Principles of Management

Unit I

Evolution of Management Science

The concept of management has acquired special significance in the present competitive and complex
business world. Efficient and purposeful management is absolutely essential for the survival of a
business unit. Management concept is comprehensive and covers all aspects of business. In simple
words, management means utilising available resources in the best possible manner and also for
achieving well defined objectives. It is a distinct and dynamic process involving use of different resources
for achieving well defined objectives. The resources are: men, money, materials, machines, methods
and markets. These are the six basic inputs in management process (six M's of management) and the
output is in the form of achievement of objectives. It is the end result of inputs and is available through
efficient management process.

Management is the act of getting people together to accomplish desired goals and objectives using
available resources efficiently and effectively. Management comprises planning, organizing, staffing,
leading, coordinating and controlling an organization (a group of one or more people or entities) or
effort for the purpose of accomplishing a goal. Resourcing encompasses the development and
manipulation of human resources, financial resources, technological resources and natural resources.
Management is essential for the conduct of business activity in an orderly manner. It is a vital function
concerned with all aspects of working of an enterprise.

Definition

According to Harold Koontz, "Management is the art of getting things done through and with people in
formally organized groups".

According to Henry Fayol, "To manage is to forecast and to plan, to organise, to command, to coordinate
and to control".

According to Peter Drucker, "Management is a multi-purpose organ that manages business and
manages managers and manages workers and work".

Management is needed for planning business activities, for guiding employees in the right direction and
finally for coordinating their efforts for achieving best/most favorable results. Efficient management is
needed in order to achieve the objectives of business activity in an orderly and quick manner. Planning,
Organising, Coordinating and Controlling are the basic functions of management. Management is
needed as these functions are performed through the management process. Management is needed
for effective communication within and outside the Organisation. Management is needed for
motivating employees and also for coordinating their efforts so as to achieve business objectives quickly.

Efficient management is needed for success, stability and prosperity of a business enterprise. Modem
business is highly competitive and needs efficient and capable management for survival and growth.
Management is needed as it occupies a unique position in the smooth functioning of a business unit.
This suggests the need of efficient management of business enterprises. Profitable/successful business
may not be possible without efficient management. Survival of a business unit in the present
competitive world is possible only through efficient and competent management.

Management as both Science and Art

Management is both an art and a science. The above mentioned points clearly reveals that management
combines features of both science as well as art. It is considered as a science because it has an organized
body of knowledge which contains certain universal truth. It is called an art because managing requires
certain skills which are personal possessions of managers. Science provides the knowledge & art deals
with the application of knowledge and skills.

Features of Management
Management is Goal-Oriented
Management integrates Human, Physical and Financial Resources
Management is Continuous
Management is all Pervasive
Management is a Group Activity

Management Functions

Whereas Luther Gullick has given a keyword POSDCORB

S for Staffing, D for Directing, Co for Co-ordination, R for reporting & B for Budgeting. But the most

i.e. Planning, Organizing, Staffing, Directing and Controlling.

Planning
It is the basic function of management. 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.

Organising
It is the process of bringing together physical, financial and human resources and developing productive

organize a business is to provide it with everything useful or its functioning i.e. raw material, tools,
-
human resources to the organizational structure. Organizing as a process involves:

Identification of activities.
Classification of grouping of activities.
Assignment of duties.
Delegation of authority and creation of responsibility.
Coordinating authority and responsibility relationships.

Staffing

The main purpose of staffing is to put right man on right job. According to Kootz &

effective selection, appraisal & development of personnel to fill the roles designed un the
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.

Directing

It is that part of managerial function which actuates the organizational methods to work efficiently for
achievement of organizational purposes. 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

Controlling
It implies measurement of accomplishment against the standards and correction of deviation if any to
ensure achievement of organizational 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 Ko
correction of performance activities of subordinates in order to make sure that the enterprise objectives

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.

Levels of Management
The term Levels of Management refers to a line of demarcation 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

1. 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 -
a. Top management lays down the objectives and broad policies of the enterprise.
b. It issues necessary instructions for preparation of department budgets, procedures, schedules etc.
c. It prepares strategic plans & policies for the enterprise.
d. It appoints the executive for middle level i.e. departmental managers.
e. It controls & coordinates the activities of all the departments.
f. It is also responsible for maintaining a contact with the outside world.
g. It provides guidance and direction.
h. The top management is also responsible towards the shareholders for the performance of the
enterprise.

2. 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 -
a. They execute the plans of the organization in accordance with the policies and directives of the top
management.
b. They make plans for the sub-units of the organization.
c. They participate in employment & training of lower level management.
d. They interpret and explain policies from top level management to lower level.
e. They are responsible for coordinating the activities within the division or department.
f. It also sends important reports and other important data to top level management.
g. They evaluate performance of junior managers.
h. They are also responsible for inspiring lower level managers towards better performance.

3. 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
to those executives whose work has to be largely with personal oversight and direction of operative
r words, they are concerned with direction and controlling function of management.
Their activities include -
a. Assigning of jobs and tasks to various workers.
b. They guide and instruct workers for day to day activities.
c. They are responsible for the quality as well as quantity of production.
d. They are also entrusted with the responsibility of maintaining good relation in the organization.
e. They communicate workers problems, suggestions, and recommendatory appeals etc to the higher
level and higher level goals and objectives to the workers.
f. They help to solve the grievances of the workers.
g. They supervise & guide the sub-ordinates.
h. They are responsible for providing training to the workers.
i. They arrange necessary materials, machines, tools etc for getting the things done.
j. They prepare periodical reports about the performance of the workers.
k. They ensure discipline in the enterprise.
l. They motivate workers.
m. They are the image builders of the enterprise because they are in direct contact with the workers.

ROLES OF MANAGER
Henry Mintzberg identified ten different roles, separated into three categories. The categories he
defined are as follows
a) Interpersonal Roles
The ones that, like the name suggests, involve people and other ceremonial duties. It can be further
classified as follows
Leader Responsible for staffing, training, and associated duties.
Figurehead The symbolic head of the organization.
Liaison Maintains the communication between all contacts and informers that compose the
organizational network.
b) Informational Roles
Related to collecting, receiving, and disseminating information.
 Monitor Personally seek and receive information, to be able to understand the organization.
Disseminator Transmits all import information received from outsiders to the members of the
organization.
Spokesperson
plans, policies and actions to outsiders.
c) Decisional Roles
Roles that revolve around making choices.
Entrepreneur Seeks opportunities. Basically they search for change, respond to it, and exploit it.
Negotiator Represents the organization at major negotiations.
Resource Allocator Makes or approves all significant decisions related to the allocation of
resources.
Disturbance Handler Responsible for corrective action when the organization faces disturbances.

Managerial Skills:
There are four skills of managers are expected to have ability of:
Technical skills:
Technical skills that reflect both an understanding of and a proficiency in a specialized field. For
example, a manager may have technical skills in accounting, finance, engineering, manufacturing, or
computer science.
Human Skills:
r of a
group and as a leader who gets things done through other.
Concept Skills:
Conceptual skills related to the ability to visualize the organization as a whole, discern interrelationships
among organizational parts, and understand how the organization fits into the wider context of the
industry, community, and world. Conceptual skills, coupled with technical skills, human skills and
knowledge base, are important ingredients in organizational performance.
Design Skills:
It is the ability to solve the problems in ways that will benefit the enterprise. Managers must be able to
solve the problems.

The Skills vary at different levels:

Top management Concept and design Skills.
Middle Human Skills.
Technical skills.
Skills of management at different levels.

Management and Administration

The difference between Management and Administration can be summarized under 2 categories: -
1. Functions
2. Usage / Applicability
On the Basis of Functions: -

Basis Management Administration

Meaning Management is an art of getting things done It is concerned with formulation of

through others by directing their efforts towards broad 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 it & how should Administration decides what is to be
he do it. done & when it is to be done.

Function Management is a doing function because Administration is a thinking function

managers get work done under their supervision. because plans & 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 concerns i.e. It is applicable to non-business concerns i.e.

profit-making organization. clubs, schools, hospitals etc.

Influence The management decisions are The administration is influenced by public

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

Status Management constitutes the employees Administration represents owners of the

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

Management theories
Management theories are the set of general rules that guide the managers to manage an organization.
Management theories (also known as "Transactional theories") focus on the role of supervision,
organization, and group performance. Theories are an explanation to assist employees to effectively
relate to the business goals and implement effective means to achieve the same. Early management
theories base leadership on a system of reward and punishment. Managerial theories are often used in
business; when employees are successful, they are rewarded; when they fail, they are reprimanded or
punished.
[Link] Classical theory of management
a) Scientific Management
b) Bureaucratic Management
c) Administrative Management
[Link]-Classical Theory
a) Behavioral Science Approach
[Link] Modern Management Theories
a) Quantitative Approach
b) System Approach
c) Contingency Approach
Difference between Classical and Neoclassical Theory

The Classical theory of management

Contribution of [Link] to Management thought

 Raised from labourer to chief engineer within 6 years.
Faced soldiering problem practice of employees deliberately working at pace slower than their
capabilities.
Scientific management propounded by Taylor emphasizes:
Need for developing a scientific way of performing each job.
Training & preparing workers to perform that particular job.
Establishing harmonious relations between management & workers so that the job is performed in
the desired way.
Two managerial practices fr
Piece-Rate Incentive System maximum pieces produced incentives received accordingly.
Time-and-Motion study jobs are broken down into various small tasks or motions & unnecessary
motions are removed to find out the best way of doing a job.

Contributions of Frank & Lillian Gilbreth

Frank Gilbreth (1868-
Motion study involves finding out the best sequence & minimum number of motions needed to
complete a task.
Both were mainly involved in exploring new ways for eliminating unnecessary motions & reducing
work fatigue.

Frank Gilbreth is best known for his experiment in reducing the number of motions in bricklaying.
By analyzing brick layers job, he reduced the number of motions in bricklaying from 18.5 to 4.
Workers increased the number of bricks laid per day from 1000 to 2700 (per hr from 120 to 350
bricks).

Contributions of Henry Laurence Gantt

He was a close associate of Taylor.
Remembered for his work on the task-and-bonus system & the Gantt Chart.
Under this, if worker completed the work fast in less than standard time, he received bonus.
Introduced incentive plan for foremen, who would be paid bonus for every worker who reached daily
standard & would receive extra bonus if all workers reached daily standard.
Chart compares actual & planned performance.
Indicates the production in terms of time rather than quantity.
Horizontal axis time, work scheduled & work completed.
Vertical axis individuals & machines assigned.

Limitations of Scientific Management

Focuses problems at the operational level but not on the management of the organization from
 Taylor & his followers overlooked the social needs of workers & overemphasized their economic &
physical needs.
It ignored the human desire for job satisfaction.

Bureaucratic Management
Weber believed that bureaucracy was the most efficient way to set up and manage an organization, and
absolutely necessary for larger companies to achieve maximum productivity with many employees and
tasks. Overall, Weber's ideal bureaucracy favors efficiency, uniformity and a clear distribution of power.
He argued that bureaucracy constitutes the most efficient and rational way in which human
activity can be organized and that systematic processes and organized hierarchies are necessary to
maintain order, to maximize efficiency, and to eliminate favoritism.
Ideal Bureaucracy
Work specialization & division of labour
Abstract rules & regulations
Impersonality of managers
Hierarchy of organization structure

Administrative Management
This theory focuses on principles that could be used by managers to coordinate the internal activities of
organizations.
perception of the concept of management. He introduced a general theory that can be applied to all
levels of management and every department. The Fayol theory is practised by the managers to organize
and regulate the internal activities of an organization. He concentrated on accomplishing managerial
efficiency.
Henri Fayol developed theory of management. According to him, the business operations of an
organization could be divided into 6 activities.
Technical producing & manufacturing products.
Commercial buying, selling & exchange.
Financial search for & optimal use of capital.
Security protecting employees & property.
Accounting recording & taking stack of costs, profits & liabilities, maintaining balance sheets &
compiling statistics.
Managerial planning, organizing, commanding, coordinating & controlling.

Fourteen Principles of Management By Henri Fayol

1. Division of Work-
Henri believed that segregating work in the workforce amongst the worker will enhance the quality of
the product. Similarly, he also concluded that the division of work improves the productivity, efficiency,
accuracy and speed of the workers. This principle is appropriate for both the managerial as well as a
technical work level.
2. Authority and Responsibility-
These are the two key aspects of management. Authority facilitates the management to work efficiently,
and responsibility makes them responsible for the work done under their guidance or leadership.
3. Discipline-
Without discipline, nothing can be accomplished. It is the core value for any project or any management.
Good performance and sensible interrelation make the management job easy and comprehensive.
Employees good behaviour also helps them smoothly build and progress in their professional careers.
4. Unity of Command-
This means an employee should have only one boss and follow his command. If an employee has to
follow more than one boss, there begins a conflict of interest and can create confusion.
5. Unity of Direction-
Whoever is engaged in the same activity should have a unified goal. This means all the person working in
a company should have one goal and motive which will make the work easier and achieve the set goal
easily.
6. Subordination of Individual Interest-
This indicates a company should work unitedly towards the interest of a company rather than personal
interest. Be subordinate to the purposes of an organization. This refers to the whole chain of command
in a company.
7. Remuneration-
This plays an important role in motivating the workers of a company. Remuneration can be monetary or
non-monetary. However, it should
8. Centralization-
In any company, the management or any authority responsible for the decision-making process should
be neutral. However, this depends on the size of an organization. Henri Fayol stressed on the point that
there should be a balance between the hierarchy and division of power.
9. Scalar Chain-
Fayol on this principle highlights that the hierarchy steps should be from the top to the lowest. This is
necessary so that every employee knows their immediate senior also they should be able to contact any,
if needed.
10. Order-
A company should maintain a well-defined work order to have a favourable work culture. The positive
atmosphere in the workplace will boost more positive productivity.
11. Equity-

employees face discrimination.

12. Stability-
An employee delivers the best if they feel secure in their job. It is the duty of the management to offer
job security to their employees.
13. Initiative-
The management should support and encourage the employees to take initiatives in an organization. It
will help them to increase their interest and make then worth.
14. Esprit de Corps-
It is the responsibility of the management to motivate their employees and be supportive of each other
regularly. Developing trust and mutual understanding will lead to a positive outcome and work
environment.

Limitations of Bureaucratic & Administrative Management

Web
global environment.
Classical theory ignored important aspects of organizational behaviour.
Does not deal with problems of leadership, motivation, power or informal relations.
Failed to consider impact of external & internal environment upon employee behaviour in
organizations.

Contribution of Neo-Classical Theory

Neoclassical theory has made significant contribution to an understanding of human behavior at work
and in organization. It has generated awareness of the overwhelming role of human factor in industry.
This approach has given new ideas and techniques for better understanding of human behavior.
The basic features of neoclassical approach are:
(i) The business organisation is a social system.
(ii) Human factor is the most important element in the social system.
(iii) It revealed the importance of social and psychological factors in determining worker productivity
and satisfaction.

Contribution of Elton Mayo to the Development of Management Thought

Elton Mayo (1880-1949) is recommended as the Father of Human Relations School. He introduced
human relations approach to management thought. His contribution to the development of
management thought is unique and is also treated as human relations approach to management. It was
Mayo who led the team for conducting the study at Western Electric's Hawthorne Plant (1927-1932) to
evaluate the attributes and psychological reactions of workers in on-the-job situations. His associates
included John Dewery, Kurt Lewin and others.
Mayo and his associates came to the following conclusions from their famous Hawthorne experiments:
1. The amount of work to be done by a worker is not determined by his physical capacity but by the
social norms.
2. Non-economic rewards play a significant role in influencing the behavior of the workers.
3. Generally the workers de not reacts as individuals, but as members of group.
4. Informal leaders play an important part in setting and enforcing the group norms

the Western Electricity Company, Chicago is popularly known as Hawthorne Studies. It

was a research programme of National Research Council of the National Academy of Science at the
Hawthorne Plant of Western Electricity Company. In the early 20th century, it was realized that
There was a clear-cut cause and effect relationship between the physical work, environment, the
well-being and productivity of the worker.
Also, there was relationship between production and given condition of ventilation, temperature,
lighting and other physical working conditions and wage incentives.
 It had been believed that improper job design, fatigue and other conditions of work mainly block
efficiency.
So to establish the relationship between man and the structure of formal organization, Hawthorne
Studies conducted. The studies were conducted in the following four phases.
1. Illumination Experiment (1924-27)
2. Relay Assembly Test Room Experiment (1927)
3. Mass Interviewing Programme (1928-31)
4. Bank Wiring Experiment (1931-32)

ILLUMINATION EXPERIMENT (1924-27)

In this experiment, two group of female workers were located in separate rooms, each group
performing the same task. The rooms were equally illuminated with stabilized room temperature,
humidity, etc. Slowly the conditions of work were changed to mark change in production. After a period
of one-and-a half year, it was concluded that illu

RELAY ASSEMBLY TEST ROOM EXPERIMENT (1927)

This experiment was conducted to observe the effects of various changes in working conditions on the

MASS INTERVIEWING PROGRAMME (1928-31)

. The workers were asked to express freely and frankly

their likes and dislike on the programmes and policies of the management, working conditions, and
behaviour of their boss with workers, etc. After a few days there was a change in the attitude of the
workers, however no reforms were introduced. That change was seen because of the following
reasons:-
The workers thought that the working conditions were changed because of their complaints.
They also felt that the wages were better although the wage scale remained at the same level.
After interviewing 21, 126 workers, and analysing their complaints, it was found that there was no
correlation between the nature of complaints and the facts.
It was concluded that the experiment succeeded in identifying the following three aspects:-
1. Workers feel elated if they were allowed to express freely. They develop a feeling that the conditions
in the environment were changed to the better although no such change took place.
2. Subordinates should be allowed to comment freely about their supervisor.
3. It is difficult to understand the real problems, personal feelings and sentiments of the workers

their feelings and sentiments.

BANK WIRING EXPERIMENT (1931-32)

This experiment was done to observe and analyse the group behaviour, workers performing a task in a
natural setting. For the experiment, a number of employees consisting of three groups of workmen
whose work was inter-related were chosen. Their job was to solder, fix the terminals and finish the
Th .
Wages were paid on the basis of a group incentive plan and each member got his share on the basis of
the total output of the group. It was found that workers had a fixed clear-cut standard of output, which
was lower than management target, however they were capable of increasing their output.
It was also found that the group did not allow its members to increase or decrease the output. They
were highly integrated with their social structure, and informal pressure was used to set right the erring
members. The following code of conduct was maintained for group solidarity:
One should not turn out too much work. If one does, he is a
One should not turn out too little work. If one does, he is a
One should not tell a supervisor anything detrimental to an associate. If one does, he is a
One should not attempt to maintain social distance or act officious. If one is an inspector, for
example, he should not act like one.

Conclusions:-
Mayo and the researchers concluded that:-
1. The behaviour of the team had nothing to do with management of general economic conditions of
the plant.
2. The workers viewed interference of extra department personnel as disturbance.

The workers considered supervisors as representative authority to discipline the workers.

1. The logic of efficiency did not go well with the logic of sentiments.
2. One should not miss the human aspects of organization while emphasising technical and economic
aspects.
3. In addition to the technical skills, the management should handle human situations, motivate, lead
and communicate with the workers.

The concept of authority should be based on social skills in securing cooperation rather than
expertise.

CONCLUSIONS FROM HAWTHORNE STUDIES BRIEFLY

1. The social and psychological factors at the workplace, not the physical conditions of the workplace

2. The organization is a social system.

3. Non- tput.
4. Workers are not inert or isolated, unrelated individual; they are social animals.
5. Division of labour strictly on specialization is not necessarily the most efficient approach.
6. The workers have a tendency to form small groups (informal organizations). The production norms
and behavioural patterns are set by such groups.
Maslow's hierarchy of needs
Maslow's hierarchy of needs is a motivational theory in psychology comprising a five-tier model of
human needs, often depicted as hierarchical levels within a pyramid. From the bottom of the hierarchy
upwards, the needs are: physiological, safety, love, esteem, and self-actualization.
The original hierarchy of needs five-stage model includes:
Maslow (1943, 1954) stated that people are motivated to achieve certain needs and that some needs
take precedence over others.
Our most basic need is for physical survival, and this will be the first thing that motivates our behavior.
Once that level is fulfilled the next level up is what motivates us, and so on.

1. Physiological needs - these are biological requirements for human survival, e.g. air, food, drink,
shelter, clothing, warmth, sex, sleep.
If these needs are not satisfied the human body cannot function optimally. Maslow considered
physiological needs the most important as all the other needs become secondary until these needs are
met.

2. Safety needs -
become salient. People want to experience order, predictability and control in their lives. These needs
can be fulfilled by the family and society (e.g. police, schools, business and medical care).
For example, emotional security, financial security (e.g. employment, social welfare), law and order,
freedom from fear, social stability, property, health and wellbeing (e.g. safety against accidents and
injury).
3. Love and belongingness needs - after physiological and safety needs have been fulfilled, the third
level of human needs is social and involves feelings of belongingness. The need for interpersonal
relationships motivates behavior
Examples include friendship, intimacy, trust, and acceptance, receiving and giving affection and love.
Affiliating, being part of a group (family, friends, work).
4. Esteem needs hierarchy - which Maslow classified into two
categories: (i) esteem for oneself (dignity, achievement, mastery, independence) and (ii) the desire for
reputation or respect from others (e.g., status, prestige).
Maslow indicated that the need for respect or reputation is most important for children and adolescents
and precedes real self-esteem or dignity.
5. Self-actualization needs are the highest level in Maslow's hierarchy, and refer to the realization of a
person's potential, self-fulfillment, seeking personal growth and peak experiences. Maslow (1943)
describes this level as the desire to accomplish everything that one can, to become the most that one
can be.

McGregor Theory X and Theory Y

McGregor believed that managers' basic beliefs have a dominant influence on the way that
organisations are run. Managers' assumptions about the behaviour of people are central to this.
McGregor argued that these assumptions fall into two broad categories - Theory X and Theory Y. These
findings were detailed in The Human Side of Enterprise, first published in 1960. Theory X and Theory Y
describe two views of people at work and may be used to describe two opposing management styles.
Theory X: the traditional view of direction and control Theory X is based on the assumptions that:
1. The average human being has an inherent dislike of work and will avoid it if possible.
2. Because of this human dislike of work, most people must be coerced, controlled, directed, and
threatened with punishment to get them to put forth adequate effort toward the achievement of
organisational objectives.
3. The average human being prefers to be directed, wishes to avoid responsibility, has relatively little
ambition, and wants security above all.
A Theory X management style therefore requires close, firm supervision with clearly specified tasks and
the threat of punishment or the promise of greater pay as motivating factors. A manager working under
these assumptions will employ autocratic controls which can lead to mistrust and resentment from
those they manage. McGregor acknowledges that the `carrot and stick' approach can have a place, but
will not work when the needs of people are predominantly social and egoistic. Ultimately, the
his publication may be reproduced in a
retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying,
recording or otherwise, without the prior permission of the publisher. objective is to persuade people to
be docile, to do what they are told in exchange for reward or escape from punishment, is presented as
flawed and in need of re-evaluation.
Theory Y: the integration of individual and organisational goals Theory Y is based on the assumptions
that:
1. The expenditure of physical and mental effort in work is as natural as play or rest. The average human
being does not inherently dislike work. Depending upon controllable conditions, work may be a source
of satisfaction, or a source of punishment.
2. External control and the threat of punishment are not the only means for bringing about effort
toward organisational objectives. People will exercise self-direction and self-control in the service of
objectives to which they are committed.
3. Commitment to objectives is a function of the rewards associated with their achievement. The most
significant of such rewards, e.g. the satisfaction of ego and self-actualisation needs, can be direct
products of effort directed towards organisational objectives.
4. The average human being learns, under proper conditions, not only to accept but to seek
responsibility. Avoidance of responsibility, lack of ambition, and emphasis on security are generally
consequences of experience, not inherent human characteristics.
5. The capacity to exercise a relatively high degree of imagination, ingenuity, and creativity in the
solution of organisational problems is widely, not narrowly, distributed in the population.
6. Under the conditions of modern industrial life, the intellectual potentialities of the average human
being are only partially utilised. Theory Y assumptions can lead to more cooperative relationships
between managers and workers. A Theory Y management style seeks to establish a working
environment in which the personal needs and objectives of individuals can relate to, and harmonise
with, the objectives of the organisation.
In The Human Side of Enterprise McGregor recognised that Theory Y was not a panacea for all ills. By
highlighting Theory Y, he hoped instead to persuade managers to abandon the limiting assumptions of
Theory X and consider using the techniques suggested by Theory Y.

Modern Management Theory: Quantitative, System and Contingency Approaches to Management

The Modern Period (1960 to present). After, 1960 management thought has been turning somewhat
away from the extreme human relations ideas particularly regarding the direct relation between morale
and productivity. Present management thinking wishes equal emphasis on man and machine.
The modern business ideologists have recognized the social responsibilities of business activities and
thinking on similar lines. During the period, the principles of management reached a stage of refinement
and perfection. The formation of big companies resulted in the separation of ownership and
management.

methods of management. But at the same time the professional management has become socially
responsible to various sections of society such as customers, shareholders, suppliers, employees, trade
unions and other Government agencies.
Under modern management thought three streams of thinking have beers noticed since 1960:
(i) Quantitative or Mathematical Approach
(ii) Systems Approach.
(iii) Contingency Approach.
(I) Quantitative or Mathematical Approach or Management Science Approach:
Mathematics has made inroads into all disciplines. It has been universally recognised as an important
tool of analysis and a language for precise expression of concept and relationship.
Evolving from the Decision Theory School, the Mathematical School gives a quantitative basis for
decision-making and considers management as a system of mathematical models and processes. This

feature of this school is the use of mixed teams of scientists from several disciplines. It uses scientific
techniques for providing quantitative base for managerial decisions. The exponents of this school view
management as a system of logical process.
It can be expressed in terms of mathematical symbols and relationships or models. Different
mathematical and quantitative techniques or tools, such as linear programming, simulation and
queuing, are being increasingly used in almost all the areas of management for studying a wide range of
problems.
The exponents of this school believe that all the phases of management can be expressed in quantitative
terms for analysis. However, it is to be noted that mathematical models do help in the systematic
analysis of problems, but models are no substitute for sound judgement.
Moreover, mathematics quantitative techniques provide tools for analysis but they cannot be treated an
independent system of management thought. A lot of mathematics is used in the field of physical
sciences and engineering but mathematics has never been considered as separate school even in these
fields.
The contributions of mathematicians in the field of management are significant. This has contributed
impressively in developing orderly thinking amongst managers. It has given exactness to the
management discipline. Its contributions and usefulness could hardly be over-emphasized. However, it
can only be treated as a tool in managerial practice.
Limitations:
There is no doubt that this approach helps in defining and solving complex problems resulting in orderly
thinking. But the critics of this approach regard it as too narrow since it is concerned merely with the
development of mathematical models and solutions for certain managerial problems.
This approach suffers from the following drawbacks:
(i) This approach does not give any weight age to human element which plays a dominant role in all
organisations.
(ii) In actual life executives have to take decisions quickly without waiting for full information to develop
models.
(iii) The various mathematical tools help in decision making. But decision making is one part of
managerial activities. Management has many other functions than decision-making.
(iv) This approach supposes that all variables to decision-making are measurable and inter-dependent.
This assumption is not realistic.
(v) Sometimes, the information available in the business for developing mathematical models are not
upto date and may lead to wrong decision-making.

management th
(ii) Systems Approach:
In the 1960, an approach to management appeared which tried to unify the prior schools of thought.
de Ludwing Von
Bertalanffy, Lawrence J. Henderson, W.G. Scott, Deniel Katz, Robert L. Kahn, W. Buckley and J.D.
Thompson.
They viewed organization as an organic and open system, which is composed of interacting and
interdependent parts, called subsystems. The system approach is to look upon management as a system
systems integrated into a unity or orderly totality.
System approach is based on the generalization that everything is inter-related and inter-dependent. A
system is composed of related and dependent element which, when in interaction, forms a unitary
whole. A system is simply an assemblage or combination of things or parts forming a complex whole.
One of its most important characteristic is that it is composed of hierarchy of sub-systems. That is the
parts forming the major systems 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 such as production,
marketing, finance, accounting and so on.
The basic features of systems approach are as under:
(i) A system consists of interacting elements. It is set of inter related and interdependent 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 vaccum. It receives information, material and energy from other
systems as inputs. These inputs undergo a transformation process within the 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 organizational level. In applying system concepts, organizations are
taken into account and not only the objectives and performances of different departments (sub-
systems).
The systems approach is considered both general and specialized systems. The general systems
approach to management is mainly concerned with formal organizations 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 dis
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 process approach has failed to lead management out of

Systems theory is useful to management because it aims at achieving the objectives and it views
organization as an open system. Chester Barnard was the first person to utilise the systems approach in
the field of management.
He feels 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
organization 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 utilised 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.
(iii) Contingency or Situational Approach:
The contingency approach is the latest approach to the existing management approaches. During the

approaches presupposing one best way to manage. Management problems are different under different
situations and require to be tackled as per the demand of the situation.
One best way of doing may be useful for repetitive things but not for managerial problems. The
contingency theory aims at integrating theory with practice in systems framework. The behaviour of an

approach, where behaviour of one sub-unit is dependent on its environment and relationship to other
units or sub-units that have some control over the sequences desired by that sub-
Thus behaviour within an organisation is contingent on environment, and if a manager wants to change
the behaviour of any part of the organization, he must try to change the situation influencing it. Tosi and
Hammer tell that organization system is not a matter of managerial choice, but contingent upon its
external environment.
Contingency approach is an improvement over the systems approach. The interactions between the
sub-systems of an organisation have long been recognised by the systems approach. Contingency
approach also recognises that organisational system is the product of the interaction of the sub systems
and the environment. Besides, it seeks to identify exact nature of inter-actions and inter-relationships.
This approach calls for an identification of the internal and external variables that critically influence
managerial revolution and organisational performance. According to this, internal and external
environment of the organisation is made up of the organisational sub-systems. Thus, the contingency
approach provides a pragmatic method of analysing organisational sub-systems and tries to integrate
these with the environment.
Contingency views are ultimately directed towards suggesting organisational designs situations.
Therefore, this approach is also called situational approach. This approach helps us to evolve practical
answers to the problems remanding solutions.
Kast and Rosenzweig give
seeks to understand the inter-relationships within and among sub-systems as well as between the
organization and its environment and to define patterns of relationships or configurations of variables
contingency views are ultimately directed toward suggesting organization designs and managerial
actions most appropriate for specific situations.

Features of Contingency Approach:

Firstly, the contingency approach does not accept the universality of management theory. It stresses
that there is no one best way of doing things. Management is situation, and managers should explain
objectives, design organisations and prepare strategies, policies and plans according to prevailing
circumstances. Secondly, managerial policies and practices to be effective, must adjust to changes in
environment.
Thirdly, it should improve diagnostic skills so as to anticipate and ready for environmental changes.
Fourthly, managers should have sufficient human relations skill to accommodate and stabilise change.
Finally, it should apply the contingency model in designing the organization, developing its information
and communication system, following proper leadership styles and preparing suitable objectives,
policies, strategies, programmes and practices. Thus, contingency approach looks to hold a great deal of
promise for the future development of management theory and practice.
Evaluation:
This approach takes a realistic view in management and organisation. It discards the universal validity of
principles. Executives are advised to be situation oriented and not stereo-typed. So executives become
innovative and creative.
On the other hands, this approach does not have theoretical base. An executive is expected to know all
the alternative courses of action before taking action in a situation which is not always feasible.
Organization Culture

Organization culture refers to the shared values, beliefs, norms, and practices that shape
the behavior and thinking of members within an organization.

Components:

o Values: Core principles or standards considered important (e.g., integrity,

innovation).
o Norms: Accepted behavior patterns and expectations.
o Artifacts: Tangible or visible elements of culture (e.g., dress code, office layout).
o Symbols: Logos, slogans, or icons representing the organization.
o Rituals and Ceremonies: Regularly occurring events that reinforce the culture
(e.g., award ceremonies).
o Language and Communication Styles: Jargon, acronyms, and ways of
communicating.

Functions of Organizational Culture:

 Provides a sense of identity for members.

 Establishes social system stability.
 Encourages employees to commit to something larger than themselves.
 Guides and shapes the attitudes and behaviors of members.
 Training and orientation programs that introduce new employees to the culture.
 Clear and consistent communication about values and norms.
 Systems that reinforce desired cultural attributes.
 Understanding the current culture through surveys, interviews, and observations.
 Defining the desired culture.
 Creating a plan to move from the current to the desired culture.
 Engaging leadership and employees in change initiatives.
 Continuously assessing progress and making adjustments.

Organizational Environment

The organizational environment consists of all external and internal factors that influence
the organization’s operations.

Types of Organizational Environment

Internal Environment:

 Employees: Their skills, attitudes, and behavior.

 Management: Leadership styles and practices.
 Corporate Culture: Shared values and norms within the organization.
 Resources: Physical, human, financial, and informational resources.
  Processes: Internal policies and workflows.

External Environment:

o Micro Environment (Task Environment):

 Customers: Needs and feedback.
 Suppliers: Relationships and reliability.
 Competitors: Strategies and market position.
 Distributors: Channels of distribution.
 Regulators: Compliance and legal issues.
o Macro Environment:
 Economic: Market conditions, economic cycles.
 Technological: Innovations and technological advancements.
 Political and Legal: Government policies, regulations, and legal issues.
 Socio-cultural: Social trends, demographics, and cultural aspects.
 Global: International influences, global market trends.

Impact of Organizational Environment:

o Influences strategic planning and decision-making.

o Affects overall organizational performance and productivity.
o Necessitates continuous adaptation to external changes.
o Helps in identifying and managing potential risks.

Current Trends and Issues in Management

1. Technological Advancements:

a. Digital Transformation:

o Integration of digital technology into all areas of business.

o Enhances operational efficiency and customer experiences.
o Includes technologies like cloud computing, artificial intelligence (AI), Internet
of Things (IoT), and blockchain.

b. Remote Work and Virtual Teams:

o Rise in remote work due to advancements in communication technologies.

o Challenges in managing virtual teams, maintaining productivity, and ensuring
employee engagement.

2. Workforce Diversity and Inclusion:

a. Diversity and Inclusion Initiatives:

o Focus on creating diverse and inclusive workplaces.

 o Implementation of policies to promote gender, racial, and cultural diversity.
o Benefits include increased creativity, better problem-solving and improved
employee satisfaction.

b. Generational Differences:

o Managing a multigenerational workforce

o Addressing different work styles, communication preferences, and values.

3. Sustainability and Corporate Social Responsibility (CSR):

a. Environmental Sustainability:

o Emphasis on sustainable business practices to reduce environmental impact.

o Adoption of green technologies and sustainable supply chain practices.

b. Social Responsibility:

o Growing expectation for businesses to contribute to social causes.

o CSR initiatives focusing on community development, education, and
healthcare.

4. Organizational Agility:

a. Agile Management Practices:

o Adoption of agile methodologies for flexibility and rapid response to market

changes.
o Emphasis on iterative processes, cross-functional teams, and customer
feedback.

b. Lean Management:

o Implementation of lean principles to eliminate waste and improve efficiency.

o Focus on continuous improvement and value creation for customers.

5. Employee Well-being and Mental Health:

a. Well-being Programs:

o Increased focus on employee well-being, mental health, and work-life

balance.
o Implementation of wellness programs, mental health support, and flexible
working arrangements.
b. Burnout Prevention:

o Addressing causes of employee burnout, such as excessive workloads and

lack of control.
o Promoting a healthy work environment and providing resources for stress
management.

6. Data-Driven Decision Making:

a. Big Data and Analytics:

o Leveraging big data and advanced analytics for informed decision-making.

o Use of predictive analytics to anticipate trends and optimize operations.

b. Data Security and Privacy:

o Ensuring data security and compliance with privacy regulations (e.g., GDPR,
CCPA).
o Implementing robust cyber security measures to protect sensitive
information.

7. Leadership and Management Styles:

a. Transformational Leadership:

o Leaders who inspire and motivate employees to exceed expectations.

o Focus on vision, innovation, and change management.

b. Servant Leadership:

o Leaders who prioritize the needs of employees and empower them to

perform at their best.
o Emphasis on empathy, listening, and support.

8. Globalization and Cross-Cultural Management:

a. Global Market Expansion:

o Businesses expanding operations globally and managing international teams.

o Navigating different cultural norms, legal environments, and market
dynamics.

b. Cross-Cultural Competence:

o Developing cultural intelligence to manage diverse teams and global

partnerships.
o Training programs to enhance cross-cultural communication and
collaboration.
Unit II
PLANNING
Planning is the fundamental management function, which involves deciding beforehand, what is to be
done, when is it to be done, how it is to be done and who is going to do it. It is an intellectual
process which lays down an objectives and develops various courses of action, by which
the organisation can achieve those objectives. It chalks out exactly, how to attain a specific goal.
Planning is nothing but thinking before the action takes place. It helps us to take a peep into the
future and decide in advance the way to deal with the situations, which we are going to encounter in
future. It involves logical thinking and rational decision making.
to do it, when to

Planning is the continuous managerial process of anticipating and forecasting the future. environment of
the business organization, the formulation of the long term and short term goals. to be achieved and
selecting the strategies for their realization.
Planning is also a management process, concerned with defining goals for a company's future direction
and determining the missions and resources to achieve those targets. To meet objectives, managers
may develop plans, such as a business plan or a marketing plan.
The planning process provides the information top management needs to make effective decisions
about how to allocate the resources in a way that will enable the organization to reach its objectives.
Productivity is maximized and resources are not wasted on projects with little chance of success.
Importance of Planning
It helps managers to improve future performance, by establishing objectives and selecting a course of
action, for the benefit of the organisation.
It minimises risk and uncertainty, by looking ahead into the future.
It facilitates the coordination of activities. Thus, reduces overlapping among activities and eliminates
unproductive work.
It states in advance, what should be done in future, so it provides direction for action.
It uncovers and identifies future opportunities and threats.
It sets out standards for controlling. It compares actual performance with the standard performance
and efforts are made to correct the same.
Planning is present in all types of organisations, households, sectors, economies, etc. We need to plan
because the future is highly uncertain and no one can predict the future with 100% accuracy, as the
conditions can change anytime. Hence, planning is the basic requirement of any organization for the
survival, growth and success.

Characteristics of Planning
1. Managerial function: Planning is a first and foremost managerial function provides the base for other
functions of the management, i.e. organising, staffing, directing and controlling, as they are performed
within the periphery of the plans made.
 1.
2. Goal oriented: It focuses on defining the goals of the organisation, identifying alternative courses of
action and deciding the appropriate action plan, which is to be undertaken for reaching the goals.
3. Pervasive: It is pervasive in the sense that it is present in all the segments and is required at all the
levels of the organisation. Although the scope of planning varies at different levels and departments.
4. Continuous Process: Plans are made for a specific term, say for a month, quarter, year and so on.
Once that
requirements and conditions. Therefore, it is an ongoing process, as the plans are framed, executed and
followed by another plan.
5. Intellectual Process: It is a mental exercise at it involves the application of mind, to think, forecast,
imagine intelligently and innovate etc.
6. Futuristic: In the process of planning we take a sneak peek of the future. It encompasses looking into
the future, to analyse and predict it so that the organisation can face future challenges effectively.
7. Decision making: Decisions are made regarding the choice of alternative courses of action that can
be undertaken to reach the goal. The alternative chosen should be best among all, with the least
number of the negative and highest number of positive outcomes.
Planning is concerned with setting objectives, targets, and formulating plan to accomplish them. The
activity helps managers analyse the present condition to identify the ways of attaining the desired
position in future. It is both, the need of the organisation and the responsibility of managers.

Steps involved in Planning

By planning process, an organisation not only gets the insights of the future, but it also helps the
organisation to shape its future. Effective planning involves simplicity of the plan, i.e. the plan should be
clearly stated and easy to understand because if the plan is too much complicated it will create chaos
among the members of the organisation. Further, the plan should fulfill all the requirements of the
organisation.

Limitations of Planning
(i) Planning leads to rigidity
(ii) Planning may not work in a dynamic environment
(iii) Planning reduces creativity
(iv) Planning involves huge costs
(v) Planning is a time-consuming process
(vi) Planning does not guarantee success

Types of Plans
Single-use and standing plans
An organisation has to prepare a plan before making any decision related to business operation, or
undertaking any project. Plans can be classified into several types depending on the use and the length
of the planning period. Certain plans have a short term horizon and help to achieve operational goals.
These plans can be classified into single-use plans and standing plans.
Single-use Plan:
A single-use plan is developed for a one-time event or project. Such a course of action is not likely to be
repeated in future, i.e., they are for non-recurring situations. The duration of this plan may depend upon
the type of the project. It may span a week or a month. A project may sometimes be of only one day,
such as, organising an event or a seminar or conference. These plans include budgets, programmes and
projects. They consist of details, including the names of employees who are responsible for doing the
work and contributing to the single-use plan. For example, a programme may consist of identifying
steps, procedures required for opening a new department to deal with other minor work. Projects are
similar to programmes but differ in scope and complexity. A budget is a statement of expenses, revenue
and income for a specified period.
Standing Plan:
A standing plan is used for activities that occur regularly over a period of time. It is designed to ensure
that internal operations of an organisation run smoothly. Such a plan greatly enhances efficiency in
routine decision-making. It is usually developed once but is modified from time to time to meet business
needs as required. Standing plans include policies, procedures, methods and rules.
Policies are general forms of standing plans that specifies the organisations response to a certain
situation like the admission policy of an educational institution. Procedures describe steps to be
followed in particular circumstances like the procedure for reporting progress in production. Methods
provide the manner in which a task has to be performed. Rules are very clearly stated as to exactly what
has to be done like reporting for work at a particular time. Single-use and standing plans are part of the
operational planning process.
There are other types of plans which usually are not classified as single use or standing plans. A strategy,
for example, is part of strategic planning or management. It is a general plan prepared by top
management outlining resource allocation, priorities and takes into consideration the business
environment and competition. Objectives are usually set by the top management and serve as a guide
for overall planning. Each unit then formulates their own objectives keeping in view the overall
organisational goals. Based on what the plans seek to achieve, plans can be classified as Objectives,
Strategy, Policy, Procedure, Method, Rule, Programme, Budget.

Objectives
The first step in planning is setting objectives. Objectives, therefore, can be said to be the desired future
position that the management would like to reach. Objectives are very basic to the organisation and
they are defined as ends which the management seeks to achieve by its operations. Therefore, an
objective simply stated is what you would like to achieve, i.e., the end result of activities.
Objectives need to be expressed in specific terms i.e., they should be measurable in quantitative terms,
in the form of a written statement of desired results to be achieved within a given time period.
Strategy

defining the organisations direction and scope in the long run. Thus, we can say a strategy is a
comprehensive plan for accomplishing an organisation objectives. This comprehensive plan will include
three dimensions, (i) determining long term objectives, (ii) adopting a particular course of action, and
(iii) allocating resources necessary to achieve the objective.
Whenever a strategy is formulated, the business environment needs to be taken into consideration. The
changes in the economic, political, social, legal and technological environment will affect an

business environment. Major strategic decisions will include decisions like whether the organisation will
continue to be in the same line of business, or combine new lines of activity with the existing business or
seek to acquire a dominant position in the same market.
Policy
Policies are general statements that guide thinking or channelise energies towards a particular direction.
Policies provide a basis for interpreting strategy which is usually stated in general terms. They are guides
to managerial action and decisions in the implementation of strategy. There are policies for all levels
and departments in the organisation ranging from major company policies to minor policies. Major
company policies are for all to know i.e., customers, clients, competitors etc., whereas minor polices are
applicable to insiders and contain minute details of information vital to the employees of an
organisation.
Procedure
Procedures are routine steps on how to carry out activities. They detail the exact manner in which any
work is to be performed. They are specified in a chronological order. Procedures are specified steps to
be followed in particular circumstances. They are generally meant for insiders to follow. The sequence of
steps or actions to be taken are generally to enforce a policy and to attain pre-determined objectives.
Policies and procedures are interlinked with each other. Procedures are steps to be carried out within a
broad policy framework.
Method
Methods provide the prescribed ways or manner in which a task has to be performed considering the
objective. It deals with a task comprising one step of a procedure and specifies how this step is to be
performed. The method may vary from task to task. Selection of proper method saves time, money and
effort and increases efficiency.
Rule
Rules are specific statements that inform what is to be done. They do not allow for any flexibility or
discretion. It reflects a managerial decision that a certain action must or must not be taken. They are
usually the simplest type of plans because there is no compromise or change unless a policy decision is
taken.
Programme
Programmes are detailed statements about a project which outlines the objectives, policies, procedures,
rules, tasks, human and physical resources required and the budget to implement any course of action.
Programmes will include the entire gamut of activities as well as
contribute to the overall business plan.
Budget
A budget is a statement of expected results expressed in numerical terms. It is a plan which quantifies
future facts and figures. Since budget represents all items in numbers, it becomes easier to compare
actual figures with expected figures and take corrective action subsequently. Thus, a budget is also a
control device from which deviations can be taken care of. But making a budget involves forecasting,
therefore, it clearly comes under planning. It is a fundamental planning instrument in many
organisations.

DECISION MAKING
Decision making is the process of making choices by identifying a decision, gathering information, and
assessing alternative resolutions. Using a step-by-step decision-making process can help you make more
deliberate, thoughtful decisions by organizing relevant information and defining alternatives.
Decision-making is perhaps the most important component of a manager's activities. It plays the
most important role in the planning process. When the managers plan, they decide on many matters as
what goals their organisation will pursue, what resources they will use, and who will perform each
required task.
According to Andrew Smilagyi, making is a process involving information, choice of alternative
actions, implementations, and evaluation that is directed to the achievement of certain stated

Decision making is described as the essence of a manager's job because it is utilized in all four
managerial functions of planning, organizing, leading and controlling. Decisions, both large and small,
are made every day by managers and they have the potential to affect others.

Characteristics of Decision Making

The following are the characteristics of decision making:
Decision making is a selection process.
Decision making is the end process. It is preceded by detailed discussion and selection of alternatives.
Decision making is the application of intellectual abilities to a great extent.
Decision making is a dynamic process.
Decision making is situational.
A decision may be either negative or positive.
Decision making involves the evaluation of available alternatives through critical appraisal methods.
Decision is taken to achieve the objectives of an organisation.

Type of Decisions
Decisions taken by organization may be classified under various categories depending upon the scope,
importance and the impact that they create in the organization. The following are the different types of
decisions:
a. Programmed and Non-programmed Decisions
Programmed decisions are normally repetitive in nature. They are the easiest to make. For example:
making purchase orders, sanctioning of different types of leave, increments in salary, settlement of
normal disputes, etc. Managers in dealing with such issues of routine nature usually follow the
established procedures. On the other hand, nonprogrammed decisions are different in that they are
non-routine in nature. They are related to some exceptional situations for which there are no
established methods of handling such things. For example: Issues related to handling a serious industrial
relations problem, declining market share, increasing competition, problems with the collaborator,
growing public hostility towards the organization fall in this category.
b. Operational and Strategic Decisions
Operational or tactical decisions relate to the present. The primary purpose is to achieve high degree of
g conditions, effective supervision,
prudent use of existing resources, better maintenance of the equipment, etc., fall in this category. One
the other hand, expanding the scale of operations, entering new markets, changing the product mix,
shifting the manufacturing facility from one place to the other, striking alliances with other companies,
etc., are strategic in nature. Such decisions will have far reaching impact on the organization.
c. Organizational and Personal Decisions
Decisions taken by managers in the ordinary course of business in their capacity as managers relating to
the organizational issues are organizational decisions. For example: decisions regarding introducing a
new incentive system, transferring an employee, reallocation or redeployment of employees etc. are
taken by managers to achieve certain objectives. As against such decisions, managers do take some
decisions which are purely personal in nature. However, their impact may not exactly confine to their
selves and they may affect the
organization, though personal in nature, may impact for the organization.
d. Individual and Group Decisions
It is quite common that some decisions are taken by a manager individually while some decisions are
taken collectively by a group of managers. Individual decisions are taken where the problem is of routine
nature, whereas important and strategic decisions which have a bearing on many aspects of the
organization are generally taken by a group. Group decision making is preferred these days because it
contributes for better coordination among the people concerned with the implementation of the
decision

The decision-making process in 7 steps

The decision-making process is spreads out in three stages: identifying phase (opportunities, problem,
and crises are recognized and relevant information is collected and problems are more clearly
identified), development phase (alternative solutions to problems are generated and modified) and
selection phase (alternative solutions to problems are generated and modified) and seven steps. The
seven steps followed by the author (Litherland, N., 2013) are: defining the problem, identifying and
limiting the factors, development of potential solutions, analysis of the alternatives, selecting the best
alternative, implementing the decision and establishing a control and evaluation system.
I. Identify the problem
The first step in the decision-making process is identifying the problem. To make a decision, you must
first identify the problem you need to solve. The manager should consider critical or strategic factors in
defining the problem. These factors are, in fact, obstacles in the way of finding proper solution. These
are also known as limiting factors. This process must, as a minimum, identify root causes, limiting
assumptions, system and organizational boundaries and interfaces. First of all, managers must identify
the problem. The problem has to be found and defined. Symptoms are identified and problems should
be judged, symptoms are not problems. They are warning signs of problems. So, managers should
search for symptoms for identification of problems. The first step needed in taking a decision is to have
detected a difference between the current situation and the desired situation. This discrepancy, or
problem, exerts pressure on the managing director, forcing him/her to take action, whether it is in such
fields as company policy, deadlines, financial recession, or concerning future job evaluations, among
other possibilities.
II. Collect relevant information

defining and analyzing the problem, the next step is to develop alternative solutions. The main aim of
developing alternative solutions is to have the best possible decision out of the available alternative
courses of action. In developing alternative solutions the manager comes across creative or original
solutions to the problems.
III. Identify the alternatives
With relevant information now at your fingertips, identify possible solutions to your problem. There is
usually more than one option to consider when trying meeting a goal for example, if your company is
trying to gain more engagement on social media, your alternatives could include paid social
advertisements, a change in your organic social media strategy, or a combination of the two.
IV. Developing alternative solutions
After defining and analyzing the problem, the next step is to develop alternative solutions. The main aim
of developing alternative solutions is to have the best possible decision out of the available alternative
courses of action. In developing alternative solutions the manager comes across creative or original
solutions to the problems. In modern times, the techniques of operations research and computer
applications are immensely helpful in the development of alternative courses of action. Once you have
identified multiple alternatives, weigh the evidence for or against said alternatives. See what companies

wins and losses. Identify potential pitfalls for each of your alternatives, and weigh those against the
possible rewards.
V. Implementation of the decision
To gathered all relevant information, and developed and considered the potential paths to take. You are

has the strongest chance of achieving your goal. In some instances, you can combine several options,
but in most cases, there will be a clear-cut direction you want to take.
VI. Take action
your decision tangible and
achievable. Use Lucidchart diagrams to plan the projects related to your decision, and then set the team
loose on their tasks once the plan is in place.
VII. Review decision
Last and important step in the decision making process is evaluating your decision for effectiveness.
Follow- up enables to identify the shortcoming or negatives consequences of the decision. It provides
valuable feed- back on which the decision may be reviewed or reconsidered.

Decision Making under various conditions

Generally, the decision maker makes decision under the condition of certainty, risk and uncertainty.
There are three conditions that managers may face as they make decisions. They are (1) Certainty, (2)
Risk, and (3) Uncertainty. These conditions determine the probability of an error in decision making.
 Techniques for Group Decision Making Process

Some of the techniques employed to make the group decision making process more effective
and decision making more efficient in which creativity is encouraged, are as follows:

i. Brainstorming:

This technique involves a group of people, usually between five and ten, sitting around a
table, generating ideas in the form of free association. The primary focus is on generation of
ideas rather them on evaluation of ideas.

If a large number of ideas can be generated, then it is likely that there will be a unique and
creative idea among them. All these ideas are written on the black board with a piece of chalk
so that everybody can see every idea and try to improve upon such ideas.

Brainstorming technique is very effective when the problem is comparatively specific and
can be simply defined. A complex problem can be broken up into parts and each part can be
taken separately at a time.

ii. Nominal Group Technique (NGT):

Nominal group technique is similar to brainstorming except that the approach is more
structured. Members form the group in name only and operate independently, generating
ideas for solving the problem on their own, in silence and in writing. Members do not interact
with each other so that strong personality domination is avoided. It encourages individual
creativity.

The group coordinator either collects these written ideas or writes then on a large black board
for everyone to see or he asks each member to speak out and then he writes it on the black
board as he receives it.

These ideas are then discussed one by one in turn and each participant is encouraged to
comment on these ideas for the purpose of clarification and improvement. After all ideas are
discussed, they are evaluated for their merits and drawbacks and each participating member is
required to vote on each idea and assign it a rank on the basis of priority of each alternative
solution. The idea with the highest aggregate ranking is selected as the final solution to the
problem.

iii. Delphi Technique:

This technique is the modification of the nominal group technique, except that it involves
obtaining the opinions of experts physically separated from each other and unknown to each
other. This insulates group members from the undue influence of others. Generally, the types
of problems handled by this technique are not specific in nature or related to a particular
situation at a given time. For example, the technique could be used to understand the
problems that could be created in the event of a war. The steps in the Delphi technique are:

1. The problem is identified and a sample of experts is selected. These experts are asked to
provide potential solutions through a series of carefully designed questionnaires.

2. Each expert completes and returns the initial questionnaire.

3. The results of the questionnaire are compiled at a central location and the central
coordinator prepares a second questionnaire based on the previous answers.

4. Each member receives a copy of the results along with the second questionnaire.

5. Members are asked to review the results and respond to the second questionnaire. The
results typically trigger new solutions or cause changes in the original position.

6. The process is repeated until a consensus is reached.

The process is very time consuming and is primarily useful in illuminating broad range, long
term complex issues such as future effects of energy shortages that might occur.

iv. Didactic interaction:

This technique is applicable only in certain situations, but is an excellent method when such a
situation exists. The type of problem should be such that it results in a yes-no solution. For
example, the decision may be to buy or not to buy, to merge or not to merge, to expand or not
to expand and so on. Such a decision requires an extensive and exhaustive discussion and
investigation since a wrong decision can have serious consequences.

Since, in such a situation, there must be advantages as well as disadvantages of either of the
two alternatives, the group required to make the decision is split into two sub-groups, one
favouring the “go” decision and the other favouring the “no go” decision.

The first group lists all the “pros” of the problem solution and the second group lists all the
“cons”. These groups meet and discuss their findings and their reasons. After the exhaustive
discussions, the groups switch sides and try to find weaknesses in their own original
viewpoints. This interchange of ideas and understanding of opposing viewpoints results in
mutual acceptance of the facts as they exist so that a solution can be built around these facts
and opinions relating to these facts and thus a final decision is reached.

Techniques of Decision-Making

1. Marginal Analysis:

This technique is used in decision-making to figure out how much extra output will result if
one more variable (e.g. raw material, machine, and worker) is added. In his book,
„Economics‟, Paul Samuelson defines marginal analysis as the extra output that will result by
adding one extra unit of any input variable, other factors being held constant. Marginal
analysis is particularly useful for evaluating alternatives in the decision-making process.

2. Financial Analysis:

This decision-making tool is used to estimate the profitability of an investment, to calculate

the payback period (the period taken for the cash benefits to account for the original cost of
an investment), and to analyze cash inflows and cash outflows.

Investment alternatives can be evaluated by discounting the cash inflows and cash outflows
(discounting is the process of determining the present value of a future amount, assuming that
the decision-maker has an opportunity to earn a certain return on his money).

3. Break-Even Analysis:

This tool enables a decision-maker to evaluate the available alternatives based on price, fixed
cost and variable cost per unit. Break-even analysis is a measure by which the level of sales
necessary to cover all fixed costs can be determined.

Using this technique, the decision-maker can determine the break-even point for the company
as a whole, or for any of its products. At the break-even point, total revenue equals total cost
and the profit is nil.

4. Ratio Analysis:
It is an accounting tool for interpreting accounting information. Ratios define the relationship
between two variables. The basic financial ratios compare costs and revenue for a particular
period. The purpose

of conducting a ratio analysis is to interpret financial statements to determine the strengths

and weaknesses of a firm, as well as its historical performance and current financial
condition.

5. Operations Research Techniques:

One of the most significant sets of tools available for decision-makers is operations research.
An operation research (OR) involves the practical application of quantitative methods in the
process of decision-making. When using these techniques, the decision-maker makes use of
scientific, logical or mathematical means to achieve realistic solutions to problems. Several
OR techniques have been developed over the years.

6. Linear Programming:

Linear programming is a quantitative technique used in decision-making. It involves making

an optimum allocation of scarce or limited resources of an organization to achieve a
particular objective. The word „linear‟ implies that the relationship among different variables
is proportionate.

The term „programming‟ implies developing a specific mathematical model to optimize

outputs when the resources are scarce. In order to apply this technique, the situation must
involve two or more activities competing for limited resources and all relationships in the
situation must be linear.

Some of the areas of managerial decision-making where linear programming technique

can be applied are:

i. Product mix decisions

ii. Determining the optimal scale of operations

iii. Inventory management problems

iv. Allocation of scarce resources under conditions of uncertain demand

v. Scheduling production facilities and maintenance.

7. Waiting-line Method:

This is an operations research method that uses a mathematical technique for balancing
services provided and waiting lines. Waiting lines (or queuing) occur whenever the demand
for the service exceeds the service facilities.

Since a perfect balance between demand and supply cannot be achieved, either customers
will have to wait for the service (excess demand) or there may be no customers for the
organization to serve (excess supply).

When the queue is long and the customers have to wait for a long duration, they may get
frustrated. This may cost the firm its customers. On the other hand, it may not be feasible for
the firm to maintain facilities to provide quick service all the time since the cost of idle
service facilities have to be borne by the company.

The firm, therefore, has to strike a balance between the two. The queuing technique helps to
optimize customer service on the basis of quantitative criteria. However, it only provides vital
information for decision-making and does not by itself solve the problem. Developing
queuing models often requires advanced mathematical and statistical knowledge.

8. Game Theory:

This is a systematic and sophisticated technique that enables competitors to select rational
strategies for attainment of goals. Game theory provides many useful insights into situations
involving competition. This decision-making technique involves selecting the best strategy,
taking into consideration one‟s own actions and those of one‟s competitors.

The primary aim of game theory is to develop rational criteria for selecting a strategy. It is
based on the assumption that every player (a competitor) in the game (decision situation) is
perfectly rational and seeks to win the game.

In other words, the theory assumes that the opponent will carefully consider what the
decision-maker may do before he selects his own strategy. Minimizing the maximum loss
(minimax) and maximizing the minimum gain (maximin) are the two concepts used in game
theory.

9. Simulation:
This technique involves building a model that represents a real or an existing system.
Simulation is useful for solving complex problems that cannot be readily solved by other
techniques. In recent years, computers have been used extensively for simulation. The
different variables and their inter-relationships are put into the model.

When the model is programmed through the computer, a set of outputs is obtained.
Simulation techniques are useful in evaluating various alternatives and selecting the best one.
Simulation can be used to develop price strategies, distribution strategies, determining
resource allocation, logistics, etc.

10. Decision Tree:

This is an interesting technique used for analysis of a decision. A decision tree is a

sophisticated mathematical tool that enables a decision-maker to consider various alternative
courses of action and select the best alternative. A decision tree is a graphical representation
of alternative courses of action and the possible outcomes and risks associated with each
action.

In this technique, the decision-maker traces the optimum path through the tree diagram. In the
tree diagram the base, known as the „decision point,‟ is represented by a square. Two or more
chance events follow from the decision point. A chance event is represented by a circle and
constitutes a branch of the decision tree. Every chance event produces two or more possible
outcomes leading to subsequent decision points.
 MBO (MANAGEMENT BY OBJECTIVES)

Every institution or organisation is established for the purpose of achieving some objectives. An

individual who starts a business has the objective of earning profits. The objective may differ from one
organisation to another organisation.

MBO (Management by Objectives) is a management system in which each member of the organisation
effectively participates and involves oneself. This system gives full scope to the individual strength
and responsibility. MBO harmonises the goal of an individual with the organisation’s goal. It creates
self-control and motivates the manager into action before somebody tells him/her to do something. It is
a strategic approach to enhance the performance of an organization. It is a process where the goals of
the organization are defined and conveyed by the management to the members of the organization.

Meaning and Definition of Objectives and MBO

Objectives are the expectation of end results for which an organisation is established and which it tries
to achieve. According to Koontz and O’Donnel, “Objective is a term commonly used to indicate the
endpoint of a management programme.”

According to George R. Terry, “A managerial objective is the intended goal which prescribes definite
scope andsuggests direction to the efforts of a manager.”

Prof. Reddin defines MBO as, “The establishment of effective standards for managerial positions and
the periodic conversion of those into measurable time bound objectives linked vertically and
horizontally and with future planning.”

Features of Objectives

The following are the features of objectives:

• each individual has own objectives

• the objectives of any organisation are specially mentioned

• the objectives may be short-term or long-term

• the objectives of an organisation should be clearly defined

• at top level, the organisation has broad objectives i.e. to earn certain rate of return on investments

• the whole organisation is divided into several sections

• each section has specific objectives

• the objectives of the organisation must conform to the general needs of the public

• all the organisations have several objectives at a time because the objectives are necessary in various
areas of business

• the objectives of the organisation may be changed in due course

• the objectives are expressed in numerical terms

• this helps in measuring the actual performance done to realise the objectives

• the framed objectives should be achievable and reasonable ones

Features of MBO

The following are the features of MBO:

• Integrates the goals of an organisation and individuals, leading to an effective management system.

• Emphasises on the effective performance.

• Combines the long term and the short term goals.

• Constant attention to refine, modify and improve the goals with changing times.

• Recognises participation of employees in goal setting process.

• A high degree of motivation and satisfaction is available to employees through MBO.

• Tries to relate the organisation goals with society goals.

The mnemonic S.M.A.R.T. is associated with the process of setting objectives in this paradigm.
"SMART" objectives are:

Specific - Target a specific area for improvement.

 Measurable - Quantify or suggest an indicator of progress.

Assignable - Specify who will do it.

Realistic - State what results can realistically be achieved, given available resources.

Time-bound - Specify when the result(s) can be achieved.

Benefits of MBO

The benefits of MBO are as given below:

• Provides a foundation of participative management.

• Gives the criteria of evaluation.

• Delegation of authority is easily done.

• Systematic evaluation of the performance.

• Managers are involved in setting objectives at various levels of management.

• Motivates employees by job enrichment.

• The responsibility of a worker is fixed through MBO.

Provides a foundation for participative management and goal setting.

Process of MBO

The process of MBO constitutes of the following steps:

• defining organisational objectives

• goals of each section

• fixing key result areas

• setting subordinate objectives or targets

• matching resources with objectives

• periodical review meetings

• appraisal of activities

• reappraisal of objectives

Advantages of Objectives

The following are the advantages of objectives:

• unified planning

• individual motivation

• coordination

• control

• basis for decentralization

Limitations of MBO

The limitations of MBO are as given below:

• it is a time consuming process

• MBO fails to explain the philosophy

• emphasises on short term objectives rather than the long term

• the status of subordinates is necessary for proper objectives setting which is not possible in MBO
process

• MBO’s are rigid in nature

• the objectives are set without considering the available resources

Guidelines for Setting Effective Objectives

The limitations of MBO can be reduced to some extent if the organisation follows certain guidelines.
These guidelines should be followed while setting objectives. These guidelines are as follows:

• Objectives are framed only by the participants who are responsible for implementing them.

• All the objectives should support the overall objectives of the organisation.

• Objectives should be attainable ones.

• Objectives should result in the motivation of workers.

• A periodical review of objectives is necessary for proper implementation.

• Objectives should have the characteristics of innovation.

• The number of objectives for each management member should be a reasonable one.

• Objectives should be ranked on the basis of their importance.

• Objectives should be in balance within a given organisation or enterprise.

• Objectives should be simple and clearly defined.

• Objectives should be specific and time bound.

Policy

A policy is a set of rules or guidelines for your organization and employees to follow in order
to achieve a specific goal. Policies can be defined as the fundamental written statements
which are meant to guide the thinking and action in decision making of the managers.

Characteristics of Policy

 Objective-oriented
 Clear and explicit, which removes chaos and ambiguities
 Carefully designed
 Simply presented, facilitating the understanding to all in the correct manner.
 Based on the holistic view, taking into account all employees, resources, facilities etc.
 Flexible enough to match the needs of the firm.
 Reviewed, revised and replaced whenever required.
 Properly communicated and implemented.
On the basis of Origin/Source

 Originated Policies: Policies which are framed by the top executives, and directs the
employees about what decisions they can take in a particular situation. Hence, the
employees are supposed to follow them strictly.
 Appealed Policies: If a subordinate is confused regarding if he/she possesses
sufficient authority to look after the situation or not, in that case, the subordinate may
seek an order from the superior. This order is said to be appealed authority.
 Imposed Policies: Imposed policies are the ones imposed on the business, by the
external agencies like government, suppliers, trade unions, industry associations,
creditors, etc.

On the basis of Level

 Basic Policies: Those policies of the firm which are pursued by the top management
level are regarded as basic policies.
 General Policies: General Policies are for middle-level management, as they are
related to the company‘s day to day operations and dealings.
 Departmental Policies: Departmental policies are specific in nature as they are framed
for the particular department only. For instance marketing policies, production
policies, purchase policies, finance policies etc.

On the basis of Managerial function

 Planning Policies: Such policies embraces future courses of action, as they are
formulated to achieve business targets. These can be organization-wide or
department-wide policies.
 Organizational Policies: Policies concerning organizational goals and objectives are
termed as organizational policies.
 Motivation and control Policies: Policies established to motivate or encourage
employees as well as to control their activities, so as to lead the firm‘s objectives,
while satisfying the personal goals of the employees.

On the basis of Expression

 Written Policies: As the name suggests, written policies are those policies of the firm
which are published to guide the employees and also to have a basic understanding of
the company‘s rules. Some of the written media, where written policies can be found
are – bulletins or notice boards, news releases, handbooks, booklets or manuals.
 Implied Policies: Policies which emerges from the conduct are implied policies. It
emanates in the area where existing policies are not in force.
 Implicit policies: Policies communicated by word of mouth by the key people in
the organization are called implicit policies.
Purpose of Policy Formulation

 To facilitate uniformity in actions.

 To set boundaries that provides basic limits and directions for managerial actions.
 To ensure quick decision making.
 To assist in coordinating the efforts of the employees.
 To ensure that goals are achieved as planned.
 To ensure effective delegation of authority, as it sets limits for the decisions taken by
the subordinates.

Strategic Management

Strategic Management is the process of setting long-term goals and developing,

implementing, and evaluating strategies to accomplish those goals. Making strategic
decisions and acting on them to adjust to evolving situations and environments is a
continuous and ongoing activity.

Strategy can often be confused with tactics, goals and even actions. The Oxford Dictionary
defines strategy as: ―A plan of action designed to achieve a long-term or overall aim‖ ―The
art of planning and directing overall military operations and movements in a war or battle‖.
Strategies are the broad action-oriented items that we implement to achieve the objectives.

Features of Strategy
1. Strategy is Significant because it is not possible to foresee the future. Without a perfect
foresight, the firms must be ready to deal with the uncertain events which constitute the
business environment.

2. Strategy deals with long term developments rather than routine operations, i.e. it deals with
probability of innovations or new products, new methods of productions, or new markets to
be developed in future.

3. Strategy is created to take into account the probable behavior of customers and
competitors. Strategies dealing with employees will predict the employee behavior.

Strategy is a well-defined roadmap of an organization. It defines the overall mission, vision

and direction of an organization. The objective of a strategy is to maximize an organization‘s
strengths and to minimize the strengths of the competitors. Strategy, in short, bridges the gap
between ―where we are‖ and ―where we want to be‖.

STRATEGIC PLANNING

Strategic planning is the process of documenting and establishing a direction of your small
business—by assessing both where you are and where you're going. The strategic plan gives
you a place to record your mission, vision, and values, as well as your long-term goals and
the action plans you'll use to reach them.

Strategic planning is a systematic process that helps you set an ambition for your business'
future and determine how best to achieve it. Its primary purpose is to connect three key areas:
your mission - defining your business' purpose.

Strategic planning is important because it influences the attractiveness of the business to

investors. The attractiveness of the business to potential investors means the ability of the
organization to access financial resources that it could use for its continued growth and
development.

Strategic Planning Stages

1. Generation of Strategic Alternatives: In this step, the firm seeks a number of strategic
alternatives in the light of the firm‘s business, industry and competition. These strategies may
be acquisition and expansion, focusing on core competencies, increase in the market share,
etc.

2. Assessment of Strategic Alternatives: At this stage, the firm observes various strategies, on
the basis of the benefits. It questions:

• Will it improve the firm‘s position or market share?

• Will it increase existing strengths?

• Will it bring new opportunities?

• Will it maximise shareholder‘s wealth?

3. Selection of Strategy: The optimum strategy is selected at this stage, among various
alternative strategies.

Both internal and external analysis of the firm is performed during the exercise; wherein
internal analysis entails an evaluation of financial performance, operational limitations,
current market position/share corporate culture, strengths and weaknesses. On the other hand,
external analysis concentrates on the analysis of competition, trends, changing business
environment, opportunities and threats, latest technology and so forth.

Unit III

ORGANISING

Organizing is the function of management that involves developing an organizational

structure and allocating human resources to ensure the accomplishment of objectives. The
structure of the organization is the framework within which effort is coordinated. Organising
is the process of identifying and grouping the work to. be performed, defining and delegating
responsibility and authority, and establishing relationships for the purpose of enabling people
to work most effectively together in accomplishing objectives. Organising is that managerial
process which seeks to define the role of each individual (manager and operator) towards the
attainment of enterprise objectives. Organising is that managerial process which seeks to
define the role of each individual (manager and operator) towards the attainment of enterprise
objectives; with due regard to establishing authority-responsibility relationships among all;
and providing for co-ordination in the enterprise-as an in-built device for obtaining
harmonious groups action. 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.

Definition

 ―Organising is the establishment of authority relationships with provisions for co-

ordination between them, both vertically and horizontally in the enterprise structure‖.
-Koontz and O ‗Donnell
 ―Organising is the process of identifying and grouping the work to be performed,
defining and delegating the responsibility and authority and establishing a pattern of
relationship for the purpose of enabling people work most effectively to accomplish
the objective‖. – Louis A. Allen.
 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.

Importance of Organizing Function

1. 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.

2. 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.

3. 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.
4. 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.

5. 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.

6. 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
grows. This is possible only when the organization structure is well- defined. This is possible
through a set of formal structure.

7. Sense of security - Organizational structure clarifies the job positions. The roles assigned
to every manager are 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.

8. 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.

Classification of Organizations

Organizations are basically classified on the basis of relationships. There are two types of
organizations formed on the basis of relationships in an organization

1. Formal Organization - This is one which refers to a structure of well-defined jobs each
bearing a measure of authority and responsibility. It is a conscious determination by which
people accomplish goals by adhering to the norms laid down by the structure. This kind of
organization is an arbitrary set up in which each person is responsible for his performance.
Formal organization has a formal set up to achieve pre- determined goals.

2. Informal Organization - It refers to a network of personal and social relationships which

spontaneously originates within the formal set up. Informal organizations develop
relationships which are built on likes, dislikes, feelings and emotions. Therefore, the network
of social groups based on friendships can be called as informal organizations. There is no
conscious effort made to have informal organization. It emerges from the formal organization
and it is not based on any rules and regulations as in case of formal organization.

Relationship between Formal and Informal Organizations

For a concerns working both formal and informal organization are important. Formal
organization originates from the set organizational structure and informal organization
originates from formal organization. For an efficient organization, both formal and informal
organizations are required. They are the two phase of a same concern.

 Formal organization can work independently. But informal organization depends

totally upon the formal organization.
 Formal and informal organization helps in bringing efficient working organization
and smoothness in a concern. Within the formal organization, the members undertake
the assigned duties in co-operation with each other. They interact and communicate
amongst themselves. Therefore, both formal and informal organizations are important.
When several people work together for achievement of organizational goals, social tie
ups tends to build and therefore informal organization helps to secure co-operation by
which goals can be achieved smooth. Therefore, we can say that informal
organization emerges from formal organization.

LINE ORGANIZATION

Line organization is the oldest and simplest method of administrative organization.

According to this type of organization, the authority flows from top to bottom in a concern.
The line of command is carried out from top to bottom. This is the reason for calling this
organization as scalar organization which means scalar chain of command is a part and parcel
of this type of administrative organization. In this type of organization, the line of command
flows on an even basis without any gaps in communication and co-ordination taking place.
Features of Line Organization

1. It is the simplest form of organization.

2. Line of authority flows from top to bottom.

3. Specialized and supportive services do not take place in these organization.

4. Unified control by the line officers can be maintained since they can independently take
decisions in their areas and spheres.

5. This kind of organization always helps in bringing efficiency in communication and

bringing stability to a concern.

Merits of Line Organization

1. Simplest- It is the most simple and oldest method of administration.

2. Unity of Command- In these organizations, superior-subordinate relationship is maintained

and scalar chain of command flows from top to bottom.

3. Better discipline- The control is unified and concentrates on one person and therefore, he
can independently make decisions of his own. Unified control ensures better discipline.

4. Fixed responsibility- In this type of organization, every line executive has got fixed
authority, power and fixed responsibility attached to every authority.

5. Flexibility- There is a co-ordination between the top most authority and bottom line
authority. Since the authority relationships are clear, line officials are independent and can
flexibly take the decision. This flexibility gives satisfaction of line executives.

6. Prompt decision- Due to the factors of fixed responsibility and unity of command, the
officials can take prompt decision.

Demerits of Line Organization

1. Over reliance- The line executive‘s decisions are implemented to the bottom. This results
in over-relying on the line officials.
2. Lack of specialization- A line organization flows in a scalar chain from top to bottom and
there is no scope for specialized functions. For example, expert advices whatever decisions
are taken by line managers are implemented in the same way.

3. Inadequate communication- The policies and strategies which are framed by the top
authority are carried out in the same way. This leaves no scope for communication from the
other end. The complaints and suggestions of lower authority are not communicated back to
the top authority. So there is one way communication.

4. Lack of Co-ordination- Whatever decisions are taken by the line officials, in certain
situations wrong decisions, are carried down and implemented in the same way. Therefore,
the degree of effective co-ordination is less.

5. Authority leadership- The line officials have tendency to misuse their authority positions.
This leads to autocratic leadership and monopoly in the concern.

Line and Staff Organization

Line and staff organization is a modification of line organization and it is more complex than
line organization. According to this administrative organization, specialized and supportive
activities are attached to the line of command by appointing staff supervisors and staff
specialists who are attached to the line authority. The power of command always remains
with the line executives and staff supervisors guide, advice and counsel the line executives.
Personal Secretary to the Managing Director is a staff official.

Features of Line and Staff Organization

There are two types of staff.

a. Staff Assistants- P.A. to Managing Director, Secretary to Marketing Manager.

b. Staff Supervisor- Operation Control Manager, Quality Controller, PRO

2. Line and Staff Organization is a compromise of line organization. It is more complex than
line concern.

3. Division of work and specialization takes place in line and staff organization.
4. The whole organization is divided into different functional areas to which staff specialists
are attached.

5. Efficiency can be achieved through the features of specialization.

6. There are two lines of authority which flow at one time in a concern :

a. Line Authority

b. Staff Authority

7. Power of command remains with the line executive and staff serves only as counsellors.
DELEGATION OF AUTHORITY

A manager alone cannot perform all the tasks assigned to him. In order to meet the targets,
the manager should delegate authority. Delegation of Authority means division of authority
and powers downwards to the subordinate. Delegation is about entrusting someone else to do
parts of your job. Delegation of authority can be defined as subdivision and sub-allocation of
powers to the subordinates in order to achieve effective results.

Delegation is the assignment of authority to another person (normally from a manager to a

subordinate) to carry out specific activities. It is the process of distributing and entrusting
work to another person. Delegation is one of the core concepts of management leadership.

Delegation means devolution of authority on subordinates to make them to perform the

assigned duties or tasks. It is that part of the process of organization by which managers make
it possible for others to share the work of accomplishing organizational objectives.

Delegation consists of granting authority or the right to decision-making in certain defined

areas and charging the subordinate with responsibility for carrying through the assigned
tasks.

Delegation refers to the assignment of work to others and confer them the requisite authority
to accomplish the job assigned.

Through delegation, a manager is able to divide the work and allocate it to the subordinates.
This helps in reducing his work load so that he can work on important areas such as -
planning, business analysis etc. Through delegating powers, the subordinates get a feeling of
importance.
DEPARTMENTATION

Departmentation or Departmentalisation is the process of grouping the activities of an

enterprise into several units for the purpose of administration at all levels. It also provides a
basis on which the top managers can co-ordinate and control the activities of the departmental
units.

Departmentation can provide a necessary degree of specialisation of executive activity for

efficient performance. It can simplify the tasks of management within a workable span. It
also provides a basis on which the top managers can co-ordinate and control the activities of
the departmental units.

Departmentation is a part of the organisation process. It involves the grouping of common

activities under a single person‘s control. The activities are grouped on the basis of a function
of the organisation. This work is done by a chief executive of the concerned organisation.

Departmentation means the process by which similar activities of the business are grouped
into units for the purpose of facilitating smooth administration at all levels. It implies the
division of total work of an organisation into individual functions and sub functions. It is the
process of division of organisation into different parts known as departments.

Departmentation is necessary on account of the following reasons:

1. Advantages of Specialisation:
Departmentation enables an enterprise to avail of the benefits of specialisation. When every
department looks after one major function, the enterprise is developed and efficiency of
operations is increased.

2. Feeling of Autonomy:

Normally departments are created in the enterprise with certain degree of autonomy and
freedom. The manager in charge of a department can take independent decisions within the
overall framework of the organisation. The feeling of autonomy provides job satisfaction and
motivation which lead to higher efficiency of operations.

3. Expansion:

One manager can supervise and direct only a few subordinates. Grouping of activities and
personnel into Departmentation makes it possible for the enterprise to expand and grow.

4. Fixation of Responsibility:

Departmentation enables each person to know the specific role he is to play in the total
organisation. The responsibility for results can be defined more clearly, precisely and
accurately and an individual can be held accountable for the performance of his
responsibility.

5. Upliftment of Managerial Skill:

Departmentation helps in the development of managerial skill. Development is possible due

to two factors. Firstly, the managers focus their attention on some specific problems which
provide them effective on-the-job training. Secondly, managerial need for further training can
be identified easily because the managers‘ role is prescribed and training can provide them
opportunity to work better in their area of specialisation.

6. Facility in Appraisal:

Appraisal of managerial performance becomes easier when specific tasks are assigned to
departmental personnel. Managerial performance can be measured when the areas of
activities are specified and the standards of performance are fixed. Departmentation provides
help in both these areas.

When a broader function is divided into small segments and a particular segment is assigned
to each manager, the area to be appraised is clearly known; and the factors affecting the
performance can be pointed out more easily. Similarly, the standards for performance can be
fixed easily because the factors influencing the work performance can be known clearly.
Thus, performance appraisal becomes more effective.

7. Administrative Control:

Departmentation is a means of dividing the large and complex organisation into small
administrative units. Grouping of activities and personnel into manageable units facilitates
administrative control. Standards of performance for each and every department can be
precisely determined.

Types of Departmentation:

There are several bases of Departmentation. The more commonly used bases are—function,
product, territory, process, customer, time etc.

(A) Departmentation by Functions:

The enterprise may be divided into departments on the basis of functions like production,
purchasing, sales, financing, personnel etc. This is the most popular basis of
Departmentation. If necessary, a major function may be divided into sub-functions. For
example, the activities in the production department may be classified into quality control,
processing of materials, and repairs and maintenance.

Board of
directors

Managing
director

production Marketing Finance Personnel

Market
Advertising Sales
research

Newspapers Radios &

&magazines T.V.

(B) Departmentation by Products:

In product Departmentation, every major product is organised as a separate department. Each

department looks after the production, sales and financing of one product. Product
Departmentation is useful when the expansion, diversification, manufacturing and marketing
characteristics of each product are primarily significant. It is generally used when the
production line is complex and diverse requiring specialised knowledge and huge capital is
required for plant, equipment and other facilities such as in automobile and electronic
industries. In fact, many large companies are diversifying in different fields and they prefer
product Departmentation. For example, a big company with a diversified product line may
have three product divisions, one each for plastics, chemicals, and metals. Each division may
be sub-divided into production, sales, financing, and personnel activities.
 Managing
director

Truck
Car division Bus division
division

Production Marketing Finance Personnel

(C) Departmentation by Territory:

Territorial or geographical Departmentation is especially useful to large-scale enterprises

whose activities are widely dispersed. Banks, insurance companies, transport companies,
distribution agencies etc. are some examples of such enterprises, where all the activities of a
given area of operations are grouped into zones, branches, divisions etc. It is obviously not
possible for one functional manager to manage efficiently such widely spread activities. This
makes it necessary to appoint regional managers for different regions.

Head office
(Bombay)

Eastern Northern Central Southern Western

(Calcutta) (New Delhi) (Kanpur) (madras) (Bombay)

New Delhi
Jalandhar Chandigarh Ajmer
(division)

Branch Branch Branch

(D) Departmentation by Customers:

In such method of departmentation, the activities are grouped according to the type of
customers. For example, a large cloth store may be divided into wholesale, retail, and export
divisions. This type of departmentation is useful for the enterprises which sell a product or
service to a number of clearly defined customer groups. For instance, a large readymade
garment store may have a separate department each for men, women, and children. A bank
may have separate loan departments for large-scale and small- scale businessmen.

General
management

Production Marketing Finance

Wholesale Retail Instalment Export

(E) Departmentation by Process or Equipment:

In such type or departmentation the activities are grouped on the basis of production
processes involved or equipment used. This is generally used in manufacturing and
distribution enterprises and at lower levels of organisation. For instance, a textile mill may be
organised into ginning, spinning, weaving, dyeing and finishing departments. Similarly, a
printing press may have composing, proof reading, printing and binding departments. Such
departmentation may also be employed in engineering and oil industries.

General
manager

Production
manager

Spinning Dyeing Weaving

(F) Departmentation by Time and Numbers:

Under this method of departmentation the activities are grouped on the basis of the time of
their performance. For instance, a factory operating 24 hours may have three departments for
three shifts—one for the morning, the second for the day, and the third for the night.
In the case of Departmentation by numbers, the activities are grouped on the basis of their
performance by a certain number of persons. For instance, in the army, the soldiers are
grouped into squads, companies, battalions, regiments and brigades on the basis of the
number prescribed for each unit. Such type of Departmentation is useful where the work is
repetitive, manpower is an important factor, group efforts are more significant than individual
efforts, and group performance can be measured. It is used at the lowest level of organisation.

ORGANIZATION CHART

Organization chart is a diagrammatical presentation of relationships in an enterprise. The

functions and their relationships, the channels of authority and relative authority of different
managers etc. are depicted in an organizational chart. An organization chart is a managerial
tool. It helps in specifying authority and responsibility of every position. As organization
chart specifically defines authority and responsibility of people in the enterprise there will be
no duplication and overlapping of duties etc.

• An organizational chart, often referred to as an org chart, is a valuable management

tool that visually represents the hierarchical structure and relationships within an
organization.

• It offers a clear and organized depiction of roles, positions, and reporting lines.

• The primary purpose of an organizational chart is to enhance understanding of the

organization‘s structure, including levels of authority, communication channels, and
functional divisions.

• The organizational chart is a graphic means of showing organizational data.

• Presentation of these charts can be done in several ways. From top to down, from left
to right, and circular.

Types of Organizational Chart

Hierarchical or Traditional Organizational Chart:

This is the classic and widely used type of org chart. It represents the organization‘s vertical
hierarchy, showcasing positions of authority at the top and lower-level positions below.

Matrix Organizational Chart:

The matrix structure combines functional departments and project teams. It displays both
vertical reporting lines within departments and horizontal reporting lines across projects,
reflecting dual reporting relationships.

Flat Organizational Chart:

Flat organizations have a decentralized approach with fewer hierarchical levels. This chart
type promotes collaboration, open communication, and a more agile decision-making
process.

Divisional Organizational Chart:

Organizations with multiple divisions or business units often utilize this chart. Each division
is presented as a separate entity with its hierarchical structure, allowing for focused
management within each division while maintaining overall coordination.

Team-based Organizational Chart:

This chart highlights the importance of cross-functional teams or self-managed teams. It

illustrates the collaboration and interdependencies among teams from different departments
or functional areas.

Virtual Organizational Chart:

These charts represent the structure and connections of geographically dispersed or remote
team members, enabling effective collaboration despite physical distances.

There are also three ways in which organization charts can be shown:

(i) Vertical

(ii) Horizontal

(iii) Circular

(i) Vertical or Top to Bottom:

In this chart major functions are shown at the top and subordinate functions in successive
lower positions. In this chart scalar levels run horizontally and functions run vertically. The
supreme authority is shown at the top while lowest authority at the bottom.

The vertical chart is shown in the following diagram. In this diagram Board of Directors is at
the top of the organization. The chief executive controls various functional managers, who in
turn have downward staff as the requirement of respective departments.

(ii) Horizontal or Left to Right:

In this chart highest positions are put on the left side and those with diminishing authority
move towards the right. The organizational levels are represented by vertical columns, the
flow of authority from higher to lower levels being represented by movement from left to
right. In other words it presents scalar levels in a vertical position and functions horizontally.
The same levels of authority as shown in vertical chart can be depicted in a left to right chart
as follows:

In horizontal chart the supreme authority Le. Board of Directors is shown on the left and
chief executive and functional managers and other levels move towards right.

(iii) Circular:

In circular chart the centre of the circle represents the position of supreme authority and the
functions radiate in all directions from the centre. The higher the positions of authority, the
nearer they are to the centre and the lesser the positions of authority, more distant they are
from the centre. The positions of relative equal importance are located at the same distance
from the centre. The lines forming different blocks of functions or positions indicate the
channels of formal authority, the same as in other arrangements. The circular chart depicts the
actual condition of outward flow of formal authority from the Chief Executive in many
directions.

Organizational manual
The organizational manual is a small book containing information about the organizational
objectives, authority and responsibility of various positions and methods and procedures
followed.

Generally following type of materials included in organizational manual

• Statement of organization objectives and policies

• Job descriptions

– Functions

– Responsibility and authority

– Relationship

• Organization procedures

• Glossary of management terms

Organisation manual is a handbook maintained in hard cover, in loose-leaf form containing

information about policies, operations, rules and regulations, objectives, procedures,
departmental details etc. An organizational manual provides and supplements additional
details to the information supplied by organization chart. It provides information on pertinent
matters about each position. It provides uniformity and consistency in the procedures and
practices. It also provides written record of every important policy, decision and procedure.
There will be no confusion about authority and responsibility. There will not be any scope for
misunderstanding about anything. The office manuals purpose is to save time, create standard
guidelines for everyone, and provide a solid foundation of knowledge. Manuals can be used
for policies, organizational means, departments, procedures, or any combination of the above.
Manuals are kept ready for reference by every functional head and his employees so that they
do not have to approach their superiors to obtain information for decision-making.

CENTRALIZATION

Centralization refers to the process in which activities involving planning and decision-
making within an organization. In a centralized organization, the decision-making powers are
retained in the head office, and all other offices receive commands from the main office.
Centralization refers to that organizational structure where decision-making power is
confined to the top management, and the subordinates need to follow the instructions of their
seniors. Centralization of authority is essential for the small-scale organizations which lack
resources and finance. 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. Centralization allows on the one hand an unified
decision ―from the center‖ on the other hand, limits the autonomy of organizational units and
may reduce flexibility of the decision. Centralization may concern all decisions and powers,
or may be centralized only selected managerial functions. When an organization follows a
centralized management structure, it can focus on the fulfilment of its vision with ease. There
are clear lines of communication and the senior executive can communicate the
organization's vision to employees and guide them toward the achievement of the vision. In a
centralized organization, decisions are made by a small group of people and then
communicated to the lower-level managers. If lower-level managers are involved in the
decision-making process, the process will take longer and conflicts will arise.

Advantages of Centralization

Centralization and decentralization are equally crucial for a business. The reasons for which
some organizations mainly centralize its structure are as follows:

 Cost Efficient: The management need not spend much on the office and
administrative expenses in a centralized organization. Even the cost of hiring experts
and highly experienced personnel at each level is saved due to the centralized
decision-making process.
 Better Command: The management can hold a better command over the subordinates
and the subordinates also clearly know whom to follow. There is proper control over
the subordinate actions, and the management is well aware of the strengths and
weaknesses of the subordinates.
 Enhances Work Quality: The subordinates are answerable directly to the top
management, and therefore they continuously aim at improving the work quality. It
also leads to standardization of the process and reduces the wastage.
 Uniformity in Action: When the control lies in the hands of few, the methods and
techniques used are usually the same throughout all the levels and departments, thus
encouraging the subordinates to perform uniformly.
 Focus on Vision: The top management clearly defines and better understand the
organizational vision. Therefore, it aligns all the resources, subordinates, activities
and strategies towards the achievement of the vision.
 Proper Coordination: The top management frames a uniform policy for subordinates
at different levels, integrate their course of action and ensures coordination among all
the subordinates.
Disadvantages of Centralization

Centralization is not suitable for all type of business organizations.

 Slows Down Operations: The top management directs the day to day operations, and
the subordinates have to report directly to the senior management. At times when
there is no managerial staff, the subordinates are unable to take immediate decisions.
Thus, resulting in slowing down of business operations.
 Delays Decision Making: In centralization, the decision-making process slows down
since all the decisions are to be taken by the top management. It is not suitable for
handling emergencies or unexpected circumstances.
 Reduces Scope for Specialization: A person cannot specialize in all the activities
alone. Therefore, in a centralized structure where all decisions are taken by the top
management, the organization lacks specialized supervision and management.
 Discourages Initiative: The subordinates are given instructions which they need to
follow without questioning the decisions of the top management. In centralization, the
subordinates are intimidated from giving their input or suggestions.
 Lacks Adaptability to Change: The centralized organization runs in a conventional
manner where the top management is somewhat rigid with its policies, methods and
techniques. Thus, it creates a barrier to adopting modern and improved practices for
organizational growth.
 Overburden on Top Management: All the planning and decision-making work is done
at the topmost level of management, they control even the day to day operations. Due
to this reason, management becomes overburdened and is unable to concentrate on
business expansion and growth.
 Bureaucratic Leadership: Centralization can be seen as a dictatorship by some, where
the top management plans every course of action and the subordinates follow the
instructions. Problem-solving becomes quite difficult in such circumstances since the
decision-maker, and the implementer is two different individuals.
 Poor Upward Communication: The subordinates are supposed to follow instructions
while the least attention is paid towards their suggestions and feedback. All this
hinders the upward communication in the organization.
DECENTRALIZATION

Decentralization refers to a specific form of organizational structure where the top

management delegates decision-making responsibilities and daily operations to middle and
lower subordinates. The top management can thus concentrate on taking major decisions with
greater time abundance. In a decentralized organization, lower level managers are given
decision-making authority and the power to run their own departments. Decentralization
includes better, more timely decisions and increased motivation. Decentralisation implies the
dispersal of decision-making power at lower levels of management. When the power to take
decisions and formulate policies does not lie with one person at the top but is passed on to
different persons at various levels, it will be a case of decentralisation. The following are the
main objectives which a decentralized system of organization seeks to achieve:

 To relieve the burden of work on the chief executive.

 To develop the managerial faculties.
 To motivate the lower level of workers.

Decentralisation is referred to as a form of an organisational structure where there is the

delegation of authority by the top management to the middle and lower levels of management
in an organisation. In this type of organisation structure, the duty of daily operations and
minor decision-making capabilities are transferred to the middle and lower levels which
allow top-level management to focus more on major decisions like business expansion,
diversification etc. Delegation refers to the assigning a portion of work and the associated
responsibility by a superior to a subordinate. In simple words, when delegation is expanded
on an organisational level, it is called decentralisation.

―Decentralisation refers to tire systematic effort to delegate to the lowest levels all authority
except that which can only be exercised at central points.‖ —Louis A. Allen

―Decentralisation means the division of a group of functions and activities into relatively
autonomous units with overall authority and responsibility for their operation delegate to time
of cacti unit.‘—Earl. P. Strong
Importance of Decentralisation

1. Rapid decision making – Most of the decisions are taken on the spot, and approval from
the higher authority is not required. The ability to make a prompt decision allows an
organisation to function its operation quickly and effectively.

2. Administrative development – The decentralisation process questions the manager‘s

judgement and techniques, when responsibility and challenges to develop solutions are given
to them. This questioning method grows confidence, encourages self-reliance, and make them
a good decision-maker resulting in the development of the organisation.

3. Development of executive skills – It allows the employee to perform task individually,

giving them invaluable exposure. This individual performance creates an environment where
an individual can enhance their expertise, take ownership & more significant responsibilities,
and be suitable for promotion.

4. Promotes growth – Decentralisation also allows the heads of the department to work
independently. This independence helps the department to grow, have a healthy competition
between other departments. Ultimately, the competition will lead to an improvement and
enhancement in productivity.

5. Higher control – It also evaluates and reviews the performances of each department and
gives them a comprehensive perspective of their work. However, controlling is the biggest
challenge of decentralisation and stabilised management and scorecard are being developed.

Advantages of Decentralisation

1. Reduces the burden on top executives

2. Facilitates diversification

3. Executive Development

4. It promotes motivation

5. Better control and supervision

Disadvantages of Decentralisation

1. Uniform policies not followed

2. Problem of Co-Ordination

Authority and Responsibility

• Authority is the right to give orders and power to exact obedience.

• Authority may be defined as the power to make decisions which guide the action of
another.

• It is relationship between two individuals, one superior , the other subordinate.

• Responsibility is a duty to which a person is bound by reason of his status or task.

• Responsibility may be defined as the obligation of a subordinate to whom duty has

been assigned, to perform the duty.

Organisation Structure
An organisational structure is a framework that determines how an organisation is
organised, including the arrangement of roles, responsibilities, and tasks. It outlines the
hierarchy, reporting relationships, and communication channels within the organisation.
By clarifying roles and responsibilities, the structure helps to establish clear lines of
authority and decision-making, promoting efficient coordination and control. It also
facilitates effective communication and collaboration by defining information flow and
channels. Additionally, the structure aids in resource allocation and utilisation, allowing
for specialisation and improved productivity. It promotes accountability and performance
evaluation by setting clear expectations and enabling assessment of individual and
departmental performance. Ultimately, an organisational structure plays a crucial role in
shaping the organisational culture, optimising workflows, and driving the achievement of
organisational objectives.

There are various types of organisational structures that an organisation can adopt, each with
its advantages and characteristics. The six main types of organisation structure are given
below:
 Line Organisation

 Functional Organisation

 Line and Staff Organisation

 Project Organisation

 Matrix Organisation

 Committee Organisation

 Line organisation, also known as a scalar or military organisation, is the simplest and
oldest form of organisational structure. It is characterised by a clear and direct chain
of command, where authority flows vertically from top to bottom. Each employee has
a single supervisor to whom they report, creating a clear line of responsibility and
accountability.
 Functional organisation is a common structure where departments are organised
based on specialised functions or tasks. Each department is headed by a functional
manager who has expertise in that particular area. This structure allows for the
efficient utilisation of specialised skills and knowledge, as employees within each
department can focus on their areas of expertise.
 In a line and staff organisation structure, line positions focus on core operations,
while staff positions provide specialised support and guidance. Staff roles, like human
resources or legal, offer expertise and advice to line managers. This structure balances
operational responsibilities with specialised support, enabling better decision-making
and problem-solving. Specialists in such organisations have advisory nature as they
do not have the power of command over subordinates in other departments.
 It is characterised by a project team that is assembled to achieve specific goals
within a defined timeframe. The project team is led by a project manager who has
authority over team members and resources. This structure allows for a dedicated and
focused approach to project management, with team members working together to
accomplish project objectives.
 A hybrid grid structure wherein pure project organisation is superimposed on a
functional structure is known as Matrix Organisation. It combines elements of both
functional and project structures. It involves dual reporting lines, where employees
have both a functional manager and a project manager. This structure allows for
 flexible resource allocation, as employees can be assigned to different projects based
on their skills and availability.
 The committee organisation structure distributes decision-making and authority
across committees or groups. These committees are formed to address specific areas
or functions within the organisation, bringing together individuals from different
departments and levels.

Span of management
Span of management is the number of people or subordinates that the manager can control
and manage. The term ‗span of management‘ is also known as ‗span of control‘ and ‗span of
supervision‘. An organisation needs to maintain a balance between the number of employees
within a team and the number of employees that a manager is responsible for taking care of.
It relies on the type and nature of the work in the organisation. The span of control of a
manager thus depends upon their subordinates, which can range from a few to a hundred.

Factors determining Span of Management

1. Capacity of Subordinates:

If they are qualified and capable enough, the work of the manager to maintain
relationships with their subordinates becomes easy, and they can manage a larger number
of people.

2. Manager‘s Capability to Manage:

The abilities of managers, like leadership, communication, decision-making, etc., to

manage more subordinates can determine the span of management.

3. Size of the Organization:

The larger the organization, the wider control it has over its subordinates, and thus, the
information flow and communication are done more effortlessly. Whereas in a smaller
organization, the span of control is restricted but concentrated and the manager can
perform better supervision.

4. Nature of Work:

A wider span of management is used when the work is stable and does not change
frequently.

5. Availability of Time:
 Top-level managers have less time for supervision as they devote the major portion of
their time to planning and organising, and therefore their span of management is narrow.

6. Plans and Activities:

If the organization‘s plans and activities to attain its goal are simple and clear, it will be
easier for the manager to control the activities happening in the organization. Whereas, if
the plans are unstable, it can be difficult for the manager to supervise the subordinates and
the activities of the organization.

7. Facilities Available:

The span of management will be wider if advanced technologies and facilities are
available. Modern and convenient office equipment and faster communication devices
simplify the task of management.

8. Degree of Decentralization:

A reasonable level of decentralization lowers the load of the manager‘s work as they can
manage a larger number of employees.

9. Type of Technology:

Wider span of management is used by organisations using mass production and assembly
line technology and a relatively narrower span is used by organisations employing batch
or process production systems.

10. Geographical Dispersion of Subordinates:

Control and management of employees become difficult when the subordinates are
dispersed at different places. Therefore, the span of management is relatively smaller.

11. Staff Assistance:

Managers can handle more subordinates if staff assistance, like a private secretary is
available. The availability of staff reduces the workload of the managers.

Human Resource Management (HRM)

Human Resource Management (HRM) is the strategic approaches to the effective

management of people in an organization, helping the business gain a competitive advantage.
It is designed to maximize employee performance in service of an employer's strategic
objectives.
Recruitment and Selection:

 Job Analysis and Design: Identifying the requirements of a job and designing roles to
match organizational needs.
 Recruitment: Attracting suitable candidates using various methods such as job
postings, social media, and recruitment agencies.
 Selection: Evaluating and choosing the best candidates through interviews,
assessments, and background checks.

Training and Development:

 On boarding: Integrating new employees into the organization and its culture.
 Skill Development: Providing ongoing training to help employees develop skills
needed for their current job and future roles.
 Leadership Development: Training programs aimed at developing managerial and
leadership skills.

Performance Management:

 Performance Appraisals: Regular reviews of employee performance against set

objectives and providing feedback.
 Goal Setting: Establishing clear and achievable goals that align with organizational
objectives.
 Performance Improvement Plans: Strategies to help underperforming employees meet
performance standards.

Compensation and Benefits:

 Salary Structures: Designing competitive and fair pay structures.

 Incentive Programs: Performance-based rewards such as bonuses and commissions.
 Benefits Administration: Managing health insurance, retirement plans, paid time off,
and other employee benefits.

Employee Relations:

 Labor Relations: Managing relationships between the employer and the workforce,
including negotiations with unions.
 Conflict Resolution: Addressing and resolving workplace disputes and grievances.
 Employee Engagement: Strategies to keep employees motivated and committed to the
organization.

HR Strategy and Planning:

 Strategic HRM: Aligning HR strategies with business objectives to support long-term

growth.
 Workforce Planning: Anticipating future HR needs and developing strategies to meet
those needs.
  HR Metrics and Analytics: Using data to make informed HR decisions and
demonstrate the value of HR initiatives.

Effective HRM is critical for attracting, developing, and retaining talent within an
organization. By strategically managing human resources, organizations can improve
productivity, foster a positive workplace culture, and achieve their strategic goals. As the
workplace continues to evolve, HRM must adapt to new challenges and trends to remain
effective and relevant.

Recruitment
Recruitment is a critical function of Human Resource Management (HRM) focused on
attracting, identifying, and hiring individuals who have the necessary skills and fit the
organizational culture. Effective recruitment ensures that the organization has the right talent
to achieve its goals and maintain a competitive advantage. Here‘s a comprehensive overview
of the recruitment process:

Steps in the Recruitment Process

Identifying the Need:

 Job Analysis: Understanding the roles and responsibilities associated with a position.
 Workforce Planning: Determining the need for new employees based on
organizational goals and staffing requirements.

Creating a Job Description:

 Job Specifications: Listing the qualifications, skills, and experience required for the
role.
 Job Responsibilities: Outlining the duties and tasks associated with the position.

Attracting Candidates:

 Internal Recruitment: Promoting job opportunities within the organization.

 External Recruitment: Using various channels to attract candidates from outside the
organization, including:
 Job Boards and Career Websites: Posting vacancies on platforms like Indeed,
Glassdoor, and LinkedIn.
 Social Media: Leveraging platforms such as LinkedIn, Facebook, and Twitter to reach
a broader audience.
 Recruitment Agencies: Partnering with agencies that specialize in finding suitable
candidates.
 Campus Recruitment: Engaging with colleges and universities to attract recent
graduates.
  Employee Referrals: Encouraging current employees to refer qualified candidates
from their networks.

Screening and Shortlisting:

 Resume Screening: Reviewing applications to shortlist candidates who meet the job
criteria.
 Initial Interviews: Conducting phone or video interviews to further narrow down the
pool of candidates.
 Assessment Tests: Utilizing tests to evaluate candidates‘ skills, aptitude, and
personality traits.

Interviewing Candidates:

 Structured Interviews: Using a standardized set of questions to ensure consistency and

fairness.
 Behavioral Interviews: Focusing on how candidates have handled situations in the
past to predict future performance.
 Panel Interviews: Involving multiple interviewers to provide diverse perspectives on
candidates.

Making the Offer:

 Salary Negotiation: Discussing and finalizing compensation packages.

 Employment Terms: Clearly outlining job responsibilities, work hours, and other
employment conditions.
 Offer Letter: Providing a formal written offer to the selected candidate.
 Training: Providing the necessary training to help new hires perform their roles
effectively.
 Mentoring: Assigning mentors to guide new employees through their initial period.

Challenges in Recruitment

 Talent Shortages: Difficulty in finding candidates with the required skills and
experience.
 High Competition: Competing with other organizations to attract top talent.
 Retention Issues: Ensuring that new hires stay with the organization for the long term.
 Cost and Time: Managing the costs associated with recruitment and reducing time-to-
hire without compromising quality.

Recruitment is a multifaceted process that requires careful planning, execution, and

continuous improvement. By adopting best practices and leveraging technology,
organizations can attract and hire the best candidates, thereby ensuring they have the talent
needed to achieve their strategic objectives. Effective recruitment not only fills current
vacancies but also builds a pipeline of future talent, contributing to the long-term success of
the organization.

Selection
Selection is the process of choosing the most suitable candidate from a pool of applicants
who have applied for a job position. This process is critical as it ensures that the organization
hires individuals who possess the necessary skills, qualifications, and cultural fit to contribute
effectively to the organization‘s goals. Here is a detailed overview of the selection process:

Steps in the Selection Process

Preliminary Screening:

 Application Review: An initial review of resumes and cover letters to filter out
candidates who do not meet the basic job requirements.
 Initial Phone/Video Screening: A brief interview to assess candidates‘ interest,
availability, and basic qualifications.

Application and Resume Screening:

 Detailed Evaluation: Analyzing the resumes and application forms to shortlist

candidates based on experience, skills, education, and achievements.
 Applicant Tracking Systems (ATS): Utilizing software to filter applications and
identify top candidates based on pre-set criteria.

Assessment Tests:

 Skills Tests: Evaluating specific job-related skills (e.g., technical skills, language
proficiency).
 Cognitive Ability Tests: Measuring general mental ability, including reasoning,
memory, and problem-solving skills.
 Personality Tests: Assessing personality traits to determine cultural fit and predict job
performance.
 Situational Judgement Tests (SJT): Presenting hypothetical, job-related situations to
evaluate candidates‘ problem-solving and decision-making skills.

Interviews:

 Structured Interviews: Using a standardized set of questions for all candidates to

ensure consistency and objectivity.
 Behavioral Interviews: Focusing on past behavior and experiences to predict future
performance. Commonly uses the STAR method (Situation, Task, Action, Result).
 Technical Interviews: Assessing job-specific technical knowledge and problem-
solving abilities.
  Panel Interviews: Involving multiple interviewers to gather diverse perspectives on
each candidate.
 Case Interviews: Presenting real-life business scenarios to evaluate analytical and
strategic thinking.

Background Checks:

 Reference Checks: Contacting previous employers, colleagues, or mentors to verify

candidates‘ work history, performance, and character.
 Criminal Record Checks: Ensuring candidates do not have a criminal history that
could pose a risk to the organization.
 Credit Checks: Sometimes used for positions involving financial responsibilities.

Medical Examinations:

 Health and Fitness: Ensuring candidates are physically and mentally fit for the job,
especially for roles requiring specific health standards.

Final Interview:

 Executive Interview: A final interview with senior management or the hiring manager
to assess the overall fit and make the final hiring decision.
 Job Offer:
 Negotiation: Discussing salary, benefits, and other employment terms with the
selected candidate.
 Offer Letter: Providing a formal written offer outlining the job role, compensation,
and other terms of employment.
 Orientation: Introducing new hires to the organization‘s culture, policies, and
procedures.
 Training: Providing the necessary training to help new employees succeed in their
roles.
 Mentorship: Assigning a mentor to support the new employee during the initial
transition period.

Challenges in Selection

 Bias and Subjectivity: Overcoming unconscious bias and ensuring objective

evaluation of all candidates.
 Quality of Information: Ensuring the accuracy and reliability of the information
provided by candidates and references.
 Time and Resource Constraints: Balancing the thoroughness of the selection process
with the need to fill positions promptly.
 Cultural Fit: Assessing candidates‘ alignment with organizational values and culture
without compromising diversity and inclusion.
The selection process is a crucial component of effective human resource management. By
implementing a structured, fair, and thorough approach, organizations can ensure they hire
the best candidates who are not only capable and qualified but also a good fit for the
company culture. Continuous improvement and adaptation to new challenges and trends are
essential to maintain an effective selection process.

Training
Training is a vital part of Human Resource Management (HRM), focusing on improving
employees' skills, knowledge, and competencies to enhance their performance and
productivity. Effective training programs help in achieving organizational goals, retaining top
talent, and ensuring a competitive edge. Here‘s a comprehensive overview of training in
HRM:

Types of Training

 Orientation Training:

Purpose: Introduces new employees to the organization‘s culture, policies, and procedures.

Content: Company history, mission, values, structure, job-specific information, and

administrative procedures.

 On-the-Job Training (OJT):

Purpose: Provides hands-on experience under the supervision of experienced employees.

Methods: Job rotation, apprenticeships, and coaching.

 Technical Skills Training:

Purpose: Enhances employees‘ technical abilities required for their specific roles.

Content: Software usage, machinery operation, programming, and other job-specific technical
skills.

 Soft Skills Training:

Purpose: Develops interpersonal skills necessary for effective workplace interactions.

Content: Communication, teamwork, leadership, conflict resolution, and emotional

intelligence.

 Compliance Training:

Purpose: Ensures employees understand and adhere to laws, regulations, and company
policies.
Content: Workplace safety, anti-harassment, diversity and inclusion, and data protection.

 Management and Leadership Training:

Purpose: Prepares employees for leadership roles and enhances managerial effectiveness.

Content: Strategic planning, decision-making, team management, and performance

evaluation.

 Career Development Training:

Purpose: Supports employees in their career growth and prepares them for future roles.

Content: Professional development courses, certifications, mentorship programs, and career

counselling.

 Cross-Functional Training:

Purpose: Broadens employees‘ knowledge and skills across different functions within the
organization.

Content: Training in various departments or roles to foster a more flexible and versatile
workforce.

Steps in Designing an Effective Training Program

 Needs Assessment:

Organizational Analysis: Identifying where training is needed to meet strategic goals.

Task Analysis: Determining the specific tasks and skills required for different roles.

Person Analysis: Assessing individual employees‘ training needs through

performance reviews and feedback.

 Setting Training Objectives:

Defining clear, measurable goals that the training program aims to achieve.

Ensuring objectives align with organizational goals and employee development plans.

 Designing the Training Program:

Content Development: Creating or selecting relevant training materials and methods.

Instructional Design: Choosing the appropriate training methods, such as lectures, e-

learning, workshops, or simulations.

Scheduling: Planning the timing and duration of training sessions.

  Implementation:

Trainers: Selecting qualified trainers or instructors.

Delivery Methods: Utilizing a mix of in-person, virtual, on-the-job, and self-paced

learning options.

Logistics: Arranging venues, equipment, and materials.

 Evaluation:

Feedback: Gathering participants‘ feedback on the training program.

Assessment: Measuring the effectiveness of training through tests, quizzes, or

practical assessments.

Performance Metrics: Tracking improvements in job performance and productivity.

 Continuous Improvement:

Review and Update: Regularly reviewing training content and methods to ensure they
remain relevant and effective.

Adaptation: Modifying training programs based on feedback and changing

organizational needs.

Challenges in Training

 Resource Constraints: Limited budget, time, and personnel to design and deliver
effective training programs.
 Employee Engagement: Ensuring employees are motivated and engaged in the
training process.
 Measuring ROI: Demonstrating the return on investment (ROI) of training programs
in terms of improved performance and productivity.
 Keeping Content Relevant: Regularly updating training materials to reflect the latest
industry trends and organizational changes.

Training is a crucial element of HRM that enhances employee skills, improves performance,
and contributes to organizational success. By designing effective training programs that align
with organizational goals and employee needs, organizations can foster a culture of
continuous learning and development. Overcoming challenges and implementing best
practices can ensure that training programs are impactful and deliver long-term benefits.
Management development
Management development is a strategic process aimed at enhancing the skills, knowledge,
and abilities of managers to improve their effectiveness and leadership capabilities within an
organization. Effective management development programs ensure that managers are
equipped to meet current and future organizational challenges, driving performance and
fostering a positive workplace culture. Here‘s an in-depth look at the components and best
practices in management development:

Key Components of Management Development

Skills Assessment:

Competency Frameworks: Defining the key skills and competencies required for
effective management within the organization.

Self-Assessments and 360-Degree Feedback: Using tools to gather feedback from

peers, subordinates, and supervisors to identify strengths and areas for improvement.

Training and Education:

Formal Education: Providing opportunities for advanced degrees, certifications, and

courses relevant to management and leadership.

Workshops and Seminars: Offering short-term, intensive training sessions focused on

specific management skills.

E-learning: Utilizing online courses and learning platforms to provide flexible

learning opportunities.

On-the-Job Development:

Job Rotation: Allowing managers to work in different departments or roles to gain a

broad understanding of the organization.

Stretch Assignments: Assigning challenging projects that push managers to develop

new skills and think strategically.

Action Learning: Engaging managers in real-world problem-solving and project-

based learning activities.

Coaching and Mentoring:

Executive Coaching: Partnering with professional coaches to provide personalized

development and feedback.

Mentorship Programs: Pairing less experienced managers with seasoned leaders for
guidance, support, and career development.

Leadership Development Programs:

 Succession Planning: Identifying and preparing high-potential employees for future
leadership roles.

Leadership Academies: Establishing in-house programs that offer structured

leadership training and development.

Executive Training: Specialized programs designed for senior leaders to enhance

strategic thinking and decision-making skills.

Performance Management:

Goal Setting and Monitoring: Setting clear performance goals and regularly reviewing
progress to ensure continuous improvement.

Feedback Systems: Implementing structured feedback mechanisms to provide

ongoing performance insights and developmental guidance.

Examples of Effective Management Development Programs

General Electric (GE) Leadership Programs:

GE‘s leadership programs are renowned for their rigorous selection process and
comprehensive development, including rotational assignments, leadership training, and
executive mentoring.

Google’s “Project Oxygen”:

Google‘s initiative focuses on identifying and developing key managerial behaviors that drive
team performance, using data-driven insights and tailored training.

IBM’s Global Executive Leadership Program:

IBM offers a range of executive development programs that combine formal education,
action learning projects, and coaching to prepare leaders for global roles.

Management development is essential for building a strong leadership pipeline and ensuring
organizational success. By incorporating a mix of training, on-the-job development,
coaching, and continuous learning, organizations can cultivate effective managers who are
well-equipped to lead their teams and drive strategic objectives. Adapting to changing
business environments and leveraging best practices will help organizations maximize the
impact of their management development efforts.
Performance appraisal
Performance appraisal is a systematic process used by organizations to evaluate employees'
job performance, provide feedback, and identify areas for improvement. This process plays a
crucial role in employee development, compensation decisions, and organizational
effectiveness. Here‘s a detailed overview of performance appraisal, including its purpose,
methods, best practices, and challenges.

Purpose of Performance Appraisal

 Performance Measurement: Assessing how well employees perform their job duties
and responsibilities.
 Feedback: Providing constructive feedback to employees to reinforce strengths and
identify areas for improvement.
 Development: Identifying training and development needs to enhance employees‘
skills and career growth.
 Compensation Decisions: Informing decisions regarding promotions, salary increases,
bonuses, and other rewards.
 Documentation: Keeping a formal record of employee performance for future
reference, including promotions, transfers, and disciplinary actions.
 Goal Alignment: Ensuring individual performance aligns with organizational goals
and objectives.

Methods of Performance Appraisal

Traditional Methods:

 Rating Scales: Using numerical or descriptive scales to rate various aspects of

performance.
 Checklist: A list of specific behaviors or characteristics that evaluators check off as
applicable.
 Critical Incident Method: Recording specific instances of positive or negative
behavior that significantly impact performance.
 Narrative Appraisal: Providing written descriptions of an employee‘s performance,
strengths, and areas for improvement.

Modern Methods:

 360-Degree Feedback: Gathering feedback from multiple sources, including peers,

subordinates, supervisors, and sometimes clients.
 Management by Objectives (MBO): Setting specific, measurable goals collaboratively
with employees and evaluating their achievement.
  Behaviourally Anchored Rating Scales (BARS): Combining elements of the rating
scale and critical incident methods to provide specific behavioral examples for each
performance level.
 Self-Assessment: Allowing employees to evaluate their own performance as part of
the appraisal process.
 Continuous Performance Management: Regular, ongoing feedback and check-ins
between managers and employees rather than annual or semi-annual reviews.

Challenges in Performance Appraisal

 Bias and Subjectivity: Overcoming personal biases and ensuring objective evaluations
can be challenging.
 Time-Consuming: Conducting thorough and effective appraisals can be time-
consuming for managers and HR professionals.
 Employee Anxiety: Employees may feel anxious or defensive about appraisals, which
can affect their openness to feedback.
 Resistance to Change: Implementing new appraisal methods or systems can face
resistance from both managers and employees accustomed to traditional approaches.
 Aligning with Business Goals: Ensuring that individual performance appraisals align
with broader organizational goals and objectives can be complex.

Performance management
Performance management is an ongoing process aimed at ensuring employees‘ activities and
outputs align with the organization's goals. It involves setting clear expectations,
continuously monitoring performance, providing feedback, and fostering employee
development. Effective performance management enhances organizational efficiency, drives
employee engagement, and supports the achievement of strategic objectives.

Key Components of Performance Management

Goal Setting:

 SMART Goals: Setting Specific, Measurable, Achievable, Relevant, and

Time-bound goals to provide clear direction.
 Alignment: Ensuring individual goals align with team and organizational
objectives.

Performance Planning:

 Role Clarity: Defining roles and responsibilities clearly to avoid confusion and
ensure accountability.
  Development Plans: Creating plans for professional development and career
growth.

Ongoing Monitoring and Feedback:

 Regular Check-Ins: Conducting frequent one-on-one meetings to discuss

progress, challenges, and support needs.
 Real-Time Feedback: Providing immediate feedback to reinforce positive
behaviors and correct issues promptly.

Performance Reviews:

 Formal Appraisals: Conducting periodic reviews (e.g., quarterly, bi-annual,

annual) to evaluate overall performance.
 360-Degree Feedback: Collecting feedback from peers, subordinates, and
supervisors for a comprehensive assessment.

Development and Coaching:

 Training Programs: Offering continuous learning opportunities to enhance

skills and competencies.
 Coaching and Mentoring: Providing personalized guidance to support
professional growth.

Performance Improvement Plans (PIPs):

 Identifying Issues: Recognizing areas where performance is below

expectations.
 Action Plans: Developing structured plans to address performance gaps with
clear timelines and support mechanisms.

Recognition and Rewards:

 Incentives: Offering monetary and non-monetary rewards to recognize and

motivate high performance.
 Public Recognition: Acknowledging achievements in team meetings or
company-wide communications.

Documentation:

 Record Keeping: Maintaining detailed records of performance discussions,

feedback, and appraisals to support decisions and track progress.
Career planning
Career planning is a critical process that helps individuals set career goals and create a
roadmap to achieve them. It involves self-assessment, exploring career options, making
informed decisions, and taking actionable steps toward career development. Here‘s an in-
depth look at the components and steps involved in effective career planning:

Components of Career Planning

Self-Assessment:

 Interests and Values: Identifying what you enjoy doing and what is important
to you in a job.
 Skills and Strengths: Recognizing your abilities and areas where you excel.
 Personality Traits: Understanding your personality and how it fits with
different careers.

Exploring Career Options:

 Research: Gathering information about various careers, job roles, and industries.
 Networking: Connecting with professionals in fields of interest to gain insights and
advice.
 Job Shadowing and Internships: Gaining firsthand experience in potential career
fields.

Setting Career Goals:

 Short-Term Goals: Objectives you aim to achieve in the near future (e.g., getting a
certification).
 Long-Term Goals: Broader career aspirations that may take years to accomplish (e.g.,
becoming a manager).

Developing a Career Plan:

 Action Steps: Specific actions required to achieve your career goals (e.g., further
education, skill development).
 Timeline: A schedule for achieving each step in your plan.
 Resources: Identifying resources needed, such as mentors, training programs, or
financial support.

Implementing the Plan:

 Education and Training: Pursuing degrees, certifications, or courses to build necessary

skills.
 Gaining Experience: Taking on roles that provide relevant experience and skill
development.
  Networking: Building professional relationships that can offer guidance, support, and
opportunities.

Evaluating and Adjusting:

 Regular Reviews: Periodically assessing progress toward your career goals.

 Flexibility: Being open to changing your plan based on new information or changing
circumstances.
 Feedback: Seeking input from mentors, peers, and supervisors to refine your career
strategy.

Steps for Effective Career Planning

 Conduct a Self-Assessment
 Research Career Options
 Set Clear, Achievable Goals
 Create a Detailed Career Plan
 Pursue Education and Training
 Gain Practical Experience
 Build and Leverage Your Network
 Evaluate Progress Regularly

Career planning is an ongoing process that requires careful consideration and proactive effort.
By understanding your strengths, exploring your options, setting clear goals, and
continuously working toward them, you can build a fulfilling and successful career. Regular
evaluation and flexibility are key to adapting to changes and seizing new opportunities as
they arise.