Course Title: Introduction to Management

Credit hours/ECTS: 3/5

Course Code: Cmgt 1021
Year and Semester; II/I
Academic Year: 2021
Instructor Name and Contact: Hibret A. (hibretatarayoo@[Link])

Pre-requisite: Not applicable

Course Rationale

This course is prepared to help students in having clear understanding of management

concepts and skills and apply them for critical thinking in the real business world. It is
designed in such a way that it will enable students to see the key elements – concepts,
applications and skills integrated in running a business efficiently.

Course Objective: the main objective of this course is to familiarize students with:
 The basic concepts and principles in management;
 Historical development of management;
 The managerial functions; and
 The overall concept of organizational environment.

Course Description
This course focuses on the basic concepts and principles of management, the functions and
controlling, and their relationships to key issues in management practices such as leadership
and motivation. The nature and role of supervisory management, functions of the supervisor
and labor relations, inspections and effective communication are also discussed.

COURSE OUTLINE:

PART ONE- INTRODUCTION

CH. I MANAGEMENT: AN OVERVIEW
1. Meaning and Definition
2. Managerial Functions
3. Significance of Management
4. Levels of Management and Types of Management
5. Managerial Roles
6. Managerial Skills and Their Relative Importance
7. Management- Science or Art
8. Universality of Management
CH. II RE-EMERGENCE AND DEVELOPMENT OF MANAGEMENT THOUGHT
[Link] in Antiquity and Pioneer Contributors
[Link] Management Theories
2.1. Scientific Management
2.2. Classical Organization Theory
3. Behavioral Management Theory
4. Modern Approaches to Management
4.1 Systems Approach
 4.2 Contingency Approach
PART TWO- MANAGERIAL FUNCTIONS
CH. III THE PLANNING FUNCTION
1. Meaning and Importance of Planning
2. Organizational Objectives
3. The Planning Process
4. Types of Plans
5. Managerial Decision Making (Meaning, Process, Conditions under which
decisions are made, Programmed and Non-Programmed Decisions)
CH. VI THE ORGANIZING FUNCTION
1. The Concept of Organization
2. Formal and Informal Organization
3. Major Elements of Organizing Function
i. Dividing the Work
ii. Departmentation – Meaning and Basis of Departmentation
iii. Delegation of Authority – Meaning and Importance
iv. Centralization and Decentralization, The Process of Delegation, Problems
in Effective Delegation
v. Authority Relationships in Organizations (Line, Staff, and Functional)
vi. Span of Management – Meaning and Factors Determining the Span of
Management)
vii. Organizational Structure - Meaning and Significance
CH V. The Staffing function
1: Meaning of Staffing
2: Process of Staffing
CH. VI THE DIRECTING/LEADING FUNCTION
1. Meaning and The Need for Leadership
2. Leadership Theories: Trait Theory, Behavioral Theory and Situations Theory
3. Leadership Styles
i. Theory X and Theory Y Assumptions
ii. Autocratic/Authoritarian Leadership Style
iii. Democratic/Participative Leadership Style
iv. Laissez Fair Leadership Style
v. Situational Leadership
4. Motivation
i. The Concept of Motivation
ii. Theories of Motivation
- Carrot and Stick Approach
- Need Hierarchy
- Money as a Motivator
- Situational Approach
5. Communication in Organization
CH. VII THE CONTROLLING FUNCTION
1. Meaning and Importance
2. The Managerial Controlling Process
3. Types of Control
4. Control Techniques/Methods
5. Making Controlling Effective
References
o Barney and Griffin (1992), the Management of Organizations: Strategy, Structure.
Behavior, Houghton Mifflin Company, USA
o D. Pringle, F. Jennings, G. Longenecker (1988), Mananaging Organization: Functions
and Behaviors, Merill Publishing coo USA
o Neo, Hollenbeck, Gerhart, wright (2000) Human Resource Management: Gaining A
Competitive Advantage, 3rd ed, Irwin MCGraw Hill, USA
o [Link], G. Hunt, [Link], (1988), Managing Organizational Behavior, 3rd
ed, John Wiley and Sons, USA
o T. Ramasamy (2001) Principles of Management, 3rd ed, Himalia Publishing House,
India
o VSP RAO and PS Narayana (1999) Principles and Practice of Management, Newdelhi
Method of Delivery:
 Class room lecture
 Paper and presentations
 Case studies
Evaluation:
 Continuous Assessment
 Mid term exam
 Assignments
 Final Exam
CLASSICAL MANAGEMENT THEORY
Serious attention to management began in the early years of this century. One of the critical
problems facing managers at that time was how to increase the efficiency and productivity of
the work force. The effort to resolve these issues marked to beginning of the study of modern
management. It was eventually labeled the classical approach, as is usually the case with the
beginning efforts of every field of study.

The classical approach to management can be better understood by examining it from two
perspectives. These two perspectives are based on the problems each examined.
One perspective concentrated on the problems of lower level managers dealing with the
every day problems of managing the work force. This perspective is known as scientific
management.

The other perspective concentrated on the problems of top managers dealing with the
everyday problems of managing the entire organization. This perspective is known as
classical organization theory.

2.2.1 Scientific Management

At the turn of the 20th century, business was expanding and creating new products and new
markets, but labor was in short supply. Two solutions were available; (1) substituting capital
for labor or (2) use labor more efficiently. Scientific management concentrated on the second
solution. Significant contributions were made to scientific management by Fredrick Winslow
Taylor, Henry L. Gantt, and Frank and Lillian Gilbreth.

Frederick Winslow Taylor (1856 - 1915

Frederick Winslow Taylor, an American engineer, was the founder of the scientific
management school of thought. He spent the greater part of his life working on the problems
of achieving greater efficiency on the shop-floor. The solutions he came up with were based
directly on his own experience at work, initially as a shop-floor worker himself and later as a
manager. His career began as an apprentice in engineering. He later moved to the Midvale
Steel Company and in the course of 11 years he rose from laborer to shop superintendent. In
1889 he left Midvale to join the Bethlehem Steel Company, where he consolidated his idea
and conducted some of his most famous experiments in improving labor productivity.
As stated earlier, at the beginning of the 20th century skilled labor was in short supply,
especially in the U.S. To expand productivity, ways had to be found to increase the efficiency
of workers. In an effort to address these problems, Taylor built the body of principles that
now constitute the essence of scientific management.

The real trouble, Taylor decided on reflection, was that no one knew how much work it was
reasonable to expect a man to do. Either employers gauged a "fair day's work" by a general
impression gained from observation or, as in his case, by actually working on some of the
jobs themselves - or they had a record of the shortest time in which certain jobs had ever been
performed. And there was plenty of room for argument about either standard.
Taylor based his managerial system on production-line time studies. Instead of relying on
traditional work methods, Taylor analyzed and timed steel workers' movements on a series of
jobs. With time study as his base, Taylor broke each job down into its components
("elements") and designed the quickest and best methods of operation for each part of the job.
He thereby established how much workers should be able to do with the equipment and
materials at hand. Taylor also encouraged employers to pay more productive workers at
higher rates than others. The increased rate was carefully calculated and based on the greater
profit that would result from increased production.
Thus, workers were encouraged to surpass their previous performance standards and earn
more pay. Taylor called his plan the differential rate system. Under this system, a man
received on piece rate if he produced the standard number of pieces and another rate if he
surpassed the standard, and in the latter case, the higher rate would be applied to all the
pieces he produced, not merely to those over the standard.

Example of the differential rate system

Regular rate per piece = $0.50
Differential rate per piece = $ 0.60
Standard production rate per day = 3 pieces

Case 1: If the worker produced 3 pieces a day, he would get $1.50, which is 3x0.50.
Case 2: If the worker produced 4 pieces a day, he would get $2.40, which is 4x0.60.
Case 3: If the worker produced 2 pieces a day, he would be fired.
Management, Taylor said, could well afford to pay the higher rates because of the economies
achieved through better methods and the elimination of slowdowns.
Taylor also called for a drastic reorganization of supervision. His system embodied two new
concepts: (1) separation of planning and doing and (2) functional foremanship.

When Taylor first entered industry, it was customary for each man to plan his own work,
generally following a pattern he had learned by watching others when he was an apprentice.
The order, in which the operations were performed, for example, was entirely up to the man
insofar as it was not dictated by the nature of the job: so was the selection of the tools. The
foreman or gang boss simply told the worker what jobs to perform, not how to do them
except, possibly, in the case of new work.

Taylor's plan also supplemented the gang boss with a number of functional foremen, each of
whom was a specialist in one type of work - for example, in the use of a lathe or a grinder.
The specialists occupied a "Planning room", and each gave orders to the workmen on his
specialty. Thus, if the gang boss assigned a worker to a job that called for several different
operations, the man would be told how to proceed by seven or eight other bosses.

But the essence of scientific management, Taylor believed, lay in none other than what called
"mental revolution". If workmen were paid handsome amounts for producing more and were
shown how to do so, they would cease their slowdowns. Since management would be
enjoying the fruits of increased productivity, it would be happy to pay the higher wages.
Interests of management and labor would be identical, and there would be no reason for strife
between them. Neither side would be interested in getting the larger percentage of the pie
because both would profit so much more by working together to increase its size. This would
automatically mean bigger slices for both, and relative shares would be unimportant.

He believed that workers, who met the higher standards, need not fear of layoffs because
their companies benefited from the increase in productivity. The higher payments would
continue because they were „scientifically correct‟ rates set at a level that was best for the
company and for the worker. At the same time, no one would be hurt by the differential
system. Workers who fell below the standard in productivity would find other work "in a day
or two", as he put it, because of the existing labor shortage.
By 1893, Taylor decided he could best put his ideas into effect as a private consulting
management engineer. He was soon able to report impressive improvements in productivity,
quality, worker morale, and wages while working with one client Simonds Rolling Machine
company. In one operation, Simonds employed 120 women workers to inspect bicycle ball
bearings. The work was tedious, the hours were long, and there seemed little reason to
believe improvements could be made. Taylor proved otherwise. First, he studied and timed
the movement of the best worker. Then he trained the rest in the methods of their more
effective co-workers and transferred or laid off the poorest performers. He also introduced
rest periods during the workdays, along with his differential pay rate system and other
improvements. The results were impressive: expenses went down while productivity, quality,
earnings, and worker morale went up.

Although Taylor's methods led to dramatic increases in productivity and to higher pay in a
number of instances, workers and unions began to oppose his approach. Like the workers at
Midvale, they feared that working harder or faster would exhaust whatever work was
available and bring about layoffs. The fact that workers had been laid off at Simonds and in
other organizations using Taylor's methods encouraged this fear. As Taylor's ideas spread,
opposition to them continued to grow. Increasing numbers of workers became convinced that
they would lose their jobs, if Taylor's methods were adopted.

By 1912, resistance to Taylorism had caused a strike at the Watertown Arsenal in USA, and
hostile members of the US Congress called on Taylor to explain his ideas and techniques.
Both in his testimony and in his two books, Shop Management and The Principles of
Scientific Management, Taylor outlined his philosophy. It rested, he said, on four basic
principles:
1. The development of a true science of management, so that the best method for
performing each task could be determined.
2. The scientific selection of the workers, so that each worker would be given
responsibility for the task for which he or she is best suited.
3. The scientific education and development of the worker.
4. Intimate, friendly co-operation between management and labor.

Taylor also contended that in order for these principles to succeed, "a complete mental
revolution" on the part of management and labor was required. Rather than quarrel over
whatever profits there were, they should both try to increase production and profits to be
shared.
In short, Taylor believed that management and labor had a common interest in increasing
productivity. And increasing productivity is the explanation for the development of western
economy.

FOLLOWERS OF TAYLOR
Henry L. Gantt

Gantt was a contemporary and colleague of Taylor's at the Bethlehem Steel Company, and he
strongly supported the ideas of scientific management propounded by Taylor. He also
emphasized the concept of mutuality of interests between management and workers. He
stressed the need to appreciate that" in all problems of management, the human element is the
most important".

Gantt made improvement in Taylor's incentive system, and developed what is known as the
"task and bonus plan". This is the foundation of many incentive plans in our times. Under
this incentive plan, the worker is paid a guaranteed daily wage whether or not he completes
the standard work. But if he completes four‟s work in three hours or less, he is paid for four
hours.

Gantt is perhaps best known for his development of graphic methods of describing plans and
making possible better managerial control. He emphasized the importance of time, as well as
cost, in planning and controlling work. This led eventually to the famous Gantt chart-a chart
used for planning and following up work progress against time. The Gantt chart is regarded
by some social historians as the most important social invention of the twentieth century.
Frank and Lillian Gibreth
Frank and Lillian Gilbreth, a husband and wife team have been regarded as important
contributors to scientific management. Frank Gilbreth became interested in motion study and
reduced the number of movements in bricklaying from eighteen to five. This increased the
productivity of bricklayers from 120 to 250 bricks per hour. Frank emphasized the need of
developing or discovering the "one best way of doing a given task", whereas Lillian
concerned herself with the human aspects of management. The Gilbreth held that the most
important cause of workers dissatisfaction was the lack of management's interest in them.
They emphasized that management should understand their needs and personality.
Frank Gilbreth's system became known as 'speed work', and the speed came not from
rushing the workers to work faster but from cutting down unnecessary motions. He identified
eighteen on-the-job motions and called them THERBLIGS. (Therbligs is Gilbreth spelt
backwards with the transposition of one letter). The on-the -job motions are: (i) search, (ii)
find, (iii) select, (iv) grasp, (v) position, (vi) assemble, (vii) use, (viii) disassemble, (ix)
inspect, (x) load transport, (xi) pre-position, (xii) release load, (xiii) transport empty, (xiv)
wait when avoidable, (xv) avoidable delay, (xvi) rest for overcoming fatigue, (xvii) plan, and
(xviii) hold.

Frank Gibreth also invented a flow chart which showed the progress of an entire operation
through time and various tasks involved in it.
Every operation is broken down into tasks which enable the identification and elimination of
unnecessary motions.

2.2.2 Classical Organization Theory

Another body of ideas developed at the same time as scientific management. These ideas
focused on the problems faced by top managers of large corporations. Since this branch of the
classical approach focused on the management of organizations while scientific management
focused on the management of work, it was labeled classical organization theory. Its two
major purposes were to (1) develop basic principles that could guide the design, creation, and
maintenance of large corporations and (2) identify the basic functions of managing
organizations.

Engineers were the prime contributors to scientific management; practicing executives were
the major contributors to classical organization theory. As with scientific management there
were many contributors to the classical organization theory. Henri Fayol is singled out for
discussion, however, because his ideas reflect classical organization theory.
Henri Fayol (1841 - 1925)
Henri Fayol, the celebrated French industrialist and theorist, began his working life as young
mining engineer at the age of 19. He spent his entire working life with the same company,
rising to Managing Director at the age of 47and only retiring after his 77th birthday. Under his
leadership the company prospered despite its near-bankrupt state when he took over.
He published a book entitled Administration Industrielle et Generale(The prince) in 1916
and that brought to light the distillation of his lifetime‟s experience of managerial work.
The works of Taylor and Fayol are essentially complementary. They both realized that the
problem of human resources and their management at all levels is the key to business success.
Both applied scientific method to this problem. Taylor worked primarily on the operative
level, from the bottom of the organizational hierarchy upward. Fayol concentrated on the
managing Director (his term) and worked downward. Fayol was perhaps the first individual
to discus management as a process with specific functions that all managers must perform.
He proposed planning, organizing, commanding and controlling as the four management
functions.
Fayol found that activities of an industrial undertaking could be divided into six groups
technical (production), (2) commercial (buying, selling, and exchanging), (3) financial
(search for, and optimum use of, capital), (4) security (protection of property and persons),
(5) accounting (including statistics), and (6) managerial (planning, organization, command
coordination, and control). Pointing out that these activities exist in businesses of every size,
Fayol observed that the first five were well known, and consequently he devoted most of his
book to an analysis of the sixth.

Fayol developed fourteen managerial principles for which he became known. He stated that
principles of management are flexible, not absolute, and must be usable regardless of
changing and special conditions.
In concluding discussion of his principles of management, Fayol observed that he had made
no attempt to be exhaustive but had tried only to describe those he had the most occasions to
use. The fourteen general principles of management developed by Fayol are presented below.
Fayol's General Principles of Management are:

i. Division of work. This is the specialization that economists consider necessary

for efficiency in the use of labor. Fayol applies the principle to all kinds of work,
managerial as well as technical.
ii. Authority and responsibility. Here Fayol finds authority and responsibility to be
related, with the latter arising from the former. When authority is exercised,
responsibility arises. He sees authority as a combination of official factors, driven
from the manager's position, and personal factors, "compounded of intelligence,
experience, morale worth, past service, etc."
iii. Discipline. "Seeing discipline as respect for agreements which are directed at
achieving obedience, application, energy, and the outward marks of respect" Fayol
declares that discipline requires good superiors at all levels. Discipline is
absolutely essential for the smooth running of business and without discipline no
enterprise could prosper.
iv. Unity of Command. This means that employees should receive orders from one
superior only.
v. Unity of Direction. According to this principle, each group of activities with the
same objective must have one head and one plan. As distinguished from the fourth
principle, it relates to the organization of the "body corporate" rather than to
personnel.
vi. Subordination of individual to General Interest. This is self-explanatory; when
the two are found to differ, management must reconcile them.
vii. Remuneration. Remuneration and methods of payment should be fair and afford
the maximum possible satisfaction to employees and employer.
viii. Centralization. Without using the term 'centralization of authority,' Fayol refers
to the extent to which authority is concentrated or dispersed. Individual
circumstances will determine the degree that will "give the best overall yield."
ix. Scalar Chain (line of authority). The scalar chain is the chain of command
ranging from the highest to the lowest ranks. In short, it is line of authority.
Adhering to the chain of command helps implement unity of direction, but
sometimes the chain is too long and better communication and better decisions
can result from two or more department heads solving problems directly rather
than referring them up the chain until a common superior is reached.
x. Order. Both equipment and people must be well chosen, well placed, and well
organized for every thing and everything in its place." For people "A place for
every body and everybody in his place."
xi. Equity. Kindness and justice will encourage employees to work well and be loyal.
xii. Stability of Tenure of Personnel. Changes in employee assignments will
necessary, but if they occur too frequently, they can damage morale and
efficiency.
xiii. Initiative. Thinking out a plan and carrying it out successfully can be deeply
satisfying. Managers should encourage employees to do this as much as possible.
 xiv. Esprit de corps. This is the principle that "in union there is strength," as well as
an extension of the principle of Unity of command, emphasizing the need for
teamwork and the importance of communication in obtaining it.
2.2.3 Bureaucratic Theory
The advocates of the bureaucratic theory contributed yet a third, widely divergent stream of
thought - a concern for how the overall structure of an organization influences managerial
effectiveness. The chief advocate of the bureaucratic organization was Max Weber (1846-
1920).
A wealthy German intellectual, Max Weber described what he believed was the ideal or pure
form of organization. Weber's "pure form" of organization is characterized by rationality and
impersonality. The parts of rationally structured organizations are designed and coordinated
to achieve specific ends. Rationality implies goal directedness. Impersonality implies
objectivity in interpersonal relations. Human resource decisions in bureaucracies were to be
strictly impartial - based on qualifications and work demands rather than on a caste system or
the personal preferences of decision makers.

The building blocks of organizations are clearly defined offices (positions) organized into a
hierarchy with a fixed chain of command. Weber's ideal bureaucratic organization was
designed for efficiency, predictability, and the reign of rules". To Weber the rational
structuring of organizations was a reaction against the unwarranted influence of political
control and the power of charismatic personalities of royalty.

Bureaucracy is characterized by:

 Hierarchy,
 Impersonality,
 Written rules of conduct,
 Promotion based on achievement,
 Specialized division of labor, and
 Efficiency
According to Weber, bureaucracies are goal-oriented organizations designed according to
rational principles in order to efficiently attain their goals. Offices are ranked in a hierarchical
order, with information flowing up the chain of command, directives flowing down.
Operations of the organizations are characterized by impersonal rules that explicitly state
duties, responsibilities, standardized procedures and conduct of office holders. Offices are
highly specialized. Appointments to these offices are made according to specialized
qualifications rather than ascribed criteria. All of these ideal characteristics have one goal, to
promote the efficient attainment of the organization's goals.
The major advantages of bureaucracy is that precision, speed, unambiguity, knowledge of the
files, continuity, discretion, unity, strict subordination, reduction of friction, and of material
and personal costs are raised to the optimum point. Its major disadvantages lie in red-tape
(excessive procedure), rigidity, and neglect of human factor.

2.3.4 Contributions and Limitations of the Classical Management Approach

Contributions
The greatest contribution of the classical approach was that it identified management as an
important element of organized society. Management has increased in importance. The facts
that management skills must be applied in schools, government, and hospitals, as well as
business firms, are stressed. Advocates of the classical approach believed that management,
like law, medicine, and other occupations, should be practiced according to principles
managers can learn.
The identification of management functions such as planning, organizing, and controlling
provided the basis for training new managers. The manner in which the management
functions are presented often differs, depending upon who is presenting them. But any listing
of management functions acknowledges that managers are concerned with what organization
is doing, how it is done, and whether it was done.
The contributions of the classical approach, however, go beyond the important work of
identifying the field of management and its process and functions. Many management
techniques used today are direct outgrowth of the classical approach. For example, time and
motion analysis, work simplification, incentive wage systems, production scheduling,
personnel testing, and budgeting are all techniques derived from the classical approach.

Limitations
One major criticism of the classical approach is that the majority of its insights are too
simplistic for today's complex organizations. Critics argue that the scientific management and
classical organization theory are more appropriate for the past, when the environments of
most organizations were very stable and predictable. The changing environment, changing
worker expectations, and changing expectations of society today are tremendous.

2.3 NEO-CLASSICAL THEORIES

Neo-classical theory is built on the basis of classical theory. It modified, improved, and
extended the classical theory. The neo-classical approach to management has two branches.
The first branch, the human relations approach, became very popular in the 1940s and 1950s.
The second branch, the behavioral science approach, became popular in the 1950s and still
receives a great deal of attention today.
2.3.1 The Human-Relations Approach
The term human-relations refer to the manner in which managers interact with subordinates.
To develop good relations, followers of this approach believed, managers must know why
their subordinates behave as they do and what psychological and social factors influence
them. While scientific management concentrated on the physical environment of the job,
human relations concentrated on the social environment.
The very significant contribution to the human-relations school of thought came from
Professor Elton Mayo, an Australian by birth and a Psychologist by training. He has been
described as the founder of the human-relations movement, whose advocates have stressed
the need for managerial strategies to ensure that concern of people at work is given the
highest priority.
The Hawthorne Studies
The Hawthorne Studies made one of the early important contributions to the human-relations
approach. These were studies conducted at the Hawthorne plant of the Western Electric
Company in Chicago, USA, between 1927 and 1932, in a number of different stages .
The main conclusions to be drawn from these studies are:

i. Individual workers cannot be treated in isolation, but must be seen as members of

a group;
ii. The need to belong to a group and have status within it is more important than
monetary incentives or good physical working conditions;
iii. Informal (Unofficial) groups at work exercise a strong influence over the behavior
of workers;
 iv. Supervisors and managers need to be aware of these social needs and cater for
them if workers are to collaborate with the official organization rather than work
against it.
What the Hawthorne studies dramatized was that humans are social-that business operations
are a matter not merely of machinery and methods but also of gearing these with the social
system to develop a complete sociotechnical system. These experiments led to the
recognition that managers operate in a social system. It should not be inferred from this that
prior to the Hawthorne experiments successful managers did not recognize the importance of
the human factor, or that management theorists overlooked it But what the work of Mayo and
his associates did underscore was the need for a greater and deeper understanding of the
social and behavioral aspects of management.
2.3.2. The Behavioral Science Approach
Other individuals who were university trained in social sciences such as psychology,
sociology, and anthropology began to study people at work.
They had advanced training in applying the scientific approach to the study of human
behavior. These individuals have become known as behavioral scientists and their approach
is considered to be distinct from the human relations approach.
The individuals in the behavioral science branch of the behavioral approach believe that man
is much more complex than the “economic man” descriptions of the classical approach and
the “social man” description of the human relations approach. The emphasis of the behavioral
science approach concentrates more on the nature of the work itself, and the degree to which
it can fulfill the human need to use skills and abilities. Behavioral scientists believe that an
individual is motivated to work for many reasons in addition to making money and forming
social relationships. They also focused on communication, motivation leadership areas.
Contributions and Limitations of the Neo-Classical Theory
Contributions
For the student of management, the neo-classical approach has contributed a wealth of
important ideas and research results on the people-managing aspect of the discipline of
management. The basic rationale is since management must get work done through others,
management is really applied behavioral science, because a manager must motivate, lead, and
understand interpersonal relations.
Limitations
The basic assumption that managers must know how to deal with people appears valid. But
management is more than applied behavioral science. For the behavioral approach to be
useful to managers, it must make them better practitioners of the process of management. It
must help them in problem solving situations. In many cases, this objective has not been
achieved because of the tendency of some behavioral scientists to use technical terms when
trying to communicate their research finding to practicing managers. Also, in some situations,
one behavioral scientist (a psychologist) may have a different suggestion than another (a
sociologist) for the same management problem. Human behavior is complex and is studied
from a variety of viewpoints. This complicates the problem for a manager trying to use
insights from the behavioral sciences.
2.4 MODERN THEORIES
Modern management theories indicate further refinement, extension, and synthesis of all the
classical and neo-classical approaches to management. Classical approach satisfied the basic
economic needs of the organization and the society.
Neo-classical approach is trying to satisfy personal security, and social needs of workers.
Both approaches must be suitably integrated to emphasize the need not only for recognition
of human values but also for recognition of productivity simultaneously. Modern
management must have the twin primary objectives of productivity (classical approach) and
satisfaction (neo-classical approach). Under the modern management theory, we have the
following streams.
i. The Systems Approach, and
ii. The Contingency Approach.

2.4.1 The systems approach

The systems theory of management views the elements of an organization as interconnected.
The approach also views the organization as linked to the environment. Organizational
effectiveness, even survival, depends on the organizations interaction with its environment.
Systems have the following features:
Subsystem: - A set of related parts that work together to achieve an objective as one
component of a larger system. For example, the human body‟s circulatory system, nervous
system, respiratory system etc. are subsystems of the human body.
Open and closed Systems:- Two extremes on a continuum, open systems interact freely with
their environments, closed systems interact much less. A large, publicly held, internally
flexible organization would be a relatively open system, as demonstrated by its many
interactions with stockholders, governments, customers, and others. These are intra-
subsystem interactions, inter-subsystem interactions, and interactions with super systems.
Input-Transformation-Output Model: - An open system receives inputs from its
environments (such as money, material, personnel, and technology) which it transforms into
outputs (such as goods and services) in interaction with environmental variables (market
conditions, world affairs, and so forth).
System Boundary: - In closed systems the boundaries (lines of demarcation) between an
organization and its environment are difficult to penetrate (for example, the boundaries of a
secretive, bureaucratically structured, closely held corporation).
Steady State: - A steady state is the dynamic equilibrium, homeostasis, or balance an
organization maintains (with suppliers and customers for example) to maintain health, and
prosperity
System Goals: - Organizations have a variety of goals. The supreme goal of an organization
is survival. All other goals depend on the achievement of this one goal. Another goal, which
is intimately correlated with survival goal, is the goal of adaptation and integration with
environment. Generally speaking, organizations, like other systems, also seek growth.
Growth is a sign of development, promise, and opportunity.
Feedback: - Every business system has an inherent feedback mechanism that provides
various types of useful information to management. Management makes use of this
information in controlling the performance at different stages of work. Feedback is also
helpful in improving the quality of the products being manufactured, and services rendered
by an organizational unit.
Psycho-social system: A business organization is a psycho- social system in the sense that
people working in a firm develop social relationships and they constantly interact with one
another.
Creativity: Business system is creative in the sense that it fruitfully converts the available
resources in to useful products. Business system creates various forms of utility and hence
adds value to the input.
Interdependence: Various subsystems of a business system are interdependent and
interacting. Different departments are linked together in one way or other to achieve specified
goals. Interdependence exists between different firms and industries also in addition to
interdependence between different departments within a firm.

An organization, according to the systems view, is :

i. A subsystem of its broader environment;
 ii. Goal oriented: people with a purpose of maximization of profits and shareholders‟
wealth, survival of organizational unit, supply of goods and services to the
consuming public, meeting the society‟s expectation, etc.;
iii. A technical subsystem using knowledge, techniques, equipment and facilities; and
iv. A structural subsystem, people working together on interrelated activities.
2.4.2 The Contingency Theory Approach
Contingency theory has been developed mainly in the 1970s. It builds on the major premises
of the systems theory that organizations are organic and open systems, a relationship of
interdependence between an organization and its environment, as well as within and between
its subsystems. The contingency theorists aim at integrating theory with practice in a systems
framework
When an organization behaves in response to forces in its environment, its behavior is said to
be contingent on the forces. Hence, a contingency‟ approach is an approach where the
behavior of one sub-unit is dependent on its environmental relationship to other units or sub-
units that have some control over the consequences desired by the sub-unit. Thus behavior
within an organization is contingent on situations, and if a manager wants to change the
behavior of any part of the organization, he or she must attempt to change that part of its
environment that is influencing it.
Contingency approach emphasizes that there is no one best way to design organizations and
manage them. Management is situational, and mangers should design organizations, define
objectives, and formulate strategies, policies, and plans in accordance with the prevailing
environmental conditions. Secondly, managerial policies and practices, to be effective must
respond to changes in the environment. Thirdly, since managements‟ success significantly
depends on its ability to cope with its environment, it should sharpen its diagnostic skills so
as to anticipate and comprehend environmental changes. Fourth, managers should have
adequate human relations skills to accommodate change, and abilities to manage transition, as
well as stabilize change.
Finally, it should use the contingency model in designing the organization, developing its
information and communication system, adopting its effective leadership styles and
formulating suitable objectives, strategies, policies and practices. Thus, contingency theory
provides a method of analysis as well as a way of integrating organization with its
environment.
CHAPTER TWO
 PLANNING
2.1 Nature & Purpose of planning
Every human activity is undertaken with them to achieve something following planning. Since man is gifted
with the power of reasoning, he rarely does anything without weighting the consequences of his
action.
- The head of a family- plans his expenditure
- The housewife- plans here daily chores,
- The students- plan their studies
- Teachers- plan their teaching work, etc
In the field of B usiness, the need for planning is all the greater. This is because of ever- growing
competition, frequent fluctuations in demand, discovery of new products, and the new ways in which
these can be used with a worldwide scarcity of resources. Planning is an activity, which is performed
before any action is taken. The action we take is based o n the p l a n . Thus, it is a n t i c i p a t o r y
decision m a k i n g p r o c e s s a n d improves performance. Planning allows integrated, consistent and
purposeful action

Planning is the primary function of management. The chief function of management is to attain the
objectives of the enterprise. For this, it is to plan not only in the beginning but throughout the operations.
planning involves deciding a best course of action from among a number of alternatives which
would help the enterprise to achieve its objectives most expeditiously & economically.
3.1.1 What is planning?
Planning has as many definitions as management, by which many authors gave to it. However,
these definitions are mutually supportive or complementary to each other. Several of the definitions
are:
Determining specified objectives & how to accomplish them.
The process by which managers set objectives, assess the future, & develop courses of action to
accomplish these objectives.
The process of preparing for change coping with uncertainty by formulation future Courses
of action.
Planning is deciding in advance what to do, how to do it, when to do it, and who is to do it
Thus, it is clear from the various definitions given above that planning involves two things.
I) Determining the aims and objectives
ii. Selecting on the bases of past e experience, present facts and circumstances and future
possibilities, the best course of action to realize the planning objective.
Planning involves selecting missions and objectives and the actions to achieve it; it requires decision
making, i.e., choosing future course of action from among alter natives. Planning is determining in
advance what is to be accomplished and how it is to be accomplished
Because planning paves the way for all down stream management functions, by serving as a bridge
between the present & the future, it is r e g a r d e d a s t h e p r i m a r y f u n c t i o n of
management.
3.1.2 Nature/ characteristics of planning
(i) The Primacy of planning
The primacy of planning means that the function of planning precedes all other managerial functions.
Since the other management functions are performed to facilitate the achievement of goals that are set
in planning process, planning logically precedes all other managerial functions.

Although in practice all the managerial functions inter-match as a single system of action, planning is
unique in that it establishes the objective necessary for all group effort. And, of course, all the other
managerial functions must be planned if they are to be effective. This is because, controlling, by
definition, is the comparison of actual performance with the planned. It is the planned performance,
which is controlled.
ii) Pervasiveness of planning
Planning is pervasive /universal in the sense that:
(a) It is the function of all managers regardless of the level they belong, the time spent on planning the
significance, the characteristic, etc.
(b) Planning exists in all organizations regardless of their type and size.
iii) Contribution to purpose & Objective
This implies that the purpose of any plan and all its supportive & derivative plans is to
facilitate the accomplishment and the achievement of the purposes and the objectives of the
organization. Managerial planning seeks to achieve a consistent, coordinated structure of operations
focused on desired ends. Without planning, actions may become merely random activity, producing
nothing but chaos.
iv) Planning is directed towards efficiency
The efficiency of a plan is measured by its contribution to purpose & objectives, offset by the costs
and other unsought factors required to formulate & operate it. Plans are efficient if they achieve
their purpose at reasonable costs, when cost is measured not only in terms of time, money, or
production but also in the degree of individual & group satisfaction.
v) It concerns future activity
Since planning is deciding currently about the future, it involves forecasting and decision
making. The essence of planning is looking a head & is concerned with deciding in the present
what is to be done in the future.

vi) It has dynamic aspects (it is flexible & continuous)

A manager plans on the basis of some assumptions, which may not come true in the future.
Therefore, he had to go on revising, modifying and adjusting plans in the light of the
prevailing realities/circumstances. Thus, p l a n n i n g i s not o nl y t h e p r i m a r y f u n c t i o n of
management, but it is also a continuous function of management. Planning is flexible as it is based on
future conditions which are always dynamic.
In sum, every business plan must have the following characteristics: objectivity, futurity, flexibility, stability,
comprehensiveness, clarity & simplicity.
3.1.3 Importance/purpose of planning
i) To offset uncertainty:-
Future is always full of uncertainties and charges which make planning a necessity because planning
foresees the future and makes provisions for it thereby giving an added strength to the organization
for continuous growth and steady prosperity.
ii) To focus attention on objectives:-
Because, all planning efforts are directed towards achieving enterprise objectives, the very act of
planning focuses attention on these objectives. Well considered overall plans u n i f y
interdepartmental activities.
iii) To gain Economical Operation:
Planning minimizes costs because of its emphasis on efficient operation and consistency.
It substitutes joint directed effort for uncoordinated piecemeal activity, even flow o f work for
uneven flow, and deliberate decisions for snap judgments.
iv) To facilitate Control
Planning and controlling are inseparable, and commonly referred to as the Siamese twins. This is because;
unplanned action cannot be controlled, for control involves keeping activities on course by correcting
deviations from plans.
Any attempt to control without a plan would be meaningless, since there is no way for people
whether they are going where they want to go (the task of control), unless they first know where they
want to go (the task of planning), plans thus furnish the standards of control.

Generally, a coordinated sense of action, managerial perspective, improved decision making, increased
efficiency, improve control & performance are also benefits of planning.
2.1.4 The Planning Process
The following are the steps that serve as a general model, which can be applied, with some
modification, to the planning processes of any organization. (Whether it is large or small; profit making
or not- for-profit)
1. Identifying and defining the real problem
An awareness of opportunities in the external environment as well as with in the organization is the
real starting point for planning. We should take a preliminary look at possible future opportunities
and see them clearly and completely, know where we stand in the light of our strengths and
weakness, understand what problems we wish to solve and why, and know what we expect to gain.
Our setting of realistic objectives depends on this awareness planning requires realistic diagnosis of the
opportunity situation.
2. Establish clear-cut objectives
The next step in the planning process is to set objectives to the entire organization and to each work
unit, not only for long-term but also for the short range.
Objectives specify the expected results and indicate the end point of what is to be done, where the
primary emphasis is to be placed, and what is to be accomplished by the net work of strategies,
policies, procedures, rules, budgets, and programs.
3. Establishing the planning Premise/assumption
Premises are assumptions providing a background against which estimated events affecting the plan
will take place. They are assumptions about the environment in which the plan is to be carried out
knowledge of the organizations goods and existing condition provides a framework for defining
which aspects of the environment will have the greatest influence on the organizations ability to
achieve its objectives.
The purpose of environmental analysis is to identify ways to respond to changes in economic,
technological, social /cultural & political/ and legal environments having indirect influence to the
organizations plans, and for changes direct influences which have extended on the organizations
market, industry, suppliers, competitors, or key resources and skills.
Here, great consideration should be made to the assumptions regarding the future. Therefore, the
assumption and the constraints under which plans are to operate should be clearly brought
about/established.
4. Identify Alternative Courses of Action
The fourth step in planning process is to find alternative course of action. We may have a number o f
alternatives and finding alternatives is not common problem, but reducing the number of
alternatives so that selecting the most promising may be analyzed which requires the assessment of
their probable consequences. Thus, the planner must usually make preliminary examination to
discover the most fruitful possibilities.
5. Evaluating Alternative Courses
After identifying the alternatives, the next logical step is to evaluate each and every
alternative by weighing them against in the light of the premises and goals. One course may appear
to be profitable but require a large cash out lay with a slow pay back; another may look less
profitable but involves less risk; still another may better suit the company' s long range objectives
but it is difficult to adapt it, etc. Therefore, make an adjustment for the forecast plan if any;
see if the cost, speed, and quality requirements are satisfied and if mechanization expedites the
work for the achievement of desired objectives in terms of each possible course of action.
6. Selecting a course of action /best Alternative
After evaluating each alternative based on the goals and premises, the next step is to decide or select
the best course of action that will help efficiently achieve the organization objectives. When we
decide, we have to make sure that the plan possesses flexibility to adjust to varying conditions,
acceptance of the plan by operating personnel as well as the existing capacity of the firm and need
for new equipment, space personnel, training and supervision.
7. Formulating Derivative plans
An arrangement of detailed sequence and timing should be made for the proposed plan. At the
point when a decision is made, planning is seldom complete and certain arrangements should be
made that support the basic plan of action chosen, that is, identification of the derivative plans
that support the major plan of action.
8. Numbering plans by Budgeting
After decisions are made and plans are set, the final step is to give them meaning that is to
number plans by converting them to budgets, this helps to establish verifiable targets of
achievement, to facilitate control and hear. The planner should be able to arrange for
sufficient reports and records over a reasonable period to be collected to inform proper
management members and measure results as well as what remedial action could be proposed if
results indicates weakness when plans are in action.
2.1.5 Types of Plans
Planning can be classified in different ways in different basis:-
1. Duration /Time dimension/
Some plans are in effect for short periods, where as others stretch decades into the future. An
important component of any plan is the planning horizon: i.e., the length of time the plan specifies
for activities to be implemented / the time that elapses between the formulation and the
execution of a planned activity. Hence, there are three planning horizons that can be identified for
classifying plans.
i) Short range plans: - a plan for a year or less one year
e.g. Annual plan of sales, revenue, production material requirement, operating expenses budget.
ii) Intermediate range plans: - plan between a year and five years.
e.g. Development of new products, modernization of facilities.
iii) Long range plans: - plan for five or more years.
e.g. Long term leases on production or ware house facilities

2. Scope Dimension
Planning can be classified in to two based on the scope or breadth of activities they represent.
A). Strategic plan: These plans are comprehensive in scope & reflect long-term needs & direction
of the organization. Strategic plans/top management plans include the development of over all
company objectives. They are p r i m a r i l y concerned w i t h solving l o n g -term problems associated
with external, environmental influences. They establish the mission of the organization. Strategic
planning is a process that involves the assessment of market conditions, customer needs,
competitive strengths and weakness; sociopolitical, legal and economic conditions; technological
developments and the availability of resources that lead to the specific opportunities or threats facing
the organization
 Strategic plans include:-
1) Mission/purpose
2) Objectives
3) Strategies
1. Mission:- Every kind of organized operation has or at least should have, if it is to be
meaningful purposes or missions.
Mission is the reason for the existence of an organization .
In every social system, enterprises have a basic function or task which is assigned to them by society –
This is the mission of the organization.
e.g. The purpose of a business generally is the production & distribution of goods and services.
2. Objectives/Goals:- The ends toward which activity is achieved.
 Objectives are desired future results
 They represent not only the end of planning but the end toward which organizing, staffing,
leading and controlling are aimed.
 While enterprise objectives are the basic plan of the film, a department may also have its own
objectives.
3. Based on their use dimension these plans can be classified in to
(i) S ingle use plans
(ii) Standing plans
Standing Plans- are used to guide activities that occur over a period of time. These are plans that are
designed to be used again and again.
Standing plans exist in the form of a)
Policies
b) Procedures/ Standard operating procedures
c) Rules & Regulations
a) Policies:- these are standing plans in that they are general statements or understandings which
guide or channel thinking in decision making.
Policies define an area with in which a decision is to be made and ensure that the decision will
be consistent with, and contribute to an objective.
 They allow some discretion / freedom
Policies help decide issues before they become problems. E.g. Hiring policy-
"All employees of the organizations must have a college degree/diploma, Purchasing
policy
Procedures:- are standing plans that establish a required method of handling future activities.
They are guides to action rather than thinking
They are plans that describe a series of action to be taken in a given situation.
Their essence is chronological sequence for a required action.
Companies have hundreds of procedures for example, telling how to perform a job.
e.g. – Many companies have a policy of at least partially reimbursing their employees for educational
expenses. When this occurs the employee will have to follow a set procedure in order to be
reimbursed.
 He/she may have to fill a form
 Attach a copy of his/her grades
 Take both documents to personnel for processing
 Wait for the check in the mail.
Rules andRegulations: - are plans that describe exactly how one particular situation is to be handled.
 Are statements of actions that must be taken or not taken
 Rules are most restricting device
 There is no room for flexibility
e.g. No smoking at an employee's desk or
All employees must be at their desks at 8:00 A.M. in the morning.
Where policies and procedures provide guidelines for decision making, rules & regulations are
statements that designate specific required action.. Rules and regulations are the most explicit and
specific forms of standing plan procedures are different from rules & regulations in that
they designate specific steps one is to perform in a situation. . Policies provide a room for
discretion for our decision but rules do not allow any discretion in their application.
Single Use P lans
Single use plans are plans that are used once, and then discarded. This type of plans is designed to
meet the needs of a unique or single situation; such as for special project or task. These plans are
formulated to achieve a specific goal & usually with i n a shorter period of time. Non- repetitive unique
situations call for the formulation of single use plans. They are also called one-time plans. Under these
plans, we have
1- Program (project)
2- Budget
A. Program:- Programs are a complex of goals, polic ies, procedures, rules, task assignments, steps
to be taken, resources to be employed and other elements necessary to carryout a given course of
action; they are ordinarily supported by budgets.
A program is a comprehensive plan that includes future use of different resources in an
integrated pattern and establishes a sequence of required actions, time schedules for each in
order to achieve stated objectives.
It covers a relatively large set of activities such as

(i) The major steps required to reach an objective

(ii) The organization unit or member responsible for each step; and
(iii) The order and timing of each step.
Budgets:- are statements of expected results or resources set aside for specific activities
expressed in numerical or quantitative terms.
 They are primary devices to control organization activities and are thus important
components of programs and projects.
 It is referred to as a "N umberized" plan /program
 It is a single use plan that specifics allocation of financial resources required to support
specific activities with in a given time period.
 Budgets are important devices for controlling activities by setting limits on the amount of
expenditures.
 A budget may be expressed either in financial terms or in terms of labor hrs, units of products,
machine hours, in any other numerically measurable term

Chapter Three
Decision Making
Decision Making: is defined as the process of selecting or choosing based on
some criteria, the best course of action from a number alternatives. Because managers
are continually confronted with opportunities and problems, they must constantly analyze the
effect of different decisions on their organizations and select the alternative t hat will move
the firm toward its stated objectives.

Types of Decisions: Several authors believe that there are two types of d e ci si ons :
Programmed & non-programmed decisions
Programmed decisions: are the kinds that managers face time and again. These decisions
are
"Programmable" because of a specific procedure can be worked out to resolve them based on
experience in similar situations.
Once a standard procedure has been established, it can be used to treat all like situations.
They usually involve in an organization‟s every day operational and administrative
activities

They are primarily found at the middle and lower levels of management.

Data used in making a programmed decision usually are complete and well defined.
Participants know the details and agree o n how to resolve the problem.

Non-programmed Decisions: are used to solve nonrecurring problems.

No well-established procedure exists for handling them, primarily because managers do not
have experience to draw upon.
In contrast to programmed decisions, available data are usually incomplete.

Non programmable decisions are commonly found at the middle and top
levels of management and often is related to an organization's policy-making
activities such as whether to add a product to the existing product line, to
reorganize the company, or to acquire another firm.

The steps in decision making process include the following:

1. Ascertain the need for a decision/Identify the problem:
The decision making process begins by determining a problem exists; that is, there is an
unsatisfactory condition.

2. Establish decision criteria:

Once the need for a decision has been determined, there comes a need to establish
decision criteria which requires identifying those characteristics that are important in
making the decision.
3. Allocate weights to criteria

The identified criteria should be weighted based on their importance and arranged in
priority. This is because some are obviously more important than others and we need to
weight each criterion to reflect its importance in the decision.
4. Develop Alternatives
This involves developing a list of the alternative that may be viable in dealing with the stated
problem.
5. Evaluate Alternatives
Once the alternatives are enumerated, the decision maker must critically evaluate each one
and identify the strong and weak point s when compared against the criteria and the weights
established. In evaluating each alternative, we are not only consider things that can be
measured in numerical terms such as time and various types of fixed & operating costs,
but also consider intangible or qualitative factors such as the quality of labor relations,
the risk of technological change or the international political climate.
6. Select the Best Alternative
After we evaluate the alternatives, the next logical step is to select the best
alternative that suits to solve our decision problem. In selecting the best alternative,
factors such as risk, economy of efforts, timing and limiting factors should be considered
adequately.
7. Putting Decision into Action
After selecting the best alternative, we implement or put it into action. This requires
communication of decisions to subordinates, getting acceptance of the decisions, and
getting support and cooperation for converting the decision in to effective action. The
decision should be effective at proper time and in proper way to make the action effective to
achieve desired objectives.

8. Following up Decisions
Having implemented the decision, the manager should compare the results of that course of
action with the desired out come, if necessary, take corrective action. Since decisions are
made based on forecasts about the future, the best decision that we select may not suit
absolutely to achieve our objectives. Therefore, managers should adjust, modify or take any
other correctives if necessary.

Decision making situations

1. Decisions under certainty: - decisions made in which the external conditions are identified and
very predictable /when ever there is complete data & information/
2. Decisions under risk:- those decisions in which probabilities can be assigned to the
expected outcomes of each alternative
3. Decisions under uncertainty:- it is a case where neither there is complete data nor
probabilities can be assigned to the surrounding conditions. Some conditions that are
uncontrollable by management include competition, government regulations, technological
advances, the overall economy, and the social and cultural tendencies of society.
 CHAPTER FOUR

ORGANIZING
Objective
To provide students with general guidelines about organizing

Its role for the achievement of organizing objectives

Nature or characteristics of organizing.

To give high light about organizational relationships

(Line Vs staff and formal Vs informal relationships)

4.1 Meaning and Definition:

The management process starts from planning; i.e., in planning, objectives that are

going to be achieved are identified / established and courses of action have been

determined. Then, the manager continues his activities by giving practical shape

to the activities/works to be performed identifying the roles where by workers are

supposed to play, and making known to the group what their duties and

responsibilities are therefore, to design and maintain such systems of roles is the

managerial function of organizing. To begin with the definition of organizing,

there is no universally accepted definition of organizing. Different authors gave

various but supplementary definitions. Among others the following are a few:

It is the establishing of effective behavioral relationships among persons so that

they may work together efficiently and gain personal satisfaction in doing selected

tasks under given environmental conditions for the purpose of achieving some

goals and objectives. - It is one of the functions of management, the one concerned

with choosing what tasks are to be done, who is to do them, how the tasks are to be

grouped, who is to report to whom and where decisions are to be made. - It is the

grouping of activities necessary to attain objectives, the assignment of each

grouping to a manager with authority to supervise it, and the provision of co-

ordination vertically and horizontally in the enterprise structure. - It defines the

part, which each member of an enterprise is expected to perform and the relation

between such members to the end that their consorted endeavor shall be most

effective to the purpose of the enterprise.

- Organizing is the part of managing that involves establishing an intentional

structure of roles for people to fill in an organization.

Hence, it is a function of identifying, classifying, grouping, and assigning various

activities and prescribing authority relationships to create an organism or

structure capable of accomplishing predetermined objectives.

Organizing involves;
i) The identification and classification of required activities necessary to attain

objectives.

ii) The grouping of activities necessary to attain objectives.

iii) The assignment of each grouping to a manager with authority necessary to

supervise it.

iv).The provision for co-ordination horizontally and vertically in the

organizational structure.

4.2 Nature /characteristics/ basic concepts in organizing

a) Division of Labor/specialization/

In small organizations, just having three or four employees, each of them do a

certain job at different time; for example a tea room having an owner manager

and two waiters can make tea, wait on customers, treat them, collect money and

perform all other duties required in a business. But as the firm grows, people must

be assigned specific tasks in which they specialize. This process is called division of

labor or specialization. It involves breaking down of a task in to its most basic

elements, training workers in performing specific duties, and sequencing activities

so that one person's effort build on another's.

Advantage: - It enables a person performing a task to become highly proficient at

it in relatively short time and these results in increasing efficiency in

productivity.

- It saves time that is always lost in changing from one job to another.

- There is less waste of materials in the learning process when division of labor is

used.

Disadvantage: - The boredom (boring) and fatigue caused by monotonous,

repetitive tasks.
- The specialist lacks job enrichment

b) Coordination:

- It is the establishment of proper and adequate relationships between an employee

and his work, one employee to another or to the group, and one department or sub-

department and another. Managers, to promote co-ordination, in addition to other

methods, use MBO program. This helps managers and subordinates to approach

and decide in common about the objectives to be achieved and the actions to be

taken. Failure to establish such relationships may result in different persons (or

departments) pursuing different paths, thus making difficult for the enterprise to

achieve its goals.

c) Accomplishment of Objectives:-

The organization structure, the result of organizing, is bound together by the

pursuit of specific and well-defined objectives. This is not typical for organizing

function; all managerial functions should bound together for the achievement of

predetermined objectives.

d) Authority & Responsibility Relationships:

Authority is the right to command subordinates action. It is defined as the

legitimate power a manager possesses to act and make decisions in caring out

responsibilities. Responsibility is the obligation of the manager to carry out

assigned duties. Thus, the organization structure; the result of organizing, should

consist of various positions arranged in a hierarchy with a clear definition of

authority and responsibility.

e) Formal Organization: The organizing function results in an intentional formal

organization structure of roles in a legally and formally organized enterprise.

f) Communication: It is the transfer of information among people to achieve

organizational goals. Successful communication is good for business and for us too.

Every organizing function should be able to create an organization, which has its

own channels and methods of communication. Since management is concerned

with working with people and unless there is common understanding between

people, goals cannot be achieved; effective communication is vital for

management. Channels of communication could be formal, informal, upward,

downward or horizontal.

4.3 The process of Organizing

Organizing function can follow the following steps.

(1) Determine tasks /activities necessary to attain objectives

(2) Create jobs and define their duties and responsibilities.

(3) Group jobs in to practical units/departments based on similarities, importance,

who will do the work, etc.

(4) Create authority/reporting relationships

(5) Delegate authority

4.4 Important Elements of Organizing Process

i) Departmentation ii) Delegation iii) Decentralization

i) Departmentation:
Departmentation is a part of the organizing process. In the context of
management, it means dividing and grouping the activities and employees of an

enterprise into various departments. All organizations divide their overall

operations in to sub activities and combine these sub activities in to working

groups. This grouping process of specialized activities in a logical manner is called

Departmentation. It implies the division of the total work of an enterprise into

individual functions and sub functions. Then, either on the basis of similarity of

work, or efficiency, these various functions or sub-function is grouped together into

work units. The work units so formed may b called departments, divisions, units,

or any other name.

It results:

 In division of work

 In organizational units to be manageable size and

 Utilization of managerial ability based on specialization to secure

maximum results.
The basic need of departmentation arises from the limitation on the number of

subordinates, which can be directly managed by a superior. If there is no

departmentation, it would seriously put limitations on the size of the organization.

Span of Management /span of control

Refers to the number of subordinates that a single manager can directly,

immediately and effectively supervise. It is related to the levels. We can have wide

span, which is associated with few organizational levels; and a narrow span which

results in many levels.

Organizations with Wide span

Advantage:

 Supervisors are forced to delegate

 Clear policies must be made

 Subordinates must be carefully selected

Disadvantage:

 Tendency of overloaded superiors to become decision bottlenecks.

 Dangers of superior's loses of control

 Requires exceptional quality of managers.

Organizations with narrow span

Advantages:

 Close supervision

 Close control

 Fast communication between subordinates and superiors

Disadvantage:

 Superiors tend to get too much involved in subordinate's work

 Many levels of management

 High costs due to many levels

  Excessive distance between lowest level and top level.

Departmentation makes organizations to expand to an indefinite degree.

 It also helps increasing efficiency of organization in the following ways:

 Specialization

 Fixation of responsibility

 Feeling of autonomy

 Development of management

 Facility in appraisal

 Facilitation of budget preparation

 Effective control of expenditures

4.4.1 The Bases of Departmentation

The most common bases of departmentation used by organizations are:

 Functional Departmentation

 Product Departmentation

 Geographic / Territorial Departmentation

 Customer Departmentation

 Process Departmentation

 Matrix /project/ and task force

A) Functional Departmentation:

Functions refer to the various responsibility areas of an organizational

component. It is the process of grouping the organization's activities in to units in

logical manner on the basis of essential functions that must be performed to attain

organizational objectives/goals. These functions include marketing, finance,

operations, manufacturing personnel, engineering etc.

Advantages:-

 It is logical, scientific and time-tested method because it groups like or

similar activities together which facilitates specialization. (efficiency is

fostered through specialization.)

 It makes supervision easier, since each manager is an expert in only a

narrow range of skills.

 Tight control of all functional units is assured, because the top managers are

responsible for the end results.

 It simplifies training.

Disadvantage:

 People in a functional department may lose sight of the overall operations of

the business; it in turn invites employees to de-emphasize the overall

company objective.

 Workers may develop highly specialized skills, but not general managerial

abilities. Consequently, functional Departmentation is not an ideal training

ground for top level managers.

 Although there is strong relationship between within a function, co-

ordination between functions is reduced.

 Sometimes conflict develops among departments as each unit competes for

resources.

 The geographic area served; or the type of product or product line produced

may require a different type of Departmentation.

 Responsibility for profit is at the top.

Despite its disadvantages, it is widely used by various managers.

B) Product Departmentation

It is the grouping of activities on the basis of product or product line. It is adopted

by (commonly used by) manufacturers who produce and sell a number of product

lines made up of several different items; such as drug, food, clothing, machines,

automobiles. etc. e.g. Product Departmentation of an automobile management

enterprise.
 Advantage:

 It enables the enterprise to focus attention effort on product lines, making it

easier for to management to see the efficiency and effectiveness of

production determining which product is profitable or not.

 It improves co-ordination between functions relating to a particular

product.

 Furnishes measurable training ground for general managers.

 Facilitates use of specialized capital, facilities, skills and knowledge.

Disadvantages:

 Requires more persons with general manager abilities.

 There is an ever-present danger of duplication of activities.

 It presents increased problem of top management control.

C) Departmentation by Geographical Area/Territory

It is often referred to as area or territorial Departmentation, and it groups

business activities on the basis of geographic region or territory, enabling a firm to

adapt to local customs and laws and to survey customer more quickly. It is

especially attractive to large-scale firms or other enterprises whose activities are

physically or geographically dispersed.

Advantages:

 Results in great saving in time and money. The enterprise can benefit from

lower freight, lower rents and lower labor costs. Thus, it takes advantages of

economics of local operations (places emphasis on local markets and

operations)

 Places responsibility at lower level (There will be quick decision.)

 Places measurable training ground for general managers.

 Better face to face communication with local interests.

Disadvantages:
  Requires more persons with general manager abilities /it is costly to

implement

 Duplication of effort

 Increase problem of top management control (This is because of having flat

span of management.)

 Sometimes, the decision to set up geographic departments is based on

economic considerations; such as, transportation costs for raw materials, for

distribution, etc.

D) Customer Departmentation:

It is the grouping of enterprise activities based on customers' interests. Companies

that must provide special services to different groups set up departments by types

of customers, using customer departmentation. For example, a manufacturer may

have both an industrial products division for its industrial customers and

consumer products division for other consumers. An airlines company may make

departments its selling departments for travelling agencies, government

passengers, tourists and other customers. Normally, setting up departments by

customers is not a primary form of departmentation. It is used instead within

some other framework.

Advantages:

 Encourages concentration on customer needs

 Giving customers feeling that they have an understanding supplier

 Develops expertise in customer area.

Disadvantage:

 May be difficult to coordinate operations between competing customer

demands.

 Requires managers and staff expert in customer's problems

 It may result in under utilization of resources in some departments.

 Customer groups may not always be clearly defined.

  There may be duplication of activities.

E) Process or Equipment Departmentation

It is the grouping of enterprise activities according to the products' manufacturing

process. This method of departmentation is logical and used when the machines or

equipment used require special skill for operating and are of large capacity which

eliminate organizational diving or have technical facilities which strongly suggest

a concentrated location. For example, a textile factory may be classified in to

Spinning, Waving, processing, etc.

 Economic and Technological considerations are the foremost reasons for

adopting process departmentation.

 It is mostly found in production departments.

Advantage:

 Achieves economic advantage

 Uses specialized knowledge

 Simplifies training

 Sues specialized technology

Disadvantage:

 Coordination of departments is difficult

 Responsibility for profit is at the top

 It is unsuitable for developing general managers

F) Matrix Departmentation

 It is an organizational arrangement that developed because of the need for

quick completion of highly technical projects that required significant

contributions by two or more functional groups.

  It begins with functional stricture and then another structure organized by

product or by client /customer or by project is overlaid upon the original

structure.

 The result is that employees are assigned to a basic functional department

and, at the same time, they are assigned to work on a particular

product/project or for a particular customer/client.

 The essence of matrix organization normally is the combining of functional

and product departmentation in the same organization structure.

Advantage

 Since there are a number of managers, there are more channels of

information

 It is oriented toward end results. (The project objectives are clear.)

 Professional identification is maintained.

 Resources are used efficiently because workers are assigned to different

projects as needed and groups or projects can share equipment.

Disadvantage

 Conflict in organization authority exists (it lends it self to power struggle.

 Possibility of disunity of command exists

 It also /results in higher over head costs because more managerial positions

are created.

 Requires manager effective in human relations.

4.5 Delegation:
Because of human limitation, a single person can't do all tasks necessary for

accomplishing a group purpose. By the same taken, as enterprises grow, it is

difficult for one person to exercise all the authority for making decisions. To solve

these problems managers share their authority and responsibility to their

subordinates which is delegation. Managers get things done through other people.

Since top managers cannot personally oversee all the activities of an organization,

they delegate authority to their subordinate managers. It is this delegation of

authority that gives subordinate managers the means with which to act.

Definition:
It is the act of assigning formal authority and responsibility for completion

of specific activities to a subordinate.

Delegation is the assignment to another person of authority and

responsibility to carry out specific activities.

Delegation is the process of allocating tasks to subordinates giving them

adequate authority to carry out those assignments and making obligated to

complete the tasks satisfactorily.

To delegate means to entrust authority to a deputy so as to enable him to

accomplish the tasks assigned to him.

4.5.1 The Importance of Delegation:

It frees a manager from some time-consuming duties that can be adequately

handled by subordinates and lets the manager devote more time to problems

requiring his/her full attention.

Decisions made by lower level managers are timelier than those that go

through scalar layers of management.

Subordinate managers can reach their full potential of and only if they are

given the chance to make decisions and to assume responsibility for them.

4.5.2 Process of Delegation

Delegation process involves;

1. The allocation of duties:-

Duties are the tasks and activities that a supervisor desires to have someone else

do. Before authority can be delegated, the duties over which the authority rests

must be allocated to a subordinate.

2. The delegation of authority:-

The essence of the delegation process is empowering another person to act for the

manager. This is a passing of formal rights to act on behalf of another.

3. The assignment of responsibility:-

When authority is delegated, we must assign responsibility. That is, when one is

given "rights", one must also be assigned a corresponding "obligation" to perform.

To allocate authority without responsibility creates opportunities for abuse, and of

course, no one should be held responsible for what he/she has no authority.

4. The creation of accountability:-

To complete the delegation process, the manager must create accountability; that

is, subordinates must be held answerable to properly carryout their duties. They

must accept credit or blame for their action. So while responsibility represents a

subordinate's obligation to carryout what is assigned, accountability is the

obligation to his or her superior to carry out the assignment in a satisfactory

manner. Subordinates are responsible for the completion of tasks assigned to them

and are accountable to their superiors for the satisfactory performance of that

work.

4.5.3 Obstacles to Effective Delegation:

It takes two parties for delegation to be effective, a manager willing to delegate

and a subordinate willing to accept operating responsibility. Either party can be

an obstacle to effective delegation.

a) Management Obstacle

There are, nevertheless, several reasons why managers hesitate to delegate

authority to subordinates.

Some managers feel the need to be in total control of every aspect of the

organization

Others lack confidence in their subordinates

Fear the consequences of having subordinates make decisions

b) Subordinate Obstacles
In some cases / instances, subordinates are reluctant to assume an equal amount of

responsibility because of either of the following reasons;

Subordinates usually feel that making decisions is the boss's job.

Subordinates fear criticisms for making bad decisions

Subordinate managers do not have enough factual information on which to

base a decision.

Subordinates are already overworked

Subordinates lack self-confidence.

There is a lack of incentive or reward for assuming a greater workload.

4.6 Decentralization
Decentralization is the opposite of centralization. In a centralized set up, decision

making authority is concentrated in a few hands at the top. Contrary to this, is a

decentralized organization, there is dispersal of decision making authority.

Definition:
It is the tendency to disperse decision-making authority in an organized structure.

It is a fundamental aspect of delegation, i.e., to the extent authority is not

delegated, it is centralized.

4.6.1 Reasons for Decentralizing:

(i) One major reason for decentralizing is to tap the knowledge and expertise of

managers; it provides the basis for greater innovation. It does so because it

allows for the utilization of specialized knowledge. Additionally, it provides

greater flexibility for the organization to respond to new ideas and test them.

(ii) To enable the organization to respond to a social environment faster.

 (iii) To help participate non-managerial employees in decision making

process, consequently, it can increase such employees' performance and

commitment to decisions and promote better overall relations between non-

managerial employees and managers.

Advantages:

Relives top management of some burden of decision making and forces

upper level managers to let go.

Encourages decision making and assumption of authority & responsibility.

Gives managers more freedom and independence in decision making.

Makes comparison of performance of different organizational units possible.

Promotes development of general managers.

Aids in adaptation to fast changing environment.

Limitations of Decentralization:

It increases the chances that a lower-level manager will take undesirable

action.

It decreases control and monitoring of subordinates' activities and also may

hinder co-ordination between diverse units.

Makes it more difficult to have a uniform policy.

Can be limited by the availability of qualified managers.

Involves considerable expenses for training managers.

4.7 Organizational Relationships

4.7.1 Formal and Informal organizations & their relationships

The design (framework) of an organization can be divided into two categories: The

formal and informal organization.

 A) Formal Organization:

It is an organization, which is established with intentional structure of roles in a

formally organized enterprise. It is one, which is drafted by top management. It is

the organization structure, which defines everything clearly, and explicitly. It is

consciously, deliberately, and rationally designed by management to achieve

predetermined objectives.

Thus, formal organization has the following important points:

It is consciously brought in to existence for the achievement of

predetermined objectives.

Authority and responsibility are clearly defined.

The line of communication is also formalized (It is shown in organization

charts)

The relationship of the superior and the subordinate is fixed. (it is

deliberately impersonal it is bureaucratic in nature and operated by the

rules & regulations; personal issues are not entertained.)

It exists in a written form.

B) Informal Organization:

 It is a network of personal and social relations not established or required

by the formal organization but arising spontaneously as people associate

with one another.

 It is undocumented and officially unrecognized relationship between

members of an organization that inevitably emerges out of the personal &

group needs of employees. It is an organization, which consists of small

social groups and friendly associations with in the formal organization. It

is genuine that whenever formal organizations are formed, informal

social groups are created within its framework. Such groups are created
 on the basis of similarity of status, interests, beliefs, attitudes, back

grounds, etc.

Such small groups are results of the need of people for social interaction, & for

friendly associations. They affect the formal organization positively or

negatively, however, management neither creates nor abolishes them. Therefore,

managers should learn how to live with it, how to influence it, and how to direct

its energy and initiative towards constructive channels.

Managers, to deal with informal organizations the following general suggestions

are helpful:

 Managers accept and understand the informal organizations

 Consider possible effects on informal organizations when they take any

action.

 Integrate, as far as possible, the interests of informal groups with those of

the formal organization.

4.8 Line and Staff Relationships

The concept of line and staff is related to authority and positions/functions.

I) Line and staff authority

This is the relationship between different types of authority exercised by managers

of an organization. These three forms of authority are called line staff and

functional authority.

a) Line authority: the authority of those managers directly responsible,

throughout the organization chain of command, for achieving organizational

goals. It enables a manager to tell subordinates what to do. This authority is

 represented by the chain of command, which links superiors and subordinates

from top to bottom in an organization. Both line and staff managers have line

authority over their subordinates.

b) Staff authority: The authority of those groups of individuals who provide line
managers with advice and services. People in staff positions assist and advice

line managers. They relieve some of the line managers' burdens by giving them

the information they need to make operational decisions. People in these

positions have the authority to offer advice and make recommendations; they

have staff authority.

c) Functional Authority: The authority of staff department members to control

the activities of workers of other departments that are related to specific staff

responsibilities. This authority is exercised over people or activities in other

departments. Usually limited in scope and duration; it is exercised one level

below the person wholes it.

II) Line and staff positions/functions:

To classify a position as line or staff, it is related to the degree to which the

function in question contributes to the direct achievement of organizational

objectives. The line functions contribute directly to accomplishing to firm's

objectives, while staff functions facilitate the accomplishment of the major

organizational objectives.

- The line functions of an organization are those functions that contribute directly

to the creation and distribution of the goods or services of the organization.

- People with line positions are responsible for physically producing the product or

service and for selling it.

- Staffs people advice and assist line people. That is the only reason these positions

exist.

- All staff positions are advisory, staff people may make recommendations, but line

managers retain formal authority and decide what to do with a staff person's

advice.
4.9 Organizational Structure & Charts
 Organizational Structure: - can be defined as the arrangement and
interrelationship of the component parts and positions of a company. It is

the established pattern of relationships among different components or parts

of the organization. There are different forms of organizational structure: -

line / military, functional organization line & staff.

 Organizational Charts: - are diagrams of the organizational structure,

showing the functions, departments, or positions of the organization and

how they are related.

 Organizational Manual: - is the description of the organizational chart, and

is designed to promote, understanding of the basic organizational structure

by means of descriptions of the various jobs that may be listed only by title

on the charts.

, Chapter Five
Staffing
5.1 Definition
The managerial function of staffing is defined as filling and keeping filled positions in the
organizational structure through identifying work-force requirement, inventorying the
people available recruiting, selecting, placing, promoting, appraising, compensating the
training and/or developing both candidates and current job holders to accomplish their
tasks effectively and efficiently.
5.2 Staffing processes
The staffing process represents the following eight activities or steps:
1. Human resource planning /Man power planning/;
2. Recruitment;
3. Selection;
4. Orientation and Induction;
5. Training and Development;
6. Performance Appraisal;
7. Transfer; and [Promotion, demotion, lateral transfer)
8. Separation
5.2.1 Human Resource Planning /Man power planning/
It is the process of determining the need of the right man at the right time to the right job. It
is the process of determining the need of the provision of adequate human resources to the
job in the organization. It is designed to ensure that the personnel need of the organization
will be constantly and appropriately met. It is accomplished through analysis of
(i) Internal factors such as current and expected skill needs, vacancies, departmental
expansions and reductions; and
(ii) External environmental factors such as the labor market, the government regulation, the
labor union; etc. As a result of this analysis, plans are developed for executing the other
steps in the staffing process. This helps an organization to determine the need of employees
for short term or for long term. There are four basic steps in human resource planning:
A) . Planning for future needs. How many people with what abilities will the
organization need to remain in operation for the foreseeable future?

B) Planning for future balance. How many people presently employed can be expected
to stay with the organization? The difference between this number and the number
the organization will need leads to the next step.

C) Planning for recruiting and selecting or for lay off. How can the organization attain
the number of people it will need?

D) Planning for development. How should the training and movement of individuals
within the organization be managed so that the organization will be assured of a
continuing supply of experienced and capable personnel?

The organizational internal environment (such as its strategic plan) as well as its external
environmental will broadly define for managers the limits with in which their human
resource plan must operate. Once there broad limits have been established, managers can
begin to compare their future personnel needs against the existing personnel situation in
order to determine what recruitment, training and development procedures they will need
to follow. The fact that the internal and external environments of an organization change
means that managers must monitor these environments to keep their human resource plan
up to date. The central elements in human resource planning are forecasting and the human
resource audit. Forecasting attempts to assess the future personnel needs of the
organization. The human resource audit assesses the organizations current human
resources. These two elements give managers the information they need to plan the other
steps in the staffing process, such as recruiting and training.
5.2.2 Recruitment
It is the process of reaching out and attempting to attract potential candidates who are
capable of and interested in filling available positions of an organization. It is concerned with
developing a pool of job candidates, in line with the human resource plan. It is an
intermediary activity between manpower planning on the one hand, and selection of
employees on the other hand.
An important part of the recruiting process is developing a written statement of the content
and the location (on the organization chart) of each job. This statement is called the job
description or position description. This statement lists the title, duties and responsibilities
for that position. Once this position /job description has been established/determined and
accompanying hiring or job specification, which defines the background, experience, and
personal characteristics an individual must have in order to perform effectively in the
position, is developed.
[Link] Sources of Recruitment
Sources of supply are the places, agencies, and institutions to which recruiters go to seek
potential candidates that will fill the vacant positions or the job needed. These sources of
supply are generally categorized in to two.
(i) Internal Recruitment / recruitment from within: this involves recruitment within the
organization; it could be through promotion lateral transfer, demotion or any there
from.

Advantage:
It is usually less expensive to recruit or promote from within than to hire from
outside of the organization.

It may faster loyalty and inspires greater effort among organization members.

Individuals will already be acclaimed to the organization and may therefore need less
initial training and orientation.

Disadvantage:
 It limits the pool of talent available to the organization.

(ii) External /outside/ recruitment: It involves recruitment outside the organization. The
major alternative sources are:
Direct application

Employee referrals /word of month/

Advertising

Educational institutions

Private/public employment agency

Other sources such as professional associations

5.2.3 Selection
It can be defined as the process of determining from among applicants WHICH ONE FILLS
BEST for the job description and specification which is offered to the job within the
organization. It involves evaluating and choosing among job candidates. The role of
recruiting is to locate job candidates; the role of selection is they evaluate each candidate
and the pick the best one for the position available. Application forms, resumes, interviews,
employment & skill tests, and reference checks are the most commonly used aids in the
selection process.
Selection is the mutual process whereby the organization decides whether or not to make a
job offer and the candidate decides on the acceptability of the offer.
5.2.4 Orientation and socialization /induction/
It is designed to provide a new employee with the information he/she needs in order to
function comfortably and effectively in the organization. Typically, socialization will convey
three types of information.
(i) General information about the daily work routine;
(ii) a review of the organizations history, purpose, operations, and products or services, and
how the employee's job contributes to the organizations needs, and
(iii) a detailed presentation, perhaps in a brochure, of organizations policies, work rules, and
employee benefits.
5.2.5 Training and Development
Organizing human resources is a dynamic activity. Job demands change, which requires
altering and updating an employee's skills. Therefore, managers are involved in deciding
when their subordinates may be in need of training. Thus, training is a process designed to
maintain or improve current job performance; development is a process designed to
develop skills necessary for future work activities.
[Link] Reasons for Training
A). To orient new employees: while schools and training institutions provide general
education in many skills new employees require additional training to acquaint them with
specific situation of the organization and the job.
B). To improve performance: training will help to improve performance by increasing
productivity, improving quality, reducing turnover, reducing labor cost, etc.
C). To maintain current performance: sometimes individuals holding a position or doing a
job may get obsolete so train these employees will help to maintain current performance.
[Link] Training Methods
There are two different types of training techniques. (i) On-the-job training (ii) Off-the-job
training
(i) On-the-job training: involves learning methods and techniques by actually doing a job
(performing the work) and increasing the levels of skills of the employee. The employee
usually learns under the supervision of the in mediate boss or co-worker who has greater
knowledge and skills about the job. It is widely used, because it is economic and convenient;
and no special facilities, equipment and training places are required and the employee
produces and contributes to the organizational objective and at the same time he learns job
rotation and job instruction methods are few of the techniques used in on the job training.
It is convenient for small number of trainees. Some of its disadvantages are: - it creates
disinterest of employees, employees have dual responsibility, & it is not convenient for large
number of employees.
(ii) Off-the-job training: This technique involves participation of employees in a series of
events removed from the actual performance of the organization and the work situation.
Advantages:
 It creates interest of employees: because employees are removed from their routine
activities and are moved to new environment.

It is convenient for large number of employees. (Trainees)

Disadvantages:
It is expensive- there are costs for trainers, facilities, and also the employee does not
contribute during the training.

There is a problem of transfer of knowledge from the training situation to the actual
situation of the job. Vestibule training, classroom instruction / lectures, films and
simulation exercises are the more popular techniques of off-the-job training.

5.2.6 Performance Appraisal

It is the process used to determine whether an employee is performing according to what is
designed or intended. It helps to formally evaluate the adequacy of recruitment and
selection and suggests whether or not the employee will need to be replaced, or trained.
The many purposes of performance appraisal can be summarized in the following key
points:
Performance appraisal should lead directly to increased productivity.

It helps in salary administration

It plays a vital role in determining an employee for promotion.

Appraisals are used as a vehicle for bringing about employee development because
the results of the performance evaluation can serve as a basis for coaching and
counseling.

Performance appraisal results are used extensively in human resource research.

5.2.7 Transfer
It is a shift of a person from one job, organization level, or location to another. The transfer
may be a promotion, demotion, or a shift to another same level position /lateral transfer/
A) Promotion
-Refers to a shift for advancement of an employee to a higher job with more employment
and prestige, higher status, and higher responsibility. The possibility of advancement often
serves as a major incentive for superior performance, and promotions are the most
significant way to recognize such superior performance. Therefore, it is externally important
that promotions be fair i.e., based on merit and free from favoritism.
B) Demotion: refers to a shift of an employee to a lower position in the hierarchy due to
inefficiency, and incompetence to fulfill assigned tasks.
C) Lateral transfer: refers to the movement of an employee from one job or position to
another without involving any significant change in the employment and status
D) Separation: This refers to those factors that bring the termination or ceasing of the
relationship between the organization and the employee. Separation may result from such
factors as resignation, layoff, discharges, and retirement.

CHAPTER SIX
DIRECTING/LEADING
6.1 Definition
Leading according to Kooth and Weihrich, is the process of influencing people so that they
will contribute to organization and group goals. It is influencing people so that they will
work willingly and enthusiastically to ward the achievement of organizational goals ultimate
objectives. When we say influencing, it does not mean that coercing/forcing, imposing,
suctioning or pushing people behind. It means rather-motivating people so that they
contribute their maximum effort for the achievement of organizational goal.
Leading/Directing is that part of management function which actuates the organization
members to work efficiently and effectively for the attainment of organizational objectives.
Planning, organizing, and staffing are merely preparations for doing the work, and the work
actually starts when managers start performing the directing function. Directing is the
interpersonal aspect of management, which deals directly with influencing, guiding,
supervising, and motivating the subordinates for the accomplishment of the predetermined
objectives. Directing is a challenging function of management, because it deals with the
human element of the organization, which represents a complex of forces about whom not
much is known. A person's beliefs, hopes, ambitions, behavior, satisfaction, and interaction
with other persons are all involved in the directing process.
6.2 Elements of Directing/Leading
There are three elements of directing that helps managers to influence people to contribute
willingly for the achievement of organizational goal. These are:
(a) Motivation
(b) Leadership
(c) Communication
A) MOTIVATION
Motivation refers to the forces to a person that arouse enthusiasm and persistence
to pursue a certain course of action.

It means stimulating people to action through incentives or inducements

The study of motivation helps managers understand what prompts people to initiate
action, what influences their choice of action, and why they persist in that action
over time.

People have basic needs such as for food, achievements or monetary gain that
translate into an internal tension that motivates specific behaviors with which to
fulfill the need. To the extent that the behavior is successful, the person is rewarded
in the sense that the need is satisfied. The reward also informs the person that the
behavior was appropriate and can be used again in the future.

Rewards are of two types:

a). Intrinsic reward - the satisfaction a person receives in the process of performing a
particular action. The completion of a complex task may bestow a pleasant feeling of
accomplishment, or solving a problem that benefits others may fulfill a personal mission.
b). Extrinsic rewards - given by another person, typically the manager, and include
promotion and pay increases.
Theories of Motivation
The following are some of the basic theories of motivation:
1. Hierarchy of Needs Theory (Abrham Maslow)

It proposes that humans are motivated by multiple needs and that these needs exist in
hierarchy order:
1. Physiological needs - the need for food, water air & sex
2. Safety needs - the need for security & safety
3. Belongingness/Social needs - the need for friendship, interaction and love
4. Esteem needs - the need for respect & recognition
5. Self-actualization needs - the ability to reach one's potentials.

Self-Actualization

Esteem Needs
Social/Biological Needs

Safety Needs
Physiological Needs

This theory is based on:

Only an unsatisfied need can influence behavior; a satisfied need is not a motivator.

A person's needs are arranged in a priority order of importance. The hierarchy goes
from the most basic needs to the best complex.

A person will at least minimally satisfy each level of need before feeling the need at
the next level.

If need satisfaction is not maintained at any level, the unsatisfied need will become a
priority once again. For example, for a person who is presently feeling social needs,
safety will become a priority once again if he or she is fired.

2. The two-Factor Theory (Herzberg 1975)

The findings of the two factor theory suggested that the work characteristics associated
with dissatisfaction are quite different from those pertaining to satisfaction which prompted
the notion that two factors influence work motivation. These factors are hygiene factors
and motivation factors.
Hygiene factors (salary, job security, working conditions, status; Company policies; quality
of technical supervision and quality of interpersonal, relationships among peers,
supervisors, and subordinates) are the primary elements involved in job dissatisfaction.
When present in sufficient quality, they have no effect; when absent, they can lead to job
dissatisfaction. Motivation factors (achievement, recognition, responsibility, advancement,
the work itself, and possibility of growth) are the primary elements involved in job
satisfaction. When present, they can stimulate personal and psychological growth.
B) LEADERSHIP
Leadership is the process of influencing individuals and groups to set and achieve goals. It is
an act of influencing and motivating people to perform certain tasks to achieve
organizational objectives. Thus, an effective leader is expected to have adequate knowledge
of human behavior, including the ability to persuade and motivate people and communicate
with them properly.
Definition:
a) "The art or process of influencing people so that they will strive willingly and
enthusiastically towards the achievement of group goals."
b) "Leadership is the ability to secure desirable actions from a group of followers voluntarily
without the use of coercion."
c) "The process of directing & inspiring workers to perform the task related activities of the
group." People should be encouraged to develop not only willingness to work, but also
willingness to work with zeal and confidence.
In short leadership involves:
Influencing and interacting with people to attain goals.

Related to a particular situation at a given point of time and a specific set of

circumstances.

By accepting the willingness, followers will make the leadership process possible.
THEORIES OF LEADERSHIP
1. The trait theory of leadership:-
Traits are inborn and inherent personal qualities of individuals. This theory believes leaders
possess certain specific inborn traits, which are inherited rather than acquired. It has a root
from "the great man theory" dating back to the ancient Greeks & Romans time, holds that
leaders are born not made. The trait theory studies focused on the personal traits of leaders
and attempted to identify a set of individual characteristics that distinguished leases from
followers' also successful leaders from unsuccessful ones. In general the trait theory hasn't
been a fruitful approach to explain leadership.
2. The behavioral theory of leadership:-
The behavioral theory of leadership focused on what leaders do rather than their traits.
Studies showed that one set of traits/leadership style might not be equally appropriate in all
situations. This theory suggested that there were two distinct types of leadership which are
known as task-oriented /production centered/ and employee oriented /people centered/.
3. The situational /contingency/ theory of leadership:

According to this theory, leadership is strongly affected by a situation from which a leader
emerges and in which he/she works. It's a function of the leader, the followers and the
situation. It attempts to discover that the one unique set of leadership traits were largely
unsuccessful. Modern management theorists are more prone to the belief that leadership is
more complex; that is it can't be represented by one set of traits or by single set of behavior,
thus effective leadership behavior depends on the environment or the situation.
LEADERSHIP STYLES
Managers in an organization shall relatively be consistent in the way they try to influence
others behavior. The manager who dominates subordinates in one situation is not likely to
use a high degree of consideration and participation in another. This behavioral pattern of
leaders is known as leadership style. It can be defined as the various patterns of behavior
favored by leaders during the process of directing and influencing workers, which is
determined by leaders personality, experience and value system, nature of followers and
environment. There are three important leadership styles
a) Autocratic
b) Democratic /participate/
c) Laissez-faire /free rein/
A). Autocratic style - "I" approach, is a leadership approach in which a manager does not
share decision making authority with subordinates. Autocratic managers may ask for
subordinates' ideas & feedback about the decision, but the imputes does not usually change
the decision unless it indicates that something vital has been overlooked. Under certain
conditions, the autocratic style is appropriate. eg. During crisis & when subordinates are
trainees and when there is act of insubordination. It is also effective when managers face
issues that they are best equipped to solve, create solutions, whose implementation does
not depend on others & desire to communicate through orders & instructions.
This leadership style is closely associated with the classical approach to management and it
is characterized by the following behavioral patterns of leaders.
The leader doesn't seek any opinions from subordinates, holds conflicts and with less
creativity.

Exercises rigid control and close supervision, relies on punishments.

Subordinates typically react by doing only what's expected and by suppressing their
frustration.

The autocratic leader is task-oriented, gives little value on showing consideration to

subordinates.

Depends on one way communication downward only.

B). Participate (democratic) style - "We" approach, It is a leadership approach in which a

manager shares decision making authority with subordinates. It involves others and lets
them bring their unique viewpoints, talents & experiences to bear on an issue.
Before subordinates are made to participate in the decision making process:
mutual trust & respect must exist between them & managers

subordinates must be willing & trained to be competent to solve problems

Managers should give time & be patient to make subordinates participate.

However, limits on subordinates' participation must be clearly spelled out before hand there
should be no misunderstanding about who holds authority to do what. This leadership style
is characterized by the following behavioral patterns of the leader.
Allows the group members to participate in decision making process, proposed
actions and encourages participation at all levels.

The leader will develop two way communications and promote team sphere.

The democratic leader explains to the group members like reasons for personal
decisions when necessary and objectively communicates criticism and praise to
subordinates.

C). Laissez-faire/Free-rein style -"They" approach, It empowers individuals or groups to

function on their own, without direct involvement from the managers to whom they report.
The style relies heavily on delegation of authority, and works best when the parties have
expert power, when participants have and know how to use the tools & techniques needed
for their tasks. Free-rein leadership works particularly well with managers & experienced
professionals in engineering, design, research & sales. Such people generally resist other
kinds of supervision. In most organizations managers must be able to use the decision
making style that circumstances dictate. Because people & circumstance constantly change
because subordinates must be prepared to the change. The effective manager switches
from one leadership style to another as appropriate.
The following are the behavioral patterns of laissez-faire leader:
Laissez-faire leaders make a few attempts to increase productivity, to develop their
attempts or to meet subordinates psychological needs.

Use their power very little, if a tall, giving subordinates a high degree of
independence in their operation.

These leaders maintain hands off policy where each subordinate work is clearly
defined.

Such leaders depend on subordinates to set their own goals and the means of
achieving them, and they see their role as one of aiding the operations of followers
 by furnishing them information and acting primarily as a contact with the groups’
external environment.

The laissez-faire leader has little or no self-confidence in his/her leadership ability, sets and
goals for the group and minimizes communication and group interaction.
6.3 COMMUNICATION

Communication is the tool in which we exercise to influence others, bring about changes in
the attitudes and views of our associates, motivate them, establish and maintain relations
with them. Without communication there would be no interaction between persons.
Definition:
"Communication is the transfer of information from one person /sender/ to another
person /receiver/ to achieve goals."

"It's a process consisting of a sender transmitting a message through media to a

receiver who respond"

6.3.1 Importance of Effective Communication

Effective communication is important to managers for three primary reasons:

Communication provides a common thread for the management processes of

planning, organizing, leading, and controlling.

Effective communications skills can enable managers to draw on the vast array of
talents available in the multicultural world of organizations.

Managers spend a great deal of time by communicating face-to face, electronic or

telephone communication with employees, supervisors, suppliers or customers.

6.3.2 The Communication Process

Communication takes place in the relationship between a sender and a receiver. It can flow
in one direction and ends there.
A model of the communication process:
 Sender Encoding Channel Decoding

Noise

RECEIVER

Feed back

a) Sender: The sender/source of message initiates the communication. In an organization

the sender will be a person with information, needs or desires and a purpose for
communicating them to one or more other people.
b) Receiver: -The person whose senses perceive the sender's message. There may be a large
number of receivers, as when a memo is addressed to all members of an organization or
there may be just one, as when one discusses something privately with a colleague.
c) Encoding: It takes place when the sender translates the information to be transmitted
into a series of symbols. The way of translating the communicator’s ideas into a systematic
set of symbols expressing the communicator’s purpose.
d) Decoding: The process by which, the receiver interprets the message and translates it
into meaningful information.
e) Channel: The formal medium of communication between a sender and a receiver. It is a
path, route or medium through which a message is transmitted.
f) Noise: Any factor that disturbs confuses or interferes with communication. Noise can arise
along what is called the communications channel or method of transmission.
g) Message: The encoded information sent by the sender to the receiver. The result of the
encoding is the message-either verbal or nonverbal. Message is a meaningful idea that
people want to share with others. It is an encoded idea with some purpose
h) Feedback: It's the response of the receiver to the sender, also passes through the same
process.
6.3.3 Types of Communication
Communication can be:
i) Formal Communication
a) Downward communication- Messages from higher authority levels to lower levels.
b) Upward communication- Messages from subordinates to supervisors and to higher levels.
c) Horizontal communication- That flows between persons of equal status in the
organization.
d) Vertical communication- May be downward or up word communication.
ii) Informal Communication
People talk about job related or unrelated information. They talk about promotions, salary
increment, demotions, administrative policies and decisions. They also talk about local and
international affairs.
They talk such situations in the form of rumors, gossips, daily friendly chat etc. This all travel
through informal networks that often develop through incidents of spatial arrangement,
similarity of personalities or compatibilities of personal skills. Informal communication is
thus, ones, aspect of organizational communication that is not designed and recognized by
management.
Since every communication cannot be programmed, grapevine is created and exists out of
the will of management. It arises out of the need for social interaction between people in
the organization. Of course what they share at an informal level will affect their ability to
communicate about their jobs and their attitude towards their work and the organization.
* Grapevine- is a natural and enviable result of people working together in groups. It cannot
be avoided because the more one tries to block the more force it will have.
* Gossip- a person with the information passes it to every other individual in the chain.
CHAPTER SEVEN
CONTROLLING
In the series of managerial functions, planning is the first function and controlling is the last. Success
in business is very often proportionate to the astuteness of its planning and the skill with which it is
controlled. Plans can be effectively achieved in most organizations only with good controls, and
planning is always pre-requisite for controlling. Planning seeks to set goals and programs and control
seek to secure performance in accordance with plans.
7.1 Definition
a) According to Koontze and O'donnell,, "The managerial function of control is the measurement and
correction of the performance of activities of subordinates in order to make sure that enterprise
objectives and the plans devised to attain them are being accomplished. It's thus the function of
every manager, from the chief executive to the Forman."
b) "Controlling is the process by which management sees if what did happen was what was
supposed to happen. If not, necessary adjustments are made." Moore. An analysis of the foregoing
statements regarding control brings out the controlling function of management.
i) Planning is the foundation of control:
Planning sets the course, control observes deviations from the course, and takes corrective action.
ii) Action's the essence of control:
Control terminates in taking corrective action where there is a deviation in performance from the
desired goals.
iii) Delegation is the key to control:
Control is exercised by taking action, and action can be taken within the authority delegated.
Accountability must be within the authority given to the manager.
iv) Information is the guide to control:
Control exercised by a manager on the basis of the information and reports from those actively
doing the job. Such reports and information may be described as "feed-back" from subordinates.
Feedback enables the manager to determine how far the operations.

7.2 THE CONTROL PROCESS

In controlling process there are three steps,
1. Setting standards
2. Measurement of performance
3. Taking corrective action
1) Setting Standards:
Standards may be tangible or intangible. Greater emphasis should be laid on tangible standards. The
standards in tangible terms may be in terms of output, costs, profit, time persons available for
training etc. intangible terms standards may be for the results to be expected from a training
program, employee morale, advertising campaign, etc. Organizations create standards to help
measure and monitor both productivity and quality efforts. People and processes are governed by
qualitative and quantitative standards. An organization uses these standards to teach, train, and
evaluate organizational performance.
2) Measurement of Performance and comparing it against standards.
An organization measures actual performance of people and processes to ascertain if they are
functioning according to plans and expectations. After it has been measured it will be compared
against the established standards.
3) Taking Corrective Actions
As soon as the deviations are reported, it is the duty of the manager concerned to take steps to
correct the past action or at least to bring similar action closer to the standards in future. When
significant deviations from established standards occur, the organization must determine the cause
by identifying the nature and scope of the problem
7.3 TYPES OF CONTROLLING
Controlling can be feed forward, concurrent or feedback controls.
1. Feed forward controls are preventive in nature. They are created to screen out possible causes of
problems. Procedures and training can be preventive as well as remedial.
2. Concurrent controls monitor on going operations as they occur in real time, allowing for instant
reactions and the spotting of trends.
3. Feedback controls are after action controls. Inspecting output after an operation has been
performed and soliciting customer feedback are examples of after-action control.
All the three types of controls are important to managers and their organizations. When designed
and used properly, they can prevent, identify, and correct deviations from established standards.