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Principle and Practices

Of

MANAGEMENT

Neelam Wayal

Definition - 1

“MANAGEMENT is the process of

designing and maintaining an

environment in which individuals,

working together in groups, efficiently

accomplish selected aims”.

-Harold koontz and Heinz Weihrich

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And therefore –

As manager people carry out the function of :-

Planning

Organising

Staffing

Leading

Controlling

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Management applies to any

kind of organization.

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It applies to Managers at

all Organisational level.

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The aim of all Managers

is the same:

To Create Surplus.

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Managing is concerned with productivity

Productivity implies effectiveness and efficiency.

Effectiveness is the achievement of objectives

Efficiency is the achievement of ends with the least

amount of resources.

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Definition - 2

“MANAGEMENT is the distinct process

consisting of activities of planning,

organising, actuating and controlling,

performed to determine and accomplish

stated objectives with the use of human

beings and other resources.”

- George R. Terry

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Thus the six M’s of management, i.e.

men (and women), materials,

machines, methods, money and

markets, or basic resources, as they

are often called are subjected to the

fundamental functions of

management – planning, organizing,

actuating and controlling to achieve

stated objectives.

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Definition –3

Management is the art of getting

things done through people

- Mary Parker Follet

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Fundamental difference between Manager

and other personnel in the organisation.

Manager’s contribution to the organisation

is indirect.

Person who is not a Manager contributes

directly to the goal of the organisation.

It does not mention various functions of

management

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Definition –5

“Management is distinct process of effective

utilization of human and material resources

to achieve enterprise objectives.”

-Another school of thought

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Management involves following five major

functions: -

To forecast

To planTo organiseTo command

To coordinate

To control

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Human resource imply

-The entire employee in an organization.

-Irrespective of their position.

Material resource includes

-Capital

-Machines

-Materials

-Technology

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Managing human resources and getting the best out

of them in terms of productivity, integrity, loyalty to

the organization and their retention in the

organisation is a difficult task.

Material resources are procured, preserved and

utilized systematically to accomplish organisational

goal.

Both human resource and material resources are to

be utilized optimally by the management.

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and therefore………….

‘Management is an activity

that converts disorganized

human and physical

resources into useful and

effective results.’

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Definition –4

Management is process of functions.

-Henry Fayol

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Managerial Functions

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Various Managerial Functions :

PLANNING

ORGANISING

LEADING

CONTROLLING

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Roles of a Manager

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Interpersonal RolesFIGUREHEAD

LEADER

LIAISON

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Informational Roles

Monitor

Disseminator

Spokesman

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Decisional RolesEntrepreneur

Disturbance Handler

Resource Allocator

Negotiator

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Interpersonal roles-

Figurehead: - Manager performs duties of a ceremonial

nature like talking to an important customer.

Leader: - Motivates his employees and reconciles their

needs and aspirations with organisational goals.

Liaison: - Cultivates contact outside vertical chain of

command to collect information relevant to the

organisation.

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Informational roles -

Monitor: - This is continuous scanning of environment for

information. This can be through personal contact or through

subordinates or may be unsolicited information.

Disseminator: - Passing of information to subordinates in

order to achieve goal of the organization.

Spokesman: - Relevant information is passed to various

groups and people who influences the organization, they are –

shareholders, government or any other organization

including press.

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Decisional role:-

Entrepreneur: - Look out for new ideas improves

organization continually by adapting it to changing external

environment.

Disturbance handler: - He is a fire fighter, finds solution for

unanticipated problems. (i.e. strike, bankruptcy of major

customer etc.).

Resource allocator: - Delegation of authority and allocation

of resources.

Negotiator: - He spends considerable time in negotiation

with supplier or employee.

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Managing

as a practice

is an

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Organizational knowledge

underlying the practice

may be referred to

as

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Managing is an art for it entails

doing things in the light of

realities of the situation. Yet

manager can work better by

using the organized knowledge

about management i.e. Science.

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The Elements of Science

Science is organized knowledge.

The salient feature of any science

is the application of the scientific

method to the development of

knowledge.

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The Scientific Approach

The Scientific method involves the determination of fact

through observation. After classifying and analyzing these

facts, scientists look for casual relationships. When these

generalizations or hypothesis are tested for accuracy and

appear to be true, that is to reflect or explain reality, they are

called “principles”. Principles have value in predicting what

will happen in similar circumstances.

Theory is systematic grouping of independent concepts and

principles that ties together a significant area of knowledge.

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Evolution of

Management thought

Scientific Management

Operational Management Theory

Behavioural Science

Sociological Approach

Modern Management Thoughts

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Scientific ManagementFredrick W. Taylor (1856 – 1912)

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Taylor’s Principles:

•Replacing rule of thumb with science (organised

knowledge).

•Obtaining harmony in work group rather than

discord.

•Achieving cooperation of individual, rather than

chaotic individualism.

•Working for maximum output, rather than

restricted output.

•Developing all worker to the fullest extent possible

for their own and their company’s highest prosperity.

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Fredrick W. Taylor (1856 – 1912)

• Acknowledged as “the father of scientific management”

• His famous work published in 1911 “Principles of

Scientific Management”.

• His primary concern:

-Increase productivity through greater efficiency

-Increased pay for workers through scientific method

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• As chief engineer of Midvale steel co. in Philadelphia he

applied

- Time and motion studies to determine fair day’s work and

best way of doing a given job.

- Pay plans based on output in an attempt to increase

productivity.

- Pay the workers according to productivity.

- Performance incentives

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He also believed that worker should be carefully selected and

trained, right man should be for the right job. Also believed

in harmony between worker, manager and the owner.

He emphasized on careful advance planning by managers,

design work systems and believed that relation between

employers and men formed without question is the important

part of art of management.

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Henry L. GanntDisciple of Taylor

Gantt (1861 – 1919) joined Taylor in Midvale steel in 1887

He believed in “harmonious co-operation” and “in all

problem of management human being is the most important

one”

He developed graphic methods of describing plans, making

possible better managerial control and emphasized the

importance of time and cost planning and controlling work.

The Gannt Chart was the forerunner of modern technique

such as the PERT (Program Evaluation and Review

Technique) .

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Frank and Lillian GilbrethFrank (1868 – 1924) and Lillian (1878 – 1972) made motion

and fatigue study using motion picture cameras. He tried to

find most economical motion for bricklaying. He classified all

movements employed in industrial work into 17 basic types

and provided shorthand symbol for each so that the analyst

could jot down each motion as he observed the worker in

action. It enhanced workers morale not only because of their

physical benefits but also for the management’s concern for

them

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Modern Operational Management Theory

Henry Fayol – (1841 – 1925)

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FAYOL’S ACTIVITIES IN INDUSTRIAL UNDERTAKING

MANAGER’S

ACTIVITIES

Financial

Commercial Security

Technical AccountingManagerial

•Planning

•Organisation

•Command

•Coordination

•Control

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FAYOL’S FOURTEEN PRINCIPLES OF

MANAGEMENT

Division of work

Authority & responsibility

Discipline

Unity of command

Unity of direction

Subordination

Remuneration

Centralisation

Scalar chain

Order

Equity

Stability of tenure

Initiative

Esprit-de-corps

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The Sociological Approach

to

Management

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1. Max Weber

2. Emile Durkheim

3. Vilfredo Pareto

There were three outstanding scholars who wrote books

and essays at the close of the nineteenth century:

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MAX WEBER

Max Weber was a German intellectual.

He empirically analysed church, government, the military

and the business

He believed that hierarchy, authority, and bureaucracy lie at

the foundation of all the Organisation

The theory is also called as the Theory of Bureaucracy

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System Theory

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Source of

Energy

Information

Human

Resource

I/PTransforming

MechanismO/P User

External Interface Feedback Mechanism

Internal interface

Feedback Mechanism

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Chester Bernard

The task of managers is to maintain a system of

cooperative effort in a formal organisation.

He suggested a comprehensive social system approach to

managing.

His analysis of the manager is truly social system

approach, since in order to comprehend analyse the

functions of executives, he looked for their major tasks

where they operate.

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MICHAEL E. PORTER

Porter is an authority on competitive strategy and

international competitiveness.

Strategy is way of doing something.

Originated from Greek term Strategia – means

art or science of being a general

Effective generals had to plan and act.

And therefore strategy is plan of action.

It is determination of basic long term goal, course of action and

allocation of resources for achieving objectives.

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Porter’s Five Forces of Competition

Industry

Compe-

titors

Buyers

Substitutes

Potential

entrants

Suppliers

Threat of intense segment rivalry

Threat of Buyer’s growing

bargaining power

Threat of new entrants

Threat of supplier’s growing

Bargaining power

Threat of substitute products

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MANAGEMENT BY OBJECTIVES

Management by objective is a planning control

device, though it also helps as a motivational tool

besides is used as tool for performance appraisal.

Peter F. Drucker in 1954 emphasized that the

objectives must be set in all areas where performance

is necessary and that performance affect the health of

the enterprise.

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DEFINITION

Management by objectives is a

comprehensive managerial system that

integrates many key managerial

activities in a systematic manner and is

consciously directed toward the effective

and efficient achievement of

organisational and individual objectives.

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The process of MBO

Setting Preliminary objective at the top

Clarifying organisational roles

Setting subordinate’s objective

Recycling objectives

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The process of MBO

Setting Preliminary objective at the top

1. Top manager to determine what he/she perceives to be purpose, mission

and goal of enterprise.

2. These goals need to be set for any period – a quarter, a year or 5 years or

whatever is felt appropriate.

3. Objectives are desired to be coincided with the annual budget.

4. Certain goals to be set for shorter period and others for much longer

period.

5. These goal are preliminary and based on analysis and judgment.

6. Goals set are in accordance with company’s strength and weaknesses in

light of available opportunities and threats.

7. These goals are tentative and subject to modification while the entire

chain of verifiable objectives are worked out by subordinates.

8. Objectives are not to be forced on subordinates as it may not give rise to

sense of commitment.

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Clarifying organisational roles

The process of MBO

1. There should be maintenance of relationship between

expected results and responsibility for attaining them.

2. Each goal and sub goal should be one particular person’s

clear responsibility.

3. Specific parts of each coordinating manager’s contribution to

the program should be clearly identified.

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The process of MBO

Setting subordinate’s objective

1. Inform subordinate managers pertinent general objectives, strategies and

plan.

2. Superior now proceeds to work with subordinates in setting their

objectives.

3. Superior asks what goal the subordinates believe they can accomplish and

in what period, with what resources.

4. Preliminary thoughts and discussions about the feasibility goals are done.

5. Superiors must be a patient counselors and help subordinate develop

consistent and supportive objectives and being careful not to set goals

that are not attainable as this may weaken the entire program of MBO.

6. Superior must listen to and work with their subordinates, and also take

responsibility for approving subordinates goals.

7. All managers at all level need capital, material and human resources in

order to accomplish their goals. Careful setting up a network of verifiable

goal shall help in allocating these resources economically.

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The process of MBO

Recycling objectives

1. Objectives can not be set by setting at the top and dividing

them among subordinates. It also can not be started from the

bottom. And therefore a degree of recycling is required.

2. Setting objectives thus should be interactive one and a joint

process.

3. Top managers may have some idea what their subordinates’

objective should be - but they will almost certainly change

these preconceived goals as the contributions of subordinates

come into focus.

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HOW TO SET OBJECTIVES

Without clear objectives, managing is haphazard.

Individual/group can not expect to perform

effectively and efficiently without clear aim.

And therefore objective should be measurable.

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Quantitative and qualitative objectives.

To be measurable, objectives must be verifiable. Example of verifiable and

non verifiable objectives is given on the table herein:

Non verifiable

objectives

Verifiable objectives

1. To make reasonable

profit

1. To achieve a return on investment of 12% at the

end of current fiscal year

2. To improve

communication

2. To issue a two page monthly newsletter

beginning October 2005 involving not more than

40 working hours of time in preparation.

3. To improve

productivity of the

production department

3. To increase production output by 5% by March

31, 2006without additional cost and

compromising quality.

4. To develop better

managers

4. To design and conduct training program for

90% managers for 200 hours and completed by

31st March 2005.

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Guidelines for setting objectives

1. The list of objectives should not be too long.

2. It should cover main feature of the job.

3. Objective must be verifiable

4. Quality desired and the projected cost should be

indicated.

5. Objective should present a challenge.

6. Objective should indicate priorities.

7. It should promote personal and professional growth and

development.

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BENIFITS AND WEAKNESSES

OF

MANAGEMENT BY OBJECTIVES

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Benefits of Management by Objectives

1) Improvement of managing – it forces managers to think

about planning and results, there is no better way to know

the standards for control than having a set of clear goals.

2) Clarification of organisation – it clarifies organisational

role and structures. It helps in identifying deficiencies in

the organisation.

3) Encouragement of personal commitment – it encourages

people to commit themselves to their goals. People

become enthusiastic when they control their own fate.

4) Development of effective controls – it sparks more

effective planning and develop effective controls.

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Weaknesses of Management by Objectives

1. Failure to teach the philosophy of MBO – many times managers fail to

understand and appreciate a good deal about MBO.

2. Failure to give guidelines to goal setters – if corporate goals are vague

unreal or inconsistent, it will be virtually impossible for managers to tune in

with them.

3. Difficulty of setting goals – truly verifiable are difficult to set. Excessive

concern for economic results puts pressure on individual that may

encourage questionable behaviour.

4. Emphasis on short run goals – there is a danger of emphasising short run

goals at the expense of the long range, all short run plans must be designed

to serve longer range goals.

5. Danger of inflexibility – hesitation to change objectives when the objective

is obsolete by revised corporate objectives or modified policies.

6. Other dangers – overuse of quantitative goals, attempt to use numbers

where they are not applicable, downgrading of important goals that are

difficult to state in terms of end results.

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McKINSEY 7-S FRAMEWORK

Structure

Shared

Values

Skills Style

SystemsStrategy

Staff

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Forecasting

Forecasting is the scientific process of looking forward

which is based on past performance, current analysis

and future trends

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Planning

Nature of Planning

Major aspect of Planning:

Its contribution to purpose and objectives

Its primacy among the manager’s tasks

Its Pervasiveness

The efficiency of resulting plans

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Purpose and objective of plans

Every plan and its supporting plans

should contribute to the objective and

purpose of the enterprise.

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Planning logically precedes all other managerial functions

The primacy of planning

PLANSObjectives

and how to

achieve them

Necessary for deciding

What kind of

Organisation structure

to have

What kind of

People we need

and when

How most

effectively to

lead people

By furnishing

standards

of control

Which helps us

know

Which affects the

kind of leadership

we have and

direction

In order to ensure

success of plans

PLANS AS THE FOUNDATION OF MANAGEMENTNeelam Wayal

The primacy of planning

Planning and controlling are inseparable – any attempt to plan

without control or control without plan is meaningless since

there is no way people to tell whether they are going where

they want to go

NEW PLANS

PLANNINGImplementation

of Plans

Controlling:

Comparing

Plan with results

Corrective

Action

Undesirable deviation

No

undesirable

deviation

from plans

CLOSE RELATIONSHIP OF PLANNING AND CONTROLLINGNeelam Wayal

The Pervasiveness of Planning

All managers plan, although the character and

breadth of planning will vary with each managers

authority and with the nature of the policies and plans

outlined by the superior

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THE EFFICIENCY OF PLAN

The efficiency of plans refers to its contribution to

purpose and objectives, offset by the costs and other

factors required to formulate and operate it.

A plan may enhance the attainment of objectives, but

at an unnecessarily high cost.

Plans are efficient if they achieve their purpose at a

reasonable cost, when cost is measured not only in

terms of time or money but also in the degree of

individual and group satisfaction.

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TYPES OF PLANS

MISSION OF PURPOSES

OBJECTIVE OR GOALS

STRATEGIES

POLICIES

PROCEDURES

RULES

PROGRAMS

BUDGETS

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STEPS IN PLANNING

Being aware of Opportunities

Establishing Objectives

Developing Premises

Determining Alternative Courses

Evaluating Alternative Courses

Selecting a Course

Formulating Derivative Plans

Numberising Plans by Budgeting

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Advantages of Planning

Makes a purposeful and orderly activities

Points out need for future change

Answers “WHAT IF” question

Provides a basic control

Encourage achievement

Compels visualisation of entirety

Increases and balances utilisation of

facilities.

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Limitation Of Planning

• Planning is limited by the accuracy of

information and future goals

• Planning costs too much

• Planning has psychological barriers

• Planning stifles initiative

• Planning delays action

• Planning is overdone by planners

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DECISION MAKING

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Decision Making

DECISION-MAKING IS

DEFINED AS THE SELECTION

OF COURSE OF ACTION FROM

AMONG ALTERNATIVES; IT IS

THE CORE OF PLANNING.

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THE IMPORTANCE AND LIMITATIONS OF

RATIONAL DECISION MAKING

Decision making is considered as major part of planning, and

therefore decision process is the core of planning.

Thus in this context, the process leading to decision is:

1. Premising

2. Identifying alternatives

3. Evaluating alternatives

4. Choosing an alternative, that is making a decision

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Rationality in decision making

Effective decision making must be rational.

The decision maker must have the clear understanding of

alternative courses by which a goal can be reached under

existing circumstances and limitations.

They must have information and ability to analyse and evaluate

alternatives in the light of the goal sought.

They must have desire to select best alternatives that shall meet

the objective.

Neelam Wayal

LIMITED, OR “BOUNDED” RATIONALITY

Because of uncertainty involved in the future, it may be

difficult to achieve complete rationality.

There may be difficulty in recognising and analysing the

available alternatives.

A manager then settle for limited rationality, or “bounded”

rationality.

Since the manager completely rational in practice, they

sometimes allow their dislike for risk and they desire to “play

it safe” –to interfere with the reach the best solution under the

circumstances.

Herbert Simon has called this “satisficing”, that is, picking a

course of action that is satisfactory or good enough under the

circumstances.Neelam Wayal

STEPS IN DECISION MAKING PROCES

STEP 1. The search for alternatives

The first step of decision making is to develop alternatives; this

is done with the assistance of the limiting factor.

A limiting factor is something that stands in the way of

accomplishing a desired objective. Recognising the limiting

factors in a given situation makes it possible to narrow the

search for alternatives to those that will overcome the limiting

factors.

Principle of the limiting factor –

By recognising and overcoming those factors that stand

critically in the way of goal, the best alternative course can be

selected.

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STEP 2. Evaluation of alternatives

Once appropriate alternative is found, the next step is to

evaluate them. This can by using following techniques:

a) Quantitative and Qualitative factor

Quantitative factors that can be measured in numerical terms, such as

time or operating cost.

qualitative or intangible factors that are difficult to measure numerically

such as political situation, labour problems etc.

b) Marginal analysis

It compares additional revenues arising from additional costs. It can be

used for comparing factors other than revenues – best output of a

machine.

c) Cost effective analysis

Seeks the best ratio benefits and cost; this means finding the least costly

way of reaching an objective.

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STEP 3. Selecting an alternative

While selecting alternatives managers can use three basic

approaches –

a) Experience – reliance on past experience plays a larger part

then it deserves in decision making.

b) Experimentation – an obvious way to decide among

alternatives is to try one of them and see what happens.

c) Research and analysis – it involves search for relationship

among more critical of the variables, constraints, and

premises that bear upon the objectives.

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ORGANISING

Neelam Wayal

Organizing is that part of managing that involves

establishing an intentional structure of roles for

people to fill in an organization. Organizing

therefore can be:

Identifying and classification of required

activities

The grouping of activities necessary to attain the

objectives

The assignment of each grouping to a manager

with a responsibility to supervise it

The provision for coordinating horizontally or

verticallyNeelam Wayal

Formal and Informal Organisation

Formal organisation refers to intentional structure of roles in

a formally organised enterprise.

Informal organisation is a network of personal and social

relations not established or required by the formal organisation

but arising spontaneously as people associate with one

another.

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Formal Organisation

Informal Organisation

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DISTINCTION BETWEEN FORMAL AND INFORMAL ORGANIZATION

Formal organization

1.It is prescribed structure of roles and

relationship consciously coordinated

towards a common objective

2. Its value goals and tasks are

predominantly oriented towards

productivity, efficiency, growth and so

on

3. It is well defined in shape. Majority

of formal organizations are pyramid

shaped. Ranks of individuals are made

clear by the use of titles.

Communication is simple. One can

easily chart all relationships

4. There is a prescribed, mostly written

system of rewards or punishment.

5. This organization is usually very

enduring and may grow to any size

Informal Organization

1.It is a natural and spontaneous

structure arising out of the social

tendency of people to associate and

interact

2. Its values, goals and tasks

predominantly center on individual

and group satisfaction, esteem,

affiliation etc.

3. It is shapeless. There are number of

multidirectional, intricate

relationships which cannot be easily

charted

4. There is an unwritten system of

reward and punishment

5. This organization is not very

enduring, being dependent on the

sentiments of members, which often

change. It also tends to remain small.

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ORGANISATION WITH NARROW SPAN

ADVANTAGES

Close supervision

Close control

Fast communication

between subordinate

and superiors

DISADVANTAGES

Superiors tend to get too involved in

subordinate’s work

Many levels of management

High cost due to many levels

Excessive distance between lowest level

and top level

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ORGANISATION WITH WIDE SPAN

ADVANTAGES

Superiors are forced to

delegate

Clear policies must be made

Subordinates must be

carefully selected

DISADVANTAGES

Tendency of overloaded Superiors to

become decision bottlenecks

Danger of superior’s loss of control

Requires exceptional quality of

managers

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DEPARTMENTATION

The word departmentation designates a distinct area,

division or branch of an organisation over which a

manager has authority for the performance for

specified period.

The pattern of departmentation will depend on given

situations, and on what the managers believe will

yield the best result for them in the situation they

face.

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DEPARTMENTATION BY SIMPLE NUMBERS

The simple numbers method of departmentation is by tolling

of persons who are to perform the same duties and putting

them under the supervision of a manager.

The method was important in the organisation of army, tribal

etc. However it is rapidly falling into disuse in the modern

society because of advance technology has demanded

specialised and different skills and not on numbers. It is useful

only at lower level of the organisation.

Neelam Wayal

DEPARTMENTATION BY TIME

One of the oldest method of departmentation where it is used

commonly for the lower levels of the organisation, this is

group activities on the basis of time.

This refers to use of shifts which is very common in

manufacturing and service industry.

Advantages-

Services available round the clock

Good for process require a

continuing cycle

Extensive use of machinery

Students can get a job

Disadvantages-

Lack of supervision during night shift

Fatigue factor prevails

Difficulty in coordination and control

Payment of overtime may increase cost

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DEPARTMENTATION BY ENTERPRISE FUNCTION

It is grouping of activities into departments such as

engineering, manufacturing, marketing, finance, etc.

Advantages-

Is logical reflections of functions

Maintains power and prestige of

major functions

Follows principles of occupational

specialisation

Simplifies training

Furnishes means of tight control at

top

Disadvantages-

Tend to deemphasise overall company

objectives

Overspecialises narrows viewpoints of

key personnel

Reduces coordination between

functions

Responsibility for profits at top only

Slow adaptation to changes in

environment

Limits development of general

mangers

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President

MARKETING PORDUCTION FINANCE

Asst. to President Secretary

Market Research Markt plg

Sales Admin.Advt.promo

Prodn. plg Ind. Engg.

ToolingProdn. Engg.

HR

Fin. Plg. Budgets

Gen. Acctg. Cost. Acctg.

Personnel

HRIS

Recruitment

Perfor. App.

A FUNCTIONAL ORGANISATION (MANUFACTURING COMPANY)

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DEPARTMENTATION BY TERRITORY OR GEOGRAPHY

This type of departmentation is attractive to large scale firms

whose activities are physically or geographically dispersed.

Advantages-

Places responsibility at lower

level

Place emphasis on local market

and problems

Improve coordination in a region

Takes advantage of economies of

local operations

Better face to face

communication with local

interests

Furnishes measurable training

ground for general managers

Disadvantages-

Requires more persons with general

manager abilities

Tends to make maintenance of

economical central services and may

require service such as HR or

purchase at the regional level

Increase problem of top

management control

Neelam Wayal

PRESIDENT

HRMMarketing Purchase Finance

Region 1 Region 2 Region 3 Region 4 Region 5

Engineering Production HRM Marketing Finance

A TERRITORIAL OR GEOGRAPHIC ORGANISATION

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CUSTOMER DEPARTMENTATION

Grouping activities so that they reflect a primary interest in

customers. This is arrangement activities on the basis to cater

to requirements of clearly defined customer groups.

Advantages-

Encourages concentration on

customer needs

Gives customer feeling that they

have an understanding supplier

Develops expertness in customer

area

Disadvantages-

May be difficult to coordinate

operation between competing

customer demands

Requires managers and staff

experts in customers’ problems

Customer group may not be

always clearly defined

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PRESIDENT

Community Banking Institutional Banking Agriculture BankingCorporate Banking

CUSTOMER DEPARTMENTATION

BANKING SECTOR

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PROCESS OR EQUIPMENT DEPARTMENTATION

Manufacturing firms sometimes group activities around a

process or a type of equipment.

Advantages-

Achieves economic advantage

Uses specialised technology

Utilises special skills

Simplifies training

Disadvantages-

Coordination of departments is

difficult

Responsibility for profit is at top

Unsuitable for developing general

managers

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PRESIDENT

Marketing Finance HRMProduction

Welding Punch Process Electroplating

PROCESS OR EQUIPMENT DIVISION

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DEPARTMENTATION BY PRODUCT

Large scale enterprises group activities on the basis of products or

product lines. Companies adopting this form of departmentation were

typically organised by enterprise function. With the growth that led to

complexity in managerial job and increase in number of subordinates

recognition of Product Division became necessary.

Advantages-

Places attention and effort on product line

Facilitates use of specialised capital,

facilities, skills, and knowledge

Permits growth and diversity of the

products and services

Improves coordination of functional

activities

Place responsibility for profits at

divisional level

Furnishes measurable training ground

for general managers

Disadvantages-

Requires more persons with

general manager abilities

Tends to make maintenance of

economical central services

difficult

Presents increased problem of

top management control

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PRESIDENT

HRMMarketing Purchase Finance

Detergents Cosmetics Food Products Pharmacy FMCG

Engineering Production HRM Marketing Accounting

PRODUCT ORGANISATION

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DIRECTING

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DIRECTING

Direction is part of management which actuates

the people to work efficiently and effectively

Direction involves communication and providing

leadership and motivation to the people to

contribute to the best of the capabilities for the

achievement of objectives of the enterprise.

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Direction has a major concern with the ‘human element’ of

the organisation. People are actuated through direction.

Planning and organising are only preparations for doing the

work and the work actually starts when the direction of

management is performed. It is the direction function of

management which is related with the activities that deal

directly with influencing, guiding, supervising and

motivating people in organisation for the attainment of

organisational objectives.

DIRECTING

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ELEMENTS OF DIRECTION

Direction consists of four elements:

1. Issuing orders that are clear, complete and within the

capabilities of subordinates to accomplish.

2. Continuous training activity in which subordinates are

instructed to carry out the particular assignment in the

existing situation.

3. Motivation of subordinates to try to meet the expectations

of the manager.

4. Maintaining discipline and rewarding those who perform

properly.

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FEATURES OF DIRECTION

1. Managerial function

2. Continuous activity

3. Pervasive function

4. communication

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Managerial function


Direction as a managerial function is the interpersonal aspect

of management processes by which organisational members

are led to understand and contribute effectively and efficiently

to accomplish organisational objectives.

Direction is an important function of management. A good

plan must have been chalked out, a sound organisation may

have been evolved and a sound team of personnel may have

been employed, but all these will be ineffective unless there is

proper direction of the people in the use of planning and

organising.

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Continuous Activity

Direction is a continuous activity. It does not stop as long as

the execution of plan is in process. A manager who issues an

order and thinks his function is complete is committing a

very serious error. He is supposed to continuously supervise

the execution of his orders or instruments. He also has to lead

and motivate his subordinates.

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Pervasive Function


Like all other functions of management, direction,

is also performed by the managers, at all levels in

the organisation.

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Acceptance of order is essential if it is carried out effectively.

Managers may elicit two types of behaviours from his

subordinates when they issue orders.

Linear Behaviour: It is obtained when there is a one way

transmission of orders from superior to subordinates.

Circular behaviour: It is two way communication between the

superior and subordinates. The superiors can persuade the

acceptance of the order more quickly.


Communication

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IMPORTANCE OF DIRECTION

Direction involves functions of leadership, communication,

motivation and morale. Directing is very important part

of management process and the organisation. It sets the

organisational machine into motion.

Importance of direction may be

1. Heart of administration

2. Initiation of action

3. Helps in achieving objectives

4. Helps to execute decision

5. Irreplaceable task

6. Helps utilise capabilities

7. Crucial to success of organisation

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Heart of administration

It is the directing function which involves

determining the course, giving orders and

instructions providing the dynamic leadership.

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Initiation of action


Direction actuates action, an organisation may

make good plans but nothing moves unless

directed into operation.

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Helps in achieving objectives

By directing a manager can utilise skills of the

people and their time and energy to achieve the

objectives of the organisation.

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Helps to execute decision

Policies and procedures of an organisation are

executed through the direction of the

management.

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Irreplaceable Task

Direction in business is similar to strategy in war,

despite presence of computers, robots etc. guidance

to the people can not be eliminated.

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Helps Utilise Capabilities


Direction helps to explore talents of individuals and get

maximum out of them.

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Crucial to Success of Organisation

Direction is crucial to success of an organisation as it

provides a test of managerial capability in running a

business enterprise successfully and is very important in

determining the success of the organisation.

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BENEFITS OF DIRECTION

1. It integrates individual efforts

2. It facilitates change in the organisation

3. It ensures stability and balance in the organisation

4. It is helpful in securing employee’s cooperation

5. It develops human resource and future managers

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PRINCIPLES OF DIRECTION

1. Principle of directing objective: The more effective the direction the greater will

be subordinate’s contribution in achieving organisational objectives.

2. Principle of harmony objective: Effective direction should facilitate integration of

individual and organisational goals.

3. Principle of effective leadership: It requires that manager should adopt an

appropriate style of leadership.

4. Principle of effective communication: Ensure effective communications.

5. Principle of unity of command: Subordinate get order from one boss.

6. Principle of individual contribution: Direction should be such that enable the

subordinates to contribute their best.

7. Principle of human relations: Manager’s success in directing depends upon

healthy human relations climate.

8. Principles of participation: Managers should invite ideas and suggestions from

their subordinates.

9. Principle of direct supervision: direction supervision improves loyalty and morale

of employees.

10. Principle of follow through: Mere issuing order is not enough, continuous

feedback is necessary in monitoring behaviour and performance of the

subordinates.

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CONTROLLING

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CONTROLLING

Controlling is the measurement and correction of performance

in order to make sure that enterprise objectives and the plans

devised to attain them are being accomplished. Planning and

controlling are closely related and without plans control is not

possible, because performance has to be measured against

some established criteria.

Control consist in verifying whether everything occurs in

conformity with plans adopted, the instructions issued and

principles established.

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The process of controlling

The process of controlling has the following basic steps-

Establishing standards

Measuring performance against standard and ascertain

the difference

Correcting variations from standards and plans

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Standards, by definition are criteria of performance. They

are the selected points in an entire planning programme at

which measures of performance are made so that managers

can receive information about how things are going and thus

do not have to watch every step in the execution of plan.

Establishing Standards


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Measurement of Performance

Measurement is the determination of the quantity or

capacity of a well-defined entity. Means of measuring

performance and obtaining data are given below:

1. Personal observation

2. Oral reports

3. Written reports

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Correcting Variations

This step ensures that operations are adjusted and efforts

are made to achieve the results initially planned. It may

involve modification of plan and is done by those who

have authority. It is aimed at uncovering the real cause of

discrepancy and initiate elimination of its source.

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COORDINATION

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COORDINATION

Coordination is the orderly arrangement of group

effort to provide unity of action in pursuit of a

common purpose

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TYPES OF COORDINATION

Internal coordination

External coordination

Vertical coordination

Horizontal coordination

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LEADERSHIP

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LEADERSHIP STYELS

1. Autocratic –

a) Hard Boiled Autocrat

b) Benevolent Autocrat

c) Manipulative Autocrat

2. Participative

3. Laissez-faire or Free rein

4. Paternalistic

5. Bureaucratic style

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MOTIVATION & MORALE

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IT IS THE NEED OR DRIVE

WITHIN AN INDIVIDUAL THAT

DRIVES HIM OR HER TOWARD

GOAL ORIENTED ACTION. THE

EXTENT OF DRIVE DEPENDS

ON THE PRESCRIBED LEVEL

OF SATISFACTION THAT CAN

BE ACHIEVED BY THE GOAL

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-Definition-

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“MOTIVATION IS A

PREDISPOSITION TO ACT

IN A SPECIFIED GOAL

DIRECTED MANNER”

-Hellriegel and Slocum

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“MOTIVATION IS THE STATE OF

AN INDIVIDUAL’S PERSPECTIVE

WHICH REPRESENTS THE

STRENGTH HIS PROPENSITY TO

EXERT EFFORT TOWARD SOME

PARTICULAR BEHAVIOUR”

-Gibson

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“A process of stimulating the self or subordinates to get into the desired course

of action”-Michael Julius

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DIFFERENCE BETWEEN

MOTIVATION AND SATISFACTION

MOTIVATION REFERS TO THE DRIVE AND EFFORT TO

SATISFY A WANT OR GOAL.

SATISFACTION REFERS TO THE CONTENTMENT

EXPERIENCED WHEN WANT IS SATISFIED. IN OTHER

WORDS, MOTIVATION IMPLIES A DRIVE TOWARD AN

OUTCOME, AND SATISFACTION IS THE OUTCOME

ALREADY EXPERIENCED.

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Mechanism of Motivation

Need Drive Barrier Goal

Deprivation Direction Overt/Covert Achievement

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NEEDS

An internal state of diseqilibrium

or deficiency which has the

capacity to energise or trigger a

behavioural response

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Motivation and Frustration

A person get frustrated because of unfulfilled need. Whenever

a person is frustrated, the defence mechanism gets triggered

into action. Frustration can be manifested into one or more of

following behaviour:

Aggression: A reaction to a situation where one’s motive is

blocked, causing oneself to turn against the barrier in terms of

verbal or physical injury.

Withdrawal: Leaving the field physically and psychologically.

Fixation: An unreasonable stubbornness, repeated behaviour,

non adjusting.

Compromise: Adjusting with the situation leading to ‘give and

take’ attitude.

Neelam Wayal

MASLOW’S HIERARCHY OF NEEDS

Self-

Actuali-

zation

Needs

Esteem Needs

Belongingness

Needs

Physiological Needs

Achievement Challenging job

Status Job title

Friendship Friends in Work

Group

Stability Pension Plan

Sustenance

Security Needs

Base Salary

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Douglas Mcgregor’s Theory

Douglas Mcgregor, a professor of industrial

Administration at MIT (USA) theorized that

every person has certain basic assumptions about

other people’s attitude towards work and

organisation the assumption is labeled as Theory

X and Theory Y.

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Theory X Assumptions

It is the traditional assumptions about the nature of people

and states that-

1. Average human being have an inherent dislike of work

and will avoid it if they can.

2. Because of this human characteristic of disliking work,

most people must be coerced, controlled, directed and

threatened with punishment to get them to put forth

adequate effort toward the achievement of organisational

objectives.

3. Average human beings prefer to be directed, wish to

avoid responsibility, have relatively little ambition, and

want security above all.

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Theory Y Assumptions

The assumption under this are _

1. The expenditure of physical effort and mental effort in

work is as natural as play or rest.

2. External control and threat of punishment are not the only

means for producing effort toward organisational

objectives. People will exercise self direction and self

control in the service of objectives to which they are

committed.

3. The degree of commitment to objectives is in proportion to

the size of the rewards associated with their achievement.

4. Average human beings learn, under proper conditions, not

only to accept responsibility but also to seek it.

Neelam Wayal

Vroom’s Expectancy Theory

The theory essentially emphasizes that motivation is increased if

the individual perceives that –

1. His effort will result in successful performance

2. Successful performance leads to desired rewards

The theory argues that the strength of a tendency to act in a

certain way depends on the strength of an expectation that the

act will be followed by a given outcome and on the

attractiveness of that outcome to the individual.

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Individual

Effort

Individual

Performance

Organizational

Rewards

Personal

Goals

1 2 3

1. Effort-performance relationship: Probability perceived by the

individual that exerting a given amount of effort will lead to

performance.

2. Performance-reward relationship: The degree to which the

individual believes that performing at a particular level will lead to

the attainment of a desired outcome.

3. Rewards-personal goal relationship: The degree to which

organizational reward satisfy an individual’s personal goals or needs

and the attractiveness of those potential rewards for individual.


Neelam Wayal


Vroom explains that motivation is a product of how much one

wants something and one’s estimate of the probability that a

certain action will lead to it.

This relationship is given in the formula:-

V X E = M

V = Valence is strength of desire for something

E = Expectancy is probability getting it with a certain action

M = Motivation is strength of drive towards an action

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Range of Valence and Expectancy

Valance

-1 0 +1

Expectancy

0 +1

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MORALE

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MORALE

Morale indicates happiness of the employees within the

organizational environment.

It is essentially akin to job satisfaction and represents the

integration of an individual with the team and the

organization itself.

Higher the morale higher is the productivity.

Relationship between morale and productivity need not

always be direct. With high morale there could be low

productivity.

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High

Low

Low HighProductivity

Morale

A B

C

Line A - High morale low productivity

Line B – High morale high productivity

Line C – High productivity low morale

Neelam Wayal

COMMUNICATION

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Written Word

What are the most common ways we communicate?

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Process of sending & receiving messages

–Spoken

–Written

–Nonverbal

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The Five Components of

Communication

STIMULAS MESSAGE DESTINATION1

Filter2

3MEDIUM

45

Internal

External

Verbal

Non-verbal

Feedback

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To change behavior

To get action

To ensure understandingTo persuade

To get and giveInformation

The Goals of Communications

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The Communication Process Model

Thoughts EncodingTransmission

OfMessage

Sender

Reception Decoding Under-standing

Receiver

Noise

Feedback

Sender

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Oral

Videoconferences

Presentations

Phone calls

Meetings

One-on-one conversations

Written

Miscellaneous

Reports

E-mail

Letters

Memorandums

Communication

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Downward

CEO

VP-1

MGR-1 MGR-2

VP-2

MGR-3 MGR-4

Upward

Lateral

Cross-Channel

Direction of Communication

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– Downward

• Job performance, policies, procedures, day-to-day operations, etc.

– Upward

• Helps prevent management isolation through conferences, suggestion systems, etc.

– Horizontal

• Help coordinate work assignments, share information on plans/activities, negotiate, etc.

– Cross-Channel

• Responsibilities typically involve many departments

Formal Communication Network

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Interpersonal Communication

ORAL

WRITTEN

NON VERBAL

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Oral Communication

1. Speeches

2. Group Discussions

3. One to one Communication

4. Meetings

5. Grapevine

Advantages

1. Speed

2. Feedback (instant)

3. Early Correction

Disadvantages

1. Distortion

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Written Communication

1. Letters

2. Electronic Mail

4. Fax

5. House Journals

3. Memos

6. Circulars

7. Notices on bulletin boards

Advantages

1. Tangible

2. Verifiable

3. Record & Storage

4. Carefully written

Disadvantages

1. Time Consuming

2. Feedback (lacking)

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Nonverbal Communication

1. Glance

2. Smile

4. Frown

5. Body movements

3. Stare

6. Intonations/emphasis

7. Facial expressions

Advantages

1. Conveys extent of liking and

disliking

2. Conveys relative perceived

status between sender and

receiver

3. Gives meaning to spoken

language

Disadvantages

1. No Record

2. May be different from

verbal communication

Neelam Wayal

Formal Small Group Networks

In an organization -• Formal Network can be complicated.

• Hundreds or thousands of people may be involved.

• Hierarchy levels may be many.

For simplification we have condensed these networks

into three groups of five people each.

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CHAIN

It rigidly follows formal chain of command

It is rigid three level organization

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WHEEL

Central figure to act as conduit for all the group communication.

This type of network is found with strong leader.

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ALL CHANNEL

Permits all group members to actively communicate with each other.

Often used by self-managed teams.

All group members are free to contribute no one person has leadership role.

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Formal Small Group Networks &

Effective Criteria

Network

Criteria Chain Wheel All Channel

Speed Moderate Fast Fast

Accuracy High High Moderate

Emergence of a

leader

Moderate High None

Member

satisfaction

Moderate Low High

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• Transmits information through nonofficial channels– Business-related

– Accurate

– Pervasive (all levels)

– Rapid

– Most active during change

– Normal

– Accept & pay attention

Informal Communication Network

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Characteristics of Grapevine

Not controlled by Management.

Perceived by most employees as being more believable

and reliable than formal communication.

It is largely used to serve self interest of the people.

Evidence show that 75%of what is carried in grapevine is

accurate.

Rumors emerge as response to situation that are important

and when there is ambiguity.

Rumors get spread because of anxiety.

Rumors can not be eliminated, but can be minimized.

Neelam Wayal

Suggestions to Reduce Negative

Consequences of Rumors

Announce timetable for making important decisions.

Explain decisions and behaviors that may appear

inconsistent or secretive.

Emphasize the downside, as well as upside, of current

decision of the future plans

Openly discuss worst-case-possibilities – it is almost

never as anxiety as the unspoken fantasy.

Neelam Wayal

•70 % of all our communication efforts are:

•misunderstood, misinterpreted, rejected, disliked, distorted, or not heard (in the same language, same culture)!

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Sender Receiver

Feedback

Distortion

Barriers to Effective Communication

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OUT OF THE TOTAL TIME IN COMMUNICATING YOU SPEND-

–9% IN WRITING

–16% IN READING

–30% IN SPEAKING

–45% IN LISTENING

INTERESTING FACTS ABOUT LISTENING

Neelam Wayal

• Perceptions

• Language

• Semantics

• Personal Interests

• Emotions

• Inflections

• Environment – noise

• Preconceived notions/expectations

• Wordiness

• Attention span

• Physical hearing problem

• Speed of thought

What causes distortion or the barriers to understanding/listening?

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Other Barriers in Communication

Management Philosophy

Attitudes and opinions

Non receptivity/defensive

Know-it-all attitude

Blocked mind

Obstinate person

Bias and prejudice

Wrong assumptions

Different comprehension

of reality

Emotions

Failure to discriminate

Polarization

Frozen evaluation

Improper assessment of the

receiver

Secrecy

Lack of self confidence

Abstractions

Premature evaluation

tendency

Filtering

Neelam Wayal

How can we improve our listening skills?

Eliminate distractions

Concentrate

Focus on the speaker

Maintain an open mind

Look for nonverbal cues

Do not react to emotive words

Ask questions

Sit so you can see & hear

Avoid prejudices

Take notes

Ask for clarification

Neelam Wayal

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