Explain the term Management Also describe its characteristics.

ANS:
DEFINITION OF MANAGEMENT

(a)

(b)

(c)

We live today in the world of trade and commerce. The business of our time is so complex that its successful operation demands a high degree of managerial ability. Unlike the old times when a businessman need cleverness, tact and a pinch of dishonesty to succeed in his limited market, success in modern business depends upon planning with r foresight, research, careful organization of men and resources, a thorough grasp of the economic situation in the country and a continuous touch with the changes in the attitudes and policies of rival business houses and of the government of the country. The modern businessman is therefore expected to be trained in Business Administration and grounding in other social sciences. Different authors have emphasized different aspects in their definitions of Management. Let us study a few of such definitions. Management as a Process: Management, in this sense, is considered to be a process. It is what the management (i.e. persons who manage) does. It implies various functions like planning organizing, staffing, directing, controlling and cocoordinating. When we say that the cause of business failure is bad management, or that the management of business is not easy, we use 'management' in this sense. Management as a Noun or as a group of persons: In this sense, management means a group of persons who manage the affairs of an enterprise. These persons are entrusted with the authority as well as the responsibility. Management implies the authority to frame business policies, the responsibility to supervise the business operations and the authority to fulfill that responsibility. The board of directors of a company, the managing committee of a university or a local body or board of trustees is all 'management' in this sense. When we say that the business enterprise is under a 'new management' or that the company needs a 'powerful management', we use the term 'management' in this sense'. Management as a Subject: When we use the term management in the sense of a subject, it means a branch of knowledge. It describes the various methods of managing any activity. G S. George has given a very simple definition of Management. "Management consists of getting things done through others. Manager is one who accomplishes the objectives by directing the efforts of others". This definition lays stress on only leadership aspect of Management. George R. Terry, "Management is a distinct process consisting of planning, organizing, actuating and controlling, performed to determine and accomplish the objectives by the use of people and resources."
1

All the above definitions emphasize one point that management becomes essential m context of a group and not in relation to the efforts of a single individual. Second point emphasized by all the authors is that management is concerned with achieving the objectives. Goals are determined in advance and management tries to fulfill them.

CHARACTERISTICS OF MANAGEMENT It is a group of functions: Management as a noun is used in two senses-as a group of people who manage and its a function of managing. To a layman, management means those persons who occupy high positions in the organization and who wield authority. To students of business management, however, management is a group of functions like planning, organizing, staffing, directing and controlling. Management is a process having many elements from planning to control. Management is universal: Be it a business, a club, an army, a charitable or religious institution or a government" office, management is at work. It extends to all organized activity including business it exists at all hierarchical levels in the organization. Managerial ability is transfers. Private administration and public administration have many things in common. A person successful in some activity would be equally successful in any other activity only because of this characteristic of management. A successful manager of a soap factory would be equally successful as a manager of an aircraft manufacturing company.

Coordination: The various departments in the organization must work in harmony with one another. People also should work in harmony and there should be no conflicts. If there is no Coordination of efforts to achieve objectives, a chaotic situation may result. Co-ordination of efforts is, therefore, important in respect of time, quality etc. to achieve the goals laid down.

Management is dynamic: Business changes itself in response to changes in environment. Business always adapts itself to the challenges posed to it day in and day out. Business also grows to earn more and more. Business is threatened by many environmental threats. Management, therefore, cannot remain static. It changes just as the needs, objectives and challenges of business change. Management also converts environmental threats into opportunities. Management does not see things as they happen, it makes them happen the way it wants them happen. It

is therefore a dynamic element i n business. Dynamic management is forward looking and pragmatic. It is leadership activity: Management gets things done through people. Human beings, therefore, are important from management's view-point. Human efforts go waste in the absence of direction. Who will use materials, machine and money, if not men? Management activates manpower. A manager acts as a leader of the group and creates environment for the followers to allow them to attain organizational objectives. Leadership has a bearing on the success or otherwise of the organization. Decision making: It is widely accepted today that ultimately all managers takes decisions. Managers are decision makers. A marketing manager takes decisions about what to market, how to market, when to market, where to market etc. A finance manager takes the decisions with regard to how much to invest, how long to invest, how to raise capital etc. These countless number of decisions based upon data and their analysis constitute management. Decisions are the choices of management out of several alternative courses open to them. They are taken with utmost care, using sophisticated management techniques of Operations Research at times. Management is profession: Managers are made and not born. Managerial ability is not inherited. It is also not natural gift. It is a body of knowledge which can be mastered by any one through training. Trained managers get training either in the organization or at management institutes which have come to occupy important position in modern business. Management is rapidly emerging as a profession. Management consultancy services are also available and it is a sign of professionalization. Some persons may have inherited certain qualities of successful managers but mere possession of these traits would not make them successful managers. Had it been true, the sons of industrialists would all have distinguished themselves as industrialists. Even accepting that there are born managers, they can become better managers if they receive professional training. Helpful to achieve objectives: Management strives consciously to attain the common objectives of the business. It subordinates the personal objectives of the individuals to the organizational objectives. In the absence of management, the organizational objectives and individual objectives will come in conflict with each other, and a chaotic situation may result. It is therefore, a critical element for the fulfillment of organizational objectives.
3

 Integrates the resources: Management integrates the resources of business enterprises as well as the resources of all types of organized activities. Men money, machines and materials are the important resources for a business unit. Management integrates and also regulates these resources in such a style that business unit will yield all kinds of benefits. Frame-work of other subjects: Management uses the principles, laws, rules and the knowledge of other subjects like Economics, Sociology, Psychology, Law, Mathematics, Statistics etc. The use of principles and knowledge provided by other concerned subjects will enrich the managerial ability of the top management. Both art and Science: Management is an art, because it achieves desired goals by applying personal insights and skills, level of knowledge and leadership. It is also a Science, because management exercises certain principles, rules and laws which are universally applicable to any organization and even any sphere of the life. Management is invisible: Certain Philosophers and experts of management discipline firmly opine that management is powerful intangible

 Explain the process or function of management. ANS: DIAGRAMATIC PRESENATION OF PROCESS OF

MANAGEMENT:
PLANNING
ORGANIZING

CONTROLING

STAFFING

BUDGEDTING

DIRECTING

REPORTING COORDINATING

MOTIVATING

1. Planning: The first essential function to be performed by management is to formulate a plan of action. Planning involves the determination of what is to be done; how, where and when it is to be done; who is to do it and how results are to be evaluated. Planning enables the manager to anticipate problems before they actually arise. Planning emphasizes the fact that if we know where we are going, we are more likely to get there. Planning helps management to be ready to face problems likely to arise. Of course, planning can introduce an element of rigidity, if the management fails to make necessary adjustments immediately. Secondly, success of planning depends on many factors which are very uncertain and cannot be predicted with accuracy. However, there is no doubt that planning reduces the degree of uncertainly and risk and brings an element of stability.

2. Organizing: The next task is to prepare an organization structure by delegation of authority and responsibility. This is done by identifying the activities of business and separates them into blocks or departments, put them in charge of specific groups of individuals and define the relationships among different groups for effective performance. This is the task of organization. The process of organizing involves three steps: (i) When a task is assigned to an executive, it is his responsibility to perform it and achieve the desired result (ii) When responsibility is delegated to a person; the commensurate authority is also given to him. (iii) The executive to whom a responsibility is delegated is responsible to make a report about the performance to his superior. The establishment of good organization simplifies administration and develops creative ability.

3. Staffing: The enterprise goals are achieved with the help of personnel only*. Hence, proper selection of the personnel for proper job is essential in modern management. The management should be aware of various jobs and their characteristics in the enterprise. Separate norms are to be adopted for managerial and non-managerial personnel for selection. Staffing includes planning of manpower requirements, determining criteria for each job, remaining in constant touch with the sources of recruitment, arranging for their training, promotion, remuneration schemes etc. The personnel manager should keep in mind that no business is better than, the people who operate it.
4. Directing:

A business does not begin to operate until the manager gives direction, which includes the work of guiding and supervising subordinates. The function is spread over different heads of departments. Each head is in charge of, and responsible for, his particular group or department. Whether the heads should adopt the authoritarian approach or a democratic approach or a free rein approach that is to be decided by them in the light of existing circumstances.
5. Motivating:

A successful manager is he who can motivate his subordinates to work willingly with enthusiasm. The employees may have enough physical and mental capacity to work, but if willingness or desire to work is lacking, their capacity will not yield any fruits, and the concern will fail to achieve its goals. A manager must therefore, arouse a desire to work; he must actuate the employees. A manager must have a keen apperception of human behaviour if he has to provide maximum motivation 'to his subordinates.
6. Coordinating:
6

It is a process by which the manager achieves harmonious group effort and unity of action in the pursuit of a common purpose. Co-ordination is the essence of management. Hence it is not an exaggeration to say that manager is in essence a co-coordinator. Without coordination, there will result a chaos in the organization. Efforts will be duplicated or an important work left out, If there is no proper coordination. Hence a manager has to coordinate not only functions and activities, but also individuals performing different functions. The main tools for securing better co-ordination are simplified organization, harmonized policies, well-designed methods of communication and personnel guidance.

7.

Reporting: Two important aspects of control are reporting and budgeting. The subordinates have to prepare reports of their performance. This enables the superiors to judge whether performance conforms to the plans adopted. Some reports pertain to the routine matters of the concern, while some are special reports prepared for some special purposes. Through reporting, a manager keeps himself informed about the day-to-day functioning of the organization. Budgeting:

8.

A budget is a very popular and effective tool of controlling. A budget is an estimate of future needs covering all the activities of an enterprise for a definite period of time. They are expressed in either monetary terms or in physical terms. A budget is prepared for each separate activity of business, e.g. sales, purchases, production, cash, capital expenditure etc. An important requirement of an effective budgetary control system is reporting budgeted figures with figures of actual performance. 9. Controlling: Control consists in verifying whether everything in the undertaking proceeds in conformity with the plan. Control consists of setting standards of performance, compare actual performance with standards and find out deviations and then to take corrective actions if necessary.

EXPLAIN MANAGEMENT ART, SCIENCE AND PROFESSION

ANS
INTRODUCTION: IS MANAGEMENT AN ART OR A SCIENCE?

There is an ongoing debate about whether management, should be considered as a science or an art. Before we come to any conclusion, it is worthwhile to understand what do the terms 'science' and art mean, and how far does management conform to them.

MANGEMENT AS A SCIENCE

As per general understanding science means systematic and special type of knowledge from which logical relations can be established and rules and principles can be derived at. Experiments and results are observed in science. Based on which cause and effect relation is established. This rule survives for long time and is used commonly. Science is systematized knowledge. To add it more accurately, a science is an organized and systematized knowledge which establishes fundamental principles explaining cause- effect relationships between two phenomena. Physics, for example, is science which has derived the famous law of gravitation according ; which any object, if tossed towards the sky has a tendency to fall o the ground due to the force of gravitation Let us see whether management is a science from this point of view. Cause Effect Relationship: Management also is a body of principles describing cause-effect relationships among the relevant phenomena - For instance, it has identified a definite relationship between the level of wage rate and the availability of efficient labour force. Where the wage rates are higher, the efficient workers are more likely to be attracted. Similarly, there is a positive relation between morale of workers and their productivity. The more contented the workers are, the higher will be their morale and consequently higher will be their productivity.
8

Body of Organized Knowledge: Science is a body of organized knowledge in the sense that it derives laws or principles on the basis of systematic observation of facts and verifies their validity again through observation and experimentation. This method leads to the establishment of objective and impartial laws free from the personal belief or bias of the investigator. On this count, management can be considered as a science it also observes inter relationships scientifically, establishes laws about them and improves them through verification in the light of actual facts of life. The findings of informal, organization, for instance, are derived on the basis of Hawthorne's experiments.

Search of Knowledge: Almost all natural sciences have employed mathematics in their search of knowledge. The results are tested with the help of mathematical methods. The tendency to use mathematics has grown over the past few years in the field of management also. For instance, operations research is an important area of management in which decisions are made on the basis of statistical andmathematical methods. Even computers are being put to service in managerial activities now a day. In short, management now incorporates many of the ingredients of scientific method of knowledge. Of course, management being a behavioral science, its laws cannot be as accurate as those of natural sciences like physics and chemistry. Universal Application: The laws of science have universal application. Definiteresults can be obtained by applying these laws at any time and at any place. For example, water can be produced by any .individual anywhere in the world by mixing two atoms of hydrogen with one atom of oxygen. The question is whether management contains universally applicable laws of human behaviour. The answer is positive. A fairly large number of laws of management possess has universal applicability. For instance, the law that high morale among the workers tends to raise their productivity can be applied in all areas of production, anywhere in the world. It must be conceded however, that not all laws of management possess this characteristic. The reason is that management
9

has to deal with human being who cannot be expected to behave in the same manner even under the same situations. Systematic Formulated Laws: In the field of science, laws are formulated systematically on the basis of scientific methods. The same tendency has been adopted now in the field of management also. The management do not prefer how to make decisions by chance or by pure intuition or keeping in view the polices of the rivals in the market. Instead, they systematically collect relevant data, indentify cause-effect relationship and then only they make certain decisions. Also, they make use of statistical and mathematical methods for this purpose. For instance, time- study method is used to determine the standard time for doing a job and jobevaluation is used to determine the wage rates for various jobs. Accumulates Knowledge: A noteworthy feature of science is that it accumulates knowledge. Hence laws of science survive longer than their profounder with the result, on the basis of existing laws, research scholars can frame new laws and can extend the scope of scientific knowledge.

Management will never fully qualify as pure science in the same sense as the well known physical science. But remarkable progress has been achieved in systematizing knowledge as also in generalizing some basic truths of management. Management is definitely a social science and the term social science more accurately represents the true context of management. THUS MANGEMENT CAN DEFINETLY BE SAID AS A SCIENCE (SOCIAL) MANGEMENT AS AN ART

Management as a science discussion stops when we say management is also an art. Art means not like music, drawing, dance, sculpture, etc. but art means personal skill, cleverness, mental ability, long vision, work-sense with help of which an officer gets the work done. Thus, art means the skill of getting the work done. The features that art possess are: While science is a theory, art is a practice.
10

The objective of science is knowledge, while that of the art is fruit. The art means application of science for deriving practical results. Science requires intellect, art requires insight and creativity. Thus it can be said as just like photography where certain rules and regulations have to be followed based on principles along with personal skill. Efficiently doing things: Art refers to the skill of doing things efficiently. But since theoretical knowledge is also required to apply this skill, we may define art as a skilful application of theoretical knowledge. Different individuals are endowed with different degrees of such skill. Some are more talented in practical application of scientific knowledge than others. For instance, Sachin Tendulkar, Sunil Gavaskar and Don Bradman had been more skilful in the art of playing cricket than other cricketers. On this interpretation, management is undoubtedly an art. Like other artists, managers are also required to possess a high degree of skill to get things done from others and to make right decisions in different situations. Creativity: It is also an essential quality of an artist. An artist such as painter has to create something on the basis of his power of imagination. Similarly, a manager has to make product by skillfully combining the factors of production like land, labour and capital. Any- layman can combine these factors of production, but only a talented manager can succeed in achieving maximum results by choosing an optimum combination. He applies his power of imagination to decide what is to be done, when, how and by whom it is to be done. CONCLUSION Management as Science and as an Art: The above discussion leads us to the conclusion that management is a science as well as an art. Its laws are derived on the basis of observations and investigations. If properly applied, its laws enable us to predict the results correctly. This suggests that laws of management are too used skillfully. Thus, management is a blending of science and art both. In the words of Dr. Terry, 'If science teaches one to know, art teaches one to do'. Dr. Terry goes

11

on to suggest that the art of management begins where the science of management ends. MANAGEMENT AS PROFESSION Another controversial issue is whether management can be categorized as a profession, just like the professions of doctors, architects and advocates. It is advisable to be clear about the meaning of the term profession before we explain ourselves with this debate. Generally, an activity which possesses the following five characteristics is known as 'profession', Specialized knowledge: Management is a developing science. Ample .literature is now available on management. Considerable research has been conducted on various aspects of management. It short it has accumulated enough knowledge to be developed as profession. Training: Management fulfils the second condition also which requires a professional to be equipped with sufficient knowledge. In almost all countries, efforts have been made to provide facilities for education and training in management. For instance, the Indian Institute of Management and some other institutions have been set up in our country for this purpose. Ethical Standards: It is admitted by all that a person who wants to engage himself as a professional manager should be a man of high integrity. Now it is admitted by all that managers cannot disregard their social responsibility. Managers do believe that they have to discharge their responsibilities towards various groups of the society even when profit maximization is the basic goal of their business. Association of members: An association is needed to regulate the conduct of members. Many countries have Management Associations. Similarly, in India there is an All India Management Association. Of course, membership of this Association in not compulsory for becoming a manager. Acceptance of Moral Responsibility: Doctors, Lawyers, C.As, Auditors etc. should be observing their moral responsibility. They should not let out secret information of
12

their client and should be honest in their dealings with their client. In the same way, the manager should observe his moral responsibility towards his client company. Remuneration: Professional Experts get a fee or salary for providing their expert services. Lawyers, Doctors, Auditors Consultants etc. interact with their clients, providing their expert services and they get a stipulated amount of remuneration or they fix a high proportion of remuneration. Sometimes they also accept return in the form of monthly wages also. From the above discussion of 'Profession, we can, conclude, that many characteristics of a profession are also seen in 'management' discipline. Therefore management has already taken the form of a profession. Doctors, Lawyers, Engineers, C.As etc. have to compulsorily follow their code of conduct but whether a 'manager' can be kept in these circumstances is still questioned. Thus, management does fulfill the above mentioned condition of profession.

W h a t is planning? State the characteristics and features of ideal planning. INTRODUCTION It is not wrong to say that managerial activity begins with planning. At present, it is difficult to find an activity where no planning is undertaken. Planning has become a general rule in economic development, in managing a business unit and even in managing family affairs. Plans are prepared in response to such questions as to what is to be done, how, where and when it is to be done. The relevant data concerning the problems at hand are collected and decisions are made on the- basis of that data, after considering alternative policies, procedures and programmes.

DEFINITION OF PLANNING

Definitions of Planning highlight most of the characteristics of planning. Following are some of the definitions of planning: According to Henry Fayol, 'Planning refers to a preview of future activities'.

13

In the opinion of Urvick Planning is fundamentally a mental predisposition to do things in an orderly way, to think before acting and to act in the light of facts rather than of guesses. The above definition- stresses that planning is concerned with future. It draws a picture of future events into the present. In his opinion, planning previews or contemplates in advance the likely results and" determines beforehand which steps are to be taken and which methods are to be adopted. Thus planning suggests the provisions to be made to face the eventualities by peeping into the future.

DIAGRAMATIC PRESENTATION:

ALL PERVASIVE
CHOICE OF ALTERNATIVES

PRIMARY FUNCTION

INTELECTUAL PROCESS
CHARACTERISTICS OF PLANNING

CONTINUOUS PROCESS

ALERT ACCURACY ACTIVITY

FORECASTING

FLEXIBLE

CHARACTERISTICS OF PLANNING

The details of planning may be different in different business units, but its basic characteristics are same everywhere. The basic characteristics of planning may be stated as follows: All-pervasive:
14

Planning is not confined to a particular section or department, nor is it limited to top management. Rather, it encompasses all levels of management. George R. Terry writes in this direction. 'It is true that top level management devotes more lime and mention to planning than lower level management, and tackles more important problems of business, and yet, the fact is that planning is needed at all levels of management.' Planning is essential in all business units, whether they are nail or large in size. In fact, planning is essential not only in business unit, it in almost all non-profit making institutions such as educational and religious institutions also. Primary function: Planning is the starting point of managerial functions. Hence it is regarded as primary function management. Proper organization of business is impossible if plan is not mea beforehand. How can staffing be possible when it is not decided? Who will do the job or what job is given to a particular person? How can staff be directed? How can it be controlled? Thus, planning precedes all other functions of management. Planning is a continuous process which goes on even when other functions of management are also being carried out. Continuous process: Planning is required not for starting a business, but it is also required when any change is to be mad instance, planning does not stop, after completing, say, a five-year plan, and sub plans are prepared continuously to adjust to changes in external Of course, once a plan is prepared, its basic strategy must not be changes. All progressive companies set up a separate planning department permanent basis consisting of expert planning officers. Alert activity: Planning aims at achieving objectives of the business. Hence, planners have to take into considerate possible consequences of a particular course of action. They have to con whether and how far the suggested programme can take the unit to it's with all its effects on the employees, market buyers etc. The definition planning given by Koontz and O'Donnell lays stress on this characteristic planning. Flexible:
15

Actual conditions often turn out to be differing from the conditions which planners may have anticipated while preparing a plan. Hence continuous redrawing of plans becomes necessary to suit the changing conditions. As Koontz and O'Donnell have remarked, ' 'a continuous review the estimates and occurrences are necessary to make planning effective. Chan are necessary to maintain the movement of business units towards its goal.' planning is rigid and not flexible, it will fail to meet challenges, it renders it; irrelevant and fails to achieve its Forecasting : Planning is prepared future. Since future is uncertain, forecasting is required to prepare a plan. This forecasting is a precondition of planning. For this reason, Fayol uses the purveyance which includes both forecasting and planning. Planning is a possible without anticipating future events and their possible effects on business. Through planning, an attempt is made to peep into future and charge out a definite programme of action. Accuracy: One of the preconditions of successful planning is that it should be simple and accurate; it must clarify the objects, their-nature, the targets to be achieved and the methods to achieve -them. Planning is not merely a bundle of desires; it is not just a dream of lunatic. Rather, it is a practicable programme of encouraging the people to act with a firm determination and zeal to achieve the goal. Intellectual process: Planning is preparing an outline of the activities to be undertaken in future. Since future is uncertain and unknown, planners have to apply their foresight to make an estimate of the future. Past experience and its analysis are useful in estimating future events. Thus, such faculties of mind as thorough understanding, clear thinking, decision making, power of imagination and foresight are all to be put to work while preparing apian. The scholars like Urvick, Koontz and O'Donnell therefore, describe planning as intellectual process. Choice of alternative:

16

The problem of planning arises when there are alternatives. The basic task of planning is to choose the best alternative from among the available alternatives. Billy Goetz and Louis Alien also stress the same aspect of planning in their definitions.

EXPLAIN THE MERITS AND DEMERITS OF PLANNING ANS:

SIGNIFICANCE OF PLANNING (ADVANTAGES OF PLANNING)

Very few people will dispute the fact that planning is essential for all business units. In fact, planning has now become indispensable not in business field; it is necessary almost in every walk of life. The main benefits of planning are as follows: Orderly activities: When a definite and clear goal is established, all efforts are pointed towards desired results. All activities of the unit are so coordinated that the goal may be realized with least cost and within shortest possible time. Reducing wastage: This is because it helps in avoiding unproductive activities. Every activity is thoroughly examined before it is started. Hence maximum possible output can be obtained within a short period. Thus, planning saves time and thereby reduces cost of production. Planning leads to economic use of resources in another way also it helps in full utilization of the existing productive capacity. Hence maximum production is achieved with minimum resources. This is beneficial not only to the concerned unit, but also to the society which can obtain a larger supply of goods at lower prices. Facing future changes and uncertainties: Future is always uncertain. A manager attempts to make an accurate estimate of production and costs etc. in the next month. But all his estimates may go wrong as the result of such unexpected occurrences as fire, strikes etc. Planning is essential to cope with such contingencies. It makes enough provisions for future changes in circumstances, so that they may not adversely affect the actual results. Achievement of Objectives: An attempt is made through planning to realize the basic objectives within a definite period of time. The manager in each department tries his best to reach the targets entrusted to him. In the absence of planning each head of the department will keep only short run benefits to his department and neglect the long term goals. Thus, planning can keep all managers conscious of the basic goals of business. Accuracy:
17

Planning is based -on definite calculations of costs and benefits. There is no room for guess work in planning. This removes the possibility of duplication of any activity and also of any unnecessary activity. The reason is obvious. Under planning, all relevant facts are accumulated, they are systematically classified and then decisions are made after analyzing those facts. This means that, under planning, decisions tend to be more scientific and rational. Helps other functions: An efficient organization can be evolved through planning only. If policies and programmes are clearly laid down, it can be easily decided how many employees are to be engaged, what sort of training will they need and how are they to be directed etc. and Budgeting is nothing but planning. Control: If it is not known, what is to be done and how it is to be done, then there is nothing to be controlled. Planning provides us with definite standards on the basis of which we can evaluate the actual activities. We can compare the actual results with the standards. If there is any discrepancy between them, causes responsible for it can be identified and measures can be taken to remove them. Thus, planning assures us that actual performance corresponds to activities planned. Clear and complete picture: A clear and complete picture of the entire business unit can emerge before the management as a result of planning. The management can have a clear idea of the relationship between various activities of business. They can have a fuller understanding of each activity. This makes co-ordination of various activities easier. Co-operation: Under planning, each employee clearly knows what he has to do and how he has to do it. There is neither ignorance nor misunderstanding about his activity on the part of any of the employees. The management selects employees on scientific basis; and jobs are assigned to them very carefully according to their ability and aptitude. Wage rates and other terms of employment are fixed by an agreement beforehand. As a result of all this, a congenial atmosphere of cooperation between labour and management prevails in business. This leads to an increase in output and reduction in costs. Balance between various activities: If production manager plans to produce 1000 units of a commodity due to limited resources at his disposal, and if an energetic sales manager tries to raise sales to at least 1500 units, how can sales manager supply 1500 units? This is what happens in the absence of planning. Balance between different activities can be ensured through planning only.
18

 LIMITATIONS (OR CRITICISM) OF PLANNING In spite of its world wide popularity, planning has not been free from criticism. Uncertainty-the base of planning: Planning is concerned with future. It is prepared on the basis of certain hypothesis about future events. This hypothesis may not turn out to be correct always. It may turn out to be different from what they are expected to be. Thus, planning has an unsound base. But miss argument is not wholly correct. It is futile to hope for cent per cent exact results through planning. Yet, it does not mean that planning is useless. Without planning, it will be more difficult to face future uncertainties of business. Long and expensive process: The second important point of criticism is that planning is a long and expensive process. It is expensive because it requires expert's services to collect relevant data, to classify them,-to analyze them and to make decisions in business. Moreover, it requires a long time to prepare alternative plans, to integrate the main plan with subsidiary plans. But, truly speaking, this-is a point of criticism against the procedure of planning. In fact, in the best of methods to be used in business, the benefits must always exceed its cost. Planning should be undertaken in a most economical manner in this sense, i. e. its cost should not be more than the benefits accruing from it. Rigid management: The initiative of employees is suppressed under planning because their activities are rigidly planned in advance. The procedures are so tightly fixed that it becomes difficult to alter them according to circumstances. Planning should to flexible. It" should be capable of change according to the change in circumstances. Otherwise, planning tends to be useless. It is also wrong to say that planning kills initiative and enthusiasm of the employees. Their opinions and suggestions are invited and appreciated before a plan is finalized. Planning is unnecessary: Some people are of the opinion that planning is unnecessary. If plans are always to be changed according to change in circumstances, it means plans remain on paper only. What is the use of planning if, in reality, things do not happen as they are planned.
19

Instead, the best course is to take full advantage of the situations as and when they arise. In case of some fields of business, planning is not possible at all. Also, in case of new business units, there is no past experience as a guide to future planning. External forces: The inflexibility of external forces which are beyond the control of the management, render planning useless. For instance, political situation and government policies exert considerable influence on the business. Management has no control over them. It has to plan within this inflexible framework. The national trade unions have become so strong that management is not always in a position to make alterations in the plans in tune with the circumstances. Moreover, technological changes are so swift and sudden that most of the existing machinery is rendered obsolete within a short period. But the foresighted management does sincerely try to forecast such external changes. If events occur unexpectedly in spite of their efforts, how can planning be blamed? Which aspect of human life is free from uncertainties? Wrong data: This is a valid point of criticism. Planning can never meet with success, if it is based on inadequate or inaccurate data. But it may be stated in answer to this criticism that the fault lies with planners, not with planning itself. Planning can be successful if care is taken to frame it on the basis of accurate and adequate information. Quality of planning depends on the quality of information and data collected. Restrict the freedom of employees: Planning basically means deciding everything in advance. Hence, employees can have no freedom of action and initiative; they cannot exploit their understanding and their discretion. Hence they lose interest in their work. As against this, it may be stated, however, that before a plan is finalized, employees are taken into confidence, their opinions are invited, and their suggestions are welcome. Hence there remains no possibility of discontent among them. Defective methods: To a large extent, mathematical methods are used in planning. Even computers are being used for this purpose in a large number of business units. But business situation should be
20

taken into consideration before applying these methods in planning. The mathematical methods are not applicable to all issues of business. For example, computers cannot help us in measuring the degree of morale of the employees. In conclusion when both sides are considered objectively, arguments against planning are not against planning as such, but against defective utilization of planning. If circumstances change rapidly, utility of planning can be increased through short range planning.

21

EXPLAIN PROCESS OF PLANNING ANS: DIAGRAMATIC PRESENTATION:

SETTING OBJECTIVE S

FACTORS OF PLANNING

DATA

RESULT S

COLLECTI ON

IMPLEMEN TATION

ANALYSIS

SUBSIDIA RY PLAN

EVALUATI ON

ALTERNAT IVE PLAN

SELECTIO N

STEPS IN PLANNING OR PROCESS OF PLANNING

22

Introduction: - In all fields the first important activity performed, knowingly or unknowingly is planning. Still the way of planning is connected with activity of the concerned field. It cannot be accurately stated that the procedure of planning remains same in every field. But as a student, it can certainly be said that the normal stages of planning are found almost similar. Procedure (stages or process) of planning: - Planning process is affected by the requirements of business financial condition and domestic circumstances. Hence, it is quite obvious that each unit think in its own way the issue of planning. Hence, while planning the activities that are used all over, under mentioned stages are to be followed serially. Setting objectives: Which path to walk on can be known only if it is known that where to reach / what the destination is? Before planning anything, first of all the objectives of the unit should be identified. If more than one objective is to be accomplished, they should be separately identified as main and subsidiary. Sometimes objectives are also classified as long term and short term and short term keeping the time factor in mind. The identification of objective may include increase in profits, growth in sales, satisfaction of employees, to acquire specific market share, social welfare objective etc. after the identification of main objectives, managers should also set out the divisional goal. As the activities that are to be performed are determined from the clarified objectives, the extent to which they are clear, to that extent planning will be effective. Identifying Bases/ Factors of Planning: - Bases/ Factors are those estimates, which affect planning. After identifying and setting the main and subsidiary objectives, consideration of the requirements to achieve them is undertaken. Full consideration is made about the source and timing of the availability of details; hence managers can obtain information at less cost and at specific moment. While identifying the bases of planning, the forecasts are made about, the factors that affect planning like stock of raw-material, laboures, fuel, competition, fashion, Government policy etc. if these bases are not defined; there is every possibility of the failure of planning. Collection of data:- Objectives are not achieved just by thinking on the resources to achieve them. In fact, the managers also have to collect the data from the decided internal and external sources. Internal sources of information may be previous years statements, employees etc. while the external sources may be Government bulletin, RBI bulletin, reports of financial institutions or companies, or commercial magazines etc. the collection of information must be done keeping in mind the time factor. If the information is not collected in time, then howsoever important information is collected there will no wonder if it becomes useless.
23

1.

2.

3.

4.

5.

6.

7.

8.

9.

Analysis of collected information:- The bunch of the data collected from internal and external sources does not give any idea to managers in decision making. Proper decisions can be taken only when the data is analyzed in reference to the objectives data becomes information only when it is made useful by proper analysis thereof. Hence, data has to be analyzed in order of priority. By doing this irrelevant data can be removed and missing information can be identified. Analyzed information is like game of cards, by which directors can take quick decisions. Evaluation of Alternatives: From the analyzed information managers locates various alternative plans for achieving the objectives. E.g. if the objective is to advertise, then it can be made by Radio, Television, Newspaper, Cinema Slider or Posters etc. these mediums of advertisement can be said the alternatives. In case of purchase options may be centralized or decentralized purchase or manufacture etc. while evaluating the alternatives, the managers, make rational forecasts of factors such as customer fashion, Government policy, competition, invention etc. with reference to these forecasts, the alternatives are evaluated. Selection of best alternative: - After a careful comparative study of alternatives, the managers select the best alternative from it on the basis of forecasts of total costs, time period, expected employee-attitude towards the plan, complexity of plan, profitability, productivity, cash flows, fashion trend etc. if selection is made on the basis of personal beliefs and bias or under any misunderstanding, then planning will fail. To avoid this counseling from experts I resorted to. Detailed planning for selected alternative: - Before putting to implementation the selected alternative/plan, a detailed planning has to make therefore. Detailed programmes of plan means to determine the conditions and time of implementation, to assign authority and responsibility to employees to achieve the goals, to arrange for the facilities of direction and supervision of activities etc. moreover, with the help of statistical techniques such as mathematical and operational research the plan is made more effective. The changes felt necessary to be incorporated in the plan while giving the ultimate shape to the selected alternative is made at this stage. In short, the plan is made detailed from various angles. Formulation of subsidiary plans:- After preparing the complete detailed programme of main plan, the preparation of connected subsidiary plans are undertaken. Subsidiary plans are mainly related to the divisional activities. The extent to which the sometime to vary the success of main plan the subsidiary plans are prepared. Actual implementation of plan: - Whatsoever proper detailed plan of the selected alternative may be made but still on paper it remains a dream. To fulfill this dream plan, its actual implementation is a must. E.g. if achievement is to be made through cinema slide, the function of advertising starts only after the required slide gets
24

10.

prepared. If out of the Roller printing and Screen Printing techniques for designing on clothe, the roller printing technique is selected, then the detailed programme for it is prepared and then printing of design is stared. From one angle this stage appears to be the last stage of planning but the last stage may be as under. Evaluating results and taking corrective actions: - Any plan can be said to be successful only if the objective thereof is achieved at least cost and in time. For this after putting the plan into implementation, the policy of Look and heap should be put in force. With help of it the actual result of plan are compared with the targets of the plan. If the activities are not performed as per the standards, then the mistakes and defects should be identified and rectificationory steps should be taken. For this type of evaluation of plan, help of experts is taken. Conclusion: - Formulation of planning has to be done very carefully because if after preparing plan any change is made there in, then necessary changes are also required to be made in organization network. Yet to make the plan more effective, the changes that are identified as necessary by comparing actual results with the standards have to be made.

State the various types/parts of plan with appropriate classification.

Answer
TYPES OF PLANS

Planning can be classified from different viewpoints. Stuart Thomson, the head of the research department of American Management Association, has classified planning as follows: DIAGRAMATIC PRESENTATION OF TYPES OF PLANS

TYPES OF PLANS

BASIS OF OBJECTIVE

BASIS OF TIME

OTHER TYPES OF PLANNING

25

(A) On the Basis of Objectives:

1.

Planning of the Existing Business: Planning of the day to day activities of the existing business is also necessary. It aims at running of the existing business according to the changing standards of the time and quality. Such planning is necessary for the existence and growth of the existing business.

2.

Reform Oriented Planning: It aims at reforming business activity by removing its deficiencies observed on its constant review. For the survival of business, it is necessary that its efficiency is maintained. Planning should be flexible enough to change with the changing circumstances. The policies and programmes should change in accordance with the change in external circumstances. Change is an essential element of successful planning while rigidity is its enemy. A changing business unit alone can satisfy the changing expectations of the customers, suppliers, labourers and other concerned groups.

3.

Developmental Planning: It aims at the development of business enterprise. To achieve this- aim various programmes of development are prepared, so that various functions are earned out in a predetermined definite order. This type of planning is concerned mainly with production and sales.

(B) On the Basis of Time: According to time, two types of planning can be distinguished (i) Long range planning and (I) Short range planning. No definite time span of planning can be suggested for all business units at all places. A survey conducted by the National Industrial Conference Board of the U.S.A. in 1952 revealed that some business enterprises prefer long range plans covering a period of three to five years, while some prefer short range plans covering a period of one year or less. The surveys carried out by the institutions such as McGraw Hill and Fortune, on, the other hand, show that there is an increasing trend among the large business units to adopt long range planning.
(II) Long Range Planning:
26

Its time period ranges from three to five years, though in some cases it may cover a period longer than five years. Of course the longer the period of planning, the greater are the chances of the estimates going wrong. A plan is formulated on the basis of certain premises and assumptions. If these assumptions are about the near future, the chances are that they will prove correct. For this reason, the short run assumptions are regarded to be more reliable as compared to the long range assumptions. This means that long range business planning is less useful because it is almost impossible to obtain reliable data. The significance of long run planning lies only in the fact that it induces creative thinking. It enables the management to visualize the image of the possible economic position of the business unit in far off future. James L. Hyson is of the opinion that not only the, 'guess 'and "estimate" (guest mate) but to some extent, even the personal opinions and prejudices of the highest authorities are also likely to get in the long range plans. Long run planning is prepared keeping in view such factors as nature of business activity, the requirements of personnel management and time required to secure a definite rate of return over investment. The company would arrange for long range planning keeping in view mainly the present financial resources and the amount of resources which is likely to be available in next five to ten years. Some business units take recourse to long range planning for future expansion of the existing plants also. (III) Short Range Planning:

It covers a period of one year or less. Generally a short run plan .is prepared to suit the financial year of the business unit. According to Dr. G. R. Terry plans with respect to time can be conveniently expressed as 1. 2. 3. Short range covering a period of 1 year and less, Intermediate range, cover 1 but less than 5 years, and Long range, over five years. Short range plans are more likely to give most favorable

results as the estimated figures are nearer reality. For instance, short term plans are more widely used for the publicity programmes and for various sales methods. Co-ordination: Short term and long term plans are not mutually exclusive. A short term plan can be prepared within the framework of a long term Plan. Such a co-ordination between short term and long term plans is essential to make planning more effective. In an effort to hastily solve the immediate problems arising out of specific circumstances in the short run,
27

the long run objectives of the business units must not be neglected. The schemes of short term plans must be intelligently co-ordinated with the basic goals of the long term plans. In addition to the above, there are several other types of planning which may be briefly referred to as follows:
(C) Other Types of Planning:

On the basis of the objectives and functional responsibilities, plans may be divided into production plan, sales plan, financial plan, investment plan, development plan, expansion plan, research plan etc. On the basis of the nature of industry, it may be divided into private plan or public plan. Over and above this, planning can be classified also on the basis of the nature of buyers, groups' degree of formality, geographical area etc. Moreover, the day to day planning is known as 'routine planning.' Generally, special efforts are made in almost every business unit to realize the goal of maximum profit through the implementation of Profit-oriented 'plans. Mere indulgence in rosy dreams cannot be called planning. In fact, it requires a most practical and systematic approach to the problems at hand. On the basis of its structure, planning can be divided into external planning and internal planning.

What is decision making? Discuss in detail process of decision making.

ANSWER

DEFINITION OF DECISION MAKING

Business cannot run without management. Management cannot be native without planning and decision making is the most essential part of Planning. At every step in planning, managers are faced with alternative courses of action. They have to choose the best alternative from among them. Choice is the essence of decision making. The definitions of decision making given by different author are: According to Koontz and O'Donnell "Decision making is the actual process from among alternatives of a course of action. It is at the core of planning.' In the words of George K. Terry. "Decision making can be defined as the selection based on some criteria of one behaviour alternative from two or more possible alternatives.
28

For example, suppose a business unit is in need of finance and there are such alternative sources of finance before it as the issue of ordinary shares, issue of preference shares, issue of debentures, accepting public deposits, obtaining loan, cash credit or overdraft from the banks and Obtaining loan from some financial institutions. To choose the most favorable source from among these is decision making.

29

Process of decision making

DIAGRAMTIC PRESENTATION

DEFINING PROBLEM

DATA COLLECTION

IMPLEMENTATION

ANALYZE PROBLEM

EVALUATE AND SELECT ALTERNATIVE SOLUTIONS

ALTERNATIVE SOLUTIONS

(1)

Defining and clarifying the problem:

The first stage of the decision making process begins with defining and clarifying the nature of the problem on hand. Just as a doctor examines the nature of the disease and then only he diagnoses it, similarly a manager has first to examine the nature of the problem and, then he has to take decision about it. Very often the problem is not as simple as it looks to be. Its origin may be deep; and there may be many factors affecting the problem. For instance, defective publicity may seem to be the cause of decline in sales, while in fact sales may have gone down due to inferior quality, high price or unattractive packing etc. Hence, the manager

30

has to be very careful in examining the nature of the problem before him. He must try to find out the basic cause of the problem.
(2)

Collecting and analyzing data:

After examining the nature of the problem, relevant data must be collected. There are two types of data to be gathered: (i) Internal data and (ii) External data. Getting right information from internal source is less difficult. But, to obtain information from external sources, one has to be very careful and cautious, because most of the external information may not have any relevance to the problem on hand. Moreover, a lot of money, time and energy are to be spent in obtaining external data. Once data is collected, it has to be so classified that it can be analyzed. The data may be presented in various forms such as tables, diagrams and formulas. Where data is not available at all, analysis may be done on the basis of assumptions. (3) Analyzing the Problem: The problem is to be analyzed in such a way that it facilitates decision making. Analysis of the problem is helpful in decision making in following respects: (i) (ii) (iii) (iv)
(4)

It clarifies the future of the decision. It suggests to what extent the decision is valid; whether it can be changed when necessary; how swiftly it can be changed, It makes it clear what will be the effects of this decision on other departments and also how will they be affected by this decision. It can be known whether the decision is concerning some routine matter or is related to some special issue How much importance is to be given to the economic, social and political forces lot analyzing the problem.

Developing Alternative Solution: Now an attempt is made to find out the alternative courses of action. In fact, the origin of problem lies in availability of many alternatives. If alternatives are not there, there is no decision to be made, all possible alternatives are to be thought of at this stage, o that the risk of wrong decision may be minimized. Identification of all possible alternatives requires
31

imagination, foresight and analytical mind on the art of the decision-maker. Sometimes, it becomes necessary to .conduct seminars and group discussion to find out the alternatives. Of course, classification and analysis of available data can be helpful in finding out the alternatives. For instance, following alternatives come to light when the information about the sources of finance is available (i) equity capital (ii) preference share capital (iii) debentures (iv) public deposit (v) Bank loan. (vi) Loan from a financial corporation and Government assistance. (5) Evaluating and Selecting Solutions: At this stage, a comparative study is made of all possible alternatives. Comparative advantages and Disadvantages of each one of them is made. The decision which is the most beneficial is to be selected. All possible consequences of the decision must he considered before making selection. Peter Drucker has suggested some important points to be kept in mind when the alternative is to be selected. i. ii. iii. Each alternative involves an element of risk. While choosing the alternative, this risk must be weighed against the expected gains. Economy is important in making the decision. That alternative should chosen which will give the greatest results with the least effort. Time factor is equally important in making decision. It is necessary lake into account the time period which the implementation of the decision mid requires. If the situation requires prompt action, then such decision mid be selected which can be put into action soon. iv. While choosing the alternative, limitations of resources, must also be taken note of. The resources required for the implementation of the decision must be within the reach of the enterprise. (6) Implementing a n d Assessment of Decision: As Drucker puts it, any solution selected has to be made effective. The decision maker has to consider whether the solution selected is practicable. If it is not possible to implement it, it must not be chosen even if it is best of all. The problem cannot be solved at all if the decision remains on paper only. To implement the decision effectively, instructions should be issued to the people concerned, meetings should be arranged, circulars should be issued and other
32

measures should be taken, if necessary. An efficient system of communication plays an important role at this point. The authority and responsibility of the personnel should be clearly fixed. If any barriers are there in implementing the decision, steps should be taken to remove them.

What is Organization? Discuss its characteristics and importance

MEANING OF ORGANISING The word 'organisation' has been derived from 'organism', which means a structure in which its parts are so linked that they assist the whole and become integrated parts of the whole. Thus organisation consists of two elements (i) Its various parts and (ii) their interrelationship with the whole e.g. man, money and materials are parts of business and they are so arranged that they assist the whole i.e. business. Different authors give different definitions of organizing. Some of them are given below: In the words of Chester Barnard , 'Organisation is a system of cooperative activities of two or more persons.' According to L. Urvick, 'Organisation is the process of dividing up of the activities which are necessary to any purpose and arranging them in groups which are assigned to individuals.' According to G. R. Terry, 'Organizing is (i) the establishing of effective behavioral relationships among persons (ii) so that they may work together efficiently and (iii) gain personal satisfaction in doing selected tasks (iv) under given environmental conditions (v)for the purpose of achieving some goal or objectives. In general sense, organizing means a process of systematically arranging and grouping the interdependent parts. Also, it means any group of persons working together for a common purpose.

CHARACTERISTICS OF AN IDEAL ORGANIZATION;

There can be no difference of opinion on the necessity for organisation as it clearly helps in realizing the objectives of business unit efficiently. It is of course true that the nature of organisation differs in different business units, yet it is possible to enumerate those
33

characteristics which apply to all sorts of organisation and make it a success. In general, that organisation which has the following characteristics is regarded as the best or an ideal form of organisation. Simplicity: Simplicity adds to the efficacy of organisation. If all organizational matters are comprehensible to the employees, the chances of its success increase. Hence, each and every organisation matter should be laid down in clear terms. If everyone in the organisation knows what he is expected to do, it is done more efficiently. Definiteness: The functions, powers and responsibilities of each employee must be determined accurately. The delegation of functions must also be clearly done. No function should either be neglected or duplicated. Certainty of distribution of work facilitates realizing the objectives of business. Stability: Instability leads to failure in any field of activity. It is more so in the field of business. The functions should be assigned to executives and employees after a careful consideration, leaving no scope for frequent changes in the" pattern of functional distribution. The stability of functions maintains the morale of the employees. However, there must be provision ensuring that, in case some key officials stop offering their services suddenly, the organisation can be easily adapted to the new situation without disturbance. Flexibility: Only that organisation can meet with success, which is capable of expansion and contraction in accordance with the changes in circumstances. Especially it should have the flexibility so that it can adjust itself to short run fluctuations in business arising out of seasonal changes and cyclical changes. Generally it is difficult to maintain the spirit of the employees in the face of such business fluctuations. The appropriate changes should be introduced in the organisation in such a manner that employees' morale is maintained, Efficiency: An organisation is considered efficient only if it helps achieve the goals of the business unit at minimum cost. From the viewpoint of the employees, it is efficient
34

if it helps them feel maximum job-satisfaction. From the viewpoint of society, it is efficient if it helps in maximization of social welfare by raising the living standards of the people at large. Balance: Authority should be delegated to a person in proportion to the importance of the function assigned to him. In other words, a balance should be established between the authority and responsibility of the executives and employees both. An ideal organisation succeeds in achieving a balance between several opposite forces. This requires no special plan. Only some well-known principles of management should be used to maintain such a balance in the organisation. If balance is not maintained, the organisation becomes inefficient. Co-ordination: The Junctions of various departments and individuals of the whole organisation should he well-coordinated. A lack of co-ordination creates conflicts among different departments or individuals in the organisation, reduces their efficiency, and leads to confusion and disorder. No department or individual can be independent of other departments or individuals. They are so interdependent and interrelated that functioning of the one does influence the efficiency of the other. Hence, it is necessary that the coordinator is more or less familiar with all functions and is constantly in contact with all departments. Specialization: Each person should be given only that job in which he is most efficient. Under the system of specialization every person has to perform same activity for long - time, and therefore he becomes proficient in it. The whole organisation gains as the result of improved productivity of employees under specialization. Allocation of Authority and Responsibility: It is not enough that authority and responsibility are allocated properly in the business unit. In addition to it, each employee must have the knowledge of what he is expected to do and to whom he is answerable. There should be a definite arrangement for controlling through proper Departmentation; work allocation and centralization of authority. A chart showing the

35

allocation of authority - and responsibility among all levels of management can be of much help for this purpose. Facility for Development: The growth of business is necessary to meet additional demand. The organisation should be such that it does not hamper its development, instead it facilitates its expansion. In other words, organisation should be shaped with due consideration of future requirements. At the same time, care should be taken to ensure that no department becomes too large to be manageable. The organisation should grow smoothly and gradually with the expansion of business, so that its efficiency is not adversely affected. Importance of Human Element: The success of any organisation depends mainly on personnel engaged in it. In fact organisation is essentially a group of individuals and it is the individual who is important in any scheme of organisation. It is therefore very necessary that human beings are given central place in the structure of any organisation.

Explain the guiding principles of organization and also state the process of organization.
GUIDING PRINCIPLES OF ORGANISATION

Management can be more effective if the structure of organisation is efficient. Some general principles have been derived from the experience and experiments to guide the management to evolve an efficient organisation structure. Unlike the laws of physical sciences, these guiding principles of organizations cannot yield definite results at all times. Yet it must be conceded that these principles, if applied properly, do tend to increase the efficiency of organisation. Surely, these principles are universal laws of administration; their application can yield optimum results everywhere in the social, political, religious and business institutions. Koontzand O'Donnell have presented following principles of organisation:

36

1.

Principle of Unity of Objective: The organisation should be so shaped as to enable the business unit achieve its objectives. All elements of the organisation should be able to contribute their best in the realization of objectives of the business unit. This principle is known as the principle of unity of objective. It implies that the structure of organisation should be goal-oriented.

2.

Principle of Efficiency: The principle of efficiency must be observed in the formation of organizational structure. The organisation is efficient if it can help to achieve the goals of the business unit with the lowest cost or with the minimum waste of resources. Minimization of production costs alone should not be taken as the criterion of efficiency. In addition to it, it is also necessary that employees feel maximum satisfaction, authority and responsibilities are clearly located and security of employment ' is guaranteed etc. In practice of course, different managements adopt different criteria of organizational efficiency.

3.

Principle of Span of Control: This principle takes into consideration the maximum number of subordinates that a superior can supervise effectively. According to this principle, the number of subordinates to be supervised by a superior should not exceed his capacities.

4.

Scalar Principle: In any organisation, final authority should be located at a definite point. Also there must be a clear line of authority running from the top to the bottom of the organisation. This principle is known as the 'scalar principle' also. It implies that there should be a chain of command from the top to the bottom and correspondingly there should be a chain of subordination from the bottom to the top. Every subordinate should know the persons to whom he is answerable and also the persons who are answerable to him. The pathway of the chain command is never short and smooth

5.

Principle of Delegation: If a person finds himself overburdened, he should assign some of his duties to some other persons in the organisation. Along with the responsibilities, he should - delegate some authority also to his subordinates. This principle is therefore, known as the principle or delegation of authority. A clear
37

instruction should be given to each subordinate as regards the job he is expected to do and responsibilities he has to bear. 6. Principle of Parity of Authority and Responsibility: Responsibilities can be fulfilled in a better way if there is a proper balance between authority and responsibility. For instance, if a person is entrusted with the responsibility of promoting sales of the product, he should also be given an authority to appoint as many salesmen under him as he deems necessary and to undertake publicity campaign etc. If responsibilities exceed authority, he will naturally be inclined to avoid some of his responsibilities. Hence a balance between authority and responsibility is imperative. 7. Principle of Absolute Responsibility: According to this principle, if a superior assigns a job to his subordinates, it does not mean that he frees himself from the responsibility which was primarily entrusted to him. He shifts it along with some authority to his subordinates just to relieve himself of its burden. Hence he is responsible for his job and that of his subordinate also. What this means is that in practice a superior can shift authority, but cannot avoid his responsibility. Koontz and O'Donnell observed, "The responsibility of-the subordinate to his superior authority received by delegation is absolute, and no superior can escape responsibility for the authorized activities of his subordinates." 8. Principle of the Level of Authority: This principle asserts that a manager should take only those decisions which are in accordance with the authority he possesses in the organisation. He should shift decision making to his superior if it requires a greater authority than what he commands. What is more important is that management should clearly state how much authority and responsibility do they assign to their subordinates. Subordinates, in turn, should also have no misunderstanding about it. Besides, superiors should not take decisions about those matters which he has already delegated to the subordinates. Otherwise, delegation of authority will have no meaning.
38

9.

Principle of the Unity of Command: This principle was put forth by Fayol. According to this principle, each employee should receive order only from one superior. Similarly, each employee should be answerable to only one superior. If an employee receives instructions or orders from two or more superiors, he will be confused as to whose orders to obey. Of course, in the functional organisation as given by Taylor there is a possibility of dual command. An employee may receive instructions from more than one boss. But in this case, instructions received from different bosses pertain to altogether different matters; so that all instructions pertaining to a single matter are received from a single boss only.

10.

Principle of Departmentation: Total activity of business unit should be divided into different departments, so that its objectives may be realized efficiently. This is known as the principle of Departmentation or principle of division of work. A person's ability to supervise the employees and their activities is limited. Hence, in the absence of Departmentation, the growth of the unit would become impossible. Departmentation can be affected on the basis of functions, regions, products or customers etc. Whatever may, be the method of Departmentation, the authority and responsibilities and functions of each department should be demarcated very clearly and interrelationship among departments - should also be clarified.

11.

Principle of Balance: The principle of balance should be followed to establish a balance between different departments of the organisation. Balance is desirable in all activities of management, but it is more so in organisation. An imbalance between centralisation and decentralisation can have adverse effects on organisation. Excessive centralisation leads to autocracy and red-tapism and excessive decentralisation can create the problems of communication and coordination. A balance is necessary between centralisation and decentralisation to get the advantages of both, avoiding at the same time their disadvantages.

12. Principle of Flexibility: How can an organisation survive it' it cannot adapt itself to changing circumstances? Changes take place constantly in the external and internal circumstances. Accordingly, the structure of an organisation must be sufficiently
39

flexible. The objects and plans of the business change with every change in circumstances and hence the structure of organisation must keep pace with it, otherwise it fails to satisfy the needs of the business unit. Instead of leading the business to its goals, it will obstruct its movement towards its goals. 13. Principle of Continuity: This principle implies that efficiency of an organisation must not be highly dependent on any single person. The structure of organisation will be risky if it gets dislocated to such an extent that it becomes inoperative when a few persons in it leave their jobs. There must be an arrangement to make trained employees immediately available for replacement if continuity is to be imparted to the organisation. There must be a provision to prepare enough employees through training to fill up the vacancies in tte4 business unit at different levels without much loss of time. 14. Principle of Leadership Facilitation: The structure of organisation should be so shaped that the manager gets opportunities to develop his leadership qualities and to use his capacity as a leader in business. Authority should be divided in such a manner that, in every department, employees regard their head as their leader and look to him for instructions and orders. This principle is also known as the principle of the growth of leadership. It emphasizes the fact that if a head lacks authority to plan, guide and control the department under him, the organisation is seriously deficient to that extent.

Write a note on following organizational structure:

1. Functional Organization 2. Committee Organization

FUNCTIONAL ORGANIZATION

Frederick W. Taylor, the father of scientific management, recommended this form of organisation to bring in efficiency in all activities of the enterprise. F. W. Taylor regards functional organisation as a sound pillar of structure of scientific management.
40

Definition: Under this form of organisation, the whole task of management is divided according to the type of function involved. Hence it is known as functional organisation. Every person has to perform a special function under this organisation. Therefore, it is also called specialized or staff organisation. Formation: The emphasis is on the division of work. Each and every task is entrusted to an expert. In other words, the principle of division of labour is honored in functional organisation. The result is that there takes place an improvement in the efficiency of the entire unit. The structure of the unit is put on a sounder basis. For instance, purchase officer is responsible for purchase of the materials etc., for all departments of the enterprise. Consequently, the purchases can be affected with utmost efficiency. Similarly, a personnel officer has to select and appoint employees for all departments of the unit as he is the person who possesses specialized knowledge about employees qualifications and efficiency. He has to look after the recruitment, selection, appointments, transfers, dismissal, and training and all labour welfare activities of the unit. Advantages of Functional Organisation:

Specialization: This pattern of organisation is based on the principles of division of labour and' specialization. Each function is entrusted to one who is most efficient in it, as he is highly skilled and qualified for it. Since he remains engaged in a specialized task for long, his proficiency grows with practice. Due to the separation of thinking and doing functions, it offers greater scope for research, improvement and growth. Benefits of Large Scale Production: Specialization and standardization facilitates large scale production, which in turn leads to reduction in per unit cost and improvement in the quality of the product. Instead, the services of an expert are utilized to the fullest extent. The supervisors also tend to work with enthusiasm as they are entrusted with jobs according to their ability and aptitude only. Besides, it is possible to ascertain the requirements of each job through job analysis. Hence, the officials and employees can be trained easily for special functions. In future the vacant posts can be filled by internal promotion only.
41

Co-operation: The functional organisation promotes co-operation among the officials. There is no possibility of internal rivalry and jealousy among them because they are engaged in different functions. Moreover every expert is responsible for a particular job in all departments. Hence, as it happens in line organisation, he does not concentrate on only one department, but takes into consideration the functioning of the entire unit and its efficiency. Hence, the difficulty of co-ordination will not arise.

Decentralisation of Authority: The evils that arise due to centralisation under line organisation are removed under functional organisation. No expert has complete authority over a department. Each expert is authorized to issue directives pertaining to his job only. Hence there can be no centralisation of authority. Easy Expansion: The expansion of the unit is facilitated under functional organisation as it makes use of the principles of specialization and standardization. There is no possibility of any adverse effect on efficiency of the expansion of business unit. For instance, a personnel officer can work with equal efficiency whether he has to recruit 25 employees or 250 employees, because he has only one activity to control. Flexibility: The vertical or horizontal level of management can be easily contracted or expanded with the contraction or expansion of the business. In case of expansion, new departments can be added, work can be restructured. In case of contraction, some of the existing departments can be closed.

Disadvantages of Functional Organisation: Apparently, functional organisation is highly beneficial. But its following deficiencies tend to reduce its utility: Expensive: The firm has to bear the costs of highly paid experts, foremen and employees. For each job, an expert is required and therefore this form of organisation is more expensive as compared to other forms. It is therefore, not useful to small firms.
42

Violation of Unity of Command: This system of organisation is complicated. Employees have to receive instructions and orders from many officials and foremen. The employees get confused and find it difficult to carry out all instructions effectively. The production process is delayed. Sometimes the order received from different experts may be contradictory. In such cases, it is possible that employees may carry them out wrongly. Difficult to Locate Responsibilities: It is not easy to place the blame for failure on any one official. In fact it is not possible to decide who is ultimately responsible for the success or failure of a particular department. Different functions of the same department are entrusted to different persons; hence officers can easily shirk their responsibilities. All this adversely affects the basic purpose of efficient management.

Lack of Discipline and Control: It is not clear who controls whom. Consequently, it becomes difficult to establish discipline among the employees and workers at the lower level. They are accountable to different persons for their work and there is a large number of supervisors over them. This makes maintenance of discipline and control difficult.

Absence of Quick Decision: Decisions concerning the same department are not taken by one individual. No single person has complete authority over a department. Hence it becomes necessary to consult different officials responsible for different functions of a department before a decision is made. Hence decision making is delayed. Due to the delay in decision-making, good opportunities are lost forever and sometimes, the enterprise is put to considerable trouble. Difficulties of Co-ordination: It is difficult to establish co-ordination among different departments. All specialized experts holding equal status are laboring under superiority complex. In the absence of a strong leader capable to coordinate their functions, serious administrative problems crop up. This, along with the absence of unity of command, results into disharmony and chaos in the organisation. Too much sub-division also leads to lack of co-ordination among the workers.
43

Increase in Clerical work: Clerical work increases beyond limit due to such requirements as writing orders for production work, filling instruction cards, preparing and guidance in written form etc.

Suggestions for the Success of Functional Organisation: Functions should be separated individually and collectively. That is, no function should be left unmanned. No, function should be entrusted to more than one person. Each section should include in it all interrelated matters.

COMMITTEE ORGANISATION

The above three forms of organisation cannot satisfy the requirements of modem business. Hence to supplement them, committee organisation began to be adopted. Definition: When group of individuals is formed to take business decisions, committee organisation comes into being. According to Haimann, "a committee is a group of persons, either appointed or elected who are to meet for the purpose of considering matters assigned to it." Dr. Terry has defined committee as a "body of persons elected or appointed to meet on an organized basis, for the discussion and dealing of matters brought before it." Advantages of Committee Organisation :

The wide popularity of this type of organisation can be attributed to its following advantages. In other words, committee organisation is adopted for following reasons: Best means of Group Deliberations: A variety of opinions can be taken advantage of. It gives enough scope for expression and exchange of various views on a problem.

44

As Bangs has remarked, 'Two heads are better than one.' Thus this leads to pooling ideas and matured judgment. Decentralization of Authority: Committee organisation removes the danger of centralization of authority. Through committee, it is possible to restrict the authority of one individual. Hence, committee organization is most appropriate at the higher level of management in industrial units. For instance, the board of directors can control the authority of the president of the company and thereby it removes the danger of concentration of power with the president. Co-operation: If assistants and colleagues are consulted before taking decisions, they will be naturally liable to carry out them with enthusiasm. Otherwise, either they will openly oppose decisions or will be lazy in their implementation. If every person is given an opportunity to take part in decision-making, he feels to be a man of importance and this feeling motivates him to work more. Co-ordination: Committee organisation is based on the principles of co-operation and coordination. The views and opinions of various departmental heads are combined at the meeting of the committee. Each departmental head gets information about the performance and working of the whole unit. The decisions are made generally after a free and frank group discussion and consequently there can be least ability of disagreement and conflict at the implementation level. Matured Decisions: Even difficult problems get easily resolved thanks to the reproduction of the practical knowledge and specialized skill of each member of the committee. All relevant aspects of a problem are thrashed out before arriving at any decision. Hence decisions made finally are most likely to be matured and correct. Useful for Training: Committee provides each of its members an opportunity to get trained in top administrative matters. Members learn by experience, develop gradually their capacities and prepare themselves for higher administrative posts. It is because of this practical training that a member is immediately available to fill the vacancy arising due to retirement of the top executives. This is necessary for maintaining Continuity of work.
45

Improvement in Labour-relations: Committee is a small democratic unit consisting of the representatives of various groups in the organisation. Even laborers', supervisors are given a place in committees. Consequently labour-relations tend favorable and bitterness in the employer-employee relations is reduced. Continuity of Managerial Policy: Membership of the committee does change frequently. Hence managerial and administrative policies keep unchanged fair long. The constancy of policy enhances employees' morale, while frequent changes decrease their morale. Helpful to Research: Constant research is essential in this age of intense Competition in the business world. Product development, introduction of a new product, application of new methods of sales etc. have become indispensable nowadays. If experts of different fields are taken in the committee, they can play an important role in this process and can put the enterprise on the path of prosperity. Helpful to Administrative officers: Since committee's decisions are collectively made, an individual member cannot be held responsible for their results. Thus, the committee organisation proves helpful to the weak administrative officers in arriving decisions without much delay. Over the time, their potential abilities begin to express themselves. Helpful to Communication: Information on crucial matters can be made available simultaneously to all members in the committee at its meetings. Not only this, these matters can be clearly explained to them. This is how communication can be speeded up and misrepresentation of information can be avoided.

Weaknesses or Disadvantages of Committee Organisation: Delay in Decision-making: It is difficult to arrive at concrete decisions promptly. The committees are notorious for wasting a lot of time in unnecessarily long discussions and useless deliberations on unimportant issues. If it is true that decisions are more likely to be matured if taken collectively, it is also true that this method of decision

46

making is time-consuming. Sometimes profitable opportunities are lost due to the delay in decision-making. Injustice to Minorities: Committee's democracy means dominance of majority. In a situation in which vested interests, being in majority, ignore the views of the members in minority, the knowledge and experience of the minority are of no value. The members in minority have to suffer injustice even when compromise approach is adopted on some points of dispute by the majority members. Business Secrets: When number of committee members grows beyond a limit, it becomes difficult to preserve business secrets. It is therefore desirable far as possible, only a few (not exceeding five to ten) most skilled and experienced members are included in the committee. Difficulty of Fixing Responsibility: In committee organisation, scientific allocation of responsibilities is not possible. Since decisions are taken collectively, it is not possible to fix responsibility on any single individual. This fact can have adverse effect on the efficiency of business unit. Negligence in Organisation: Important executives have to spare time frequently for conducting meetings of the committee. The executives have to attend meetings at the cost of their much more important duties. The result is negligence in functioning of the enterprise. Trouble and Bitterness: Sometimes, heated discussions among the members on some important issues result into losing of tempers, enmity, bitterness and discontent. It is likely that most often a statement of a member is misrepresented or misinterpreted. Hence, an atmosphere of co-operation is replaced by that of opposition and bitterness. Expensive: Various expenses are to be incurred to make preparations of arrange a meeting, to induce members to attend regularly and to rearrange the meetings postponed in the past. The committees should be welcome only if their benefit exceeds cost. When is Committee Organisation Appropriate?
47

When a variety of information is necessary to reach a sound conclusion and when the decision is so important that the judgment of several qualified, people is necessary. When activities of different departments need to be adjusted frequently to secure coordination.

What is staffing? Explain the guiding principles of staffing. Ans:

INTRODUCTION

Employees hold a key place in business. No business enterprise can exist and function without employees. The success of business enterprise depends to a large extent on the quality of its personnel. The plan of business may be logically sound and structure of organisation may be perfect, but if the recruitment and training of personnel are unscientific, business cannot grow. The growth of business depends mainly on the willingness and ability of its employees. MEANING It is difficult to give an accurate definition of staffing. We may try to clarify its meaning, by referring to various definitions, however: According to Dalton Mcfarland, "Staffing is the function by which manages holds, an organisation through the recruitment, selection and development of individual as capable employees. Koontz, O'Donnell and Weihrich have said. "The managerial function of staffing is defined as filling positions in the organisation structure through identifying workforce requirements, inventorying the people available, recruitment, selection placement, promotion, appraisal, compensation and training of needed people." The main elements of staffing derived from above definitions may be summed as follows:
48

1. It is concerned with procurement, development and maintenance of a satisfactory and satisfied labour force through recruitment, promotion and transfer. 2. The management has to plan, manage, direct and control various matters concerning labour force. 3. Staffing ought to be done keeping in view not only the interests of the employer or business unit only, but those of the employees and society also. 4. Every manager in the organisation has to do staffing function. GUIDELINE PRINCIPLES FOR SUCCESSFUL STAFFING Every enterprise will have different employee related problems. Hence, equal rules cannot be given for all the enterprises. Some of the guideline principles are discussed below, which are essential for successful staffing: Scientific selection: Careful selection of an employee prevents the wastage of time and energy. Hence, there should be specific standards for selection. With the help of job analysis and job description the specific form of the task should be fixed and accordingly the employee should be selected. The employee should also have the capacity, enthusiasm and aptitude for work. If the statement of Plato is adopted by the managers and understand its meaning, the scientifically learnt employees can be easily available. High and strict standards in employment testing : The scientific management have developed several tests in order to ascertain his physical and mental capacities. For knowing the personality and capacities in the employees, the scientific management has developed several tests. For knowing the latent personality and capacity of a candidate, these tests are utilized. For example, for testing loyalty, trustworthiness, courage, cleverness, patience, sincerity etc. these tests should have high and strict standards, so that only interested person gets selected. Management expert Dr. George Terry has written, 'The best method of selection is tests." The tests should be scientifically taken and they should be verified from time to time.
49

Proper opportunities of promotion : Every person has desire and ambition to go ahead. Hence, a system should be developed through which employee gets the opportunity of promotion at proper time. Specific standards should be established for promotion. In case of special work skill, wisdom, deep understanding and independent thinking power should be properly promoted. Now it is not the trend just to promote seniors only. The policy of promotion should be impartial and just. Standards and parameters of efficiency : The efficiency of an organization can be maintained only if there are specified standards of efficiency. Not only that, there should be parameters to know whether the functioning is as per those specified standards or not. Efficiency of employees can be maintained by keeping fresh their knowledge through refresher training, conferences and seminars. Besides the above principles, it is essential that proper attention is paid to following matters also :
(i) (ii) (iii)

Employees should be provided employment safety. The conditions of employment should be just and impartial. The wage rates of employees should have to be scientific through job evaluation. Work analysis, job description, job requirement, work assessment and personnel evaluation methods should be scientifically implemented. Employees, supervisors and officers should be provided proper training at proper time.. The employees should be provided good working conditions. Proper arrangement should be there for solving employee's complaint and removing dissatisfaction. To the maximum possible, the employees should be provided benefits of social security and welfare facilities. Emphasis should be laid on the human element in behavour with employees.

(iv)

(v)

(vi) (vii)

(viii)

(ix)

50

In short, all the possible efforts should be made to obtain and maintain satisfied employees. All these details are included in the work area of staffing. Above guideline principles should be followed for maintaining the standards of efficiency.

What is directing? Explain its methods.

INTRODUCTION

Directing is getting done through subordinates, tasks which are assigned to them. The business objectives are achieved through cooperative efforts of a number of persons. Directing includes supervision of subordinates, directing them in their path issuing instructions and orders to them and providing them dynamic leadership by manager. In order that predetermined goals are efficiently achieved in time, it is necessary that subordinates must be guided and directed. Direction is very important function of the management. It is to be noted that planning and organization are only preliminary functions in connection to the activities of business unit. It is the Directing which starts and drives the activities of the business unit . MEANING The top management of the enterprise sets the organizational goals through the planning, policies and strategies of the enterprise. Directing makes sure the employee and entire work environment for the achievement of the goals of the enterprise. We examine below some of the definitions given by various authors: Koontz and O'Donnell said," It is the executive function of guiding and overseeing subordinates" Marshal Dimock writes "Directing function involves determining the courses giving orders and instructions and providing the dynamic leadership." According to Urwick "Manager must act as a guide, interpreter and teacher to guide the subordinates in their pursuits."

51

In short, all the above definitions emphasize one point, "Directing is supervising the work of subordinates and guiding them in their efforts." METHODS OF DIRECTING

Autocratic method: By this method the business manager believes that his subordinates should not be allowed to work independently without his sanction. "Effective leadership is essential for directing, but it can be autocratic." Here, it is believed that employees do not work properly of their own, hence, they need permission. When the employees are unskilled, illiterate and untrained, this method is used. Following are the three characteristics of this method: Centralization of authority should be made for the manager. Depends mainly on the orders. Strict supervision should be maintained. Centralize authority in the manager: Here all the authorities are centralized in the hands of the manager. His subordinates are not delegated any authority. Rapid decisions are the main benefit of this system. This method gives best results where the employees are untrained and illiterate. If we examine its limitations, as the authority is centralized with the manager, his work load is increased, which leads to delay in decisions. Secondly, the employees carrying their duty without enjoying any authority cannot last long in the business. They leave the unit as soon as they get an opening. This leads to rise in employee turnover, which reduces the efficiency.

Just depend on the orders : In the second method of autocratic system, only orders are used for taking work from the employees. Educated employees show unhappiness towards such a system. Uneducated employees also get bored by just orders only. Here, an employee does not feel freedom for working. Even then, where the employees are not ready to bear any responsibility, this method bears success. In this method of commands, detailed instructions are given. The manager, issuing commands, would obviously consider his method being the best. Employees are not able to utilize their skill, intellect, imagination or wisdom. Untrained and inexperienced employers may find these instructions helpful to them, but not for the longer period of time. Strict supervision system: Strict supervision is the characteristic of autocratic policy. The leader may not have trust in his subordinates; consequently, strict supervision is required.
52

This autocratic method of directing is advisable only in certain special conditions. Where the employees are uneducated, unskilled and untrained, this system can work, but if the employees are educated and trained, this system, ignoring the democratic ways, cannot last long. Following autocratic method can become useful: When the uniform policy is to be strictly followed. When the employees are unskilled, untrained and illiterate. Where the employees are of extreme thoughts. When there are critical or endangering conditions. When there is extensive indiscipline in the employee.

Discussion method: This is the democratic method of directing. This method gives importance to discussion. For taking work from employees, democratic method is used. Through formal and informal meetings, the suggestions of the employees are sought and considered. In the formal meeting, notice is issued, in which the place, time and agenda are mentioned. The main aim of the meeting is to explain the business policy, explain the changes taking place in administration, or giving proper explanation about the functioning of the employees. Informal meeting is convened without written notice as per requirement. This type of meeting may be for certain departments also. The main aim of the meeting is to discuss as required, to solve the unexpected problems and to give important information to employees. Such meetings, which shows trust in the employees, are welcomed by them. From the motivational point of view, this method of directing has more possibility of getting successful, because this system gives weightage to the opinions of the employees. It plays an important role in rising the employee morale. The decision in which the employee himself is the partner, it is obvious that he implements it enthusiastically after properly understanding it. This method of directing has certain limitations also. If the top managers are not able to successfully utilize it, then its democratic benefits cannot be derived. If the meeting is handled autocratically, and the members are criticized or respect is not shown to employees, then this system fails.
53

In the following situations mutual discussion method becomes more favourable : o When the employees are aware about their functions and complex problems of the unit. o When the employees are trained and educated. o When the employees can independently think and desire the inclusion in decision taking. Open method: This method shows the zenith of democracy. The high officers interfere to the minimum extent in the functioning of the employees. High officers only supervise their work. Wherever necessary, simply they put suggestions and the final decision is left to the employees. Where the employees are educated and trained, believe in selfdiscipline and having deep understanding this system becomes successful. The manager, who utilizes this method, believes that such a situation should be created that employees can give their independent contribution in accomplishing the objective. To bring out the latent capacity in the employees, this method is the best. In this method, the high officers show trust in his subordinates and in turn employees try to be loyal to him. Sometimes, it may so happen that subordinates may take wrong decisions or are confused in taking decisions or may delay in taking decisions. Above types of limitations of delegating authority should also be taken into consideration. Free working does not mean that one should be careless about the supervision. Required- supervision is, of course, maintained. Though minimum interference is the characteristic of this method. Wherever required, the manager utilizes his authority. In this free method, the employees may hold discussion with higher officials. For educated and high level officers, this system is an ideal one. This method is more favorable in following situations: Where the employees have to frequently take decisions. Where the employees are capable of holding discussion with the officers. Where the employees are educated, trained and having sense of responsibility.

What is controlling? Explain process of controlling.

54

INTRODUCTION: Planning ranks first in the sequence of managerial functions, while controlling is the last among them. Yet, controlling is as important as planning. Controlling ensures that actual performance is according to the predetermined course of action. Thus it facilitates the realization of objectives. The importance of control as one of the functions of management has been accepted by all experts in the subject of management. Control is an important function of management in as much as, it is through control that the management can check whether the actual performance is in accordance with the predetermined plan, instructions issued and established principles. MEANING AND DEFINITION OF CONTROL According to Peter F. Drucker, "Control maintains the equilibrium between ends and means, output and effort." Koontz and O'Donnell are of the opinion that, "Control is the measurement and correction of the performance of subordinates in order to make sure that enterprise objectives and the plans devised to attain them are accomplished." Henry Fayol "In an undertaking, 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, people, and actions." All these definitions emphasize almost the same elements of controlling. The standards of performance are fixed and actual performance is compared with them. If there is any deviation from the standards, corrective measures are taken. Either the performance is corrected or objectives are changed or new plans are prepared or structure of organisation is changed or any such material change is made. Every employee, every function and everything is controlled. Thus, managerial control is comprehensive. Philip Kotler defines control as 'a process of taking steps to bring actual results and desired results close together." How exactly does the above diagram attempt to visualize thej^otler's definition of control?

55

THE CONTROL PROCESS or MANAGERIAL CONTROL PROCESS The basic control process embraces three steps in all situations. They are as follows: 1. Establishment of Standards, 2. Measurement of Performance 3. Taking Corrective Steps In short, controlling consists of (a) determining what should be done or what is expected, (b) finding out what is being done, (c) comparing results with expectations and (d) applying corrective measures if results deviate from the expectations. The steps establishing control procedure may be represented diagrammatically as follows: Establishment of Standards:

A standard is a criterion against which results can be measured. Standards may be of many kinds. They may be physical standards like units of production, man-hours etc. They may be financial like cost of materials per unit. There are generally definite units in which standards are expressed. But there may be intangible standards also e.g. one of the goals of business may be to establish high morale among employees. It is difficult to measure morale is quantitative units. We discuss various kinds of standards below:

Physical standards:
These are standards not expressed in financial terms. For measuring quality of raw materials consumed, labour-hours, output of the factory etc. physical standards are used. It signifies the quantity e.g. production per man-hour, goods transported per ton kilometer etc. Physical standards can also be laid down for quality e.g. hardness of steel, durability of cloth etc.

Cost standards:
These standards are expressed in monetary terms, such as cost per unit of output, wages per unit of output, factory overhead per machine-hour or per man-hour.

56

 Revenue standards
These standards are also stated in money terms but they relate to revenue side. The examples are sales value per unit of output, revenue per kilometer in a transport concern etc.

Capital standards:
The capital standards express the assets in money terms. They relate to the capital expenditure. In other words they are concerned with the balance sheet and not the profit and loss of the company. The examples are rate of return on capital invested, return on share-holders' funds etc. In fact ratios relating to balance sheet are capital standards.

Intangible standards:
Some standards can be expressed neither in physical terms nor in money terms. So far as the human factor or human relationship is concerned, it is difficult to express the optimum situation in concrete terms. Examples are; morale of the employees and honesty of the supervisors

Measurement of performance:

The second step in the process of control is to make arrangements for the measurement of performance. This step consists of two activities 1. 2. Collection data about actual performance Comparing actual performance with standards. Collecting data about actual performance: Before we can compare the actual performance with standards, it is necessary to collect information about what is being done. This can be achieved in many different ways.

57

Personal Observation: Many business executives make frequent visits to the areas of activities so that they can see for themselves what is being done. Advocates of this method believe that there is no better method than this for collecting data. This is because they want the direct picture before them of what is going on. Many sales executives visit their sales offices to get on the spot-information. This method is most suitable in case of activities that lead to intangible results which are measurable quantitatively. For example, this method is advisable when the purpose is to know the response of the buyers to a new product or the morale of the employees. But this method is not suitable for big organisation. It is not possible to get accurate quantitative data by personal observation. Accuracy is not obtained. It is time consuming. It causes delay in decision making. It creates a feeling in the employees that the executives do not trust them or they have no confidence in them. The employees feel that their freedom to work is being invaded by the executives. It remains limited to a few employees and tasks only.

Oral Reports: At the end of the day, salesmen personally see the sales manager and orally give them information about the number of customers visited, the number of units sold, opinions and attitudes expressed by the customers etc. Under this method a free exchange of views is possible. The sales-manager is able to know exactly what is going on but also is able to give suggestions and help to the salesmen. Oral reports are obtained with the help of group meetings also. This method is useful in maintaining contact with the employees. Further, information can be obtained on the spot or where doubt arises, further questions may be asked and the matter be clarified.

Written Reports: The written report method is used in almost all business organizations. Very detailed information on performance can be obtained through written reports and this information can be preserved as a record for a long period of time. There are two types of written reports viz. routine reports and special reports. Routine reports provide information about the working of different departments regularly at a definite interval of time. Charts and tables are extensively used to
58

convey this information. In Du Pont Company of the U.S.A. nearly 350 charts are presented before executive committee every month. Special reports are prepared only occasionally for some specific aspect or problem. A separate independent cell is created for this purpose in some business enterprises.

Comparing actual performance with standards: The results made known through data collected should be critically examined and compared with the standards established. If performance deviates from standard, there is a need to take corrective steps. There can be no fixed standard about the extent of deviation which can be tolerated. Sometimes even a small deviation may become a matter of serious concern. Sometimes even a large deviation of performance is ignored by the management. Written reports are important in this area of control also. Reports can specify which activity or department is not going on in accordance with the required standard and what corrective measures should be taken to remove this particular shortfall. For comparison purpose, the figures of performance of previous month or previous year etc. and the percentages are very useful. Management by Exception: According to the principle of exception, management should concentrate attention only on those exceptional cases which are not going as planned. When a particular activity is proceeding as planned, there is no need to take corrective action. The management need not pay any attention to them. But the corrective actions are needed in areas where performance is not according to standards. The attention of management must be drawn to this aspect. This saves a lot of time of higher management. A purchaser is instructed to buy 100 items each at a definite price. But, suppose, out of them, 5 items are purchased at a price higher than that fixed by the management. In that case, it is necessary to report these five items only. These five are exceptions and can be investigated further. Evidently, the principle of exception, if adopted, can help management save their time and energy both. Taking Corrective Steps
59

The last step is to take corrective action. If standards of ^ performance are fixed and if performance is measured with them, it is easy to take corrective actions, because the manager knows where corrective measures must be applied. The essence of control', wrote Lundy, 'lies in the initiation and follow-up of corrective action'. Corrective actions are taken by those who have authority over actual performance. Corrective steps involve restructuring organizational set up, or better selection and training of subordinates or reassignment of duties etc. The controlling function is incomplete without taking corrective action. Controlling does not stop at taking corrective action for the deviations noticed. It must look to the future also. It must take such steps that they do not occur in future. It must be remembered that taking corrective steps must be a positive affair and should not hurt the feelings of employees. The employees must be taken into confidence when such steps are taken and they must be made to feel that such steps are in the best interest of the company and not against them personally.

YOUR SUCCESS IS MY DREAM

/

60