
3. Failure to manage risk - Many project plans have a list of risks, but no
further analysis or planning happens unless triggered by an adverse event
during project execution. Once a project team has defined the risks, team
members can attempt to determine the probability and impact of the
occurrence for each risk. At that point, they can either act to avoid the
risk through alternatives analysis, reduce the probability and/or impact
with mitigation strategies, or plan a response to the risk event after it
happens.
4. Insufficient team skills - To quote a colleague, "Availability is not a
skill." Unfortunately, the busiest people also tend to be the most highly
skilled. Finding out that a team member is incompetent can be very
difficult since most incompetent people do not know that they are
incompetent.
First, do not blame the worker, who is probably trying to do what's right.
Chances are he or she was not given the proper training or direction to be
effective in his or her position. Second, starting with the project manager
role, document the core set of skills needed to accomplish the expected
workload and honestly compare each person's skills against your list.
Using this assessment of the team, project managers can guide the team
toward competency with training, cross-training, additional resources,
external advisors, and other methods to close the skills gap.
5. Customers and end users are not engaged during the project - Project
teams become so focused on internal deliverables, deadlines, and

15
Principles of
processes that external stakeholders are not given input during critical
management phases. Planning status meetings that will be attended by customers and
end users keeps them informed. Using these meetings as forums for
Notes information gathering will help ensure that the final product will meet
the expectations of all your important stakeholders.
6. Vision and goals are not well-defined- Goals of a project (and the
business needs being fulfilled) are not always clearly defined.
Communicating these vague goals to the project participants becomes an
impossible task. Overcoming vagueness is particularly difficult when the
project manager has also been given unclear instruction.
Here are some possibilities. Determine which parts of a project are not
understood by the team and other project participants and ask them for
feedback or note feedback and questions that come up. Check the project
documentation as prepared and tighten up the stated objectives and goals.
Each project is, ideally, tied into the direction, strategic goals, and vision
for the whole organization, as part of the portfolio of projects for the
organization.
There are an infinite number of reasons why projects are challenged, but
the solutions always seem to come back to one thing: good
communication, which brings us to . . .
7. Ineffective communication - Thanks to technology advancement, there
is no shortage of information flow. The problem is that we do not
provide the right information to the right people, partly because our
organizations do not cultivate good communication and partly because
we don't know what and who are "right." To solve this, determine the
communication, "whom," "what," "when," and "how," for each project.
Find (or create) some templates for agendas, minutes, reports, and plans,
and reuse them on every project.
Management and Administration
According to Theo Haimann, “Administration means overall
determination of policies, setting of major objectives, the identification
of general purposes and laying down of broad programmes and projects”.
It refers to the activities of higher level. It lays down basic principles of
the enterprise. According to Newman, “Administration means guidance,
leadership & control of the efforts of the groups towards some common
goals”.
Whereas, management involves conceiving, initiating and bringing
together the various elements; coordinating, actuating, integrating the
diverse organizational components while sustaining the viability of the
organization towards some pre-determined goals. In other words, it is an
art of getting things done through & with the people in formally
organized groups.
The difference between Management and Administration can be
summarized under 2 categories: -
1. Functions

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 2. Usage / Applicability Introduction
On the Basis of Functions: -
Notes
Basis Management Administration

Meaning Management is an art of getting It is concerned with

things done through others by formulation of broad
directing their efforts towards objectives, plans & policies.
achievement of pre-determined goals.

Nature Management is an executing function. Administration is a decision-

making function.

Process Management decides who should as it Administration decides what is

& how should he dot it. to be done & when it is to be
done.

Function Management is a doing function Administration is a thinking

because managers get work done function because plans &
under their supervision. policies are determined under
it.

Skills Technical and Human skills Conceptual and Human skills

Level Middle & lower level function Top level function

On the Basis of Usage: -

Basis Management Administration

Applicability It is applicable to business It is applicable to non-business

concerns i.e. profit-making concerns i.e. clubs, schools,
organization. hospitals etc.

Influence The management decisions are The administration is influenced

influenced by the values, by public opinion, govt. policies,
opinions, beliefs & decisions religious organizations, customs
of the managers. etc.

Status Management constitutes the Administration represents owners

employees of the organization of the enterprise who earn return
who are paid remuneration (in on their capital invested & profits
the form of salaries & wages). in the form of dividend.

Practically, there is no difference between management &

administration. Every manager is concerned with both - administrative
management function and operative management function as shown in
the figure. However, the managers who are higher up in the hierarchy
denote more time on administrative function & the lower level denote

17
Principles of
more time on directing and controlling worker’s performance i.e.
management.
management

Notes

The Figure above clearly shows the degree of administration and

management performed by the different levels of management

Arguments For The Against Professionalization

Professionalisation of management is opposed on the following grounds:
(1) Management is basically an art or practice. Minimum educational
qualifications alone cannot make effective manager. Moreover, no
uniform set of qualifications or academic degree is ideal for management
success in different types of organizations.
Therefore, it is undesirable to license managers or to limit the access to
management career to people in a specialized degree.
(2) Professionalized qualified managers are not necessarily more
efficient and effective than other managers. In India big businessman
have successfully created business empires on the basis of their family
background (heredity) and experience. What is important is successful
managers whether they possess a degree/diploma or not is immaterial.
(3) Unlike lawyers, chartered accountants or doctors, managers do not
have a uniform group of clients. They are the trustees of shareholders
and all others groups having stake in a company. Therefore, it is not
practicable to define precisely the obligations of managers for the
purpose of regulating their professional activities.
(4) Many persons from the existing professions, e.g., law; accountancy,
medicine, etc. serve as managers in business organizations. For example,
several chartered accounts are working as finance/accounts managers in
private sector and public sector organizations.
The activities of much professionally qualified persons are being already
regulated of their respective professionals bodies.
(5) Management education and training facilities in India are not yet
fully developed. Therefore, it may not be desirable to make a degree or
diploma in management as an essential qualification for each and every
manager.

18
Levels of Management Introduction
The term “Levels of Management’ refers to a line of demarcation
Notes
between various managerial positions in an organization. The number of
levels in management increases when the size of the business and work
force increases and vice versa. The level of management determines a
chain of command, the amount of authority & status enjoyed by any
managerial position. The levels of management can be classified in three
broad categories:
1. Top level / Administrative level
2. Middle level / Executory
3. Low level / Supervisory / Operative / First-line managers
Managers at all these levels perform different functions. The role of
managers at all the three levels is discussed below:
Top Level of Management
It consists of board of directors, chief executive or managing
director. The top management is the ultimate source of authority and it
manages goals and policies for an enterprise. It devotes more time on
planning and coordinating functions.
The role of the top management can be summarized as follows -
1. Top management lays down the objectives and broad policies of the
enterprise.
2. It issues necessary instructions for preparation of department budgets,
procedures, schedules etc.
3. It prepares strategic plans & policies for the enterprise.
4. It appoints the executive for middle level i.e. departmental managers.
5. It controls & coordinates the activities of all the departments.
6. It is also responsible for maintaining a contact with the outside world.
7. It provides guidance and direction.
8. The top management is also responsible towards the shareholders for
the performance of the enterprise.
Middle Level of Management
The branch managers and departmental managers constitute middle
level. They are responsible to the top management for the functioning of
their department. They devote more time to organizational and
directional functions. In small organization, there is only one layer of
middle level of management but in big enterprises, there may be senior
and junior middle level management. Their role can be emphasized as -
1. They execute the plans of the organization in accordance with the
policies and directives of the top management.
2. They make plans for the sub-units of the organization.
3. They participate in employment & training of lower level
management.

19
Principles of
4. They interpret and explain policies from top level management to
management lower level.
5. They are responsible for coordinating the activities within the division
Notes or department.
6. It also sends important reports and other important data to top level
management.
7. They evaluate performance of junior managers.
8. They are also responsible for inspiring lower level managers towards
better performance.
Lower Level of Management
Lower level is also known as supervisory / operative level of
management. It consists of supervisors, foreman, section officers,
superintendent etc. According to R.C. Davis, “Supervisory management
refers to those executives whose work has to be largely with personal
oversight and direction of operative employees”. In other words, they are
concerned with direction and controlling function of management. Their
activities include -
1. Assigning of jobs and tasks to various workers.
2. They guide and instruct workers for day to day activities.
3. They are responsible for the quality as well as quantity of production.
4. They are also entrusted with the responsibility of maintaining good
relation in the organization.
5. They communicate workers problems, suggestions, and
recommendatory appeals etc to the higher level and higher level goals
and objectives to the workers.
6. They help to solve the grievances of the workers.
7. They supervise & guide the sub-ordinates.
8. They are responsible for providing training to the workers.
9. They arrange necessary materials, machines, tools etc for getting the
things done.
10. They prepare periodical reports about the performance of the
workers.
11. They ensure discipline in the enterprise.
12. They motivate workers.
13. They are the image builders of the enterprise because they are in
direct contact with the workers.
Importance of Management
1. It helps in Achieving Group Goals - It arranges the factors of
production, assembles and organizes the resources, integrates the
resources in effective manner to achieve goals. It directs group efforts
towards achievement of pre-determined goals. By defining objective of
organization clearly there would be no wastage of time, money and
effort. Management converts disorganized resources of men, machines,
money etc. into useful enterprise. These resources are coordinated,

20
directed and controlled in such a manner that enterprise work towards Introduction
attainment of goals.
2. Optimum Utilization of Resources - Management utilizes all the Notes
physical & human resources productively. This leads to efficacy in
management. Management provides maximum utilization of scarce
resources by selecting its best possible alternate use in industry from out
of various uses. It makes use of experts, professional and these services
leads to use of their skills, knowledge, and proper utilization and avoids
wastage. If employees and machines are producing its maximum there is
no under employment of any resources.
3. Reduces Costs - It gets maximum results through minimum input by
proper planning and by using minimum input & getting maximum
output. Management uses physical, human and financial resources in
such a manner which results in best combination. This helps in cost
reduction.
4. Establishes Sound Organization - No overlapping of efforts (smooth
and coordinated functions). To establish sound organizational structure is
one of the objective of management which is in tune with objective of
organization and for fulfillment of this, it establishes effective authority
& responsibility relationship i.e. who is accountable to whom, who can
give instructions to whom, who are superiors & who are subordinates.
Management fills up various positions with right persons, having right
skills, training and qualification. All jobs should be cleared to everyone.
5. Establishes Equilibrium - It enables the organization to survive in
changing environment. It keeps in touch with the changing environment.
With the change is external environment, the initial co-ordination of
organization must be changed. So it adapts organization to changing
demand of market / changing needs of societies. It is responsible for
growth and survival of organization.
6. Essentials for Prosperity of Society - Efficient management leads to
better economical production which helps in turn to increase the welfare
of people. Good management makes a difficult task easier by avoiding
wastage of scarce resource. It improves standard of living. It increases
the profit which is beneficial to business and society will get maximum
output at minimum cost by creating employment opportunities which
generate income in hands. Organization comes with new products and
researches beneficial for society.
Roles of a Manager
The study describes the work life of a Manager. Mintzberg then
identified ten separate roles in Managerial work, each role defined as an
organised collection of behaviours belonging to an identifiable function
or position. They are,
1. FIGUREHEAD: The Manager performs ceremonial and symbolic
duties as head of the organisation.
2. LEADER: Fosters a proper work atmosphere and motivates and
develops subordinates;
3. LIASION: Develops and maintains a network of external contacts to
gather information;
4. MONITOR: Gathers internal and external information relevant to the
organisation;

21
Principles of
5. DISSEMINATOR: Transmits factual and value based information to
subordinates;
management
6. SPOKESPERSON: Communicates to the outside world on
Notes performance and policies.
7. ENTREPRENEUR: Designs and initiates change in the organisation;
8. DISTURBANCE HANDLER: Deals with unexpected events and
operational breakdowns;
9. RESOURCE ALLOCATOR: Controls and authorises the use of
organisational resources;
10. NEGOTIATOR: Participates in negotiation activities with other
organisations and individuals.
He further grouped these roles into three subcategories: Interpersonal
contact (1, 2, 3), Information processing (4, 5, 6) and Decision making
(7-10).
Mintzberg also found that although individual capabilities influence the
implementation of a role, it is the organisation that determines the need
for a particular role, addressing the common belief that it predominantly
a Manager’s skill set that determines success. Effective Managers
develop protocols for action given their job description and personal
preference, and match these with the situation at hand.
Development of Management Thought
Various approaches to management
EMPIRICAL APPROACH
•Study of managerial experiences and cases(mgt)
•Contributors: Earnest Dale, Mooney & Reiley, urwick.
•Features
–Study of Managerial Experiences
–Managerial experience passed from participationerto students for
continuity in knowledge management.
–Study of Successful & failure cases help practicisingmanagers.
–Theoretical research combined with practical experiences.
•Uses
–Learning through experience of others
•Limitations
–No Contribution for the development of management as a discipline
–Situations of past not the same as present.
HUMAN BEHAVIOUR APPROACH
•Organisationas people
–a) Interpersonal Behaviour Approach -Individual Psychology
–b) Group Behaviour Approach -Organisation Behaviour
•Features
–Draws heavily from psychology & sociology.
–Understand human relations.
–Emphasis on greater productivity through motivation & good human
relations

22
–Motivation, leadership, participative management & group dynamics Introduction
are core of this approach.
•Uses Notes
–Demonstrates how management can be effective by applying
knowledge of organisation behaviour.
•Contributors
–Maslow, Herzberg, Vroom, Mc Cleland, Argyris, Likert, Lewin, Mc
Gregor, etc.
•Limitations
–Treating management as equivalent to human behaviour.
–Talks about organisation & organisation behaviourin vague terms.
SOCIAL SYSTEM APPROACH
•Understanding the behaviourof groups & individuals.
•Features
[Link] System, a system of cultural relationship
[Link] exist between external and internal environment of the
organisation.
[Link] Organisation-Cultural relationships of social groups
working within the organisation.
[Link]-operation necessary
[Link] directed -harmony between goals of organisation& goals of
groups.
•Contributors
–Pareto, Chester Barnard
•Uses
–Organisationaldecisions should not be based on desires of one group
alone but should reflect the interests of all the parties.
•Limitations
–Broader than management & its practice
–Overlooks many management concepts principles & techniques that are
important to practisingmanagers.
DECISION THEORY APPROACH
•Manager –Decision maker
•Organisation–Decision making unit.
•Features
–Management is decision making.
–Members of Organisation -decision makers and problem solvers.
–Decision making -control point in management
–Increasing efficiency -the quality of decision
–MIS, process & techniques of decision making are the subject matter of
study.
DECISION THEORY APPROACH
•Contributors
–Simon, Cyert, Forrester, etc.

23
Principles of
•Uses
management –Tools for making suitable decisions in organisations.
•Limitation
Notes –Does not take the total view of management
–Decision making -one aspect of management
MATHEMATICAL APPROACH
•Management-logical entity
•Actions-Mathematical symbols, Relationships and measurable data.
•Features
[Link] Solving mechanism with the help of mathematical tools and
techniques.
[Link] Expressed in mathematical symbols.
[Link] in management –quantified.
[Link] -Decision making, system analysis & some aspect of human
behaviour.
[Link] -Operations research ,simulation etc.
•Contributors
–Newman, Russell Ackoff, Charles Hitch, etc.
•Uses
–Provided Exactness in management discipline.
•Limitations
–Not a separate school
–Technique in decision making.
SOCIO -TECHNICAL SYSTEMS APPROACH
•Features
–Social & technicalssystems interact. This interaction is important for
organisationaleffectiveness.
–Organisation–governed by social laws as well as psychological forces.
–Technical aspects of organisationmodified by the social aspects.
•Contributors
–Trist, Bamforth, Emery etc.
•Uses
–Organisationaleffectiveness depends on looking at people and their
interactions and also at the technical environment in which they operate.
–Change in technology
–Change in social interactions at work place
SOCIO -TECHNICAL SYSTEMS APPROACH
•Limitations
–Lack of total managerial view
–Concentrate on factory or other production system
–No new contribution
–People aware about the role of technology of the social system of the
work place.

24
SYSTEMS APPROACH Introduction
•An enterprise
•Man-Made system Notes
•Internal parts
•Achieve established goals
•External parts
•Achieve interplay with its environment
•Manager integrates his available facilities with goal achievement.
•Uses
–Quick Perception
–Better Planning
•Limitations
–Complicated
–Expensive
CONTIGENCY SCHOOL
•In developing management concepts the environment within which the
concepts are to be applied has to be considered.
•Internal environment
–Structure, Processes, Technology.
•External Environment
–Social, Economic, Political etc.
•Features
–Appropriateness of a management technique depends on situation.
–If -Then approach.
OPERATIONAL APPROACH
•Management is a process.
•Universalist/ Classist/ Traditional Approach.
•This school concentrates on the role and functions of managers and
distills the principles to be followed by them.
•Features
–Functions of managers remain same
–Functions of management
–core of good management
–Framework of management
–Principles of management
•Contributors
–Fayol, LyndallUrwick,Harold Koontz, Newman, Mc Farland, Taylor.
•Uses
–Flexible & practical but not universal.
Taylor’s Contribution and Scientific Management
Scientific management concept
Scientific management concept is one of the principles of management
and is also known as classical theory. This principle is propounded by

25
Principles of
Fredrick Winslow Taylor (F.W Taylor) – the father of management. He
management was born in USA in 1856. He joined Midvale steel company where he
worked as a machine shop worker for two years as gang boss for some
Notes years and as chief engineer at the age of [Link] also joined Bethlehem
steel company where he served for a long time. Later he devoted his time
to develop the concept of scientific management.
He noticed that there were much disorder and wastage of human as well
as other resources at work place. The managers and staffs had no concept
about systematic and efficient performance of task. And all were
following traditional ways of doing work. So he tried to remove these
problems through the development of new concept. Thus the scientific
management concept was developed.
Contributions of F.W Taylor
While working in Midvale Company as a manager Taylor observed that
employees were not performing as per their capacity of productivity.
And he considered that this condition was occurring because of no care
towards the waste. Taylor worked towards the experiments at his work
place to increase the worker’s efficiency so that maximum output could
be achieved by utilizing effort at maximum level.
1. Scientific task setting:- Taylor observed that the management does
not know exactly the works – pieces of work- volume of works- which
are to be performed by the workers during a fixed period of time- which
is called working day. In a working day how much work is to be dome
by a worker but be fixed by a manager and the task should be set
everyday. The process of task setting requires scientific technique. To
make a worker do a quantity of work in a working day is called scientific
task setting
2. Differential payment system:- under this system, a worker received
the piece rate benefit which will attract the workers to work more for
more amount of wages and more incentives would be created to raise the
standardization of output to promote the workers to produce more and
perform more task than before and utilize waste time to earn more
wages.
3. Reorganization of supervision:- concepts of separation of planning
and doing and functional foremanship were developed. Taylor opines
that the workers should only emphasize in planning or in doing. There
should be 8 foreman in which 4 are for planning and 4for doing. For
planning they were route clerk, instruction cord clerk, time and cost clerk
and disciplinarian. And for doing they were speed boss, gang boss, repair
boss and inspector.
4. Scientific recruiting and training:-staffs and workers should be
selected and employed on scientific basis. Management should develop
and train every workers by providing proper knowledge and training to
increase their skills and make them effective

26
5. Economy:- efficient cost accounting system should be followed to Introduction
control cost which can minimize the wastages and thoroughly reduced
and thus eliminated. Notes
6. Mental revolution:- Taylor argued that both management and
workers should try to understand each other instead of quarrelling for
profits and benefits which would increase production, profit and benefits.
Henry Fayola’s contribution
The general management principles as summarized by Fayol
The 14 Management Principles from Henri Fayol (1841-1925) are:
1. Division of Work. Specialization allows the individual to build up
experience, and to continuously improve his skills. Thereby he can be
more productive.
2. Authority. The right to issue commands, along with which must go the
balanced responsibility for its function.
3. Discipline. Employees must obey, but this is two-sided: employees
will only obey orders if management play their part by providing good
leadership.
4. Unity of Command. Each worker should have only one boss with no
other conflicting lines of command.
5. Unity of Direction. People engaged in the same kind of activities must
have the same objectives in a single plan. This is essential to ensure unity
and coordination in the enterprise. Unity of command does not exist
without unity of direction but does not necessarily flows from it.
6. Subordination of individual interest (to the general interest).
Management must see that the goals of the firms are always paramount.
7. Remuneration. Payment is an important motivator although by
analyzing a number of possibilities, Fayol points out that there is no such
thing as a perfect system.
8. Centralization (or Decentralization). This is a matter of degree
depending on the condition of the business and the quality of its
personnel.
9. Scalar chain (Line of Authority). A hierarchy is necessary for unity of
direction. But lateral communication is also fundamental, as long as
superiors know that such communication is taking place. Scalar chain
refers to the number of levels in the hierarchy from the ultimate authority
to the lowest level in the organization. It should not be over-stretched
and consist of too-many levels.
10. Order. Both material order and social order are necessary. The former
minimizes lost time and useless handling of materials. The latter is
achieved through organization and selection.
11. Equity. In running a business a ‘combination of kindliness and
justice’ is needed. Treating employees well is important to achieve
equity.
12. Stability of Tenure of Personnel. Employees work better if job
security and career progress are assured to them. An insecure tenure and
a high rate of employee turnover will affect the organization adversely.
13. Initiative. Allowing all personnel to show their initiative in some way
is a source of strength for the organization. Even though it may well
involve a sacrifice of ‘personal vanity’ on the part of many managers.

27
Principles of
14. Team Spirit (Esprit de Corps). Management must foster the morale of
its employees. He further suggests that: “real talent is needed to
management
coordinate effort, encourage keenness, use each person’s abilities, and
Notes reward each one’s merit without arousing possible jealousies and
disturbing harmonious relations.”
What is Management? Five elements
Fayol's definition of management roles and actions distinguishes
between Five Elements:
1. Prevoyance. (Forecast & Plan). Examining the future and drawing up
a plan of action. The elements of strategy.
2. To organize. Build up the structure, both material and human, of the
undertaking.
3. To command. Maintain the activity among the personnel.
4. To coordinate. Binding together, unifying and harmonizing all activity
and effort.
5. To control. Seeing that everything occurs in conformity with
established rule and expressed command.
Origin of the 14 Principles of Management. History
Henri Fayol (1841-1925) was a French management theorist whose
theories in management and organization of labor were widely influential
in the beginning of 20th century. He was a mining engineer who worked
for a French mining company Commentry-Fourchamboult-Decazeville,
first as an engineer. Then he moved into general management and
became Managing Director from 1888 to 1918. During his tenure as
Managing Director he wrote various articles on 'administration' and in
1916 the Bulletin de la Société de l’ Industrie Minérale, printed his
"Administration, Industrielle et Générale – Prévoyance, Organisation,
Commandement, Coordination, Contrôle". In 1949 the first English
translation appeared: ‘General and Industrial Management’ by
Constance Storrs.
Usage of the 14 Management Principles. Applications
* Change and Organization.
* Decision-making.
* Skills. Can be used to improve the basic effectiveness of a manager.
* Understand that management can be seen as a variety of activities,
which can be listed and grouped.
Managerial Qualities and Training
The training and development of employees is crucial to any
organisation’s performance. For businesses, the aim is to gain a
competitive advantage. For other organisations you’ll want to improve
how you work or obtain better outcomes. Ultimately, all organistions are
looking to optimise their human resources by honing the skills of their
workforce.
Training is, therefore, a huge responsibility and needs motivated and
skillful individuals to handle it. While there are many opinions on the
efficacy of some training programs, few doubt the necessity of really
good, targeted training.

28
Training employees is a challenging job though, and whether you’re an Introduction
independent trainer or employed with a corporation, trainers and training
managers are expected to have a ton of qualities for the training to be a Notes
success. If we were to hone in on the six most desirable qualities of
training managers, however, they would be as follows.
1. A Deep Knowledge of the Business
A deep and thorough understanding of the business or organisation you
are part of is among the greatest assets that you as a training manager can
possess. A good rule of thumb is whether you can articulate both what
your company does and how it does it in a few simple, concise sentences.
* How your product is bought, sold, and delivered to customers.
* Why your product exists, and what problem it solves.
* How your broader industry operates, the pressures it has, and how it
makes money.
* An awareness of the competition and new trends in your line of
business
The aim of most corporate training is to maximise company resources
and build an efficient and productive workforce. This is only possible
when you are aware of the skillsets that your workforce requires.
Detailed knowledge of your business or operation is therefore necessary
to when designing and evaluating training programs that will help your
direct reports achieve your organisation’s strategic goals.
2. The Ability to Measure and Assess Staff Training Needs
Awareness of how the training needs of your employees is critical to
developing your team. Professional trainers are expected to conduct a
thorough training needs analysis before undertaking a training
assignment, and as a manager, you’ll need to as well. This process will
help you determine two things – what needs to be learned by your team,
and how to prioritise the learning. Don’t get fixated on the process
though! What truly sets a good training manager apart is her ability to
read between the lines and zero in on the essence of a problem.
For example, you may find that you’ve been told employees in a certain
division are failing to meet their goals. The recommendation comes to
you that they need to be sent back to basic training to learn how to do
their basic job functions all over again.
Even though this example sounds very specific and it would be easy to
take this recommendation unchallenged, this brief is actually as vague as
it gets!
A good manager will understand that faltering productivity is just a
symptom. The real problem could be anything — an inability to focus, a
distracting environment, confusing directions form the team manager,
technological challenges, or something else.
Real life is always more complicated, and part of your challenge as a
manager focused on the true training needs of your team will mean

29
Principles of
you’ll need to peel away layers of confusion to get to the heart of the
management problem. Don’t settle for surface solutions – doing so will just
demoralise your team and prevent discovery and diagnosis of the true
Notes problem.
Assessment of training needs is going to require a lot of interaction and
input with a department or employees direct management as well – don’t
forget to incorporate them into the process. Developing and publishing
your training assessment process is really key as well so everyone can
understand how it works, and in some cases even self assess.
3. Strong Communication and Interpersonal skills
Regardless of whether you conduct your own training programs or not, it
is imperative for a good training manager to be highly efficient in
communication of all kinds.
Understanding problems, conveying ideas, conducting training – all of
this is carried through words. If you have trouble communicating, it’s
unlikely you’ll be able to get your staff properly motivated, or effectively
describe the reasons behind the need for the training you’re
recommending to your employees.
But again, while a way with words is a great asset, it is nothing if it’s not
tempered with empathy, rooted in the understanding of how people learn,
and backed by good interpersonal skills. Effective managers should
develop their people skills and actually enjoy relating to people. You
should love to talk, interact with people, love listening to their problems,
love coming up with solutions to these problems, and enjoy motivating
your students to be better.
It’s worth noting that these skills which will help you be a better training
manager are also core skills for any teacher or trainer! In addition to
general personal skills, there are some problem solving skills that will
help you develop your team. The ability to break complex ideas down
into components that make for easier understanding, and the ability to
draw the best out of your students is core to helping others learn, and the
more you hone these skills, the more you’ll be set apart.
4. A Passion for Continuous Learning
The best learners make the best teachers. A passion for learning reflects
in the quality of your teaching. How can you teach and motivate others if
you yourself are lackadaisical about the process of learning?
Besides, learning is a continuous process. Every day around the world
thousands of academic papers are submitted, hundreds of seminars are
given, and thousands of blog posts written discussing new research and
insights into age-old management problems. As a corporate trainer who
wants to remain on top of the game you need to keep yourself abreast of
the latest developments in your field. A passion for learning will make
this less of a chore and more of a spirited endeavor.

30
Be an avid reader and draw from all fields (philosophy, human Introduction
psychology, sports, nature and wildlife, spirituality, politics — you get
the picture!). That’s the only way to cultivate a well-rounded Notes
understanding of the world we live in. We recommend loading up an
RSS reader with quality reading that you can set time aside to tackle.
Twitter is another good resource to use as you can follow thought leaders
and organisations that provide great insights. Shameless Plug: remember
to sign up for our weekly training tips newsletter!
5. Innovative Thinking
The prospect of attending yet another training session can make anyone,
from seasoned corporate executives to employees who have just started,
want to shoot themselves in the head. We’ve all been in plenty of
repetitive and monotonous training sessions. We’ve all sat through
presentations that were boring or were clearly being taught with a
minimum of effort by the instructor. Even if students are excited to
explore a topic, a bad training sessions can kill any enthusiasm they may
have had and trainees will soon start zoning out.
But training (even corporate training) doesn’t have to be boring. To keep
things fresh and to maximise your chances of gaining and holding your
audience’s attention, try to improvise on your teaching style. Be
different and bold with your training material. Don’t regurgitate old
formats; have fun with different formats of teaching. Draw inspiration
from all around you.
Keep things interesting and entertaining for your students. Push the
boundaries of creativity and include newer forms of technology. As
mentioned earlier, it helps to have an interest in a wide range of subjects.
That allows you to draw plentiful of unlikely and delightful analogies,
and create interesting (but effective) training material for your students.
6. Embrace Efficiency
Training budgets are almost never static. They’re one of the last things
to be increased by management in response to growth, and they’re one of
the first things to be cut! Training managers almost never had the
resources they need, whether it’s time, money, tools, or buy-in from the
rest of the company. These are the realities of the training business
though, and they’re not going to change, so make sure you develop an
acute appreciation of and desire for efficiency. Anything that can save
you time or money when delivering the vital education you’re
responsible for should be examined and sought after. It might be time to
think about researching eLearning software or even more comprehensive
training management software to help you do more with less.
Conclusion
It’s a tough job, but it’s so important! Hopefully you’ll have drawn
inspiration and gathered some additional thoughts after reading about

31
Principles of
these six qualities. If you have thoughts, comments, or questions, don’t
management hesitate to let us know!
General Principles of Management
Notes
1. Division of work: this principle is basically the same with adam
smith’s “division of labour” which means “specialization“. According to
fayol, the object of division of work is to produce more and better work
with the same effort.
2. Authority and responsibility: authority is the right to give orders and
the power to exact obedience. Distinction must be made between a
manager’s official authority deriving from office and personal authority.
(note: later in 1959, social psychologists john french and bertam raven,
defined five sources of power as: coercive power, reward power,
legitimate power, referent power and expert power).
According to fayol, authority is not to be conceived of apart from
responsibility, that is apart from sanction – reward or penalty – which
goes with the exercise of power. Responsibility is a corollary of
authority, it is its natural consequence and essential counterpart, and
wheresoever authority is exercised responsibility arises.
3. Discipline: discipline, being the outcome of different varying
agreements, naturally appears under the most diverse forms; obligations
of obedience, application, energy, behaviour, vary, in effect from one
firm to another, from one group of employees to another, from one time
to another. Nevertheless, general opinion is deeply convinced that
discipline is absolutetly essential for the smooth running of business and
that without discipline no enterprise could prosper.
4. Unity of command: this principles emphasizes that an employee
should receive orders from one superior only. Fayol says that if it is
violated, authority is undermined, discipline is in jeopardy, order
distributed and stability threatened. (note: matrix organizations are in
contrast to fayol’s unity of command principle).
5. Unity of direction: one head and one plan for a group of activities
having the same objective. (note: organizations write and announce
vision and mission statements, objectives and strategies so that the
organizations align and go in the same direction).
6. Subordination of individual interest to the general interest: this
principle calls to mind the fact that in a business the interest of one
employee or group of employees should not prevail over that of the
concern, that the interest of the home should come before that of its
members and that interest of the state should have pride of place over
that of one citizen or group of citizens. (note: what about the “invisible
hand” concept of adam smith?)
7. Remuneration (payment/compensation) of personnel: remuneration
of personnel is the price of the services rendered. It should be fair and, as
far as is possible, afford satisfaction both to personnel and firm
(employee and employer). Three modes of payment in use for workers
are : time rates, job rates and piece rates. Fayol also mentioned about
bonuses and profit-sharing and non-financial incentives.
8. Centralization: everything which goes to increase the importance of
the subordinate’s role is decentralization, everything which goes to
reduce it is centralization. The question of centralization or
32
decentralization is a simple question of proportion, it is a matter of Introduction
finding the optimum degree for the particular concern.
The degree of centralization must vary according to different cases: Notes
* if the moral worth of the manager, his strength, intelligence,
experience and swiftness of thought allow him to have a wide span of
activities he will be able to carry centralization.
* if conversely, he prefers to have greater recourse to the experience of
his colleagues whilst reserving himself the privilige of giving central
directives, he can effect considerable decentralization.
9. Scalar chain (line of authority): the scalar chain is the chain of
superiors from the ultimate authority to the lowest ranks.
10. Order: fayol defines the formula for order as “a place for everyone
and everyone in his place”. He classifies two types of order as material
order, which means everthing must be in its appointed place and social
order, which presupposes the most succesful execution of the two most
difficult managerial activities: good organization and good selection.
Social order demands precise knowledge of the human requirements and
resources of the concern and a constant balance between these
requirements and resources.
11. Equity: desire for equity and equality of treatment are aspirations to
be taken into account in dealing with employees. (note: in motivation
theories of organizational behaviour equity is important. John stacey
adams, (behavioral psychologist) asserted that employees seek to
maintain equity between the inputs that they bring to a job and the
outcomes that they receive from it against the perceived inputs and
outcomes of others in 1963. Please follow the link for a visual
representation of adams theory)
12. Stability of tenure of personnel: time is required for an employee to
get used to new work and succeed in doing it well, always assuming that
he possesses the requisite abilities. If when he has got used to it, or
before then, he is removed, he will not have had time to render
worthwhile service. If this be repeated indefinetly the work will never by
properly done.
Generally the managerial personnel of prosperous concerns is stable, that
of unsuccessful ones is unstable. Instability of tenuer is at one and the
same time cause and effect of bad running. In common with all the other
principles, therefore, stability of tenure and personnel is also a question
of proportion.
13. Initiative: much tact and some integrity are required to inspire and
maintain everyone’s initiative, within the limits imposed, by respect for
authority and for discipline. The manager must be able to sacrifice some
personal vanity in order to grant this sort of satisfaction to subordinates.
14. Esprit de corps: means “union is strength“. Harmony, union among
the personnel of a concern, is great strenght in that concern. The
principle to be observed is unity of command; the dangers to be avoided
are (a) a misguided interpretation of the motto “divide and rule”, (b) the
abuse of written communications.
(a) personnel must not be split up. Dividing enemy forces to weaken
them is clever, but dividing one’s own team is a grave sin against the
business.

33
Principles of
(b) abuse of written communications. Wherever possible, contacts should
be verbal; there is gain in speed, clarity and harmony.
management
Elements of management
Notes People who succeed as organizational managers understand that once
they take on the responsibility of leading a team or department, their
mindset has to change. For a manager, success is no longer about what
they can achieve on their own, and getting ahead isn’t a journey made
alone. Managers are successful when group goals are met because
subordinates are properly motivated and contributing at their highest
level.
So what does it take to be a successful manager? Read on to learn five of
the most important mindset changes managers need to adopt from day
one.
1. Manage Others’ Time – In addition to managing your own time—
which is tricky when you must accept additional responsibilities—a good
manager sets schedules for others to meet. This doesn’t mean you should
micromanage each employee’s calendar, but it does mean that you have
clarified with your staff what their priorities are, you know when
deliverables are due, and you address the problem when an employee
fails to meet assigned deadlines.
If a subordinate is behind or has failed to meet a goal, that’s their
problem, right? Wrong—when you accept the role of manager, you
accept responsibility for all work being done well and on time, whether
you’re actually doing that work or not.
2. Satisfaction Becomes More Abstract – A manager’s satisfaction is
often indirect. It comes from taking pride in helping others succeed,
rather than completing the job alone. Learning how to properly delegate
work enables you to clear your plate to make room for other managerial
responsibilities while also helping your subordinates develop important
skills.
Acknowledging employees’ accomplishments when they do well ensures
that they’ll be excited to take on new tasks again in the future. If you find
yourself only pointing out mistakes or problems, it won’t be long before
morale and workmanship are depleted. Mistakes are bound to happen
and shouldn’t be swept under the rug. But bringing mistakes to
employees’ attention must be balanced with acknowledgement when a
job is well done.
3. Shift in Job Evaluation – Your performance is no longer judged by
the boss alone. It is also judged by those who report to you. It’s
important that you stay aware of how employees perceive you (and that
does mean asking from time time—you can do this informally in
conversation or anonymously through 360-degree feedback tools).
When you become manager, it does not mean that you are immune to
criticism and evaluation, and your position doesn’t allow you to slack
off. Being a manager also doesn’t mean that you should be perfect.
Especially for new managers, it will take some time to adjust to your
position. This is why it’s important to be open to feedback and aware
that there’s always room for improvement.
4. Problem Solving – A manager must deal with all types of problems,
some of which include:

34
 * Operational – Why did we miss our numbers last month? Introduction
* Interpersonal – How can I help my subordinates better manage
conflict? Notes
* Strategic – Do I have the right people in the right positions?

It’s important that managers have fundamental problem solving skills

and that they know when to seek input from others. You won’t always
have all the answers, but you can make sure you ask the right people the
right questions.
Problem solving might seem like a skill that mainly requires rationality
and solid logic, but successful problem solving is also very creative.
Sometimes the best solution is completely out of the box. A successful
manager will be able to solve problems resourcefully and with an open
mind.
5. Key Resources are People – Because a manager must get things done
through others, people are your best asset. Taking the time to learn the
strengths of each person on your team (and manage them accordingly)
not only ensures that you are challenging people and bringing out their
best, it also sends the message that you care about them.
When employees know that they are valuable to you and the efforts of
the organization as a whole, they take pride in their work. After all, that’s
why you’re making such an effort to be a great manager,
Tarlor And Fayol A Comparison
We have seen that both F.W. Taylor and Henry Fayol contributed to the
science of management. There are points of similarity and dissimilarity
in the works of both of these pioneers. Urwick has summed up the
contributions of the two as: “The work of Taylor and Fayol was, of
course, essentially complementary. They both realised that, the problem
of personnel and its management at all levels is the key to industrial
success.
Both applied scientific method to this problem. That Taylor worked
primarily on the operative level, from the bottom of the industrial
hierarchy upwards, while Fayol concentrated on the Managing Director
and worked downwards, was merely a reflection of their very different
careers.” We can, thus, sum up the points of similarity and dissimilarity
between the two as follows:
Similarity:
1. Both of them felt the universality of management.
2. Both applied scientific methods to the problems of management.
3. Both observed the importance of personnel and its management at all
levels.
4. Both wanted to improve the management practices.
5. Both of them developed their ideas through practical experience.
6. Both of them explained their ideas through their books.
7. Both of them stressed mutual co-operation between employers and
employees.
Dissimilarity:
1. Taylor laid his attention on the problems of shop floor while Fayol
concentrated on the functions of managers at top level.

35
Principles of
2. Taylor worked from the bottom of the industrial hierarchy upwards,
while Fayol focussed on the chief executive and worked downwards.
management
3. The main aim of Taylor was to enhance productivity of labour and
Notes eliminate wastages. Fayol tried to develop a universal theory of
management.
4. Taylor called his philosophy of work as ‘Scientific Management’
whereas Fayol expressed his work as ‘General Theory of
Administration’.
5. Taylor is known as father of Scientific Management and Fayol as the
father of Principles of Management.
6. Taylor’s philosophy has undergone a big change under the influences
of modern developments, but Fayol’s principles of management have
stood the test of time arid are well accepted even in the present days.
7. Fayol looks to the management in the wider perspective as compared
to Tayior
Universality Of Management Principles
Is the manager’s job universal? Are the principles of management
universally applicable? It has already been stated that managing is found
in all types, functions, levels and sizes of organisations. Management can
be applied to all organised human efforts whether they are in business,
government, educational, social, religious or other fields. Universality of
management suggests that the manager uses the same managerial skills
and principles in each managerial position held in various organisations.
Accordingly an industrial manager could manage a philanthropic
organisation, a retired army general could manage a university, a civil
servant could manage an industrial organisation, and so on.
Universality implies transferability of managerial skills across industries,
countries. It means that management is generic in content and is
applicable to all types of organisations. Lawrence A. Appley declared
that ‘He who can manage, can manage anything.’ Let us examine the
factors that have contibuted to the universal application of management
in every level of organisation and at every level of organisation.
Arguments for Universality
1. Same functions. Quite often it is erroneously thought that
management exists only in a business and not in other enterprises. The
fact is, however, that when acting in their respective managerial
capacities not only the company president but also the office supervisor
perform the fundamental functions of management. The difference lies in
such things as the breadth of the objectives, the magnitude of the
decisions taken, the organisation relationships affected, and so on.
Managers perform essentially the same functions irrespective of their
level in the organisation, industry or country.
2. Universal principles. Classical writers (Fayol, Urwick and others)
believed that there are certain principles in management which are
universally applicablee. These are the principles of departmentation,
principles of division of labour, principle of span of control, the scalar
principle, principle of unity of command, etc. Such principles as one man
one boss, division of work to improve speed and efficiency, limiting the
number of persons to be supervised so that managers can concentrate on
exceptional problems, the principles governing motivation theory have

36
certainly proved their worth up to a point, and these principles have been Introduction
translated into practice for a long time. These principles have found
universal expression of the nature and level of management in Notes
organisations.
3. Fundamentals are same, the techniques employed and practices
followed are different. Managing occurs in parks, ranches, hospitals,
farms, universities, cities, police, agencies, churches, airports and
community organisations, industries, and so on. The fundamentals
governing the management of a business, a church or a university are
same: the difference lies in the techniques employed and practices
followed. All managers arc accountable for performance of other people:
they plan, make decisions, organise work, motivate people and
implement controls and so forth. In order to accomplish things, the
techniques employed might differ depending on situational factors like :
culture, tradition, attitude, etc. Same is the case with management
practices. An automobile designed for use in deserts or jungles will be
markedly different from the one that is designed for city traffic. The
design principles governing both models are the same. The generic
content of management fundamentals is such that they can be applied
universally : practices and techniques employed may differ depending on
the nature of industry, the organisational level where these are applied,
etc.
4. Practical evidence. Managing is found in all types, functions,
levels and sizes of organisations. The fact that managers regularly move
from public to private sector organisations bears ample testimony to the
fact that management concepts are universal across organisational types.
For example, D. D. Ensenhower went from a general in the U.S. Army to
President of Columbia University and to President of the United States.
Again Sri P.L. Tandon. the former Chairman of Hindustan Lever Ltd,
has managed the PNB, STC and the NCAER successfully during his
tenure as the Chairman in these organisations. The basic concepts of
management propagated by American writers have found expression
even in communist countries. According to Drucker. “the rapid
development of Brazil, the rapid development of non-communist
countries, that is, of Hong Kong, Singapore, and Taiwan, the rapid
development of so poor and backward a peasant country as Iran are all
traceable to the impact of management”.
Arguments against Universality
1. Complete substitutability is impossible. It is true that the
manager’s job becomes most universal in content at the upper echelons
of organisations. The higher one moves in an organisation the more he or
she performs the generic functions of management planning, organising,
leading and controlling and the less he or she is involved in day-to-day
technical matters. The relationship between performance and functions
entrusted becomes more intense as one moves lower down the order. For
example, the success of a drilling supervisor of an oil rig depends to a
large extent on his technical knowledge of drilling. On the other hand,
the president of an oil company does not need to have much of the
technical intricacies of drilling for oil or how to refine it. Before tossing

37
Principles of
the ‘universality argument’, we must apply brakes and qualify the
statement. Generic in content does not imply complete substitutability.
management
2. Organisational philosophies differ. Universality presupposes the
Notes existence of predictability regarding the outcome of management actions.
A manager working in Firm A must be able to predict the likely
consequences of his actions in Firm B where he is likely to join. He may
have to face insurmountable difficulties in case the underlying
philosophies of these organisations were to differ. For instance, in one
organisation the emphasis is on profit maximisation and in the other the
emphasis is on social responsibilities. Such conflicting demands affect
managerial actions and what a manager could apply with success in one
organisation may not find a meaningful expression in the other
organisation where the underlying philosophy is different. As pointed out
by Dale, no individual could be a good administrator in religious,
academic, military, and business institutions of both communist and
democratic countries because the philosophies that underlie each are
drastically different and one person could not encompass so much.
3. Universality of principles: A Ridiculous Statement? Classical
management principles were written by practitioners in management and
were based on personal experience and limited observation only. They
have only tried to pass on their ideas as universal truths. In the absence
of a rigorous scientific basis, no wonder, Simon dubbed the principles as
proverbs, comparable to folklore and folk-wisdom. Moreover, these
principles are vague and too general and , as a result, are very difficult to
apply to a specific organisation. They often overlap and are sometimes
incompatible with one another. The terminology ‘universal principles’,
‘universal truths’ is quite unfortunate.
4. Management is a product of the culture. Managers have to
operate within the broad constraints operating in an economy: culture,
tradition, organisational philosophies, etc. Managerial behaviour in a
deeply traditional, religious economy is bound to be different from the
advanced and scientifically-oriented economy. It is fruitful to search for
a common set of ‘principles’ or ‘absolutes’ or ‘determinate solutions’
where managers have to operate in highly diverse cultures. A career in
management is, by itself, not a preparation for major political office....or
for leadership in the armed forces, the church or a university.
The writers who argue that management principles are culture bound
seem to ignore that the fundamentals governing the management of
enterprises in India, Japan, U.S.A., and Brazil are the same. and they are
applicable and adaptable in various cultures. Otherwise, it would not
have been possible for Indian Managers doing successful business in
Great Britain. Chinese management thinkers teaching in America, and
Japanese managers working successfully in Brazil and Hong kong. The
universality of management thesis is well supported by several research
studies by Hair, Porter, Negandhi and Richman etc. According to these
researchers, cultural and situational factors may influence the way in
which a manager discharges his functions but the fundamentals of
management remain unchanged.

38
Social Systems Approach Bernard’s Contribution Introduction
Chester Barnard was the President of new Jerray Bell Telephone
Company. He served in various other organisations too. His important Notes
writings include: The Functions of Executive (1938). Organisation and
Management (1948). Elementary Conditions of Business Morals.
His writings had important impact on human organisation. In his
organisation theory he adopted a sociological approach and in dealing
with the functions of executives, he stressed the importance of leadership
and communication. Barnard divided organisation into formal and
informal. He said that informal organisation is an important part of
formal organisation.
Barnard's Contributions to Management Thought:
Barnard suggested social systems approach to management. His main
contributions to management thought can be described as follows:
1. Theory of Formal Organisation:
Barnard gave a theory of formal organisation. He defined it as "a system
of consciously co-ordinated activities of forces of two or more persons."
According to him, organisation consisted of human beings whose
activities were co-ordinated and therefore becomes a system : According
to Barnard initial existence of organisation depends upon three elements
: (i) the willingness of persons to contribute efforts to the co-operative
system (ii) there should be an objective of co-operation and (iii) proper
communication system is necessary.
2. Organisational Equilibrium:
Barnard suggested an equilibrium model to describe the balance
achieved between the contributions of the members of an organisation
and return contribution made by the organisation to the fulfilment of
private goals of the members. Barnard treated organisation as separate
from the environment where it works.
The persons working in the organisation have two roles—a personal role
and an organisational role. There should be a balance between what
employees get out of the organisation (money, status, recognition, etc.)
and what they contribute in form of time, knowledge, discomfort,
production, etc.
3. Acceptance Theory of Authority:
Barnard did not agree with the classical concept of authority where it
comes from top to bottom. He said that authority comes from bottom. In
his opinion authority is confirmed only when it is accepted by a person to
whom it has been addressed. Disobedience of such a communication is a
denial of authority.
According, to Barnard the decision as to whether an order has authority
or not lies with the person to whom it is addressed, and does not reside in
persons of authority or those who issue these orders. Thus in Barnard's
view, if a subordinate does not accept his manager's authority, it does not
exist.
A person will accept authority under following conditions':
(a) He can and does understand the communication;
(b) At the time of his decision he believes that it is not inconsistent with
the purpose of the organisation.

39
Principles of
(c) At the time of his decision, he believes it to be compatible with his
personal interest as a whole; and
management
(d) He is able (mentally and physically) to comply with it.
Notes 4. Functions of the Executive:
Barnard postulated three types of functions for the executives in forma!
organisational set up. These functions are:
(a) Maintaining proper communication in the organisation
(b) Obtaining essential services from individuals for achieving
organisational goals
(c) Formulating purposes and objectives at all levels.
5. Informal Organisation:
Barnard was of the opinion that both formal and informal organisations
co-exist in every enterprise. Informal organisation refers to those social
interactions which do not have consciously co-ordinated joint purpose.
This organisation exists to overcome the problems of formal
organisation. Barnard suggested that executives should encourage the
development of informal organisation to bring cohesiveness in the
organisation and also to serve as a means of communication.
Simon’s Contribution
Herbert Simon, a noble prize winner in Economics, has made significant
contributions in the field of management particularly administrative
behaviour and decision making. His contributions cover both social
systems and decision theory approaches, more particularly the latter.
Simon examined the principles of management given by Urwick and
Guflick and found them contradictory and ambiguous.
He described these principles as ‘myths’, ‘slogans’; and ‘homely
proverbs’. Simon looked at organisational problems in totality of socio-
psychological context and viewed that decision making takes place in
this context.
His major contributions to management are summarized below:
1. Concept of Organisation:
Simon has described an organisation as a complex network of decisional
processes, all pointed towards their influence upon the behaviour of the
operatives. He has viewed the organisation containing distribution and
allocation of decision-making functions.
According to him, physiology of the organisation is to be found in the
process whereby organisation influences the decisions of its members,
supplying these decisions with their devices. Thus, the best way to
analyses an organisation is to find out where and by whom decisions are
made.
2. Decision-making:
Perhaps the greatest contribution of Simon is in the field of decision-
making. Decision-making is the core of management and management is
synonymous with decision-making. This is why he has been referred to
as decision theorist. According to him, the decision process can be
broken into a series of three sequential steps.

40
These are: Introduction
(i) Intelligent activity the initial phase of searching the environment for
conditions calling for decisions; Notes
(ii) Design activity the phase of inventing, developing, and analysing
possible course of action to take place; and
(iii) Choice activity the final phase of actual choice selecting a particular
course of action from those available.
3. Bounded Rationality:
Simon is of view that man is not completely rational. He has criticized
the theories which are based on the assumptions of complete rationality.
He has advocated the principle of bounded rationality. Accordingly,
managers do not go for maximum satisfaction of a decision but are
satisfied with good enough satisfaction from a decision.
Managers cannot maximize on account of various limitations and
constraints. A decision is a rational for achieving the desired ends,
appropriate means are adopted. However, it is not easy to separate the
ends from the means because of ends-means chain. This ends-means
chain is seldom an integrated or completely integrated one.
The relationship between organisational activities and ultimate objectives
is also not dear. Moreover, a simple ends-means chain analysis may not
help in reaching accurate conclusion because what is an end at one point
of time or at one level of organisation might be a means at the other time
or at other level of organisation.
4. Administrative Man:
Simon has given the concept of administrative man as the model of
decision-making. The model is based on the following assumptions:
(i) Administrative man adopts satisfaction approach in decision-making
rather than the maximizing approach of economic man.
(ii) He perceives the word as a simplified model of real world. Thus, he
remains content with simplification,
(iii) He can make his choice without first determining all possible
alternatives and without screening that these are in-fact all the
alternatives,
(iv) He is able to make decisions with relatively simple rule of thumb, or
tricks of trade, or force of habit. The administrative man model describes
the decision-making process of mangers tarty then alternative thereby of
economic man.
5. Organizational Communication:
Simon has emphasised the role of communication in organisation.
According to him, there are three stage in the communication process;
initiation, transmittal, and receipt of information. There may be blockade
of communication and any of these three stages. In order to overcome the
problem of communication, he has emphasised the role of informal

41
Principles of
communication and has attached less importance to the formal network
management of authority.
Peter F. Drucker’s Contributions
Notes
Some of the major contributions of Peter Drucker are as follows: 1.
Nature of Management 2. Management Functions 3. Organisation
Structure 4. Federalism 5. Management by Objectives 6. Organizational
Changes.
Among the contemporary management thinkers, Peter Drucker outshines
all. He has varied experience and background which include psychology,
sociology, law, and journalism. Through his consultancy assignments, he
has developed solutions to number of managerial problems. Therefore,
his contributions cover various approaches of management. He has
written many books and papers.

The more important books are; Practice of Management (1954),

Managing by Results (1964), The Effective Executive (1967), The Age
of Discontinuity (1969), Management: Tasks, Responsibilities and
Practices (1974), and Management Challenges for 2Century (1999),
1. Nature of Management:
Drucker is against bureaucratic management and has emphasised
management with creative and innovative characteristics. The basic
objective of management is to read towards innovation. The concept of
innovation is quite broad. It may include development of new ideas,
combining of old and new ideas, adaptation of ideas from other fields or
even to act as a catalyst and encouraging others to carry out innovation.
He has treated management as a discipline as well as profession. As a
discipline, management has its own tools, skills, techniques and
approaches. However, management is more a practice rather than a
science. Thus, Drucker may be placed in ’empirical school of
management’.
While taking management as a profession. Drucker does not advocate to
treat management as a strict profession but only a liberal profession
which places more emphasis that managers should not only have skills
and techniques but should have right perspective putting the things into
practice. They should be good practitioners so that they can understand
the social and cultural requirements of various organisations and
countries.
2. Management Functions:
According to Drucker, management is the organ of its institution. It has
no functions in itself, and no existence in itself. He sees management
through its tasks. Accordingly, there are three basic functions of a
manager which he must perform to enable the institution to make its
contribution for:
(i) the specific purpose and mission of the institution whether business,
hospital or university;
(ii) making work productive and the worker achieving; and
(iii) managing social impacts and social responsibilities.
All these three functions are performed simultaneously within the same
managerial action. A manager has to act as administrator where he has to
improve upon what already exists and s already known. He has to act as
42
an entrepreneur in redirecting the resources from seas of tow or Introduction
diminishing results to areas of high or increasing results.
Thus, a manager has to perform several functions: setting of objectives, Notes
making, organising and motivating. Drucker has attached great
importance to the objective setting function and has specified eight areas
where clear objective setting is required. These are: market standing,
innovation, productivity, physical and financial resources, profitability,
managerial performance and development, worker performance and
attitude, and public responsibility.
3. Organisation Structure:
Drucker has decried bureaucratic structure because of its too many
dysfunctional effects. Therefore, it should be replaced. He has
emphasised three basic characteristics of an effective organisation
structure.
These are:
(i) Enterprise should be organised for performance;
(ii) it should contain the least possible number of managerial levels;
(iii) it must make possible the training and testing of tomorrow’s top
managers—responsibility to a manager while still he is young.
He has identified three basic aspects in organising activity analysis,
decision analysis, and relation analysis. An activity analysis shows what
work has to be performed, what kind of work should be put together, and
what emphasis is to be given to each activity in the organisation
structure.
Decision analysis takes into account the four aspects of a decision: the
degree of futurity In the decision, the impact of decision over other
functions, number of qualitative factors that enter into it, and whether the
decision is periodically recurrent or rare. Such an analysis will determine
the level at which the decision can be made. Relation analysis helps in
defining the structure and also to give guidance in manning the structure.
4. Federalism:
Drucker has advocated the concept of federalism. Federalism refers to
centralised control in decentralised structure Decentralised structure goes
far beyond the delegation of authority. It creates a new constitution and
new ordering principle. He has emphasised the close links between the
decisions adopted by the top management on the one hand and by the
autonomous unit on the other.
This is just like a relationship between federal government and state
governments. In a federal organisation, local managements should
participate in the decision that set the limits of their own authority.
Federalism has certain positive values over other methods of organising.
These are as follows:
(i) It sets the top management free to devote itself to its proper functions;
(ii) It defines the functions and responsibilities of the operating people;
(iii) It creates a yardstick to measure their success and effectiveness in
operating jobs; and
(iv) It helps to resolve the problem of continuity through giving the
managers of various units education in top management problems and
functions while in an operating position.

43
Principles of
5. Management by Objectives:
Management by objectives (MBO) is regarded as one of the important
management
contributions of Drucker to the discipline of management. He introduced
Notes this concept in 1954. MBO has further been modified by Schleh which
has been termed as management by results’. MBO includes method of
planning, setting standards, performance appraisal, and motivation.
According to Drucker, MBO is not only a technique of management but
it is a philosophy of managing. It transforms the basic assumptions of
managing from exercising cattalo to self-control. Therefore, in order to
practice MBO, the organisation must change itself MBO has become
such a popular way of managing that today t is regarded as He most
modern management approach. In fact, it has revolutionalised the
management process.
6. Organizational Changes:
Drucker has visualised rapid changes in the society because of rapid
technological development. Though he is not resistant to change, he feels
concerned for the rapid changes and their impact on human life.
Normally, some changes can be absorbed by the organisation but not the
rapid changes.
Since rapid changes are occurring in the society, human beings should
develop philosophy to face the changes and take them as challenges for
making the society better. This can be done by developing dynamic
organizations which are able to absorb changes much faster than static
ones. Drucker’s contributions have made tremendous impact on the
management practices. His contributions have been recognised even by
the management thinkers of Socialist Bloc.
For example, Vishiani a USSR management thinker writes about
Drucker as follows:
“Drucker shows certain foresightedness and understanding of the
development prospects of modern production when he opposes the view
that worker is no more than an appendage of machine. Moved by a desire
to strengthen the position of capitalism, he endeavors to give due
consideration also to some objective trends in production management.
Drucker, therefore, tells the industrialists not to fear a limited
participation of the workers in the management of production process.
He warns them that if they do not abandon that fear, the consequences
may be fatal to them.” Drucker is perhaps the only Western management
thinker who has attracted so much attention of the communist world.
Hawthorne Experiments Mayo’s Contribution
George Elton Mayo was in charge of certain experiments on human
behavior carried out at the Hawthorne Works of the General Electric
Company in Chicago between 1924 and 1927. His research findings have
contributed to organization development in terms of human relations and
motivation theory.
Flowing from the findings of these investigations he came to certain
conclusions as follows:
 Work is a group activity.
 The social world of the adult is primarily patterned about work
activity.

44
  The need for recognition, security and sense of belonging is more Introduction
important in determining workers' morale and productivity than
the physical conditions under which he works. Notes
 A complaint is not necessarily an objective recital of facts; it is
commonly a symptom manifesting disturbance of an individual's
status position.
 The worker is a person whose attitudes and effectiveness are
conditioned by social demands from both inside and outside the
work plant.
 Informal groups within the work plant exercise strong social
controls over the work habits and attitudes of the individual
worker.
 The change from an established society in the home to an
adaptive society in the work plant resulting from the use of new
techniques tends continually to disrupt the social organization of
a work plant and industry generally.
 Group collaboration does not occur by accident; it must be
planned and developed. If group collaboration is achieved the
human relations within a work plant may reach a cohesion which
resists the disrupting effects of adaptive society.
Variables Affecting Productivity
Specifically, Mayo wanted to find out what effect fatigue and monotony
had on job productivity and how to control them through such variables
as rest breaks, work hours, temperature and humidity. In the process, he
stumbled upon a principle of human motivation that would help to
revolutionize the theory and practice of management.
Mayo took six women from the assembly line, segregated them from the
rest of the factory and put them under the eye of a supervisor who was
more a friendly observer than disciplinarian. Mayo made frequent
changes in their working conditions, always discussing and explaining
the changes in advance.
He changed the hours in the working week, the hours in the workday the
number of rest breaks. the time of the lunch hour. Occasionally, he
would return the women to their original, harder working conditions.
Relay Assembly
The investigators selected two girls for their second series of
experiments and asked them to choose another four girls, thus making a
small group of six. The group was employed in assembling telephone
relays - a relay being a small but intricate mechanism composed of about
forty separate parts which had to be assembled by the girls seated at a
lone bench and dropped into a chute when completed.
The relays were mechanically counted as they slipped down the chute. It
was intended that the basic rate of production should be noted at the
start, and that subsequently changes would be introduced, the
effectiveness of which would be measured by increased or decreased
production of the relays.
Feedback mechanism
Through out the series of experiments, an observer sat with the girls in
the workshop noting all that went on, keeping the girls informed about

45
Principles of
the experiment, asking for advice or information, and listening to their
complaints.
management
The experiment began by introducing various changes, each of which
Notes was continued for a test period of four to twelve weeks. The results of
these changes are as follows:
Conditions and results
 Under normal conditions with a forty eight hour week, including
Saturdays, and no rest pauses. The girls produced 2,400 relays a
week each.
 They were then put on piece-work for eight weeks.
 Output went up
 Two five minute rest pauses, morning and afternoon, were
introduced for a period of five weeks.
 Output went up once more
 The rest pauses were lengthened to ten minutes each.
 Output went up sharply.
 Six five minute pauses were introduced, and the girls complained
that their work rhythm was broken by the frequent pauses.
 Output fell slightly
 Return to the two rest pauses, the first with a hot meal supplied
by the Company free of charge.
 Output went up
 The girls were dismissed at 4.30 p.m. instead of 5.00 p.m.
 Output went up
 They were dismissed at 4.00 p.m.
 Output remained the same
 Finally, all the improvements were taken away, and the girls went
back to the physical conditions of the beginning of the
experiment: work on Saturday, 48 hour week, no rest pauses, no
piece work and no free meal. This state of affairs lasted for a
period of 12 weeks.
 Output was the highest ever recorded averaging 3000 relays a
week.
What happened during the experiments
What happened was that six individuals became a team and the team
gave itself wholeheartedly and spontaneously to co-operation in the
experiment. The consequence was that they felt themselves to be
participating freely and without afterthought and were happy in the
knowledge that they were working without coercion from above or
limitation from below.
They were themselves satisfied at the consequence for they felt that they
were working under less pressure than ever before. In fact regular
medical checks showed no signs of cumulative fatigue and absence from
work declined by 80 per cent.
It was noted too, that each girl had her own technique of putting the
component parts of the relay together - sometimes she varied this
technique in order to avoid monotony and it was found that the more
intelligent the girl, the greater was the number of variations (similar to
McClelland's research findings into achievement motivated people.)

46
The experimental group had considerable freedom of movement. They Introduction
were not pushed around or bossed by anyone. Under these conditions
they developed an increased sense of responsibility and instead of Notes
discipline from higher authority being imposed, it came from within the
group itself.

The findings
To his amazement, Elton Mayo discovered a general upward trend in
production, completely independent of any of the changes he made.
His findings didn't mesh with the then current theory (see F.W. Taylor)
of the worker as motivated solely by self-interest. It didn't make sense
that productivity would continue to rise gradually when he cut out breaks
and returned the women to longer working hours.
Mayo began to look around and realized that the women, exercising a
freedom they didn't have on the factory floor, had formed a social
atmosphere that also included the observer who tracked their
productivity. The talked, they joked. they began to meet socially outside
of work.
Mayo had discovered a fundamental concept that seems obvious today.
Workplaces are social environments and within them, people are
motivated by much more than economic self-interest He concluded that
all aspects of that industrial environment carried social value.
When the women were singled out from the rest of the factory workers,
it raised their self-esteem. When they were allowed to have a friendly
relationship with their supervisor. they felt happier at work. When he
discussed changes in advance with them, they felt like part of the team.
He had secured their cooperation and loyalty; it explained why
productivity rose even when he took away their rest breaks.
The power of the social setting and peer group dynamics became even
more obvious to Mayo in a later part of the Hawthorne Studies, when he
saw the flip side of his original experiments. A group of 14 men who
participated in a similar study restricted production because they were
distrustful of the goals of the project.
The portion of the Hawthorne Studies that dwelt on the positive effects
of benign supervision and concern for workers that made them feel like
part of a team became known as the Hawthorne Effect; the studies
themselves spawned the human relations school of management that is
constantly being recycled in new forms today, witness quality circles,
participatory management, team building, et al.
Incidentally, the Hawthorne Works the place where history was made, is
history now itself. Western Electric closed it in 1983.
The Hawthorne effect today
In the training world, the Hawthorne Effect is a chameleon. Ask several
trainers and you'll probably get several definitions, most of them
legitimate and all of them true to some aspect of the original experiments
by Elton Mayo, in Chicago that produced the term.
It has been described as the rewards you reap when you pay attention to
people. The mere act of showing people that you're concerned about
them usually spurs them to better job performance.
That's the Hawthorne Effect.

47
Principles of
The Hawthorne Effect at Work
Suppose you've taken a management trainee and given her specialized
management
training in management skills she doesn't now possess. Without saving a
Notes word, you've given the trainee the feeling that she is so valuable to the
organization that you'll spend time and money to develop her skills. She
feels she's on a track to the top, and that motivates her to work harder
and better. The motivation is independent of any particular skills or
knowledge she may have gained from the training session. That's the
Hawthorne Effect at work.
In a way, the Hawthorne Effect can be construed as an enemy of the
modern trainer. Carrying the theory to the edges of cynicism, some
would say it doesn't make any difference what you teach because the
Hawthorne Effect will produce the positive outcome you want.
A Sense of Belonging?
How do you respond to executives who denigrate training and credit the
Hawthorne Effect when productivity rises? So what? Effective training
performs a dual function: It educates people and it strokes them. And
there's nothing wrong with using the Hawthorne Effect to reach this other
training goal. In fact, the contention is that about 50% of any successful
training session can be attributed to the Hawthorne Effect.
The Hawthorne Effect has also been called the 'Somebody Upstairs
Cares' syndrome. It's not as simplistic as the ideal popular under the
human relations craze over recent years that you just have to be nice to
workers. It's more than etiquette.
When people spend a large portion of their time at work, they must have
a sense of belonging, of being part of a team. When they do, they
produce better. That's the Hawthorne Effect.
Orwellian?
One often hears a different interpretation of the Hawthorne Effect.
George Orwell would understand this version; it has a Big Brother ring
that?s far less benign than other definitions. People use it when they talk
about workers under the eye of the supervisor.
If someone should subtly observe workers on the job to see if they truly
apply new procedures they've learned in a training course. Occasionally,
managers object saying that observation isn't a valid test Of course they'll
do a good job if you're watching them, they tell her. Isn't that the
Hawthorne Effect? Well not exactly.
Systems approach to management
In the 1960, an approach to management appeared which try to unify the
prior schools of thought. This approach is commonly known as ‘Systems
Approach’. Its early contributors include Ludwing Von Bertalanfty,
Lawrence J. Henderson, W.G. Scott, Deniel Katz, Robert L. Kahn, W.
Buckley and J.D. Thompson.
They viewed organisation as an organic and open system, which is
composed of interacting and interdependent parts, called subsystems.
The system approach is top took upon management as a system or as “an
organised whole” made up of sub- systems integrated into a unity or
orderly totality.

48
Systems approach is based on the generalization that everything is inter- Introduction
related and inter­dependent. A system is composed of related and
dependent element which when in interaction, forms a unitary whole. A Notes
system is simply an assemblage or combination of things or parts
forming a complex whole.
One its most important characteristic is that it is composed of hierarchy
of sub-systems. That is the parts forming the major system and so on. For
example, the world can be considered-to be a system in which various
national economies are sub-systems.
In turn, each national economy is composed of its various industries,
each industry is composed of firms’ and of course a firm can be
considered a system composed of sub-systems sudi as production,
marketing, finance, accounting and so on.
Features of Systems Approach:
(i) A system consists of interacting elements. It is set of inter-related and
inter-dependent parts arranged in a manner that produces a unified
whole.
(ii) The various sub-systems should be studied in their inter-relationships
rather, than in isolation from each other.
(iii) An organisational system has a boundary that determines which
parts are internal and which are external.
(iv) A system does not exist in a vacuum. It receives information,
material and energy from other systems as inputs. These inputs undergo
a transformation process within a system and leave the system as output
to other systems.
(v) An organisation is a dynamic system as it is responsive to its
environment. It is vulnerable to change in its environment.
In the systems approach, attention is paid towards the overall
effectiveness of the system rather than the effectiveness of the sub-
systems. The interdependence of the sub-systems is taken into account.
The idea of systems can be applied at an organisational level. In Appling
system concepts, organisations are taken into account and not only the
objectives and performances of different departments (sub-systems).
The systems approach is considered both general and specialised
systems. The general systems approach to management is mainly
concerned with formal organisations and the concepts are relating to
technique of sociology, psychology and philosophy. The specific
management system includes the analysis of organisational structure,
information, planning and control mechanism and job design, etc.
As discussed earlier, system approach has immense possibilities, “A
system view point may provide the impetus to unify management theory.
By definitions, it could treat the various approaches such as the process
of quantitative and behavioural ones as sub-systems in an overall theory
of management. Thus, the systems approach may succeed where the

49
Principles of
process approach has failed to lead management out of the theory of
management jungle.”
Systems theory is useful to management because it aims at achieving the
Notes objectives and it views organisation as an open system. Chester Barnard
was the first person to utilize the systems approach in the field of
management.
He feete that the executive must steer through by keeping a balance
between conflicting forces and events. A high order of responsible
leadership makes the executives effective. H. Simon viewed organisation
as a complex system of decision-making process.
Evaluation of System Approach:
The systems approach assists in studying the functions of complex
organisations and has been utilized as the base for the new kinds of
organisations like project management organisation. It is possible to
bring out the inter-relations in various functions like planning,
organising, directing and controlling. This approach has an edge over the
other approaches because it is very close to reality. This approach is
called abstract and vague. It cannot be easily applied to large and
complex organisations. Moreover, it does not provide any tool and
technique for managers.
REVIEW QUESTIONS
1. Describe concept and nature of management<
2. What are the main characteristics or salient features or nature of
management?
3. What are functions of management?
4. What are arguments for the against professionalization?
5. Describe the relation between management and administration.
6. Discuss about levels of management.
7. What are the importance of management?
8. Describe various roles of a manger.
9. Describe taylor’s contribution and scientific management.
10. Discuss about social systems approach bernard’s contribution.
11. What is systems approach to management?

FURTHER READINGS
1. Principles Of Management - Mason Andrew Carpenter,
Talya Bauer
2. Principles Of Management -Tony Morden
3. Principles Of Management -D. Chandra Bose
4. Principles Of Management -[Link]
5. Principles Of Management -K. Anbuvelan

50
UNIT -2 PLANNING Planning

CONTENTS
 Concept Process and Types of Planning Notes
 Decision Making
 Management By Objectives
 Corporate Planning And Environment Analysis
 Review Questions
 Further Readings
Planning means looking ahead and chalking out future courses of action
to be followed. It is a preparatory step. It is a systematic activity which
determines when, how and who is going to perform a specific job.
Planning is a detailed programme regarding future courses of action.
It is rightly said “Well plan is half done”. Therefore planning takes into
consideration available & prospective human and physical resources of
the organization so as to get effective co-ordination, contribution &
perfect adjustment. It is the basic management function which includes
formulation of one or more detailed plans to achieve optimum balance of
needs or demands with the available resources.
According to Urwick, “Planning is a mental predisposition to do things
in orderly way, to think before acting and to act in the light of facts
rather than guesses”. Planning is deciding best alternative among others
to perform different managerial functions in order to achieve
predetermined goals.
According to Koontz & O’Donell, “Planning is deciding in advance what
to do, how to do and who is to do it. Planning bridges the gap between
where we are to, where we want to go. It makes possible things to occur
which would not otherwise occur”.
Steps in Planning Function
Planning function of management involves following steps:-
1. Establishment of objectives
a. Planning requires a systematic approach.
b. Planning starts with the setting of goals and objectives to
be achieved.
c. Objectives provide a rationale for undertaking various
activities as well as indicate direction of efforts.
d. Moreover objectives focus the attention of managers on
the end results to be achieved.
e. As a matter of fact, objectives provide nucleus to the
planning process. Therefore, objectives should be stated
in a clear, precise and unambiguous language. Otherwise
the activities undertaken are bound to be ineffective.
f. As far as possible, objectives should be stated in
quantitative terms. For example, Number of men working,
wages given, units produced, etc. But such an objective
cannot be stated in quantitative terms like performance of
quality control manager, effectiveness of personnel
manager.

51
Principles of
g. Such goals should be specified in qualitative terms.
h. Hence objectives should be practical, acceptable,
management
workable and achievable.
Notes 2. Establishment of Planning Premises
a. Planning premises are the assumptions about the lively
shape of events in future.
b. They serve as a basis of planning.
c. Establishment of planning premises is concerned with
determining where one tends to deviate from the actual
plans and causes of such deviations.
d. It is to find out what obstacles are there in the way of
business during the course of operations.
e. Establishment of planning premises is concerned to take
such steps that avoids these obstacles to a great extent.
f. Planning premises may be internal or external. Internal
includes capital investment policy, management labour
relations, philosophy of management, etc. Whereas
external includes socio- economic, political and
economical changes.
g. Internal premises are controllable whereas external are
non- controllable.
3. Choice of alternative course of action
a. When forecast are available and premises are established,
a number of alternative course of actions have to be
considered.
b. For this purpose, each and every alternative will be
evaluated by weighing its pros and cons in the light of
resources available and requirements of the organization.
c. The merits, demerits as well as the consequences of each
alternative must be examined before the choice is being
made.
d. After objective and scientific evaluation, the best
alternative is chosen.
e. The planners should take help of various quantitative
techniques to judge the stability of an alternative.
4. Formulation of derivative plans
a. Derivative plans are the sub plans or secondary plans
which help in the achievement of main plan.
b. Secondary plans will flow from the basic plan. These are
meant to support and expediate the achievement of basic
plans.
c. These detail plans include policies, procedures, rules,
programmes, budgets, schedules, etc. For example, if
profit maximization is the main aim of the enterprise,
derivative plans will include sales maximization,
production maximization, and cost minimization.
d. Derivative plans indicate time schedule and sequence of
accomplishing various tasks.

52
 5. Securing Co-operation Planning
a. After the plans have been determined, it is necessary
rather advisable to take subordinates or those who have to
implement these plans into confidence.
b. The purposes behind taking them into confidence are :- Notes
i. Subordinates may feel motivated since they are
involved in decision making process.
ii. The organization may be able to get valuable
suggestions and improvement in formulation as
well as implementation of plans.
iii. Also the employees will be more interested in the
execution of these plans.
6. Follow up/Appraisal of plans
a. After choosing a particular course of action, it is put into
action.
b. After the selected plan is implemented, it is important to
appraise its effectiveness.
c. This is done on the basis of feedback or information
received from departments or persons concerned.
d. This enables the management to correct deviations or
modify the plan.
e. This step establishes a link between planning and
controlling function.
f. The follow up must go side by side the implementation of
plans so that in the light of observations made, future
plans can be made more realistic.
Characteristics of Planning
Planning is goal-oriented.
a. Planning is made to achieve desired objective of business.
b. The goals established should general acceptance otherwise
individual efforts & energies will go misguided and misdirected.
c. Planning identifies the action that would lead to desired goals
quickly & economically.
d. It provides sense of direction to various activities. E.g. Maruti
Udhyog is trying to capture once again Indian Car Market by
launching diesel models.
Planning is looking ahead.
a. Planning is done for future.
b. It requires peeping in future, analyzing it and predicting it.
c. Thus planning is based on forecasting.
d. A plan is a synthesis of forecast.
e. It is a mental predisposition for things to happen in future.
Planning is an intellectual process.
a. Planning is a mental exercise involving creative thinking, sound
judgement and imagination.
b. It is not a mere guesswork but a rotational thinking.
c. A manager can prepare sound plans only if he has sound
judgement, foresight and imagination.
d. Planning is always based on goals, facts and considered
estimates.

53
Principles of
Planning involves choice & decision making.
a. Planning essentially involves choice among various alternatives.
management
b. Therefore, if there is only one possible course of action, there is
Notes no need planning because there is no choice.
c. Thus, decision making is an integral part of planning.
d. A manager is surrounded by no. of alternatives. He has to pick
the best depending upon requirements & resources of the
enterprises.
Planning is the primary function of management / Primacy of
Planning.
a. Planning lays foundation for other functions of management.
b. It serves as a guide for organizing, staffing, directing and
controlling.
c. All the functions of management are performed within the
framework of plans laid out.
d. Therefore planning is the basic or fundamental function of
management.
Planning is a Continuous Process.
a. Planning is a never ending function due to the dynamic business
environment.
b. Plans are also prepared for specific period f time and at the end of
that period, plans are subjected to revaluation and review in the
light of new requirements and changing conditions.
c. Planning never comes into end till the enterprise exists issues,
problems may keep cropping up and they have to be tackled by
planning effectively.
Planning is all Pervasive.
a. It is required at all levels of management and in all departments
of enterprise.
b. Of course, the scope of planning may differ from one level to
another.
c. The top level may be more concerned about planning the
organization as a whole whereas the middle level may be more
specific in departmental plans and the lower level plans
implementation of the same.
Planning is designed for efficiency.
a. Planning leads to accompishment of objectives at the minimum
possible cost.
b. It avoids wastage of resources and ensures adequate and optimum
utilization of resources.
c. A plan is worthless or useless if it does not value the cost
incurred on it.
d. Therefore planning must lead to saving of time, effort and
money.
e. Planning leads to proper utilization of men, money, materials,
methods and machines.
Planning is Flexible.
a. Planning is done for the future.

54
 b. Since future is unpredictable, planning must provide enough Planning
room to cope with the changes in customer’s demand,
competition, govt. policies etc.
c. Under changed circumstances, the original plan of action must be
revised and updated to male it more practical. Notes
Advantages of Planning
Planning facilitates management by objectives.
a. Planning begins with determination of objectives.
b. It highlights the purposes for which various activities are to be
undertaken.
c. In fact, it makes objectives more clear and specific.
d. Planning helps in focusing the attention of employees on the
objectives or goals of enterprise.
e. Without planning an organization has no guide.
f. Planning compels manager to prepare a Blue-print of the courses
of action to be followed for accomplishment of objectives.
g. Therefore, planning brings order and rationality into the
organization.
Planning minimizes uncertainties.
a. Business is full of uncertainties.
b. There are risks of various types due to uncertainties.
c. Planning helps in reducing uncertainties of future as it involves
anticipation of future events.
d. Although future cannot be predicted with cent percent accuracy
but planning helps management to anticipate future and prepare
for risks by necessary provisions to meet unexpected turn of
events.
e. Therefore with the help of planning, uncertainties can be
forecasted which helps in preparing standbys as a result,
uncertainties are minimized to a great extent.
Planning facilitates co-ordination.
a. Planning revolves around organizational goals.
b. All activities are directed towards common goals.
c. There is an integrated effort throughout the enterprise in various
departments and groups.
d. It avoids duplication of efforts. In other words, it leads to better
co-ordination.
e. It helps in finding out problems of work performance and aims at
rectifying the same.
Planning improves employee’s moral.
a. Planning creates an atmosphere of order and discipline in
organization.
b. Employees know in advance what is expected of them and
therefore conformity can be achieved easily.
c. This encourages employees to show their best and also earn
reward for the same.
d. Planning creates a healthy attitude towards work environment
which helps in boosting employees moral and efficiency.

55
Principles of
Planning helps in achieving economies.
a. Effective planning secures economy since it leads to orderly
management
allocation of resources to various operations.
Notes b. It also facilitates optimum utilization of resources which brings
economy in operations.
c. It also avoids wastage of resources by selecting most appropriate
use that will contribute to the objective of enterprise. For
example, raw materials can be purchased in bulk and
transportation cost can be minimized. At the same time it ensures
regular supply for the production department, that is, overall
efficiency.
Planning facilitates controlling.
a. Planning facilitates existence of certain planned goals and
standard of performance.
b. It provides basis of controlling.
c. We cannot think of an effective system of controlling without
existence of well thought out plans.
d. Planning provides pre-determined goals against which actual
performance is compared.
e. In fact, planning and controlling are the two sides of a same coin.
If planning is root, controlling is the fruit.
Planning provides competitive edge.
a. Planning provides competitive edge to the enterprise over the
others which do not have effective planning. This is because of
the fact that planning may involve changing in work methods,
quality, quantity designs, extension of work, redefining of goals,
etc.
b. With the help of forecasting not only the enterprise secures its
future but at the same time it is able to estimate the future
motives of it’s competitor which helps in facing future
challenges.
c. Therefore, planning leads to best utilization of possible resources,
improves quality of production and thus the competitive strength
of the enterprise is improved.
Planning encourages innovations.
a. In the process of planning, managers have the opportunities of
suggesting ways and means of improving performance.
b. Planning is basically a decision making function which involves
creative thinking and imagination that ultimately leads to
innovation of methods and operations for growth and prosperity
of the enterprise.
Disadvantages of Planning
There are several limitations of planning. Some of them are inherit in the
process of planning like rigidity and other arise due to shortcoming of
the techniques of planning and in the planners themselves.
1. Rigidity
a. Planning has tendency to make administration inflexible.
b. Planning implies prior determination of policies,
procedures and programmes and a strict adherence to
them in all circumstances.

56
 c. There is no scope for individual freedom. Planning
d. The development of employees is highly doubted because
of which management might have faced lot of difficulties
in future.
e. Planning therefore introduces inelasticity and discourages Notes
individual initiative and experimentation.
2. Misdirected Planning
a. Planning may be used to serve individual interests rather
than the interest of the enterprise.
b. Attempts can be made to influence setting of objectives,
formulation of plans and programmes to suit ones own
requirement rather than that of whole organization.
c. Machinery of planning can never be freed of bias. Every
planner has his own likes, dislikes, preferences, attitudes
and interests which is reflected in planning.

3. Time consuming
a. Planning is a time consuming process because it involves
collection of information, it’s analysis and interpretation
thereof. This entire process takes a lot of time specially
where there are a number of alternatives available.
b. Therefore planning is not suitable during emergency or
crisis when quick decisions are required.
4. Probability in planning
a. Planning is based on forecasts which are mere estimates
about future.
b. These estimates may prove to be inexact due to the
uncertainty of future.
c. Any change in the anticipated situation may render plans
ineffective.
d. Plans do not always reflect real situations inspite of the
sophisticated techniques of forecasting because future is
unpredictable.
e. Thus, excessive reliance on plans may prove to be fatal.
5. False sense of security
a. Elaborate planning may create a false sense of security to
the effect that everything is taken for granted.
b. Managers assume that as long as they work as per plans, it
is satisfactory.
c. Therefore they fail to take up timely actions and an
opportunity is lost.
d. Employees are more concerned about fulfillment of plan
performance rather than any kind of change.
6. Expensive
a. Collection, analysis and evaluation of different
information, facts and alternatives involves a lot of
expense in terms of time, effort and money
b. According to Koontz and O’Donell, ’ Expenses on
planning should never exceed the estimated benefits from
planning. ’

57
Principles of
External Limitations of Planning
management 1. Political Climate- Change of government from Congress to some
other political party, etc.
Notes 2. Labour Union- Strikes, lockouts, agitations.
3. Technological changes- Modern techniques and equipments,
computerization.
4. Policies of competitors- Eg. Policies of Coca Cola and Pepsi.
5. Natural Calamities- Earthquakes and floods.
6. Changes in demand and prices- Change in fashion, change in
tastes, change in income level, demand falls, price falls, etc.

Definition of Business Policy

Business Policy defines the scope or spheres within which decisions can
be taken by the subordinates in an organization. It permits the lower level
management to deal with the problems and issues without consulting top
level management every time for decisions.
Business policies are the guidelines developed by an organization to
govern its actions. They define the limits within which decisions must be
made. Business policy also deals with acquisition of resources with
which organizational goals can be achieved. Business policy is the study
of the roles and responsibilities of top level management, the significant
issues affecting organizational success and the decisions affecting
organization in long-run.
Features of Business Policy
An effective business policy must have following features-
1. Specific- Policy should be specific/definite. If it is uncertain, then
the implementation will become difficult.
2. Clear- Policy must be unambiguous. It should avoid use of
jargons and connotations. There should be no misunderstandings
in following the policy.
3. Reliable/Uniform- Policy must be uniform enough so that it can
be efficiently followed by the subordinates.
4. Appropriate- Policy should be appropriate to the present
organizational goal.
5. Simple- A policy should be simple and easily understood by all
in the organization.
6. Inclusive/Comprehensive- In order to have a wide scope, a
policy must be comprehensive.
7. Flexible- Policy should be flexible in operation/application. This
does not imply that a policy should be altered always, but it
should be wide in scope so as to ensure that the line managers use
them in repetitive/routine scenarios.
8. Stable- Policy should be stable else it will lead to indecisiveness
and uncertainty in minds of those who look into it for guidance.
Difference between Policy and Strategy
The term “policy” should not be considered as synonymous to the term
“strategy”. The difference between policy and strategy can be
summarized as follows-
Policy is a blueprint of the organizational activities which are
repetitive/routine in nature. While strategy is concerned with those

58
organizational decisions which have not been dealt/faced before in same Planning
form.
Policy formulation is responsibility of top level management. While
strategy formulation is basically done by middle level management.
Policy deals with routine/daily activities essential for effective and Notes
efficient running of an organization. While strategy deals with strategic
decisions.
Policy is concerned with both thought and actions. While strategy is
concerned mostly with action.
A policy is what is, or what is not done. While a strategy is the
methodology used to achieve a target as prescribed by a policy.
Policy Formulation stands at the top of the transport planning process. It is
a strategic planning process leading to a general concept, usually a
“Transport Master plan”. Such a master plan is a political decision. It
includes a set of measures aimed at the future developments of the
transport system. A consensus has to be found on which scenario or
group of measures out of different scenarios and bundles of measures is
apt to fulfil the intended goals in the best way. This overall concept
normally is a legally-binding framework for more detailed plans and
concepts for a longer period of time.
Policy Formulation is most important at higher strategic levels but has to
be considered at each level of a transport planning process:
• Strategic policies in transport cover a larger area and include long-term
strategies. These policies have to be far sighted and consequently
implemented.
• Regional and local transport policies are applied on regions and small
areas (towns, villages, etc.), following the overall principles of a general
concept – however on a smaller scale.
The differences between the various levels - national, regional, local –
appear in the allocation of authorities and competence and in the extent
of impacts and effects.
Participation and information of all involved parties should be regarded
as an important aspect to gain accepted goals and accepted policies. One
problem of environmentally sound policies is that the measures to
achieve transport systems heading towards sustainability are in most
cases unpopular.
All transport policies should basically have common features such as:
• inclusion of all affected parties (transport operators, transport users,
politicians, etc.);
• inclusion of all affected aspects (transport, modes of transport, health,
environment, social policies, economics, etc.);
• approval of a majority (voters, experts, etc.);
• strategic view, logical and consistent layout and implementation over
longer periods;
• possibilities to (re)adjust the policies based on feedback and evaluation,
etc.
Implementation is normally regarded as a vital and often neglected
phase of strategic planning.
“The implementation encloses all actions that take place during the
realisation of the plans, i.e. budgeting, construction of infrastructure and

59
Principles of
the undertaking of necessary institutional changes for policy measures
(TENASSESS 1999, Annex II)”.
management
It is essential that implementation also comprises the analysis of social
Notes and political acceptability of measures and the sensibility of citizens,
politicians, journalists and experts for objectives and programmes before,
during and after implementing transport measures. Public awareness and
information campaigns as well as the installation of a permanent
marketing procedure may help to enhance the acceptability of transport
plans or single measures. Quality control – concerning acceptability as
well as functionalism of implemented measures – provides the possibility
for readjustment, improvement and reaction.
Decision-making
Decision-making is regarded as the cognitive process resulting in the
selection of a belief or a course of action among several alternative
possibilities. Every decision-making process produces a final choice that
may or may not prompt action. Decision-making is the process of
identifying and choosing alternatives based on the values and preferences
of the decision-maker.
Decision-making can be regarded as a problem-solving activity
terminated by a solution deemed to be satisfactory. It is, therefore, a
process which can be more or less rational or irrational and can be based
on explicit knowledge or tacit knowledge.
Human performance with regard to decisions has been the subject of
active research from several perspectives:
* Psychological: examining individual decisions in the context of a set of
needs, preferences and values the individual has or seeks.
* Cognitive: the decision-making process regarded as a continuous
process integrated in the interaction with the environment.
* Normative: the analysis of individual decisions concerned with the
logic of decision-making and rationality and the invariant choice it leads
to. A major part of decision-making involves the analysis of a finite set
of alternatives described in terms of evaluative criteria. Then the task
might be to rank these alternatives in terms of how attractive they are to
the decision-maker(s) when all the criteria are considered
simultaneously. Another task might be to find the best alternative or to
determine the relative total priority of each alternative (for instance, if
alternatives represent projects competing for funds) when all the criteria
are considered simultaneously. Solving such problems is the focus of
multiple-criteria decision analysis (MCDA). This area of decision-
making, although very old, has attracted the interest of many researchers
and practitioners and is still highly debated as there are many MCDA
methods which may yield very different results when they are applied on
exactly the same data.[2] This leads to the formulation of a decision-
making paradox.
Logical decision-making is an important part of all science-based
professions, where specialists apply their knowledge in a given area to
make informed decisions. For example, medical decision-making often
involves a diagnosis and the selection of appropriate treatment. But
naturalistic decision-making research shows that in situations with higher
time pressure, higher stakes, or increased ambiguities, experts may use

60
intuitive decision-making rather than structured approaches. They may Planning
follow a recognition primed decision that fits their experience and arrive
at a course of action without weighing alternatives.
The decision-maker's environment can play a part in the decision-making
process. For example, environmental complexity is a factor that Notes
influences cognitive function.[3] A complex environment is an
environment with a large number of different possible states which come
and go over time.[4] Studies done at the University of Colorado have
shown that more complex environments correlate with higher cognitive
function, which means that a decision can be influenced by the location.
One experiment measured complexity in a room by the number of small
objects and appliances present; a simple room had less of those things.
Cognitive function was greatly affected by the higher measure of
environmental complexity making it easier to think about the situation
and make a better decision.
Decision making skills and techniques
We use our decision making skills to solve problems by selecting one
course of action from several possible alternatives. Decision making
skills are also a key component of time management skills.
Decision making can be hard. Almost any decision involves some
conflicts or dissatisfaction. The difficult part is to pick one solution
where the positive outcome can outweigh possible losses. Avoiding
decisions often seems easier. Yet, making your own decisions and
accepting the consequences are the only way to stay in control of your
time, your success, and your life. If you want to learn more on how to
make a decision, here is some decision making tips to get you started.
A significant part of decision making skills is in knowing and practicing
good decision making techniques. One of the most practical decision
making techniques can be summarized in those simple decision making
steps:
1. Identify the purpose of your decision. What is exactly the problem to
be solved? Why it should be solved?
2. Gather information. What factors does the problem involve?
3. Identify the principles to judge the alternatives. What standards and
judgement criteria should the solution meet?
4. Brainstorm and list different possible choices. Generate ideas for
possible solutions. See more on extending your options for your
decisions on my brainstorming tips page.
5. Evaluate each choice in terms of its consequences. Use your
standards and judgement criteria to determine the cons and pros of each
alternative.
6. Determine the best alternative. This is much easier after you go
through the above preparation steps.
7. Put the decision into action. Transform your decision into specific
plan of action steps. Execute your plan.
8. Evaluate the outcome of your decision and action steps. What
lessons can be learnt? This is an important step for further development
of your decision making skills and judgement.
Final remark. In everyday life we often have to make decisions fast,
without enough time to systematically go through the above action and

61
Principles of
thinking steps. In such situations the most effective decision making
strategy is to keep an eye on your goals and then let your intuition
management
suggest you the right choice.
Notes Decision Making Models
Models of Decision Making
• The Rational Model
– Consists of a structured four-step sequence:
• identifying the problem
• generating alternative solutions
• selecting a solution
• implementing and evaluating the solution
Simon’s Normative Model
- Based on premise that decision making is not rational
- Decision making is characterized by
* Limited information processing
* Use of rules of thumb or shortcuts
* satisficing
Assets of Group Decision Making
• Groups can accumulate more knowledge and facts
• Groups have a broader perspective and consider more alternative
solutions
• Individuals who participate in decisions are more satisfied with the
decision and are more likely to support it.
• Group decision making processes serve an important communication
function as well as a useful political function.
Liabilities of Group Decision Making
• Groups often work more slowly than individuals.
• Groups decisions involve considerable compromise that may lead to
less than optimal decisions.
• Groups are often dominated by one individual or a small clique, thereby
negating many of the virtues of group processes.
• Overreliance on group decision making can inhibit management’s
ability to act quickly and decisively when necessary.
Individual vs. Group Decision Making
• In establishing objectives, groups are probably superior to individuals
because of the greater amount of knowledge available to groups.
• In identifying alternatives, the individual efforts of group members
encourage a broad search in various functional areas of the organization.
• In evaluating alternatives, the collective judgement of the group, with
its wider range of viewpoints, seems superior to that of the individual
decision maker.
Individual vs. Group Decision Making
• In choosing an alternative, group interaction and the achievement of
consensus usually result in the acceptance of more risk than would be
accepted by an individual decision maker.
• Implementing a decision , whether or not it was made by a group, is
usually accomplished by individual managers.
Management by Objectives
An effective management goes a long way in extracting the best out of
employees and make them work as a single unit towards a common goal.

62
The term Management by Objectives was coined by Peter Drucker in Planning
1954.
The process of setting objectives in the organization to give a sense of
direction to the employees is called as Management by Objectives.
It refers to the process of setting goals for the employees so that they Notes
know what they are supposed to do at the workplace.
Management by Objectives defines roles and responsibilities for the
employees and help them chalk out their future course of action in the
organization.
Management by objectives guides the employees to deliver their level
best and achieve the targets within the stipulated time frame.
Need for Management by Objectives (MBO)
 The Management by Objectives process helps the employees to
understand their duties at the workplace.
 KRAs are designed for each employee as per their interest,
specialization and educational qualification.
 The employees are clear as to what is expected out of them.
 Management by Objectives process leads to satisfied employees.
It avoids job mismatch and unnecessary confusions later on.
 Employees in their own way contribute to the achievement of the
goals and objectives of the organization. Every employee has his
own role at the workplace. Each one feels indispensable for the
organization and eventually develops a feeling of loyalty towards
the organization. They tend to stick to the organization for a
longer span of time and contribute effectively. They enjoy at the
workplace and do not treat work as a burden.
 Management by Objectives ensures effective communication
amongst the employees. It leads to a positive ambience at the
workplace.
 Management by Objectives leads to well defined hierarchies at
the workplace. It ensures transparency at all levels. A supervisor
of any organization would never directly interact with the
Managing Director in case of queries. He would first meet his
reporting boss who would then pass on the message to his senior
and so on. Everyone is clear about his position in the
organization.
 The MBO Process leads to highly motivated and committed
employees.
 The MBO Process sets a benchmark for every employee. The
superiors set targets for each of the team members. Each
employee is given a list of specific tasks.
Limitations of Management by objectives Process
 It sometimes ignores the prevailing culture and working
conditions of the organization.
 More emphasis is being laid on targets and objectives. It just
expects the employees to achieve their targets and meet the
objectives of the organization without bothering much about the
existing circumstances at the workplace. Employees are just
expected to perform and meet the deadlines. The MBO Process
sometimes do treat individuals as mere machines.

63
Principles of
 The MBO process increases comparisons between individuals at
the workplace. Employees tend to depend on nasty politics and
management
other unproductive tasks to outshine their fellow workers.
Notes Employees do only what their superiors ask them to do. Their
work lacks innovation, creativity and sometimes also becomes
monotonous.
STRATEGY PLANNING – ENVIRONMENTAL ANALYSIS
The 1st step of the strategy management process is environmental
analysis. An organization can only be successful if it is appropriately
matched to its environment.
ENVIRONMENT ANALYSIS is the study of the organizational
environment to pinpoint environmental factors that can significantly
influence organizational operations.
MANAGERS commonly perform environmental analyses to help them
understand what is happening both inside and outside their organizations
and to increase the probability that the organizational strategies they
develop will appropriately reflect the organizational environment.
In order to perform an environmental analysis efficiently and effectively,
a manager must thoroughly understand how organizational environments
are structured.
For purposes of environmental analysis, the environment of an
organization is generally divided into 3 distinct levels:
1. General Environment
2. Operating Environment
3. Internal Environment
Managers must be well aware of these 3 organizational environmental
levels, understand how each level affects organizational performance and
then formulate organizational strategies in response to this
understanding.
THE GENERAL ENVIRONMENT:
The components normally considered part of the general environment
are:
 Economic
 Social: Including Demographics and Social Values
 Political
 Legal
 Technological
THE OPERATING ENVIRONMENT:
The operating Environment includes various components like:
 Customer
 Competition
 Labour
 Supplier
 International Issues.
THE INTERNAL ENVIRONMENT:
The level of an organization’s environment that exists inside the
organization and normally has immediate and specific implications for
managing the organization is the internal environment.
It includes marketing, finance and accounting,planning,organizing,
influencing and controlling within the organization.

64
 Planning
REVIEW QUESTIONS
1. What is the Characteristics or nature of planning?
2. Describe the Role or significance of planning. What are the Notes
Limitations of planning?
3. Describe the Steps in planning.
4. What are the Nature and importance of planning premises?
5. Describe Classification of planning premises.
6. What are the Essential elements of planning?
7. What are the Essentials of policy formulation? Describe the
Classification of policies.
8. What are the Process and principles of policy formulation
procedure?
9. What are Meaning and elements of decision making? Describe
Characteristics of decision making.
10. What is Procedure of decision making?
11. Describe MBO and its advantages and limitations.
12. What are Process and prerequisites of MBO?
13. What are the Factors determining corporate plans?
FURTHER READINGS
1. Principles Of Management - Mason Andrew Carpenter,
Talya Bauer
2. Principles Of Management -Tony Morden
3. Principles Of Management -D. Chandra Bose
4. Principles Of Management -[Link]
5. Principles Of Management -K. Anbuvelan
IMPORTANT NOTES

65
Principles of
management
UNIT 3 ORGANISING
CONTENTS
Notes
 Nature and Process of Organizing
 Authority and Responsibility Relationships
 Delegation of Authority
 Centralization and Decentralization
 Departmentation and Formats
 Formal and Information Organizations
 Review Questions
 Further Readings

Organizing Function of Management

Organizing is the function of management which follows planning. It is
a function in which the synchronization and combination of human,
physical and financial resources takes place. All the three resources are
important to get results. Therefore, organizational function helps in
achievement of results which in fact is important for the functioning of a
concern. According to Chester Barnard, “Organizing is a function by
which the concern is able to define the role positions, the jobs related and
the co-ordination between authority and responsibility. Hence, a manager
always has to organize in order to get results.
A manager performs organizing function with the help of following
steps:-
1. Identification of activities - All the activities which have to be
performed in a concern have to be identified first. For example,
preparation of accounts, making sales, record keeping, quality
control, inventory control, etc. All these activities have to be
grouped and classified into units.
2. Departmentally organizing the activities - In this step, the
manager tries to combine and group similar and related activities
into units or departments. This organization of dividing the whole
concern into independent units and departments is called
departmentation.
3. Classifying the authority - Once the departments are made, the
manager likes to classify the powers and its extent to the
managers. This activity of giving a rank in order to the
managerial positions is called hierarchy. The top management is
into formulation of policies, the middle level management into
departmental supervision and lower level management into
supervision of foremen. The clarification of authority help in
bringing efficiency in the running of a concern. This helps in
achieving efficiency in the running of a concern. This helps in
avoiding wastage of time, money, effort, in avoidance of
duplication or overlapping of efforts and this helps in bringing
smoothness in a concern’s working.
4. Co-ordination between authority and responsibility -
Relationships are established among various groups to enable

66
 smooth interaction toward the achievement of the organizational Organising
goal. Each individual is made aware of his authority and he/she
knows whom they have to take orders from and to whom they are Notes
accountable and to whom they have to report. A clear
organizational structure is drawn and all the employees are made
aware of it.
Principles of Organizing
The organizing process can be done efficiently if the managers have
certain guidelines so that they can take decisions and can act. To
organize in an effective manner, the following principles of organization
can be used by a manager.
1. Principle of Specialization
According to the principle, the whole work of a concern should
be divided amongst the subordinates on the basis of
qualifications, abilities and skills. It is through division of work
specialization can be achieved which results in effective
organization.
2. Principle of Functional Definition
According to this principle, all the functions in a concern should
be completely and clearly defined to the managers and
subordinates. This can be done by clearly defining the duties,
responsibilities, authority and relationships of people towards
each other. Clarifications in authority-responsibility relationships
helps in achieving co-ordination and thereby organization can
take place effectively. For example, the primary functions of
production, marketing and finance and the authority
responsibility relationships in these departments should be clearly
defined to every person attached to that department. Clarification
in the authority-responsibility relationship helps in efficient
organization.
3. Principles of Span of Control/Supervision
According to this principle, span of control is a span of
supervision which depicts the number of employees that can be
handled and controlled effectively by a single manager.
According to this principle, a manager should be able to handle
what number of employees under him should be decided. This
decision can be taken by choosing either froma wide or narrow
span. There are two types of span of control:-
a. Wide span of control- It is one in which a manager can
supervise and control effectively a large group of persons
at one time. The features of this span are:-
i. Less overhead cost of supervision
ii. Prompt response from the employees
iii. Better communication
iv. Better supervision
v. Better co-ordination
vi. Suitable for repetitive jobs
According to this span, one manager can effectively and
efficiently handle a large number of subordinates at one
time.

67
Principles of
b. Narrow span of control- According to this span, the
work and authority is divided amongst many subordinates
management
and a manager doesn't supervises and control a very big
Notes group of people under him. The manager according to a
narrow span supervises a selected number of employees at
one time. The features are:-
i. Work which requires tight control and supervision,
for example, handicrafts, ivory work, etc. which
requires craftsmanship, there narrow span is more
helpful.
ii. Co-ordination is difficult to be achieved.
iii. Communication gaps can come.
iv. Messages can be distorted.
v. Specialization work can be achieved.
Factors influencing Span of Control
0. Managerial abilities- In the concerns where managers are
capable, qualified and experienced, wide span of control is always
helpful.
1. Competence of subordinates- Where the subordinates are
capable and competent and their understanding levels are proper, the
subordinates tend to very frequently visit the superiors for solving their
problems. In such cases, the manager can handle large number of
employees. Hence wide span is suitable.
2. Nature of work- If the work is of repetitive nature, wide span of
supervision is more helpful. On the other hand, if work requires mental
skill or craftsmanship, tight control and supervision is required in which
narrow span is more helpful.
3. Delegation of authority- When the work is delegated to lower
levels in an efficient and proper way, confusions are less and
congeniality of the environment can be maintained. In such cases, wide
span of control is suitable and the supervisors can manage and control
large number of sub- ordinates at one time.
4. Degree of decentralization- Decentralization is done in order to
achieve specialization in which authority is shared by many people and
managers at different levels. In such cases, a tall structure is helpful.
There are certain concerns where decentralization is done in very
effective way which results in direct and personal communication
between superiors and sub- ordinates and there the superiors can manage
large number of subordinates very easily. In such cases, wide span again
helps.
Principle of Scalar Chain
Scalar chain is a chain of command or authority which flows from top to
bottom. With a chain of authority available, wastages of resources are
minimized, communication is affected, overlapping of work is avoided
and easy organization takes place. A scalar chain of command facilitates
work flow in an organization which helps in achievement of effective
results. As the authority flows from top to bottom, it clarifies the
authority positions to managers at all level and that facilitates effective
organization.

68
Principle of Unity of Command Organising
It implies one subordinate-one superior relationship. Every subordinate is
answerable and accountable to one boss at one time. This helps in Notes
avoiding communication gaps and feedback and response is prompt.
Unity of command also helps in effective combination of resources, that
is, physical, financial resources which helps in easy co-ordination and,
therefore, effective organization.
Authority Flows from Top to Bottom
Managing Director
↓
Marketing Manager
↓
Sales/ Media Manager
↓
Salesmen
According to the above diagram, the Managing Director has got the
highest level of authority. This authority is shared by the Marketing
Manager who shares his authority with the Sales Manager. From this
chain of hierarchy, the official chain of communication becomes clear
which is helpful in achievement of results and which provides stability to
a concern. This scalar chain of command always flow from top to bottom
and it defines the authority positions of different managers at different
levels.
Importance of Organizing Function
Specialization - Organizational structure is a network of relationships in
which the work is divided into units and departments. This division of
work is helping in bringing specialization in various activities of
concern.
Well defined jobs - Organizational structure helps in putting right men
on right job which can be done by selecting people for various
departments according to their qualifications, skill and experience. This
is helping in defining the jobs properly which clarifies the role of every
person.
Clarifies authority - Organizational structure helps in clarifying the role
positions to every manager (status quo). This can be done by clarifying
the powers to every manager and the way he has to exercise those
powers should be clarified so that misuse of powers do not take place.
Well defined jobs and responsibilities attached helps in bringing
efficiency into managers working. This helps in increasing productivity.
Co-ordination - Organization is a means of creating co-ordination
among different departments of the enterprise. It creates clear cut
relationships among positions and ensure mutual co-operation among
individuals. Harmony of work is brought by higher level managers
exercising their authority over interconnected activities of lower level
manager.

69
Principles of
Authority responsibility relationships can be fruitful only when there is a
formal relationship between the two. For smooth running of an
management
organization, the co-ordination between authority- responsibility is very
Notes important. There should be co-ordination between different relationships.
Clarity should be made for having an ultimate responsibility attached to
every authority. There is a saying, “Authority without responsibility
leads to ineffective behaviour and responsibility without authority makes
person ineffective.” Therefore, co-ordination of authority- responsibility
is very important.
Effective administration - The organization structure is helpful in
defining the jobs positions. The roles to be performed by different
managers are clarified. Specialization is achieved through division of
work. This all leads to efficient and effective administration.
Growth and diversification - A company’s growth is totally dependent
on how efficiently and smoothly a concern works. Efficiency can be
brought about by clarifying the role positions to the managers, co-
ordination between authority and responsibility and concentrating on
specialization. In addition to this, a company can diversify if its potential
grow. This is possible only when the organization structure is well-
defined. This is possible through a set of formal structure.
Sense of security - Organizational structure clarifies the job positions.
The roles assigned to every manager is clear. Co-ordination is possible.
Therefore, clarity of powers helps automatically in increasing mental
satisfaction and thereby a sense of security in a concern. This is very
important for job- satisfaction.
Scope for new changes - Where the roles and activities to be performed
are clear and every person gets independence in his working, this
provides enough space to a manager to develop his talents and flourish
his knowledge. A manager gets ready for taking independent decisions
which can be a road or path to adoption of new techniques of production.
This scope for bringing new changes into the running of an enterprise is
possible only through a set of organizational structure.
Principle: AUTHORITY AND RESPONSIBILITY
Authority is the power to give orders and get it obeyed or in other words
it is the power to take decisions.
Responsibility means state of being accountable or answerable for any
obligation, trust, debt or something or in other words it means obligation
to complete a job assigned on time and in best way.
Authority and responsibility are closely related and this principle states
that these two must go hand in hand. It means that proper authority
should be delegated to meet the responsibilities.
A match should be there between these two because of two main
reasons:--
Firstly, if a person is given some responsibility without sufficient
authority he can’t perform better, and also could not accomplish the
desired goal.
Secondly, if there is excess authority being delegated to an individual
without matching responsibility then the delegated authority will be
misused in one way or the other.

70
This is an important and useful principle of management because if Organising
adequate authority is not delegated to the employees they cannot
discharge their duties with efficiency and this in turn will hamper the Notes
achievement of the organizational goal. Sometimes the relation between
management and employees is also badly effected by non delegation of
proper authority.
Positive impacts of this principle:
 No misuse of authority.
 Helps to complete job effectively and efficiently.
 Individuals can be held accountable.
 Systematized and effective achievement of organizational objectives.
Consequences of violation of this principle:
 Misuse of authority.
 Responsibility can’t be discharged effectively.
 No one can be held accountable.
 Conflicts between management and employees.
MEANING OF ACCOUNTABILITY
Subordinates receive the authority from top level of the organization and
they also receive the command and direction to perform the work. In
other words, they are authorized and responsible for a specific function.
Sometimes the task may not be performed effectively the subordinates
may not be performed effectively. The subordinates must report to boss
about the assigned task. S/he must answer his/her performance which is
known as accountability.
Meaning of delegation of authority
All activities are not performed by one person. Authority should be
provided to the subordinates too. Process of transferring authority and
creation of responsibility between superior and subordinates to
accomplish a certain task is called delegation of authority. It can take
place without decentralization. It can be withdrawn by delegator at any
time. It minimizes the burden of managers of unit, departments or plant.
Relationship is between superior and immediate subordinates are
indicated. It is technique of management used to get the things done
through others. It is confined to manager and subordinates. Authority is
only delegated, not responsibilities. Very important to management
process Control remains in hand of superior who supervise the activities
of subordinates. It is an art of management science. When authority is
not given to subordinates there is no performance. Delegation is the
process of sharing power and work (deliver the power from one to
another).
Principles of delegation of authority
1. Principle of parity of authority and responsibility- parity of
authority and responsibility is one of the important principles of
delegation of authority. There is equality in assigned task and power to
do the work. Authority to the subordinates is given by the superior on the
basis of assigned task. So Authority to the subordinates is given nether
more or less than the task otherwise their can be improper utilization of
authority and mismanagement of task.

71
Principles of
2. Principle of absoluteness of responsibility- according to it,
responsibility can’t be delegated. Only authority can be delegated. The
management
person who delegates authority is himself responsible for his seniors.
Notes 3. Principle of unity of command- according to it, subordinates must be
commanded by one superior, they should take their task from one
superior and should be accountable fro their responsibility toward the
superior level of operation
4. Principle of functional definition of authority and responsibility-
as per this principle. Duties and task assigned by the superior and the
authority given to fulfill the task should be clearly explained and
decided. But this subordinates can know about the limit of one’s right,
duties and responsibility.
5. The scalar chain- according to it, authority flows from top to bottom.
So that scalar chain is the basis of relationship between the superior and
subordinates. It emphasizes the relation between superior and
subordinates by which delegation will be easier.

Difference between delegation and decentralization of

authority
Major Differences between Delegation and Decentralization!
1. Responsibility:
In delegation, a superior delegates or transfers some rights and duties to a
subordinate but his responsibility in respect of that work does not end.
On the other hand, decentralisation relieves him from responsibility and
the subordinate becomes liable for that work.
2. Process:
Delegation is process while decentralisation is the end result of a
deliberate policy of making delegation of authority to the lowest levels in
managerial hierarchy.
3. Need.
Delegation is almost essential for the management to get things done in
the organisation i.e., delegating requisite authority for performance of
work assigned. Decentralisation may or may not be practised as a
systematic policy in the organisation.
4. Control:
In delegation the final control over the activities of organisation lies with
the top executive while in decentralisation the power of control is
exercised by the unit head to which the authority has been delegated.
5. Authority:
Delegation represents selecting dispersal of authority whereas
decentralisation signifies the creation of autonomous and self-sufficient
units or divisions.
6. Scope:
Delegation hardly poses any problem of co- ordination to the delegator
of authority. While decentralisation poses a great problem in this regard
since extreme freedom of action is given to the people by creating self-
sufficient or autonomous units.

72
7. Good Results: Organising
Decentralisation is effective only in big organisations whereas delegation
is required and gives good results in all types of organisations Notes
irrespective of their size.
8. Nature:
Delegation is the result of human limitation to the span of management.
Decentralisation is the other hand, is the result of the big size and multi-
farious functions of the enterprise.
Authority and responsibility relationships
Meaning of authority
Authority is the kind of right and power through which it guides and
directs the actions of others so that the organizational goals can be
achieved. It is also related with decision making. It is vested in particular
position, not to the person because authority is given by an institution
and therefore it is legal.

Meaning of responsibility
Authentic body of an organization is top level management, top level
management direct the subordinates. Departmental managers and other
personnel take the direction from top level management to perform the
task. Authority is necessary to perform the work .only authority is not
provided to the people but obligation is also provided. So the obligation
to perform the duties and task is known as responsibility.
Meaning of accountability
Subordinates receive the authority from top level of the organization and
they also receive the command and direction to perform the work. In
other words, they are authorized and responsible for a specific function.
Sometimes the task may not be performed effectively the subordinates
may not be performed effectively. The subordinates must report to boss
about the assigned task. S/he must answer his/her performance which is
known as accountability.
Authority and Responsibility are the basic functions considered at the
primary stage in a management system. In successful enterprises, these
are the basic functions that are maintained by the respective superior
authorities of an organization. Moreover, responsibility is often
considered as control and management over something.
Authority is an entity or power to enforce certain laws, rules and
expectations. An authoritative power is always granted with the freedom
of taking decisions and managing necessary controls, for the benefits of
an organization. The great Henri Fayol described authority as, “the right
to give orders and the power to exact obedience”. Without authority, a
manager ceases to be a manager, because he cannot get his policies
carried out through others. Hence, it is considered to be one of the
founding stones of formal and informal organizations. It flows
downwards in an organization, i.e. it works from the upper superiors to
the lower followers.
Responsibility is an entity which is prone to follow and obey some
specifically assigned rules in order to accomplish a task. To maintain

73
Principles of
responsibility is actually a tough task. The actions taken by a
typically responsible party have a moral, ethical, or rational foundation.
management
Responsibility according to Davis, is defined as "an obligation of
Notes individual to perform assigned duties to the best of his ability under the
direction of his executive leader." It is a relationship, in which a person is
responsible to ensure and guarantee the accomplishment of an assigned
task. In a business organization, responsibility is solely dependent on the
authoritative managers to manage and conduct the operations. These are
performed in order to uplift the organization.
Authority and responsibility are notable features in the field
of management. There are various authoritative powers in the society,
which are solely responsible for conducting and following operations and
tasks related to development. The authoritative powers are to be
managed with the all care and effort possible, in order to maintain
stability in an organization. On the other hand, responsible duties have to
be followed with by working hard and observing good management.
They both work in correspondence to one another in a business
enterprise.
Limitations of Authority
Authority is not unlimited. It should be attached with certain duties &
responsibilities. Unlimited authority is an instrument of possible
corruption. Specific authority is given for specific functions. Ex:
Financial manager is given financial powers. He cannot enter in the areas
of marketing & production. There are specific limits of authority. The
top management cannot perform all the functions themselves. He cannot
expect that a manager can perform all the functions. So power placed in a
limited form to discharge a particular duty.
Authority of a manager is limited as per plans, policies of the
organisation. Bureaucratic organisation does not give more authority to
manager. A manager is always accountable to his superior manager of
authority. Similarly “Articles of Association” decides the level of
authority. Social setup decides the amount of authority to be exercised by
a particular manager. Law of country limits the authority to be exercised
by the organisation.
Sources of Power in an Organization
Power makes the world go ‘round – and in the professional world, it
enhances our careers. Depending on who has power and how that power
is used, both positive and negative outcomes can results from the use (or
abuse) of power. The more power you had, the more carefully it needs
to be exercised. But in general, we all want more power: it gives us a
bigger say in decision-making and more control over our environment.
To some degree, by leveraging skills, social capital and leadership, the
amount of these different types of power is in your own hands.
Legitimate Power
Power that is given to a person based on their position or role is known
as legitimate power (or positional power). It’s determined by the
hierarchy of the organization; junior managers report to senior managers
and senior managers report to directors. Other than being promoted,
there’s not much you can do directly to get more legitimate
power. Increasing some of your other types of power – mainly referent

74
and expert power – leads to having more legitimate power. Legitimate Organising
power can’t be faked: in order for it to be wielded, the person claiming
the power has to have earned it legitimately. Notes
Reward Power
Tied in closely with legitimate power, reward power is the ability that
one holds to dole out incentives and compensation in an
organization. This includes salary raises and bonuses, praise,
recognition, and promotion. Reward power that is used fairly can be
highly motivating to employees. They’ll do more and better things by
going for the rewards with the knowledge that they are
achievable. However, if the rewards are given out unfairly and
favoritism is used, this will demotivate them and make reward power
less legitimate.
Coercive Power
Coercive power can be scary: it’s what sets in the fear of being punished
for poor performance and keeps us coming in early and staying at the
office late. People who wield coercive power can influence others’
behavior by their ability to threaten and punish others. These actions
might include demotion, firing, and reprimanding, but can also be less
concrete and abusive in the form of social ostracizing and shaming. A
good dose of coercive power keeps employees in line, and with good
management doesn’t need to be used often or severely. The mere
knowledge that it’s there is usually enough.
Referent Power
Even if you don’t have any granted power in an organization, you can
still influence others’ behavior and decision-making. Referent power is
the ability to influence others because they respect, admire, or like
you. There are many ways to earn referent power at work. Especially if
you are new to an organization, you can start building social capital right
away by saying “yes” when people ask you to do things. Never say,
“No, that’s not my job” – especially to your boss. It’s OK to say no
when you really can’t do something – just say, “no, but…” and give
another solution. Also, befriend others with referent power – find the
influential people in your organization, be part of the “in” crowd, and
others will respect you.
Expert Power
Expert power is another way to earn respect and influence independently
of the hierarchy of your organization. With expert power, you have the
ability to influence others because of recognized talent, abilities, and
knowledge. The key to gaining expert power is to know your job: be
conscious of what you need to know to do your job well and build those
skills. Cross-training is another way to gain expert power – you won’t
just know your job, but others’ jobs as well. Look for opportunities in
your skillset and offer to do things in areas that you’re skilled in to gain
more expert power.
Line, staff and functional authority relationships is discussed below:
The terms line and staff are used quite often in management literature.
These terms have been borrowed from the military terminology.
Organisationally, the line is the chain of command that extends from the
Board of Directors through the various delegations and re- delegations of

75
Principles of
authority and responsibility to the point where the primary activities of
the company are performed.
management
Line departments are those that are directly engaged in producing or
Notes selling the goods or services. All other activities are staff activities. Staff
refers to those elements of the organisation which provide advice or
service to the line. When one position exists primarily to provide advice
or service to another, it is a staff position.
According to Allen, “line refers to those positions and elements of the
organisation, which have the responsibility and authority and are
accountable for accomplishment of primary objectives. Staff refers to
those elements which have responsibility and authority for providing
advice and service to line in attainment of objectives.
“Line elements provide decision authority and a central means for the
flow of communication through a scalar & chain of authority; staff
elements facilitate the .decision process by bringing in expert and
specialised knowledge. For example, the production manager in a factory
is a line manager since he is directly responsible for achieving the
production targets of the organisation.
Similarly, the marketing manager is also a line manager since he is
engaged in selling products of the company. But, an industrial engineer
is a staff man. He is not directly entrusted with the task of production. He
is required to give specific advice to the production manager. His job is
to review the various production methods, incentive plans, quality
control techniques, etc. Similarly, a market research manager is a staff
manager.
His job is to assist the marketing manager by gathering a wide variety of
information about the market in which the company operates. The
internal auditor is also a staff manager since he is predominantly
concerned with assisting the top management in exercising control over
the various activities of the concern.
Line managers make the strategic decisions by exercising command
authority, whereas staff official’s advice and counsel with no authority to
command except within their own staff chain of command. The use of
staff to assist line came into being because of the need to provide special
counsel and assistance to the manager who was unable to carry out the
demands of his position.
Fayol described staff official as “an adjunct reinforcement and sort of
extension of the manager’s personality”. Line officials are in the chain of
command from the highest executive to the lowest position in the
organisation. Each successive manager exercises direct line authority
over his subordinates.
Although the line-staff concept is firmly entrenched in the management
theory, the distinction between these two concepts is not very clear in
many instances. There are many functions which are line in one
company and staff in another.
Designing, and engineering departments in an aircraft manufacturing
company is a line function whereas the same department would be a staff
function in a drug manufacturing company. Similarly, in a hire purchase
company, finance is set up as a line function whereas in a typically
manufacturing company, finance operates as a specialised staff

76
department. Research in a drug manufacturing company, may be a line Organising
function whereas it may be a staff function in many others.
Causes of Conflicts between Line and Staff Notes
Whatever may be the way of structuring an organization, basically
organizations are tightly knotted together by the cord of authority
relationships. Such relationships act as a cohesive force and integrate the
whole organization.
The types and degrees of authority vary with the decision-making levels.
Different authority relationships basically revolve around line and staff
relationships. Line functions are those that directly influence the
accomplishment of objectives of an organization, while staff functions
help the line staff to work effectively and accomplish organizational
objectives.
However, in reality it is difficult for us to separate direct and supportive
functions. In fact, functions are based on the nature of the organization.
Hence such categorization of line and staff functions varies from
organization to organization. In a manufacturing organization,
production and sales are considered as line functions, while finance,
purchase, personnel, maintenance, quality control, etc. are considered as
staff functions.
Line and staff distinctions are made on the basis of two viewpoints—
functional viewpoint and authority relationships viewpoint. Allen
defined line and staff functions thus—”Line functions are those which
have direct responsibility for accomplishing the objectives of the
enterprise and staff refers to those elements of the organizations that help
the line to work more effectively in accomplishing the primary
objectives of the enterprise.” Since organizational objectives determine
the line and staff functions, any change in objectives may result in
changes in the line and staff functions. The principal distinctions
between line and staff are given in Table 4.1

Line and Staff Conflicts:

Line and staff managers are supposed to work harmoniously to achieve
the organizational goals. But their relationship is one of the major
sources of conflict in most organizations. Since such conflicts lead to
loss of time and organizational effectiveness, it is always desirable to
identify the sources of such conflicts and initiate necessary action to
overcome them.
Theoretically, it is impossible to differentiate between line and staff
functions and because of this, conflicts cannot be avoided. However, line

77
Principles of
and staff conflicts can be grouped into three categories—conflicts due to
line viewpoint, conflicts due to staff viewpoint, and conflicts due to the
management
very nature of line and staff relationships.
Notes Conflicts due to Line Viewpoint:
1. Lack of accountability:
Line managers generally perceive that staff managers are not accountable
for their actions. Such lack of accountability on the part of staff leads to
ignoring of the overall organizational objectives. Staff takes the credit for
achieving the results, which is actually achieved by the line people. But
if anything goes wrong, they blame the line. Such perception among the
line managers is one of the most important sources of line and staff
conflict.
2. Encroachment on line authority:
Line managers often allege that staff managers encroach upon their
authority by giving recommendations on matters that come within their
purview. Such encroachments influence the working of their departments
and often lead to hostility, resentment, and reluctance to accept staff
recommendations.
3. Dilution of authority:
Staff managers often dilute the authority and be- little the responsibilities
of line managers. Line managers fear that their responsibilities may be
reduced and they even suffer from a feeling of insecurity.
4. Theoretical basis:
Staff being specialists, they generally think within the ambit of their
specialization. They fail to relate their suggestions to the actual reality
and are unable to understand the actual dimensions of the problems. This
is because staff is cut-off” from the day-to-day operations. This results in
impractical suggestions, making it difficult to achieve organizational
goals.
Conflicts due to Staff Viewpoint:
1. Lack of proper use of staff:
Staff managers allege that line managers often take decisions without
any input from them. Line just informs staff after taking decisions. This
makes staff managers feel that line do not need staff. But even in such
cases (where line takes its own decisions without consulting staff), if
anything goes wrong, staff is made responsible.
2. Resistance to new ideas:
Line managers resist new ideas as they feel implementing new ideas
means something is wrong with the present way of working. Such
rigidity of line managers dissuades staff from implementing new ideas in
the organization and adds to their frustration.
3. Lack of proper authority:
Staff often alleges that despite having the best solutions to the problems
being faced in their areas of specialization, they fail to contribute to
organizational goals. This is because the staff lack the authority to
implement the solutions and are unable to persuade the line managers
(who have the authority) to implement them.
Conflicts Due to the Very Nature of Line and Staff Relationships:

78
1. Different backgrounds: Organising
Line and staff managers are usually from different backgrounds.
Normally line managers are seniors to staff in terms of organizational Notes
hierarchy and levels. On the contrary, staff managers are relatively
younger and better educated. Staff often looks down upon the line. Such
complexes create an atmosphere of mistrust and hatred between the line
and staff.
2. Lack of demarcation between line and staff authority:
In practice it is difficult to make a distinction between line and staff
authority. Overlapping and duplication of work creates a gap between the
authority and responsibility of line and staff. Each tries to shift the blame
to the other.
3. Lack of proper understanding of authority:
Failure to understand authority causes misunderstandings between the
line and staff. This leads to encroachment and creates conflict.
To overcome the line and staff conflict, it is necessary for an
organization to follow certain approaches:
1. Clarity in relationships:
Duties and responsibilities of both line and staff should be clearly laid
down. Relationships of staff with the line and their scope of authority
need to be clearly defined. Similarly, line managers should also be made
responsible for decision making and they should have corresponding
authority for the same. Line should enjoy the freedom to modify, accept,
or reject the recommendations or advice of the staff.
2. Proper use of staff:
Line managers must know how to maximize organizational efficacy by
optimizing the expertise of staff managers. They need to be trained on
the same. Similarly, staff managers should also help the line to
understand how they can improve their activities.
3. Completed staff work:
Completed staff work denotes careful study of the problem, identifying
possible alternatives for the problem, and providing recommendations
based on the compiled facts. This will result in more staff work and
pragmatic suggestions.
4. Holding staff accountable for results:
Once staff becomes accountable, they would be cautious about their
recommendations. Line also would have confidence on staff
recommendations, as staff is accountable for the results.
Centralization and Decentralization
Centralization is said to be a process where the concentration of
decision making is in a few hands. All the important decision and actions
at the lower level, all subjects and actions at the lower level are subject to
the approval of top management. According to Allen, “Centralization” is
the systematic and consistent reservation of authority at central points in
the organization. The implication of centralization can be :-
1. Reservation of decision making power at top level.
2. Reservation of operating authority with the middle level
managers.
3. Reservation of operation at lower level at the directions of the top
level.

79
Principles of
Under centralization, the important and key decisions are taken by the
top management and the other levels are into implementations as per the
management
directions of top level. For example, in a business concern, the father &
Notes son being the owners decide about the important matters and all the rest
of functions like product, finance, marketing, personnel, are carried out
by the department heads and they have to act as per instruction and
orders of the two people. Therefore in this case, decision making power
remain in the hands of father & son.
On the other hand, Decentralization is a systematic delegation of
authority at all levels of management and in all of the organization. In a
decentralization concern, authority in retained by the top management for
taking major decisions and framing policies concerning the whole
concern. Rest of the authority may be delegated to the middle level and
lower level of management.
The degree of centralization and decentralization will depend upon the
amount of authority delegated to the lowest level. According to Allen,
“Decentralization refers to the systematic effort to delegate to the lowest
level of authority except that which can be controlled and exercised at
central points.
Decentralization is not the same as delegation. In fact, decentralization is
all extension of delegation. Decentralization pattern is wider is scope and
the authorities are diffused to the lowest most level of management.
Delegation of authority is a complete process and takes place from one
person to another. While decentralization is complete only when fullest
possible delegation has taken place. For example, the general manager of
a company is responsible for receiving the leave application for the
whole of the concern. The general manager delegates this work to the
personnel manager who is now responsible for receiving the leave
applicants. In this situation delegation of authority has taken place. On
the other hand, on the request of the personnel manager, if the general
manager delegates this power to all the departmental heads at all level, in
this situation decentralization has taken place. There is a saying that
“Everything that increasing the role of subordinates is decentralization
and that decreases the role is centralization”. Decentralization is wider in
scope and the subordinate’s responsibility increase in this case. On the
other hand, in delegation the managers remain answerable even for the
acts of subordinates to their superiors.
Implications of Decentralization
1. There is less burden on the Chief Executive as in the case of
centralization.
2. In decentralization, the subordinates get a chance to decide and
act independently which develops skills and capabilities. This
way the organization is able to process reserve of talents in it.
3. In decentralization, diversification and horizontal can be easily
implanted.
4. In decentralization, concern diversification of activities can place
effectively since there is more scope for creating new
departments. Therefore, diversification growth is of a degree.
5. In decentralization structure, operations can be coordinated at
divisional level which is not possible in the centralization set up.

80
 6. In the case of decentralization structure, there is greater Organising
motivation and morale of the employees since they get more
independence to act and decide. Notes
7. In a decentralization structure, co-ordination to some extent is
difficult to maintain as there are lot many department divisions
and authority is delegated to maximum possible extent, i.e., to the
bottom most level delegation reaches. Centralization and
decentralization are the categories by which the pattern of
authority relationships became clear. The degree of centralization
and de-centralization can be affected by many factors like nature
of operation, volume of profits, number of departments, size of a
concern, etc. The larger the size of a concern, a decentralization
set up is suitable in it.
Departmentalization in Management:
As one gets from the name, the word departmentation refers to the
division of the labor, instead of the individuals, of the group of the
various types of the activities that are involved. The departments are
formed from the related activities that have the ability to form various
semi independent units.
The process of the departmentation generally follows no stiff rules but
the main purpose of carrying on with the process of the departmentation
is to provide the level of the convenience to each of the organization.
The whole or the total business activity is divided in to the work units as
per the convenience of all the organizations.
But the basis on which the departmentation may be or can be done, can
be summarized as the follows
1. Departmentation by the time –
a. The main point here, on which the departmentation is based, is the
‘time’.
b. People can be easily supervised.
c. Working as the exemplified by the shift working in the factories, acts
as a great example for explaining the departmentation by the time.
2. Departmentation by the location or the place –
a. A really good example of this type of the departmentation depending
on the location can be the regional offices spread over the number of the
places, branch offices etc.
b. One of the possibilities includes the presence of the manufacturing
activity at one place and the marketing activity at a different place.
3. Departmentation by the functions –
a. A separate department can be formed depending on the nature of the
activity that is to be performed.
b. The various activities that are closely related can be brought together
in this type of the departmentation.
4. Departmentation by the processes –
a. Different processes are converted to the different departments in this
type of the departmentation.
b. For example, various processes like the spinning, the weaving, the
dyeing etc are involved in a textile mill and depending on these
processes only, new departments have come up.

81
Principles of
5. Departmentation by the divisions –
a. Before going any further, it is very important to understand the
management
meaning of the word ‘divisions’.
Notes b. The divisions can be defined as the extensions of the concept of the
departments.
c. In this type of the departmentation, the departments act as the cost
centers.
d. The divisions act as the profit centers.
e. The divisions are accountable to the income as well as the expenditure.
6. Strategic Business Units (SBU) –
a. During the engagement of the organization in the multiple businesses,
there is a dire need for treating each of the business unit as a strategic
unit and for fulfilling this purpose, an independent competitive business
approach is very essential and here these units are referred to as the
strategic business units.
Advantages of the process of the Departmentation
1. The departmentation is greatly based on the logics.
2. With the help of the departmentation, proper attention can be given to
the various activities and hence, resulting in the growth of the
organization.
3. Synergy can be brought in to the various results.
4. The departmentation results in establishing the team spirit and the co–
operative culture.
Types of Departmentation
 Functions, e.g., sales, production, personnel, planning, transport,
etc.
 Products, e.g., air-conditioners, accounting machines, electronic
calculators, etc.
 Territory, region, or geographical area, e.g., Northern Railway,
Western Railway, N.E. Railway, etc.
 Customer, e.g., wholesaler, retailer, government.
 Process.
 Appropriate combination of any of these types.
Function wise Departmentation
Under each of these five managers, there will be subordinate managers
and under them, the subordinate staff.
The advantages of this type of structure are as follows:
 It is a logical reflection of functions.
 It follows the principle of specialisation.
 Maintains power and prestige of major functions.
 Inter-departmental co-ordination is facilitated.
 The structure is simple, logical and easy to understand.
 Provides a good means of control at the top.
There are also some disadvantages:
 Responsibility for profits tends to be at the top.
 There may be chances of heavy centralisation in decision-making.

82
  Where geographical centralisation is desirable or required, this form Organising
becomes unsuitable.
 This is not very suitable where product lines have to be emphasized. Notes

 There is a lower potential for manager development.

Product wise Departmentation
The advantages of this type of structure are:
 Places greater effort on individual product line.
 Better customer service arising from greater product knowledge.
 Simplifies departmentation of profitability of each product line.
Responsibility for profits is at the Division level.
 Improves co-ordination of functional activities.
 New department may be added without difficulty. Permits growth
and diversity of products and services.
 Detailed information on markets for specific products will be
generated.
 Extremely suitable where product lines are complex or vary greatly.
 Furnishes measurable training ground for Managers.
Some of the disadvantages inherent in such departmentation are:
 A customer has to deal with different salesmen or managers for
different products of the same company.
 Extra costs of maintaining separate sales force for each product.
 Duplication of costs on travel, etc.
 Tends to make maintenance of economical central services difficult.
 Results in increased problems of the top management control.
Territorial or Geographical Departmentation
The advantages of such departmentation are:
 Regional expertise is generated and managers can tackle customers
or competition better. Places responsibility at lower levels.
 Proximity will reduce costs of operation and administration.
 Places emphasis on local markets and problems. Local conditions
might warrant different types of selling. This is possible only in
territorial departmentation.
 Improves co-ordination at the regional level.
 Better face-to-face communication with local interests in mind.
 Better manager development.
Some disadvantages are listed as follows:
(i) Involves higher costs of co-ordination and control from
headquarters.
(ii) Results in more managerial levels which increases overhead costs.
(iii) Unsuitable for departments like Finance, where no gains are
possible by specialisation on local factors.
(iv) Increases problems of the top management control.

83
Principles of
Departmentation by Customers
Some advantages of this type of structure are:
management
o Greater specialized customer service.
Notes o Where marketing channels are considerably different for various
types of customers, this type of structure is very useful.
 Some disadvantages of this type are:
 May not be enough work for certain types of customers. Hence,
under employment of facilities and manpower specialized in
terms of customer groups.
 Problems of co-ordination might pose difficulties.
 Unequal development of customer groups.
Formal and Informal Organization
Formal Organisation:
When the managers are carrying on organising process then as a result of
organising process an organisational structure is created to achieve
systematic working and efficient utilization of resources. This type of
structure is known as formal organisational structure.
Formal organisational structure clearly spells out the job to be performed
by each individual, the authority, responsibility assigned to every
individual, the superior- subordinate relationship and the designation of
every individual in the organisation. This structure is created
intentionally by the managers for achievement of organisational goal.
Features of Formal organisation:
(1) The formal organisational structure is created intentionally by the
process of organising.
(2) The purpose of formal organisation structure is achievement of
organisational goal.
(3) In formal organisational structure each individual is assigned a
specific job.
(4) In formal organisation every individual is assigned a fixed authority
or decision-making power.
(5) Formal organisational structure results in creation of superior-
subordinate relations.
(6) Formal organisational structure creates a scalar chain of
communication in the organisation.
Advantages of Formal Organisation:
1. Systematic Working:
Formal organisation structure results in systematic and smooth
functioning of an organisation.
2. Achievement of Organisational Objectives:
Formal organisational structure is established to achieve organisational
objectives.
3. No Overlapping of Work:
In formal organisation structure work is systematically divided among
various departments and employees. So there is no chance of duplication
or overlapping of work.

84
4. Co-ordination: Organising
Formal organisational structure results in coordinating the activities of
various departments. Notes
5. Creation of Chain of Command:
Formal organisational structure clearly defines superior subordinate
relationship, i.e., who reports to whom.
6. More Emphasis on Work:
Formal organisational structure lays more emphasis on work than
interpersonal relations.
Disadvantages of Formal Organisation:
1. Delay in Action:
While following scalar chain and chain of command actions get delayed
in formal structure.
2. Ignores Social Needs of Employees:
Formal organisational structure does not give importance to
psychological and social need of employees which may lead to
demotivation of employees.
3. Emphasis on Work Only:
Formal organisational structure gives importance to work only; it ignores
human relations, creativity, talents, etc.
Informal Organisation:
In the formal organisational structure individuals are assigned various
job positions. While working at those job positions, the individuals
interact with each other and develop some social and friendly groups in
the organisation. This network of social and friendly groups forms
another structure in the organisation which is called informal
organisational structure.
The informal organisational structure gets created automatically and the
main purpose of such structure is getting psychological satisfaction. The
existence of informal structure depends upon the formal structure
because people working at different job positions interact with each other
to form informal structure and the job positions are created in formal
structure. So, if there is no formal structure, there will be no job position,
there will be no people working at job positions and there will be no
informal structure.
Features of informal organisation:
(1) Informal organisational structure gets created automatically without
any intended efforts of managers.
(2) Informal organisational structure is formed by the employees to get
psychological satisfaction.
(3) Informal organisational structure does not follow any fixed path of
flow of authority or communication.
(4) Source of information cannot be known under informal structure as
any person can communicate with anyone in the organisation.
(5) The existence of informal organisational structure depends on the
formal organisation structure.
Advantages of Informal Organisation:
1. Fast Communication:
Informal structure does not follow scalar chain so there can be faster
spread of communication.

85
Principles of
2. Fulfills Social Needs:
Informal communication gives due importance to psychological and
management
social need of employees which motivate the employees.
Notes 3. Correct Feedback:
Through informal structure the top level managers can know the real
feedback of employees on various policies and plans.
Strategic Use of Informal Organisation. Informal organisation can be
used to get benefits in the formal organisation in the following way:
1. The knowledge of informal group can be used to gather support of
employees and improve their performance.
2. Through grapevine important information can be transmitted quickly.
3. By cooperating with the informal groups the managers can skillfully
take the advantage of both formal and informal organisations.
Disadvantages of Informal organisation:
1. Spread Rumours:
According to a survey 70% of information spread through informal
organisational structure are rumors which may mislead the employees.
2. No Systematic Working:
Informal structure does not form a structure for smooth working of an
organisation.
3. May Bring Negative Results:
If informal organisation opposes the policies and changes of
management, then it becomes very difficult to implement them in
organisation.
4. More Emphasis to Individual Interest:
Informal structure gives more importance to satisfaction of individual
interest as compared to organisational interest.
REVIEW QUESTIONS
1. Describe the Nature and importance Organization.
2. What are the Principles of organization?
3. Describe the Responsibility and accountability relationship.
4. What are Sources and limitation of authority?
5. Describe the Delegation of authority. What are Importance of
delegation?
6. What is the meaning and advantages of Centralization?
7. What are the Distinction between decentralization and
delegation?
8. What are the Bases for departmentalization ?
9. Describe the Formal and informal organization.

FURTHER READINGS
1. Principles Of Management - Mason Andrew Carpenter,
Talya Bauer
2. Principles Of Management -Tony Morden
3. Principles Of Management -D. Chandra Bose
4. Principles Of Management -[Link]
5. Principles Of Management -K. Anbuvelan

86
 UNIT-4 MOTIVATION AND MOTIVATION AND
LEADING PEOPLE AT
WORK

LEADING PEOPLE AT WORK Notes

CONTENTS
 Motivation
 Leadership
 Communication
 Review Questions
 Further Readings
Motivation
Motivation is the word derived from the word ’motive’ which means
needs, desires, wants or drives within the individuals. It is the process of
stimulating people to actions to accomplish the goals. In the work goal
context the psychological factors stimulating the people’s behaviour can
be -
 desire for money
 success
 recognition
 job-satisfaction
 team work, etc
One of the most important functions of management is to create
willingness amongst the employees to perform in the best of their
abilities. Therefore the role of a leader is to arouse interest in
performance of employees in their jobs. The process of motivation
consists of three stages:-
1. A felt need or drive
2. A stimulus in which needs have to be aroused
3. When needs are satisfied, the satisfaction or accomplishment of
goals.
Therefore, we can say that motivation is a psychological phenomenon
which means needs and wants of the individuals have to be tackled by
framing an incentive plan.
The motivation concepts were mainly developed around 1950’s. Three
main theories were made during this period. These three classical
theories are-
 Maslow’s hierarchy of needs theory
 Herzberg’s Two factor theory
 Theory X and Theory Y
These theories are building blocks of the contemporary theories
developed later. The working mangers and learned professionals till date
use these classical theories to explain the concept of employee
motivation.
Maslow’s Hierarchy of Needs Theory
Abraham Maslow is well renowned for proposing the Hierarchy of
Needs Theory in 1943. This theory is a classical depiction of human

87
Principles of
motivation. This theory is based on the assumption that there is a
hierarchy of five needs within each individual. The urgency of these
management
needs varies. These five needs are as follows-
Notes 1. Physiological needs- These are the basic needs of air, water,
food, clothing and shelter. In other words, physiological needs
are the needs for basic amenities of life.
2. Safety needs- Safety needs include physical, environmental and
emotional safety and protection. For instance- Job security,
financial security, protection from animals, family security,
health security, etc.
3. Social needs- Social needs include the need for love, affection,
care, belongingness, and friendship.
4. Esteem needs- Esteem needs are of two types: internal esteem
needs (self- respect, confidence, competence, achievement and
freedom) and external esteem needs (recognition, power, status,
attention and admiration).
5. Self-actualization need- This include the urge to become what
you are capable of becoming / what you have the potential to
become. It includes the need for growth and self-contentment. It
also includes desire for gaining more knowledge, social- service,
creativity and being aesthetic. The self- actualization needs are
never fully satiable. As an individual grows psychologically,
opportunities keep cropping up to continue growing.
According to Maslow, individuals are motivated by unsatisfied needs. As
each of these needs is significantly satisfied, it drives and forces the next
need to emerge. Maslow grouped the five needs into two categories -
Higher-order needs and Lower-order needs. The physiological and the
safety needs constituted the lower-order needs. These lower-order needs
are mainly satisfied externally. The social, esteem, and self-actualization
needs constituted the higher-order needs. These higher-order needs are
generally satisfied internally, i.e., within an individual. Thus, we can
conclude that during boom period, the employees lower-order needs are
significantly met.
Implications of Maslow’s Hierarchy of Needs Theory for Managers
As far as the physiological needs are concerned, the managers
should give employees appropriate salaries to purchase the basic
necessities of life. Breaks and eating opportunities should be given
to employees.
As far as the safety needs are concerned, the managers should
provide the employees job security, safe and hygienic work
environment, and retirement benefits so as to retain them.
As far as social needs are concerned, the management should
encourage teamwork and organize social events.
As far as esteem needs are concerned, the managers can appreciate
and reward employees on accomplishing and exceeding their targets.
The management can give the deserved employee higher job rank /
position in the organization.

88
 As far as self-actualization needs are concerned, the managers can MOTIVATION AND
give the employees challenging jobs in which the employees’ skills LEADING PEOPLE AT
WORK
and competencies are fully utilized. Moreover, growth opportunities
can be given to them so that they can reach the peak. Notes
The managers must identify the need level at which the employee is
existing and then those needs can be utilized as push for motivation.
Limitations of Maslow’s Theory
 It is essential to note that not all employees are governed by same
set of needs. Different individuals may be driven by different
needs at same point of time. It is always the most powerful
unsatisfied need that motivates an individual.
 The theory is not empirically supported.
 The theory is not applicable in case of starving artist as even if
the artist’s basic needs are not satisfied, he will still strive for
recognition and achievement.
Herzberg’s Two-Factor Theory of Motivation
In 1959, Frederick Herzberg, a behavioural scientist proposed a two-
factor theory or the motivator-hygiene theory. According to Herzberg,
there are some job factors that result in satisfaction while there are other
job factors that prevent dissatisfaction. According to Herzberg, the
opposite of “Satisfaction” is “No satisfaction” and the opposite of
“Dissatisfaction” is “No Dissatisfaction”.

Herzberg’s view of satisfaction and dissatisfaction

Herzberg classified these job factors into two categories-

a. Hygiene factors- Hygiene factors are those job factors which are
essential for existence of motivation at workplace. These do not lead
to positive satisfaction for long-term. But if these factors are absent /
if these factors are non-existant at workplace, then they lead to
dissatisfaction. In other words, hygiene factors are those factors which
when adequate/reasonable in a job, pacify the employees and do not
make them dissatisfied. These factors are extrinsic to work. Hygiene
factors are also called as dissatisfiers or maintenance factors as they
are required to avoid dissatisfaction. These factors describe the job
environment/scenario. The hygiene factors symbolized the
physiological needs which the individuals wanted and expected to be
fulfilled. Hygiene factors include:

89
Principles of
* Pay - The pay or salary structure should be appropriate and
reasonable. It must be equal and competitive to those in the same
management
industry in the same domain.
Notes * Company Policies and administrative policies - The company
policies should not be too rigid. They should be fair and clear. It
should include flexible working hours, dress code, breaks, vacation,
etc.
* Fringe benefits - The employees should be offered health care plans
(mediclaim), benefits for the family members, employee help
programmes, etc.
* Physical Working conditions - The working conditions should be
safe, clean and hygienic. The work equipments should be updated and
well-maintained.
* Status - The employees’ status within the organization should be
familiar and retained.
* Interpersonal relations - The relationship of the employees with his
peers, superiors and subordinates should be appropriate and
acceptable. There should be no conflict or humiliation element
present.
* Job Security - The organization must provide job security to the
employees.
b. Motivational factors- According to Herzberg, the hygiene factors
cannot be regarded as motivators. The motivational factors yield
positive satisfaction. These factors are inherent to work. These factors
motivate the employees for a superior performance. These factors are
called satisfiers. These are factors involved in performing the job.
Employees find these factors intrinsically rewarding. The motivators
symbolized the psychological needs that were perceived as an
additional benefit. Motivational factors include:
 Recognition - The employees should be praised and recognized for
their accomplishments by the managers.
 Sense of achievement - The employees must have a sense of
achievement. This depends on the job. There must be a fruit of
some sort in the job.
 Growth and promotional opportunities - There must be growth and
advancement opportunities in an organization to motivate the
employees to perform well.
 Responsibility - The employees must hold themselves responsible
for the work. The managers should give them ownership of the
work. They should minimize control but retain accountability.
 Meaningfulness of the work - The work itself should be
meaningful, interesting and challenging for the employee to
perform and to get motivated.
Limitations of Two-Factor Theory
The two factor theory is not free from limitations:
 The two-factor theory overlooks situational variables.
 Herzberg assumed a correlation between satisfaction and
productivity. But the research conducted by Herzberg stressed upon
satisfaction and ignored productivity.

90
 The theory’s reliability is uncertain. Analysis has to be made by the MOTIVATION AND
raters. The raters may spoil the findings by analyzing same response LEADING PEOPLE AT
in different manner. WORK
 No comprehensive measure of satisfaction was used. An employee Notes
may find his job acceptable despite the fact that he may hate/object
part of his job.
 The two factor theory is not free from bias as it is based on the
natural reaction of employees when they are enquired the sources of
satisfaction and dissatisfaction at work. They will blame
dissatisfaction on the external factors such as salary structure,
company policies and peer relationship. Also, the employees will
give credit to themselves for the satisfaction factor at work.
 The theory ignores blue-collar workers. Despite these limitations,
Herzberg’s Two-Factor theory is acceptable broadly.

Implications of Two-Factor Theory

The Two-Factor theory implies that the managers must stress upon
guaranteeing the adequacy of the hygiene factors to avoid employee
dissatisfaction. Also, the managers must make sure that the work is
stimulating and rewarding so that the employees are motivated to
work and perform harder and better. This theory emphasize upon
job-enrichment so as to motivate the employees. The job must utilize
the employee’s skills and competencies to the maximum. Focusing
on the motivational factors can improve work-quality.
Theory X and Theory Y
In 1960, Douglas McGregor formulated Theory X and Theory Y
suggesting two aspects of human behaviour at work, or in other
words, two different views of individuals (employees): one of which
is negative, called as Theory X and the other is positive, so called as
Theory Y. According to McGregor, the perception of managers on
the nature of individuals is based on various assumptions.
Assumptions of Theory X
 An average employee intrinsically does not like work and
tries to escape it whenever possible.
 Since the employee does not want to work, he must be
persuaded, compelled, or warned with punishment so as to
achieve organizational goals. A close supervision is required
on part of managers. The managers adopt a more dictatorial
style.
 Many employees rank job security on top, and they have
little or no aspiration/ ambition.
 Employees generally dislike responsibilities.
 Employees resist change.
 An average employee needs formal direction.
Assumptions of Theory Y
 Employees can perceive their job as relaxing and normal.
They exercise their physical and mental efforts in an inherent

91
Principles of manner in their jobs.
management  Employees may not require only threat, external control and
coercion to work, but they can use self-direction and self-
Notes control if they are dedicated and sincere to achieve the
organizational objectives.
 If the job is rewarding and satisfying, then it will result in
employees’ loyalty and commitment to organization.
 An average employee can learn to admit and recognize the
responsibility. In fact, he can even learn to obtain
responsibility.
 The employees have skills and capabilities. Their logical
capabilities should be fully utilized. In other words, the
creativity, resourcefulness and innovative potentiality of the
employees can be utilized to solve organizational problems.
Thus, we can say that Theory X presents a pessimistic view of
employees’ nature and behaviour at work, while Theory Y presents
an optimistic view of the employees’ nature and behaviour at work.
If correlate it with Maslow’s theory, we can say that Theory X is
based on the assumption that the employees emphasize on the
physiological needs and the safety needs; while Theory X is based
on the assumption that the social needs, esteem needs and the self-
actualization needs dominate the employees.
McGregor views Theory Y to be more valid and reasonable than
Theory X. Thus, he encouraged cordial team relations, responsible
and stimulating jobs, and participation of all in decision-making
process.
Implications of Theory X and Theory Y
Quite a few organizations use Theory X today. Theory X
encourages use of tight control and supervision. It implies
that employees are reluctant to organizational changes. Thus,
it does not encourage innovation.
Many organizations are using Theory Y techniques. Theory Y
implies that the managers should create and encourage a work
environment which provides opportunities to employees to
take initiative and self-direction. Employees should be given
opportunities to contribute to organizational well-being.
Theory Y encourages decentralization of authority, teamwork
and participative decision making in an organization. Theory
Y searches and discovers the ways in which an employee can
make significant contributions in an organization. It
harmonizes and matches employees’ needs and aspirations
with organizational needs and aspirations.

Leadership
Leadership is both a research area and a practical skill, regarding the
ability of an individual or organization to "lead" or guide other
individuals, teams, or entire organizations. Controversial viewpoints are
present in the literature, among Eastern and Western approaches to

92
Leadership, and also within the West, on US vs. European approaches. In MOTIVATION AND
US academic environments Leadership is defined as "a process of social LEADING PEOPLE AT
WORK
influence in which a person can enlist the aid and support of others in the
accomplishment of a common task". Leadership seen from a European Notes
and non-academic perspective encompasses a viewpoint of a Leader that
can be moved both by communitarian goals but also by the search for
personal power, as the European Research Daniele Trevisani states:
"Leadership is a holistic spectrum that can arise from: higher levels of
physical power, need to display power and control others, force
superiority, ability to generate fear, or group-member's need for a
powerful group protector (Primal Leadership), superior mental energies,
superior motivational forces, perceivable in communication and
behaviors, lack of fear, courage, determination (Psychoenergetic
Leadership), higher abilities in managing the overall picture (Macro-
Leadership), higher abilities in specialized tasks (Micro-Leadership),
higher ability in managing the execution of a task (Project Leadership),
and higher level of values, wisdom, and spirituality (Spiritual
Leadership), where any Leader derives its Leadership from a unique mix
of one or more of the former factors".
Studies of leadership have produced theories involving traits, situational
interaction, function, behavior, power, vision and values, charisma, and
intelligence, among others
Leadership Models/Approaches
There are many models and theories of leadership. For example, the
following models appear in the literature:

 transformational  adaptive leadership,

leadership,  autocratic leadership,
 transactional  authoritative
leadership, leadership,
 moral leadership,  laissez-fair leadership,
 constructivist  situational leadership,
leadership,  spiritual leadership,
 servant leadership,  servant-leadership,
 cultural leadership, etc. (Goleman,
 primal leadership, Boyatzis & McKee,
 charismatic 2002).
leadership,

Some authors make difference between the old paradigm models and
the new paradigm models of leadership. These new models relate to
concepts such as ‘charismatic leadership' (Conger, 1989; House, 1971),
‘visionary leadership' (Sashkin, 1988), and ‘transformational leadership'
(Bass, 1985).
Whereas earlier ‘old paradigm' models see leadership as a process, that
93
Principles of
 involves influencing others,
 occurs within a group context, and
management
 involves goal attainment (Northouse, 2007)
Notes more recent definitions of leadership have highlighted the role of leader
as ‘defining organizational reality' (Bryman, 1996). Other recent research
interest has centred on relationships between leaders and followers,
with some writers stressing the need to study ‘followership'. This has
been argued as important, not only because all leaders are also followers,
but also because modern notions of leadership place considerable
emphasis on the power and importance of followers in ultimately
legitimizing and enabling leadership. This last period saw the growth of
attention to differences between ‘leaders' and ‘managers' (Kotter, 1990,
cited in Alimo-Metcalfe and Alimo-Metcalfe, 2005).
Trait Approach
The trait approach was one of the first systematic attempts to study
leadership. However, the term trait has been the source of considerable
ambiguity and confusion in the literature, referring sometimes and
variously to personality, temperaments, dispositions, and abilities, as
well as to any enduring qualities of the individual, including physical and
demographic attributes (Zaccarro et al., 2004, p.103).
Allport (1961, p.347) defined a trait as a "neuropsychic structure having
the capacity to render naby stimuli functionally equivalent, and to initiate
and guide equivalent (meaqninfully consistent) forms of adaptive and
expressive behavior" (cited in Zaccarro et al., 2004, p.103).
Zaccarro et al. (2004, p.104) define leader traits as relatively stable and
coherent integrations of personal characteristics that foster a consistent
pattern of leadership performance across a variety of group and
organisational situations. These characteristics reflect a range of stable
individual differences, including personality, temperament, motives,
cognitive abilities, and expertise.
In the early 20th century, leadership traits were studied to determine
what made certain people great leaders. These theories focused on
identifying the innate qualities and characteristics possessed by great
social, political, and military leaders. It was believed that people were
born with these traits, and only the "great" people possessed them.
During this time, research concentrated on determining the specific traits
that clearly differentiated leaders from followers (Northouse, 2007, p.
15).
Thus, history is marked with theories about leadership traits and
characteristics as leadership is regarded as a difficult job with serious
responsibilities. It is believed that these traits provide people with the
potential to perform the necessary actions required to be successful
leaders.
The trait approach focuses on the leader and not on the followers or the
situation. This approach is concerned with what traits leaders exhibit and
who has these traits. It assumes that it is the leader and his/her
personality that are central to the leadership process. For organizations it
means that selecting the right people will increase organizational
effectiveness. The managers can also analyze their own traits and

94
understand their strengths and weaknesses and how others see them in MOTIVATION AND
organization (Northouse, 2007, p.23-24). LEADING PEOPLE AT
WORK
Style approach
A different perspective to trait theory for leadership is to consider what Notes
leaders actually do as opposed to their underlying characteristics. By the
late 1940s researchers became less concerned with identifying individual
traits of leadership and started to be more interested in leadership
behaviours.
A number of models and theories have been developed to explore this.
One approach focusing on the behavior of the leader is the style
approach. This approach focuses on what leaders do and how they act
(Northouse, 2007, p.69).
This approach indicates that leadership is composed of two general kinds
of behaviors:
 task-oriented behaviour and
 relationship-oriented behaviours (McCaffery, 2004, p.64).
Task-oriented behaviours facilitate goal accomplishment and help group
members to achieve their objectives. Relationships-oriented behaviours
help subordinates feel comfortable with themselves, with each other, and
with the situation in which they find themselves. The central purpose of
the style approach is to explain how leaders combine these two kinds of
behaviors to influence subordinates in their efforts to reach a goal
(Northouse, 2007, p.69).
Many studies have been conducted to investigate the style approach: for
example, The Ohio State University Study, The University of Michigan
Study and Blake and Mouton's Leadership Grid. Adair (1983), Likert
(1967) and Mintzberg (1973) have advocated this approach.
The style approach has several positive contributions to the leadership
research:
• The style approach broadened the scope of leadership research to
include the behaviours of leaders and what they do in various situations.
• A wide range of leadership style studies validates and gives
credibility to the basic tenets of the approach and offer a viable approach
to understanding the leadership process.
• These studies have identified the core of the leadership process
consisting of two major types of behaviours: task and relationship.
• The style approach is heuristic in providing a broad conceptual
map that is worthwhile to use in attempts to understand the complexities
of leadership. based on this approach, leaders can assess their actions and
determine leadership style (Northouse, 2007, p.78-79).
The style approach focuses on what leaders do and how they act rather
than who leaders are. It identified two main types of behaviors of
effective leadership: task-oriented behaviors and relationship-oriented
behaviors. The focus of the style approach is how leaders combine these
two types of behaviors.
Several studies contributed to the development of the style
approach: The Ohio State University Study, The University of Michigan
Study and Blake and Mouton's Leadership Grid.

95
Principles of
The style approach has several strengths and weaknesses. However, it
provides a valuable framework for assessing leadership in a broad way.
management
Skills Approach: Robert Katz
Notes The third approach in the Leadership studies is the Leadership Skill
Approach. While the Traits Approach took into account the personality
of the leader and the Style Approach the behaviour of the leader, the
Leadership skills approach takes into account the knowledge and abilities
that the leader has. A leader can learn certain skills and turn himself into
a remarkable one.
Although different in the focus, the Traits Approach and the Skills
Approach, both center their attention in the leader, as its main purpose.
Researchers have studied leadership skills and abilities for a number of
years. However, there are two influential models. The first one is a
model proposed by Robert Katz in 1955. The second approach is
proposed by Michael Mumford and colleagues in the year 2000. These
models can be seen as complimentary to each other, since they offer
different views on leadership from the skills point of view.
In the model proposed by Katz in the Harvard Bussiness Review, titled
"Skills of an Effective Administrator" from 1955, he recognizes three
different abilities that a leader should have. These are:
 Technical Skills
 Human Skills
 Conceptual Skills
Katz argued that these skills are quite different from traits or qualities of
leaders. Skills are what leaders can accomplish, whereas traits are who
leaders are (Northouse, 2007, p.40). A technical skill is knowledge
about and competency and proficiency in a specific work or activity. For
example, to use certain computer software packages (for example, MS
Excel or Access) is an advanced technical skill.
A human skill is one that enables to work with people. It is different
from technical skills which have to do with working with things. These
abilities help us to get along with people and to communicate and work
within teams.
A conceptual skill is abilities to work with ideas and concepts. These
skills enable us to understand and better decide the actions and measures
that has to be taken in a particular field of work.
Based on his observations Katz stated that the level of importance of
each set of skills (technical, human and conceptual) was directly
correlated with the level that the person has in the organization.
Situational Approach
Another approach to leadership studies is the situational approach, the
basic premise of which is that different situations demand different types
of leadership. This approach was developed by Hersey and Blanchard
(1969) based on Reddin's (1967) 3-D management style theory.
A situation, within this context, is a "set of values and attitudes with
which the individual or group has to deal in a process of activity and
with regard to which this activity is planned and its results appreciated.
Every concrete activity is the solution of a situation." Situations can be
complicated affairs and generally have five elements:
 the structure of interpersonal relationships within the group;

96
 the characteristics of the group as a whole; MOTIVATION AND
 the characteristics of the group's environment from which members LEADING PEOPLE AT
come; WORK
 physical constraints on the group; and
Notes
 the perceptual representation, within the group and among its
members, of these elements and the "attitudes and values engendered
by them" (from the International Encyclopedia of the Social Sciences,
edited by David L. Sills).
Situational influences thus constrain the leader who must adapt his or her
style of leadership to the situation at hand. Situational leadership,
according to Northouse, has both a directive and a supportive dynamic.
A situationally motivated leader realizes that the skills and motivation of
any group member are not static and the mix of the leader's supportive
and directive activities must likewise change with the situation.
The situational approach has been refined and revised several times since
its inception and it has been used extensively in organizational leadership
training and development (Northouse, 2007, p.91).
Contingency Theory
Closely related to the situational approach is what has become known as
contingency theory. The contingency theory of leadership was proposed
by the Austrian psychologist Fred Edward Fiedler in his landmark
1964 article, "A Contingency Model of Leadership Effectiveness."
The contingency theory emphasizes the importance of both the leader's
personality and the situation in which that leader operates. Fiedler and
his associates studied leaders in a variety of contexts but mostly in
military context and their model is based on their research findings.
They outline two styles of leadership:
 task-motivated and
 relationship-motivated.
Task refers to task accomplishment, and relationship-motivation refers to
interpersonal relationships.
Fiedler measured leadership style with the Least Preferred Co-Worker
Scale (LPC scale.) The leaders scoring high on this scale are relationship
motivated and those scoring low are task motivated (Northouse, 2007,
p.114).
Central to contingency theory is concept of the situation, which is
characterized by three factors:
 Leader-member relations, deals with the general atmosphere of the
group and the feelings such as trust, loyalty and confidence that the
group has for its leader.
 Task structure, is related to task clarity and the means to task
accomplishment.
 The position power, relates to the amount of reward-punishment
authority the leader has over members of the group (Northouse, 2007,
p.114-115).
These three factors determine the favorableness of various situations in
organizations.
Continuum of Leadership
The leadership continuum was originally written in 1958 by
Tannenbaum and Schmidt and was later updated in the year 1973. Their

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Principles of
work suggests a continuum of possible leadership behavior available to a
manager and along which many leadership styles may be placed. The
management
continuum presents a range of action related to the degree of authority
Notes used by the manager and to the area of freedom available to non-
managers in arriving at decisions. A broad range of leadership styles
have been depicted on the continuum between two extremes of autocratic
and free rein (See figure 1). The left side shows a style where control is
maintained by a manager and the right side shows the release of control.
However, neither extreme is absolute and authority and freedom are
never without their limitations.

The Tannenbaum and Schmidt continuum can be related to McGregor’s

supposition of Theory X and Theory Y. Boss-centered leadership is
towards theory X and subordinate-centered leadership is towards theory
Y.
Continuum Leadership Behaviuor.

A manager is characterized according to degree of control that is

maintained by him. According to this approach, four main styles of
leadership have been identified:
 Tells: The manager identifies a problem, chooses a decision, and
announces this to subordinates. The subordinates are not a party to
the decision making process and the manager expects them to
implement his decisions as soon as possible.
 Sells: The decision is chosen by the manager only but he
understands that there will be some amount of resistance from those
faced with the decision and therefore makes efforts to persuade them
to accept it.
 Consults: Though the problem is identified by the manager, he does
not take a final decision. The problem is presented to the
subordinates and the solutions are suggested by the subordinates.
 Joins: The manager defines the limits within which the decision can
be taken by the subordinates and then makes the final decision along
with the subordinates.

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Communication MOTIVATION AND
 A famous quote says - “The way we communicate with others and LEADING PEOPLE AT
WORK
with ourselves ultimately determines the quality of our lives”
 The process of passing any information from one person to the other Notes
person with the aid of some medium is termed as communication.
 The first party who sends the information is called the sender and
the second party who receives the information, decodes the
information and accordingly responds is called the receiver or the
recipient. Thus in simpler terms communication is simply a process
where the sender sends the information to the receiver for him to
respond.
Sender -----------------------------------Receiver
Information
 Joe might have an unparalleled, incomparable concept or an idea with
him but he would never get the credit if he merely keeps it within
himself. He has to pass on the idea to his fellow workers. He has to
communicate. Not only communicate but also effectively
communicate.
 In an organization, your boss will never give you your share of credit,
unless and until you present your work in a well defined manner. How
will one present his/her work- by communication.
 Parents will never understand that their child is hurt unless and until,
the child cries or shows his wounds. What is crying? A form of
communication. What does showing of wounds mean-The child wants
to communicate to his parents that he needs to be immediately
attended by the doctor.
 Mike preferred pasta to pizza and once during the Christmas party, he
made his point clear and pasta was ordered only for Mike as Jenny,
Christina and Tony were all pizza lovers. Mike did nothing but simply
communicated and passed on his desire to his gang, here Mike being
the sender and the others receiver.
 It is of utmost importance not only to communicate but also
effectively communicate. Please throw some light on the first instance
where Lisa was not suitably promoted. She did give her presentation,
she did communicate, then why was she denied her promotion? She
did not effectively communicate. The trick is not only to communicate
but effectively communicate. And if you can effectively
communicate, the world is all yours.
The Communication process
Please go through the below diagram:
Parry (Sender)
(Content - Can be some information, data, diagram, analysis,
report)
(Information)↓ ↑(Feedback)
Peter (Receiver)
(Decodes the information, understands the information and
responds)
 The above diagram goes a long way to explain the communication
process.

99
Principles of
 Communication process is a simple process where a message is
being transferred from a sender to the receiver. The receiver after
management
receiving the message understands the message in the desired form
Notes and then acts accordingly.
 The Process of Sending the Message
 The first party or the sender first thinks of information, whatever he
intends to communicate or transfer to the others. Then he puts the
information or the message in words or prepare a content. The
process of putting the thoughts in words is called encoding. Finally
the content after being ready is transmitted to the receiver.
 The process of receiving the Message
 The message reaches the sender, who then decodes the message or in
simpler terms breaks the information, understands it and responds to
the receiver. The sender also gives feedback to the receiver after he
has understood the complete information.
 Communication in simpler terms is a process of passing the
information from the first party (sender) to the second party
(receiver). Communication plays a vital role not only in
organizations or one’s professional career but also is essential in day
to day life.
Different Types of Communication
Verbal communication
Verbal communication is a type of communication where the
information flows through verbal medium like words, speeches,
presentations etc. In verbal communication the sender shares his/her
thoughts in the form of words. In organizations, individuals
communicate verbally among each other in the form of dialogues,
speech, presentations, discussions to name a few. The tone of the
speaker, the pitch and the quality of words play a crucial role in verbal
communication. The speaker has to be loud and clear and the content has
to be properly defined. Haphazard and unorganized thoughts only lead to
confusions and misunderstandings among individuals. In verbal
communication, an individual must understand the importance of words
and how to put them across.
While speaking the pitch ought to be high and clear for everyone to
understand and the content must be designed keeping the target audience
in mind. In verbal communication it is the responsibility of the sender to
cross check with the receiver whether he has downloaded the correct
information or not and the sender must give the required response.
Sarah to ken - “I want a glass of water” is an example of verbal
communication.
Non verbal communication
Imagine yourself in a situation, where you can’t speak but have to
communicate an urgent information to the other person or for that matter,
you are sitting in an important meeting and you want to express your
displeasure or pleasure to your colleague without uttering even a word.
Here non verbal mode of communication comes into picture. Facial
expressions, gestures, hand and hair movements, body postures all
constitute non verbal communication. Any communication made
between two people without words and simply through facial

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movements, gestures or hand movements is called as non verbal MOTIVATION AND
communication. In other words, it is a speechless communication where LEADING PEOPLE AT
content is not put into words but simply expressed through expressions If WORK
one has a headache, one would put his hand on his forehead to
Notes
communicate his discomfort - a form of non verbal communication. Non
verbal communications are vital in offices, meetings and even in
romantic chats.

Visual Communication
Before planning any outing or tour, Sandra always refers to the map of
that place. Through the map, she tries to find out more about the place,
the route to reach that place, hotels, shopping joints etc. The map is
actually passing information about the place to Sandra or communicating
with Sandra. This mode of communication is called visual
communication. In visual communication, the recipient receives
information from signboards, displays, hoardings, banners, maps etc. The
sign board of Mc Donald’s or KFC indicates eating joints - a form of
visual communication. The sign board of “No Parking Zone”
communicates to the individuals that any vehicle must not be parked in
the vicinity - again a mode of visual communication. Vision plays a very
important role in visual communication and it depends on the recipient
how to interpret the message.
Communication Flows in an Organization
In an organization, communication flows in 5 main directions-
1. Downward
2. Upward
3. Lateral
4. Diagonal
5. External
1. Downward Flow of Communication: Communication that
flows from a higher level in an organization to a lower level is a
downward communication. In other words, communication from
superiors to subordinates in a chain of command is a downward
communication. This communication flow is used by the managers to
transmit work-related information to the employees at lower levels.
Employees require this information for performing their jobs and for
meeting the expectations of their managers. Downward communication
is used by the managers for the following purposes -
2. Upward Flow of Communication: Communication that flows to
a higher level in an organization is called upward communication. It
provides feedback on how well the organization is functioning. The
subordinates use upward communication to convey their problems and
performances to their superiors.
The subordinates also use upward communication to tell how well they
have understood the downward communication. It can also be used by
the employees to share their views and ideas and to participate in the
decision-making process.
Upward communication leads to a more committed and loyal workforce
in an organization because the employees are given a chance to raise
and speak dissatisfaction issues to the higher levels. The managers get

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Principles of
to know about the employees feelings towards their jobs, peers,
supervisor and organization in general. Managers can thus accordingly
management
take actions for improving things.
Notes Grievance Redressal System, Complaint and Suggestion Box, Job
Satisfaction surveys etc all help in improving upward communication.
Other examples of Upward Communication are -performance reports
made by low level management for reviewing by higher level
management, employee attitude surveys, letters from employees,
employee-manager discussions etc.
3. Lateral / Horizontal Communication: Communication that
takes place at same levels of hierarchy in an organization is called
lateral communication, i.e., communication between peers, between
managers at same levels or between any horizontally equivalent
organizational member. The advantages of horizontal communication
are as follows:
It is time saving.

It facilitates co-ordination of the task.

It facilitates co-operation among team members.

It provides emotional and social assistance to the

organizational members.

It helps in solving various organizational problems.

It is a means of information sharing

It can also be used for resolving conflicts of a department

with other department or conflicts within a department.
4. Diagonal Communication: Communication that takes place
between a manager and employees of other workgroups is called
diagonal communication. It generally does not appear on organizational
chart. For instance - To design a training module a training manager
interacts with an Operations personnel to enquire about the way they
perform their task.
5. External Communication: Communication that takes place
between a manager and external groups such as - suppliers, vendors,
banks, financial institutes etc. For instance - To raise capital the
Managing director would interact with the Bank Manager.
Communication Channels
Communication channels are the means through which people in an
organization communicate. Thought must be given to what channels are
used to complete various tasks, because using an inappropriate channel
for a task or interaction can lead to negative consequences. Complex
messages require richer channels of communication that facilitate
interaction to ensure clarity.
A new kind of employee intranet. Delivers 5X employee engagement.

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Face-to-Face MOTIVATION AND
Face-to-face or personal communication is one of the richest channels of LEADING PEOPLE AT
communication that can be used within an organization. Physical WORK
presence, the tone of the speaker's voice and facial expressions help Notes
recipients of a message interpret that message as the speaker intends.
This is the best channel to use for complex or emotionally charged
messages, because it allows for interaction between speaker and
recipients to clarify ambiguity. A speaker can evaluate whether an
audience has received his message as intended and ask or answer follow-
up questions.
Broadcast Media
TV, radio and loud speakers all fall within the broadcast media
communication channel. These types of media should be used when
addressing a mass audience. Businesses seeking to notify customers of a
new product may advertise or do promotions using a broadcast channel.
Similarly, a CEO may do a global company address by having a
television feed broadcast across global sites. When a message intended
for a mass audience can be enhanced by being presented in a visual or
auditory format, a broadcast channel should be used.
Mobile
A mobile communication channel should be used when a private or more
complex message needs to be relayed to an individual or small group. A
mobile channel allows for an interactive exchange and gives the recipient
the added benefit of interpreting the speaker's tone along with the
message. Some within an organization may opt to use this channel versus
a face-to-face channel to save on the time and effort it would take to
coordinate a face-to-face meeting.
Electronic
Electronic communication channels encompass email, Internet, intranet
and social media platforms. This channel can be used for one-on-one,
group or mass communication. It is a less personal method of
communication but more efficient. When using this channel, care must
be taken to craft messages with clarity and to avoid the use of sarcasm
and innuendo unless the message specifically calls for it.
Written
Written communication should be used when a message that does not
require interaction needs to be communicated to an employee or group.
Policies, letters, memos, manuals, notices and announcements are all
messages that work well for this channel. Recipients may follow up
through an electronic or face-to-face channel if questions arise about a
written message.

Importance of Communication
Effective Communication is significant for managers in the organizations
so as to perform the basic functions of management, i.e., Planning,
Organizing, Leading and Controlling.
Communication helps managers to perform their jobs and
responsibilities. Communication serves as a foundation for planning. All
the essential information must be communicated to the managers who in-

103
Principles of
turn must communicate the plans so as to implement them. Organizing
also requires effective communication with others about their job task.
management
Similarly leaders as managers must communicate effectively with their
Notes subordinates so as to achieve the team goals. Controlling is not possible
without written and oral communication.
Managers devote a great part of their time in communication. They
generally devote approximately 6 hours per day in communicating. They
spend great time on face to face or telephonic communication with their
superiors, subordinates, colleagues, customers or suppliers. Managers
also use Written Communication in form of letters, reports or memos
wherever oral communication is not feasible.
Thus, we can say that “effective communication is a building block of
successful organizations”. In other words, communication acts as
organizational blood.
The importance of communication in an organization can be
summarized as follows:
1. Communication promotes motivation by informing and clarifying
the employees about the task to be done, the manner they are
performing the task, and how to improve their performance if it is
not up to the mark.
2. Communication is a source of information to the organizational
members for decision-making process as it helps identifying and
assessing alternative course of actions.
3. Communication also plays a crucial role in altering individual’s
attitudes, i.e., a well informed individual will have better attitude
than a less-informed individual. Organizational magazines, journals,
meetings and various other forms of oral and written communication
help in moulding employee’s attitudes.
4. Communication also helps in socializing. In todays life the only
presence of another individual fosters communication. It is also said
that one cannot survive without communication.
5. As discussed earlier, communication also assists in controlling
process. It helps controlling organizational member’s behaviour in
various ways. There are various levels of hierarchy and certain
principles and guidelines that employees must follow in an
organization. They must comply with organizational policies,
perform their job role efficiently and communicate any work
problem and grievance to their superiors. Thus, communication
helps in controlling function of management.
An effective and efficient communication system requires managerial
proficiency in delivering and receiving messages. A manager must
discover various barriers to communication, analyze the reasons for their
occurrence and take preventive steps to avoid those barriers. Thus, the
primary responsibility of a manager is to develop and maintain an
effective communication system in the organization.
Communication Medium
We divide the different types of communication medium into two
different categories:
1. Physical media
2. Mechanical media (everything that is not No. 1)

104
This site focus on the internal communication. Our listings of types of MOTIVATION AND
communication medium therefore exclude external media. LEADING PEOPLE AT
Physical media WORK
With physical media we mean channels where the person who is talking
Notes
can be seen and heard by the audience. The whole point here is to be able
to not only hear the messages but also to see the body language and feel
the climate in the room. This does not need to be two-way channels. In
certain situations the receiver expect physical communication. This is the
case especially when dealing with high concern messages, e.g.
organizational change or downsizing. If a message is perceived as
important to the receiver they expect to hear it live from their manager.
 Large meetings, town hall meetings
 Department meetings (weekly meetings)
 Up close and personal (exclusive meetings)
 Video conferences
 Viral communication or word of mouth
Large meetings
Large meetings have got great symbolic value and should be used only at
special occasions. This channel works very well when you need to get
across strategic and important messages to a large group of people at the
same time, creating a wide attention, get engagement or communicate a
sense of belonging. Large meetings are excellent when you want to
present a new vision or strategy, inform about a reorganisation or share
new values. The opportunity for dialogue is limited at large meeting, of
course but you can create smaller groups where dialogue can be
performed.
Weekly departmental meetings
In the weekly meetings you and your group communicate daily operative
issues, gives status reports and solves problems. Weekly meetings are
also used to follow up on information from large meetings, management
team meetings etc from a “what’s-in-it-for-us-perspective”. This type of
smaller group meetings gives good opportunities for dialogue. This
channel is often the most important channel you have as a manager,
because that’s where you have the opportunity to build the big picture,
you can prepare for change, you can create ownership of important
strategies and goals etc. This is a favourite among the types of
communication medium.
Up close and personal
This is a form of meetings where, often, a senior manager meets with a
“random” selection of employees to discuss and answer questions. Some
managers use this as a on going activities on a monthly basis. It can also
be used in specific projects or campaigns e.g. launching new strategies.
Viral communication
Or viral marketing as it is also called works external as well as internal
and refer to marketing techniques that use pre-existing social networks to
produce increases in awareness or knowledge through self-replicating
viral processes. It can be word-of-mouth delivered or enhanced by the
network effects of social media.

105
Principles of
Mechanical media
The second of the two types of communication medium is mechanical
management
media. With mechanical media we mean written or electronic channels.
Notes These channels can be used as archives for messages or for giving the
big picture and a deeper knowledge. But they can also be very fast.
Typically though, because it is written, it is always interpret by the
reader based on his or her mental condition. Irony or even humour rarely
travels well in mechanical channels.
 E-mail
 Weekly letters or newsletters
 Personal letters
 Billboards
 Intranet
 Magazines or papers
 Sms
 Social media
E-mail
E-mail is a good channel for the daily communication to specific target
groups. It is suitable mainly for up-to-date and “simple” messages and
where there is no risk of misunderstanding; E-mail is an important
supplement to weekly meetings and the Intranet. Invitation to and agenda
for meetings can with advantage be sent out with e-mail before the
meeting, while background facts and minutes from meetings is well
suited to be stored on the Intranet.
Some short e-mail tips:
 Write short and to the point.
 Target your messages to the audience and avoid sending unnecessary
all-employees-e-mails.
 Set up your subject line to describe what the e-mail is about.
 Clearly state if the message is for information or for action.
 Avoid attaching large documents if possible. Post a link or direct to
the source instead.
Weekly letters
Managers that have large groups of employees and who has difficulties
in meeting all of them often choose to publish a personally weekly letter.
It is sort of a short summary of news with personally reflections. Many
employees often appreciate it because it has the potential to give the
“what’s-in-it-for-us” angle. They can also contain summaries and status
in tasks, projects or issues – yesterday, today and tomorrow.
Personal letters
At special occasions it can be justified to send a personal letter to
employees in order to get attention to a specific issue. E.g. pat on the
back letter after extra ordinary achievements. Or it can be a letter with
your personal commentary on an ongoing reorganisation that affects
many employees. One other example is a letter that summarizes the past
year and wishes all the best for the holidays.
Billboard
One of the most forgotten types of communication medium is clearly the
billboard. Especially today, when everything is about social media. But
the good thing with the billboard is that you can use billboards to inform

106
people who does not have computers and/or access to the Intranet or to MOTIVATION AND
reach people that work part time and does not attend weekly meetings. LEADING PEOPLE AT
 News summary WORK
 Weekly letters
Notes
 Minutes from meetings
 Schedules
 Holiday lists
You can also use the billboard to gather ideas e.g. for items for upcoming
meetings
Intranet
The Intranet is of course one of the most used types of communication
medium and a very important communication channel and work tool for
you as a manager, but it is also your job to help your employees prioritise
and pick out the information on the Intranet, as well as translating
messages into local consequences. Ask your self: what information
concerns you employees? In what way are they concerned? How do I
best communicate this to my employees? Weekly meeting or your
weekly letter can be a suitable channel to discuss or inform of
information found on the Intranet.
Employee magazine
A Magazine offers the opportunity to deepen a specific issue, explain
context, describing consequences or tell a story. It also has the
opportunity to reach many employees. If you want to create a broad
internal understanding of strategic messages the magazine can be a good
vehicle to use e.g. by writing an article based on an interview with you.
As were the case with the Intranet you also have to “translate” the
information in the magazine to your employees. You can ask yourself:
What does the content in a specific article mean to us? How shall I best
communicate it to the employees?
Sms
Or text messaging to the mobile phone is one of the new types of
communication medium and not a very widely used channel but where it
is used it is proven very effective. Some companies use it as an alert
system e.g. for giving managers a head start when something important
will be published on the Intranet. The advantage with Sms is that it is
fast. But it should be used rarely as an exclusive channel. Some
companies use it as a subscription tool where you can subscribe to e.g
press-releases.
Social media
Wikipedia describe social media as “Media designed to be disseminated
through social interaction, created using highly accessible and scalable
publishing techniques. Social media supports the human need for social
interaction, using Internet- and web-based technologies to transform
broadcast media monologues (one to many) into social media dialogues
(many to many). It supports the democratization of knowledge and
information, transforming people from content consumers into content
producers. Businesses also refer to social media as user-generated
content (UGC) or consumer-generated media (CGM).”
More and more companies are using social media in their external
marketing, setting up twitter and Facebook accounts etc. But these

107
Principles of
channels are also used internal where managers become “friends” on
Facebook with their employees or where managers use blog and twitter
management
targeting their employees.
Notes Push or Pull
You can also divide the different types of communication medium in
Push or Pull channels.
Push channels are channels where the sender are pushing the message to
the receiver. Meaning it is up to the sender to control the communication.
 E-mail
 News letters and letters (if sent out)
 Magazines (if sent out)
 Meetings
 Telephone
 Sms
Pull channels on the other hand is when the receiver is pulling the
message from the sender. It is up to the receiver when he or she wants to
take in the message.
 Intranet
 Billboards
 New letters and letters (if not sent out)
 Magazines (if not sent out)
 Social media
Push channels are often regarded as having higher reliability than pull
channels because of the fact that it is more active in the communication.
Communication Barriers
Communication is a process beginning with a sender who encodes the
message and passes it through some channel to the receiver who decodes
the message. Communication is fruitful if and only if the messages sent
by the sender are interpreted with same meaning by the receiver. If any
kind of disturbance blocks any step of communication, the message will
be destroyed. Due to such disturbances, managers in an organization face
severe problems. Thus the managers must locate such barriers and take
steps to get rid of them.
There are several barriers that affects the flow of communication in an
organization. These barriers interrupt the flow of communication from
the sender to the reciever, thus making communication ineffective. It is
essential for managers to overcome these barriers. The main barriers of
communication are summarized below.

Following are the main communication barriers:

1. Perceptual and Language Differences: Perception is generally
how each individual interprets the world around him. All
generally want to receive messages which are significant to them.
But any message which is against their values is not accepted. A
same event may be taken differently by different individuals. For
example : A person is on leave for a month due to personal
reasons (family member being critical). The HR Manager might
be in confusion whether to retain that employee or not, the
immediate manager might think of replacement because his
teams productivity is being hampered, the family members might

108
 take him as an emotional support. MOTIVATION AND
The linguistic differences also lead to communication LEADING PEOPLE AT
breakdown. Same word may mean different to different WORK
individuals. For example: consider a word “value”.
Notes
a. What is the value of this Laptop?
b. I value our relation?
c. What is the value of learning technical skills?
“Value” means different in different sentences. Communication
breakdown occurs if there is wrong perception by the receiver.
2. Information Overload: Managers are surrounded with a pool of
information. It is essential to control this information flow else
the information is likely to be misinterpreted or forgotten or
overlooked. As a result communication is less effective.
3. Inattention: At times we just not listen, but only hear. For
example a traveler may pay attention to one “NO PARKING”
sign, but if such sign is put all over the city, he no longer listens
to it. Thus, repetitive messages should be ignored for effective
communication. Similarly if a superior is engrossed in his paper
work and his subordinate explains him his problem, the superior
may not get what he is saying and it leads to disappointment of
subordinate.
4. Time Pressures: Often in organization the targets have to be
achieved within a specified time period, the failure of which has
adverse consequences. In a haste to meet deadlines, the formal
channels of communication are shortened, or messages are
partially given, i.e., not completely transferred. Thus sufficient
time should be given for effective communication.
5. Distraction/Noise: Communication is also affected a lot by noise
to distractions. Physical distractions are also there such as, poor
lightning, uncomfortable sitting, unhygienic room also affects
communication in a meeting. Similarly use of loud speakers
interferes with communication.
6. Emotions: Emotional state at a particular point of time also
affects communication. If the receiver feels that communicator is
angry he interprets that the information being sent is very bad.
While he takes it differently if the communicator is happy and
jovial (in that case the message is interpreted to be good and
interesting).
7. Complexity in Organizational Structure: Greater the hierarchy
in an organization (i.e. more the number of managerial levels),
more is the chances of communication getting destroyed. Only
the people at the top level can see the overall picture while the
people at low level just have knowledge about their own area and
a little knowledge about other areas.
8. Poor retention: Human memory cannot function beyond a limit.
One cant always retain what is being told specially if he is not
interested or not attentive. This leads to communication
breakdown.

109
Principles of
How to overcome these barriers of communication.
1. Eliminating differences in perception: The organization should
management
ensure that it is recruiting right individuals on the job. It’s the
Notes responsibility of the interviewer to ensure that the interviewee has
command over the written and spoken language. There should be
proper Induction program so that the policies of the company are
clear to all the employees. There should be proper trainings
conducted for required employees (for eg: Voice and Accent
training).
2. Use of Simple Language: Use of simple and clear words should
be emphasized. Use of ambiguous words and jargons should be
avoided.
3. Reduction and elimination of noise levels: Noise is the main
communication barrier which must be overcome on priority basis.
It is essential to identify the source of noise and then eliminate
that source.
4. Active Listening: Listen attentively and carefully. There is a
difference between “listening” and “hearing”. Active listening
means hearing with proper understanding of the message that is
heard. By asking questions the speaker can ensure whether
his/her message is understood or not by the receiver in the same
terms as intended by the speaker.
5. Emotional State: During communication one should make
effective use of body language. He/she should not show their
emotions while communication as the receiver might misinterpret
the message being delivered. For example, if the conveyer of the
message is in a bad mood then the receiver might think that the
information being delivered is not good.
6. Simple Organizational Structure: The organizational structure
should not be complex. The number of hierarchical levels should
be optimum. There should be a ideal span of control within the
organization. Simpler the organizational structure, more effective
will be the communication.
7. Avoid Information Overload: The managers should know how
to prioritize their work. They should not overload themselves
with the work. They should spend quality time with their
subordinates and should listen to their problems and feedbacks
actively.
8. Give Constructive Feedback: Avoid giving negative feedback.
The contents of the feedback might be negative, but it should be
delivered constructively. Constructive feedback will lead to
effective communication between the superior and subordinate.
9. Proper Media Selection: The managers should properly select
the medium of communication. Simple messages should be
conveyed orally, like: face to face interaction or meetings. Use of
written means of communication should be encouraged for
delivering complex messages. For significant messages reminders
can be given by using written means of communication such as :
Memos, Notices etc.

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 10. Flexibility in meeting the targets: For effective communication MOTIVATION AND
in an organization the managers should ensure that the LEADING PEOPLE AT
individuals are meeting their targets timely without skipping the WORK
formal channels of communication. There should not be much
Notes
pressure on employees to meet their targets.
REVIEW QUESTIONS
1. Describe Mc gregors theory X and theory Y of motivation.
2. What are Distinction between theory X and Theory Y?
3. Discuss about Maslow’s need priority model.
4. Discuss a Comparison between Maslow and Herzberg models.
5. What is the Meaning and nature of leadership?
6. What is the Importance and functions of leadership?
7. What is the Different leadership styles?
8. What are Channel of communication? Discuss about Media of
communication.
9. What are Principal barriers to communication ?
FURTHER READINGS
1. Principles Of Management - Mason Andrew Carpenter,
Talya Bauer
2. Principles Of Management -Tony Morden
3. Principles Of Management -D. Chandra Bose
4. Principles Of Management -[Link]
5. Principles Of Management -K. Anbuvelan
IMPORTANT NOTES

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Principles of
management
UNIT -5 MANAGERIAL
Notes CONTROLS
CONTENTS

 Nature and Process of Controlling

 Managerial Control Techniques
 Review Questions
 Further Readings
Controlling Function of Management
What is Controlling?
Controlling consists of verifying whether everything occurs in
conformities with the plans adopted, instructions issued and principles
established. Controlling ensures that there is effective and efficient
utilization of organizational resources so as to achieve the planned goals.
Controlling measures the deviation of actual performance from the
standard performance, discovers the causes of such deviations and helps
in taking corrective actions
According to Brech, “Controlling is a systematic exercise which is called
as a process of checking actual performance against the standards or
plans with a view to ensure adequate progress and also recording such
experience as is gained as a contribution to possible future needs.”
According to Donnell, “Just as a navigator continually takes reading to
ensure whether he is relative to a planned action, so should a business
manager continually take reading to assure himself that his enterprise is
on right course.”
Controlling has got two basic purposes
1. It facilitates co-ordination
2. It helps in planning
Features of Controlling Function
Following are the characteristics of controlling function of management-
1. Controlling is an end function- A function which comes once
the performances are made in conformities with plans.
2. Controlling is a pervasive function- which means it is
performed by managers at all levels and in all type of concerns.
3. Controlling is forward looking- because effective control is not
possible without past being controlled. Controlling always look to
future so that follow-up can be made whenever required.
4. Controlling is a dynamic process- since controlling requires
taking reviewal methods, changes have to be made wherever
possible.
5. Controlling is related with planning- Planning and Controlling
are two inseperable functions of management. Without planning,
controlling is a meaningless exercise and without controlling,
planning is useless. Planning presupposes controlling and
controlling succeeds planning.

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Process of Controlling MANAGERIAL
CONTROL
Controlling as a management function involves following steps:
1. Establishment of standards- Standards are the plans or the targets Notes
which have to be achieved in the course of business function. They
can also be called as the criterions for judging the performance.
Standards generally are classified into two-
a. Measurable or tangible - Those standards which can be measured and
expressed are called as measurable standards. They can be in form of
cost, output, expenditure, time, profit, etc.
b. Non-measurable or intangible- There are standards which cannot be
measured monetarily. For example- performance of a manager,
deviation of workers, their attitudes towards a concern. These are
called as intangible standards.
Controlling becomes easy through establishment of these standards
because controlling is exercised on the basis of these standards.
2. Measurement of performance- The second major step in controlling
is to measure the performance. Finding out deviations becomes easy
through measuring the actual performance. Performance levels are
sometimes easy to measure and sometimes difficult. Measurement of
tangible standards is easy as it can be expressed in units, cost, money
terms, etc. Quantitative measurement becomes difficult when
performance of manager has to be measured. Performance of a
manager cannot be measured in quantities. It can be measured only
by-
a. Attitude of the workers,
b. Their morale to work,
c. The development in the attitudes regarding the physical environment,
and
d. Their communication with the superiors.
It is also sometimes done through various reports like weekly, monthly,
quarterly, yearly reports.
3. Comparison of actual and standard performance- Comparison of
actual performance with the planned targets is very important.
Deviation can be defined as the gap between actual performance and
the planned targets. The manager has to find out two things here-
extent of deviation and cause of deviation. Extent of deviation means
that the manager has to find out whether the deviation is positive or
negative or whether the actual performance is in conformity with the
planned performance. The managers have to exercise control by
exception. He has to find out those deviations which are critical and
important for business. Minor deviations have to be ignored. Major
deviations like replacement of machinery, appointment of workers,
quality of raw material, rate of profits, etc. should be looked upon
consciously. Therefore it is said, “ If a manager controls everything,
he ends up controlling nothing.” 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.
Once the deviation is identified, a manager has to think about various
cause which has led to deviation. The causes can be-

113
Principles of
a. Erroneous planning,
b. Co-ordination loosens,
management
c. Implementation of plans is defective, and
Notes d. Supervision and communication is ineffective, etc.
4. Taking remedial actions- Once the causes and extent of deviations
are known, the manager has to detect those errors and take remedial
measures for it. There are two alternatives here-
a. Taking corrective measures for deviations which have occurred; and
b. After taking the corrective measures, if the actual performance is not
in conformity with plans, the manager can revise the targets. It is here
the controlling process comes to an end. Follow up is an important
step because it is only through taking corrective measures, a manager
can exercise controlling.
Relationship between planning and controlling
Planning and controlling are two separate functions of management, yet
they are closely related. The scope of activities if both are overlapping to
each other. Without the basis of planning, controlling activities becomes
baseless and without controlling, planning becomes a meaningless
exercise. In absense of controlling, no purpose can be served by.
Therefore, planning and controlling reinforce each other. According to
Billy Goetz, “Relationship between the two can be summarized in the
following points
1. Planning preceeds controlling and controlling succeeds planning.
2. Planning and controlling are inseparable functions of management.
3. Activities are put on rails by planning and they are kept at right place
through controlling.
4. The process of planning and controlling works on Systems Approach
which is as follows :
Planning → Results → Corrective Action
5. Planning and controlling are integral parts of an organization as both
are important for smooth running of an enterprise.
6. Planning and controlling reinforce each other. Each drives the other
function of management.
In the present dynamic environment which affects the organization, the
strong relationship between the two is very critical and important. In the
present day environment, it is quite likely that planning fails due to some
unforeseen events. There controlling comes to the rescue. Once
controlling is done effectively, it give us stimulus to make better plans.
Therefore, planning and controlling are inseperate functions of a
business enterprise.
Control Techniques:
Many techniques have been developed to control the activities in
management. The list is very long, and it is difficult to describe them all.
Some of the important techniques are:
Financial Control:
Finance is related with mobilization of funds and their utilization
and the return on them. Financial control is exercised through the
following:
1. Financial Statements:

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Income statement (telling about expenses, segmental incomes, overall MANAGERIAL
income and expenses, and the net profit/loss), and Balance Sheet (shows CONTROL
the net worth at a single point of time and the extent to which the debt or
equity finance the assets) Notes
2. Financial Audits:
Financial audits, either internal or external are conducted to ensure that
the financial management is done in line with the generally accepted
policies, procedures, laws, and ethical guidelines. Audits may be internal
(by Organisation’s own staff), external (statutory audit by chartered
accountants), and management audit (by experts).
3. Ratio Analysis:
Ratio analysis monitors liquidity, profitability, debt, and activity related
aspects.
4. Budgetary Controls:
Budgetary control is the process of constructing budgets, comparing
actual performance with the budget one and revising budgets or activities
in the light of changed conditions.
Budgetary control is as such not related only to finance area, but all
functional areas do take help of budgetary control. Budgets help not only
in planning but also help to keep a tab on overall spending.
Budgeting may be top-down (managers prepare the budget and ask
subordinates to use); bottom-up (figures come from lower levels and
adjusted at upper levels); zero-based (justifying allocation of funds on
the basis of activities or goals); and flexible budgeting (varying standards
and varying allocations).
5. Break-even Analysis:
It is a tool of profit planning and deals with cost-volume-profit
relationships.
6. Accounting:
Accounting includes responsibility accounting, cost accounting, standard
cost approach, direct costing, and marginal costing.
Marketing Control:
In the field of marketing, to see that customer gets right product at the
right price at the right place and through right communication, the
control is exercised through the following:
Market Research:
It is to assess customers’ needs, expectations and the delivery; and the
competitive scenario.
Test Marketing:
To assess consumer acceptance of a new product, a small-scale
marketing is done. HUL uses Chennai for most of its test marketing.
Marketing Statistics:
Marketing managers control through marketing ratios and other statistics.
Human resource control:
Human resource control is required to have a check on the quality of new
personnel and also to monitor performances of existing employees so as
to determine firm’s overall effectiveness.
Goal setting, instituting policies and procedures to guide them are to help
them. Common controls include performance appraisals, disciplinary
programmes, observations, and development assessments.

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Principles of
Information Control:
management All organizations have confidential and sensitive information to be kept
secret. How to control access to computer databases is very important.
Notes This has become a key contemporary issue in control. Organizations
keep a watch on employee’s computer usage in general and internet in
particular.
Production Control:
To ensure quality production in right quantity at right time economically
production controls are required. Two of the important techniques
include: Inventory control (ABC Analysis, Economic Order Quantity,
Just-in time inventory control), and quality control (through inspection,
statistical quality control).
Project Control:
Network analysis is most suitable for the projects which are not routine
in minimizing cost and completing project well in time. Network
analysis makes use of two techniques – Programme Evaluation and
Review Technique (PERT), and Critical Path Method (CPM).

PERT vs CPM
CPM and PERT (Program Evaluation and Review Technique) are most
commonly used methods for project management. There are some
similarities and differences between PERT and CPM. PERT can be
applied to any field requiring planned, controlled and integrated work
efforts to accomplish defined objectives.

CPM PERT
 CPM uses activity oriented network.  PERT uses event oriented Network.
 Durations of activity may be estimated with a  Estimate of time for activities are not so
fair degree of accuracy. accurate and definite.
 It is used extensively in construction projects.  It is used mostly in research and development
projects, particularly projects of non-
repetitive nature.
 Deterministic concept is used.  Probabilistic model concept is used.
 CPM can control both time and cost when  PERT is basically a tool for planning.
planning.

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  In CPM, cost optimization is given prime  In PERT, it is assumed that cost varies MANAGERIAL
importance. The time for the completion of directly with time. Attention is therefore
CONTROL
the project depends upon cost optimization. given to minimize the time so that minimum
The cost is not directly proportioned to time. cost results. Thus in PERT, time is the
Thus, cost is the controlling factor. controlling factor. Notes
Management auditing
Management Audit' is a systematic examination of decisions and
actions of the management to analyse the performance. Management
audit involves the review of managerial aspects like organizational
objective, policies, procedures, structure, control and system in order to
check the efficiency or performance of the management over the
activities of the Company. Unlike financial audit, management audit
mainly examine the non financial data to audit the efficiency of the
management. Somehow audit tries to search the answer of how well the
management has been operating the business of the company? Is
managerial style well suited for business operation? Management Audit
focuses on results, evaluating the effectiveness and suitability of controls
by challenging underlying rules, procedures and methods.[2]
Management Audit is an assessment of methods and policies of an
organization's management in the administration and the use of
resources, tactical and strategic planning, and employee and
organizational improvement. Management Audit is generally conducted
by the employee of the company or by the independent consultant and
focused on the critical evaluation of management as a team rather than
appraisal of individual.
Objectives of Management Audit
1. Establish the current level of effectiveness
2. Suggest Improvement
3. Lay down standards for future performance
4. Increased levels of service quality and performance
5. Guidelines for organizational restructuring
6. Introduction of management information systems to assist in meeting
productivity and effectiveness goals
7. Better use of resources due to program improvements
Audit Procedures in Management Audit
Generally auditor deploy following audit procedures to conduct the
management audit.
1. Questionnaire
2. Interview with employee and managers
REVIEW QUESTIONS
1. What is the Meaning and nature of controlling?
2. What are the Importance and limitations of control?
3. What are the Elements or process of control?
4. Describe the Requirements of a good control system.
5. Discuss about Budgetary control and Management audit.
6. Discuss about PERT/CPM and its role in managerial control.

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Principles of FURTHER READINGS
management 1. Principles Of Management - Mason Andrew Carpenter,
Talya Bauer
Notes
2. Principles Of Management -Tony Morden
3. Principles Of Management -D. Chandra Bose
4. Principles Of Management -[Link]
5. Principles Of Management -K. Anbuvelan
IMPORTANT NOTES

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 UNIT-6 MANAGEMENT OF MANAGEMENT OF
CHANGE

CHANGE Notes

CONTENTS
 Nature and process of planned change
 Meaning of change and its causes
 Resistance to change
 Causes and steps to overcome them
 Change process
 Managing he change
 Emerging horizons of management in changing environment
 Challenges to the management
 Tasks of future managers to deal with challenges
 Review Questions
 Further Readings
Planned Change in Organization
Every change should have a planned way. Planned change may help the
person people to adapt with the change environment, planned change is
pre determined. It is decided in advance what is to be done in future. It is
a deliberate process.
For making any planned change, pre thinking is supposed to be done
about the outcomes and impact of change also. Despite carefulness if any
negative impact is seen, one can have preparation or metal objective to
face the changes. Here is a definition of planned change given below:
Definition of planned change
However, we can define planned change as follows: Any kind of
alternation or modification which is done in advance and differently for
the improvement of present position into brighter one is called planned
change.
Forces for planned change is an Organization
An organization’s planned change may take place-having demand for
two sources. These forces are classified into internal sources and external
sources. These two forces demanding for planned change are shown in
the following diagram:

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Principles of Resistance to Change
management Definition
Resistance to change is the action taken by individuals and groups when
Notes
they perceive that a change that is occurring as a threat to them.
Key words here are 'perceive' and 'threat'. The threat need not be real or
large for resistance to occur.
In its usual description it refers to change within organizations, although
it also is found elsewhere in other forms. Resistance is the equivalent of
objections in sales and disagreement in general discussions.
Resistance may take many forms, including active or passive, overt or
covert, individual or organized, aggressive or timid.
RESISTANCE TO CHANGE
Objectives
1. To examine fundamental reasons why people and organizations resist
change.
2. To gain an appreciation that the adoption of innovation is a complex
process involving a variety of people and factors.
THE NATURE OF CHANGE
Adoption of Change
The adoption of new ideas and techniques does not occur naturally but
results from hard work, trial and error. It is important to recognize this
fact and to make an effort to develop information that is concise,
readable and to the point and to make sure the information reaches
people who can use it. A broad spectrum of skills is needed to lead to
effective management of innovation and change. There is no magic
formula for success--no such formulas exist.
Multiple channels of communication should be used to promote the
adoption of an innovation. Never expect one report, one presentation,
one telephone call or one conference to accomplish
everything. Successful programs need to be carefully conceived and
carried out. Human contacts are critical ingredients, and need to be used
along with good written and visual materials. These materials are
useless without an understanding of the needs, limitations and problems
of the user.
Change agents can bring innovation for the user by examining their
preconceived notions about the way things should be done. Personnel
have to be receptive to change themselves, they have to be able to
evaluate new ideas objectively and see their users --not as they have been
--but as they might be.
Resistance to Change
The adoption of innovations involves altering human behavior, and the
acceptance of change. There is a natural resistance to change for several
reasons.
People resist change:
 When the reason for the change is unclear. Ambiguity--whether
it is about costs, equipment, jobs--can trigger negative reactions
among users.
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  When the proposed users have not been consulted about the MANAGEMENT OF
change, and it is offered to them as an accomplished fact. People CHANGE
like to know what's going on, especially if their jobs may be
affected. Informed workers tend to have higher levels of job Notes
satisfaction than uninformed workers.
 When the change threatens to modify established patterns of
working relationships between people.
 When communication about the change--timetables, personnel,
monies, etc.--has not been sufficient.
 When the benefits and rewards for making the change are not
seen as adequate for the trouble involved.
 When the change threatens jobs, power or status in an
organization.
(An unwilling user can always make an idea fail, no matter how good it
is.)
Decision makers will be more responsive to change:
 If the information presented coincides with their current values,
beliefs, and attitudes:
 If they perceive that the change will benefit them more than it
will cost them:
 If the innovation requires marginal rather than major changes in
their views or lives:
 If they have a demonstrated need for the innovation: and
 If the innovation is introduced gradually so that people can adjust
to the resulting change.
FACTORS WHICH AFFECT THE ADOPTION OF
INNOVATION
CHARACTERISTICS OF THE INNOVATION
Relative Advantage:
Generally, innovations must be seen as producing a SIGNIFICANT
IMPROVEMENT over current procedures and techniques in order to be
adopted. The benefits must be perceived as so great as to be well worth
the inevitable problems and costs associated with any change.
Simplicity:
The innovation, or at least the way it is presented, should be EASY TO
UNDERSTAND. Even when users agree that the proposed change
would be "good," they may not be enthusiastic if they think it's too
complicated to understand or implement.
Easy to Try:
The new method or item must be easy to introduce, as well as easy to
abandon if it doesn't seem to be working out. If an agency must make
drastic changes in operating procedures in order to try something out, it
will resist change, whatever its perceived merits. It helps if a technology
can be tried in stages before the final decision to adopt is made.

121
Principles of
Easy to Measure:
management Once the new procedure or item is in place, it must be easy to measure
the benefits, whether in money, time, efficiency or some other evaluation
Notes measure meaningful to the adopter.
Inexpensive:
The up-front cost of a new technology is often an obstacle, especially in
rural areas and small agencies. If there is a large immediate increase in
costs, it will be difficult to get the technology adopted, even if long-term
savings are guaranteed.
Characteristics of the Organization
Risk Taking Climate:
Are the managers of the organization willing to take risks? Both the size
and age of an organization can affect this willingness. Younger firms are
usually more willing to take risks and, for risk taking, small is
better. The complicated structure of larger firms works against risk
taking. The exception to this are large organizations whose success has
been based on innovation.
Attitude towards Failure:
New ideas, procedures and technology involve risk and it is not be
possible to always succeed. Good decisions can have bad
outcomes. How an organization reacts to a failed attempt to implement a
change is critical. If people are punished, belittled, or put down for
trying something new that doesn't work, the will be seldom willing to do
it again. If, on the other hand, efforts are made to learn from the failure
and to make it work a more open process of change will occur.
Compatible Procedures/Technology:
The more a new idea is compatible with past procedures, techniques and
values of an organization, the more likely the organization is to adopt it.
Extent of Regulation:
The extent to which outside organizations, particularly government, can
control the behavior of an organization affects innovation. Such outside
regulation can have either a positive or negative effect, depending on the
regulation and/or its enforcement
Emerging Horizons of Management in Changing Environment :
Emerging Horizons of Management in Changing Environment Presented
By: Naliney Mishra Vishan Kumar Syad F araz A hmad Z aidi
PowerPoint Presentation:
EMERGING:- Coming into prominence existence HORIZON:- The
Limit Of a person’s understanding or interests.
Emerging Principles Of Management :
Emerging Principles Of Management Principles of management by
perception. Principles of Social Responsibility. Principles of Effective
Organization Development. Principles of Effective MIS utilization.

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Principles of effective Employee utilization. MANAGEMENT OF
The important area creating the challenges are-: Social environment CHANGE
Economic environment Technological environment Physical
Notes
environment Political environment Competition International
environment Risk & Security
SOCIAL ENVIRONMENT:
SOCIAL ENVIRONMENT Population explosion. Educational level.
Leisure time. Public opinion. Reconciliation of conflicting demand of
social group
POPULATION EXPLOSION:
POPULATION EXPLOSION It effects by -: Requiring new job More
products New method of production and distribution New products for
population mix
EDUCATIONAL LEVEL:
EDUCATIONAL LEVEL It will have an effect in following ways-:
Increasing consumer literacy will lead to increase in demand of the
consumer Workers will be more inclined towards safeguard of their
interest.
LEISURE TIME:
LEISURE TIME Reduced working hours. Quick means of transport.
Increased automation.
PUBLIC OPINION:
PUBLIC OPINION People have distrust in the market system. Very
complex. Prefer government controls.
RECONCILATION OF CONFLICTING DEMANDS OF SOCIAL
GROUP:
It consist of- Satisfying the demand of all the stakeholders. Consideration
to human resource Decentralization
CHANGES IN ECONOMIC ENVIRONMENT:
CHANGES IN ECONOMIC ENVIRONMENT Government policy of
liberalization of industrial licensing. FDI. Growth of multinational
corporations.
CHANGES IN PHYSICAL ENVIRONMENT:
CHANGES IN PHYSICAL ENVIRONMENT Protection of Ecology.
The growing awareness of people about environment will pose problems
before managers.
VIRTUAL WORKPLACES:
VIRTUAL WORKPLACES It is the workplace which is not located
physically rather many workplaces are connected with each other
through technology without regard to physical boundary. BENEFITS
Work from anyplace at anytime Cost effectiveness Productivity Easy
accommodation of both personal and professional life CHALLENGES
Failure to leverage the technology that supports virtual workplace Lack
of human contact Psychological instability
EMPOWERED EMPLOYEES:
EMPOWERED EMPLOYEES It is to give authority and autonomy to
employees regarding their work. They are allowed to give input, control
their work and make suggestion for organization and their work. PROS-:
Increased productivity Job satisfaction Improved quality CONS-:
Increased risk

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Principles of
FLEXIBLE WORK ARRANGEMENT:
FLEXIBLE WORK ARRANGEMENT It is about an employee and
management
employer making changes to when , where and how a person will work
Notes to meet individual and business need. WHEN-: Flexible working hour
Part time work Variable year employment WHERE Working from home
Working remotely HOW Job sharing Phased retirement
Changes in Political Environment:
Changes in Political Environment Greater government interference.
More joint sector enterprises. Financial institution will not be silent
spectators.
INCREASED COMPEITIVENESS :
CUSTOMER SERVICE:
CUSTOMER SERVICE It is to provide service to the consumer before,
during and after a purchase. Customer service is important because
customer loyalty develops as customers feel a connection with a
company.
INNOVATION:
INNOVATION It is a method by which an idea gets converted into any
economical form which satisfies some need. It can be of any three forms-
Advantages-: Competitive advantage Speed-up of process Increasing
brand value Increasing the market
GLOBALISATION:
GLOBALISATION It is the interconnection with the international
market and the effect that this relation has on the local and national
market . It’s advantages-: Increased competition Increase in market
Infrastructure improvement Rising economies Quality management
Changes in International Environment:
Changes in International Environment GATT. WTO. IMF. U.S.S.R.
RISK:
RISK is defined as the possibility or threat of damage , injury , liability
loss or other negative occurrence, caused by external or internal
vulnerabilities.
PowerPoint Presentation:
Risk management In risk management, a prioritization process is
followed whereby the risks with the greatest loss and the greatest
probability of occurring are handled first, and risks with lower
probability of occurrence and lower loss are handled in descending order
.Meeting Challenges: Management Tasks Ahead:
Meeting Challenges: Management Tasks Ahead Forecasting of Trends.
Management of Information. Creativity. Strategic planning. Management
by Objectives. Use of Interpersonal Skills.
Meeting Challenges: Management Tasks Ahead:
Meeting Challenges: Management Tasks Ahead Management of human
relations. Fulfillment of Social Responsibility. Development of
Integrated systems. Adoption of Contingency approach.

Changing nature of Managerial functions:

Changing nature of Managerial functions Planning. Organizing. Staffing.
Directing. Controling .

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PowerPoint Presentation: MANAGEMENT OF
TERRORISM Firms are vulnerable not only to attacks on their own CHANGE
assets, but also to attacks on their suppliers , customers , transportation
providers, communication lines , & other elements . Terrorism produces Notes
fear & anxiety that saps the employee productivity
PowerPoint Presentation:
Security management Security management is a broad field of
management related to: * Assets management, *Human resource safety
function. *It is the set of functions that protects telecommunications
networks and systems from unauthorized access by persons
UNCERTAINTY OVER FUTURE ENERGY
RESOURCES/PRICES:
UNCERTAINTY OVER FUTURE ENERGY RESOURCES/PRICES In
terms of energy sources fossil fuels consist of 93%, water for 1% and
labor for 6%. It is the need of the hour to have energy security . The term
is used in regard with pilling the crude oil, finding alternative to the
fossil fuels. With the growth of business the management has to find
newer means to satisfy it’s need of energy. Conventional and non-
conventional resources both should be used for generating energy.
DISCRIMINATION CONCERN:
DISCRIMINATION CONCERN It is the discrimination done on the
basis of caste, marital status, gender, pregnancy, gender change, sexual
preference, pregnancy, race, color, nationality, belief and age. The Noble
prize-winning economist Gary Becker showed in his book The
economics of discrimination how the market automatically punishes the
companies that discriminate. Effects- Unemployment rate Violence
Productivity
EMPLOYEE ASSISTANT PROGRAM:
EMPLOYEE ASSISTANT PROGRAM It is an arrangement between
the employees and the institution to provide a variety of support
programs for its employees regarding work, marital problems,
depression, anger management, anxiety and physical illness.
FEATURES -: Direct access Quick response Confidentiality Off-site
Direct treatment appropriate coverage
FUTUROLOGY:
FUTUROLOGY Science which uses mathematical & statistical
techniques with the help of computers to present alternative scenarios
regarding the future.
PowerPoint Presentation:
Qualities of the future managers He, besides being a specialist in his area
of specialization, must also posses requisite knowledge about other areas
of management. Various managerial skills should be possessed by
managers at all levels. Manager’s vision should be clear, he must be able
to absorb future information, distribute it throughout the organization ,
make and implement the decisions based on this information.

REVIEW QUESTIONS
1. What is the Nature and process of planned change?

125
Principles of
2. What is the Meaning of change and its causes?
management 3. What is the Resistance to change? What are Causes and steps to
overcome them?
Notes 4. Describe Change process. What are the Emerging horizons of
management in changing environment?
5. What are the Challenges to the management?
FURTHER READINGS
1. Principles Of Management - Mason Andrew Carpenter,
Talya Bauer
2. Principles Of Management -Tony Morden
3. Principles Of Management -D. Chandra Bose
4. Principles Of Management -[Link]
5. Principles Of Management -K. Anbuvelan
BIBLIOGRAPHY
1. Principles Of Management - Mason Andrew Carpenter,
Talya Bauer
2. Principles Of Management -Tony Morden
3. Principles Of Management -D. Chandra Bose
4. Principles Of Management -[Link]
5. Principles Of Management -K. Anbuvelan
6. Principles Of Management -P. K. Saxena
7. Principles Of Management -Robert Kreitner

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