MANAGEMENT ESSENTIALS FOR

ENGINEERS UNIT I
MANAGEMENT CONCEPT
Introduction to Management
Definition of Management
Nature/Characteristics of Management
Scope of Management
Functions of Management
Management Process
Levels of Management
Skills of Management
Role of Management
Evolution of Management Thought
 INTRODUCTION OF MANAGEMENT

The managers achieve organizational objectives by getting work from others and not
performing in the tasks themselves. Management is an art and science of getting
work done through people. It is the process of giving direction and controlling the
various activities of the people to achieve the objectives of an organization.
 DEFINITION OF MANAGEMENT

According to Mary Parker Follett, “Management is the art of getting things done through people.”

Harold Koontz defined as, “Management is the art of getting things done through and with people in
formally organized groups. It is the art of creating an environment in which people can perform and
individuals could cooperate towards attaining of group goals.”

In view of Joseph Massie, “Management is defined as the process by which a cooperative group
directs actions towards common goals.”

[Link]’s point of view, “Management is a distinct process, consisting of planning,

organizing, actuating and controlling, performed to determine and accomplish stated goals by the use
of human beings and other resources.”
 MANAGEMENT FUNCTIONS

Planning refers manager’s think of their actions in advance. Their actions are
usually based on some method, plan or logic, rather than on a hunch.

Organizing refers manager’s coordinate the human and material resources of the
organization.

Actuating refers managers motivate and direct subordinates

Controlling refers attempts to ensure that there is no deviation from the plan or
norms.
 NATURE/CHARACTERISTICS OF MANAGEMENT

1. Management is an activity. It is a process of organized activity concerned with efficient

utilization of resources of production like men, material, machine, money etc.
2. Management is a purposeful activity. It is concerned with the achievement of an objective
through its functions. Objectives may be explicit or implicit.
3. Management concerned with the efforts of a group. Management is concerned with
management of people and not the direction of things. It motivates the workers to contribute their
best.
4. Management is getting things done. A manager does not do any operating work himself but
gets it done through others.
5. Management applies economic principles. Management is the art of applying the economic
principles that underlie a control of men and materials in the enterprise under consideration.
6. Management involves decision-making. It is a decision-making process and the decisions
are involved in all the functions of management.
7. Management coordinates all activities and resources. It is concerned with coordination of
all activities and resources to attain the specific objectives.
8. Management is a universal activity. The techniques and tools of management are universally
applicable.
 NATURE/CHARACTERISTICS OF MANAGEMENT
9. Management is an integrating process. It integrates the men, materials and machines for
achieving stated objectives.
10. Management is concerned with direction and control. It is concerned with direction and
control of human efforts to attain the specific objectives.
11. Management is intangible. It is abstract and cannot be seen. It is evidenced by the quality of
organization and through its results.
12. Management is both science and an art. Management has certain universally applicable
principles, laws etc. Hence, it is a science. It is also an art, because it is concerned with
application of knowledge for the solution of organizational problems.
13. Management is a profession. It is becoming a profession because there is established
principles of management which being applied in practice.
14. Management is an inter-disciplinary approach. Management as a body of discipline takes
the help or other social science like psychology, sociology, engineering, economics, mathematics
etc.
15. Management is dynamic and not static. Management adopts itself to the social changes
and also introduces innovation in methodology.
 SCOPE OF MANAGEMENT

Production Management

Marketing Management

Financial Management

Personnel Management
Production Management. Production function so as to produce the right goods in right
quantity at the right time and at the right cost. It consists of the following activities.
 Designing the product

 Location and layout of plant and building

 Operations of purchase and storage of materials

 Planning and control of factory operations

 Repairs and maintenance

 Inventory control and quality control

 Research and development etc.

Marketing Management. It refers to the identification of consumer’s
needs and supplying them the goods and services, which can satisfy those,
wants. The activities are as follows:
 Marketing Research to determine the needs and expectations of consumers
 Planning and developing suitable products
 Setting appropriate prices
 Selecting the right channels of distribution
 Promotional activities like advertising and salesmanship to communicate with the
customers.
Financial Management. Financial management seeks to ensure the right
amount and type of funds to business at the right time and at reasonable
cost. The activities are as follows:
 Estimate the volume of funds requires for long term and short term needs of
business
 Selecting the appropriate sources of funds
 Raising the required funds at the right time
 Ensuring proper utilization and allocation of raised funds
 Administration of earnings.
Personnel Management. It involves planning, organizing, directing and controlling the
procurement, development, compensation, maintenance etc. of the human resources in an
enterprise. It consists of the following activities:
 Manpower planning
 Recruitment
 Selection
 Training and Development
 Performance Appraisal
 Compensation and promotion
 Employee services and benefits
 Maintaining personnel records etc.
 FUNCTIONS OF MANAGEMENT
Henri Fayol identifies five functions of management viz, planning, organizing,
commanding, coordinating and controlling.
Koontz and O’Donnell, divides the management functions into planning, organizing,
staffing, directing and controlling.
Warren Haynes and Joseph Massie classifies management functions into decision-
making, planning, organizing, staffing, directing, controlling, and communicating.
Luther Gulick, states seven such functions under the catch word “POSDCORB” Which
stand for
 P – Planning
 O – Organizing
 S – Staffing
 D – Directing
 Co – Coordinating
 R – Reporting
 B – Budgeting
 MANAGEMENT PROCESS

Planning

Organizing

Staffing

Directing

Controlling
 PLANNING

Planning is the function that determines in advance what should be done. It is

looking ahead and preparing for the future. It is a process of deciding the business

objectives and charting out the methods of attaining those objectives.

Following are the sub functions of planning: forecasting, decision making, strategic

formulation, policy-making, programming, scheduling, budgeting, problem solving,

innovation and research activities.

 ORGANIZING
It refers to coordinate human resources with other resources such as material, machine,
money etc. Once managers have established objectives and developed plans to achieve
them, they must design and develop a human organization that will be able to carry out
those plans successfully.
 Identifying the activities necessary to achieve the objectives.

 Grouping activities into various departments.

 Assigning duties or tasks to appropriate individuals.

 Delegating necessary authority to individuals and fixing responsibilities for results.

 Defining authority and responsibility relationship among individuals.

 STAFFING
Staffing may also be considered an important function involved in building the
human organization. In staffing, the manager attempts to find the right person for
each job.
Staffing fixes a manager’s responsibility to recruit and to make certain that there is
enough manpower available to fill the various positions needed in the organization.
Staffing involves the selection and training of future managers and a suitable system
of compensation.
Staffing obviously cannot be done once and for all, since people are continually
leaving, getting fired, retiring and dying. Often too, the changes in the organization
create new positions, and these must be filled.
 DIRECTING
After plans have been made and the organization has been established and staffed, the next
step is to move towards its defined objectives. This function can be called by various
names: ‘Leading’, ‘Directing’, ‘Motivating’, ‘Actuating’, and so on. But whatever the name
used to identify it, in carrying out this function the manager explains to his people what they
have to do and helps them do it to the best of their ability. Directing thus involves three sub-
functions. They are as follows

Communication,
Leadership and
Motivation.
 CONTROLLING
The manager must ensure that everything occurs in conformity with the plans
adopted, the instructions issued and the principles established. Three elements are
involved in the controlling function.
Establishing standards of performance.
Measuring current performance and comparing it against the established standards.
Taking action to correct any performance that does not meet those standards.
Controlling function has the following sub functions. They are
 Fixation of standards,
 Recording,
 Measurement,
 Reporting,
 Corrective action.
 LEVELS OF MANAGEMENT

In every company, there is a managerial hierarchy or chain of command, which consists of

several levels of authority. The number of management levels may differ from company to
company. In a big company the management levels may be classified into three categories
viz.
 Top management

 Middle management

 Supervisory or Operating management

TYPES OF BUSINESS ORGANIZATION
 SOLE PROPRIETORSHIP
The business is owned, managed, and controlled by an individual is known as a sole proprietorship.

Advantages:

Total control of the business: As the sole owner of your business, you have full control of business
decisions and spending habits.

No public disclosure required: Sole proprietorships are not required to file annual reports or other
financial statements with the state or federal government.

Easy tax reporting: Owners don't need to file any special tax forms with the IRS other than the
Schedule C (Profit or Loss from Business) form.

Low start-up costs: While you may need to register your business and obtain a business occupancy
permit in some places, the costs of maintaining a sole proprietorship are much less than other
business structures.
 SOLE PROPRIETORSHIP

Disadvantages include:

Unlimited liability: You are personally responsible for all business debts and company
actions under this business structure.

Lack of structure: Since you are not required to keep financial statements, there is a risk of
becoming too relaxed when managing your money.

Difficulty in raising funds: Investors typically favor corporations when lending money
because they know that those businesses have strong financial records and other forms of
security.
 JOINT HINDU FAMILY
BUSINESS
A form of business organization found only in India in which the business is
owned and carried on by the HUF(Hindu Undivided Family) members is
known as Joint Hindu Family Business. It is one of the oldest forms of
business organization in India. This form is governed by the ‘Hindu Law’.
The eldest member and head of the family, also known as “Karta,” controls
the business.
 PARTNERSHIP
The most crucial disadvantage of a sole proprietorship is the lack of enough financing in the
business, which is resolved in this form of business organization.
According to the Indian Partnership Act, 1932, a partnership is a form of business
organization in which there is a relation between two or more people with an agreement to
share the firm’s profits carried on by every partner or any one of the partners acting for all.
It solves the need to acquire greater capital investment, risk-sharing, and a variety of skills
in the business, which is not available in Sole Proprietorship and Joint Hindu Family
Business. The minimum number of partners required in a partnership firm is two. There are
different types of partners and partnerships in this form of business organization.
 PARTNERSHIP
Advantages of partnerships include:

Easy to establish: Compared to other business structures, partnerships require minimal

paperwork and legal documents to establish.

Partners can combine expertise: With more than one like-minded individual, there are
more opportunities to increase their collaborative skillset.

Distributed workload: People in partnerships commonly share responsibilities so that one

person doesn't have to do all the work.
 PARTNERSHIP
Disadvantages to consider:

Possibility for disagreements: By having more than one person involved in business
decisions, partners may disagree on some aspects of the operation.

Difficulty in transferring ownership: Without a formal agreement that explicitly states

processes, a business may come to a halt if partners disagree and choose to end their
partnership.

Full liability: In a partnership, all members are personally liable for business-related debts
and may be pursued in a lawsuit.
 COOPERATIVE

A cooperative, or a co-op, is a private business, organization or firm that a

group of individuals owns and runs to meet a common goal. These owners
work together to operate the business, and they share the profits and other
benefits. Most of the time, the members or part-owners of the cooperative
also work for the business and use its services.
 COOPERATIVE

Advantages of a cooperative include:

Greater funding options: Cooperatives have access to government-sponsored grant

programs, like the USDA Rural Development program, depending on the type of cooperative.

Democratic structure: Members of a cooperative follow the "one member, one vote"
philosophy, meaning that everyone has a say, regardless of their investment in the co-op.

Less disruption: Cooperatives allow members to join and leave the business without
disrupting its structure or dissolving it.
 COOPERATIVE

Disadvantages include:

Raising capital: Larger investors may choose to invest in other business structures
that allow them to earn a larger share, as the cooperative structure treats all investors
the same, both large and small.

Lack of accountability: Cooperatives are more relaxed in terms of structure, so

members who don't fully participate or contribute to the business leave others at a
disadvantage and risk turning other members away.
 JOINT STOCK COMPANY
An association of different individuals formed to carry out business activities
is known as a joint stock company. This form of organization has an
independent legal status from its members.
Basically, a joint stock company is an artificial individual with a separate
legal entity, common seal and perpetual succession. The Joint Stock Company
form of organization is governed by the Companies Act, 2013.
The shareholders of the company are its owners; however, the Board of
Directors is elected by the shareholders and is the chief managing body of the
company. Usually, the shareholders or the owners of the company have
indirect control over its operations. A company can be either private or a
public company.
 ADVANTAGES
1 Limited Liability
Each shareholder has a portion of the company’s protection and accountability in a joint stock firm. It
means they won’t have to pay back their initial investments unless the company goes bankrupt.
Consequently, they won’t lose their personal property, such as their house or car
2 Scale Advantages
A joint stock company offers its owners economies of scale. One of the main benefits is that it may
provide a steady flow of funding to businesses with high investment demands. Contrary to other
organizational arrangements, joint stock companies can develop and expand. Since records are more
visible, fraud is less risky, and this strategy makes it easier to catch people who break the law.
3 Benefits of Taxation
If a corporation is a joint stock company, no taxes are due on the stock shares until they sell them. This
corporation involves less paperwork and is easier to set up in the market because the firm’s capital is
divided among numerous investors.
#4 Higher Accountability
Since shareholders now possess a stake in the firm, they will demand reassurance that there is appropriate
usage of their money once the company decides to move its headquarters or get out of particular
businesses. This increased accountability improves judgment and streamlines risk analysis.
 DISADVANTAGES
1 Difficult to Form
Joint Stock Companies are challenging to establish for several reasons. One explanation is that several people must
consent to the company’s creation. Even one objection prevents the corporation’s creation. In addition, several legal
issues also arise.
2 Lack of Secrecy
Because they must be open and honest with their shareholders, the firm must reveal information about its operations,
finances, and other sensitive issues. Another downside is that outsiders may find getting insider information and
privileges easier if they can access specific details.
3 Decision-making Delays
There is a greater likelihood of internal conflict inside a Joint Stock Company because there are many levels of
authority within the organization.
4 More Government Laws and Restrictions
The government places many restrictions on joint stock companies. They must adhere to the same rules as other
businesses. For example, there are limitations on permissible foreign investments.
5 Immoral or Unethical Management
The board of directors determines each member’s compensation, and some managers exploit their staff members to
increase their income. Executives and stockholders have competing interests.
 FREDERICK WINSLOW TAYLOR -
CONTRIBUTION
In 1909, Taylor published "The Principles of Scientific
Management." In this, he proposed that by optimizing and
simplifying jobs, productivity would increase. He also advanced
the idea that workers and managers needed to cooperate with one
another. This was very different from the way work was typically
done in businesses beforehand.
 FOUR PRINCIPLES OF SCIENTIFIC
MANAGEMENT
Taylor's four principles are as follows:
1. Replace working by "rule of thumb," or simple habit and common sense, and
instead use the scientific method to study work and determine the most efficient
way to perform specific tasks.
2. Rather than simply assign workers to just any job, match workers to their jobs
based on capability and motivation, and train them to work at maximum
efficiency.
3. Monitor worker performance, and provide instructions and supervision to ensure
that they're using the most efficient ways of working.
4. Allocate the work between managers and workers so that the managers spend
their time planning and training, allowing the workers to perform their tasks
efficiently.
HENRI FAYOL – 14 PRINCIPLES OF
MANAGEMENT
Henry Fayol, also known as the Father of Modern Management
Theory, gave a new perception on the concept of management.
He introduced a general theory that can be applied to all levels
of management and every department. He envisioned
maximising managerial efficiency. Today, Fayol’s theory is
practised by the management to organise and regulate the
internal activities of an organisation.
1. Division of Work
2. Authority and Responsibility
3. Discipline
4. Unity of Command
5. Unity of Direction
6. Subordination of Individual Interest
7. Remuneration
8. Centralization
9. Scalar Chain
10. Order
11. Equity
12. Stability
13. Initiative
14. Esprit de Corps
1. Division of Work

Henri believed that segregating work in the workforce amongst the workers will enhance the quality of
the product. Similarly, he also concluded that the division of work improves the productivity, efficiency,
accuracy and speed of the workers. This principle is appropriate for both the managerial as well as a
technical work level.

2. Authority and Responsibility

These are the two key aspects of management. Authority facilitates the management to work efficiently,
and responsibility makes them responsible for the work done under their guidance or leadership.

3. Discipline

Without discipline, nothing can be accomplished. It is the core value for any project or any
management. Good performance and sensible interrelation make the management job easy and
comprehensive. Employees’ good behaviour also helps them smoothly build and progress in their
professional careers.
4. Unity of Command

This means an employee should have only one boss and follow his command. If an employee
has to follow more than one boss, there begins a conflict of interest and can create confusion.

5. Unity of Direction

Whoever is engaged in the same activity should have a unified goal. This means all the
people working in a company should have one goal and motive which will make the work
easier and achieve the set goal easily.

6. Subordination of Individual Interest

This indicates a company should work unitedly towards the interest of a company rather than
personal interest. Be subordinate to the purposes of an organisation. This refers to the whole
chain of command in a company.
7. Remuneration

This plays an important role in motivating the workers of a company. Remuneration can be
monetary or non-monetary. Ideally, it should be according to an individual’s efforts they have put
forth.

8. Centralization

In any company, the management or any authority responsible for the decision-making process
should be neutral. However, this depends on the size of an organisation. Henri Fayol stressed on
the point that there should be a balance between the hierarchy and division of power.

9. Scalar Chain

Fayol, on this principle, highlights that the hierarchy steps should be from the top to the lowest.
This is necessary so that every employee knows their immediate senior also they should be able to
contact any, if needed.
10. Order
A company should maintain a well-defined work order to have a favourable work culture. The positive
atmosphere in the workplace will boost more positive productivity.
11. Equity
All employees should be treated equally and respectfully. It’s the responsibility of a manager that no
employees face discrimination.
12. Stability
An employee delivers the best if they feel secure in their job. It is the duty of the management to offer
job security to their employees.
13. Initiative
The management should support and encourage the employees to take initiatives in an organisation. It
will help them to increase their motivation and morale.
14. Esprit de Corps
It is the responsibility of the management to motivate their employees and be supportive of each other
regularly. Developing trust and mutual understanding will lead to a positive outcome and work
environment.
 ORGANIZATION CHART
An organizational chart, often referred to as an org chart, is a valuable management tool that
visually represents the hierarchical structure and relationships within an organization. It
offers a clear and organized depiction of roles, positions, and reporting lines.

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

organization’s structure, including levels of authority, communication channels, and
functional divisions. Providing a visual overview enables employees, managers, and
stakeholders to grasp the interconnections between different parts of the organization and
identify who holds responsibility for specific tasks and decisions.
 TYPES OF ORGANIZATIONAL CHARTS
Hierarchical or Traditional Organizational Chart: This is the classic and widely used type of org chart.
It represents the organization’s vertical hierarchy, showcasing positions of authority at the top and lower-
level positions below.
Matrix Organizational Chart: The matrix structure combines functional departments and project teams.
It displays both vertical reporting lines within departments and horizontal reporting lines across projects,
reflecting dual reporting relationships.
Flat Organizational Chart: Flat organizations have a decentralized approach with fewer hierarchical
levels. This chart type promotes collaboration, open communication, and a more agile decision-making
process.
Divisional Organizational Chart: Organizations with multiple divisions or business units often utilize
this chart. Each division is presented as a separate entity with its hierarchical structure, allowing for
focused management within each division while maintaining overall coordination.
Team-based Organizational Chart: This chart highlights the importance of cross-functional teams or
self-managed teams. It illustrates the collaboration and interdependencies among teams from different
departments or functional areas.
Virtual Organizational Chart: With the increasing prevalence of remote work and virtual teams, virtual
org charts have gained relevance. These charts represent the structure and connections of geographically
dispersed or remote team members, enabling effective collaboration despite physical distances.
HIERARCHICAL OR TRADITIONAL ORGANIZATIONAL CHART
MATRIX ORGANIZATIONAL CHART
DIVISIONAL ORGANIZATIONAL CHART
TEAM-BASED ORGANIZATIONAL CHART:
 ADVANTAGES OF ORGANIZATION CHART
Visual Clarity: One of the primary advantages of organizational charts is their
ability to present a clear and visually appealing representation of an organization’s
structure. By visually illustrating the relationships between positions, departments,
and teams, org charts help employees and stakeholders easily grasp the overall
hierarchy and interconnections within the organization.
Role Definition and Accountability: Organizational charts play a crucial role in
defining and communicating the roles and responsibilities of individuals within the
organization. By outlining reporting lines and position titles, org charts provide
employees with a clear understanding of their roles as well as those of their
colleagues. This clarity enhances accountability as individuals are aware of their
specific responsibilities and who they are accountable to.
Improved Communication and Collaboration: With their visual depiction of
reporting relationships, organizational charts facilitate efficient communication and
collaboration. Employees can quickly identify the appropriate channels for
communication, ensuring smooth information flow within the organization.
Additionally, org charts help identify key decision-makers, enabling effective
coordination and collaboration among teams and departments.
 ADVANTAGES OF ORGANIZATION CHART
Adaptability and Growth: Organizational charts are valuable tools for managing
organizational growth and change. As organizations evolve, the charts can be easily
updated and modified to reflect new positions, departments, or reporting
relationships. This adaptability ensures that the org chart remains an accurate
representation of the organization’s structure, supporting smooth transitions and
accommodating growth.
Empowered Decision-Making and Delegation: Clear decision-making authority is
a significant advantage provided by organizational charts. By visually representing
authority levels, org charts help employees understand who has decision-making
power at each level of the organization. This clarity promotes efficient decision-
making by ensuring that decisions are made by the appropriate individuals or teams.
Talent Management and Succession Planning: Organizational charts play a vital
role in talent management and succession planning. By visually mapping the
hierarchy, leaders can identify potential successors for key positions. This enables
organizations to develop and groom employees for future leadership roles, ensuring
a smooth transition of responsibilities.
 LIMITATIONS OF ORGANIZATION CHART
Simplification of Complexity: Organizational charts provide a simplified representation of complex
organizational structures. They may not capture the intricate informal networks, cross-functional
collaborations, and dynamic nature of relationships within the organization. It’s important to
recognize that the chart’s static nature might overlook important informal lines of communication and
relationships that play a significant role in decision-making and problem-solving.
Lack of Contextual Information: Organizational charts primarily focus on the formal structure and
reporting relationships, often neglecting the broader context in which the organization operates.
Factors such as organizational culture, power dynamics, and informal hierarchies are not adequately
reflected in the chart. This limitation can hinder a comprehensive understanding of how the
organization functions and how decisions are made.
Incomplete Representation of Roles: Organizational charts may not fully capture the diverse
responsibilities and duties associated with each position. Job roles can vary significantly within the
same title, and an org chart might not provide a comprehensive understanding of the tasks and
functions performed by individuals or teams. It is important to supplement the org chart with detailed
job descriptions to avoid confusion and misinterpretation of roles within the organization.
 LIMITATIONS OF ORGANIZATION CHART
Complexity of Representing Large Organizations: For large organizations or those with
complex structures, accurately representing the intricacies of reporting lines, divisions, and
teams in a single org chart can be challenging. The chart may become cluttered and difficult
to interpret, diminishing its usefulness as a communication and reference tool.
Lack of Flexibility and Timeliness: Organizational charts are often static and may not
keep up with the rapid changes that organizations undergo. Restructuring, mergers, or
evolving roles can quickly render the org chart outdated, reducing its relevance and
reliability as a representation of the current organization. Regular updates and a clear
communication process for changes are necessary to address this limitation.
Perception of Rigidity: Employees may view organizational charts as rigid hierarchies that
discourage creativity, collaboration, and flexibility. This perception can hinder innovation,
teamwork, and cross-functional initiatives, as individuals may feel constrained by their
designated roles and hesitant to communicate with colleagues outside their immediate
reporting lines.
 ORGANIZATIONAL STRUCTURE

Organizational structure is a management concept that outlines the methods

of doing activities in the organization from beginning to end in order to
achieve the defined goals and objectives. It is related to creating different
departments and divisions of activity for the integrity of performing the jobs.
TYPES OF ORGANISATION AND THEIR STRUCTURE

Formal Organisation: Formal organisation is that type of organisation structure

where the authority and responsibility are clearly defined. The organisation structure
has a defined delegation of authority and roles and responsibilities for the members.
The formal organisation has predefined policies, rules, schedules, procedures and
programs. The decision making activity in a formal organisation is mostly based on
predefined policies.
Formal organisation structure is created by the management with the objective of
attaining the organisational goals.
Informal Organisation: Informal organisations are those types of
organisations which do not have a defined hierarchy of authority
and responsibility. In such organisations, the relationship between
employees is formed based on common interests, preferences and
prejudices.
There are several types of formal organisation based on their
structure, which are discussed as follows:
1. Line Organisation
2. Line and Staff Organisation
3. Functional Organisation
4. Project Organisation
5. Matrix Organisation
 LINE ORGANISATION
Line Organisation: Line organisation is the simplest organisation structure and it also happens to be
the oldest organisation structure. It is also known as Scalar or military or departmental type of
organisation.
In this type of organisational structure, the authority is well defined and it flows vertically from the top
to the hierarchy level to the managerial level and subordinates at the bottom and continues further to
the workers till the end.
There is a clear division of accountability, authority and responsibility in the line organisation structure.
Advantages of Line organisation
1. Simple structure and easy to run
2. Instructions and hierarchy clearly defined
3. Rapid decision making
4. Responsibility fixed at each level of the organisation.
Disadvantages of Line organisation:
1. It is rigid in nature
2. It has a tendency to become dictatorial.
3. Each department will be busy with their work instead of focusing on the overall development of the
organisation.
 LINE AND STAFF ORGANISATION:
Line and Staff Organisation: Line and staff organisation is an improved
version of the line organisation. In line and staff organisation, the functional
specialists are added in line. The staff is for assisting the line members in
achieving the target effectively.
Advantages of Line and Staff organisation
1. Easy decision making as work is divided.
2. Greater coordination between line and staff workers.
3. Provides workers the opportunity for growth.
Disadvantages of Line and Staff Organisation
1. Conflict may arise between line and staff members due to the improper
distribution of authority.
2. Staff members provide suggestions to the line members and decision is
taken by line members, it makes the staff members feel ignored.
 FUNCTIONAL ORGANISATION:
Functional Organisation: Functional organisation structure is the type of organisation
where the task of managing and directing the employees is arranged as per the
function they specialise. In a functional organisation, there are three types of
members, line members, staff members and functional members.
Advantages of Functional organisation
1. Manager has to perform a limited number of tasks which improves the accuracy of
the work.
2. Improvement in product quality due to involvement of specialists.
Disadvantages of Functional organisation
1. It is difficult to achieve coordination among workers as there is no one to manage
them directly.
2. Conflicts may arise due to the members having equal positions.
 PROJECT ORGANISATION
Project Organisation: A project organisation is a temporary form of organisation
structure that is formed to manage projects for a specific period of time. This form of
organisation has specialists from different departments who are brought together for
developing a new product.
Advantages of Project organisation
1. The presence of many specialists from different departments increases the
coordination among the members.
2. Each individual has a different set of responsibilities which improves control of the
process.

Disadvantages of Project Organization

1. There can be a delay in completion of the project.
2. Project managers may find it difficult to judge the performance of different
specialists.
 MATRIX ORGANISATION
Matrix Organisation: Matrix organisation is the latest form of organisation that is a
combination of functional and project organisation. In such organisations there are
two lines of authority, the functional part of the organisation and project
management part of the organisation and they have vertical and horizontal flow of
authority, respectively.
Advantages of Matrix Organisation
1. Since the matrix organisation is a combination of functional and project
management teams, there is an improved coordination between the vertical and
horizontal functions.
2. Employees are motivated as everyone will be working towards one project.
Disadvantages of Matrix Organisation
1. Due to the presence of vertical and horizontal communication, there will be
increased cost and paperwork.
[Link] multiple supervisors for the workers leads to confusion and difficulty in
control.
PROCESS OF ORGANISATIONAL STRUCTURE
Step 1: Designing Jobs

Job design is the first step in designing the organizational structure. Job
design is the process of dividing complex jobs into simple tasks or activities
and grouping similar tasks into a job package. It is a process of defining an
individual’s work-related responsibilities.

Step 2: Grouping Jobs (Department)

In this step, similar job activities are grouped into units or departments with
some logical arrangement. But it is almost impossible to manage everything if
the organization grows up. In such a situation, different managerial jobs need
to be created and managers need to be hired.
Step 3: Establishing Reporting Relations
It is required to clarify who needs to report to whom. Normally, lower positions are
required to report to a subsequently higher position (immediate superior). Such
relationships are established in a vertically linear form.
This is called the chain of command. Thus, a chain of command is a clear and
distinct line of authority among the positions in an organization.
Step 4: Distributing Authority
Authority is the decision-making power. Each job position should have a certain
degree of authority which allows employees to make decisions during the job. This
is a source of inspiration to the employees. There must be a balance between
responsibility and authority to maintain good coordination, prompt decision, and
discipline in the organization.
Thus, in the organizing process, the authority should be properly distributed among
the job position. Only required and sufficient authority should be fixed with
responsibility.
Step 5: Coordinating Activities
Coordination is the process of linking the activities of the various departments of the
organization. Efforts and output of each department should be integrated in order to increase
organizational efficiency. Thus, the efforts of departments should be coordinated.
Coordination is essential because of the interdependency of departments for information and
resource. The greater the interdependency more coordination is required in the organization.
For effective coordination, effective communication channels need to be established.
Step 6: Differentiating Between Positions
Finally, as the last building block of organizational structure, line position and staff position
need to be differentiated.
A line position is a position in the direct chain of command while a staff position is a position
created for providing expertise suggestions, advice, and support to the line position. Staff
positions are temporary in nature and hold very little authority.
There can be a contradiction between a staff position and a line position. Thus, line and staff
positions should be differentiated clearly.
 LEADERSHIP

Leadership is a process by which an executive can direct, guide and influence

the behaviour and work of others towards accomplishment of specific goals in
a given situation. Leadership is the ability of a manager to induce the
subordinates to work with confidence and zeal.
 CHARACTERISTICS OF LEADERSHIP

1. It is a inter-personal process in which a manager is into influencing and guiding

workers towards attainment of goals.
2. It denotes a few qualities to be present in a person which includes intelligence,
maturity and personality.
3. It is a group process. It involves two or more people interacting with each other.
4. A leader is involved in shaping and moulding the behaviour of the group towards
accomplishment of organizational goals.
5. Leadership is situation bound. There is no best style of leadership. It all depends
upon tackling with the situations.
 IMPORTANCE OF LEADERSHIP:

 Initiates action
 Motivation
 Providing guidance
 Creating confidence
 Building morale
 Builds work environment
 Co-ordination
 LEADERSHIP STYLES ARE AS FOLLOWS:
Autocratic leadership style:
1. In this style of leadership, a leader has complete command and hold over their
employees/team. The team cannot put forward their views even if they are best for the team’s
or organizational interests. They cannot criticize or question the leader’s way of getting things
done.
2. The leader himself/herself gets the things done. The advantage of this style is that it leads to
speedy decision-making and greater productivity under leader’s supervision. Drawbacks of
this leadership style are that it leads to greater employee absenteeism and turnover.
3. This leadership style works only when the leader is the best in performing or when the job is
monotonous, unskilled and routine in nature or where the project is short-term and risky.

The Laissez Faire Leadership Style:

1. Here, the leader totally trusts their employees/team to perform the job themselves. He just
concentrates on the intellectual/rational aspect of his work and does not focus on the
management aspect of his work.
2. The team/employees are welcomed to share their views and provide suggestions which are
best for organizational interests. This leadership style works only when the employees are
skilled, loyal, experienced and intellectual.
LEADERSHIP STYLES ARE AS FOLLOWS:
Democrative/Participative leadership style: The leaders invite and encourage the
team members to play an important role in decision-making process, though the
ultimate decision-making power rests with the leader.
The leader guides the employees on what to perform and how to perform, while the
employees communicate to the leader their experience and the suggestions if any.
The advantages of this leadership style are that it leads to satisfied, motivated and
more skilled employees. It leads to an optimistic work environment and also
encourages creativity. This leadership style has the only drawback that it is time-
consuming.
Bureaucratic leadership: Here the leaders strictly adhere to the organizational
rules and policies. Also, they make sure that the employees/team also strictly
follows the rules and procedures. Promotions take place on the basis of employees’
ability to adhere to organizational rules.
Drive
Leaders tend to be highly motivated individuals. This inner drive is reflected in a
number of common ways. They reflect a greater effort level in general, they strive
for achievement, they have greater ambition, they work with greater energy, they are
often tenacious, and they are more likely to take the initiative rather than wait for
someone else to do so.
Desire to Lead
Effective leaders also tend to have a strong desire toward leadership roles and
functions. Although others are happier to allow others to take the lead, leaders want
to do so themselves.
Honesty/Integrity
The moral aspect of leadership is highly significant. Effective leaders must
demonstrate high levels of honesty and integrity. This is essential to inspiring
confidence and trust from employees and other followers, without which a leader is
not likely to be effective. Dishonesty may not always be revealed at first, but it
usually is with time. There are many stories of business leaders who are successful
for a period of time but later find themselves in serious trouble due to dishonest or
unethical practices.
Self-Esteem /Self-Confidence
These two elements, self-esteem and self-confidence, are closely related and tend to
be prominent in leaders. Perhaps it is best to view these traits in terms of the negative
perspective. A lack of self-esteem and self-confidence is very problematic for a
leader. When these traits are lacking, doubts arise and insecurities plague a leader’s
activities. The leader tends to be confident that his beliefs, plans, and actions are
correct (hopefully with good reason). This confidence is important in that it enables
the leader to persist steadfastly in the right course even when there are obstacles and
doubts from others.
Open-Mindedness
At the same time, effective leaders also tend to be open-minded to new ideas and
experiences. They recognize that innovation is often valuable, and they also tend to
consider ideas and suggestions from others. Self-confidence and self-esteem do not
have to conflict with this spirit of open-mindedness.
Intelligence
One obvious trait that many people look for in leaders is intelligence. Studies have shown
that this is indeed an important qualification. It has been suggested, however, that pure
cognitive ability is a “threshold” qualification. That is, it is important for the entrance into
leadership roles. However, once within the leadership circle, most individuals have relatively
high intelligence levels, so mere cognitive ability is not enough to distinguish a leader from
other leaders.
Extraversion
Another unsurprising personality trait that is commonly associated with leadership is being an
extrovert. Leaders tend to be outgoing and social in their personalities, which helps them take
the lead and act with initiative. It also helps them with the important aspect of connecting to
and inspiring others through relationships.
Though many leaders are extraverts, there are certainly examples of successful leaders who
are not. Sometimes other strengths are sufficient to compensate for not being an extravert, or
sometimes a leader who is not naturally an extravert is able to train himself to be more
outgoing in behavior when needed, though this still does not generally change the leader’s
basic personality. Bill Gates of Microsoft and Mark Zuckerberg of Facebook are two
prominent examples of extremely successful leaders who are introverts by personality.
Knowledge of the Business
Another key ingredient in the leadership trait mix is knowledge of the business. Even
if an individual has all the natural personality traits desired of leaders, a lack of
knowledge and experience is usually impossible to overcome. A leader must be
competent in his field, and the most effective leaders are usually experts with deep
insight.
RECENT TRENDS IN MANAGEMENT ARE:
Workforce Diversity
Outsourcing
Knowledge Management
Learning Organization
Time Management
Business Process Reengineering
Conflict Management
Stress Management
Participative management
Green Management
Workforce Diversity
One of the main recent trends in management is workforce diversity. It is the
involvement of heterogeneous types of employees in the organization who represents
their age, gender, and ethnicity. Due to changes in population dimensions, improved
workforce, social pressure, and increased globalization diversity is constantly
increasing.
Outsourcing
Outsourcing means getting resources from outside. It is the process of providing
some parts of jobs to other organizations to bring quality and get the benefit of
specialization.
It is an important means of reducing costs and improving quality. If an organization
performs every activity by itself, it may not be able to perform the activity efficiently
and the quality of product or service may also be inferior. Thus, organizations have
to identify certain areas that can be outsourced to minimize the cost of operation and
increase the quality of products.
Knowledge Management
Knowledge management is the process that helps organizations identify, select,
organize, disseminate, and transfer important information and expertise for
organizational prosperity. It emphasizes that knowledge can be turned into business
ideas and used for the success of the organization. The effective management of
knowledge enables management for effective and efficient problem-solving,
dynamic learning, strategic planning, and decision-making.
Learning Organization
Learning organization involves institutions where there is the provision of
continuous learning to adapt to the changing environment of businesses. The
business environment is an ever-changing process. So, to bring new concepts into the
business, the innovation of new ideas, models, design, structure, and technology is
essential. A business organization performing at the highest level today will not
remain the same in the future if there is no provision for learning.
Time Management
Time management is prioritizing activities for using time effectively. It is used for
scheduling time. Time is a unique and most important resource and if it is wasted, it
can never be recovered.
Time management may help employees who are suffering from a lack of planning,
sort out their priorities, etc. It is about balancing different aspects of life which
makes the goal achievable. But remember time is always limited.

Business Process Reengineering (BPR)

Business process reengineering is a new trend in the management field. It purpose is
that the way work is done should be fundamentally and radically changed so that
every effort of the firm is driven to achieve customer satisfaction and thereby greater
performance and profitability.
Conflict Management

Conflict refers to all kinds of opposition or antagonistic interaction between or

among individuals and groups. It exists when one party has hampered or is about to
hamper the accomplishment of goals.

Stress Management

Stress refers to the body’s psychological, physiological, and emotional response to

any demand. Stress occurs when the pressure is greater than the resources. Large
workloads, long work hours, fewer resources, and less job security are the major
causes of stress for employees.
Participative Management
It means involving subordinates in the decision-making process with their immediate
superiors. Here, both the manager and the subordinates are involved in the decision-
making process. It increases the value of the employees by considering them as part
of the management.
Green Management
One of the new trends in management is green management which focuses on
environmental conservation for the sustainable development of business activities. It
focuses on promotions of green technology that presents the most viable way of
meeting with the new green-related activities.
 THE FUNCTIONAL AREAS OF MANAGEMENT
PRODUCTION MANAGEMENT
Production management is also known as Operations Management. Production means the creation of
the utilities. The goods are produced by the way of conversion of raw materials into work-in-progress
and then the work-in-progress into finished goods. Production management is very essential for the
business because whatever is produced will be sold by the business. Production management aims at
ensuring availability of right type of product in the adequate quantity at the right time by incurring the
least cost. The other activities involved in production management are as follows:
Location and layout of plants and buildings
Designing of the product
Purchase and storage of the materials
Planning and control of production operations
Repairs and maintenance
Inventory control
Quality control
Research and development activities
Determination of quantity and quality to be produced
Work analysis and listing
Time and motion study
Determination of method and procedure of production.
FINANCIAL MANAGEMENT
Finance is the life blood of the business. The continuous management of finances is needed at
all the levels to ensure the optimum utilization of funds available with the business. Financial
management aims at allocating the funds from the source which will generate least cost and
application of funds from where the maximum profit can be generated. Management of
finances involves following activities:
Assessing financial needs
Determining the sources of raising funds
Taking the investment decisions i.e. capital budgeting decisions
Determination of optimum capital structure
Budgetary control
Determining cost of each source of capital
Proper utilization of funds
Working capital management
Ensuring fair return to the investors.
Coordinating the various departments financial needs.
Preparation analysis and interpretation of the financial statements.
Negotiating for outside financing.
Determination of dividend policy, etc.
MARKETING MANAGEMENT
Marketing management is the analysis, planning, implementation and control of the programs
designed to create, build and maintain beneficial exchanges with target buyers for the purpose
of achieving the organizational objectives. Marketing management is responsible for
organising, directing and controlling all the marketing activities included in the process of
marketing. Marketing management consists of the following activities:
Identifying and assessing the needs of the consumer by conducting the market research.
Planning and developing suitable products and services.
Setting appropriate prices for products and services.
Selecting channels for distribution.
Selecting the modes of promotion of the products such as advertisement using different
medias, publicity, maintaining public relations etc.
Making the marketing strategy.
Choosing appropriate marketing mix.
Conducting market surveys at regular intervals.
PERSONNEL MANAGEMENT
Personnel management is also known as Human Resource Management. To quote Mary Parker
Follet, management is the art of getting things done through others; this states that management is
all about dealing with the personnel of the organization. Personnel management is the
management of manpower and is basically concerned with the recruitment, selection, training and
maintaining the cordial relations, which contribute maximum towards the achievement of the
objectives set. The personnel management involves following activities:
Manpower planning
Recruitment of employees
Selection of employees
Training and development of employees
Orientation of employees
Compensation, promotion and transfers of the employees
Motivation of the employees
Stress management of the employees
Ensuring proper communication among the employees.
Supervision of the employees
Ensuring health, welfare and safety measures adopted for the employees.
Controlling the performance of the employees.
Job evaluation.
Job description.
OFFICE MANAGEMENT
Office is the nerve centre of the business. Office is to be managed properly for the
quick, better and desired results. The functions of office management involves:
Maintaining and keeping the records.
Developing efficient system of communication.
Development of time and labour saving devices.
Establishing cordial relations between all sections of an enterprise.
Keeping up to date system of accounting.
MATERIAL MANAGEMENT
Materials form a major part of any product. It is very important for every firm to keep strict
control on the materials receipts, supply and use of materials. The following are the main
functions of material management:
Determination of requirements of materials
Selection of sources of supply.
Purchasing the right quantity of materials at the right time from the right place at the right time.
Storage and preservation of the material.
Proper material handling
Inventory control.
Determining material levels.
CUSTOMER RELATIONSHIP MANAGEMENT
The art of managing the organization’s relationship with the customers and
prospective clients refer to customer relationship management. It refers to the study
of needs and expectations of the customers and providing them the right solution.
This includes:
Identification of the target market.
Collecting and storing the data related to the market.
Establishing proper communication channel with the customers.
Analyzing the sales data.
Personalizing the interaction with the customers.