lecture notes-management (edited) (1)

8/3/2019 Lecture Notes-Management (Edited) (1)

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Management: An Overview

In this chapter we will discuss:

Definitions of Management

The Role of Management

Functions of Managers

Levels of Management

Management Skills and Organizational Hierarchy

Approaches to Management

INTRODUCTION

One of the most important activities in business is the management of the 4Ms men, machines,

material and money. The term management can be interpreted differently in different contexts.

Hence, it is difficult to define. In one context, it may comprise the activities of executives and

administrative personnel in an organization, while in another, it may refer to a system of getting

things done. In a broad perspective, management can be considered as the proper utilization ofpeople and other resources in an organization to accomplish desired objectives. With increasing

global competition, changes in the world of technology, changing business practices and increasing

social responsibility of organizations, the role of managers has become all the more significant.

In this chapter, we will first examine the definitions of management given by some eminent

management thinkers to understand the essence of management. Secondly, we will discuss the five

basic functions of management i.e., planning, organizing, staffing, leading and controlling. The

chapter also focuses on the managerial skills required at various levels of the organizational

hierarchy and briefly explains the various approaches to management.

DEFINITIONS OF MANAGEMENTThe term management can be interpreted in a variety of ways. To gain a better insight into the

nature of management, let us look at some of the definitions of management:

Harold Koontz and Heinz Weihrich define management as the process of designing and maintaining

an environment in which individuals, working together in groups, efficiently accomplish selected

aims.

Louis E. Boone and David L. Kurtz define management as the use of people and other resources to

accomplish objectives.

Dalton E. McFarland defines management as a process, by which managers create, direct,

maintain, and operate purposive organizations through systematic, coordinated, cooperative human

effort.

Mary Parker Follet termed management as the act of getting things done through people.

Definitions by Follet and Louis E. Boone and Kurtz call attention to the fact that managers achieve

organizational goals by getting others to do the necessary tasks. The other two definitions suggest

that management is much more than just getting the work done and (as shown in Figure 1.1)

suggest the following aspects of management:


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1. Managers carry out the functions of planning, organizing, staffing, leading and

controlling: Henry Fayol was the first management thinker to outline the five basic functions

carried out by managers. Every manager performs these basic functions. These functions are

discussed in detail in the later part of this chapter.

2. Management is essential to any kind of organization: Wherever there are groups of

people working together to achieve some common objectives, it becomes essential to guide,

organize and control them. The term management applies to any organization irrespective

of the size or nature of operations. The prime concern of a CEO of a multinational company,

the General Manager of a hotel, the first-level supervisor, the manager of a cricket team and

the student president in a college is to manage their people and resources effectively.

Figure 1.1: Key Aspects of the Management Process

3. Management is essential at all hierarchical levels: Management is necessary at all

levels. However, the type of skills and the degree to which various skills are required at

different levels of the hierarchy may vary. In order to perform their duties satisfactorily,

managers need technical, human, conceptual and design skills.

4. The goal of all managers is to generate surplus: The aim of all business managers is to

create a surplus. To accomplish this objective, the manager has to create an environmentwhich encourages people to accomplish as much as possible with the least amount of

resources and personal dissatisfaction. Even in non-profit organizations, the aim of managers

is to accomplish their goals with the minimum amount of resources or to make as much

surplus as possible with available resources.

5. The aim of all managers is to improve productivity, efficiency and effectiveness:

Productivity is defined as the output-input ratio within a time period with due consideration

for quality. It can be expressed as:

Productivity = Outputs / Inputs (within a time period, quality considered)


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Productivity can be improved in the following ways:

By producing more output with the same inputs.

By reducing inputs, but maintaining the same level of outputs.

By increasing outputs and reducing inputs, thereby, making the ratio more favorable.

Productivity can be improved by ensuring efficiency and effectiveness in the operations of the firm.

Effectiveness refers to achievement of stated organizational objectives while efficiency denotes the

judicious use of resources to achieve organizational objectives. In the words of Peter Drucker,

efficiency means doing things right, while effectiveness means doing the right things. In his book,

Management Tasks, Responsibilities, Practices, Drucker states that effectiveness is the foundation

of success whereas efficiency is a minimum condition for survival after success has been achieved.

THE ROLE OF MANAGEMENT

As mentioned earlier, managers perform five functions planning, organizing, staffing, leading and

controlling. Since these functions are very essential for effective management, they have been used

as the basic framework for this book. They have been briefly explained in the next section of thechapter.

In order to understand the role of management, in the late 1960s, Henry Mintzberg devised a new

approach the managerial roles approach by observing what managers actually do. He did a

careful study of five chief executives at work and found that they were involved in a number of

varied, unpatterned activities of short duration. Using a method called structured observation,

Mintzberg isolated ten roles which he believed were common to all managers. As shown in Table 1.1,

these ten roles were grouped into three categories interpersonal roles, informational roles and

decisional roles.

A manager is required to interact with many people, both within and outside the organization and

hence, the need to perform interpersonal roles. The three interpersonal roles of a manager are

figurehead, leader and liaison. In his role as a figurehead, a manager performs all the ceremonial or

symbolic duties. Example, it would be the duty of a college dean to award diplomas at the

convocation ceremony. In the leadership role, a manager is required to motivate the employees to

perform at their best to achieve the companys objectives. In the liaison role, a manager is required

to interact with people both within and outside the organization.

A manager acts as a channel of information within the organization. The three informational roles of amanager are that of a recipient, disseminator and spokesperson. In the role of a recipient, a manager

receives information pertaining to changes, opportunities and problems that the organization may face.As a disseminator, a manager provides information to subordinates that would influence their

performance at work. And finally, a manager performs the role of a spokesperson when he or she

represents the organization in public.


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Table 1.1: Mintzberg's 10 Managerial Roles

INTERPERSONAL FigureheadPerforms ceremonial and symbolic duties such as greeting

visitors, signing legal documents.

LeaderDirect and motivate subordinates, training, counseling, and

communicating with subordinates.

LiaisonMaintain information links both inside and outside

organization, use mail, phone calls, meetings

INFORMATIONAL Monitor Seek and receive information, scan periodicals and reports,maintain personal contacts

DisseminatorForward information to other organization members, send

memos and reports, make phone calls

SpokespersonTransmit information to outsiders through speeches, reports,

memos

DECISIONAL EntrepreneurInitiate improvement projects, identify new ideas, delegate

idea responsibility to others

Disturbance

Handler

Take corrective action during disputes or crises; resolve

conflicts among subordinates; adapt to environmental crises

Resource Allocator Decide who gets resources, scheduling, budgeting, settingpriorities

NegotiatorRepresent department during negotiation of union contracts,

sales, purchases, budgets, represent departmental interests

FUNCTIONS OF MANAGERS

The functions of a manager provide a useful framework for organizing management knowledge

under the various heads of planning, organizing, staffing, leading and controlling. Managerial

functions are effective tools for managers to achieve the organizations planned objectives. They

include the general administrative duties that need to be carried out in virtually all organizations.Figure 1.2 depicts the management process and shows the various functions that managers are

involved in. It is evident from the figure that managers are involved in more than one activity at the

same time.

Figure 1.2: Management Functions

Planning


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Planning can be defined as the process, by which, managers decide the mission and objectives of the

firm and take necessary steps to achieve the desired objectives. At the same time, managers need to

determine the future trends in business and incorporate change and innovation into the organization

from time to time.

There are various types of plans and they may range from planning to define the overall purposes

and objectives of an organization to planning for a specific action. Planning helps a firm decide its

future course of action.

OrganizingOrganizing is the process of assigning tasks and allocating resources to individuals to enable them to

accomplish organizational goals. Organizing is a continuous process of determining (1) which tasks areto be performed, (2) how tasks can best be combined into specific jobs, (3) how jobs can be grouped

into various units, and (4) the authority and reporting relationships within the corporate hierarchy. Theorganizational structure of a firm is a key element in determining its success or failure. If plans are not

organized properly even the best of plans can fail. On the other hand, the pitfalls associated with apoor plan can be eliminated by excellent organization.

Staffing

Today, staffing is better known as human resource management and involves manning or filling the

various positions in the organizational hierarchy. Activities like determining manpower requirements,assessing the number of people presently available in the organization, recruiting and selecting

candidates, training and placing them in the organization come under the purview of staffing. Thisfunction also deals with compensation, performance appraisal, promotion and career planning.

LeadingLeading is defined as the management function of influencing, motivating, and directing people

towards the achievement of organizational goals. It is the management function that involvesinfluencing and inspiring team members to perform well and accomplish corporate objectives. Leading

involves (1) communicating with others, (2) leadership styles and approaches, and (3) motivatingpeople to put forth the effort required to achieve organizational goals. In simple words, it is the act of

making things happen through others.

Controlling

The final step in the management process is to monitor the progress of an organization towards its

goals. Controlling can be defined as the continuous measurement and analysis of actual operations

against the established industry standards developed during the planning process and corrections of

deviations, if any.

The basic control process involves (1) comparing performance with standards, (2) determining where

negative deviations occur, and (3) developing remedial measures to correct deviations.

LEVELS OF MANAGEMENT

In many small business enterprises, the owner is the only member of the management team. But,

as the size of an organization increases, a more sophisticated organizational structure is required. It

is a normal practice to categorize management into three basic levels: (1) top-level management,

(2) middle-level management, and (3) supervisory or first-level management. Figure 1.3 illustrates

the levels of management. The duties and responsibilities at these three levels of management vary

from organization to organization, depending upon the size, technology, culture, etc. prevailing in

the organization.

The number of managerial positions at each level varies from organization to organization. In most

of the organizations, there are more positions at the first-level, fewer in the middle, and very few at


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the top. Many describe this kind of an organizational structure as a pyramid, as the managerial

positions gradually decline as one progresses towards the higher levels of management (see Figure

1.4). The various activities performed at each of these levels of management are illustrated in Table

1.2.

Figure 1.3: Levels of Management

Figure 1.4: Managerial Levels and Areas

Top-Level Managers


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Top-level managers are usually appointed, elected or designated by the organizations governing

body. They are few in number, and they include job classifications such as the Chief Executive

Officer (CEO), President, Vice President, Senior Vice President and Executive Director. Top-

level managers are responsible for taking major decisions for the organization as a whole. The top-

level managers are responsible for the overall activities of the business and are accountable for its

impact on the society at large. They work to some extent with the middle-level managers in

implementing the plans, and maintaining overall control over organizational performance.

In public limited companies, top-level managers report to the Board of Directors. Members of the board

are selected by shareholders. Depending on the size of the company, the number of board membersvary from 15 to 25. When a board comprises a majority of individuals who have close ties with themanagement, they essentially act as rubber stamps. But, on the other hand, boards with more

outsiders operate more independently and are more proactive. Though it is a usual practice to elect theCEO as the chairperson of the board, a study has suggested that companies having an outsider as a

board chairperson perform better, as he/she helps the board to monitor the performance of the topmanagement objectively.

Middle-Level Managers

Middle-level managers deal with the actual operation of various departments in an organization. They

are directly responsible for the performance of managers at lower levels. Their typical titles include

manager, director, chief, department head and divisional head. The number of middle-level

managers in complex organizations is far higher than other managers. These managers are

responsible for implementing the plans and strategies developed by top management for the

accomplishment of organizational goals. They look to the top management for direction and guidance

and are answerable to them. In many organizations, middle-level managers serve as a source of

innovation and creativity. Thus, they play a vital role in the success of the organization.

Due to the advent of information technology, online technical assistance has become available to first-level managers. This has resulted in making middle-level managers redundant and has thus reduced

the number of middle-level managers in many organizations

First-Level Managers

First-level managers are directly responsible for the performance of employees involved in

operations. They are usually called supervisors. They may be addressed by different names. In a

manufacturing plant, the first-level manager may be called a foreman, in a research department

the technical supervisor, and in a large office the clerical supervisor. First-level managers

implement the operational plans developed by middle managers and take corrective actions, when

needed. They are responsible for output variables like number of units produced, labor costs,

inventory levels, and quality control. Since first-level managers act as a link between the

management and the rest of the workforce, they often confront conflicting demands. In recent

times, the power of these managers has gradually decreased because of union influence, the

increasing educational level of workers, and the growing use of computers to track many activities

formerly monitored by first-level managers.

MANAGEMENT SKILLS AND ORGANIZATIONAL HIERARCHY

A managers job is varied and complex. Hence, managers need certain skills to perform the

functions associated with their jobs. During the early 1970s, Robert K. Kalz identified three kinds of

skills for administrators. These are technical, human and conceptual skills. A fourth skill the ability

to design solutions was later added to the above mentioned skills.

Technical Skills


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Technical skills refer to the ability of a person to carry out a specific activity. In order to do so, one

needs to have knowledge of methods, processes and procedures. Engineers, computer specialists,

accountants and employees in manufacturing departments all have the necessary technical skills for

their specialized fields. Technical skills are essential for first-level managers. For example,

employees at the operational level work with tools, and their supervisors must be able to teach

them how to perform the tasks assigned to them using these tools. First-level managers spend

much of their time in training subordinates and clarifying doubts in work-related problems.

Human Skills

Human skills or interpersonal skills refer to the ability of a person to work well with other people in a

group. It is the ability to lead, motivate, and communicate with people to accomplish certain

objectives. Human skills are of paramount importance in the creation of an environment, in which

people feel comfortable and are free to voice their opinions. These skills aid employees during

interaction with their supervisors, peers and people outside the work unit such as suppliers,

customers and the general public. These skills are important for all levels in the organization.

Conceptual Skills

Conceptual skills refer to the ability of a person to think and conceptualize abstract situations. It is

the ability to understand and coordinate the full range of corporate objectives and activities. These

skills are most important at the top management level, as top-level managers have the greatest

need to see the big picture, to understand how the various parts of the organization relate to one

another and associate the organization with the external environment.

Design Skills

Design skills refer to the ability of a person to find solutions to problems in ways that would benefit

the organization. Top managers should not only recognize a problem but also suggest ways to

overcome them. If they only see the problem, they become mere problem watchers, and will

prove ineffective. Managers at upper organizational levels should be able to design a rational and

feasible solution to the problem by considering the various internal and external factors.

The relative significance of these skills varies at different levels in the organizational hierarchy asshown in Figure 1.6. We can briefly summarize them as follows:

Figure 1.6: Relative Need for the Main Categories of Skills

APPROACHES TO MANAGEMENT


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1. The empirical or case approach: In this approach, one tries to understand management

principles with the help of cases. It also identifies the situations, wherein organizations have

either succeeded or failed by following this approach.

2. The interpersonal behavior approach: This approach is based on individual psychology

and focuses on interpersonal relationships.

3. The group behavior approach: This approach is based on sociology and social

psychology. It stresses on the behavior of people in groups.

4. The cooperative social systems approach: It advocates a system of cooperation using

both interpersonal and group behavioral aspects.

5. The sociotechnical systems approach: It realizes the impact of technical systems on

personal attitudes and group behavior. This approach focuses on areas involving close

relationships between technical systems and the people involved such as production, office

operations, etc.

6. The decision theory approach: The focus in this approach is on the decision-making

process and people involved in it.

7. The systems approach: It considers organizations to be open systems as they interact

with the external environment. It recognizes the importance of the inter-relationship

between planning, organizing and controlling.

8. The mathematical or management science approach: This approach treats

management as a logical process, which can be expressed in terms of mathematical symbols

and relationships.

9. The contingency or situational approach: In this approach, the main assumption is that

there is no hard and fast rule for all situations. Managerial practice depends upon

circumstances. Different circumstances may necessitate the use of different methods.

10. The managerial roles approach: This approach had been developed by studying the

work methods of five chief executives. The study identified ten managerial roles, which were

grouped into three catsegories interpersonal, informational and decisional roles.

11. The McKinseys 7-S framework: The seven Ss used in this approach are strategy,

structure, systems, style, staff, shared values and skills.

12. The operational approach: This approach attempts to develop the science and theory of

management by drawing upon concepts, principles, techniques and knowledge from other

fields and managerial approaches.

Evolution of Management Thought Classical Approach

Behavioral Approach

Quantitative Approach

Modern Approaches to Management


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INTRODUCTION

According to one school of thought, history has no relevance to the problems faced by managers

today. Some are also of the opinion that management theory is too abstract to be of any practical

use. However, both theory and history are indispensable tools for managing contemporary

organizations.

Like most modern disciplines, contemporary management thought has its foundations in the history

of management and the many significant contributions of theorists and practitioners. A theory is a

conceptual framework for organizing knowledge that provides a blueprint for various courses of

action. Hence, an awareness and understanding of important historical developments and theories

propounded by early thinkers is important for todays managers.

In this chapter, we first take a look at the early approaches to management. We then focus on four

well-established schools of management thought (see Table 2.1): (i) the classical approach; (ii) the

behavioral approach; (iii) the quantitative approach and (iv) the modern approaches to

management. Finally, some emerging approaches in management thought are discussed.

Table 2.1: Major Classification of Management Approaches and their Contributors

Major Classification of Management

Approaches

Major Contributors

Classicalapproach

Scientificmanagement

Frederick W. Taylor, Frankand Lillian Gilbreth and

Henry Gantt

Bureaucratic

management

Max Weber

Administrative

management

Henri Fayol

Behavioral

approach

Group influences Mary Parker Follet

Hawthorne studies Elton Mayo

Maslows needs

theory

Abraham Maslow

Theory X and TheoryY

Douglas McGregor

Model I versus Model

II values

Chris Argyris

Quantitative

approach

Management science -

Operationsmanagement

-

Managementinformation system

-

Modernapproaches

The Systems Theory -

Contingency Theory -

Emerging pproaches:Theory Z and Quality

management

William Ouchi

CLASSICAL APPROACH


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Classical management thought can be divided into three separate schools: scientific management,

administrative theory and bureaucratic management. Classical theorists formulated principles forsetting up and managing organizations. These views are labeled classical because they form the

foundation for the field of management thought. The major contributors to the three schools ofmanagement thought scientific management, administrative theory and bureaucratic management

are Frederick W. Taylor, Henry Fayol and Max Weber respectively.

Scientific Management

Scientific management became increasingly popular in the early 1900s. In the early 19 th century,

scientific management was defined as that kind of management which conducts a business or affairs

by standards established, by facts or truths gained through systematic observation, experiment, or

reasoning. In other words, it is a classical management approach that emphasizes the scientific

study of work methods to improve the efficiency of the workers. Some of the earliest advocates of

scientific management were Frederick W. Taylor (1856-1915), Frank Gilbreth (1868-1924), Lillian

Gilbreth (1878-1972), and Henry Gantt (1861-1919).

Frederick Winslow Taylor

Frederick Winslow Taylor took up Henry Townes challenge to develop principles of scientific

management. Taylor, considered father of scientific management, wrote The Principles of Scientific

Management in 1911. An engineer and inventor, Taylor first began to experiment with new

managerial concepts in 1878 while employed at the Midvale Steel Co. At Midvale, his rise from laborer

to chief engineer within 6 years gave him the opportunity to tackle a grave issue faced by the

organization the soldiering problem. Soldiering refers to the practice of employees deliberately

working at a pace slower than their capabilities. According to Taylor, workers indulge in soldiering for

three main reasons:

1. Workers feared that if they increased their productivity, other workers would lose

their jobs.

2. Faulty wage systems employed by the organization encouraged them to work at a

slow pace.3. Outdated methods of working handed down from generation to generation led to a

great deal of wasted efforts.

Table 2.4: Four Steps in Scientific Management

Step Description

Step 1 Develop a science for each element of the job to replace old rule of

thumb methods.

Step 2 Scientifically select employees and then train them to do the job as

described in Step 1.

Step 3 Supervise employees to make sure they follow the prescribed

methods for performing their jobs.

Step 4 Continue to plan the work but use workers to actually get the work

done.

In essence, scientific management as propounded by Taylor emphasizes:

i. Need for developing a scientific way of performing each job.


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ii. Training and preparing workers to perform that particular job.

iii. Establishing harmonious relations between management and workers so that the job is

performed in the desired way.

Frank and Lillian Gilbreth

After Taylor, Frank and Lillian Gilbreth made numerous contributions to the concept of scientific

management. Frank Gilbreth (1868-1924) is considered the father of motion study.Lillian Gilbreth

(1878-1972) was associated with the research pertaining to motion studies. Motion study involves

finding out the best sequence and minimum number of motions needed to complete a task. Frankand Lillian Gilbreth were mainly involved in exploring new ways for eliminating unnecessary motions

and reducing work fatigue.

The Gilbreths devised a classification scheme to label seventeen basic hand motions such as

search, select, position, and hold which they used to study tasks in a number of

industries. These 17 motions, which they called therbligs (Gilbreth spelled backward with thet and

h transposed), allowed them to analyze the exact elements of a workers hand movements. Frank

Gilbreth also developed the micromotion study. A motion picture camera and a clock marked off in

hundredths of seconds was used to study motions made by workers as they performed their tasks.

He is best known for his experiments in reducing the number of motions in bricklaying. By carefully

analyzing the bricklayers job, he was able to reduce the motions involved in bricklaying from 18

to 4. Using his approach, workers increased the number of bricks laid per day from 1000 to 2700

(per hour it went up from 120 to 350 bricks) without exerting themselves.

Lillians doctoral thesis (published in the early 1900s as The Psychology of Management) was one of

the earliest works which applied the findings of psychology to the management of organizations.

She had great interest in the human implications of scientific management and focused her

attention on designing methods for improving the efficiency of workers. She continued her

innovative work even after Franks death in 1924, and became a professor of management at

Purdue University. Lillian was the first woman to gain eminence as a major contributor to the

development of management as a science. In recognition of her contributions to scientific

management, she received twenty-two honorary degrees.

Figure 2.1 Gantt scheduling chart


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Henry Laurence Gantt

Henry L. Gantt (1861-1919) was a close associate of Taylor at Midvale and Bethlehem Steel. Gantt

later became an independent consultant and made several contributions to the field of

management. He is probably best remembered for his work on the task-and-bonus system and the

Gantt chart. Under Gantts incentive plan, if the worker completed the work fast, i.e. in less than the

standard time, he received a bonus. He also introduced an incentive plan for foremen, who would be

paid a bonus for every worker who reached the daily standard. If all the workers under a foreman

reached the daily standard, he would receive an extra bonus. Gantt felt that this system would

motivate foremen to train workers to perform their tasks efficiently.

The Gantt Chart (see Figure 2.1) is still used today by many organizations. It is a simple chart that

compares actual and planned performances. The Gantt chart was the first simple visual device to

maintain production control. The chart indicates the progress of production in terms of time rather

than quantity. Along the horizontal axis of the chart, time, work scheduled and work completed are

shown. The vertical axis identifies the individuals and machines assigned to these work schedules.

The Gantt chart in Figure 2.1 compares a firms scheduled output and expected completion dates towhat was actually produced during the year. Gantts charting procedures were precursors of todays

program evaluation and review techniques.

Limitations of scientific management


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Scientific management has provided many valuable insights in the development of management

thought. In spite of the numerous contributions it made, there are a few limitations of scientific

management. They are:

The principles of scientific management revolve round problems at the operational level

and do not focus on the management of an organization from a managers point of view.

These principles focus on the solutions of problems from an engineering point of view.

The proponents of scientific management were of the opinion that people were

rational and were motivated primarily by the desire for material gain. Taylor and his

followers overlooked the social needs of workers and overemphasized their economicand

physicalneeds.

Scientific management theorists also ignored the human desire for job satisfaction.

Since workers are more likely to go on strike over factors like working conditions and job

content (the job itself) rather than salary, principles of scientific management, which were

based on the rational worker model, became increasingly ineffective.

Administrative Theory

While the proponents of scientific management developed principles that could help workers perform

their tasks more efficiently, another classical theory the administrative management theory

focused on principles that could be used by managers to coordinate the internal activities oforganizations. The most prominent of the administrative theorists was Henri Fayol.

French industrialist Henri Fayol (1841-1925), a prominent European management theorist,

developed a general theory of management. Fayol believed that with scientific forecasting and

proper methods of management, satisfactory results were inevitable. Fayol was unknown to

American managers and scholars until his most important work, General and Industrial

Management, was translated into English in 1949. Many of the managerial concepts that we take for

granted today were first articulated by Fayol. According to Fayol, the business operations of an

organization could be divided into six activities (see Figure 2.2)

Figure 2.2: Business Operations of an Organization

Fayol outlined fourteen principles of management:


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1. Division of work: Work specialization results in improving efficiency of operations. The

concept of division of work can be applied to both managerial and technical functions.

2. Authority and responsibility: Authority is defined as the right to give orders and the

power to exact obedience. Authority can be formal or personal. Formal authority is derived

from ones official position and personal authority is derived from factors like intelligence and

experience. Authority and responsibility go hand-in-hand. When a manager exercises

authority, he should be held responsible for getting the work done in the desired manner.

3. Discipline: Discipline is vital for running an organization smoothly. It involves obedience

to authority, adherence to rules, respect for superiors and dedication to ones job.

4. Unity of command: Each employee should receive orders or instructions from one

superior only.

5. Unity of direction: Activities should be organized in such a way that they all come under

one plan and are supervised by only one person.

6. Subordination of the individual interest to the general interest: Individual interests

should not take precedence over the goals of the organization.

7. Remuneration: The compensation paid to employees should be fair and based on

factors like business conditions, cost of living, productivity of employees and the ability of the

firm to pay.

8. Centralization: Depending on the situation, an organization should adopt a centralized

or decentralized approach to make optimum use of its personnel.

9. Scalar chain: This refers to the chain of authority that extends from the top to the

bottom of an organization. The scalar chain defines the communication path in an

organization.

10. Order: This refers to both material and social order in organizations. Material order

indicates that everything is kept in the right place to facilitate the smooth coordination of

work activities. Similarly, social order implies that the right person is placed in the right job

(this is achieved by having a proper selection procedure in the organization).11. Equity: All employees should be treated fairly. A manager should treat all employees in

the same manner without prejudice.

12. Stability of tenure of personnel: A high labor turnover should be prevented and

managers should motivate their employees to do a better job.

13. Initiative: Employees should be encouraged to give suggestions and develop new and

better work practices.

14. Espirit de corps: This means a sense of union. Management must inculcate a team

spirit in its employees.

Bureaucratic ManagementBureaucratic management, one of the schools of classical management, emphasizes the need for

organizations to function on a rational basis. Weber (1864-1920), a contemporary of Fayol, was one

of the major contributors to this school of thought. He observed that nepotism (hiring of relatives

regardless of their competence) was prevalent in most organizations. Weber felt that nepotism was

grossly unjust and hindered the progress of individuals. He therefore identified the characteristics of

an ideal bureaucracy to show how large organizations should be run. The term bureaucracy

(derived from the German buro, meaning office) referred to organizations that operated on a

rational basis. According to Weber, a bureaucracy is a highly structured, formalized, and

impersonal organization. In other words, it is a formal organization structure with a set of rules and

regulations. The characteristics of Webers ideal bureaucratic structure are outlined in Table 2.5.


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These characteristics would exist to a greater degree in ideal organizations and to a lesser degree

in other, less perfect organizations.

Table 2.5: Major Characteristics of Webers Ideal Bureaucracy

Characteristic DescriptionWork specialization and

division of labor

The duties and responsibilities of all the employees are clearly defined.Jobs are divided into tasks and subtasks. Each employee is given a

particular task to perform repeatedly so that he acquires expertise in thattask.

Abstract rules and

regulations

The rules and regulations that are to be followed by employees are welldefined to instill discipline in them and to ensure that they work in a co-

coordinated manner to achieve the goals of the organization.

Impersonality of managers

Managers make rational decisions and judgments based purely on facts.

They try to be immune to feelings like affection, enthusiasm, hatred andpassion so as to remain unattached and unbiased towards their

subordinates.

Hierarchy of organization

structure

The activities of employees at each level are monitored by employees at

higher levels. Subordinates do not take any decision on their own andalways look up to their superiors for approval of their ideas and opinions.

BEHAVIORAL APPROACH

The behavioral school of management emphasized what the classical theorists ignored the human

element. While classical theorists viewed the organization from a production point of view, the

behavioral theorists viewed it from the individuals point of view. The behavioral approach to

management emphasized individual attitudes and behaviors and group processes, and recognized

the significance of behavioral processes in the workplace. Table 2.6 gives an overview of the key

contributions to management theory by the behavioral management school of thought.

Elton Mayo: Focusing on Human Relations

Elton Mayo (1880-1949), the Father of the Human Relations Approach, led the team which

conducted a study at Western Electrics Hawthorne Plant between 1927 and 1933 to evaluate theattitudes and psychological reactions of workers in on-the-job situations. The researchers and

scholars associated with the Hawthorne experiments were Elton Mayo, Fritz Roethlisberger, T.N.

Whitehead and William Dickson. The National Research Council sponsored this research in cooperationwith the Western Electric Company. The study was started in 1924 by Western Electrics industrial

engineers to examine the impact of illumination levels on worker productivity. Eventually the studywas extended through the early 1930s.

Exhibit 2.3

Limitations of Human Relations Approach

Human relations theory recognizes the significance of human resources. This theory believes thateach individual is unique and the attitude and behavior of an employee determines the way he or

she works. This theory is against the view that people respond automatically to monetary stimulus.Human relations theory was one of the greatest advances in management, yet, it did not succeed in

establishing new concepts.

The limitations of the Human Relations theory are:

The Human Relations theorists are of the opinion that by removing fear, people would

perform effectively. This view attacked the assumption that workers can be motivated towork only through fear. The Human Relations approach made a significant contribution at a

time when it was generally being assumed that workers have to be coerced to work. Yet, this


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approach has very little to say about positive motivation. The positive motivation aspect has

been generalized by the Human Relations theorists.

Human Relations theory does not provide enough focus on work. It emphasizes moreon interpersonal relations and on the informal group. Consequently, this approach assumes

that a workers attitudes, behavior and effectiveness is predominantly determined by hisrelation with his fellow-workers and not by the kind of work he does.

Human Relations does not understand the economic implications of organizational

problems. Therefore, most of the principles advocated cannot be applied in the organizationalcontext. Human Relations theory also tends to be very vague. It stresses on giving the

workers a sense of responsibility but hardly tells what their responsibilities are.

Human Relations theory has made noteworthy contributions to the field of management. It provides

valuable guidance in understanding the employees and managing them. This theory also states theimportance of attitudes and behaviors in managing the workforce effectively. Human Relations is

one of the foundations on which the building of management is to be built. Although this theory hasgiven great insights, it has its limitations also. This theory focuses more on the informal group and

is very vague about the positive motivation aspects.

Table 2.7: Elton Mayo and the Hawthorne Studies

Pre-judgments Findings

Job performance depends on the

individual worker.

The group is the key factor in job

performance.Fatigue is the main factor affecting

output.

Perceived meaning and importance of

the work determine output.

Management sets production standards.Workplace culture sets its ownproduction standards.

Abraham Maslow: Focusing on Human Needs

In 1943, Abraham H. Maslow (1908-1970), a Brandeis University psychologist, theorized that people

were motivated by a hierarchy of needs. His theory rested on three assumptions. First, all of us have

needs which are never completely fulfilled. Second, through our actions we try to fulfill our unsatisfiedneeds. Third, human needs occur in the following hierarchical manner: (i) physiological needs; (ii)safety or security needs; (iii) belongingness or social needs; (iv) esteem or status needs; (v) self-

actualization, or self-fulfillment needs. According to Maslow, once needs at a specific level have beensatisfied, they no longer act as motivators of behavior. Then the individual strives to fulfill needs at

the next level. Managers who accepted Maslows hierarchy of needs attempted to change theirmanagement practices so that employees needs could be satisfied.

Douglas McGregor: Challenging Traditional Assumptions about Employees

Douglas McGregor (1906-1964) developed two assumptions about human behavior, which he

labeled Theory X and Theory Y. According to McGregor, these two theories reflect the two

extreme sets of belief that different managers have about their workers. Theory X presents an

essentially negative view of people. Theory X managers assume that workers are lazy, have little

ambition, dislike work, want to avoid responsibility and need to be closely directed to make them

work effectively. Theory Y is more positive and presumes that workers can be creative and

innovative, are willing to take responsibility, can exercise self-control and can enjoy their work.

They generally have higher-level needs which have not been satisfied by the job.

Like Maslows theory, McGregors Theory X and Theory Y influenced many practicing managers.

These theories helped managers develop new ways of managing the workers.

Management Science


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The management science approach stresses the use of mathematical models and statistical methods

for decision-making. It visualizes management as a logical entity, the action of which can be

expressed in terms of mathematical symbols, relationships and measurement data. Another name

commonly used for management science is operations research. Recent advances in computers

have made it possible to use complex mathematical and statistical models in the management of

organizations. Management science techniques are widely used in the following areas:

Capital budgeting and cash flow management

Production scheduling

Development of product strategies

Planning for human resource development programs

Maintenance of optimal inventory levels

Aircraft scheduling

Various mathematical tools like the waiting line theory or queuing theory, linear programming, the

program evaluation review technique (PERT), the critical path method (CPM), the decision theory,

the simulation theory, the probability theory, sampling, time series analysis etc. have increased the

effectiveness of managerial decision-making. To apply a quantitative approach to decision-making,

individuals with mathematical, statistical, engineering, economics and business background skills

are required. Since one person cannot have all these skills the quantitative method requires a teamapproach to decision-making. This approach has been criticized for its overemphasis of

mathematical tools. Many managerial activities cannot be quantified because they involve human

beings who are governed by many irrational elements.

Operations Management

Operations management is an applied form of management science. It deals with the effective

management of the production process and the timely delivery of an organizations products and

services. Operations management is concerned with: (i) inventory management, (ii) work

scheduling, (iii) production planning, (iv) facilities location and design, and (v) quality assurance.The tools used by operations managers are forecasting, inventory analysis, materials requirement

planning systems, networking models, statistical quality control methods, and project planning and

control techniques.

MODERN APPROACHES TO MANAGEMENT

Besides the classical, behavioral and quantitative approaches to management, there are certainmodern approaches to management. Two of these approaches are the systems theory and the

contingency theory, which have significantly shaped modern management thought.

Systems Theory

Those who advocate a systems view contend that an organization cannot exist in isolation and that

management cannot function effectively without considering external environmental factors. The

systems approach gives managers a new way of looking at an organization as a whole and as a part

of the larger, external environment.

According to this theory, an organizational system has four major components: inputs,

transformation processes, output and feedback (see Figure 2.4). Inputs money, materials, men,

machines and informational sources are required to produce goods and services. Transformation

processes or throughputs managerial and technical abilities are used to convert inputs into


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outputs. Outputs are the products, services, profits and other results produced by the organization.

Feedbackrefers to information about the outcomes and the position of the organization relative to

the environment it operates in.

Figure 2.4: A Systems View of Organizations

Fundamentals of Planning Definitions of Planning

Nature of Planning

Significance of Planning

Types of Plans

Steps in the Planning Process

Prerequisites for Effective Planning

INTRODUCTION

Planning is the process of bridging the gap between where we are and where we want to be in the

future. In other words, planning is looking ahead, relating todays events with tomorrowspossibilities. It is the process of deciding in advance what to do, how to do, when to do it, and who

does what. Proper planning minimizes risk and ensures that resources are efficiently and effectivelyutilized.

Planning and controlling are inseparable. Planning involves determining organizational objectivesand developing strategies to achieve the objectives, while controlling involves establishing standards


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of performance and comparing actual results with the planned results. Controlling without planning

is meaningless. Unless one knows where to go, one cannot tell whether one is going in the rightdirection or not. Planning gives an organization the required focus and direction. Thus planning is a

prerequisite of the control function.

DEFINITIONS OF PLANNING

In simple words, planning is deciding in advance what action to take, how and when to take a

particular action, and who are the people to be involved in it. It involves anticipating the future andconsciously choosing the future course of action.

According to Peter Drucker, Planning is a continuous process of making present entrepreneurialdecisions (risk taking) systematically and with best possible knowledge of their futurity, organizing

systematically the efforts needed to carry out these decisions and measuring the result of thosedecisions against the expectations through an organized systematic feedback.

In the words of George R. Terry, Planning is the selecting and relating of facts and the making and

using of assumptions regarding the future in the visualization and formulation of proposed activitiesbelieved necessary to achieve desired results. Thus, while planning, a manager makes use of facts

and reasonable premises and also considers the relevant constraints. The manager then decideswhat activities are needed, how they are to be carried out and how they would contribute to the

achievement of the desired results.

Dalton E. McFarlands definition of planning takes into account the dynamic nature of the

environment. He defines planning as follows:Planning is a concept of executive function that embodies the skills of anticipating, influencing andcontrolling the nature and direction of change.

According to Heinz Weihrich and Harold Koontz, Planning involves selecting mission and objectivesand the actions to achieve them; it requires decision-making that is, choosing from alternative

future courses of action. Thus, planning involves determining organizational objectives and decidinghow best to achieve them. It involves looking ahead and relating todays events with tomorrows

possibilities.

NATURE OF PLANNING

Planning is Goal-oriented

Planning is an Intellectual or Rational Process

Planning is a Primary Function

Planning is All-pervasive

Planning is Forward-looking

Planning is a Perpetual Process

Planning is an Integrated Process

Planning Involves Choice

SIGNIFICANCE OF PLANNING

In a complex business situation, planning helps managers meet the challenges posed by theenvironment, while at the same time minimizing the risks associated with them. Planning is a

prerequisite not only for achieving success but also for surviving in a complex and competitive world.

Planning is very important in all types of organizations. It forces organizations to look ahead and

decide their future course of action so as to improve their profitability. Organizations that plan inadvance are more likely to succeed than those which fail to plan for the future.

Planning is the first step in the management process. It ensures that the employees of anorganization carry out their work in a systematic and methodical manner. It also helps coordinate

and control various tasks and makes sure that resources are used optimally.


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Focuses Attention on Objectives

Offsets Uncertainty and Risk

Provides Sense of Direction

Provides Guidelines for Decision-making

Increases Organizational Effectiveness

Provides Efficiency in Operations

Ensures Better Coordination

Facilitates Control

Encourages Innovation and Creativity

Facilitates Delegation

Figure 4.1: Planning and Management Levels

Strategic plans

These plans are designed to achieve strategic goals. More precisely, strategic plans are generalplans that indicate the resource allocation, and priorities and actions necessary for achieving

strategic goals. These plans which establish overall objectives for organizations, analyze the variousenvironmental factors that affect organizations. Table 4.1 describes eight major areas for strategic

goals.

Table 4.1: Eight Major Areas for Strategic Goals

Major Areas Description

Market Standing Desired share of present and new markets, including areas


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in which new products are needed, and service goals aimed

at building customer loyalty.

Innovation Innovations in products or services as well as innovations

in skills and activities required to supply them.

Human

Resources

Supply, development and performance of managers and

other organization members; employee attitudes anddevelopment of skills; relations with labor unions, if any.

Financial

Resources

Sources of capital supply and how capital will be utilized.

PhysicalResources

Physical facilities and how they will be used in theproduction of goods and services.

Productivity Efficient use of resources relative to outcomes.

Social

Responsibility

Responsibilities in such areas as concern for the

community and maintenance of ethical behavior.

Profit

Requirements

Level of profitability and other indicators of financial well-

being.

Tactical plansThey aim at achieving tactical or short-term goals. These plans help support the implementation ofstrategic plans. Tactical plans essentially indicate the actions that major departments and sub-units

should take to execute a strategic plan. Such plans are more concerned more with actually gettingthings done than with deciding what to do. They are thus essential for the success of strategic

plans.

Tactical plans are developed by middle-level managers, who may consult lower-level managers

before finalizing the plan and communicating it to top-level management. Compared to strategicplans, tactical plans cover a shorter time frame (usually 1 to 3 years). A middle-level manager

acting as a tactical planner deals with much less uncertainty and risk than the strategic planner. Theinformation that he requires is also less and most of it can be derived from internal sources.

Operational plans

Operational plans are developed to determine the steps necessary for achieving tactical goals. They

are stated in specific, quantitative terms and serve as the department managers guide to day-to-day operations. Operational plans are developed by lower-level managers. These plans generally

consider time frames of less than a year, such as a few months, weeks, or even a few days. Theyspell out specifically what must be accomplished over short time periods in order to achieve

operational goals. Lower-level managers who develop operational plans work in an environment ofrelative certainty. Hence, the amount of risk involved in making operational plans is lesser than that

involved in making tactical plans. The information needed for operational planning can be obtainedalmost completely from within the organization. Unless operational goals are achieved, tactical and

strategic goals will not be achieved. Therefore operational plans are necessary for the success oftactical and strategic plans.

STEPS IN THE PLANNING PROCESS

Planning is an endless process. The process is constantly modified to suit changes in environmentalconditions and changes in objectives and opportunities for the firm. As organizations differ in terms of

their size and complexity, no single planning procedure is applicable to all organizations. However, allplanning processes contain some basic steps, which are represented in Figure 4.3.

Figure 4.3: The Basic Steps in the Planning Process


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PREREQUISITES FOR EFFECTIVE PLANNING

Planning is an essential managerial function and should be given due emphasis in order to make itmore effective. It forms the basis for other functions in the management process. The following

measures help to make the planning exercise more effective.

Establishing the Right Climate for Planning

Clear and Specific Objectives

Planning Premises

Initiative at Top Level

Participation in Planning Process

Communication of Planning Elements

Integration of Long-term and Short-term Plans

Guidelines for Successful Planning and Implementation

Involve the right people in the planning process While planning, it is essential to obtain inputsfrom those who will implement the plans and from representatives belonging to groups which will be

affected by the plan. People who are involved in these plans should also be involved in reviewing andauthorizing the plan.

Communicate the plan throughout the organization As plans keep changing, it becomes difficultto remember who is supposed to do what and according to which version of the plan. Moreover, the

key stakeholders may also request copies of the various plans of the organization. Therefore, it wouldbe in the best interests of the organization to put its plans in writing and make them known throughout

the organization.

Goals should be SMARTER A SMARTERgoal or objective is:Specific A goal should be specific, not vague and hard to understand.

Measurable The outcomes of a goal should be measurable.Acceptable The goal should be acceptable to those who are to pursue it.

Realistic The goals to be achieved should be realistic.Time frame The goal should specify a time frame for achieving it.

Extending The goal should stretch the capabilities of the performer and motivate him to extend his

capabilities beyond the usual limit.Rewarding The goal should be such that those involved in its accomplishment are rewarded.

Making people accountable Plans should specify who is responsible for what results. The

persons responsible should periodically review the status of the plan.


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Redesigning the plan Sometimes, it is necessary to deviate from the plan. The persons responsiblefor implementing the plan should note such deviations when they occur and make necessary

adjustments to the plan.

Evaluating the plan Feedback should be obtained regularly from the people implementing the

plan. The feedback should address aspects such as how the planning process could have been made

better, whether the goals are realistic, and whether sufficient resources are available forimplementing the plan. This will help planners ensure that the plans meet the needs of the

organization.

Acknowledging and Celebrating accomplishments This step is frequently overlooked. It is oftenobserved that new targets are set once desired results have been achieved. As a result, employees

have to continually solve one problem after the other. In order to avoid cynicism and fatigue fromcreeping into the planning process, one must acknowledge the good work done and have a little

celebration. This would boost the morale of the planners and would ensure their fullest efforts in

subsequent plans.

Fundamentals of Organizing Definitions of Organizing

Benefits of Organizing

Formal vs Informal Organization

Span of Management

The Process of Organizing

Prerequisites for Effective Organizing

INTRODUCTION

Organizing is a very important managerial function. If planning focuses on deciding what to do,

organizing focuses on how to do it. Thus, after a manager has set goals and worked out a plan to

accomplish those goals, the next managerial function is to organize people and allocate resources to

carry out the plan.

People who know how to make effective use of their resources can make any organizational design

or pattern work efficiently. A manager has to create the right conditions to enable the employees to

effectively utilize the resources of the organization to achieve organizational goals. He has to make

the employees understand the necessity of cooperation for accomplishing tasks. Employees should

understand their roles and responsibilities and should work together to achieve the organizational

objectives. This applies to any organization business, government, or a football team. For a

subordinate to understand his role, a manager must provide verifiable objectives and a clear pictureof the major duties to be performed. The manager must also specify subordinates authority and

responsibility. This gives the subordinate an idea of what he must do to achieve the goals and

objectives of the organization. In addition, a manager should provide the subordinates with

necessary information and tools for effectively performing their roles. Organizing is therefore

designing and maintaining a formal structure of roles and positions.

DEFINITIONS OF ORGANIZING


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According to Stephen P. Robbins and Mary Coulter, organizing is determining what tasks are to be

done, who is to do them, how the tasks are to be grouped, who reports to whom, and where

decisions are to be made.

Thus, organizing refers to important dynamic aspects such as what tasks are to be performed, who

has to perform them, on what basis the tasks are to be grouped, who has to report to whom and

who should have the authority to take decisions.

L.A. Allen defined organizing as the process of identifying and grouping the work to be performed,defining and delegating responsibility and authority, and establishing relationships for the purpose

of enabling people to work most effectively together in accomplishing objectives.1[2]

According to this definition, organizing is a management function involving assigning duties,

grouping tasks, delegating authority and responsibility and allocating resources to carry out a

specific plan in an efficient manner.

In a nutshell, organizing refers to the grouping of activities and resources in a logical fashion.

BENEFITS OF ORGANIZING

Effective organizing provides numerous organizational benefits:

The process of organizing helps an individual develop a clear picture of the tasks he or

she is expected to accomplish.

The process of organizing supports planning and control activities by establishing

accountability and an appropriate line of authority.

Organizing creates channels of communication and thus supports decision-making and control.

The process of organizing helps maintain the logical flow of work activities. By so doing, it

helps individuals and workgroups to easily accomplish their tasks.

Organizing helps an organization make efficient use of its resources and avoid conflict and

duplication of effort.

Organizing coordinates activities that are diverse in nature and helps build harmonious

relationships among members involved in those activities.

The process of organizing helps managers to focus task efforts such that they are logically and

efficiently related to a common goal.

CLOSED SYSTEM VS OPEN SYSTEM

Closed System View of Organizations

The classical management theorists assumed that the primary goal of organizations was economic

efficiency, and that organizations were essentially closed systems. Consequently, they regarded

organizations as rational and economic entities.

According to Louis E. Boone and David L Kurtz, Closed systems are sets of interacting elements

operating without any exchange with the environment in which they exist.2[4] This definition implies

that closed systems require no inputs human, technical, etc. from the external environment in

which they exist. But no organization can be a totally closed system. For instance, even a relatively

closed system, like a wind-up alarm clock, requires outside intervention when it slows down or goes

1

2


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out of order. Thus, a totally closed system is only a theoretical concept. Different systems differ in

the degree to which they depend on the external environment for information, material and energy

inputs.

The two basic characteristics of a closed system are:

It is perfectly deterministic and predictable.

There is no exchange between the system and the external environment.

If the initial conditions and the stimuli in a closed system are known, the final condition, i.e., the

result can be predicted with certainty. Let us consider the example of a pool table. Prior knowledge

of the following conditions and stimuli make it possible to accurately predict where each ball will

come to rest:

the position of every ball on the table

the elasticity of the bumpers

the coefficient of friction between the balls and the table

the force with which the cue ball is hit

the direction of the cue ball

the type of spin on the cue ballClassical management theorists borrowed certain ideas from the closed-system concept that was

popular during that period of time. As a result, these theorists emphasized structure and attempted

to eliminate environmental disruptions that could affect their studies of planned systems activities.

Open System View of Organizations

Traditional closed-system views (like scientific management, the universal process approach, and

bureaucracy) ignored the influence of the external environment. This sometimes led to the failure of

plans and inefficient handling of resources. Unlike the closed-system approach, the open-system

concept stressed the need for flexibility and adaptability in organizational structure, and the mutualinterdependence between the organization and its external environment. According to this concept,

organizations should be adaptive and should take into consideration the influence of the external

environment. According to Andy Groove, former CEO of Intel Corp, A corporation is a living

organism, and it has to continue to shed its skin.

The modern open-system model of organizing allows an organization to interact with its

environment and evolve its organizational structure gradually over time. Thus, open systems are

based on a biological model rather than a physical one.

Boone and Kurtz define an open system as a set of elements that interact with each other and the

environment, and whose structure evolves over time as a result of interaction.

The open-system concept is based on the assumption that no system is totally deterministic or

predictable because of the uncertainties in theexternal environment. Here again, let us consider the

example of the pool table. As a player strikes the cue ball, his or her opponent may pick up a ball

from the table. This disturbs the game and it now becomes impossible to predict where the balls will

ultimately come to rest. This is analogous to the influence of the environment on the system.

An organization is a system consisting of several subsystems which interact with one another. The

organization, in turn, is a subsystem of a larger system social, political, economic or legal system.

System-to-system interactions, like the movement of capital (example: corporate borrowings), the

movement of goods and services (example: international trade), and the movement of people in

and out of the labor force, are as important as the systems themselves.


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SPAN OF MANAGEMENT

Organizations are growing in terms of size and geographical coverage, thereby increasing the

workload of executives. To cope up with this workload, managers should delegate routine activities

to their subordinates. Delegation of such activities would leave managers free to handle key

strategic issues. The number of subordinates a manager has to supervise has a direct bearing on

the degree to which managers can interact with and supervise subordinates. The span of control

refers to the number of subordinates a superior can supervise efficiently and effectively.

According to Kathryn M. Bartol and David C. Martin, The span of management or span of control is

the number of subordinates who report directly to a specific manager.

The principle of span of management states that there is a limit to the number of subordinates a

manager can effectively supervise, but the exact number will depend on the impact of underlying

factors.

One important thing is to be noted in the definition cited above. It is not how many people who

report to a manager that matters. What matters is how many people who have to work with each

other report to a manager. What counts are the number of relationships rather than the number of

men.

The span of control is a very important principle that emphasizes the need for coordination among

the subordinates working under a particular manager. The question therefore arises: how many

people can a manager supervise effectively? Students of management have come to the conclusion

that a manager can effectively manage usually four to eight subordinates at the upper levels, and

eight to fifteen subordinates at the lower levels. According to the British consultant, Lyndall Urwick,

the ideal number of subordinates for a higher level executive should be four while the number of

subordinates for an executive at the lower level may be eight or twelve. Others are of the view that

a manager can manage twenty to thirty subordinates.

THE PROCESS OF ORGANIZING

The process of organizing follows a logical sequence. The process of organizing consists of the

following six steps:

The objectives of the organization should be established

The supporting objectives, policies and plans should be formulated

The activities required to achieve the objectives should be identified and classified

The best way of grouping the activities and utilizing the available human and material

resources should be chosen

Authority should be delegated to the head of each group so that they can perform theiractivities

The various groups should be connected to each other, both horizontally as well as

vertically, by means of authority relationships and information flows.

PREREQUISITES FOR EFFECTIVE ORGANIZING

The span of management and the levels of organization are clearly defined


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The factors determining the basic framework of departmentation, along with their

strengths and weaknesses, are taken into consideration

The different kinds of authority and responsibility relationships that exist in an

organization are understood

The way authority is delegated throughout the organization structure, along with the

degree of delegation, is taken into consideration

The way the manager implements organization theory is considered

Human Resource Management and Staffing Human Resource Management: An Overview

Staffing

Recruitment

Selection

INTRODUCTION

The most important resource of an organization is its human resources the people who work in the

organization. People are vital for the effective operation of a company. To meet the challenges and

competitive atmosphere of todays business environment, managers must recognize the potential ofhuman resources, and then acquire, develop and retain these resources. This forms the basis ofhuman resource management (HRM). HRM is the management of various activities that are

designed to enhance the effectiveness of the manpower in an organization in the achievement of

organizational goals. Acquiring skilled, talented, and motivated employees is an important part ofHRM.

Human resource management forms a crucial function in organizations of all sizes. Larger firms

usually have a separate HRM department. Small organizations, however, cannot always afford tohave a separate HRM department that can continually follow the performance of individuals in the

organization and review their accomplishment of goals. Instead, in such organizations, eachmanager is responsible for utilizing the skills and talents of the employees under him, effectively.

Traditionally, HRM departments had a relatively small role to play in the organizations overall

mission and plans. They developed staffing plans, handled complaints, determined benefits andcompensation, and conducted performance appraisal programs. These activities were, and still are,very important in managing an organization. However, today HRM departments are playing a more

strategic role in charting the course of their firms. Changes in the environment, such as increasingcosts, changing demographics and limited skilled labor supply, rapid technological changes and the

need for new skills, have created a strategic need for HRM expertise. These changes have led to theacknowledgment that human resources need careful attention and are vital to the success of any

business.

In this chapter, we will first discuss HR planning. The other steps in the HRM process staffing,

training and development, performance appraisal, and compensation will also be discussed. Thelater part of the chapter will discuss the two important elements of staffing recruitment and

selection. The chapter concludes with a description of the socialization process of new employees.

Human resource management: an overviewHuman Resource Management (HRM) may be defined as the organized function of planning for human

resource needs, and recruitment, selection, development, compensation and evaluation of performance

to fill those needs. The HRM process is an ongoing function that aims to keep the organization suppliedwith the right people in the right positions, when they are needed. The HRM process, shown in Figure

12.1, includes five basic activities: (1) human resource planning, (2) staffing, (3) training anddevelopment, (4) performance appraisal, and (5) compensation.

Figure 12.1 Human Resource Management Process


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Human Resource PlanningHuman resource planning is the process of determining future human resource needs relative to an

organizations strategic plan and devising the steps necessary to meet those needs [2]. It involvesestimating the size and composition of the future work force, and helping the organization acquire the

right number and the right kind of people when they are needed.

Figure 12.2 Human Resource Planning
http://d/mba/assets/sub1/chp12/prnnot/3.htm#2#2http://d/mba/assets/sub1/chp12/prnnot/3.htm#2#2


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Staffing

Though the term human resource management is frequently used for the managerial function ofstaffing, staffing is just a part of the HRM process and plays an important role. Staffing involves a

set of activities aimed at attracting and selecting individuals for positions in a way that will facilitatethe achievement of organizational goals. The two basic steps of staffing are recruitment and

selection.

The staffing process is a systematic attempt to implement the human resource plan by recruiting,

evaluating and selecting qualified candidates for job positions in the organization. Recruitmentinvolves finding and attempting to attract job candidates who are suitable for filling job vacancies. Job

analysis, job description, and job specification are important tools in the recruitment process. Oncesuitable candidates are attracted to the job position, the management needs to find qualified people

to fill the positions through the selection process. Several methods are used in selecting prospectivecandidates. These include preliminary screening, application blank, selection test, comprehensive

interviews, etc.

Training and Development

Although organizations often recruit fully qualified individuals who require little or no training,training is usually undertaken for new recruits as well as for existing manpower, who require

improved skills in order to advance in the organization. Employees at all levels managerial,technical and operative will require some training at some point of time in their careers. Although

the objectives, methods, and course or program contents often differ, the basic principles ofteaching/learning are the same. Training is formally defined as a planned effort to improve the

performance of the employee in his area of work. In other words, training denotes efforts toincrease employee skills in their jobs. For instance, employees might be instructed in new decision-

making techniques or the capabilities of data processing systems.

Development programs are designed to educate employees beyond the requirements of their

present positions in order to prepare them for promotions. They also help them get accustomed tothe organizational climate. Development is long-term in nature. It helps the employee fit into the

organization.

Thus, the processes of training and development aim at increasing the ability of individuals andgroups to contribute to organizational effectiveness.

Performance Appraisal

Performance appraisal compares an individuals job performance against standards or objectivesdeveloped for the individuals position. The process of performance appraisal involves defining the

expectations for employee performance, measuring, evaluating and recording employeeperformance against these expectations, and providing the employee with feedback regarding his

performance. The major purpose of performance appraisal is to influence employee performanceand development in a positive way. When the performance is high, the individual is likely to be

rewarded (by a hike in pay or a promotion). If performance is low, some corrective action (such asadditional training and development) might be arranged to make the performance meet the desired

standards.

Thus, effective performance appraisal as a control technique, requires standards, information andcorrective action. Standards in performance evaluation are prior specifications of acceptable levelsof job performance. Information must be available in order to measure the actual job performance

against the standard job performance. Corrective action must be taken by managers to restore anyimbalance between actual and standard job performance.

Compensation


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Compensation consists of the wages paid directly to the employees for the amount of time worked

or the number of units produced. It also includes the monetary and non-monetary benefits that anemployee receives as part of his employment relationship with the organization. Wages paid for

time worked (or number of units produced) are typically payments made in the form of cash andreflect direct work-related remuneration such as basic pay, merit increases, or bonuses. Benefits, on

the other hand, are forms of supplementary non-monetary payments over and above the wagespaid. They include various protection plans (such as employee insurance), services (such as

company cafeteria), pay for time not worked (such as during vacations or sick leave), and incomesupplements (such as stock ownership plans).

A sound compensation program enhances the organizations ability to attract and retain employees.The compensation program affects every member of the organization, and it is one of the most

important and time-consuming tasks of the human resources department.

Motivating Employees for Job Performance

Definitions and Meaning of Motivation

Classification of Motivation Theories

Motivational Techniques

INTRODUCTION

In any type of organization, a manager must know what motivates his workers in order to make

each individual employee perform to the best of his ability. It is not an easy task to motivate

employees because they respond in different ways to their jobs and to organizational practices.

Motivation is a human psychological characteristic that affects a persons degree of commitment. It

is the set of forces that move a person towards a goal. It deals with how behavior is energized,

how it is directed and how it is sustained. The managers challenge, then, is to channel this energy

and direct this behavior toward the organizations ends.

Factors that affect work motivation include individual differences and organizational practices.

Individuals differ in their personal needs, values and attitudes, interests and abilities.

Organizational practices that affect motivation include the rules, policies, managerial practices and

reward systems. In order to motivate employees, managers must consider how these factors

influence and affect their job performance.


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DEFINITIONS AND MEANING OF MOTIVATION

According to Stephen P. Robbins, motivation is the willingness to exert high levels of effort toward

organizational goals, conditioned by the efforts ability to satisfy some individual need.

Fred Luthans views motivation as a process that starts with a physiological or psychological

deficiency or need that activates behavior or a drive that is aimed at a goal or incentive.

The three key elements in the above definitions are needs, drives and goals. Needs set up drives

aimed at goals; this is the basic process of motivation. Figure 16.1 depicts the motivation process.

Need is the origin of any motivated behavior. Need is a felt deprivation of physiological or

psychological well-being. Needs exist in each individual in varying degrees. When an individualrecognizes a need, he is driven by a desire to fulfill the need. Drives are directed at fulfillment of

needs. Drives are action-oriented and provide an energizing thrust toward reaching a goal.Incentives or goals are the instruments used to induce people to follow a desired course of action.

Once the goal is attained, the physiological or psychological balance is restored and the drive is cutoff.

Figure 16.1: The Basic Motivation Process

Table 16.1: Approaches to Motivation

Type Characteristics Theories ManagerialExamples

Content Concerned withfactors that arouse,

start or initiatemotivated behavior

1. Needshierarchy

theory

2.Two-factor

theory

3.ERG theory

Motivation bysatisfying individual

needs for money,status, and

achievement.

Process Concerned not onlywith factors that

arouse behavior, butalso with the

process, direction, orchoice of behavioral

patterns

1.Expectancytheory

2.Equity theory

Motivation byclarifying the

individualsperception of work

inputs, performancerequirements and

rewards.


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Maslows needs hierarchy theory

One of the most popular explanations for human motivation was developed by the psychologist,

Abraham Maslow and popularized during the early 1960s. Maslows hierarchy of needs theory

argues that human needs form a five-level hierarchy (see Figure 16.2). Maslow classified these

needs into five groups: physiological needs, need for security, social needs (love and

belongingness), self-esteem needs and self-actualization needs.

Figure 16.2: Maslow's Needs Hierarchy

Herzbergs

lecture notes-management (edited) (1)

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