Internal motivation through join goal setting by the manager and his subordinates, with an aim to increase subordinate’s own control of his work. It emphasizes active participation of subordinates in the process of decision making that affect them directly.

The MBO aims at changing behaviour and attitudes of subordinates towards getting the job done. It is result oriented, emphasing performance rather than personality traits and concentrates on goals rather than methods.

Under MBO the procedure followed includes five steps.

1) Establishment of organization wide strategy & goals. These goals are expressed clearly so that they can be measured accurately. These goals should be challenging and be revised periodically to meet changes in the situation.

2) Establishment of short term performance targets jointly by the management and subordinate.

3) Arranging frequent performance review meetings between the manager and subordinates.

4) Establishment of major check posts to measure the progress. The manager should exercise sound judgement, so that the performance will be directed towards achieving goals.

5) Providing feed back to the employees about their performance for motivating them towards achievement of the goals and satisfying their needs.

Under MBO three basic elements 1) Goal setting 2) Participation & 3) Feedback play a key role in enhancing performance of the employees.

Advantages of MBO

1) MBO is useful in increasing employee motivation.2) It helps in reducing internal conflicts among the managers by reducing competition among

them.3) It results into “Means Ends” Chain, as the lower level management establishes targets

which are integrated with those of the higher level. It results in making everybody’s activity directed towards organizational goals.

4) It helps in reducing role conflict and ambiguity.5) It provides more objective criteria for evaluating the performance of employees.6) It is useful in identifying performance deficiencies that helps employees to aim at self

improvement and provides effective training and development of employees.

Thus MBO is regarded as a superior method of performance evaluation although it has certain limitations.

a) Many managers are not concerned with performance but they select other criteria for reward i.e. “looking productive” rather than” being productive”

b) In stead of taking performance as a basis for reward other bsis like getting along with the people, personality traits, physical appearance etc.

3) Human Assets Accounting Method--

This method aims at attaching money estimates to the value of a firm’s internal human organization and its external customer goodwill. If able and well trained persons leave the firm then human organization can be said to be worthless but if they join it its human assets increase. If distrust and conflicts exist, the human assets are devalued but if team work and high morale prevail then the human organization becomes a valuable assets.

The present value of a firm’s human organization can be appraised by developed procedures through periodic measurements of “key casual” and intervening enterprise” The key casual variables include the structure of an organization’s management policies, decision business leadership, strategies , skills and behaviour. The intervening variables indicate internal health of the organization, which includes attitudes, loyalties , motivation, collective capacity for effective interaction, communication and decision making. These two types of measurements are made continuously over several years for generating necessary data for computation of the human asset accounting.

This method is rarely used.

4) Behaviourally Anchored Rating Scales (BARS)

It is a recent appraisal method which is said to be better and more effective in practice.

The procedure of BARS involves five steps.

1) To generate Critical incidents—

The people having better knowledge of the job are asked to describe key elements or critical incidents of effective and ineffective performance behaviour.

2) To develop performance Dimensions--

These people cluster the incidents into a smaller set about five to ten about performance dimensions and each cluster is clerly defined.

3) To reallocate incidents--

Any group who know about the job, then reallocate the original critical incidents after giving them cluster definitions and critical accidents and are asked to redesign each incident to the dimension most suitable for it. The critical incident is accepted if about 50 to 80% of this group assigns it to the same cluster as was done by the earlier group.

4) To give scale to incidents—

The second group is asked to rate on 7 to 9 points scales the behaviour described in the incident regarding how far effectively or ineffectively it represents performance on the appropriate dimensions.

5) To develop final instrument

A subset of incidents about six or seven per cluster are used as Behaviour Anchors for the performance dimensions.

Advantages of BARs Methods—

1) It is more accurate tool for measuring performance of employees.2) It provides clear standards like extremely good, average performance etc.3) The use of critical incidents in useful in providing feed back to the

employees which are appraised.4) The technique is not biased by the evaluation of the rater.

Essential of Effective Performance Appraisal system—

A sound system of performance appraisal must satisfy the following conditions.

1) The plan for appraisal should be simple to design and operate, and easy to understand.

2) The appraisal plan should be designed taking into consideration the objectives of the appraisal programme.

3) The appraisers should be trained properly so that they have no personal bias and have abilities to give correct evaluation of employees.

4) The plan should lay down standards of performance in clear and precise terms.

5) The plan should take into account the current appraisal practices adopted by the organizations.

6) The appraisal should be carried on the continuous basis.

7) The appraisal plan should be followed by reward system for satisfactory performance.

8) The appraisal plan should be revised periodically after discussions with employees.

Q.12 a) What is performance Appraisal? Explain it’s significant.

b) What are the different methods of performance appraisal?

**************UNIT – 13 TRAINING & DEVELOPMENT13.1 Introduction –

Organizations and individuals should develop and progress simultaneously for their survival and attainment of mutual goals. Hence every modern management aims at developing the organization through developing its resources, because the people, of the people and for the people, make organization. If an organization has to develop, then its employees have to develop. The training and development programs adopted by the management are meant mainly for developing the employees.

13.2 TRAINING –

When employee is selected, place and inducted he needs to be provided with training facilities for helping him to adjust with his job. Training is an act of increasing knowledge and skill of the employees for doing a particular job. It is a short-term educational process utilizing systematic and organized procedure for helping the employees in learning technical knowledge and skills for a definite purpose.

According to Beach,” Training is the organized procedure by which people learn knowledge and skill for a definite purpose.” Training changes and improves the knowledge skill, behavior and aptitude and attitude of the employees, towards the requirements of job and the organization.

13.3 Training V Development

Employee training refers to training given to employees in the areas of operation, technical and related areas, while development implies developing employees in the areas of principles and techniques of management administration, organization and related areas it is in the nature of education given to managerial personnel.

Area Training DevelopmentFor whom Technical and non managerial

personnelManagerial Personnel

Content Technical skills and knowledge Managerial and behavioral skills and knowledge.

Purpose Specific Job related Conceptual and general knowledge.

Duration Short term Long term

13.4 Need For Training

Training is needed in the organization on account of the following reasons.

1) To match the employee specifications with job requirements and organizational needs.

2) To enable the organization to adapt to the changes training of employees in new techniques and developing necessary skills is necessary.

3) Training in skills of co-ordination, integration and adaptability, is essential for the employees to meet the organizational requirements of growth, diversification and expansion.

4) Training in human relations is necessary to promote healthy interpersonal relations in the organization.

5) Old employees need refresher training to enable them to keep abreast of

changing techniques and the use of sophisticated tools and equipment.

6) Training becomes necessary when a person has to move from one job to another because of transfer, promotion or demotion.

13.5 Advantages of Training Programs—

The role of training may be explained as follows –

1) Training tends to increase efficiency of workers, hence there is maximum utilization of resources leading to significant reduction in cost of production.

2) Trained workers know the methods of doing their jobs in a systematic manner, hence the possibility of accidents is reduced to the minimum.

3) Training promotes stability of the organization through reducing the rate of absenteeism and turn over it enables the workers to do their jobs in the absence of any supervision.

4) Trained workers tend to get maximum job satisfaction by treating work as play, hence their productivity and morale remains at higher levels.

5) Training not only increases efficiency and productivity but also increases production of quality products so as to sell them at competitive rates.

6) Training improves the power of understanding of employees and knowledge about their roles and jobs, hence they a can accept changes themselves quickly on account of changes in their attitudes towards their jobs, management and the organization.

7) Training reduces supervision hence it enables the managers to concentrate upon more important problems of the organization.

13.6 Procedure of Training Programs—

Once training needs are identified through performance evaluation, training programs have to be arranged by the organizations for improving the performance of the employees on their jobs. The training programs consists of the following steps.

1) Identification of Training needs—

Training needs may be determined on the basis of an organizational analysis which aims at contribution of individual workers towards achievement of organizational goals. Second, operations analysis which determines what type of behaviour of a worker is required to complete a particular job efficiently. Third, man analysis reviews the knowledge, attitudes and skills required to do the job and behaviour to achieve organizational goals.

2) Development of Training objectives and Programe-

On the basis of training needs the training objectives are determined then the training programs are developed to achieve these objectives and training programs prepared in consultation with line executives.

3) Implementation of Training programs—

While implementing a training program it is necessary to decide about trainees, trainers or instructors training period and training material equipments.

While selecting the candidates for training careful screening of candidates is useful in making training program effective.

For the purpose of training qualified instructors may be hired or internal trained and experienced trainers may be appointed for conducting the training programs. The trainer should explain and demonstrate the operation step by step and allow the trainees to repeat these operations. He should clear all the queries and doubts of the trainees relating to the job.

The length of time period for training depends on the skill to be acquired, capacity of the trainees and the media of training used. To secure attention and interest training session should not be longer than two hours. It is desirable to give training during working hours in order to make training effective necessary training material should be prepared and the complete outline of the course may the given in the beginning. Training material be handed over to the trainees well in time so as to enable them to come prepared in the class.

4) Evaluation of Training program—

The effectiveness of training program needs to be evaluated through.

1) Putting a trainee “On his own”2) Checking frequently to be sure that he has followed instructions

carefully.3) Extra supervision and close follow up till he is qualified to work

under normal supervision.

13.7 Training Methods

A number of training methods have been developed by the experts These methods may be classified as follows –

Training methods

On the job Methods Off the Job methods

1) Job Rotation 1) Vestibule Training2) Job instruction 2) Role playing3) Coaching 3) Lecture method4) Committee Assignments 4) Conference/Discussions

5) Program Instructions

A) On the job Training Methods—

Job instruction training is commonly used where an individual is placed on the job and is taught necessary skills for performing the job. The trainee learns under supervision and guidance of an instructor or qualified worker. On the job training gives first hand knowledge and experience under actual working conditions it includes the following methods.

1) Job Rotation—

Under this method the trainee is moved from one job to the other so that the trainee gets job knowledge and experience from his trainer in different job assignments. This methods helps in getting the knowledge about all the aspects of the job.

2) Job instruction or Training through step by step—

Under this method the trainer explains to the trainee the method of doing the job systematically. Through step by step instructions the trainee acquires skill and full knowledge about the job. The trainer appraises the performance of the trainee, provides feed back and corrects the trainee.

3) Coaching—

The trainee is placed under a supervisor who works as a coach for training the employee. The supervisor provides feed back to the trainee and gives suggestions for improving his performance.

4) Committee Assignment-

Under this method, a group of trainees is given an actual organizational problem and told to find solution to it . The trainees attempt to solve the problem jointly. This method is useful to develop the spirit of teamwork in the organization.

B) Off the Job Methods—

Under these methods, the trainee is not given the job directly but he is made to concentrate on learning the material related to his future job performance . The trainee can fully concentrate on learning without any distraction for performing the

job. He is given opportunity for freedom of expression of his doubts and difficulties in understanding the problem if any. Companies now use multimedia and information technology for the purpose of training the employees. Off the job training methods are discussed below—

1) Vestibule Training or Training Centre Training—

It involves classroom training imparted with the help of machinery and equipment which are similar to those in use at the work place. In the classroom theory is taught and practical work is conducted on production line. This method is useful for training inspectors, machine operators, typists etc.

2) Role Playing –

It is a method of human interaction which involves realistic behaviour in imaginary situations. It involves action and practice. The participants play role of certain characters such as mechanical engineer, production manager, quality control inspectors foreman etc. This method is useful for developing interpersonal relations and interactions.

3) Lecture Method—

It is a traditional and direct method of giving instructions. The instructor gives a lecture to the group of trainees. The lecture motivates the trainees to take interest in the lectures. This method is useful in saving time and cost of providing instructions to individual candidates separately. The main limitation of the method is it may not be effective in transfer of training effectively.

4) Conference or Group Discussions-

This method is useful for training supervisory personnel. The trainees form a group and ideas are proposed and examined, assumptions are tested and conclusions are arrived at, and all these tend to contribute to the improvement of job performance. Discussions involve two way communication and hence feedback is immediately provided. The participants feel free to speak in small groups. The success of this method depend upon the quality of leadership of the group.

5) Programmed Instructions—

This is a recent popular method where the subject matter to be learned is presented in a series of carefully planned sequential units. These units are arranged from simple to more complex levels of instruction. The trainee goes through these units by answering questions or filling up the blanks. This method is criticized as time consuming and expensive but it is highly effective.

13.8 MANAGEMENT DEVELOPMENT

Development is defined as a long term educational process utilizing a systematic and organized procedure by which managerial personnel get conceptual and theoretical knowledge. It refers to theoretical and philosophical educational process. It involves broader education and its purpose is long term development.

1) Koontz and O’Donnell-- “Management development includes the process by which managers and executives acquire not only skills and competency in their present jobs but also capacities for future managerial tasks.”

2) Flippo - “ Management development includes the process by which mangers and executives acquire not only skills and competency in their present jobs but also capacities for future managerial tasks.”

3) Beach - “Management development is a systematic process of training and growth by which individuals gain and apply knowledge, skills, in sights and attitudes to manage orientation effectively “

4) Jucious -- “ Executive development is a program by which executives, capacities to achieve desired objectives are increased.”

Thus management development means any planned, guided or directed activity, undertaken by a manager to help himself to become more competitive in his present office and to consciously prepare himself for assuming higher and more important managerial duties and responsibilities so that he can claim promotion by merit or competence.

13.8.1 Objectives of Management Development Program –

The management development programmes are organized for achieving the following objectives.

1) To encourage managers to develop as persons in their capacity to handle greater responsibility.

2) To improve performance of managers at all levels in their present jobs.

3) To improve and sustain good performance of managers throughout their careers.

4) To assure the organization the availability of required numbers of managers with the necessary skills and Capacities to meet the present and future need of the organization.

5) To improve thought process and analytical ability in order to uncover and examine problems and take decisions in the best interests of the organization and the country as a whole etc.

13.8.2 Need for Management Development Programs—

There are several reasons for developing management development programs.

1) Management development programs not only result in developing managers but also in increasing their contribution towards industrial development and economic development of India.

2) Techno managers need to be developed in the areas of management skills, abilities and knowledge.

3) Efficient functioning of Public utility services like transport and communications etc depend on professionalization of management in these sectors.

4) Human resources development of managers in multiple areas call for the executive development programs .

5) These programs are necessary for developing technical and conceptual skills to non technical managers.

6) Intensive competition at national and international level has led to the development of various grand strategies by various business organizations which necessitates the development of managers.

13.8.3 Methods of Management Development-

There are several techniques that are used for the purpose of management development. These methods may broadly be divided into two categories on the job and off the job methods.

Methods of Management Development

On the Job Techniques Off the Job Techniques

1. Coaching 1. The Case study method2. Job Rotation 2. Incident Method3. Under Study 3. Role Playing4. Multiple Management 4. In Basket Method5. Special Projects and Task Forces 5. Business Games6 Experience 6. Sensitivity Training7 Selective Readings 7 Simulation8 Committee Assignment 8 Grid Training

9 Conferences & Seminars10 Lectures

A) ON THE JOB TECHNIQUES--

On the job techniques may be discussed as follows –

1) Coaching -- Under this technique the supervisor works as a coach. The training of subordinate by his immediate boss is considered as a most effective management development technique. The trainee serves as a assistant to the senior officer so that they may fill up the vacancy which may arise future. The coach maintains a development file for each of his subordinates regarding how subordinate is receiving, the skills being acquired and how well is he performing.

2) Job or Position Rotation- Under this method the trainee is rotated from one job to another on systematic and regular basis so as to broadens his knowledge and understanding. Job rotation tends to promote competition among the rotating trainees. It reduces barriers to internal communication and facilitates interdepartmental co-operation by familaring the trainee with various aspects of the operations of the firm. But this program may give rise to indiscipline, low morale and disruption, hence it is necessary to administer it skillfully.

3) Understudy Method—Understudy technique involves a trainee to assume at a future time the full responsibility of the position currently held by the superior. This method helps in supplying the organization a person with as much competence as the superior to fill his post which may full vacant on account of transfer, promotion or retirement of the superior. During the training program the trainee gots an opportunity to take decisions about daily operating problems as well as long run problems.

4) Multiple Management—Under this method a permanent advisory committees of managers study problems of the company and make recommendations to higher management. It is also called as junior board of executive system. These committees discuss the actual problems to develop ultiple solutions which are evaluated for the purpose of decision making.

5) Special Projects and Task force— Under special project, an executive is assigned a project that is related to the objectives of his development. For example, a trainee may be asked to develop a system of cost control in the execution of the order. He studies the problem and makes recommendations upon it. This project helps in educating the trainee about importance of cost and organizational relationships with accounting and other departments it helps him to acquire knowledge about allied subject also.

6) Experience – Learning through experience is the old technique of executive development. It is believed that people can learn on their own through experience. However this method is time consuming and costly as it takes longer time and energy to learn.

7) Selective Readings— Managers by reading professional books and articles in journals can came to know about recent developments, research findings, theories and techniques of management. Many organizations maintain rich library to encourage their executives and managers to acquire new skills and improve their performance.

8) Committee Assignment-- The executive is placed on a committee appointed to make recommendations on the particular aspect related to the organization. The executives can learn through discussions during the committee meetings.

B) OFF THE JOB TECHNIQUES --

The executives may be trained through off the job methods. These techniques may be discussed as follows—

1) The case study Method –The case is the actual or field situation which is presented in a written form for the purpose of discussion. The study involves identification of the problem analysis of the situation in terms of cause effect relationships. There may be several relations for the problem identified, and each of these solutions in evaluated on the basis of costs and benefits and implications of it, and the best solution is selected for decision making. This method is useful for developing problem solving skills.

2) Incident Method – This method was developed by Paul Pigors it aims at developing the trainee in the areas of intellectual ability, practical, judgment and social awareness. Incidents are prepared on the basis of actual situation and each employee in the training group is asked to study the incident and suggest short term decisions. Later on the group studies and discusses the incident and discusses solutions and takes decisions relating to incidents, through group interaction. This method is a combination of case study and in basket training.

3) Role playing-- It is a popular technique under this method the employee learns by playing a role in a dramatic situation which corresponds to his work. The main idea of role playing is to enable the trainee to understand the situation from the perspective different from his own. A meeting of supervisors is called and two of them are selected for role playing. A common problem like an employee seeking transer” selected and one of the supervisor plays a role of the employee and the other acts as his supervisor. They play their respective roles while other members watch it

carefully and make mental notes and evaluate the performance. After the drama is over, the other two members are told to act out the some situation or a general discussion of the acting may be carried out. This method is said to be very effective for developing executives.

4) In Basket Method -- the trainees are given necessary background information about a simulated company, Its products key personnel, its plans, memoranda, requests and other relevant data about the firm. The trainee has to study all the information, make notes, delegate tasks and prepare memos in a given period of time. This method helps in developing 1) Situational judgement in being able to recall details, establish priorities interrelate items and determine need for more information 2) Social sensitivity in exhibiting courtesy in written notes, scheduling meetings with personnel involved and explaining reasons for action taken and 3) Willingness to make decision and take action.

5) Business Games -- The trainee are divided into two groups. They are told to discuss and arrive at decision on the matters like production, pricing, advertising, research expenditure etc. assuming themselves to be the member of management team of the simulated organization. The other team assumes itself as competitors and react to the decision. The immediate response or feedback helps in knowing relative performance of each team. The co-operative decision taken by the team promotes greater interaction among participants and get experience of cooperative group processes. It also tends to develop organizational ability , leadership qualities, quickness of thinking and ability to adopt under stress.

6) Sensitivity Training-- This techniques aims at developing awareness of and sensitivity of behavioural patterns of the trainee and others. The trainee are told to play unstructured role in a laboratory situation where he comes to know more about himself and the impact of his behaviour on others. It is useful in developing, managerial sensitivity, trust and respect for others. The main limitation of this method is the trainee has to pay heavy emotional cost.

7) Simulation - Under this method an actual job situation is created so that the trainee feels that he is experiencing all those conditions. He is asked to play a particular role under these circumstances and solve the problems by taking decisions. He is given feed back about his performance immediately.

The main problem with this method is to create a situation where the trainee feels the pressures and realities of actual decision making on the job. As trainee is aware of the fat that the situation is artificial, it tends to prevent him from experiencing all that he is going to experience in real life.

8) Grid Training—Management grid training is a six phase program lasting for three to five years. It begins with upgrading managerial skills, continues to group improvement, improving intergroup relations and goes into corporate planning, developing implementation method and ends with an evaluation phase. The grid represents several leadership styles, each style representing a different combination of the two basic orientations, that are concern for people and concern for production.

9) Conferences and seminars-- A conference is a meeting of several persons to discuss the subject of common interest. Better contribution from members can be expected as each one builds upon ideas of other participants. This method is best suited when a problem has to be analyzed and examined from different view points. It is useful for members

in developing their abilities to modify their attitudes. Participants like this method because they get an opportunity to express their views freely.

The success of the conference depends on the conference leader. In order to make conference and seminar successful, the leader has to manage the discussions concentrate on the central problems by encouraging participants to develop alternatives and present their views. Attempts should be made by the leader to prevent domination of a few participants.

10. Lectures – This is an ideal method for presenting and explaining series of acts, concepts and principles. The lecturer organizes the material and gives it to a group of trainees through his lecture. The main advantage of lecture method is that it is direct and can be used for training a larger group at the same time. It enables to explain the subject in details. It is also time saving device as it enables to explain principles, policies, concepts and experience in the short time.

But the lecture method does not allow participation of the trainees & sometimes it may become boring which may hinder learning. The skills can only be developed by doing, for example a person can learn swimming by doing rather than listening a series of lectures or reading several books. Hence it is said that” An ounce of practice is worth tons of theory” The lectures are useful in gaining new knowledge, learning about new techniques and broader concepts, which when implemented in practice tend to improve the performance significantly.

13.8.4 Selection of Techniques –

The success of management training programs ultimately depends on the selection of the appropriate techniques. It may be noted that no single method can prove to be quite sufficient> Hence it is desirable to select a suitable combination of the techniques to make management development programmed more effective. As all managers at all levels require all kinds of skills but in different proportions, a suitable combination of training methods, need to be selected taking into consideration the management level of the trainees. Taking regular feed back and evaluating every training program enables the top executives to develop more effective training programs for implementing in future.

13.8.5 Electronic Management Development Programs—

Technological revolution has made the computer and Internet as integrate parts of management development programs. Now high quality generic packages are available for management development programs on CD Rom dealing with topics like time management, stress management and communication skills. Cyber Media and Innoserv systems, multimedia HRD and Microwave Computer Services Companies have developed CD Roms in future Video Conferencing, sharing networked resources and internet etc will be used extensively for management development programs because multimedia programs are observed to be more effective efficient and of high quality with very low cost.

13.8.6 Evaluation of Management Development Programmes—

Management development programs should be evaluated for finding out whether the objectives of these programs have been achieved or not. These programs have been achieved or not. These programs can be effective if they contribute to individual, group and organizational goals. The senior HRD manager be assigned the responsibility of evaluation. While evaluating the training program objectives and goals of it should be

taken into consideration. Evaluation has to be a continuous process and specific. It is desirable that the trainees should be informed in advance about the content, objectives, area and methods of evaluation. Evaluation should be objective and realistic in terms of standards, direction etc. The areas of evaluation include managerial skills knowledge, technical skills and knowledge, conceptual skills and knowledge. Evaluation should also include training methodology, input output content, infrastructure, physical facilities, teaching aids trainers efficiency in conducting programs. Evaluation is essential to betaken immediately as well as at specific intervals in the long run to find out the total impact of the programs on job behaviour and efficiency of the trainees, improvement in decision making, skills, interpersonal relations, strategy formulation and implementation skills , role modeling skills etc. The evaluation results should be communicated to the trainees, their superiors, subordinates and HRD department of the organization. These results serve important purpose of improvement of the future programs in the company.

Q.13. a) What do you know about Training and Development ? Why is it needed?

b) Critically evaluate various methods used for training and development?

************** UNIT – 14 CAREER PLANNING 14.1 Introduction

Companies aim at developing career plans and career development of its employees, after providing them technical and managerial skills. Organizational career planning became important on account of rapid changes in technology, human needs, values and aspirations increase in size and complexity of organizations and increasing number of openings at different levels. Individual career planning started gaining importance on account of rapid growth and speed of knowledge, increase in training and educational facilities and ever increasing job opportunities.

14.2 Career Planning

Career is defined as individually perceived sequence of attitudes and behaviours concerning work related experience and activities over the span of individuals life.” It involves an individual’s perception of his career and forms a process or sequence of activities which occur during his work life.

According to Flippo a career is a sequence of separate but related work activities that provide continuity, order and meaning to a person’s life. Hall defines career.

Davis defines career planning as the process by which one selects career goals and the path to these goals.

Career planning aims at matching individual potential for promotion and individual aspirations with organizational needs and opportunities. Career planning is making sure that the organization has the right people with right skills at the right time. It indicates what training and development would be necessary for advancing in the career, altering the career path or staying in the current position. Its focus is on future needs and opportunities and removal of stagnation, obsolescence and dissatisfaction of the employees. In the process it opens avenues for growth to higher levels of responsibilities for each and every employee of the organization through hierarchy of position and training and development activities to equip the individuals with the requisites for succession.

14.3 Objectives of Career Planning-

1) To secure the right man at the right job at the right time.

2) To maintain a contended team of employees.

3) To provide adequate career avenues to employees to higher leels of responsibilities.

4) To strength then the retention program of the organization.

14.4 Need for career planning—

Career planning is necessary on account of the following reasons—

1) To attract competent persons and to retain them in the organization.

2) To provide suitable promotional opportunities.

3) To enable the employees to develop and make them ready to meet future challenges.

4) To correct placement of employees.

5) To increase the utilization of managerial reserves within the organization.

6) To reduce employee dissatisfaction and turnover.

7) To improve motivation and morale.

An effective career planning is necessary not only for satisfying individual’s aspirations but also for the organization to have motivated devoted and significantly contributing work force towards organizational goals.

14.5 Career Stages

According to Schein there are five career stages. These are 1) Exploration 2) Entry 3) Basic training iv) Early career v) mid career which nearly confirms to ages and the general pattern of entry, peak and performance plateau.

At the entry stage people look for a job and try to overcome insecurities at the basic training stage.

The early career stage tends to balance individual and organizational needs.

Schein also provides five “ Career Anchors “ to the progress through career stages. These anchors are 1) Management competence 2) Technical and functional competence 3) Security 4) Creativity and autonomy and 5) independence. These anchors shape decisions goals, and movements of people and consist of talents and abilities, motive and needs, attributes and values. They are the outcome of an individual’s experience and his interaction with the work environment, and form a set of driving and restraining forces on career decisions and choices. An understanding of an individual’ dominant anchor provides a basis for predicting his career choices. For example, a person having creativity or autonomy and independence is likely to become so dissatisfied at his mid career that he may leave the job in a large company and start his own small enterprise.

These career stages of an individual enables him to understand one’s own career behaviour and thus facilitate self assessment. In addition , other assessment of his skills, abilities, interests , strengths and weaknesses , the individual may utilize this understanding to formulate his career plans. He may formulate his career objectives in the light of such assessments and take actions which reflect organizational realities.

14.6 Career Planning Process –

Career planning involves four fundamental elements which represent career planning process.

a) Direction- This involves career goals one sets and the organization’s ability to act favourable upon these goals, especially in the light business objectives and realities.

b) Career time—It relates to distance and velocity factors – how far one wants to go in an organization or on the career path and how fat he expects to get there.

c) Transition- It is the resistance faced while moving toward career goals. Transition relates to the changes expected in knowledge, skill and attitude on the path to a career goal.

d) Outcomes – It relates to the probabilities that one’s investment and sacrifices for career progress will pay off.

14.7 Career structure or career ladders-

The characteristics of a good career structure are as follows—

1) It has steps consistent with the general value of jobs and with other career structures.

2) It makes clear that getting to the top of the structure is not a right but is based on merit and capability of an individual.

3) The entry requirements for each step are clear.

4) There is formal assessment procedure in order to progress from one step to another.

5) The career structure is known and understood by all.

6) It is controlled and implemented with integrity.

7) It links with development review part of appraisals.

14.8 Advantages of career planning-

Career planning is advantageous not only to the individual but also to the organization—

a) For individuals—

i) Career planning helps individuals to have knowledge of various career opportunities, his priorities etc.

ii) This knowledge is useful for a person to select the career which is suitable to his life styles, preferences family environment, scope for self development etc.

iii) It enables the organization to identify internal employees for promotion.

iv) Internal promotions up gradation and transfers motivate employees, raises morale and promotes job satisfaction.

v) Increased job satisfaction increases employee commitment and creates a sense of belongingness and loyalty to the organization.

vi) Employees prefer waiting for promotion rather than joining the other organization. Thus turnover is reduced.

vii) In improves employees’ performance on the job by tapping their potential abilities and further employee growth.

viii) It tends to satisfy esteem needs of the employees.

b) For the organization-

Career planning and development from the long term point of view tends to increase effectiveness of human resource management. The main advantages to the organizations are as follows –

i) Efficient career planning and development ensures the availability of the persons with necessary skills talents and knowledge.

ii) It helps the organization to attract and retain highly skilled and talented employees.

iii) It ensures that the women and people belonging to backward communities get opportunities for growth and development.

iv) It satisfies employees’ expectations and tends to minimize job frustration.

v) It enhances organization’s cultural diversity through attracting and retaining the people from different cultures.

vi) It helps in promoting organizational goodwill through protecting interests of the employees.

14.9 Career Planning Programs—

There are four essential elements of these programs which include—

1) Individual assessments of abilities, interests, career needs and goals.

2) Organizational assessments of employee abilities and potential.

3) Communication of information relating to career options and opportunities with the organization.

4) Career counseling to set realistic goals and plan for their attainment.

14.10 Career Development –

Career planning is the process by which an individual selects career goals and the path to these goals, while career development includes those personal improvements one undertakes to achieve personal career plan.

14.10.1 Career Development System –

Career development programs include the following steps.

1) Assessment of Needs --

This stage involves in conducting of needs assessment as a training program.

2) Vision --

It deals with determining new directions and possibilities of career development. Vision helps in linking the needs with the interventions.

3) Action Plan--

An action plan is formulated to achieve the vision, with support of the top management.

4) Results--

Career development program is integrated with on going employee training and management development program. And it is continuously evaluated in order to revise it to make it more effective.

14.10.2 Career Development Actions—

There are several problems in the process of career planning and development and their implementation. The main problems may be summarized as follows –

1) Job Performance

In order to work out a career development path for the employee, he must prove that his performance on the present job is up to the level of standards established, if he wants career progress.

2) Exposure--

The employee should not have more desire, but it has to be associated with skills, knowledge qualification, achievements, performance etc. Then only they can decision about career progress.

3) Resignations--

There is a widespread tendency among the employees to resign the present jobs in the organization if they find that career opportunities else were are better than those in the present organization. Under such conditions it becomes difficult for the organization to work out and implement career development plan from the long term point of view. The organization should make an attempt to demonstrate that there are career development opportunities to those who have necessary qualifications and expertise.

4) Changing the jobs--

Employees giving priority to the organizational loyalty over career loyalty tend to change the job in the same organization, when they find that career opportunities are better in other jobs in the same organization then in the present job.

5) Career Guidance

Counseling is considered as the best technique for providing information, advice and encouragement to switch over to another career or organization, where career opportunities are better.

Thus while taking the decision about career planning and development an individual should take into consideration the reliable information about organizational policies in these areas and after counseling may take decision which he thinks to be in the interest of both, the organization and the individual.

14.11 Career Management—

Career management is the process of designing and implementing goals , plans, strategies to enable the organization to satisfy employee needs while allowing individuals to achieve their career goals.

Career management is the implementation of organizational career planning. The accelerating rate of change, both within organizations and in the environment under which they function has created need for career management programs. Advances in information technology, changing management concepts and requirement have made career planning still more important. Professional managers have to cope successfully with various changes affecting career-planning programs, especially in rapidly expanding organizations. The aspirations and personal philosophies of present younger employees have significantly changed. They expect that they can mature and progress only under professional management atmosphere that will permit them to realize their full potential. Hence each organization must have a well designed systematically planned and clearly understandable career management system with clearly stated principles and guidelines. Managers at all the levels should know all the processes in career planning and understand how they fit in the total organizational system.

14.12 Succession Planning

Succession planning implies, identification, development and making people well prepared to accept higher responsibilities, by accepting higher level jobs as when the feel vacant.

Succession may be from internal employees or external candidates. Generally organizations prefer to appraise potentialities of the employees, identify training gaps for future vacancies and aim at developing them for accepting higher level jobs.

14.13 Recent trends in career planning—

Organizations have realized the need of career planning as a technique of retaining employees. Career planning should provide not only multiple alternatives but also help them to develop their skills, and widen their knowledge base.

Organizations view career planning as an opportunity for offering a wide range of alternatives to employees. In the place of traditional corporate” on the way up “ Ladder, now there is emphasis on multiple career paths where employees are shown several lateral opportunities and involving employees in their own career paths.

Some organizations instead of planning the career of the employees, concentrate on contract staff from employee leasing firms and body shop piers.

Q.14 a) What is meant by career planning and career Development?

b) What are the problems in career planning and development? Suggest measures for effective career planning and development.

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UNIT – 15 DIRECTING

15.1 Introduction—

Once the plans are formulated, the organization structure is designed and competent persons are appointed at appropriate positions, the organization becomes ready for going into action. The actual action begins when orders and instructions are issued by the top management to employees and steps are taken to get them executed. This is known as the managerial function of directing.

15.2 Definitions –

1) Haimnn – “Directing consists of the process and techniques utilized in issuing instructions and making certain that operations are carried on as originally planned.”

2) Koontz and O’Donnel – Direction is the interpersonal aspect of managing by which subordinates are led to understand and contribute effectively to the attainment of enterprise objectives.”

3) Urwick and Breach – Directing is the guidance, the inspiration, the leadership of those man and women that constitute the real core of the responsibilities of management.

4) Earnest Dale- “ Direction is telling people what to do and seeing that they do it to the best of their ability.”

Thus directing is a complex function that includes all those activities which are designed to encourage subordinates to work effectively and efficiently in both the short and long run.

A manager issues orders and instructions inspire people, communicate with them and guides them through the process of directing.

15.3 Characteristics of Directing –

On the basis of definitions the main features of direction are as follows –

1) Dynamic Function -

Dynamic is an important and dynamic function of management. It is dynamic function because the methods and technique of directing people changes with changes in plans and organizational relationships. It is an important function because through direction management initiates actions in the organization.

2) Universal Function --

Directing is a pervasive function as it is performed by managers at all levels. It is performed by managers at all levels. It is performed in the context of superior subordinate relationship and every manager in the organization performs his duties both as a superior and a subordinate.

3) Continuing Function -

Direction is a continuous process as it continues through out the life of the organization. A manager has to give orders to his subordinates , motivate them lead them and guide them on continuous basis.

4) Origins at the top level--

Direction initiates at the top level in the organization and follows downwards through the hierarchy. It emphasizes that a subordinates should be directed by his own superior only.

5) Dual Objectives-

Direction has dual objectives. On one hand it aims at getting things done through subordinates and on the other, to provide superiors opportunities for some more important work which cannot be assigned to their subordinates.

6) Performance oriented function --

Performance is the essence of direction. Directing is basically a process around which all performance revolves. It is the essence of operation and co-ordination is the result of better managerial directing. Direction as a creative function, converts plans into performance or actions for achieving the objectives. Directing ensures continuity of operations for effective achievement of goals.

7) Involves Human Factor--

Directing function of management is concerned with relationships between people. It involves the study and modifying individual and group behaviour. For the purpose of effective directing it is necessary to have proper understanding of human nature and behaviour. It aims at creating healthy work environment which would release the latent talents and manifest abilities. Directing is difficult and challenging function because it deals with interpersonal and intergroup relationships over which management has little control.

8) Linking function--

Directing creates a link between prepatory functions (Planning , organizing and staffing) and the control function of management.

15.4 Importance of direction—

Direction is described as the heart of the management process. It is the life-spark of an organization which sets the organizational machine into motion. Thus direction is an important function of management on account of following reasons.

1) Direction initiates action—

Organization consists of human and non human resources which need to be handled in a certain way to achieve the desired results. Management through direction conveys and motivates individuals in the organization to function in the desired way to achieve organizational objectives in the absence of direction. Other functions like planning organizing and staffing become ineffective.

2) Direction integrates efforts of employees—

In order to achieve organizational objectives, interrelated activities of all the employees need to be systematically integrated which is done through direction.

3) Direction attempts to get maximum from individuals—

Individuals in the organization have enough potentialities and capabilities, which can be used through proper motivation, leadership and communication which are the elements of direction.

4) Direction facilitates changes in the organization-

Organization is described as a subsystem of a social system, hence any change in the social system, has to be accommodated by the organization by changing itself.

In order to accept and implement these changes management has to motivate the employees affected by these changes, which is the essential part of direction.

5) Direction provides stability and balance in the organization—

Direction through effective motivation communication and leadership provides stability in the organization and helps in maintaining balances between different departments in the organization. Hence the organization can function efficiently and effectively over a long period of time.

Thus direction stands out as an important function of management. It has also been observed that there is a high correlation between direction and work performance. So direction is described as the heart of administration.

15.5 Principles of Direction—

Direction is a complex and dynamic process because it deals with human behaviour at work, which tends to be unpredictable. Hence direction is said to be an art, which a manager can learn only through experience. However for the purpose of effective direction certain principles of direction have been developed as follows—

1) Principles of Harmony of objectives –

People join the organization to achieve certain objectives, that is, they want to satisfy their physiological and psychological needs while working in the organization. At the same time organization aims at achieving its objective of maximization of profits. Hence management through appropriate direction techniques should try to integrate both the individual and organizational objectives. Although common interests must prevail over individual interests, still certain factors like ambition, laziness weakness etc tend to reduce the importance of common interests. Hence appropriate direction tends to minimize the impact these factors.

2) Principle of unity of command—

According to this principle a subordinate should at a time receive orders and instructions from superior only. This is necessary to avoid conflicting orders, division of loyalty, indiscipline. Multiple subordination tends to undermine authority, creates conflicts, and makes difficult to fix responsibility for results.

3) Principle of Appropriateness of Direction Technique --

There are three direction techniques, such as authoritarian, consultative and free rein Each techniques has its own advantages and disadvantages. Hence the techniques used for direction has to be appropriate to the people, the task and the situation. Standard operating procedures are not always useful for direction.

4) Principle of Direct supervision --

Superiors must maintain face to face or direct contact with their subordinates. Because it helps in improving motivation and morale of the employees, increases their loyalty, and also provides immediate feed back. It is desirable to use formal techniques of supervision with personal touch.

5) Principle of Managerial Communication--

As communication is an important tool of direction, to make it efficient it is necessary to have a two way communication, so that a subordinate gets chance to express their feelings which the boss must know. In the process of communication

comprehension or correct understanding of the message is most important, which may be checked through feedback.

6) Principle of strategic use of informal organization—

As the formation of informal organization in formal organization is natural and inevitable process, a manager instead of resisting it, try to accept, understand and use effectively to get its support to the formal organization. Through co-operation of informal leaders direction function can be made more effective.

7) Principle of Leadership –

Leadership is the process of influencing behaviour of the individuals in the organization for goal achievement. Hence dynamic and efficient leadership is necessary for effective direction. A manager should possess essential qualities of a good leader. He should guide and counsel his subordinates not only in work related matters but also on their personal problems. It is necessary to win the confidence and co-operation of the subordinates. When a manager respects the opinions and views of his subordinates his direction tends to become more effective.

8) Principle of Maximum Individual Contribution-

When every individual in the organization contributes maximum towards achievement of organizational objectives. Then performance of individuals becomes effective. Hence the manager should adopt such direction techniques that will enable the subordinates to contribute to the maximum possible extent.

9) Principle of Efficient Motivation-

When the subordinates are properly induced and motivated, they tend to co-operate voluntarily in the efforts of achieving organizational goals. Hence direction should be oriented towards inspiring the employees to contribute fully towards the well being of the organization.

10) Principle of follow through--

Direction is a continuous managerial process, mere issuing orders and instructions is not enough and it is essential to ensure that the work is done in the desired manner. Therefore a manager has to follow through the whole performance of his subordinates. Follow up is essential not only to correct activities of the subordinates but also in revising direction wherever necessary.

15.6 Techniques of Direction—

The directing function of management consists of the following elements or techniques .

i) Issuing orders and instructions.

ii) Supervising subordinates to ensure that the performance of the subordinates confirms to the plan

iii) Motivating subordinates to strive hard towards to achievement of desired goals.

iv) Providing leadership to guide and counsel subordinates to accomplish their jobs in the best way.

v) Communicating with subordinates to create mutual understanding, trust and teamwork.

vi) Maintaining discipline and rewarding the efficient and effective employees. Out of these principles the first three principles may be discussed while others are explained in the following pages.

15.6.1 Orders and Instructions--

In the process of direction issuing of orders and instructions is an essential step as these orders initiate, modify, guide and terminates the activities of the subordinates, in the organization.

According to Koontz and Odonnel “as a directional techniques an instruction is understood to be a charge or command by a superior requiring subordinates to act or not to act in given circumstances.” An order is a fundamental tool of getting things done by the subordinates. The orders and instructions reflect managerial decisions and initiate action on the part of subordinates,. Thus an order can only be issued by a superior and it is enforceable by means of superior’s authority. A superior can use sanctions (punishments) against subordinates if they do not carry out his orders in the prescribed manner.

Orders may be general or specific, formal or informal, written or oral. A written order is clear and complete. It provides supervisors time to understand and manager can fix the responsibility. It also provides written record, although it is time consuming and costly.

15.6.2 Supervision—

Supervision is an important step in the process of directing. Super vision implies expert overseeing of employees at work . It involves direct personal contat with subordinates. Supervision converts plan into action. A supervisor is an important link between management and workers.

Supervision takes place at all the levels of management as each superior supervises the work of his subordinates throughout the chain of command.

Supervisors and foremen explain plans and policies to workers and also transmits the feelings and suggestions of workers to higher level managers.

In order to be effective a supervisor must possess technical and human skills.

15.6.2.1 Factors of Effective supervision—

1) Human relation skills—

Supervision is concerned with inspiring and guiding workers towards greater performance, hence a supervisor must recognizes individual differences and adopt people oriented approach to develop harmonious interpersonal relations in his department. He must have personal maturity and emotional stability.

2) Technical Skills –

A supervisor must be technically competent to guide his workers in the best way of doing their work. He must give proper attention to personal development of his subordinates.

3) Knowledge of Company—

An effective supervisor must full know about management philosophy, plans and policies of his company. He should be aware about changes in such policies and procedures and communicate them to his workers.

4) effective leadership-

The supervisor’s style should be appropriate to the nature of task and the type of workers. He may adopt a suitable combination of close and generl supervision.

5) Favourable work climate-

In order to create favourable work climate the top management should give necessary authority and status to the supervisors in the organization. High performance standards and a congenial work climate should be created and maintained through out the organization. There should be emphasis on training, compensation and promotion of the supervisors in the organization.

15.6.3 Motivation and Morale--

An organization becomes effective when all the employees make maximum contribution when all the employees make maximum contribution towards achievement of organizational objectives. The performance of a group depends upon the ability and willingness of its members to work and the technology used by them. Ability is the function of education; training and experience while willingness depend on the level of motivation. Thus

P = A X M X TWhere P = Performance

A = AbilityM = MotivationT = Technology

In modern organizations the main problem is the process of maximization of performance is the low level of motivation among the employees. The success of manager at present depends upon his capacity to inspire and motivate of his subordinates to work hard to achieve organizational objectives.

15.6.3.1 Motivation-- The term motivation has been derived from the word motive. A motive is an inner state that activates, energizes or moves and individual and canalize his behaviors towards goals. It reflects an impulse, drive or urge to move in a specific direction to reduce the tension of the need. The motives and needs are initiating and sustaining drives are those which move an individual to satisfy needs while goals are the ends towards which the behaviour is directed. Human behaviour is governed by multiple needs which arise fro human motives. Motivation is an art of understanding these motives and satisfying them to direct and sustain behaviour towards the accomplishment of organizational goals.

15.6.3.2 Definitions --

1) Scott – Motivation means a process of stimulating people to action to accomplish desired goals.

2) McFarland – Motivation refers to the way in which urges, drives, desires, aspirations, needs direct and control or explain the behaviour of human beings.”

3) Brech - Motivation is an inspirational process which impels the members of the team to pull their weight effectively, to give their loyalty to the group to carry out properly the tasks that they have accepted and generally to play an effective part in the job that the group has undertaken.

4) Koontz O’Donnell - “Motivation is a general term applying to the entire class of drives, desires, needs wishes and similar forces. To say that manager motivates their subordinates is to say that they do those things which they hope will satisfy these drives and desires and induce the subordinates to act in a desired manner.

5) Encyclopaedia of Management -- “ Motivation refers to the degree of readiness of an organism to pursue some destinated goal and implies the determination of the nature and locus of the forces inducing the degree of readiness.

Thus motivation is concerned with how behaviour gets started, is energized sustained, directed and stopped. As a function of management motivation is the process of inspiring and impelling people to take required actions by providing stimuli that satisfy their needs and motives. Motivation is a psychological, dynamic and the complex of multiple forces which propel an individual into action and keep him at work. It reflects will to work.

15.6.3.3 Nature of Motivation -- On the basis of above definitions the nature or characteristics of motivation may be stated as follows –

1) Motivation is a continuous process –

A man is a social animal with unsatiable and multiple wants. When one want is satisfied, other want emerges and all the wants cannot be satisfied. As satisfaction of wants is an unexciting process motivation also is an unending process.

2) Motivation is a psychological concept—

Motivation is an inner force which cannot be seen but its effect can be observed. When employees are properly motivated they tend to perform well. Proper motivation is possible only through proper analysis of psychology of workers.

3) Motivation involves the whole individual –

An individual is motivated fully and not partly because it is a psychological phenomena which affects the person as a whole. The basic needs of an individual determine motivation, but all these needs are interrelated and hence cannot be separated.

4) Motivation may be financial or Non financial—

Financial motivation include increasing wages allowances, bonus, etc. Non financial incentives include recognition, praise, giving more responsibility and authority, and giving opportunity to participate in decision making etc.

5) Frustrated individuals are difficult to motivate –

When individual’s needs are not satisfied, he gets frustrated and may become mentally ill to some extent. Such frustrated persons are difficult to motivate unless their basic needs are satisfied.

6) Goals are Motivators—

People work to achieve their individual goals hence once goals are achieved they may not be interested in their work. So managers should

identify individual goals and help them in satisfying old goals and setting new goals.

7) Unifying force –

Unifying force means the drive to actualize one’s own image. The self image of a person plays an important role in motivations. If an individuals has created his image as a leader he continues to act as a leader. Management should help him so as to keep him motivated.

8) Motivation may be positive or Negative-

Positive motivation means helping an individual in the process of achieving his goals through incentives. Negative motivation implies discouraging an employee through penalties and punishment for undesirable behaviour or action. Demotion termination etc. are examples of negative motivation. As they obstruct individuals attempts to achieve his goals.

9) Motivation is not satisfaction

Motivation is the process of stimulating an individual or a group to take desired action, while satisfaction implies contentment arising from the satisfaction of need. Motivation is the drive towards an outcome, where as satisfaction refers to the outcome experienced by a person.

10) Motivation is the product of anticipated values from an action (Valence) and the perceived probability that these values will be achieved by action (expectancy) . Thus.

M = V X EWhere M = Motivation

V = ValenceE = Expectancy

15.6.3.4 Importance of Motivation-

Motivation plays an important role in accomplishment of organizational goals. Its importance in organization may be stated as follows –

1) Maximum utilization of resources --

Motivated works tend to work sincerely and hard, hence the organizational resources tend to be optimally utilized

2) Higher willingness to work

Motivation influences the willingness of people to work, & hence higher level of willingness of the employees contributes significantly towards the achievement of individual , group and organizational goals.

3) Reduction in Absenteeism and Turnover—

Motivation leads to job satisfaction and high morale due to which labour unrest, absenteeism and turn over tends to be reduced. Motivated employees have higher commitment and loyalty to the organization. It provides stability in the work force. Motivation also promotes self discipline.

4) Motivation Facilitates change—

Effective motivation helps in overcoming resistance to change and negative attitude on the part of employees. Motivated employees not only accept but also are ready

to invite change. The try to learn more and may suggest certain desirable changes. Motivation sets tone of an organization.

5) Motivation promotes harmonious relations --

Motivation results in harmonious relations between employer and employees. Sound industrial relations result in industrial harmony and peace employee morale and discipline tends to be high. Motivation improves acceptance and compliance of orders and instructions.

6) Better corporate image—

On account of adequate opportunities provided by the company to its employees for the satisfaction of physical and psychological needs helps in improving organizational image in the eyes of the public. Talented people are eager to join and work in such organizations. Motivation also helps in utilizing and developing creative talents of employees. As Rikert has observed, “ Motivation is the core of management.”

7) Development of Cooperative Spirit—

Motivation is useful for developing and maintaining cooperative spirit in the organization which results in higher output and efficiency.

15.6.3.5 Theories of Motivation—

Several theories of motivation have been developed by the experts to explain how to motivate employees. Among these the following theories are popular.

A) Maslow’s Need Hierarchy Theory -

Maslow classified various needs of human beings in a definite order. His theory may be summarized as follows –

1) Man is perpetually wanting animal and his all the needs can never fully satisfied . As soon as one need is satisfied the another need becomes more urgent. This process continues from birth to death of a person.

2) Human needs differ in importance and hence can be arranged in a hierarchy like pyramid some needs are more important than others.

3) An individual’s need at a particular level on the hierarchy emerge only when the lower level needs are reasonably well satisfied.

4) Satisfied needs do not motivate behaviour. Once a particular ned is satisfied, it ceases to be a motivating factor.

A man may live by bread alone so long as there is shortage of bread. But once his hunger is satisfied, bread fails to motivate him.

5) The lower order needs such as physiological and safety needs are more finite or limited than higher order needs, which tend to be unlimited ego and self actualization needs are seen to be dominate among higher level managers.

Maslow has classified human needs into five categories—

Self Actualization

Needs

Esteem Needs

Social Needs

Safety Needs

Physiological Needs

1) Physiological Needs – At the base of the need hierarchy are physiological needs for food, water, air, sex, sleep, clothing, shelter etc. These needs are basic for the survival of human beings. Hence they have to be satisfied before all other needs. Reasonable satisfaction of physiological needs is necessary for the preservation and efficient functioning of human body. An organization can satisfy these needs of the employees by paying better salaries, providing proper working conditions, and other benefits.

2) Safety Needs - Once physiological needs are reasonably well satisfied , security needs become dominant. These needs include physical safety or protection against murder, fire, accidents etc. and economic security against unemployment, old age, sickness disability etc. An organization can influence these needs either positively by providing job security, pension and insurance plans, safe working conditions etc or negatively by arousing fear of being fired or laid off, arbitrary management actions etc. Every person needs protection from danger and deprivation.

3) Social Needs -- Man is a social animal and hence he has a need to belong and to be accepted by others. These needs include need for love and affection, association with social groups, friendship etc. Every person wants to build meaningful, relationships with others.

4) Ego Needs -- Ego needs include self esteem and esteem for others . Self esteem implies needs for self respect self confidence, feeling of personal worth and independence. Esteem for others refers to need for recognition, status, power, prestige, achievement etc. An organization com help employees in satisfying these needs through job title, praise recognition, promotion etc.

5) Self –actualization Needs – These are the needs of realizing one’s full potential. These include need for becoming everything what one is capable of becoming, for accomplishing more and more what a person is capable of achieving. This need is also known as need for self fulfillment or self realization. It requires continuous self development. This need lies at the highest rung of the ladder of human needs. It is very rare to achieve this need.

Evaluation of Theory—

Thus Maslow has provided classification of human wants for analyzing and understanding human behaviour. It indicates that a behaviour of a person is regulated by multiple motives. It helps in explaining different types of behaviour in similar situations. His theory is applicable not only to explain motivation at work but also for others like teachers, ministers, and others like teachers, ministers, and other groups. It explains that people are motivated by unsatisfied needs but satisfied needs do not provide motivation power. It also states that as lower level needs are satisfied higher level needs replace them and tend to govern, person’s behaviour. His theory is very popular and several research studies support the hypothesis that human needs have a hierarchical order.

However Maslow’s theory suffers from several limitations—

i) It has been observed that individuals usually seek to satisfy severl needs at a time. For example, even before safety need is fully satisfied the ego need may emerge. Maslow’s theory fails to explain the phenomenon of multiple motivation . behaviour of an individual is guided by multiple motives though one of them may be most dominant.

As behaviour is multi-motivated, it is difficult to know about needs and motives of an individual on the basis of his behaviour.

ii) The need priority order cannot be generalized because it depends on personality and cultural values. For example, higher level need of Indian worker may be lower level need of American worker studies have concluded that hierarchy does not hold good in case of Indian managers and American blue collar workers.

iii) Movement in the need hierarchy may not be always upwards and may not follow the same sequence as stated by Maslow. For example , in case of some individuals the need for self esteem may be more potent than need for love some people prefer to lose their job rather than their respect.

iv) The same need may cause different types of behaviour. Some need satisfiers may satisfy more than one need. For example money may satisfy physiological , satisfy and social needs.

Thus the hierarchy of needs is not always fixed and the sequence in which needs arise may differ from one individual to another. In case of artists like singers, musicians, painters political leaders etc. their self actualization needs become more dominate motivating force even before their lower level needs are satisfied. Similarly need priorities of an individual may change over time.

B ) Herzberg’s Two factor Theory

Herzberg and his associated conducted research study based on interviews of 200 engineers and accountants in USA. They concluded that, there are two sets of factors which affect satisfaction or dissatisfaction of employees some job conditions operate of dissatisfy employees when they are absent, but their presence does not motivate them, in a strong way these factors are called dissatisfiers or “Hygiene factors,” as they are required for supporting mental health of the employees . they are also called as “Maintenance Factors” because they are required to maintain reasonable level of satisfaction among the employees.

Another set of job conditions tend to build up strong motivation and high job satisfaction but their absence does not result into strong dissatisfaction among the employees. They are called as motivational factors or “satisfiers”

a) Maintenance or Hygiene factors --

These are dissatisfaction and their presence is necessary to avoid dissatisfaction among the employees. They are external to the job and relate to job environment. These factors are 1) Company policy and administration 2) Technical Supervision 3) Interpersonal relations with superiors, subordinates and peers 4) working conditions 5) Salary 6) Job security 7) Status 8) Personal Life.

b) Motivational factors or satisfiers--

These factor are related to the content of the job which are inherent in the job. These include 1) Feeling of achievement 2) Recognition 3) Challanging work. 4) Advancement 5) Increased responsibility 6) Opportunity for growth.

Herzberg emphasized that the potency of various factors is not entirely a function of factor themselves but it is also influenced by the personality characteristics of individuals who may be either motivation seekers or maintenance seekers. A motivation seeker is motivated by the job contents or satisfiers while, maintenance seeker is motivated by the factors surrounding the job or job environment.

Herzberg also pointed out that the two sets of factors are unidirectional as their effect can be seen in one direction only . Maintenance factors create dissatisfaction only while motivational factors lead to satisfaction only.

Evaluation of Theory—

Herzberg’s theory is helpful in understanding the effect of job characteristics on motivation and performance. It emphasizes the importance of job content in work motivation. According to this theory the most effective technique of intrinsic motivation is job enrichment or upgrading the job in terms of the responsibility and challenge in work. It also explains that satisfaction and dissatisfaction are not extremes of the same continuum. The opposite of job satisfaction is not job satisfaction but it only implies no job satisfaction. Similarly opposite of job satisfaction is not job dissatisfaction but only absence of job satisfaction.

However Herzberg’s theory has been criticized on the following grounds.

1) The conclusions of the theory are based on a very small sample which is not representative of human nature. Generalizing the findings to other occupational groups with different background and environment is not justified.

2) The model is “method bound” and several studies using other methods have arrived at contradictory conclusions. Even the mythology is doubtful.

3) The distinction between motivational and maintenance factors is not rigid and definite. The same factor may be satisfier to one individual but dissatisfaction for another. For example salary and working conditions may be significant motivators for individuals in an underdeveloped country but not for those from developed countries.

4) The theory over simplifies the relationship between motivation and satisfaction. In fact, satisfaction and dissatisfaction are two opposite situations on the same continuum. Any change in the job content as well as job environment may influence satisfaction of employees.

5) Herzberg’s theory neglects the role of pay, status and interpersonal relationships which are considered as important determinants of satisfaction.

6) Motivational and maintenance factors may not be wholly unidirectional in their influence they operate primarily in one direction but may partly operate in the other direction also. For example, pay and job securities are main sources of dissatisfaction but they may also operate as motivators for blue collar employees it is doubtful whether the factors leading to satisfaction and dissatisfaction are really different from each other.

Comparision of Maslow and Herzberg Models –

There is significant similarity between these two models

Self Actualization Esteem

Social Security

Physiological

Survival Needs Growth Needs Theory X Theory Y Hygiene Factors Motivating Factors.

As shown in the figure the maintenance or hygiene factors mainly satisfy lower level needs while motivating factors tend to satisfy higher level needs. Both the models concentrate upon explaining what motivates an individual. In developed countries lower level needs are relatively fulfilled hence higher level needs serve as motivating factors. In under developed countries lower level needs tend to act as motivators as they are not fulfilled. According to Herzberg these are dissatisfies, so they do not motivate employees. Thus Herzberg model can be said to be complementary to need hierarchy theory. Herzberg model is applicable to individuals in developed countries, where as Maslow’s theory is applicable to individuals in underdeveloped countries. Maslow’s theory has wider applicability as it suggests that any unsatisfied need whether of lower level or higher level tends to motivate individuals.

C ) McGregor’s Theory X and Theory Y

Douglas Mc Gregor has developed a theory of motivation based on two sets of assumptions about human behaviour.

a) Theory X

Mc Gregor has described the first set of assumptions of Theory X related to traditional theory. It indicates the traditional approach to motivation based on negative assumptions about people, as stated below.

1) The average human being is by nature indolent (lazy) and will work as little as possible. He does not like work and will avoid work as far as possible.

2) The average person lacks ambition, dislikes responsibility and prefers to be led by others. He is not capable of directing his own behaviour. He is not interested in achievements.

3) An average humanbeing is inherently self centred and indifferent to organizational goals or needs.

4) An average individual is by nature resistant to change and wants security above all.

5) The average person is gullible as he can be easily persuaded or deceived and is not very bright, so he is a ready victim of the schemer (like political agitator or worthless sadhus)

These assumptions suggest hard approach consisting of close supervision,centralized structure of organization, autocratic leadership and tight control, Managers believing in this approach to human nature emphasis that – 1) Management is responsible for organizing elements of productive

enterprise- money, material, men, machinery etc in the interest of economic needs.

2) Management includes directing employees efforts, motivating them, controlling their actions and modifying their behaviour to suit the needs of the organization.

3) Managements’ active intervention is necessary because people are passive, and resist to organizational needs. Hence they must be persuaded, rewarded, punished and controlled to make them to put their efforts towards achievement of organizational goals. As employees are irresponsible and immature they must be forced and pushed into work performance.

b) Theory Y

Mc Gregor argued that as the assumptions of theory x do not represent real human nature and the approach based on such unrealistic assumptions fails to satisfy higher level needs of the people. So he developed a theory Y which he believed to be more realistic about describing human behaviour . The theory y is based on the following assumptions.

1) The average human beings do not inherently dislike work, rather meaningful work is a source of satisfaction. The physical and mental efforts at work are as natural as play or rest.

2) External control and the treat of punishment are not the only means for bringing about efforts towards organizational objectives. People prefer to exercise self-direction and self control for achieving the objectives committed by them.

3) Commitment to objectives depends upon the rewards associated with their achievement. For example, the satisfaction of ego and self actualization needs can be direct result of the efforts directed towards organizational objectives.

4) The average human being learns under proper conditions. He likes not only to accept but also tries to seek responsibility. Avoidance of responsibility, lack of ambition, emphasis on security etc are generally consequence of experience and these are not inherent human characteristics.

5) The capacity to exercise high degree of imagination ingenuity or inventiveness and creativity in the solution of organizational problems is widely distribute in the population.

6) Under the modern industrial life, the intellectual potentialities of people are only partially utilized.

Theory suggests a new approach to management characterized by democratic leadership, participation in decision-making, self-control, MBO, Job enrichment, decentralization etc. Employees are treated as mature, intelligent, responsible, innovative and self-motivated individual. Recent studies in behavioural sciences support the assumptions of theory Y than those of the theory X. However an optimum combination of both these theories tends to be more effective in practice rather than any one of them. According to Mc Gregor,” The central principle which derive from theory Y is that of integration: the creation of conditions such that members of the organization can achieve their own goals best by directing their efforts towards the success of the enterprise.” The goals of individual employees should be so integrated with organizational goals that job becomes the means for employees in achieving self control, sense of achievement and competence.

Mc Gregor’s work represented a major change in management philosophy. Some critics have criticized it, that the approach racks in giving specific details about how to manage, but it has definitely suggested that a major reorientation in managerial thinking was necessary in the light of present circumstances.

D ) Mclelland’s Needs Theory –

Mclleland during his study identified three types of basic motivating needs. These are 1) Need for power (n/pwr) , 2) Need for Affiliation (n/AFF) and need for achievement (n/Ach)

a) Power Motive --

The ability to induce or influence behaviour of others is power. The people with high power need have a great concern for exercising influence and control. Such individuals are generally seeking positions of leadership. They are forceful, out spoken hard headed demanding and involve themselves in conversation.

b) Affiliation Motive –

As people are social animals, most of individuals like to interact and be always in the company of others especially in situations where they feel belonging are accepted by others. But affiliation motive is not so broad as affiliation plays very complex and vital role in human behaviour. According to Mclleland the people with high need affiliation usually derive pleasure from being loved and they tend to avoid the pain of feeling neglected and rejected. They are interested in maintaining pleasant relationships, enjoying sense of intimacy and understanding and enjoy consoling and helping others in trouble.

c) Achievement Motive –

McClelland’s work led him to believe that the need for achievement is a distinct human motive and it can be isolated and assessed in any group. He identified four basic characteristics of high achievers.

i) Moderate Risks-- Persons possessing high achievement need prefer to take moderate risks as they do not believe in taking high risks for achieving their goals.

ii) Immediate feedback – Persons with high N/ACH desire activities which provide immediate and precise feedback information about their progress towards their goals.

iii) Accomplishment -- Persons with high n/ACH find accomplishing tasks as intrinsically satisfying rather than accompanying material rewards. He wants to earn money not for money’s sake but for the material benefits that it can buy.

iv) Preoccupation with Task-- High achievers select goals and then they remain totally occupied with tasks until these are successfully completed. They do not feel satisfied unless they put their maximum efforts in completion of their tasks. Such dedicated commitment often reflects on his external personality which may have negative effect on those who come in contact with them.

According to Mclelland manager show high on achievement and power but low on affiliation Middle level managers have higher n/ACH as compared to the chief executive. Achievement motivated people are assets of most organizations as they progress much faster, but when they are promoted where their success depends not only on their work but on the activities of others, they tend to be less effective. They are basically task masters and expect every body to be like them. Which is rarely possible. Hence organization need managers with varying degrees of achievement and affiliation motives.

E) Vroom’s Valence Expectancy Theory--

Vroom’s model is built around concepts of value, expectancy and force. Its basic assumption is that “The choice made by a person among alternative courses of action is lawfully related to psychological events occurring contemporaneously with the behaviour.” Vroom’s concept of force is equivalent to motivation.

F == V X E

Where F is motivating Force.

V = ValenceE = Expectancy

a) Valence -- Valence means the strength of an individual’s preference to a particular outcome. Other terms equivalent to valence are incentive , attitude , expected utility etc. In order to have a positive valence for individual he must prefer attending the outcome than not attending it. A zero valence occurs when the individual is indifferent towards the outcome and the valence is negative when the individual prefers not attaining the outcome to attaining it. Another major input into valence is the instrumentality of the first level outcome in obtaining a derived second outcome. The first level outcome of high performance acquires a positive valence by Virtue of the expected relationship to the preferred second level outcome. For example, if a person desires promotion and feels that supervisor performance is a very strong factor in achieving that goal. His first level outcomes are superior, overall on poor performance and his second level outcome is promotion. The person would be motivated for superior performance (First level outcome) is instrumental in obtaining promotion (Second level outcome).

b) Expectancy - The other factor determining motivation is expectancy i.e.the probability that a particular action will lead to the outcome. It is different from instrumentality, which relates first and second level outcomes, but the expectancy is the probability that a particular action will lead to a particular first level outcome. The strength of motivation to perform a certain act will depend on the sum of the products of the values of the outcomes times the expectations.

RolePerception

ExtrinsicRewards

The theory recognizes individual differences in work motivation and suggests that motivation is a complex process. It also clarifies the relationship between individual and organizational goals. The theory emphasizes that a manager’s job is to design and environment for performance taking into account the differences in various situations. Theory is also consistent with MBO. However Vroom’s theory is difficult to apply in practice, although it is a step in right direction although it does not help management in solving its motivational problems.

F) Porter and Lawler Model of Motivation--

The content theories assume that satisfaction leads to improved performance but vroom and porter, and Lawler emphasized that performance causes satisfaction. According to Porter and Lawler performance in organization appears to be the function of three important factors.

a) A employee must want to perform, the desire of the employee to do the assigned jobs. One must be motivated.

b) Motivation alone will not ensure task performance, because a person must have the necessary abilities and sills.

c) A person must have an accurate knowledge of the requirements of the job if he is expected to devote his energies fully on the assigned tasks. One must have clear role perceptions.

Key variables in the Model—

1) Efforts -- Efforts will not directly lead to specific level of performance. Effort signifies the amount of energy exerted by an individual on a specified task. Effort in the result of attractiveness of the reward and the way in which the individual perceives the linkage between effort and pay off. If an employee places a high value on a reward and if he perceives a high probability

Value Ability Perceived Of Reward and Equitable

Traits RewardsIntrinsicRewards

Efforts Performance Accomplishment

Perceived SatisfactionEffort-reward Probability

PORTER –LAWLER MOTIVATION MODEL

That his effort will lead to this reward then he will exert greater efforts. Motivation is considered as the force on employee to undertake efforts.

2) Performance -

Performance results from a combination of the effort put forth by the individual and the level of ability which he has and the way he perceives the role he should take. Efforts and performance are not equal as quite often discrepancy between them

may result. Many students inspite of studying hard fail on account of lack of ability to understand the things properly or misdirected efforts due to bad planning.

3) Rewards --

The model shows that performance leads to intrinsic and extrinsic rewards Intrinsic rewards are given by the person to himself for good performance, like feeling of accomplishment of doing something important. There intrinsic rewards are subject to few disturbances hence likely to be directly related to good performance.

Extrinsic rewards like pay promotion job security status etc are given by organization and are imperfectly related to performance. In addition, the perceived equitable rewards vitally affect the performance satisfaction relationship. This variable refers to the amount of rewards are individual feels he should receive as a result of performance.

4) Satisfaction --

According to porter and Lawler satisfaction is a deficiency measure if actual rewards > perceived rewards -- satisfaction results but if actual rewards < perceived rewards –> dissatisfaction results

Thus satisfaction is only partly determined by rewards and it is more dependent on performance than performance on satisfaction.

Evaluation--

The authors argued that the relationship between expectancy. Attitudes, importance attitudes and performance to seem to be more significant. The model is more complex but explains fully different variables underlying in motivation. In practice also, motivation is not simple cause effect relationship but it is complex phenomenon. The model suggests that managers should carefully assess their reward system and through careful planning and clear definition of role requirements, the effort performance, reward-satisfaction system should be integrated into an entire system of managing. The model provides a very useful tool for understanding, predicting and influencing behaviour and attitudes in organization.

15.6.4 Morale –

The term morale indicates the oval attitudes of individuals and groups in the organization towards their work environment, the enterprise and management . It is collection of employees’ Feelings, sentiments and attitudes towards their jobs. Superiors and the company. According to Leighton, “Morale is the capacity of a group of people to pull together persistently and consistently in the pursuit of a common purpose.

15.6.4.1 Nature of Morale –

The main features of morale are as follows –

i) Morale is composite or aggregate feeling. It is collection of feelings, attitudes, and sentiments of employees. Attitudes are what individuals feel and think.

ii) Morale is intangible factor as it cannot be seen but can be felt or experienced and a relative term.

iii) It is a group phenomenon, which indicates the feel of favorable or unfavorable attitudes of the employees collectively about all the aspects of their work-the job, their tasks, working conditions, fellow workers, superiors and company. Etc.

iv) Moral is different from job satisfaction although the components of both are the same. Morale is a group concept while job satisfaction is individual concept.

v) Good morale leads to team work but team work may not result high morale.

vi) Morale is the by product of group relationships. It is a mental attitude of entire group of employees.

vii) Morale reflects the degree of enthusiasm and willingness with which the members of a group perform the allotted tasks.

viii) Morale is always present and it varies from excellent to negative.

ix) Morale is a relative term as it does not indicate , by itself , the existence of good or bad state.

x) Degree of morale can be estimated from the indices of absenteeism, turnover, disputes, grievances etc.

xi) Morale is an indicator of mental health of employees, it is manifested by attitudes towards the work accomplishment rather than emotions displayed at work.

xii) Morale describes attitudes and feelings about work environment while motivation reflects willingness to work arising from need satisfaction. Morale is a group phenomenon while motivation is individualistic concept. Motivation depends on motives while morale depends on interpersonal relations among members of a group.

15.6.5 Morale and Productivity—

Human Relations experts argue that high morale always results in high productivity and vice versa. Workers with high morale show good team spirit and contribut their best towards the ccomplishment of goals. But research findings conclude that there is direct relationship between morale and high productivity and they do not move in the same direction and they do not change is the same proportion (See figure)

Only

Morale high productivity

Morale High High morale

High productivity only

Productivity

Morale and productivity are not perfectly related because there are number of variables between employee morale and productivity. Morale reflects attitude of individual employees and this attitude tends to interpret, understand and define a situation or his relationship with others. As all expressed attitudes are not to be put into practice, the morale will not be exactly related to productivity. high morale only indicates a predisposition to be more productive if leadership is effective with proper production facilities and individual’s ability. These factors are shown in the figure.

IndividualFactors

Morale

ProductivitySatisfaction

Attitudes

OrganizationalFactors

The figure shows that productivity is a function of four factors – 1) Organizational factors 2) Individual factors 3) attitudes and iv) morale. Attitudes and morale in turn are determined by the satisfaction of individuals which is again affected by organizational and individual factors. Thus productivity depends on several factors, while morale is one of them. Hence efficient managers recognize that behavioural management requires a positive integration of goals so that people working together will achieve high morale with high productivity.

15.6.6 Morale Building –

Morale building in the organization is a continuous process and it is a responsibility of every manager so it is necessary to have a successful and sound management with top management interested in the employees at all levels and with advanced personnel management programs for building employee morale. The management should collect periodic information about the status fo employee morale in the organization, so as to know what are necessary steps required for morale building. The following steps may be suggested to improve the morale in the organization.

1) Developing sound manpower management through proper grievance

handling, safety measures, discipline rules and welfare activities.

2) Human Relations Approach for developing trust and authentic relationships among people which results in increased interpersonal competence inter group cooperation, flexibility, it helps in creating ideal work environment for development of employees, making work exciting and challenging which may lead to higher satisfaction to employees.

3) Management of Attitudes through incentives, persuasion, effective communication, leadership etc.

4) Designing appropriate organization structure is necessary for morale building. Research studies have concluded that flat structure increases employee morale through shortening the length of vertical communication, providing more scope for self actualization and realization of individual’s capabilities.

5) Increasing employee participation in the process of decision making.

6) Job enlargement and job enrichment may provide opportunity to overcome monotony, fatigue, disinterest etc and create the environment to satisfy high order needs, which h lead to higher morale.

7) The preventive approach to conflicts is valuable as it helps in avoiding costly hostility and warfare. Handling conflicts through collective bargaining, grievance handling joint consultation etc help in morale building

8) Effective control over absenteeism, turnover is also necessary for improving morale in the organization.

Q.15 a) Define direction and explain its characteristics.

b) Discuss principles and Techniques of direction.

c) Define motivation and morale. Explain their importance.

********************

UNIT – 16 LEADERSHIP

16.1 Introduction –

Leadership is an important element of directing. it is universal phenomenon as it is found in every group of people. A leader is a person who influences the attitudes and behaviour of other members in the group activity. A leader guides and directs other people towards the achievement of group objectives. He creates and sustains enthusiasm among them.

Leadership is an integral part of management and it plays a vital role in managerial operations.

16.2 Definitions –

1) Chester Bernard—Leadership is the quality of the behaviour of individuals whereby they guide people or their activities in organized effort.”

2) Terry—“Leadership is the activity of influencing people to strive willingly for mutual objectives.”

3) Keith Davis – “Leadership is the ability to persuade others to seek defined objectives enthusiastically. It is the human factor which binds a group together and motivates it towards goals,”

4) Theo Haimann – Leadership is the process by which an executive imaginatively directs, guides and influences the work of others in choosing and attaining specified goals by mediating between the individuals and the organization in such a manner that both will obtain maximum satisfaction.”

5) Tannen baum etc – Leadership is interpersonal influence exercised in a situation and directed through communication process, towards attainment of specified goasl.

6) Drucker – “Leadership is the lifting of a man’s vision to higher sights, the raising of man’s performance to a high standard, the building of a man’s personality beyond its normal limitations.”

7) Leadership is the process of influencing group activities towrd achievement of goals in a given situation.

Thus the leadership may be defined as

L = F (f,g,w,s)

L = LeadershipF = is the function of (or depends upon)F = FollowersG= Goal W= Willingness on the part of followersS = a given situation

16.3 Nature /Characteristic of leadership

1. Leadership is a personal quality. It is ability to induce subordinates or followers to work with confidence and zeal towards the achievement of

organizational goals. Leadership is the ability to form a group of followers voluntarily, without the use of coercion.

2. The essence of leadership is followers. It is the willingness of people to follow, that makes a person a leader. People accept a person as their leader when they feel that he can satisfy their needs and goals.

3) Leadership is a process of interpersonal influence by which one person influences others in a situation to strive willingly towards the realization of common goals.

4) Leadership involves a community of interests between the leader and his followers The objectives of both are one and the sme.

5) Leadership is a continuous process of influencing behaviour of his followers. An individual is a leader when he is accepted as a leader by a group of persons and there is communication between the leader and the group.

6) Leadership is exercised in a particular situation at a given point of time and under a specific set of circumstances. The effectiveness of leadership

depends upon the situational variables. Different leadership styles will be appropriate under different circumstances. Thus leadership is an dynamic art.

7) Leadership is a reciprocal relationship. A leader not only influences his group but at the same time is influenced by it.

Thus leadership is a psychological process of influencing followers and providing guidance to them. Leadership is essential to influence people to achieve mutually compatible objectives. Hence all organizational success can be attributed to leadership.

16.4 Importance of Leadership—

Efficient leadership is essential to effective management. Leader is described as a fulcrum on which needs of the organization and demands of the individuals are balanced. Many business failures are attributable to poor leadership. It is the quality of leadership that determines the future of an organization. There is no substitute for effective leadership.

The significance of leadership is reflected in the following functions.

1) Motivating employees –

Sound leadership creates an urge for accomplishment and transforms potential into performance. A good leader improves loyalty , commitment of employees towards the organization, and provides motivating force for individuals which inspires people to work, hard.

2) Morale Building –

The leader lifts a follower;s vision to higher sights, raises his performance and builds his personality. He shapes the thinking and attitudes of the group and maintains discipline and tries to maintain morale at a higher level.

3) Creating confidence –An efficient leader promotes self-confidence and enthusiasm among the members of the group by way of advising and guiding them. He acts as a friend, coach and counselor to his subordinates he sets an example for them. His efforts are concentrated towards creating confidence and team building among his subording.

4) Co-ordination—

Leadership unifies individual efforts into group efforts through effective co-ordination for achieving organizational goals. He creates a community of interests by harmonizing organizational goals and individual interest of subordinates . He serves as arbitrator and mediator between opposing factions for resolving internal conflicts and tries to maintain solidarity among the group members.

5) Facilitates change—

Dynamic leadership plays a key role in bringing about organizational change and development. In a world of change and uncertainly the

business leader becomes a vital element in the very process of change itself.

6) Goal setting

A leader guides the group by setting goals and interpreting objectives. He outlines the operations of the organization so that achievement of goals can become easier and quicker.

7) Representation—

A leader is the representative of his followers and as the true guardian of group interests. He defends the integrity of the group. He uses his power carefully to achieve organizational effectiveness.

Thus leadership is essential to achieve higher and better performance. It serves as an aid to formal authority and determines effectiveness of the organization.

16.5 Management V Leaderships

There is significant difference between these two terms.—

i) Leadership exists in both, organized and unorganized groups but management cannot operate without formal organizational structure.

ii) A manager directs people through the use of formal authority but a leader may or may not have formal authority (right to command) but he always has a power (ability to influence) Managers obtain authority from the organization and the leader gets power from his followers.

iii) A manager has command over allocation and distribution of sanctions. A manager has control over positive sanctions such as promotion and awards for better performance. A manager can exercise negative sanctions such as with holding promotions or increments, demotion in cases of default etc. But a leader has different type of sanctions to exercise and grant. He can grant or withhold access to satisfying the very purpose of joining the groups – social satisfaction and related task rewards. These sanctions are informal that are relevant to the individual with belongingness or ego needs, where as the organizational sanctions granted or exercised by the manager are related to the physiological and security needs of individual.

iv) Another fundamental difference is that of role continuance. A manager may continue in office as long as his performance is satisfactory and acceptable to the organization. But in case of a leader, he maintains his position only through day to day wish or willingness of the followers, i.e. how well he facilitates his group in accomplishing their objectives.

v) Although in case of a manager and leader followers are involved still the reasons are different. People follow managers because their job description supported by a system of rewards and sanctions, requires them to follow , whereas people follow leaders on voluntary basis.

If there are no followers leader no more exists but even if there are no followers a manager may exist.

vi) Managers are accountable for the job behaviours of those managed by him as well as their own performance, but the leaders are not accountable for the behaviour of their followers in the same way as manager’s accountability.

Thus managership implies a clear-cut accountability relationship whereas leadership implies no accountability relationship between himself and the followers and to the organization.

vii) The scope of management is much wider than that of leadership. A manager has to perform all the five functions of planning, organizing, staffing directing and controlling where as a leader only directs his followers by influencing their behavior. Thus leadership is a part of management but not all of it. In other words all managers are leaders but all leaders are not managers.

16.6 Formal Vs Informal leaders –

There are leaders in both formal and informal groups. A formal leader is one who has organizational authority to direct and control the activities of his subordinates. He is accountable to those who have elected him in a formal way. Formal leaders are elected or appointed to manage an organization. A formal leader cannot depend solely on his use of authority because subordinates rarely put maximum efforts under the pressure of authority. A top manager having considerable authority but lacking in leadership qualities is likely to be less effective than a supervisor with little authority but high degree of leadership qualities.

Informal leaders are not appointed or elected but emerge in informal groups. The do not possess formal authority but they influence the followers because the followers believe that the leader can provide them satisfaction.

Within formal organizations several informal leaders may exist working for the interests for their own groups. There may be conflict between their interest generally management tries to eliminate the informal leaders who have influence on group members and they can create impulse in the organization. Hence it is desirable to build up good relations with informal leaders by associating them in decision-making process, taking their advice for solving human relation problem etc.

16.7 Theories or Approaches to Leadership—

Leadership is a complex and multidimensional in character hence it is difficult to have a single satisfactory theory of leadership. As leadership is crucial ingredient in organizational effectiveness and it being a complex interpersonal process of influencing behavior, certain approaches to explain leadership have been developed. These three theories are 1) Trait Theory 2) Behavioral Approach 3) Situational theory. Let us discuss them briefly.

1) Trait Theory

The traditional approach has been to describe leadership in terms of personal traits and special characteristics of leaders. These traits are not acquired but are inherent personal qualities. The trait theory emphasizes that leaders are born and not made. Leadership is a function of in born traits.

Some of these traits include intelligence understanding, perception, high motivation, socio economic status, initiative, maturity, need for self-actualization , self assurance, understanding interpersonal human relations. The existence of these traits becomes a measure of leadership it holds that the possession of certain traits permits certain individuals to gain position of leadership. However it was observed that the pattern of leadership traits is different from situation to situation. A person who becomes a leader in one situation. There is no single personality trait that would describe a leader and be applicable in all situations.

Leadership implies activity movement and getting work done. The leader is a person who occupies a position of responsibility in co-ordinating activities of the

members of the group. Hence leadership must be considered in terms of interactions- for one to lead and others who want to be led.

Trait theory of leadership suffers from conclusiveness and oversimplifications. The theory

Personality TraitsOf leadership

Focuses attention only on the leader and neglects dynamism of the leadership process. Theory also neglects situational characterizes which give rise to leadership. Other weaknesses of theory are

1) All traits are not identical with regard to the essential characteristics of leader.

2) Some traits can be acquired by training and may not be in herited.

3) It does not identify the traits that are most important and those that are least important in identifying successful leader.

4) The traits required to attain leadership may not be the same that are acquired to sustain leadership different leaders have different traits with different degrees.

5) It fails to explain many leadership failures inspite of the required traits.

6) It has been found that many traits possessed by leaders are also found among followers, then why followers do not become leaders is not explained.

7) It neglects environmental factor which may differ from situation to situation.

8) A leader may employ three types of skills at different levels in the organization Technical, Human and administrative skills. It is ridiculous to assume that traits are uniformly distributed at all managerial levels.

The trait approach lacks predictive value except some narrowly defined situations. Any researchers disagree with the trait model and prefer behavioral approaches.

2) Behavioural Approaches—

Behavioural theory attempts to describe leadership in terms of what leaders do. According to this approach, leadership is the result of effective role behavior. leadership is shown by person’s acts rather than by his traits, hence attention is

Abilities

1. Supervising Ability

2. Intelligence

3. Initiative

Personal Traits

1) Self Assurance

2) Decisiveness

3) Masculinity/femininity

4) Maturity

5) Working class Affinity

Motivators

1. Need for occupational Achievement.2. Self Actualization

3. Power Over Others

4. High financial reward

5. Job security.

focused on leader behaviour. The following are important studies under this approach.

A) The Michigan Studies-

Michigan researchers after studying numerous industrial situations identified two leadership styles—employee center and production centered. Which influence employee performance and productivity.

They suggested employee –oriented style of leadership ismore effective in increasing productivity. They concluded that supervisory controls and production oriented leadership style tends to be frustrating to the employees, affects their morale leading to unsatisfactory performance on the job.

Leadership styles

Employee oriented leader Production oriented leader1. Treats subordinates as human

beings1. Gives more emphasis on technical

aspects of job.2. Shows concern for employees’

well being2. Emphasis on work standards and

close supervision.3 Encourages and involves

employees in goal setting3. Employees are considered as tool

in production process.

These studies emphasized human relations hence became popular. Researchers were able to identify specific behaviors that influenced employee behavior and productivity. So they advised that a people oriented style should be preferred over a work orientation. Hence 1950’s there was widespread belief that employee oriented leadership style was always superior and effective.

B) The Ohio State University Studies

These studies identified two types of leadership behaviors- Initiating structure (IS) and consideration © after analyzing actual leadership behavior in different situations.

Initiating structure (IS) refers to the extent to which the leaders can structure and define the activities of subordinates so that organizational goals are accomplished. IS (giving directions and orders) involves creating a work environment, so that the work of the group is organized, co-ordinate, sequential and organizationally relevant so that people know exactly what is to be done and how it is to be done. The structure involves having the leader organize and define role of each member is to assume, assign, tasks to them and push for realization of organizational goals.

Consideration © refers to the ability of the leader to establish rapport, mutual respect and two way communication with employees, a concern for the needs of the members of the work group, an attitude that encourages participative management and respect for the feed back of the followers.

The researchers found that IS and C were independent and distinct dimensions. A high score on one dimension does not necessitate a low score on the other (orthogonal). Leader behavior was plotted on two separate axes rather than ona single continuum. Four guardant were developed to show IS and C in varying combinations.

IS & C CombinationsHigh Consideration

AndHigh Consideration

And

Low structure High

StructureLow Structure

AndLow Consideration

Low considerationAnd

High Structure

Initiating Structure

Evaluation –

The two-style model became popular and made outstanding contribution to leadership studies afterwards. The concepts of initiating structure and consideration had high intuitive appeal to practicing managers and many training programs adopted them.

It has been criticized on the grounds of simplicity lack of generalist ability and exclusive reliance on questionnaire responses to measure leadership effectiveness.

According to Fiedler, C and Is are not independent dimensions. It is not possible for a person to be both, production oriented and employee oriented at the same time.

It is also argued that there is no significant relationship between leader behavior and such measures like productivity.

It is over implications of reality. The impact of environmental variables on specific leader behavior is completely ignored. The effects of both Is and C are situation ally determined.

C) Managerial Grid (MG)

Blake and Mouton created and developed the concept of managerial grid, based on massive practical research into behavioral sciences in the industrial setting. The existing aspect of Mg is its effectiveness in improving people’s attitude and behavior throughout the organization for the benefit of the organization. It promises to turn the art of managing into a science. It has been practically more effective in achieving higher profits and improving union management relations.

Theory in brief-

Authors believed that concern for production and the concern for people are the two sides of the same coin and should be utilized with maximum and integrated concern to achieve, the objectives of the organization. They assumed that people and production are complementary rather that mutually exclusive.

a) Concern for production –

It is not limited to things only as it includes creative ideas of that applied research turns into useful products, procedures or processes, quality and thoroughness of staff services, work load, efficiency and measurements and units of output.

b) Concern for People-

It is not confined to narrow considerations of interpersonal warmth the friendliness but it covers a wide variety of concerns that includes concern for degree of personal commitment to completing job, accountability based on trust rather than force, self esteem, desire for a sense of security at work, friendship with co-workers leading to healthy work climate.

The concept of managerial grid is based on applying educational techniques under the concern of full and adequate concern for production and concern for people to bring an entire organization to a higher level of development and efficient functioning.

The two terms used for the model , “Concern for people “ and “ concern for production” are attitudinal in nature as compared to Ohio’s behavioural concepts of Is and C.

MANAGERIAL GRID

HighC oncern

forPe

o Lowp Low Concern for Production Highl e

The figure shows the degrees of concern for people and production and possible interactions among them the concern for production is shown on horizontal axis where as the concern for people is shown on vertical axis. Each is expressed as a nine point scale of concern. The number 9 represents maximum concern.

a) Improverished - Exertion of minimum effort to get required work done is appropriate to sustain organization relationship.

b) Country Club - Thoughtful attention to needs of people for satisfying relationships leads to a comfortable friendly atmosphere in the organization or a work temple.

c) Middle Road - Adequate organizational performance is possible through balancing the necessity to get work with maintaining morale of people at satisfactory level.

d) Task - Efficiency in the organization results from arranging conditions of work in such a way that human elements interfere to a minimum degree.

e) Team—Work accomplishment is from committed people and interdependence through a common stake in organization that leads to relationships of trust and respect.

Theoretically there are 81 (9x9) possible position on the grid indicating different leadership styles, but five styles are considered as basic styles.

Country Club Team1.9 9.9 5 5 Middle Road Improverished Task 1.1 9.1

i) The 9,1 leader is mainly concerned with production and has little concern for people. He emphasized meeting production schedules and get task done at all costs.

ii) The 1,9 styles reflects a minimum concern for production, with maximum concern for people.

iii) The 1,1 leader has little concern for both, production and people.

iv) The 5,5 style indictes moderate concern for both.

v) The 9,9 style is viewed as the ideal leadership style as it exhibits a maximum concern for both, production and people. It is called “super leader style” which has been the subject matter of many management training programs. According to the authors, this is the best style of effective leadership what changes with situation is the tactics of application.

Evaluation –

The grid program is popular among practitioners but it is highly controversial among the theorists and researchers because of its lack of empirical evidence.

3) Situational Theories --

Both trait and behavioural approaches failed in developing comprehensive and adequate theory of leadership style, because each of them attempted to isolate broad dimensions of leadership behaviour and oversimplified the reality.

The situational theorists, instead of one best way style, argue that the variables in each situation must be analyzed before an optimum style is selected. Leadership is a complex, dynamic, social and interpersonal process and to understand it clearly we have to see the situation in which a leader operates. The situational approach to leadership is highly fascinating but is challenging for implementation. An effective leader has to be flexible to adapt to the differences among subordinates and situations. Leadership effectiveness depends upon the fit between personality, task, power, attitudes and perceptions. Based on this conception the following four theories may be briefly discussed.

a) Fiedler’s Contingency Modelb) House’s Path Goal Model.c) Life Cycle Theory of Leadershipd) Vroom’s and Yetton Normative Model

a) Fiedler’s Contingency Model-

Fiedler tried to identify important, measurable environmental variables which exert a strong influence on alternative leader approaches and possible situational outcomes.

The Situational Factors –

Fiedler’s model is called Contingency Model because leader’s effectiveness is partially contingent upon three major situational variable, which are viewed as attributes (Low-High, Present, Absent) rather than continuous. They are 1) Leader member relations 2) Task structure and 3) The leader’s position power.

1) Leader member relations—It refers to the degree of confidence, trust and respect followers have in the leader.

2) Task Structure - It measures the extent to which the task performed by subordinates is routine or non routine. Task structure refers to the degree to which the task requirements are clearly defined (Clarity of goals) the correctness of a decision can be easily verified (verifiability of decisions made) and there are alternative solutions to task problems(Multiplicity of options to solve problems) Thus task structure refers to how routine and predictable is the work of the task group.

3) Leader Position Power : It refers to the power inferent in the leader’s organizational position. It refers to the degree to which he has various rewards and sanctions, his authority over group members and the degree to which this authority is supported by the organization.

4) Favorableness of the situation – Depending upon high and low categories of these situational variables, he developed eight possible combinations ranging from highly favorable to unfavorable situations.

A favourable situation is where the leader member relations are good, the task is highly structured and the leader has enormous power to exert influence on subordinates. An unfavorable situation is one, where the leader’s power is weak, relations with members are poor and the task is unstructured and unpredictable. Between these two extremes lies the situation of intermediate difficulty.

Fielder argued that a permissive, relationship-oriented style is best when the situation is moderately favorable or moderately unfavorable. When the situation is highly favourable or highly unfavourable a task oriented style produces the desired performance.

Fielder maintains that there is no single successful style of leadership and the most appropriate style depends upon the situation faced by the leader. Leader’s performance depends on personality and situational favourableness.

Fielder’s model is criticized on the grounds that it is unidirectional as he suggested that leaders can be either task oriented or relationship oriented, as the situation demand. He has shaped his theory to fit known results.

Contingency model lacks a theoretical orientation, as it is derived from research data rather than from theoretical framework. It has predictive power but lacks explanatory power.

Only few situational variable are considered but there are other several situational modifiers affecting the leadership style and subordinate performance like subordinates’ expectation of leader behavior congruence of leadership styles among organizational levels, ability of leader to influence superior etc.

The modex is complex and hence difficult to understand.

Situational variables affect the leadership style but he has not explained how it affects the style.

He has suggested that the change in the job is preferable to change in the leadership style but it is very difficult to change the situation to fit the leadership style.

In spite of these limitations the model is better as it accommodates a number of personal and situational factors in the study of leadership and he operationalises the model into a set of actions that can be used to improve leadership effectiveness.

b) Path –Goal Theory –

The path Goal model developed by House attempts to predict leadership effectiveness in different situations. The term path goal indicates that the leader smooth the path to work goals and provide rewards for achieving them.

Main propositions of the theory—

1) Leader behaviour is acceptable and satisfying to the extent that the subordinates perceive such behaviour as an immediate source of satisfaction, and as an instrument for future satisfaction.

2) Leader behaviour is motivational if such behaviour results in the satisfaction of subordinate’s needs & it also complements the environment of workers by providing guidance, clarity of direction and rewards necessary for effective performance.

According to this theory the leader should –

i) Clear path by eliminating confusion or conflicting ideas that subordinate may hold.

ii) Clarity goalsiii) Provides supportiv) Provide rewards andv) Analyze the situation, task and employee needs.

Leaders can perform these strategic functions, according to this model by adopting the following styles of behaviour.

i) Supportive - Leader is friendly and approachable to the employees; shows concern for status, well being and needs of employees and treats them is his equals.

ii) Directive – Leader focuses on planning organizing and co-coordinating the activities of subordinates. He defines standards of performance and helps subordinates to know about what is expected of them.

iii) Participative – Leader consults the employees and solicits their suggestions and accept good decisions.

iv) Achievement Oriented – Leader sets challenging goals and expects the workers to perform at their best. He also seeks increments for their performance.

According to this approach, the specific style that works best in determined by two types of situational variables, 1) Personal Characteristics of the subordinates and environmental pressures and demands.

1) Personal Characteristics of employees -- Internally oriented employees who believe that, they can control their own behavior prefer leaders having supportive style, while externally oriented employees who believe that fate controls their behaviour prefer directive type leadership.

2) Work environment—Environmental factors include subordinates tasks, formal authority system of the organization and the primary workgroup. Any of these environmental factors can motivate or constrain the employees. When the task is unstructured, worker feels that his path to satisfaction is difficult and hence he likes to be directed. But if workers are working on structured and well defined tasks, supportive style of leadership is preferred.

Evaluation –

The path goal theory is criticized as follows –

i) It is complicated and hence empirical testing becomes difficult due to methodological complexities.

ii) Further research studies do not support it.

iii) It is a post Hoc Theory in the sense that some of the research evidence supporting the theory was also used to construct it.

iv) It gives incomplete picture as it provides tentative explanation of leadership style.

v) The models neglect effects of personal traits that may constrain the selection of leader behaviour.

vi) Assumption that leaders can change their behaviors to various leadership situations is a major limitation of this approach.

In-spite of these limitations it is appreciated, because it not only suggests what type of leader may be effective in a given situation but also explains why is he effective. The strength of the path goal theory is the limitation of contingency theory and vice versa. It is a viable approach when task oriented variables like task ambiguity, task autonomy and task uncertainty are confronted by followers and leaders. This theory also provides a necessary framework for new research in this field.

c) Life Cycle Theory-

Paul Hersey and Kenneth Blanchard developed a systematic conceptualization of situational factors as related to leader behaviur it is based on a curvilinear relationship between task and relationships and maturity of followers. Situational leadership is based on an interplay among three variables.

1) Task behaviour – It is seen in terms of the amount of guidance a direction given by the leader.

2) Relationship behaviour – It is determined by socio emotional support provided by the leader.

3) Maturity of followers- It is reflected by the readiness level exhibited by subordinates in performing a given task. Maturity is defined in terms of achievement motivation i.e. ability and willingness of followers to take responsibility for directing their own behavior. All persons exhibit maturity in varying degrees in relation to task, function or objective a leader is attempting to accomplish through their efforts.

The life cycle theory suggests that the leader behavior, to be effective, must change as followers mature. The leader behavior moves firm 1) High task-low relationship to ii) high task high relationship iii) High relationship – low task behavior to iv) Low task low relationship behavior as the followers progress from immaturity to maturity. Appropriate leadership style may be selected. Thus there are four leadership styles.

i) Telling – Where followers are unable and unwilling to do the job, they require specific directions about what, how, when to do various tasks. It suggests directive behavior and involves high task and low relationship behavior.

ii) Selling—In case of members with moderate maturity who are unable but willing to do the job, leader behaviour has to be supportive and directive, because the followers are confident but lack skills. This style involves high task—high relationship behaviour.

iii) Participating—When employees are willing and able to do the job, they require motivational force. Leader is facilitating and communicating it involves high relationship low task behaviour.

iv) Delegating—When employees have both the job maturity and psychological maturity they do not require guidance and direction so low relationship and low task behavior is appropriate.

Although this theory is popular for management development programs, still it has limitations as stated below—

1) It has not been refined and tested scientifically based analysis.

2) It assumes that the leader has ability to know about actual maturity levels of subordinates but if subordinate disagrees with the leader’s assessment of his maturity then conflict arises.

3) As maturity level of subordinates changes the leaders style should change but the leader may not be able to change his style.

Despite of these limitations this theory is appreciated as it clarifies certain conceptual issues.

1) The maturity level of group has an important bearing for leadership style.

2) As the situation changes, a leader has to change his style to be effective.

Though it is lacking in empirical support the life cycle theory is useful for providing base for leadership research.

16.8 Vroom-Yetton Model of leadership—

This model has been refined and modified to be more effective.

Assumptions—

1) Decision making style varies with the situation.

2) Leadership style varies with number of subordinates who are affected by decision.

3) No single decision making style is appropriate to all situations.

4) Leader must select the best process that will influence the amount of participation by subordinates in decision making.

Decision making styles

Authors have developed a leadership decision making models which indicate kind of situations in which various degrees of participation by subordinates in decision making seems to be appropriate. The suggest five decision making styles- two of autocratic , tow consultative and one group style.

The choice of a leadership depends on three variable –

1) Quality of rationality of the decision 2) The acceptance or commitment by subordinates to execute the decision

effectively.3) The amount of time required to make the decision.

The two main conclusions of the model are

1) More than one leadership style may be effective in a particular situation.

2) If time poses any constraint the leader can use the most autocratic style; if he has time for developing subordinates the most participative style from the feasible set can be chosen.

Evaluation –

This model is appreciated for it provides guidelines for when to involve subordinates, for example if the problem is known and structured, manager has necessary information and when there no problem subordinates acceptance then manager can take decision but if the problem is complex & subordinates can be trusted and there are many solutions then manager should share the problem with subordinates as a group, manager may allow discussion and decision is taken.

The model is criticized for time criterion. A leader chooses that style that takes less time, but it may not be appropriate all the time. A rational manager may like to take advantage of hidden talents of subordinates and may select a style, which is time consuming.

There are also number of methodological problems which reduces utility of model.

In spite of these limitations this model has provided promising approach for understanding leadership behavior. The model tends to reduce the gap between theory and practice and may prove as a proto type for actual practice of contingency management.

The chief merit of situational theory is that it has meaning for practicing managers who must consider the total situation while designing an environment for performance. However the theory neglects the possibility that some traits influence the chances of becoming a leader or attaining success as a leader.

16.9 Styles of Leadership

A style of leadership indicates the behavior of a leader during supervision of his subordinates. It indicates the philosophy of the leaders. It is a relatively enduring set of behaviors which is a characteristic of the individual, regardless of the situation. Thus there may be as many different styles as there are leaders. Basically three types of leadership are listed out—

1) Autocratic or Dictatorial leadership 2) Participative or Democratic Leadership3) Laissez or free rein leadership

Let us discuss these styles briefly.

1) Autocratic or Dictatorial Leadership—

Autocratic leader keeps the decision making authority and control in his hands and assumes full responsibility for all actions. He structures the entire work situation in his own way and expects that the workers to follow his orders. He does not tolerate any deviation from his orders. He holds over the head of subordinates the threat of penalties and punishment. There is strict supervision, one way communication and rigid controls. It tends to be a one man show.

There are three types of autocratic leaders—

a) Strict Autocrat – He uses negative motivation, like penalties, criticism, and coercion etc. for influencing behavior of subordinates. As a result the subordinates are insecure, uninformed and afraid of leader’s authority.

b) Benevolant Autocrat --He also centralizes decision making power in him but he uses positive motivation style, by taking into account feelings and needs of subordinates. He can be effective in achieving high performance and harmonious human relations in many situations. He uses his power to distribute rewards for his subordinates.

c) Incompetent Autocrat – He adopts an autocrat style for hiding his incompetence. But such a style cannot be for a longer time.

Advantages –

i) Autocratic style is useful when the subordinates are new on the job and have no experience either in the managerial decision making process or performing without active supervision.

ii) When appropriate it can increase efficiency and productivity and can get quicker results especially during the period of crisis or emergency, when there is a need to take decisions quickly.

iii) It is useful when the chain of command and the division of work is clear and understood by all.

iv) It provides strong motivation and reward to the self centered leader.

v) In competent subordinates can work as their role in decision making is negligible.

Disadvantages

1) People dislike autocratic leadership because it does not provide scope for subordinates to develop and take initiative.

B

2) Subordinates tend to be defensive and prefer to please the leader.

3) Subordinates may get frustrated, have low motivation and morale, low production and conflicts among employees.

4) These is more dependence and less individualists in the organization resulting in non development of future leaders.

5) In the absence of feed back decisions tend to be poor and more costly errors may take place.

6) It is not suitable when the work force is knowledgeable about their jobs and the job calls for teamwork and co-operative spirit.

B) Participative or Democratic Leadership--

A democratic leader takes his subordinates in confidence and consults with them to get feedback during the process of decision making his job is to be moderator, although he makes the final decision and he alone is responsible for the results. The group members are encouraged to take initiative and demonstrate creativity and take interest in formulating plans and policies and have maximum participation in decision-making. It results in better relations between management and labour, promotes morale, productivity and greater job satisfaction. This style of leadership is most effective where the work force is experienced and dedicated and is able to work independently with least directives.

Advantages

1) Active participation in management by employees assures rising –

THREE STYLES OF LEADERSHIP

AUTOCRATIC PARTICIPATIVE FREE-REIN F L

A E

L

S1 S2 S3

D

C

Productivity and Satisfaction—

ii) Employees tend to develop a greater sense of self-esteem, due to importance given to their ideas and their contribution.

iii) They are ready to accept changes introduced by management as they have themselves participated in taking decision to bring about these changes.

B

cE

D

L

iv) The leadership induces confidence, co-operation and loyalty among workers.

v) It promotes employee motivation, moral and productivity and maintain healthy industrial relations.

vi) It provides scope for the development of future leaders which is essential to maintain organizational stability.

vii) It significantly improves employees’ attitudes towards the job and organization.

Disadvantages

1) The democratic leadership requires literate, informed and organized labour, which is not always possible.

2) This approach assumes that all workers are genuinely interested in the organizational activities and their individual goals are integrated with the organizational goals. But these assumption may not be valid.

3) There has to be an environment of mutual trust. Some employees may feel that this approach is simply to manipulate them. Hence the employees must be fully receptive to make this approach effective, which is rather difficult to achieve in practice.

4) Some group members may feel unsatisfied as their ideas are not accepted for action. This may promote feeling of frustration and ill will.

5) This approaches time consuming as too many ideas and view points may make it difficult to arrive at decision and may turn out to be a source of frustration to impatient management.

6) Some managers may not prefer this approach because they may fear that their authority and control over subordinates may be reduced.

7) This approach depends on motivation through non financial incentives like recognition, appreciation, prestige, status etc. But the labour may be mainly interested is financial incentives.

C) FREE REIN OR LAISSEZ FAIRE LEDERSHIP.

Under this type of leadership, the leader is a nominal head and does not give any direction. He acts mainly as a liaison between the group and provides inputs and information to group members. He allows subordinates to plan, organize and develop their own techniques for accomplishing goals within the network of organizational policies and objectives.

The participation of the leader is minimum and instead of leading and directing gives complete freedom to the group for decision making. When group members are highly talented, intelligent and full awre about their roles and responsibilities and have the knowledge and skills to accomplish these tasks without direct supervision, this approach tends to be very effective. Such type of leadership is common in research laboraties where scientists can take their decisions. Advantages

i) Free rein style creates an environment of freedom individuality and promotes team spirit in the group.

ii) It is highly creative, with a free and informed work environment.

iii) It is more useful where people are highly motivated and achievement oriented.

Iv) It is effective where the leader is interested in delegating decision making authority.

Disadvantages

i) It may result in disorganized activities which may lead to inefficiency and chaos.

ii) It may develop into insecurity and frustration may develop due to lack of specific decision making authority and guidance.

iii) The team spirit may suffer due to presence of some un-co-operative members.

iv) Some members of the group may push up their interests above the group and team interest.

v)Q.16 a) Define leadership. Explain various theories and styles of leadership.

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UNIT – 17 COMMUNICATION

17.1 Introduction

Communication is the most important and most effective element of the management process, Interpersonal communication is essential for all managerial activities. Managerial functions involve some form of directions and feedback. Effective management is a function of effective communication. Many operations have failed on account of poor communication, misunderstood messages and unclear instructions.

17.2 Definitions

1) Kazmier – Communication is “the process of passing information and understanding from one person to another.”

2) Newman—Communication is an exchange of facts ideas, Opinions or emotions by two or more persons.”

3) Allen -- Communication is sum total of all the things one person does when he wants to create understanding in the mind of another. It is a bridge of meaning. It involves systematic and continuing process of telling, listening and understanding.”

4) Koontz and O’Donnel – “Communication is the transfer of information from one person to another whether or not it elicits confidence. But the information transferred must be understandable to the receiver.”

Communication is much more than simply transformation of information as it involves interpretation and understanding of the message. It is an interchange of thoughts and information to create mutual understanding and confidence. It is the informational intercourse through words, letters, symbols or message. According to one survey an average Indian spends nearly 78 percent of his time in communicating.

By communication we mean the flow of material information, perception and understanding between various parts and members of an organization, and all the methods, means and media of communication all channels of networks , the system of communication all the person to person interchange. It includes all aspects of communication –up, down, lateral , speaking writing, listening, reading, methods, media, channels networks flow ; interpersonal , interorganizational intra organizational.”

17.3 Nature of Communication –

From the above definitions, the following features of communication may be identified.

i) Communication is a two way or reciprocal process involving exchange of ideas, facts and opinions. It provides feed back mechanism. It is a meeting of minds.

ii) Communication is a co-operative process involving two or more persons and the end result of communication is mutual understanding.

iii) Communication is a continuous process. A manager has to be continuously in touch with his subordinates and superiors in order to get things get done it is a dynamic activity.

iv) Communication is a pervasive function as it applies to all levels of management and all phases of management. It travels up and down and also from side to side.

v) The main purpose of communication is to motivate a response and to create mutual understanding. It aims at achieving organizational goals through creating right type of responses. It is the basis of action, co-operation and effective management.

vi) Communication includes all means by which meaning or message is conveyed from one party to another. These include written words spoken words, facial expressions, signs , gestures visual aids etc.

vii) Communication is a circular process. Every communication leads to reaction or feed back which may generate future communication.

17.4 Objectives of communication –

i) To develop information and understanding among all employees.

ii) To foster an attitude which is necessary for motivation co-operation and job satisfaction.

iii) To discourage mis information, ambiguity and rumours.

iv) To prepare workers for a change in methods or environment by giving them necessary information in advance.

v) To encourage subordinates to supply ideas and suggestions for improving upon the product or work environment and taking these suggestions seriously.

vi) To improve labour management relations by keeping the communication channels open.

vii) To encourage social relations among workers by encouraging inter communication.

17.5 Importance of Communication—

Modern period is characterized by communication explosion, communication is the precondition of civilization because without the ability to communicate it would be impossible to accumulate knowledge, and there will not be progress in human life. In case of business organizations, effective functioning is not possible without effective communication. The necessity of effective communication in management is widely recognized, hence its importance may be described as follows –

1) Smooth and steady functioning of an Enterprise—

An effective system of communication is necessary for smooth and steady functioning of an organization of any type. Communication plays a major role in organizations. As instructions and information are passed continuously from are end to the other from superior to subordinate etc.

2) Quick decision making and implementation—

Communication helps the administration to take quick decisions and systematic implementation of them. It lubricates the organizational machinery by way of keeping the people working in accordance with the decisions of the top management.

3) Proper planning and co-operation—

Communication helps in planning by a wider participation which makes to accomplish the task easier and effective. As Niles has pointed out, “Good communications are essential to co-ordination. They are necessary upward, downward and sideways through all the levels of authority and advice for the transmission, interpretation and adoption of policies for the sharing of knowledge and information and for the more subtle needs of good morale and mutual understanding.

4) Maximum productivity with Minimum cost—

Effective system of communication helps to attain maximum production at minimum cost by motivating employees through proper planning and explaining their roles, building up high morale in the organization. Communication then becomes a part of education, propaganda , leadership and guidance function of management.

5) Democratic Management and Morale Building

Under an effective communication and system employees can express their grievances, attract attention of management toward their problems and get proper settlement. Thus it helps in morale building and democratic management.

6) Sound Management—

As peter Drucker has pointed out, good communication is foundation of sound management. The functions of management like planning , integrating and controlling depend on communication. Any plan is based on information, which is not possible without communication. Adaptation of changing environment may not be possible without communication. While exercising functions of management there are interactions with the people that leads to communication. While exercising functions of management there are interactions with the people, that leads to communication. Thus communication is an important dimension of organizational life which determines the effectiveness and efficiency of management.

Thus communication is important in organization as it ties people and structure together, it serves as a bridge of meaning between two or more people. It involves understanding and acceptance of the ideas to act in it. Effective communications is the substance of management.

17.6 Process of communication—

The basic elements of communication are as follows –

1) Sender or Source –

The message originates from the sender, which may be an individual, a group, an institution, an organization or even a machine. He initiates the communication process because he has a need to communicate or has some idea or information, which he wants to communicate to the receiver for example, a manager communicates with other members, subordinates, superiors etc. People in production department communication with the people in marketing department etc each communicator has to transmit information to other person called receiver.

2) Encoding –

The communicator’s message or information may be coded in order to maintain secrecy or privacy, so it is put in the form symbols or privacy, so it is put in the form symbols or by language sometimes messages are encoded non verbally like gestures. This message has to be tranglated in simple language to explain the idea. This is known as encoding. Encoding should convey exact message either verbal or non verbal message.

Communication Process

Noise

Sender Or Source

(1) (2) (3) (4) (5) (6)

FEED BACK(7)

3) The Message –

The output of encoding process is the message sent by the sender the message is what a manager is communicating and the form of message whether verbal non verbal, depends upon the purpose of communication. It is necessary that the message sent by the sender should be clear and precise.

Encoding Message Channel Decoding Receiver

4) Channel—

Channel is a medium or carrier of message sent by the sender. It provides a bridge between the sender and the receiver of the message sight and sound are the common channels in the context of business organization the channel may be face to face meeting, written memos, telephonic talks, letters group meetings etc. Sometimes managers send their messages by their silence, facial expressions and tone of voice and other body movements. The receive should understand what the communication wants to communicate.

5) Decoding—

Decoding element refers to the process by which the receiver translates the message into the terms that one meaningful to him. Some times staff professionals use symbol that are decoded by the people outside the group. The main purpose of communication is to transfer an idea from one person to another. When the idea is correctly transferred there is agreement in the process, otherwise distortion in decoding takes place, due to sever factors such as linguistic, or semantic difficulties, receivers past experience, his expectation etc. The gap arises between intended meaning and perceived meaning.

6) Receiver –

It is the most important element of communication process. The sender should take into account the receiver and his abilities his understanding capacity of the message being transmitted. Effective communication is always receiver oriented and not media oriented.

7) Feed back –

Feed back is essential for removing distortion between intended and the received message. One way communication lacks in feed back hence two way communication with feed back is said to be more effective feed back loop provides a channel for receiver response which enable the sender to know whether the message received is exactly the same as the message sent. Feed back may be direct or face to face or indirect in terms of actual results. Feed back provides a check to see how successfully the message has been transferred and interpreted by the receiver.

17.7 Types of communication—

Organization is a network of communication channels. These channels may evolve on their own or may be deliberately designed. Various types of communications are as follows

Types of Communcation

Verbal (Oral) Formal Downward Or Or upward andWritten informal Horizontal

1) Verbal or Oral Communication—

It is also known as face to face communication and may be in the form of direct talk and conversation or the public address, telephone calls or talking on intercom system. It is more effective while setting a dispute among employees or reprimanding and worker. In one way communication.

It is very effective for leaders to address the followers via public address system or audio –visual media. The human voice can provide the message much more forcefully and effectively than written words and is an effective way of changing attitudes, beliefs and feelings as faith trust and sincerity can be much measured in a face to face conversation rather than written words advantages –

1) It is direct, simple, time saving and cheaper form of communication.

2) It allows for feedback and spontaneous thinking.

3) It helps in avoiding delays, red tape and other formalities.

4) It conveys personal warmth and friendliness and develops a sense of belonging because of personal contacts.

5) Any misunderstanding can be cleared immediately.

6) It is more convenient to measure the effect of communication.

7) It is the only method to be used during periods of emergency.

Disadvantages

1) There is no formal record of transaction.

2) If the verbal message is passed on along the hierarchical chain of command, then some distortion can occur during the process.

3) Lengthy and distant communications cannot be effectively conveyed verbally.

4) The receiver may receive the message in his own perception and thus misunderstand the intent of the message.

5) Spontaneous responses may not be carefully thought about.

6) The spirit of authority cannot be transmitted effectively in verbal transaction.

7) Many a times different meaning be conveyed by manner of speaking, tone of voice and facial expressions.

8) It may be taken casually

2) Written Communication-

It is communication in writing and is mostly in the form of letters, instructions, memos, rules and regulations formal reports policy manuals etc. Written communication in organizations is necessary for efficient functioning of organization. It is effective where action is to be taken during certain future period. It is often used where communication of technical and lengthy information is necessary. It is more orderly and more binding subordinates.

Advantages –

i) Written communication provides permanent record for future reference.

ii) It serves as evidence of events and proceedings.

iii) It reduces possibility of misunderstanding and misrepresentation.

vi) It can save time when many persons scattered over area are to be connected at the same time.

vii) It is useful for lengthy and statistical information for its communication.

viii) It appears formal and authoritative for action.

ix) It can be checked for accuracy.

Disadvantages

i) It tends to be time consuming and lengthy reports difficult to remember in full.

ii) There is no feed back opportunity to be sure that the receiver has understood the message.

iii) Written material may leak out before time causing problems.

iv) Secrecy cannot be maintained.

vi) It leads to excessive formality in personal relations.

B) Formal Communication --

Formal communication refers to the flow of information and ideas through the formally established channels. Formal communications is official or institutional channel, deliberately created by the management. It is established by formal structure of authority relationships through delegation. It is associated with the status or position of the sender and receiver i.e. superior subordinate relationships. It is hierarchical in nature. It is usually in writing in the form of policy manuals, hand books order, memos , company bulletins etc.

Formal communication deals with work related matters. All orders and instructions , decision etc are communicated to subordinates. It is authentic in nature. It is a systematic, timely and orderly flow of information and ideas. It supports executive authority and control and helps in fixing responsibility for results.

Formal communication tends to be slow and inflexible as it has to flow through the scalar chain. Formal channels do not satisfy all the needs of employees. It may be resisted and distorted. It results in filtering of information at various points. In order to overcome such problems a system of multiple channels linking one position with various other positions may be used. But unlimited use of it may lead to confusion and may undermine superior’s authority.

Informal Communication (Grape Vine)

It is the communication-taking place among employees through informal contacts. It is structuraless unofficial channel, unplanned communication. It is spontaneous network of personal contacts.

It originates on account of informal work groups that are present in all types of organizations informal communication arises due to the natural human tendency to communicate to each other. It is crated by people on their own. Informal channel includes all non formal communications. Employees want to know what is going on in the organization and when they do not get required information through formal channels, they adopt informal channels. Similarly, a manager may seek some information about workers through grapevine, personal information about superiors is not communicated through formal channels, so employees try to get it through grapevine.

Informal communication fills up gaps in the formal communication system. It is flexible & fast flow of ideas and information it is multidimensional and dynamic in nature as it does not follow any chain of command grapevine is useful for motivating employees building team work and creating loyalty to the organization. It may be used to supplement formal channel to clarify management’s views it helps in providing feed back to managers and helps him in meeting social needs of employees.

The main limitation with grape vine is that it often carries incomplete information, and rumors, which may misled employees. Hence managers should see that grapevine in the organization in a desired way by supplying necessary information to the employees in time informal leaders may help in stopping a rumor. When true facts are told to them.

Formal and Informal channels exist simultaneously. These may help to promote interaction between the functional and social systems of an organization. They can play complementary role.

Downward, Upward and Horizontal Communication –

Formal communication may have downward ,upward and horizontal channels of both oral and written communication.

a) Downward Communication --

Downward communication originates from superior in scalar chain. It is used to control and influence subordinates. It initiates activity and has high degree of acceptance. Sometimes downward communication may be resisted, distorted or difficult for co-coordinating purposes. However it is through downward communication a manager defines goals, direct the subordinates, tells them what is expected of them. He administers rewards for better performance and punishes for undesirable activities. The examples of downward communication are given below—

Oral WrittenInstructions Orders, instructionsLectures, meetings Policy statementsCounseling Company manualsGrapevine, Rumors Union Circulars

Bulletins etc.

b) Upward Communication --

It includes transmission of messages from subordinates to superiors. It serves as a feed back which enables management to know about how far downward communication is understood and implemented. The upward communication is useful for knowing about suggestions, attitudes and grievances of employees. Upward communication provides an opportunity to subordinates to participate and satisfy their egoistic needs. But this communication is hampered by status gaps, lack of trust, lack of support by management etc. Upward communication may take following forms.

Oral Written

Face to Face communication ReportsGrape vine, remour GrievancesMeetings/Conferences SuggestionsInterviews ComplaintsSocial and Cultural activities Attitude/morale surveys.

c) Horizontal Communication--

It is communication between persons at the same level in organizational hierarchy. Formal Communication allows horizontal communication or interaction. It is a mechanism of co-ordination, and supports parties emotionally and socially. It helps in co-coordinating activities of different departments or divisions of an organization. However it may be hampered by functional departmentation, specialized thinking and narrow outlook. Horizontal communication is also known as lateral or crosswise communication.

In the context formal communication it is necessary that a proper balance should be achieved between various flows of communication. Upward, downward and horizontal communication are complementary to each other. A three way communication system tends to be more effective than one way communication especially downward communication.

17.8 Principles of Communiction—

In order to make communication more effective the following principles may be followed—

i) Principle of clarity-

The idea or message to be transmitted should be clear so that it can be properly understood by the receiver. The idea must be interpreted in the same sense and spirit. The words do not speak themselves but the speaker gives meaning to them.

ii) Principle of Attention--

In order to making communication effective it is necessary that the attention of the recipient has to be drawn to the message communicated to him.

iii) Principle of Consistency --

The communication to be effective has to be consistent with the plans, objectives, policies and programs of the organization. Because in consistent messages tend to create Chaos and confusion in the minds of the employees which is not desirable for the organization.

iv) Principle of Adequacy--

To make communication effective the information should be adequate and complete in all respects. If it is inadequate then it delays action and destroys understanding and relations the purpose of communication may not be served.

v) Principle of Timeliness –

The ideas or information should be communicated at proper time because any delay in communicating the message fails to serve the purpose of communication and its effectiveness also decreases significantly.

vi) Principle of Integration

Communication must aim at integrating individual objectives with the organizational objectives so that it will promote cooperation among the employees.

vii) Principle of informality—

Although formal communication is important in the formal organization still informal communication is equally important it is desirable that the executives in the organization should behave as informally as possible. It may make them efficient and effective.

viii) Principle of feedback-

The communication must be confirmed through feedback, in order to know whether the recipient has understood properly or not and to know whether the recipient has agreed or not to the proposal. It is essential to understand the people.

ix) Principle of communication network-

Communication network means the routes through which the flow of communication takes place so as to reach at the particular recipient as desired by the sender. A manager should select that network which is most suitable and effective.

When these principle are followed communication becomes more effective and it will help in promoting co-operative spirit in the organization.

17.9 Barriers of communication

The communication must be interpreted and understood in the same manner and in the same since as it was meant to be sent by the sender, otherwise it cannot achieve the desired results and a communication breakdown may take place. There are several roadblocks to effective communication breakdown may take place. There are several roadblocks to effective communication, which may affect the proper reception of communication. In addition there are personal factors, which may be responsible for misinterpretation of communication. These of communication. These barriers may be discussed as follow (see table )

1) Physical Barriers –

These are environmental factors, which obstruct smooth flow of communication. This includes noises and other interferences. As physical distance increases communication of message becomes more difficult. Sometimes equipments to be used may be defective.

2) Personal or Socio-Psychological Barriers

Personal barriers may arise from motives attitudes, judgment, emotions, social values of persons which may create psychological distance. When people with different perceptions communicate they find it difficult to arrive at proper meaning, they find it difficult to arrive at proper meaning, as everyone perceives the message from his own viewpoint.

Effective communication requires mutual trust and confidence. Differences in value judgments and reference frames may inhibit communication. Sometimes cognitive dissonance may create problems, as people tend to be selective in receiving and reacting to the communication in the organization. A person tends to hear only those messages which confirm and endorse his beliefs, opinions, attitudes and judgments. People tend to ignore the counter points or views thinking that these are hostile or unfriendly. Many a times a person is pre occupied and hence he may not be able to pay proper attention. Notices circulars, bulletins etc fail to activate him. Poor retention and improper timings may affect communication process adversely.

3) Organizational Barriers--

Organization is intentionally created mechanism to achieve certain goals. It provides a formal framework through which communication is designed to flow, but the structuring of flow itself may impede the communication. Organizational policies, rules and regulations, superior subordinate relationship and complex structure of organization may affect communication.

4) Semantic Barriers—

Semantics means the meaning attached to a word or symbol. It has been rated that about 80% of English words have more than one meaning. Semantic difference exist between the vocabularies of old people and young people, and among people in different areas, jobs, careers etc. These differences lead to a great deal of distortion. Sometimes body language may be inconsistent with verbal communication or tone of the speech may lend another meaning to an innocent sentence.

Similarly symbols may have many meanings and we have to choose any of them according to the extent of the text of communication. Pictures are visual aids worth thousand words. An organization us pictures like blueprints, charts, maps films etc. But sometimes these pictures may create maps, films etc. But sometimes these pictures may create confusion, so selected words are attached to make them more meaningful.

5) Mechanical Barriers

Inadequate arrangement for transmission of news, facts and figures, poor office layout, defective procedures and practices and the use of wrong media etc. tend to be the barriers in effective communication of messages.

On account of these barriers the message may not be properly communicated and it may result in distortion, filtering and omission. Distortion means changing the

context of the message or the meaning of the message. Filtering means reducing the message only to a few basic details. Omission means deletion or excluding all or the part of the message. Hence it is necessary to be careful about these barriers to communication and attempts should be made to overcome them.

Barriers of communication

Physical Personal Or- Organizational Semantic Mechanical Barriers Socio- Barriers Barriers Barriers

Psychological Barriers

1) Noise 1) Cultural 1) Status & Position 1. Inferences 1. Inadequate2) Distance 2) Perception 2) Poor supervision 2. Symbols Network3) Equipment 3) in attention 3) Inadequate a) Languages 2. Poor office & media used 4) poor retention Information b) Pictures Layout

4) Information c) Actions 3. Defective overload d) Body language procedures

& Practices 5) Resistance to 5) Network breakdown 3. Multimeaning

to change words 6) Selection of 6) Organizational 4. unclarified improper Policy assumption

channel 7) Organizational 5. Faculty Translation 7) Poor timing structure 6. Bodly expressed Results

messagei. Distorationii. Filteringiii. Omission

17.9.1 Overcoming Communication Barriers—

Effective communication is necessary for efficient management. Breakdowns in communication are not only expensive and time consuming but are also injudicious to teamwork, motivation and morale of employees. Hence it is essential to take necessary steps to ensure that the process of communication takes place effectively. Although it may be difficult to eliminate all these barriers, efforts have to be made to have adequate communication stystem in the organization. The following measures can be suggested to make communication effective.

1) Clarification of the idea--

The idea or message should be clear about what the communicator wants to communicate and he should be clear about the objective of the communication. He should select a suitable medium and form of communication carefully. The message should be concrete, and correct. Technical terms should be avoided and language suitable to the listener be used.

2) Completeness of message –

The message should be complete, timely and adequate in all respects in order to avoid any misunderstanding. All the important details should be included and underlying assumption also should be clarified. If the detailed information is not supplied, people may make assumptions about missing information.

This results in distortion of the meaning. Incomplete communication tends to delay action and spoils relations and also increases costs. The message has to be relevant to the nature and purpose of communication.

3) Understanding the Receiver

The communicators must take into consideration the physical and mental abilities of the receiver of the message. He must find out needs, feelings reception capacity, perceptions and understanding levels of person receiving the message, and then communicate the message. The message should be designed from the view point of the receiver. Thus the sender of the message must concentrate on the problems from the receivers point of view, or the message must be receiver oriented which is known as an empathy in communications.

4) Using Appriate Channels

The channels and media used for communication must be suitable to the message, the receiver and the purpose of communication. A judicious combination of formal and informal channels, written and oral media may help in improving the effectiveness of communication.

5) Consistency in communication—

The message should be consistent with the objectives, policies programs and philosophy of the organization. This is necessary to avoid confusion and chaos in the organization. Different messages have to be consistent. Communications need to be supported by proper actions and behaviour to ensure creditability in communications. As action and deeds speak louder than words, Adequate facilities should be provided for promoting communication.

6) Feed back system—

In order to be effective, communication should be a two way process and attempts should be made to know the reactions of the receiver. The use of feedback mechanism helps in promoting participation of subordinates and is useful in making future communications more effective. An ideal feed back system helps in building up of mutual understanding and in avoiding distortions in messages. Feed back indicates the return flow of communication.

7) Simplified Structure-

The communication system can be made more effective by simplifying the procedures, reducing the layers, making constructive use of grapevine or informal communication and regulating information flow. The lines of communication should be direct and short and the number of levels should be minimized as far as possible. Regulation of the flow of information eliminates communication overload and ensures optimum flow information to members of the organization. Filtering of information should be discouraged. It is desirable that the communication system should be tailor made to the needs of the organization.

8) Improving Listening

The sender and the receiver of the message must be able to listen with attention, patience and empathy. Generally top executives suffer from bad listening and they need to avoid value judgments. They should be aware of actions and their impact on others.

9) Mutual Trust and Confidence –

Communication is basically an interpersonal process and in order to make it more effective, it is necessary to develop mutual trust, respect and confidence among the members of the organization. The organizational climate should be made more personal and intimate. Attitudes and behaviour of the people are necessary to be modified to overcome barriers of status and class distinctions. The executives should be provided adequate training for improving their communication skills.

These steps may help in minimizing barriers in communication in organizations.

Q.17 a) What is communication? Explain the process types and principles of Communication?

b) What are the barriers to communication? How these barriers can be removed?

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UNIT – 18 CONTROLLING

18.1 Introduction—

Controlling is an important function of management it not only deals with recording actual performance but also indicates the actions required to achieve the goals. Control is useful for guiding the activities towards some predetermined goals. It is the process of confirming that the events confirm the plans as closely as possible.

18.2 Definitions—

1. Brech – “Control is checking performance against predetermined standards contained in the pans with a view to ensuring adequate progress and satisfactory performance.”

2. Terry - “Controlling is determining what is being accomplished, that is evaluating the performance and if necessary, applying corrective measures so that the performance takes place according to plans.”

3. Theo Haimann- “ Control is the process of checking to determine whether or not, plans are being adhered to, whether or not proper progress is being made towards the objectives and goals and acting, if necessary, to correct any deviations.

4. Henry Fayol - “Control consists in verifying whether everything occurs in conformity with the plans adopted, the instructions issued and principles established. It has for object to point out weaknesses and errors in order to rectify them and prevent recurrence. It operates on everything, things, people and actions.”

5. Koontz and O’Donnell - “ The meaningful function of controlling is the measurement and correction of the performance of activities of subordinates in order to make sure that enterprise objectives and the plans devised to attain them are being accomplished.

6. Anthony - “Controlling is the process by which managers assure that resources are obtained and used effectively and efficiently in the accomplishment of the organizational objectives .”

Thus the function of control is to accomplish organizational goals by implementing previously determined strategies and policies, so that whatever needs to be done, is done properly. In other words control helps in maintaining an equilibrium between the means and ends or between efforts and output. It makes sure that actual performance is in conformity with the intended and planned performance leading towards achievement of organizational objectives. Thus the process of controlling ensures that right things happen at the right time in the right way and by the right people.

18.3 Characteristics or Features of controlling system :-

On the basis of above definitions the following characteristics of controlling may be identified

1) Control is based on planning—

Control aims at evaluating actual performance against predetermined standards. Plans serve as the standards. Plans serve as the standards of desired performance. Planning sets the course and control ensures action according to the chosen course of action. Control is the last step in management process but in fact it begins with the setting up of plan. Control implies the existence of plans or standards.

2) Information is the guide to control-

Control depends on the feedback information regarding actual performance. Hence accurate, reliable and timely availability of feed back is necessary for effective control action.

3) Action is the essence of control-

It is the action which adjusts performance to the predetermined standards. Timely action is necessary to correct deviations for minimizing waste of time, money and efforts.

4) Delegation is the key to control-

An executive can take corrective action only when he has been delegated necessary authority for it. A person has authority to control only those functions for which he has authority and is directly accountable. Control standards help the manager to expend his span of management.

v) Control aims at Future--

As control deals with a post mortem of what happened in the past, it is considered as “Looking back” But the corrective action is designed to improve the performance in future. Hence control has to be considered as looking at the future through the eyes of the past. In addition, sound control tends to be preventive in nature. It does not hinder an action but it corrects the action to achieve the goals.

vi) Control is a continuous function-

Sometimes it is argued that control is necessary only when actual performance deviates from the planned one, or to punish persons in charge of it, but it is not a correct view. As activities of management are a continuous control also tends to be a continuous any dynamic process involving continuous review of results and standards.

vii) Control is objective oriented--

Control is not an end itself but it is a means for achieving desired objectives. The function of control is positive in a sense that it makes things happen. It is not an hinderance in performance nor a negative in nature.

viii) Control is an universal function

Control is a primary or fundamental function of management as every manager has to exercise control over the performance of his subordinates. Thus control is essential at the every level of management. The process of management is not complete unless controlling is implemented.

ix) The focus should be on strategic control points--

The control system must be reflect and support the organization’s established overall priorities so that the activities of strategic significance, where deviations would lead to greatest harm, receive immediate attention and corrective action be taken.

x) Controls tend to be economically realistic—

A control system must be worth of the expense. The cost of implementation of control system must be lower than the benefits received from it.

Control is people oriented

Management control is people oriented because control is achieved through people and not things. It is people who achieve control. Subjective attitudes of the employees are more important than objective figures for the purpose of success of control system.

18.4 Importance of control—

An effective control system is essential for an organization on account of its several advantages.

i) Control facilitates decision making—

The process of control is useful in taking correct actions for bringing actual performance and standards together. Corrective measures involve right decisions about what and how deviations are to be rectified. Executive decisions are mainly control decisions, as policies laid down by management become basis and reason for control. Through the process of control the management can verify the quality of various policies.

ii) Control facilitates decentralization—

Executives delegate and decentralize authority and use an effective system of control. They use control to see that the decisions taken by subordinates are consistent with the policies of the organization and whether the authority delegated is being properly used. Thus management needs control system to check the progress of subordinates and take corrective action in time to avoid failure.

iii) Stimulating Action

Control provides basis for future action by locating and correcting mistakes and helps in preventing recurring mistakes. Control points out shortcoming

in planning and other functions of management. Control helps in successful implementation of plans.

iv) Enhancing employee Morale-

A sound control system is essential for motivation and morale of employees. An efficient control system helps management to identify changes that are affecting the organization so that advance action can be taken to cope with the threats and exploit opportunities arising due to change. By providing feed back in time, control tends to increase sense of security and morale in the organization.

v) Improving efficiency of operations-

Control contributes significantly towards improving efficiency of an organization by concentrating on achievement of objectives. Just like a navigator who continuously takes readings to ascertain whether he is relative to a planned course, a business manager continuously takes readings to assure himself that his organization is on the predetermined course.

vi) Promoting Co-ordination –

Control helps is promoting co-operative between different units of the organization. A control system stresses upon the ultimate responsibility of managers so that each one of them tries to work in harmony with others. As Terry has pointed out, “Control maintains equilibrium between means and ends, output and effort. Controlling helps ensure that actions proceed according to plans, that proper direction is taken and that the various factors are maintained in their correct interrelationships so that adequate co-ordination is attained.

vii) Psychological Pressure –

The control system has a positive impact on the behaviour of employees, as they become very cautions while performing their duties. They know that they are being observed and their performance will be evaluated against the standards set. This effect of performance measurement can be strengthened through a system of rewards and punishments based on performance. The control system also tends to minimize wastages and losses in the organization.

viii) The Exception Principle-

A good control system works on the exception principle. The attention is paid by management on only important deviations. This helps in eliminating unnecessary and uneconomic supervision, reporting and waste of managerial time.

18.5 Advantages of Managerial Control –

1) Managerial control reduces chances of mistakes by identifying deviations and taking corrective action in time.

2) It helps in taking right decision about what type of follow up action is to be taken.

3) It facilitates decentralization and delegation of authority effectively.

4) It helps in identifying shortcoming of the enterprise.

5) It helps in co-ordination of activities of various departments of the organization through directing them systematically in the direction of achieving organizational goals.

6) It has positive impact on the behavior of employees by making them cautious while performing their duties.

18.6 Limitations of control system

The managerial control system has to face the following limitations.

1) The control system cannot control external factors such s government policy, technological changes etc. because they are beyond the direct control of management.

2) Managerial control process tends to be costly process because sufficient attention has to be paid to observe the performance of several subordinates which needs lot of time and efforts.

3) It tends to reduce freedom of subordinates as they feel that these controls do not allow them to work as they feel right and desirable. So they may resist controls. The control may lose its significance if accountability cannot be fixed for subordinates.

4) If standards are not carefully defined in quantitative terms, the control system may lose its effectiveness.

18.7 Steps in control Process –

The control process includes the following steps—

1) Establishments of standards –

In order to have effective control system it is necessary to set standards or criteria for evaluating the performance. Qualitative or intangible standards deal with attitudes, relationships company image, executive development etc. Quantitative standards include physical standards, costs and revenue standards, and capital and time standards.

2) Measurement of actual Performance—

Next step is appraisal of performance which implies measurement of actual results and comparing them with the predetermined standards. This appraisal may be done through observation, reports, statements etc. Several techniques such as ratios, averages, indices, control charts etc may be used for measuring and comparing performance of subordinates and deviations are detected in advance of their actual occurrence and avoided by appropriate actions. Thus attempts are made to detect deviations in time to avoid adverse consequences. Adequate standards and means to determine performance of subordinates facilitate measurement of results. Control reports should be clear, precise, complete and in time.

3) Analysis of variances—

In order to detect the extent of deviations actual performance is compared with the standards. Management has to decide about which deviations are

critical and need to be corrected in time so as to avoid wastages of controlling all the les important deviations. Once crucial deviations are detected, they are analyzed so as to identify their causes and effects on the organizational performance. Reports containing control information are sent to the person whose performance is being measured and controlled, so as to enable him to exercise self-control. This is known as feed back. A summary of feedback is also sent to his supervisor to enable him to provide assistance and guidance to his subordinate in improving his performance. While reporting the performance the principle of control by exception is exercised and only significant deviations are reported for taking appropriate action.

The control Process

Standards Operations Feed back(Plans) (Organizing stuffing measurement

direction) and analysis

Corrective Action

4) Taking Corrective Action—

Control does not mean only measurement of performance for finding out deviations but suitable remedial action has to be taken depending on the causes of deviations, supplied by the feed back Information. It is taken immediately so that normal position can be restored as quickly as possible. Corrective action may include revision or adjustment of standards, reorganization, Improvements in selection, training of employees, providing positive incentives etc. Corrective action is the last step of control process and control arrives at planning.

18.8 Requirements of Effective Control System

1) Suitability—

A sound control system must be appropriate to the needs and nature of the activity to be controlled. It should be suitable to the organizational structure. The techniques used for control should be consistent with the objectives, size and nature of the organization. The control system should concentrate on organizational objectives.

2) Promptness –

An ideal control system should be efficient in detecting and reporting deviations before they actually take place,. Timely action is possible only when information is available about deviations and their causes. Deviations and related problems should be reported quickly so that corrective action can be taken immediately before situation becomes out of control.

3) Forward Looking—

In order to be very effective the control system should be instantaneous and it should be directed towards future. It should enable mangers to forecast future troubles and threats so as to take necessary action before substantial loss takes place. Forward looking control should be so designated that it should motivate employees to achieve higher and better performance.

4) Strategic Point Control –

A good control system should focus attention on critical or significant variations. It should point out strategic or key areas where remedial action is required. All deviations are not of equal importance and hence do not require the similar attention. A manger can save his valuable time effort and energy and talents by concentrating on few exceptional variations. Thus the ”Control by Exception” is desirable for a manager for increasing his efficiency.

5) Objectivity –

For the purpose of accurate evaluation the standards and measurement of performance should be impartial, unbiased and objective in nature. They should be based on facts and participation, so that control becomes acceptable and workable. The control system should be verifiable and free form any personal bias. It should be acceptable to the employees.

6) Flexibility—

The control system should be flexible enough to be adaptable to changing conditions in the organization. It should be applicable under dynamic conditions. The control system should be continuously reviewed and kept up to date as far as possible.

7) Economy—

Controls must be worth of cost. Cost of installation and maintenance of control must be lower as compared to its benefits. Controls are desirable only when their expected benefits exceed costs involved. Hence a small firm cannot afford an expensive control system.

8) Simplicity-

A control system should be simple so that it can be easily understood and administered. Any complex and very elaborate system of control tends to be in effective. Hence control system should be developed taking into consideration the abilities of the executives.

9) Suggestive –

Control system should indicate not only variations but also suggest corrective action that should be taken. It should not only indicate where failures are taking place but also who is responsible for these deviations, and what should be done to overcome them. It should focus on action rather than on information.

18.9 Techniques of Managerial Control—

There are various techniques of managerial control. Which broadly may be classified as Traditional control Techniques and Modern Control Techniques. Traditional Control techniques may be further classified as Budgetary and Non-budgetary control techniques. Modern control techniques include Return on investment, Responsibility Accounting, Human Resource Accounting, Management Audit, Management information system PERT and CPM, etc. Let us discuss them briefly.

18.9.1 Traditional Control Techniques -

1) Budgetary control Techniques – Budget is one of the popular traditional techniques of control. A budget is a financial statement of anticipated revenues and expenditures for a specified period of time.” A budget is a financial or quantitative statement, prepared and approved prior to a definite period of time, of the policy to be pursued during that period for the purpose of attaining a given objective.” According to Terry, a budget is an estimate of future needs arranged according to an orderly basis covering some or all of the activities of an enterprise for a definite period of time.”

Budget is a control device because it provides a standard for evaluation of actual performance. It is also useful in communicating, motivating, planning etc functions of management.

Budgetary Control is the process of defining desired performance through the preparation of budgets measuring and comparing actual performance with the corresponding budget estimates and taking corrective action to correct deviations, if any. As Terry has pointed out, budgetary control is a process of finding out what is being done and comparing actual results with the corresponding budget data in order to approve accomplishments or to remedy differences by either adjusting the budget estimates or correcting the cause of differences. The ultimate objective of budgetary control is to help management in operating the business in the most efficient manner through providing control over the use of resources.

In business several types of budgets are prepared and used extensively. Most of the common budgets may be discussed as follows –

a) Sales Budget – Sales budget is the direct outcome of sales forecast and it takes into consideration the factors like demand and supply, competition, past sales trends, future estimates of sales, seasonal changes etc. Which affect volume of sales. The sales forecasts are based on population trends, consumer purchasing power, disposable income, price trends of the products, rate of inflation , general business conditions etc.

b) Production Budget – It lays down the quantity of output to be produced during the budget period. It is prepared on the basis of sales budget. The objective of production budget is to maintain proper balance between sales, output and inventory and to make optimum use of available resources, and facilities to produce maximum output at minimum cost. Production budget gives detailed production program for the organization, taking into consideration production cycle, seasonal fluctuations, production mix, speed of output, scheduling of orders to be fulfilled etc.

c) Materials Budget - It deals with the quantities of raw materials required for production of during the budget period. It is based on the production budget. Material budget is prepared for scheduling the purchase of materials required to produce budgeted volume of output. It also deals with the problems of storage, working capital, inventory control etc.

d) Labour Budget – It deals with the estimates of direct and indirect requirements of labour for a given period of time.

e) Cash Budget – It deals with the estimates of cash receipts and disbursements during the budget period.

f) Capital expenditure Budget—it consists of the estimates of capital investment in plant machinery and equipment, and other fixed assets, taking into consideration the future expansion etc programs of the enterprise.

g) Overheads Budget - It contains estimates of overhead costs, which includes factory overheads, distribution overheads and administrative overheads. The overheads budget is prepared to control fixed costs.

h) Master Budget -- It is a summary budget covering all functional and operational budgets. It indicates the proposed activities in details and the estimated results during the budget period.

i) Fixed and Flexible Budgets – A fixed budget is prepared on the basis of fixed level of operations and it does not indicate changes in cost according to the level of activity, Its aim is to co-ordinate sectional activities. The flexible budget indicates changes in costs according to different levels of activity it is useful for comparing results at different levels of output. It is more useful as a control measure than the fixed budget.

Advantages of Budgetary Control

An efficient system of budgetary control has several advantages as stated below-

1) Sound Planning—Budgeting makes planning more purposeful as budgets express the objectives and programs of an enterprise in financial or quantitative terms. Budgets direct every action of the organization towards achievement of goals.

2) Co-ordination- Budgeting is useful in developing unified action and co-ordination of individual efforts. The interaction between managers and subordinates during the process of budgeting tends to promote co-ordination through integration of the activities of employees.

3) Communication – While developing budget, managers usually communicate their plans to the subordinates, thus budgets serve as to indicate tasks to be performed by them at various levels in the organization, Thus budget communicates how subordinates have to act for achieving goals of the enterprise.

4) Effective control - Budgets serve as means of effective control, through providing standards for evaluation of performance objectively. Budgetary control enables management can identify deviations from plans and can take corrective action in time.

5) Employee Motivation- Budgets by way of providing standards of performance , enable the employees what is expected from them. As budgets are prepared in consolation with subordinate executives, they tend to improve their commitment and morale and motivates them to achieve the standards.

6) Democratic Management – Budgetary control helps in delegating authority without loss of control. It enables subordinates to participate in the process of the preparation of budgets. Thus budgets promote democratic management in the organization.

Thus budgetary control facilitates the entire process of management, from planning to policy formulation to co-ordination and control. It is much useful for profit planning and cost control.

Limitations of Budgetary Control

Budgetary control has the following limitations.

1) Inaccuracy -- As budgets are based on estimates, their reliability tends to be doubtful. Under dynamic environment the assumption on which forecasts are based may not hold good. Hence budget estimates may turnout to be inaccurate.

2) Rigidity -- Budgets suffer from rigidity as standards fixed tend to continue over a long period of time over budgeting may serve as a constraint and freedom and initiative of mangers tends to get restricted.

3) Expensive – Budgeting is a time consuming and tedious process and it cannot yield quick result. It calls for expenditure in terms of time, money and energy to formulate and implement budgets. Sometimes budgets are treated as ends and people become cautions to function within the limits of budgets.

4) Misuse of Budgets-- Budgets may be used to hide inefficiency. Managers may demand excess resources and they concentrate on spending allocated resources under fear that if they will not spend there resources they will be allocated less resources in the next budget. Sometimes budgets are made as precedents and certain expenses are sought to be justified on the grounds that they were incurred in the past. Thus budgets are likely to be misused in several ways.

5) Emotional Resistance – As budgets are used as standards for evaluation of performance employees may consider them as pressure devices and complain about it. Such unfavourable reactions tend to reduce effectiveness of budgets.

6) Not a substitute for Management -- Budgets by themselves cannot prevent deviations nor ensure satisfactory results. Effective supervision and timely corrective action is required to improve performance. Thus budgetary control is a tool of management and not a substitute for it.

Essential of Effective Budgetary Control –

A sound budgetary control system must satisfy the following requirements –

1) Accurate Forecasting –

In order to have realistic budgets it is necessary to have accurate forecasting for formulating buegets. A budget manual should be prepared to prepare budget on sound lines. The objectives of the budgetary control system should be prepared to prepare budget on sound lines. The objectives of the budgetary control system should be specified and must be based on organizational structure.

2) Sound organizational Structure –

In order to have effective budget it is necessary to have a sound organizational structure where authority and responsibilities from budgeting should be clearly defined. A budget director should compile and co-ordinate various functional budgets and budgetary control should be so developed that it will be suitable for every job in the organization.

3) Flexibility –

Budgets should be maintained flexible through continuous review and revision. They should be useful for dynamic action and all the limiting factors should be considered. Managers should have reasonable degree of freedom and discretion in the process of administration of budgets.

4) Reporting and Recording in time

Accurate and reliable system for recording and reporting of current events must be developed. In order to take corrective action in time. Timely reporting of deviations is necessary. There should be an integrated accounting system consisting of financial accounting, cost accounting and management accounting. Operating results should be continuously compared with budget estimates, for finding out deviations.

5) Top Management Support—

In order to have effective budgeting, full support of top management is necessary. Top executives should consider budgeting as an integral part of dynamic management. Executives responsible for achieving budgeting targets should be authorized to implement budgets, so that they can function effectively.

6) Participation –

Subordinates executives should participate in the process of formulation and implementation of budgets, for increasing acceptability and achievements of budgetary targets. Employees should support in implementing budgets effectively.

7) Open Communication

Free and frank communication in the organization along with proper training and education for preparing and executing budgets to subordinates may help in making budgetary control system efficient and effective .

Management should take steps to avoid failure in budgeting and the process of preparation of implementation of budgets he carried on scientific lines through participation to be effective.

TECHNIQUES OF MANAGERIAL CONTROL

Traditional Techniques Modern Control Techniques

1. Return on Investment 2. Responsibility Accounting

Budgetary Non-Budgetary 3. Human Resource Control Control Accounting Techniques Techniques 4. Management Audit

5. MIS1. Sales Budget 1. Personal Observation 6. PERT/CPM2. Production Budget 2. Statistical Data3. Materials Budget 3. Special Reports &4. Labour Budget Analysis5.Cash Budget 4. Operational Audit6.Capital Expenditure 5. Financial Statement Budget Analysis7. Overheads Budget 6. Break even Analysis8. Master Budget 7. Standard Costing9. Fixed Flexible budget

2. Non Budgetary Control Techniques --

There are several traditional non budgetary techniques that are often used are discussed below.

a) Personal Observation—

It is the oldest techniques, which includes mechanical observation of performance while it is taking place for the purpose of finding out deviation through comparing with the standards laid down. It helps early detection of deviations and taking quick corrective action. But it tends to exercise psychological pressure on subordinates and also involves personal bias of the observer. It is time consuming and expensive technique. It may restrict creativity and initiative. However Haimann Argues that there is no substitute for it, in the control of activities of subordinates.

b) Statistical Data—

Statistical Data has been a popular technique of management control. This data is useful in explaining the problem quickly. Statistical data are mostly used in control areas like production planning and control, inventory control, quality control etc. Such data is useful for measurement and evaluation of performance objectively and accurately.

c) Special Reports and Analysis—

Routine accounting and statistical reports submitted by various departments of the organization. However they do not provide sufficient information in certain areas. The experts prepare special reports and analysis in particular problem areas to indicate policy implications and steps required to implement the policy more effectively.

d) Operational Audit—

Internal audit or operational audit, is carried out by the special staff, of the operations and accounts of an enterprise, in order to provide overall review of performance . It is used to check and balance on daily operations. Internal audit is useful technique of control technique. Similarly external audit is also regularly carried out. It is independent verification of financial statements. Thus internal

audit aims at judging the effectiveness of internal control while external audit ensures the reliability of accounting system. Both these audits are complementary and serve as useful techniques of control.

e) Financial statement Analysis-

Financial Statement i.e. profit and loss account and balance sheet are useful for finding out trends in the performance of the business. They can be used for comparisons over different periods time as well as with other organizations. Analysis of these statements in the form of ratio analysis helps in knowing about financial conditions of the organization. Profitability ratios indicate profit-earning capacity while liquidity ratios measure company’s ability to meet short term obligations. Solvency rations are used to know its ability to pay long term debts, while operating ratios measure efficiency of manufacturing and sales operations. However ratio analysis suffers from certain limitations, as they do not indicate actual magnitudes and there are no standard values for various ratios. Any single ratio may not be of much use and hence it has to be supplemented with other ratios.

f) Break-Even-Analysis—

It is also called as Cost-volume profit analysis it refers to the analysis of the interrelation ships between costs, sales, volume and profits. It makes use of chart for indicating behaviour of cost at different level of sales and its effect on profits. The break even point is a point of no profit no loss as at this point total cost equals total revenue. Y Total revenue

Profits

Total Cost Costs (Rs)

Loss Fixed Costs

O Sales (Rs) X

B – is break even point

In the break even chart, on X axis sales volume (Rs.) is shown while on Y axis costs (Rs.) are shown. Fixed Costs are represented by a horizontal line because the remain fixed in spite of changes in sales. The variable Costs are shown at different levels of sales volumes. Similarly total costs, total revenue and estimated profit or loss are given along with changing level of sales. The point at which the total revenue line and the total cost line intersect, represents breakeven point. This

Total Fixed costB.E Point = ------------------------------------------ X Price

Price-Variable Cost Permit

The technique of breakeven analysis is useful for decision-making and control. It explains the marginal results of managerial decision.

The break-even analysis is based on the assumption that the fixed costs can be separated from variable costs, which may not be always possible. Second, fixed costs may remain constant up to certain level after which they tend to increase. Considerably, Third, the break-even point also changes with a change in selling price, operating efficiency, product mix etc. Fourth, it also neglects influence of incomes, plant size, technology, time lag between production and sales etc.

g) Standard Costing—

This technique is often used for cost reduction and cost control. Under standard costing standards for materials, labour, overheads and other components of total cost are fixed and actual costs are compared with these standard, costs and variances are analyzed to find out their causes. Then necessary action may be taken to prevent variances in future standard costing enables management in detecting sources of in efficiency and wastages. It concentrates on controllable costs. Standard costing is also used as the basis for budgeting and incentive plans. It helps in measurement and is useful for comparison of operating performance. However it is rather difficult and costly to determine cost. Record keeping becomes tedious, as dual costs have to be maintained. It is also necessary to make frequent changes in standard costs on account of changes in business environment. Sometimes the standards may be resisted by employees.

18.9.2 MODERN TECHNIQUES OF COST CONTROL

Taking into consideration the importance of human factor in management, several new control techniques have been developed by experts. These techniques take into account the socio-psychological needs of human beings. They provide lot of information which traditional techniques cannot readily provide. Some of the new techniques may be discussed as follows.

a) Rate of Return on Investment (ROI)

According to this techniques attempt is made to measure relationship between the amount of net profits and the size of total investment of an enterprise. It is effective technique of financial control. It is assumed that the objective of an enterprise is not to maximize profits but to optimize rate of return on investment.

Sales Net ProfitsROI = ------------------- X ------------------ Investment Sales

Net Profits

= ------------------- Sales

Net profit is taken before taxes but after interest Investment includes both, current assets minus depreciation. Projected ROI may be calculated on the basis of historical data.

Advantages

i) ROI reflects operating efficiency of an enterprise and it concentrates on various forces affecting profitability of business.

ii) It helps in rational allocation of resources & functions as supplement to budgetary planning and control.

iii) It helps in evaluation of alternative uses of capital.

iv) It can be used as total control technique as it reflects the overall objectives of business.

v) It provides sound basis for interfere comparisons it can be used for evaluating performance between departments of the same organization.

Limitations—

1) ROI is simple technique but in practice it involves several difficulties such as selection and valuation of assets forming the investment base, allocation of joint costs, fixation of standard rate of return etc.

2) Under period of rapidly changing prices, historical costs become inadequate for appraisal of performance through the ROI. Actually costs and assets must be valued at current prices. Hence adjustments in price changes have to be made for making ROI technique more realistic.

3) Excessive concentration on ROI may result in neglecting long term considerations.

4) It may also lead to greater concentration on financial performance as non financial factors like industrial relations , executive development corporate image tend to be neglected.

In spite of these limitations the ROI technique is widely used for evaluation of capital projects and business enterprises.

b) Responsibility Accounting—

It is a system of accounting where each departmental head is held responsible for the performance of his department. Each department is considered as a responsibility center and its manager is held responsible for the targets fixed for his unit. Responsibility centers are of three types. A) The cost centers, whose performance is judged through accomplishment of tasks within specified amount of expenditure b) For profit centers, performance is measured in terms of achievement of profit targets. C) In case of investment centers managers are held responsible for effective use of assets.

Under responsibility accounting costs are assigned to the responsibility centers and not to the products. Each center is charged with those costs that are within its control. The costs are collected and reported according to these responsibility centers. Thus the system of responsibility accounting is useful for knowing exactly who is responsible for costs. It also helps in management by objectives.

C) Human Resource Accounting—

Financial and cost accounting do not take into consideration the valuable asset of the organization that is human resources. Under traditional accounting system investment in human resources is treated as operating expenses and hence profits are underestimated. But an organization uses its human assts, current earnings are inflated at the cost of future earnings. Hence the human assets need to be

properly valued. The present and future earnings of an enterprise depend on the quality of its human resources.

Lickert has developed a technique for human resource accounting. Human resource accounting is defined as accounting for people as an organizational resource involving measurement of costs incurred in the development of human assets and the economic value of these assets to an organization. There are two approaches used for it. In one approach original costs incurred in the procurement or acquisition costs and development (learning costs) of employees are taken into consideration. Under second approach replacement costs are used.

The value of an individual to the organization is defined as the present worth of the stream of future services that he is expected to provide to the firm. This is called as individual’s expected realization value (IERV) . It is a function of the individual’s conditional value and his likelihood of remaining in the organization. The former depends on the individual’s abilities and activity levels, while the latter is a function of job satisfaction, organizational commitment motivation etc.

Advantages –

1) Human resource accounting is useful as a base for efficient planning and management of human resources.

2) It helps in measurement of cost of acquisition of human resources.

3) It supplies information for appraising staffing process and for maximizing the expected realizable value.

4) It provides data for developing promotion policy to ensure effective use of human resources.

5) It has favourable psychological effect for job satisfaction and employee morale.

Limitations—

1) It is very difficult to measure the value of human assets especially when work is qualitative in nature.

2) Many factors related to human behaviour cannot be predicted accurately.

3) Human resource accounting is time consuming and costly procedure.

4) To measure human beings in terms of money is degrading and hence it is opposed by the employees and their organizations.

18.10 MANAGEMENT AUDIT

The success of the organization depends on the quality of management. Management audit is designed to make an assessment of management. It is an independent, systematic and critical appraisal of the total management process. It is a periodic evaluation of the past and present managerial practices to identify the adjustments necessary to make the organization more effective and efficient. Management audit aims at measuring deviations from the principles and practices

of effective management at various levels of organization and their effects on the end results. Thus it serves as a tool of measuring the effectiveness of management as a whole.

The results of management audit are presented in the form of periodic reports to top management, which provide objective judgment on the quality of managers and the system in which they operate. Management audit can be done by internal or external auditor outside agencies tend to carry out management audit more objectively but they may not be fully acquainted with managerial practices and environment of the organization.

Management audit is still a developing concept. Its scope and contents are not yet fully defined. There is also lack of well defined procedures and principles for management audit and also there is a shortage of qualified management auditors. Efficiency of management audit depends on skill, ingenuity and expertise of the management auditors.

18.11 Management Information System (MIS)

For the purpose of efficient control it is necessary to have adequate, reliable accurate and timely information or feed back or operations. It is the quality of data that determines the quality of managerial decision. But data need to be processed to make it information. Electronic Data Processing (EDP) devices like computer permits economical and quick storage and processing of huge data.

The use of electronic devices has led to the development of integrated information systems which provide regular flow of information required for decision making and control. It is known as MIS . Thus MIS is a system that provides relevant information in the right form and at the right time to different managers for the purpose of planning and control. It is an organized and refined method of providing past, present and projected information on internal operations and external environment.

MIS is useful in reducing time, cost and energy required for collection, processing and supply of information to various organizational units. By improving the quality and quantity and timeliness of information, MIS makes planning and control more effective and efficient.

18.12 Program Evaluation and Review Technique (PERT) and critical path method (CPM)—

These network techniques are concerned with controlling time spent in completing the project. All the activities of a project are integrated in a logical sequence to find out minimum time required for completing the project.

The process of PERT/CPM includes the following steps.

1) The activities and events that are required to complete the project are clearly identified.

2) Event is the actual performance of a task at a given point of time while activity represents time and resources for progressing from one event to another. Events provide basis for measuring the progress of a programme.

Event is shown by a circle and activity by an arrow. Each event indicates initiation or termination of an activity.

3) The sequential arrangement of activities is decided in such away that a particular event cannot be performed without completing the preceeding events. The activities are arranged in a logical sequence and the order in which they are to be performed is decided.

4) A correct estimate is made of time to be taken by each activity. There are three time estimates-

a) Optimistic time showing minimum time required if every thing goes on well.

b) Pessimistic time showing maximum time of activity.

c) Most probable time which lies between these two

5) The last step involves determining the critical path. It is the longest path in the network in terms of time. If the activities on this path are not completed in time. If the activities on this path are not completed in time. The entire project will be delayed. It is critical because the time spent on the activities that lie along this path determines the total time taken in completing the project. As all other paths are shorter, they have some slack time.

Advantages –

i) PERT/CPM techniques are useful for handling a wide range of problems related to the project management. CPM is used for planning and controlling most logical sequence of activities for accomplishing a project.

ii) Network techniques of PERT/CPM help in planning time schedules and costs and allocation of resources.

iii) PERT attracts attention on critical activities that need to be corrected. It facilitates control by exception by avoiding wastage of time and money on less important activities.

iv) PERT brings all the components of a program together in one chart. By studying sequence and interrelationships of different components of the project it enables simultaneous performance of various parts of the project. It shows interdependence of different activities.

v) It provides a standard method for communicating project plans, schedules and costs.

vi) It makes possible to have feed forward control as a delay in one activity will affect other activities & hence the project as a whole.

vii) The PERT helps in creating pressure for action at the right spot and level in the organization, at right time.

Limitations-

i) It is usually difficult to estimate correct time for completing various activities as they are not repetitive in nature. Errors in estimates at various points may make PERT chart unreliable.

ii) PERT/CPM is time consuming and costly technique of management control.

iii) These techniques cannot be used where reasonable estimate of time schedule is not possible as in case of mass production. Because once a repetitive sequence of events is worked out, elaborate and continuing control is not required.

iv) PERT concentrates more on time than costs, so when other considerations than time are involved it may not be a useful technique.

Thus there are several techniques of management control. A manager has to select an appropriate technique or set of techniques while carrying out controlling function efficiently and effectively.

Q.18 a) Define the concept of controlling. Discuss its need and significance in management.

b) Discuss various techniques of controlling along with merits and demerits of each of them.

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UNIT – 19 DECISION MAKING

19.1 IntroductionManagement is essentially a decision making. Making process . In case of every function of management, a manager has to make a choice among alternative courses of action. Whatever a manager does, he does it through making, decisions. A manager by way of taking decisions directs the behaviour of subordinates. So management is defined as an art and science of decision making. However , it may be noted that, decision making is the means for carrying out managerial tasks and responsibilities. The efficiency of the organization depends upon the efficiency of decision making of its management.

19.2 Definitions—

1) Terry- “ Decision making is the selection based on some criteria from two or more possible alternative.”

2) McFarland -- “A decision is an act of choice where in an executive forms a conclusion about what must be done in a given situations a decision represents a course of behaviour chosen from a number of possible alternatives “

3) Decision making may be defined as the process of consciously choosing a course of action from available alternatives for the purpose of achieving a desired result.

4) Decision making is a rational process including all those investigative, creative, diagnostic and evaluative activities which take place while making a decision.

19.3 Nature or Characteristics of decision-making

On the basis of above definitions, the main characteristics of decision making may be stated as follows.

i) Decision making is a process of making a rational choice or selecting one of the various alternative courses of action.

ii) Decision making is necessary only when different alternative solutions are available.

iii) The aim of decision making is to find out the best alternative by evaluating costs and benefits of each alternative.

iv) Decision making is a purposeful activity.

v) Decision making is an intellectual or mental and rational or logical process. It is the end result of thinking and judgement.

vi) Decision making involves the commitment of resources and reputation of the organization.

vii) Decision making is always related to the situation or environment.

viii) Decision making is a pervasive function of management as the managers at all the levels in the organization have to take decisions.

ix) Decision making is a human and social process, because it involves the use of intellectual abilities and intuition, subjective values and judgement, Manager’s knowledge and experience enables him to take correct decisions.

x) Decision making implies freedom of choice from among alternative courses of action.

xi) Decision relates means to the end i.e. how to use resources to achieve certain goals.

19.4 Types of Decisions—

Managerial decisions are of different types which may be classified on different bases asfollows

1) Organizational and personal decisions--

Decisions taken by an executive in his official capacity or on behalf of the organization then it is called organizational decision. The executive is delegated the authority to take such decisions which affects the functioning of the organization. For example, transfer of an employee or to produce a new product is an organizational decision.

Personal decisions are taken by an individual for himself in his personal capacity, and such authority is not delegated. Personal decisions usually influence personal life of an individual, but sometimes it may affect the organization. For example, decision to leave the organization by top executive.

2) Routine and Strategic Decisions--

Routine or tactical decisions are related to the day to day operations of the organization. They are taken by lower level managers, repetitively according to the policies, procedures and practices of the organization. These decisions may not need thinking, hence can be taken quickly.

Strategic or basic decisions are taken by the top management. They are concerned with policy matters and may affect objectives and structure of the organization. These decisions involve long-term commitment. Hence they need lot of thinking, environmental analysis, and considerable deliberation. These decisions involve higher risk and uncertainty. For example location of plant, starting new business activity etc are examples of strategic decisions.

3) Policy and operating Decisions-

Policy decisions are important decisions because they affect the organization as a whole so they are taken by the top management.

Operating or administrative decisions are taken by lower levels of management. These decisions translate policies into specific actions for example, merit based promotion is a policy decision while calculating merit of employees is an operative decision. Policy decisions provide basis for taking operating decisions.

4) Programmed or structured and Non-Programmed or unstructured decisions.

Programmed decisions are of routine and repetitive in nature and they are taken according to specific procedures, systematic procedures, systematic procedures are established, which are used for taking programmed decisions. For example, when an employee applies for leave, the supervisor can take decision according to the rules and regulations of the organizations, without referring to higher authorities.

Non programmed decisions are taken to solve unstructured or unique problems for which there is no standard procedure to solve such problems for example, If many employees apply for leave on a particular day, then the supervisor has to refer the case to top management for decision. Such decisions need judgement, intuition are creativity.

5) Individual and group decisions--

A decision taken by an individual on his own is called individual decision. Such decision is taken in small-scale organization or autocratic management of a large organization. Individual decisions may be taken in case of routine problems involving simple analysis of variables and in situations where definite procedure for taking decision is available.

The group of persons takes group decisions. All the major and strategic decisions are taken by the group of people, which are taken after discussing the problem from all angles, hence it tends to be balanced, practical and acceptable decision. For example Board of Directors, Executive committee etc is in charge of taking group decisions.

19.5 Styles of Decision Making

There are various styles adopted by executives for taking decisions. The most commonly used styles are as follows

i) Autocratic Decision Making--

Autocratic executives think that their subordinates do not have necessary abilities to take correct decisions and they do not like to take responsibility, hence he prefers to take decision on his own. He does not feel, that it is necessary to discuss the problem with subordinates and in order to avoid wastage of time he takes decision and makes others to imp lent it. If anything goes wrong he tends to criticize the process of implementation rather than rationality of the decision.

ii) Participative Decision Making—

A participative executive believes that subordinates are aware about the problems and have necessary skill and abilities to solve them. In order to take advantage of the expertise and talents of the subordinates in the process of decision making. He believes that participative decision tends to be more realistic, practicable and acceptable to the subordinates . On account of their participation it motivates them to implement such decisions effectively and efficiently.

iii) Consultative Decision Making--

When executives face complex and highly technical problems, they prefer to discuss the issues with experts in related fields and after consultation they prefer to take decision. Sometimes they have to provide consultation to their subordinates for taking decisions.

19.6 Decision Making Process-

Decision-making is a systematic and planned process consisting of several interrelated phases or steps. These stages may be discussed as follows –

1) Defining the problem

Once goals are known and planning premises are clear, the first step is to identify and define the problem clearly. In order to find out right solution accurate diagnosis or perception of the problem is necessary. When problem is well defined it is half solved. Definition of the problem involves defining desired results, identification of fundamental cause and magnitude of the problem and the limits or boundaries within which it is to be solved. Clear definition of the problem is useful for collecting necessary data or information in order to find correct solution.

2) Analyzing the Problem --

After clearly defining the problem, the next step is to analyze it in terms of nature, impact, futurity (to what length of time the decision tends to commit the business to the cause of action), periodicity etc of the decision. Analyzing the problem involves listing of important factors, which are obstacles in achieving goals, which may include human, material financial or external factors. Information relating to all these aspects have to be collected to arrive at correct decision. The collective data need to be analyzed to find out causes (independent variables) and effects (dependent variables) According to the principle of limiting or strategic factor, attention should be concentrated on relevant factors or variables.

3) Developing Alternative Solutions-

In order to arrive at sound decision it is necessary to find out possible or viable alternatives. While identifying alternatives imagination experience and judgement is required, Finding suitable alternatives is necessary to have correct decision. While considering the alternative even negative alternative , like not to take action, has to be considered.

DefineTheProblem

ObjectivesConstraintsCausesMeasuresOf success

Analyze TheProblem

CollectionOf dataCritical Factors Uncertainties

DevelopAlternatives

ImaginationInvestigationExperienceJudgment

4) Evaluating Alternatives --

After developing alternatives , next step is to compare and evaluate these alternatives on the basis of their costs, feasibility, time and contribution to objectives, taking into consideration limiting or strategic factors . For the purpose of evaluation of alternatives marginal analysis or cost benefit analysis is used, as it involves measurement of advantages and disadvantages of each alternative. Evaluation of alternatives in terms of their strengths and weaknesses in achieving objectives has to be carried out systematically and objectively.

STEPS IN DECISION MAKING PROCESS

FEED BACK

Peter Drucker has suggested that, while evaluating the alternatives, risk involved, economy of effort, timing or urgency and limitation of resources should be taken into consideration.

v) Selecting the best Alternative --

A comparative evaluation of different alternatives will suggest the relative worth of each alternative. The alternative, which can make net maximum contribution (Costs <Benefits) to the goals should be selected as the best alternative under given conditions. While selecting best alternative post experience, experiments and Research and analysis may be used.

vi) Implementing the Decision--

Once the best alternative is selected, steps need to be taken to put it into practice. Implementation or execution of the decision involves

EvaluateAlternatives

RiskEconomyOf EffortTimingLimitationOf Resources

SelectAction

ExperienceExperimentsResearch& Analysis

ImplementDecision

CommunicationAcceptanceDetailedPlansControls

Follow up-Results-Comparison With Expectations -Adjustments

i) Preparation of detailed plans.ii) Communication of decisioniii) Gaining acceptance of decisioniv) Getting support and co-operation of those who are going to convert

decision into effective actions.V0 Developing controls for proper implementation of the decision.

The decision should be implemented at the right time, in right manner.

vii) Evaluation or follow up --

To see whether the results are satisfactory or not. If not make improvements in the decisions.

19.7 Simon’s Model of Decision Making --

According to Simon decision making process consists of three phases.

a) Intelligence Phase

It involves searching the environment for conditions calling for decisions. Necessary data inputs are obtained, processed and examined for clues that may identify problems or opportunities.

b) Design --

It involves inventing, developing and analyzing possible courses of action. It involves processes to understand the problem, to generate solutions and to test solutions for feasibility.

c) Choice –

It includes selecting an alternative or course of action from those available. A choice is made and implemented.

Intelligence Phase There is a flow of activities from intelligence to design to choice, but at any phase there may be a return to a previous phase. For example, a decision maker in the choice phase may reject all alternatives and return to the design phase for generation of additional alternatives.

Flow Chart of Decision Process

The intelligence phase of the model includes activities to identify problem situations or opportunity situations requiring design and choice. Intelligence implies scanning the environment either continuously or intermittently depending upon the situation. For example marketing manager makes periodic visits to key customers to review possible problems and identify new customers needs. In other words, intelligence activities are characterized by dissatisfaction of potential rewards from a new state.

Design Phase

Choice Phase

Thus simon’s model does not go beyond the choice phase. But other models suggest the following steps.

1) Recognition of problem or need for decision.2) Analysis and statement of alternatives3) Choice among alternatives4) Communication and implementation of decision.5) Follow up and feed back of results of decisions.

19.8 Rationality in Decision Making

Rationality implies the capacity for intelligent and objective action, According Steiner,” a rational business decision is one which effectively and efficiently assures the achievement of aims for which the means are selected. Rationality in decision-making means that a decision maker tries to maximize the values in a situation by selecting most suitable course of action for achieving goals. Rationality also refers to the selection of preferred behavior alternatives in terms of values, so that the consequences of behavior can be evaluated.

The end means or value system approach to rationality suffers from certain limitations. For example

1) Ends to be achieved may not be correctly stated. 2) It may be difficult to separate ends from means , in practice.3) It neglects time element in decision making.

The classical economic approach to decision making has been criticized by Simons stating that, in practice people are not completely rational and do not always seek optional solutions. Managers want reasonably good solution rather or than optimal solutions. Bounded Rationality—Humans have limited capacity for rational thinking. They Construct simple model of reality. But it does not follow that the rational solution for the simplified model is rational in real situation. Rationality is restricted or bounded not only by limitations on human processing capacities but also by individual differences such as age education and attitudes.

19.9 Decision making under uncertainty.

The environment under which decisions are taken are of three types.

1) Under conditions of certainty, the outcome of various alternatives can be predicted accurately.

2) Under conditions of risk, the available information is not sufficient for accurate prediction of outcomes and hence probability of outcomes and hence probability of outcomes may be used.

3) Under conditions of uncertainty, neither the available information is sufficient nor probabilities are known and hence atmosphere of decision making tends to become more difficult .

19.10 Decision Tree –

According to McFarland,” a decision tree is a graphic method by which a decision maker can more readily visualize the courses of action open to him, together with the risks, possible outcomes and information needs involved in the problem.

A decision tree indicates the magnitude, probability and interrelationship of all possible outcomes. Every possible outcome is weighed in probabilistic terms and then evaluated. Each alternative is shown as a Brach of a tree.

The expected value of each course is calculated by multiplying the estimated probability with the potential income associated with the outcome. The overall monetary gain for each alternative is obtained by adding the exacted values for each possible outcome.

Decision Tree is useful for complex decisions involving series of chances of events over time . According to this technique a manager has to identify alternative courses of action, estimate probabilities and calculate expected pay off, so that he can anticipate results of his decision. Second decision tree also explains interdependence of events that take place over time.

The decision tree is prepared on the basis of data obtained from pay off matrix. A pay of matrix is a table indicating various alternative outcomes of each alternative under different Conditions. For each course of action the probability is calculated for making choice. A set of values is prepared for each predicted outcome and the alternative with highest value is selected.

Generally the decision making tree is drawnHorizontally, It has three important components. The first is the base of the tree or decision point,

Represented by a square. The second is a Chance point represented by a circle, which shows where chance event.

Q.19 a) What do you understand by decision making? Explain the nature, and types of decision making .

b) Discuss the process of decision making

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UNIT - 20 SHORT NOTES

20.1 Management Vs Administration –

Management, administration, organization are basic terms of management science. According to some authors these terms are synonymous while others hold that they are separate terms. According to Sheldon administration is the function in industry concerned in the determination of corporate policy, the co-ordination of finance, production and distribution, the settlement of the compass of the organization and the ultimate control of the executive. Management is the function in industry concerned in the execution of policy, within limits set up by the administration and the employment of the organization for the particular objects set before it.

Organization is the process of so combining the work which individuals on groups have to perform with the faculties necessary for its execution that the duties so formed, provide the best channels for efficient, systematic positive, and co-ordinate application of the available effort.

Administration determines organization; management uses it for achieving organizational goals.

Administration Management

1 Policy Administration is concerned with policy making

Management is concerned with implementation of policy

2. Functions Legislative Executive

3. Concern with human efforts

Not concerned with human resources

Mainly concerned with direction of human efforts in the execution of plan and policy

4. Functions Planning and organizing Motivating & Controlling

5. Level of Management At the top level Middle and Lower level of management

6. Co-ordination and control Administration co-ordinates resources frames organizational structure & exercises control over enterprise

Management uses organization for achieving targets fixed by administration

7. Ability required Administrative ability Technical ability

8. Scope Wider at upper level Wider at lower level in the organization

9. Use Term is used in government sector units

Term is used in private sector units

10. Nature Sphere is static and finite Management is dynamic and in finite process.

1) Levels of Management and Their Functions

In business organizations there is a scalar chain on chain of command from top authority to the lowers level. This hierarchy or chain arises through superior subordinate relationships at various levels of management. The level of management determines the authority and status of managers.

A) Top Management-

It is a policy making group responsible for the overall direction and success of the organization. It includes shareholders, Board of Directors, Chief Executive.

Functions

i) To analyze evaluate and deal with external environmental forces.

ii) To establish long term goals, strategy, policies of the company.

iii) To create organizational framework consisting authority responsibility relationships.

iv) To appoint departmental and other key executives.

v) To provide overall leadership to the company.

vi) To represent the company to the outside world like trade associations, Government, trade unions etc.

vii) To co-ordinate and review the activities of different departments.

B) Middle Level Management—

It is concerned with the task of implementing the policies and plans worked out by top management. It consists of departmental heads and other executive officers attached to the different departments. They have to face pressures from above, below and from sideways and have to work under top management to achieve broad objectives of the organization.

Functions --

i) To interpret and explain the policies formed by top management.

ii) To compile and issue detailed instructions regarding operations.

iii) To maintain close contacts with operating results so that performance evaluation becomes easier.

iv) To participate in operating decisions.

v) to cooperate among themselves so that the organization as a whole gets itself integrated and coordinated.

vi) To motivate supervisors for achieving organizational goals.

vii) To train and develop supervisory personnel.

C) Supervisory Or Lower Level Management-

It consists of supervisors, foremen, sales officers, Accounts officer etc. They are mainly concerned with technical and routine problems, They maintain personal contacts with workers and. They get work done through their people. The main functions of supervisors are –

i) To Plan day to day production with the goals set by higher authorities.

ii) To assign jobs to workers & provide facilities for training and developing them.

iii) To supervise and control workers and to maintain personal contacts with them.

iv) To provide materials tools etc and to maintain machinery in good condition.

v) To explain work procedure and advise workers and solve their problems.

vi) To maintain discipline, morale and good human relations in the organizations.

vii) to report feed back information and the problems of the employees which cannot be solved at supervisory level.

It may be noted that, according to the level of management, different types of skills are required.

At the lower level of management technical skills are required while at the middle and higher level conceptual skills are required. These skills include ability to see the whole organization and interrelationships between its parts. It is a mental ability to coordinate and integrate all the activities of the organization. Such skills are necessary to understand the problem from all of its aspects and the environment giving rise to such problems.

Human skills are required for all types of managers because they have to get work done through them. Human skill consists of ability to work effectively with and understand and motivate the people to achieve goals.

Top Management Thus technical skill deal with Jobs, human skill with persons

And conceptual skill with ideasAll these skills are interrelated and are required for all the manger

Middle Management mangers although their relative impo Importance varies with the level

Of management as shown in the figure figure.

Lower Level Management

20.2 BUREAUCRACY

Max Weber believed that bureaucratic organizations are the most rational means of carrying out imperative control over human beings. Weber described the

Conceptual Skill

Human Skills

Technical Skill

bureaucratic model as an orderly structuring of power to achieve rational human behaviour under a hierarchy of professionals. Main features of Bureaucracy –

a) A set of written rules and regulations

Bureaucracy functions with the help of rules and regulations that are recorded in writing. Rules are designed to maintain uniformity of action and equality of treatment. Written rules and procedures serve as guides for actions for managers and workers. Norms of conduct are established and everybody is expected to follow them.

b) Specialisation—

Under bureaucracy there is systematic division of labour, rights and power. Every member knows his job well and he does it efficiently.

c) Hierarchy of Authority –

On account of series of delegations, a hierarchy of authority is created, so that every subordinate is under the control and supervision of his superior. This is necessary for executing orders effectively and efficiently.

d) Impersonal Relations—

Under Bureaucracy a person gets authority on account of his position in the organization and not as a prson. Hence impersonal relations tend to develop. Staff members are not the owners of the means of production. Even organizational property controlled by an individual is completely separated form his personal property.

e) Trained Personnel

Under Bureaucracy members of the staff are provided specialized technical training so that he can apply rationally technical rules or norms. The bureaucrat derives authority and legitimate command from technical skill and knowledge, and employees are placed according to their technical skill and competence, in the organization.

f) Organizational Freedom—

Under Bureaucracy the organization is free from external control and positions cannot be monopolized by any person. All positions are free and flexible allocated and re allocated according to the needs of the organization.

Limitations of Bureaucracy—

Bureaucracy was observed to be an ideal organizational design having ability to utilize available technical knowledge and skill. Rules and procedures in written form were expected to provide guidelines for action. However in practice several difficulties have to be faced and hence ideal bureaucracy cannot be achieved.

1) Division of labour inhibits effective communication among technical experts & between various levels of authority.

2) The network of rules and regulations do not provide scope for creativity and initiative to the employees who tend to work in a mechanical way.

3) Prejudice and bias in promotion may lead to incompetence and frustration.

Thus bureaucracy is a rigid machine model of organization which may lead to goal Displacement empire building and impersonality. It cannot satisfy higher order needs of the individuals and hence there is limited scope for executive development.

20.3 SPAN OF MANAGEMENT

It is also called as Span of Control, Span of authority on Span of Supervision. Span of management means the number of subordinates managed efficiently by a single manager on officer in the organization. In other words, span of management implies the number of subordinates reporting directly to a superior. It refers to number of people which an executive can supervise and manage effectively.

There are many factors which affect the span of management. Some of them are discussed below.

1) Nature of Work -- In case of routine and repetitive type of work span can be wider as it does not require much attention and guidance from supervisor.

2) Capacity of the supervisor -- Each manager has different mental capacity and physical energy. A supervisor who can understand problems quickly command loyalty from people, get a;pmg wotj subordinates easily etc can have wider span of control.

3) Ability of subordinates -- Efficient and well trained employees need little guidance, hence the span can be wider where such employees are available.

4) Clarity of Plans – If the plans are clearly defined then subordinates do not need frequent guidance, hence the span can be wider.

5) Degree of Decentralization – Under high degree of decentralization , a manager has not to make many decision hence he can supervise a large number of subordinates.

6) Staff Assistance -- An executive can supervise more subordinates if advice and assistance of staff specialists is available to him.

7) Location of Operations-- Where the operations are scattered over larger areas, span tends to be narrower . for example it is easier to supervise 25 workers working in one room but it is difficult to supervise 25 salesman located in different districts.

8) Communication and control Techniques— When the communication system is effective then the span can be wider. For example, a well established grievance procedures and suggestion schemes reduce face to face contacts between worker and supervisor similarly impersonal control through reporting and budgeting permits a wider span then control through personal supervision. Sophisticated information and communication system reduces close supervision, use of objective standards tend to wider span of management

9) Level of Management – Generally at the lower level of management the span tends to be wider as compared to the higher level of management.

Measurement of span of management

Graicunas has developed the following formula to find out number of superior subordinate relationships in the organizations.

2nR == n X ------ + (n-1)

2

Where R = number of relationshipsN = number of subordinates

Thus in case of 5 subordinates there will be 100 relationships and when subordinates are 10 then the number of relations increases to 5210.

The span of management is not a rigid rule to be applied in all situations but it is a valuable tool for identifying organizational weaknesses. In recent years there is a trend towards wider span through decentralization, efficient communication & control techniques, increase in competence of managerial and subordinates skills etc. The appropriate span will be determined by the situation.

20.4 Management By Objectives (MBO)

Peter Drucker developed an approach to management known as the MBO. It is a philosophy and a technique of management. It is a process where superiors and subordinates jointly identify specific goals, decide about results to be achieved, assess contribution of each individual and integrates individuals with the organization so as to make optimum use of the organizational resources.

MBO is a comprehensive management approach focusing on objectives or expected results for providing a framework for organizational and managerial decisions.”

Characteristics of MBO –

1) MBO is goal oriented as it focuses on determination of individual and organizational goals and achieving them efficiently.

2) Participation of Subordinates- It is through superior subordinate participation goals are set, and performance is appraised. It helps in clarifying job relationships and improves motivation and morale of the people.

3) Emphasis on Key Result Areas – The emphasis in MBO is on performance improvement in the critical areas through identifying key result areas. Attention is paid to the priority areas having significant impact on performance and growth of the organization.

4) Systems approach – MBO is basically a systems approach to management. It aims at integrating an individual with an organization and the organization with its environment. It aims at achieving individual and organizational goals through goal congruence.

5) Optimum use of Resources-- MBO aims at achieving optimum utilization of resources – both human and non human resources. And contribution of each individual is measured through evaluative mechanism.

6) Dynamism and simplicity - MBO is a very simple technique which can be applied by any manager of any organization.

7) Operational process – MBO is an operational process in a sense that it helps to translate concepts into practice. MBO is made operational through performance appraisal and self control

8) Multiple Accountability – Under MBO accountability for results is not centralized but every member of the organization is accountable for accomplishing his part of organizational goals.

9) Comprehensive Approach – MBO is a total approach. It given equal importance to economic and human dimensions of an organization.

The process of MBO—

MBO includes the following steps—

1) Defining Objectives –

Organizational long term objectives are framed by the top level management and are passed down.

2) Determining Goals of Each Department or section—

On the basis of organizational objectives, the Departmental objectives and time period required to achieved them is fixed.

3) Fixing Key Result Areas—

Taking into consideration organizational objectives key result areas are fixed and arranged on the priority basis. These include profitability market standing, innovation etc.

4) Setting subordinate objectives or targets—

Next step involves setting up objectives for individuals and set standards for evaluating them.

5) Balancing Resources with objectives –

Objectives are framed on the basis of resources . Unless adequate resources are available, objectives cannot be accomplished. Thus available resources are properly allocated for achieving goals.

6) Periodical Review of Performance—

The superior subordinates hold meetings periodically for discussing the progress of achievement of objectives. If any problems are noticed then they are discussed and their solutions are found out. If necessary the standards of performance may be modified.

7) Appraisal of Activities –

At the end of the fixed period there is discussion with superior regarding subordinate’s performance against specified standards. A supervisor takes action whenever necessary.

8) Reappraisal of objectives –

Organization has to function under dynamic environment and its survival and growth depends on its flexibility to adjust according to the changes in

the environment. Hence top management has to see that organizational goals are set according to the changing situation.

Advantages of MBO—

1) MBO involves participative decision-making, which makes objectives more explicit and plans more realistic.

2) It promotes an integrated view of management and helps interdepartmental coordination.

3) Performance under MBO is innovative and future oriented, positive, objective and participative. It provides objective criteria for evaluation of actual performance.

4) MBO is useful in promoting executive development in the organization.

5) MBO provides a framework for planned changes. It improves organization’s capacity to cope with its changing environment.

Limitations of MBO—

1) The idea of MBO is simple but difficult to implement in practice because it needs changes in conventional attitudes and practices which is very difficult.

2) MBO requires high degree of participation at all level of organization. But superiors rarely participate in goal setting.

3) It is also difficult to set goals that are easily verifiable.

4) MBO concentrates on short-term goals at the cost of long-term goals which may not be always desirable.

5) MBO may introduce inflexibility in organization in a changing environment.

6) MBO is also criticized as time consuming and costly process.

7) Levinson observed that MBO is self-defeating in the long run because it fails to take into account the deeper emotional components of motivation.

8) Due to the desire for verifiability people may over emphasize quantitative goals and important qualitative goals may be neglected.

20.5 Co-ordination -- The Essence of Management

Co-ordination implies orderly arrangement of group efforts to ensure unity of action in the process of achievement of organizational goals. According to Brech- “Co-ordination is balancing and keeping together the team by ensuring suitable allocation of tasks to the various members and seeing that the tasks are performed with due harmony among the members themselves.

Features –

i) Co-ordination is not a distinct function but is an essence of management.

ii) Co-ordination is the basic responsibility of every manager.

iii) It is necessary wherever people work in a group to achieve common goals.

iv) It is a continuous process.

v) Its object is to lend unity of purpose to group efforts.

vi) Balancing, timing and integrating are the three elements of co-ordination.

Advantages –

i) Co-ordination helps in achieving higher efficiency and economy.

ii) It improves morale and job satisfaction of employees, which tends to promote good human relations.

iii) It ensures unity of action as executives think of organization as a whole rather than sectional outlook.

iv) Co-ordination develops loyalty and commitment among employees and hence organizational effectiveness increases significantly.

Effective co-ordinations-

In order to make co-ordinates more effective the following techniques are suggested.

1. Sound Planning—Clear cut objectives, harmonized policies and integrated procedures ensure uniformity of action. Precise policies and detailed programs facilitate co-ordination of activities and individuals in the organization.

2) Simplified organizational structure to have clear cut definition of authority and responsibility of each department and individual is useful in making co-ordination more effective.

3) Effective two way communication as well as open and regular communication is the key to effective co-ordination.

4) Effective leadership and supervision is necessary to achieve co-ordination of efforts both at planning and execution stage.

5) Effective chain of command- when the line authority and responsibility is clearly defined, conflicts tend to decrease and effective co-ordination takes place.

6) Liaison Officer -

The external co-ordination is obtained through a liaison officer especially for keeping cordial relations with government and outsiders,

7) Co-operative Spirit--

Sound policies and procedures provide basis for better relations and development of spirit of co-operation, which helps in promoting effective co-ordination in the organization.

20.6 Japanese Style of Management – theory Z

William Ouchi has developed theory Z based on Japanese style of management. This approach concentrates on organizational behaviour side of management. It emphasizes decision making through consequence in democratic manner, family relationship between employer and employees, co-operative and trust worthy relationship among workers which ensures team spirit, devotion to work etc.

Main features –

1) Trust and Openness –

The atmosphere of trust, and openness among employees, trade unions and management executives tends to reduce conflict. Trust, openness and integrity are necessary to make organization effective and efficient.

2) Life Time Employment –

Life time employment assured to all the employees helps in building strong bond between employees and organization. During unfavorable business conditions workers should not be retrenched but maintained on the job while shareholders may lose dividend for some time.

3) Employee Participation—

Workers involvement in decision-making affecting their interests are observed to be effective. As workers are involved in decision making, they feel that it is their own decision and hence they feel responsible for implementing it.

4) Integrated Organization—

Under integrated organization job rotation is given importance because it improves understanding of interdependence of tasks and also promotes team spirit in the organization.

5) Co-ordination—

The role of a leader is co-ordination of the efforts of the employees and create class feelings in the organization.

6) Absence of Formal Structure –

There is no formal organizational structure because of existence of perfect team work with co-operation, ideas, strategies plans and information.

7) Motivation—

Workers are given such jobs which give them job satisfaction, and favourable work environment tends to keep work force highly motivated.

8) Informal Control System—

Control is exercised through mutual trust, co-operation, teamwork rather than superior subordinates relationships.

9) Ideal working environment—

The stable work environment maximizes workers satisfaction.

20.7 Japanese Management Process—

It is characterized by five main elements. Which are summarized below—

1) A Vibrant Company Philosophy—

A company philosophy raises the aspirations ideals and beliefs of those who are associated with the company which is turn create a certain set of attitudes which motivate managers supervisors and employees to strive for achieving goals that are high noble and fulfilling. This is a natural phenomenon of the Japanese culture, which encourages people to co-operative together in groups to achieve the goals of the society and the nation. As a result people respond to the strong vibrant company philosophy.

2) A Distinct Corporate Culture-

Japanese tradition, culture and social mores leave significant impression on the evolution of distinct corporate culture which encourages co-operation and collaboration between management and labour in the interests of the economic health and welfare of the country. There is a certain amount of loyalty and commitment towards employees on the part of the company and its management and similarly a tremendous commitment and loyalty on the part of employees to the company. This is a cultural phenomena which is rarely observed in other countries. The Japanese society expects this type of relationships and does not like hire and fire policy of management . The loyalty and commitment factor has deep impact on motivation and morale of the workers and is useful in solving problems related to productivity, profitability, adjusting to technological changes etc. There is constant interaction between employees and management which encourages and further builds commitment and loyalty to each other.

3) Long Range Human Resource Development—

The bedrock of Japanese Management Philosophy is the lifetime-one-company career of employees which enables for long range human resource planning, career path and development across functions, slow and steady individual professional growth, strong emphasis on training development and education and long term company employee relationship. Most of the investment in human resource development is company specific and closed system of recruitment does not provide scope labour turnover.

4) Total Employee involvement in problem solving—

Another outstanding feature of Japanese Management is the total involvement of employees in problem solving and helping the company to reach the right decision at the right time. For example Japan has emerged as the world’s largest and most efficient producer of steel is because 2,16,000 workers in the steel industry submitted 2.3 million voluntary suggestions to improve productive and quality control in 1981 of which 85% were adopted.

5) Company compensation and benefits --

In Japanese industry there is a highly visible casual relationship between company health and welfare and employee health and welfare. Most of the Japanese companies pay all of its employees a large share of there compensation in the form of a bonus, twice a year, which is equal to five to

six months salary of each employee and the amount does not depend on individual performance but on the performance of the company. As result risk of share holders is of the company. As result risk of shareholders is shifted to employees who suffer through bad years and prosper in good years. During bad years a firm can cut its payroll by nearly 30 percent without laying anyone of. During good years employees get much larger bonus than expected hence most of it is saved. In addition there is tax incentive for saving, hence the rate of savings in Japan is nearly four times higher than in USA.

Thus what makes Japanese management unique is the spirit of co-operation and collaboration which is the result of successful working of the combination of the above stated five elements.

8) Social Responsibility of Business

The term social responsibility is extensively used in economics, sociology, politics and business management. It is an important concept, which is gradually gaining acceptance as a way of life. It involves the working of an individual or a group in a such a way that it does not in fringe the legitimate interests of all others associated with him.

Koontz and O’Donnel have defined social responsibility as the personal obligation of every one, as he acts in his own interest, to assume that the rights and legitimate interests of all others are not impinged.

According to Bowen, social responsibility is an obligation to pursue those policies to make those decisions or to follow those lines of action which are desirable in terms of objectives and values of our society.

20.8 Theories of Social Responsibility --

There are various views about social responsibility of business. These are as follows

a) Legal Theory of Responsibility-

According to this theory, the management is responsible to manage the business in the best interests of the owners or shareholders. These responsibilities are to be carried out under various provisions under the companies act 1956 etc.

b) Economic Theory of Responsibility—

This theory emphasizes that the management has to manage its business in the most economical manner under given market conditions.

c) Labour Theory of Responsibility

This theory argues that the management should protect the interests of labour in managing the business activities.

d) Social Responsbility Theory—

According to this theory business house owes obligations towards society. All life is a trust and all power carries with it obligations. The Gandhi an principle of trusteeship emphasizes the responsibility of business units to its

customers workers shareholders and the community at large and the mutual responsibilities of all these to one another.

Thus every business organization as a subsystem of the social system has responsibility to make optimum use of resources to supply goods and services required by the society. An enterprise is a corporate citizen with legal personality. A company has responsibility to provide security of employment with fair wages, equal opportunity for personal growth and development in the company. Responsibility to consumers implies setting up and maintaining standards of quality and service and charging fair prices for products and services.

The main areas of social responsibility are –

1) Utilization and conservation of national resources.

2) Promoting and protecting interests of the four groups of the society i.e. shareholders, employees consumers and the society at large.

3) To work within the framework of the laws of the land as laid down by the government and to support the socio economic developmental policies of the government.

4) Environmental planning--

At present the whole earth is subjected to the treatment of poisonous and Deadly poisonous and deadly pollutants dumped in water, air and land. Air pollution results in climatic changes and toxicity both are dangerous to lives men, animals and plants . In all the industrial cities. Co2 and So2 content has been increasing rapidly. Similarly water pollution is also posing health hazards to the people, mainly due to sewage from cities. Noise and sound also affect human health. Rapid process of urbanization and increasing deforestation are considered as main causes of the problem environment disequilibriam. Hence it is within social responsibilities of management to take steps to minimize air water and noise pollution.

5. Social health and family planning—

Several problems like technological unemployment, congestion, housing and crime in urban areas where industrial units are located and problem of population and family planning, depletion and degeneration of natural and other resources used by the organizations, harmful effects of certain chemicals products like chemical fertilizers, DDTY pesticides etc on human health and environmental balance, all these are also held as part of the scope of social responsibility.

6) General values and philosophy of the country.

In Indian context our social values include democratic participative endeavor spirit of freedom, tolerance, fairplay, secularism emancipation of weaker sections and eradication of poverty, balanced regional development, social justice, non violence etc.

India being a welfare state, aiming at the establishment of socialistic pattern of society through mixed economic system expects business to carryout its social responsibility. In fact business units are expected to be proactive rather than reactive.

They should visualize the social problems and take steps to solve them as far as possible.

20.9 What do you know about

a) ISO 9000b) TQMc) Quality Circlesd) JITe) Ergonomics

A ) ISO -9000

International organization for standardization is a special international agency for standardization. ISO 9000 standards are the standards set up for the organization for different nature of works accepted internationally. ISO 9000 standards provide the essential information needed to take management policy or quality assurance and convert them into actin.

The ISO 9000 series is an excellent means of communication within and outside the organization hence it has international acceptance.

The ISO 9000 concept is oriented towards developing effective management system to improve the performance of business and reducing non productive costs such as repairs, rewors, reinspection complaint handling etc.

The main goal of introduction of ISO in the organization is to achieve optimum cost through improvement in business practices. Especially by improving production processes, logistic processes, information, communication motivation and working discipline.

The strategy of ISO 9000 standards aims at disciplined and systematic performance of daily work of all the employees. The ISO 9000 standards have to be implemented perfectly and the employees should obey all the rules and regulations which are necessary to bring about cultural change which is often resisted by the employees. Hence it is necessary that

i) An extensive information campaign should be held.ii) Adequate training should be given to the coworkers.iii) To make ISO 9000 successful, wholehearted supported of all the

workersis necessary.

The ISO 9000 is a standard which provides guidance to the organization on the concepts characteristics , types and use of quality system standards. It also provides guidance for selecting the part of the standard applicable to any organization, product or service.

a) ISO 9001 -- This standard covers the situation where supplier is responsible for conceptual design and development work, production, inspection, installation and after sales servicing.

b) ISO 9002 -- This standard covers production installation and services only.

c) ISO 9003 -- This standard covers only quality assurance in final inspection and test it is not widely used .

d) ISO 9994-- This standard provides guidance to the organization for introducing quality management systems into its activities. It covers areas like quality risks, costs and benefits, product safely and liability, personnel motivation, monitoring etc.

Objectives of ISO 9000

1) To reduce multiplicity of standards

2) To facilitate international trade

3) To facilitate implementation of quality management system

4) To provide one standard applicable to all countries.

Benefits of ISO 9000

1) Third party audit and certification

2) Recognition of Company’s quality system.

3) Enhances customer confidence

4) Opening the gate for export quality system

5) Effective maintenance of quality system.

6) Improvement in productivity.

7) Improved communications and morale.

9) Improved vendor relations

Concepts behind ISO 9000

1) PDCA Cycle

2) Self Control

3) Do it right first time.

4) Customer oriented strategy.

5) Co-operation collective wisdom.

6) Transfrequency and evidence

7) Kaizen (Continuous Improvement)

8) Quality everyone’s responsibility

9) Use of statistical techniques

10) Customer supplier chains

Thus ISO 9000 deals with specifications for producers and suppliers about the requirements of quality oriented system. It explains procedures and suggests criteria to ensure that the output of the organization consistently meets the customer requirement.

B) Total quality management (TQM)

The organizational competence, survival and growth depends upon the quality of the products and services produced and supplied by the organization. Japan made significant progress in a very short time mainly because of its quality consciousness.

Quality is defined as “that which makes something what it is, characteristic element, basic nature, kind, the degree of excellence of a thing superiority.” Quality is the totality of features and characteristics of a product or a service that bears on its ability to satisfy given needs. Quality is not only a degree of conformance to design and specification, but also internal and external customer. Satisfaction, where internal customer in the person or department performing next operation and external customers include not only final consumers but also intermediate purchasers like wholesale and retail traders. Quality may be described as a degree of congruence between expectations and fulfillment. In a broad sense quality is a way of managing the business.

TQR SOR (A stimulus directed toward an organization produces some response)

Any leadership style can be effective or ineffective depending on the response that style gets in a particular situation.

Managers may have high concern for product quality the person engages in avoidance or withdrawal behaviour (low relationship and low task behaviour) while other managers may adopt different styles.

TQM -- TQM is concerned with the integration of all efforts in the organization towards quality improvement , quality development and maintenance to meet full customer satisfaction at economic levels.

Need of TQM—

1) To sustain existence and growth of organization in open demand oriented economy and market.

2) To enhance quality of work life.

3) To achieve employee satisfaction through participation and involvement.

4) To increase committed customers.

5) To improve and enhance organization’s image.

6) To improve certainty in operations

7) To achieve stated targets

8) To help in socio economic growth.

Thus TQM deals with product in its totality. It is a company wide program controlled by management to produce quality products.

ISO 9000 and TQM

All the four models focus on individual parameters, yet the common features of quality improvement, reducing costs, increasing flexibility are the key issues. This is achieved by

1) Kaizen2) Quality Circles3) Small group activities4) Quality improvement team approaches (QUITS)

Any one of these approaches may be adopted after the base of ISO systems is established.

Necessary Conditions for TQM

In order to implement TQM program successfully the following conditions are necessary

1) Top management support

2) Long Term Perspective

3) Customer focus or consumer orientation

4) Systems approach as TQM calls for involvement of the organization as a whole.

5) Full participation is necessary where each and every employee has to participate in the process of improvement.

6) Training in TQM philosophy and technique

7) Efficient feedback system

8) Improved and open communication system.

C) QUALITY CIRCLES --

Practice of Japanese origin. Groups of workers, often led by their supervisors, meet to discuss and attempt to solve problems in achieving quality and production targets. The total work fore carries responsibility for quality and efficiency and for suggesting improvements.

Quality circle may be defined as a small group of employees, engaged in the same or similar jobs, voluntarily decide to meet together regularly to identify analyze and find solutions to the work related problems, under the leadership of their supervisor or foreman.

The philosophy underlying this approach is the involvement of all the employees for improving their performance and contribution to the organizational goals with minimum costs in terms of money, materials, energy and time. It believes in dignity of human beings and aims at respecting humanity and develop healthy work environment.

Advantages of quality Circles

Quality circles play an important role in increasing efficiency and effectiveness of the organization through continuous improvement in quality but also provides advantages to the participants as follows –

1) Active participation in quality circles results in personal development of employees

2) It provides opportunity to know about new ideas, tools and techniques.

3) It promotes analytical ability essential for solving the problems

4) It provides ground for developing leadership qualities.

5) It promotes sense of belongingness and loyalty to the organization.

Efficient functioning of quality circles benefits the organization as follows

1) Increasing awareness about quality through out the organization.

2) Development of participative culture and sense of belonging

3) Improved two way communication.

4) Attitudinal change and significant

Contribution towards work

5) Promotes team spirit in the organization.

Limitation of quality circles—

1) Participation on voluntary bases tends to be rare phenomenon.

2) Top management may not support it.

3) No scope for trade unions.

4) In the absence of motivation, participation may turnout to be ineffective.

21 JUST IN TIME (JIT)

JIT is the techniques developed by Japan for achieving continuous improvement and minimization of wastages arising out of activities not adding value to the product or servicing the customer. According to JIT approach, materials and components are supplied to the work station just at the time when these are required for production. Thus the inventory of raw materials tends to be minimum or at zero level. It helps in reducing cost of working capital, requirements of storage facilities and minimizes through time as production process can be shortened significantly.

The main elements of JIT are—

1) High quality levels

2) Continuous Improvement

3) Quick and economical set ups

4) Purchasing and producing in economical lots

5) Uniform production rate

6) Multiskilled employees

7) Flexible facilities

8) Emphasis on preventive maintenance.

In order to make JIT approach

Successful it is necessary that.

1) The Focus shall be on long term objectives

2) Customers orientation

3) Goal congruence

4) Systems approach

Thus JIT has been used effectively by Japanese firms to maintain competitive edge at international level. It minimizes inventory costs and makes production process faster and more efficient. It helps in improving quality & provides greater plant flexibility. As a result investment in floor space and in plant is reduced. at it is based on customer orientation it helps in providing consumer enlightenment in the long run.

E) ERGONOMICS

Ergonomics is the study of relationship between a person and his occupation, equipment and environment and particularly application of anatomical, physiological and psychological knowledge to the problems arising there from. Thus it is known as “Fitting the job to the workers” A specialist involved in the study and application of ergonomics is the occupational psychologist.

Ergonomics is known in USA as human engineering.

Definition and Meaning

The word ‘Ergonomics’ owes its origin to two Greek words, ERGOS meaning Work and NOMOS meaning study.

The ILO1 definition is : Ergonomics is the application of the human biological sciences in conjunction with engineering sciences to the workers and his working environment, so as to obtain maximum satisfaction for the worker and at the same time enhance productivity.

Thus the objective of Ergonomics is two fold:

a) Worker Satisfaction

b) Enhanced Productivity

Ergonomics achieves the above by the study of conditions in which people work most effectively and comfortably with machines. It aims at making the working environment synergycal to the human activities and thus improving overall labor productivity.

Ergonomics covers a very wide area starting from initial conceptual design stage to ultimate production facilities. It helps create better working conditions by suggesting:

a) the best way of using human body.

b) The best way of arranging the workplace.

c) The best design of tools and equipment.

Use of Ergonomics

Today the market has changed from a seller’s marker to buyer’s market; and productivity has become a buzzword. The Principles of Ergonomics help in improving the labour productivity giving the competitive edge to the organization.

The age-old concept of finding a worker to do a job is no longer valid. The modern concept is to design the job to suit the worker. Job satisfaction and job interest are the two vital ingredients to obtain better labour productivity. It is an established fact that uncongenial working conditions affect productivity adversely. A worker’s interest in his job depends to a great extent on how comfortable the workplace is. Ergonomics not only helps in crating a better working environment, it also motivates workers as human comfort is given the priority while applying this principle.

The relation between Ergonomics and Work study—

The ILO definition is: Work study 2 is the systematic examination of the methods of carrying out activities so as to ensure the effective use of resources and to set up standards of performance for the activities being carried out.

There are eight steps in performing a complete work study. They are Select, Record , Examine, Develop, Evaluate, Define, Install and Maintain. While examining and developing new methods, a work study practitioner makes use to Ergonomics principles. These Principles help him develop the most economical method to do a particular job/activity.

Organization Chart for a Manufacturing Company

Board of Directors

Chairman &Managing Director

ManagerPurchase

ManagerMarketing

Manager Manufacturing Manager

FinanceManager Personal

Director Research & Development

ProductionControl

QualityControl

Procurement Transportation & Traffic

Plant Manager I

PlantManager II

PlantManager III

Supervisor Supervisor Supervisor

Foreman Foreman Foreman

Operations Operations perations