PRINCIPLES OF

MANAGEMENT
They say that dedicating is one of the most
beautiful acts of love one can perform. I would
argue that it is even more beautiful to dedicate this
to you without saying my name
PRI NCI PLES OF M AN AGEM ENT (M G2351)
UNIT I OVERVIEW OF MANAGEMENT
Definition - Management - Role of managers - Evolution of Management thought -
Organization and the environmental factors Trends and Challenges of Management in
Global cenario!
UNIT II PLANNING
"ature and #ur#ose of #lanning - $lanning #rocess - T%#es of #lans Ob&ectives - -
Managing b% ob&ective 'M(O) trategies - T%#es of strategies - $olicies - Decision
Ma*ing - T%#es of decision - Decision Ma*ing $rocess - Rational Decision Ma*ing
$rocess - Decision Ma*ing under different conditions!
UNIT III ORGANIZING
"ature and #ur#ose of organizing - Organization structure - +ormal and informal grou#s
organization - ,ine and taff authorit% - De#artmentation - #an of control -
Centralization and Decentralization - Delegation of authorit% - taffing - election and
Recruitment - Orientation - Career Develo#ment - Career stages Training - -
$erformance -##raisal!
UNIT IV DIRECTING
Creativit% and .nnovation - Motivation and atisfaction - Motivation Theories -
,eadershi# t%les - ,eadershi# theories - Communication- (arriers to effective
communication - Organization Culture - Elements and t%#es of culture - Managing
cultural diversit%!
UNIT V CONTROLLING
$rocess of controlling - T%#es of control - (udgetar% and non-budgetar% control
techni/ues - Managing $roductivit% - Cost Control - $urchase Control - Maintenance
Control - 0ualit% Control - $lanning o#erations!
UNIT I
OVERVIEW OF MANAGEMENT
D E F I N I T I ON
-ccording to 1arold 2oontz3 4Management is an art of getting things done through and 5ith the
#eo#le in formall% organized grou#s! .t is an art of creating an environment in 5hich #eo#le can
#erform and individuals and can co-o#erate to5ards attainment of grou# goals!
L EVE L S OF M A N A G E M E N T
The three levels of management are as follo5s
1. The Top M!"e#e!$
.t consists of board of directors3 chief e6ecutive or managing director! The to#
management is the ultimate source of authorit% and it manages goals and #olicies for an
enter#rise! .t devotes more time on #lanning and coordinating functions!
The role of the to# management can be summarized as follo5s
a! To# management la%s do5n the ob&ectives and broad #olicies of the enter#rise!
b! .t issues necessar% instructions for #re#aration of de#artment budgets3
#rocedures3 schedules etc!
c! .t #re#ares strategic #lans 7 #olicies for the enter#rise!
d! .t a##oints the e6ecutive for middle level i!e! de#artmental managers!
e! .t controls 7 coordinates the activities of all the de#artments!
f! .t is also res#onsible for maintaining a contact 5ith the outside 5orld!
g! .t #rovides guidance and direction!
h! The to# management is also res#onsible to5ards the shareholders for the
#erformance of the enter#rise!
2. M%&&'e Le(e' M!"e#e!$
The branch managers and de#artmental managers constitute middle level! The% are
res#onsible to the to# management for the functioning of their de#artment! The% devote
more time to organizational and directional functions! .n small organization3 there is onl%
one la%er of middle level of management but in big enter#rises3 there ma% be senior and
&unior middle level management! Their role can be em#hasized as
a! The% e6ecute the #lans of the organization in accordance 5ith the #olicies and
directives of the to# management!
b! The% ma*e #lans for the sub-units of the organization!
c! The% #artici#ate in em#lo%ment 7 training of lo5er level management!
d! The% inter#ret and e6#lain #olicies from to# level management to lo5er level!
e! The% are res#onsible for coordinating the activities 5ithin the division or
de#artment!
f! .t also sends im#ortant re#orts and other im#ortant data to to# level
management!
g! The% evaluate #erformance of &unior managers!
h! The% are also res#onsible for ins#iring lo5er level managers to5ards better
#erformance!
3. Lo)e* Le(e' M!"e#e!$
,o5er level is also *no5n as su#ervisor% 8 o#erative level of management! .t consists of
su#ervisors3 foreman3 section officers3 su#erintendent etc! -ccording to R!C! Davis3
4u#ervisor% management refers to those e6ecutives 5hose 5or* has to be largel% 5ith
#ersonal oversight and direction of o#erative em#lo%ees! .n other 5ords3 the% are
concerned 5ith direction and controlling function of management! Their activities include
a! -ssigning of &obs and tas*s to various 5or*ers!
b! The% guide and instruct 5or*ers for da% to da% activities!
c! The% are res#onsible for the /ualit% as 5ell as /uantit% of #roduction!
d! The% are also entrusted 5ith the res#onsibilit% of maintaining good relation in the
organization!
e! The% communicate 5or*ers #roblems3 suggestions3 and recommendator%
a##eals etc to the higher level and higher level goals and ob&ectives to the
5or*ers!
f! The% hel# to solve the grievances of the 5or*ers!
g! The% su#ervise 7 guide the sub-ordinates!
h! The% are res#onsible for #roviding training to the 5or*ers!
i! The% arrange necessar% materials3 machines3 tools etc for getting the things
done!
&! The% #re#are #eriodical re#orts about the #erformance of the 5or*ers!
*! The% ensure disci#line in the enter#rise!
l! The% motivate 5or*ers!
m! The% are the image builders of the enter#rise because the% are in direct contact
5ith the 5or*ers!
FUNCTI ONS OF M AN AGEM ENT
Management has been described as a social #rocess involving res#onsibilit% for economical
and effective #lanning 7 regulation of o#eration of an enter#rise in the fulfillment of given
#ur#oses! .t is a d%namic #rocess consisting of various elements and activities! These activities
are different from o#erative functions li*e mar*eting3 finance3 #urchase etc! Rather these
activities are common to each and ever% manger irres#ective of his level or status!
Different e6#erts have classified functions of management! -ccording to George 7 9err%3 4There
are four fundamental functions of management i!e! #lanning3 organizing3 actuating and
controlling! -ccording to 1enr% +a%ol3 4To manage is to forecast and #lan3 to organize3 to
command3 7 to control! :hereas ,uther Gullic* has given a *e%5ord ;POSDCOR+< 5here $
stands for $lanning3 O for Organizing3 for taffing3 D for Directing3 Co for Co-ordination3 R for
re#orting 7 ( for (udgeting! (ut the most 5idel% acce#ted are functions of management given
b% 2OO"T= and O<DO""E, i!e! P'!!%!"3 O*"!%,%!"3 S$--%!"3 D%*e.$%!" and Co!$*o''%!"!
+or theoretical #ur#oses3 it ma% be convenient to se#arate the function of management but
#racticall% these functions are overla##ing in nature i!e! the% are highl% inse#arable! Each
function blends into the other 7 each affects the #erformance of others!
1. P ' !! % !"
.t is the basic function of management! .t deals 5ith chal*ing out a future course of
action 7 deciding in advance the most a##ro#riate course of actions for achievement of
#re-determined goals! -ccording to 2OO"T=3 4$lanning is deciding in advance 5hat to
do3 5hen to do 7 ho5 to do! .t bridges the ga# from 5here 5e are 7 5here 5e 5ant to
be! - #lan is a future course of actions! .t is an e6ercise in #roblem solving 7 decision
ma*ing! $lanning is determination of courses of action to achieve desired goals! Thus3
#lanning is a s%stematic thin*ing about 5a%s 7 means for accom#lishment of #re-
determined goals! $lanning is necessar% to ensure #ro#er utilization of human 7 non-
human resources! .t is all #ervasive3 it is an intellectual activit% and it also hel#s in
avoiding confusion3 uncertainties3 ris*s3 5astages etc!
2. O*"!%,%!"
.t is the #rocess of bringing together #h%sical3 financial and human resources and
develo#ing #roductive relationshi# amongst them for achievement of organizational
goals! -ccording to 1enr% +a%ol3 4To organize a business is to #rovide it 5ith ever%thing
useful or its functioning i!e! ra5 material3 tools3 ca#ital and #ersonnel<s! To organize a
business involves determining 7 #roviding human and non-human resources to the
organizational structure! Organizing as a #rocess involves>
.dentification of activities!
Classification of grou#ing of activities!
-ssignment of duties!
Delegation of authorit% and creation of res#onsibilit%!
Coordinating authorit% and res#onsibilit% relationshi#s!
3. S$--%!"
.t is the function of manning the organization structure and *ee#ing it manned! taffing
has assumed greater im#ortance in the recent %ears due to advancement of technolog%3
increase in size of business3 com#le6it% of human behavior etc! The main #ur#ose o
staffing is to #ut right man on right &ob i!e! s/uare #egs in s/uare holes and round #egs
in round holes! -ccording to 2ootz 7 O<Donell3 4Managerial function of staffing involves
manning the organization structure through #ro#er and effective selection3 a##raisal 7
develo#ment of #ersonnel to fill the roles designed un the structure! taffing involves>
Man#o5er $lanning 'estimating man #o5er in terms of searching3 choose the
#erson and giving the right #lace)!
Recruitment3 selection 7 #lacement!
Training 7 develo#ment!
Remuneration!
$erformance a##raisal!
$romotions 7 transfer!
/. D%*e.$%!"
.t is that #art of managerial function 5hich actuates the organizational methods to 5or*
efficientl% for achievement of organizational #ur#oses! .t is considered life-s#ar* of the
enter#rise 5hich sets it in motion the action of #eo#le because #lanning3 organizing and
staffing are the mere #re#arations for doing the 5or*! Direction is that inert-#ersonnel
as#ect of management 5hich deals directl% 5ith influencing3 guiding3 su#ervising3
motivating sub-ordinate for the achievement of organizational goals! Direction has
follo5ing elements>
u#ervision
Motivation
,eadershi#
Communication
(%) S0pe*(%1%o!2 im#lies overseeing the 5or* of subordinates b% their su#eriors! .t is the
act of 5atching 7 directing 5or* 7 5or*ers!
(%%) Mo$%($%o!2 means ins#iring3 stimulating or encouraging the sub-ordinates 5ith zeal
to 5or*! $ositive3 negative3 monetar%3 non-monetar% incentives ma% be used for this
#ur#ose!
(%%%) Le&e*1h%p2 ma% be defined as a #rocess b% 5hich manager guides and influences
the 5or* of subordinates in desired direction!
(%() Co##0!%.$%o!12 is the #rocess of #assing information3 e6#erience3 o#inion etc
from one #erson to another! .t is a bridge of understanding!
5. Co!$*o''%!"
.t im#lies measurement of accom#lishment against the standards and correction of
deviation if an% to ensure achievement of organizational goals! The #ur#ose of
controlling is to ensure that ever%thing occurs in conformities 5ith the standards! -n
efficient s%stem of control hel#s to #redict deviations before the% actuall% occur!
-ccording to Theo 1aimann3 4Controlling is the #rocess of chec*ing 5hether or not
#ro#er #rogress is being made to5ards the ob&ectives and goals and acting if necessar%3
to correct an% deviation! -ccording to 2oontz 7 O<Donell 4Controlling is the
measurement 7 correction of #erformance activities of subordinates in order to ma*e
sure that the enter#rise ob&ectives and #lans desired to obtain them as being
accom#lished! Therefore controlling has follo5ing ste#s>
'i) Establishment of standard #erformance!
'ii) Measurement of actual #erformance!
'iii) Com#arison of actual #erformance 5ith the standards and finding out deviation if
an%!
'iv) Corrective action!
R O L ES OF M A N A GER
1enr% Mintzberg identified ten different roles3 se#arated into three categories! The categories he
defined are as follo5s
) I!$e*pe*1o!' Ro'e1
The ones that3 li*e the name suggests3 involve #eo#le and other ceremonial duties! .t can be
further classified as follo5s
,eader Res#onsible for staffing3 training3 and associated duties!
+igurehead The s%mbolic head of the organization!
,iaison Maintains the communication bet5een all contacts and informers that com#ose
the organizational net5or*!
3) I!-o*#$%o!' Ro'e1
Related to collecting3 receiving3 and disseminating information!
Monitor $ersonall% see* and receive information3 to be able to understand the
organization!
Disseminator Transmits all im#ort information received from outsiders to the members
of the organization!
#o*es#erson On the contrar% to the above role3 here the manager transmits the
organization<s #lans3 #olicies and actions to outsiders!
.) De.%1%o!' Ro'e1
Roles that revolve around ma*ing choices!
Entre#reneur ee*s o##ortunities! (asicall% the% search for change3 res#ond to it3 and
e6#loit it!
"egotiator Re#resents the organization at ma&or negotiations!
Resource -llocator Ma*es or a##roves all significant decisions related to the allocation
of resources!
Disturbance 1andler Res#onsible for corrective action 5hen the organization faces
disturbances!
EVOLUTI ON OF M AN AGEM ENT T4OUG4T
The #ractice of management is as old as human civilization! The ancient civilizations of
Eg%#t 'the great #%ramids)3 Greece 'leadershi# and 5ar tactics of -le6ander the great) and
Rome dis#la%ed the marvelous results of good management #ractices!
The origin of management as a disci#line 5as develo#ed in the late ?@
th
centur%! Over
time3 management thin*ers have sought 5a%s to organize and classif% the voluminous
information about management that has been collected and disseminated! These attem#ts at
classification have resulted in the identification of management a##roaches! The a##roaches of
management are theoretical frame5or*s for the stud% of management! Each of the a##roaches
of management are based on some5hat different assum#tions about human beings and the
organizations for 5hich the% 5or*!
The different a##roaches of management are
a) Classical a##roach3
b) (ehavioral a##roach3
c) 0uantitative a##roach3
d) %stems a##roach3
e) Contingenc% a##roach!
The formal stud% of management is largel% a t5entieth-centur% #henomenon3 and to some
degree the relativel% large number of management a##roaches reflects a lac* of consensus
among management scholars about basic /uestions of theor% and #ractice!
) T4E CLASSICAL APPROAC45
The classical a##roach is the oldest formal a##roach of management thought! .ts roots #re-date
the t5entieth centur%! The classical a##roach of thought generall% concerns 5a%s to manage
5or* and organizations more efficientl%! Three areas of stud% that can be grou#ed under the
classical a##roach are scientific management3 administrative management3 and bureaucratic
management!
'i) cientific Management!
+rederic* :inslo5 Ta%lor is *no5n as the father of scientific management! cientific
management 'also called Ta%lorism or the Ta%lor s%stem) is a theor% of management that
ana l% z es and s % n t hes iz e s 5 o r * f lo 5 s3 5 ith the ob&ective of im#roving labor # r oduc t iv it % ! .n other
5ords3 Traditional rules of thumb are re#laced b% #recise #rocedures develo#ed after careful
stud% of an individual at 5or*!
'ii) -dministrative Management!
-dministrative management focuses on the management #rocess and #rinci#les of
management! .n contrast to scientific management3 5hich deals largel% 5ith &obs and 5or* at
the individual level of anal%sis3 administrative management #rovides a more general theor% of
management! 1enri +a%ol is the ma&or contributor to this a##roach of management thought!
'iii) (ureaucratic Management!
(ureaucratic management focuses on the ideal form of organization! Ma6 :eber 5as
the ma&or contributor to bureaucratic management! (ased on observation3 :eber concluded
that man% earl% organizations 5ere inefficientl% managed3 5ith decisions based on #ersonal
relationshi#s and lo%alt%! 1e #ro#osed that a form of organization3 called a bureaucrac%3
characterized b% division of labor3 hierarch%3 formalized rules3 im#ersonalit%3 and the selection
and #romotion of em#lo%ees based on abilit%3 5ould lead to more efficient management! :eber
also contended that managersA authorit% in an organization should be based not on tradition or
charisma but on the #osition held b% managers in the organizational hierarch%!
3) T4E +E4AVIORAL APPROAC45
The behavioral a##roach of management thought develo#ed3 in #art3 because of
#erceived 5ea*nesses in the assum#tions of the classical a##roach! The classical a##roach
em#hasized efficienc%3 #rocess3 and #rinci#les! ome felt that this em#hasis disregarded
im#ortant as#ects of organizational life3 #articularl% as it related to human behavior! Thus3 the
behavioral a##roach focused on tr%ing to understand the factors that affect human behavior at
5or*!
'i) 1uman Relations!
The 1a5thorne E6#eriments began in ?@BC and continued through the earl% ?@DEs! -
variet% of researchers #artici#ated in the studies3 including Elton Ma%o! One of the ma&or
conclusions of the 1a5thorne studies 5as that 5or*ersA attitudes are associated 5ith
#roductivit%! -nother 5as that the 5or*#lace is a social s%stem and informal grou# influence
could e6ert a #o5erful effect on individual behavior! - third 5as that the st%le of su#ervision is
an im#ortant factor in increasing 5or*ersA &ob satisfaction!
'ii) (ehavioral cience!
(ehavioral science and the stud% of organizational behavior emerged in the ?@FEs and
?@GEs! The behavioral science a##roach 5as a natural #rogression of the human relations
movement! .t focused on a##l%ing conce#tual and anal%tical tools to the #roblem of
understanding and #redicting behavior in the 5or*#lace!
The behavioral science a##roach has contributed to the stud% of management through
its focus on #ersonalit%3 attitudes3 values3 motivation3 grou# behavior3 leadershi#3
communication3 and conflict3 among other issues!
.) T4E 6UANTITATIVE APPROAC45
The /uantitative a##roach focuses on im#roving decision ma*ing via the a##lication of
/uantitative techni/ues! .ts roots can be traced bac* to scientific management!
'i) Management cience 'O#erations Research)
Management science 'also called o#erations research) uses mathematical and statistical
a##roaches to solve management #roblems! .t develo#ed during :orld :ar .. as strategists
tried to a##l% scientific *no5ledge and methods to the com#le6 #roblems of 5ar! .ndustr% began
to a##l% management science after the 5ar! The advent of the com#uter made man%
management science tools and conce#ts more #ractical for industr%
'ii) $roduction -nd O#erations Management!
This a##roach focuses on the o#eration and control of the #roduction #rocess that
transforms resources into finished goods and services! .t has its roots in scientific management
but became an identifiable area of management stud% after :orld :ar ..! .t uses man% of the
tools of management science!
O#erations management em#hasizes #roductivit% and /ualit% of both manufacturing and
service organizations! :! Ed5ards Deming e6erted a tremendous influence in sha#ing modern
ideas about im#roving #roductivit% and /ualit%! Ma&or areas of stud% 5ithin o#erations
management include ca#acit% #lanning3 facilities location3 facilities la%out3 materials re/uirement
#lanning3 scheduling3 #urchasing and inventor% control3 /ualit% control3 com#uter integrated
manufacturing3 &ust-in-time inventor% s%stems3 and fle6ible manufacturing s%stems!
&) S7STEMS APPROAC45
The sim#lified bloc* diagram of the s%stems a##roach is given belo5!
The s%stems a##roach focuses on understanding the organization as an o#en s%stem
that transforms in#uts into out#uts! The s%stems a##roach began to have a strong im#act on
management thought in the ?@GEs as a 5a% of thin*ing about managing techni/ues that 5ould
allo5 managers to relate different s#ecialties and #arts of the com#an% to one another3 as 5ell
as to e6ternal environmental factors! The s%stems a##roach focuses on the organization as a
5hole3 its interaction 5ith the environment3 and its need to achieve e/uilibrium
e) CONTINGENC7 APPROAC45
The contingenc% a##roach focuses on a##l%ing management #rinci#les and #rocesses
as dictated b% the uni/ue characteristics of each situation! .t em#hasizes that there is no one
best 5a% to manage and that it de#ends on various situational factors3 such as the e6ternal
environment3 technolog%3 organizational characteristics3 characteristics of the manager3 and
characteristics of the subordinates! Contingenc% theorists often im#licitl% or e6#licitl% criticize the
classical a##roach for its em#hasis on the universalit% of management #rinci#lesH ho5ever3
most classical 5riters recognized the need to consider as#ects of the situation 5hen a##l%ing
management #rinci#les!
M-"-GEME"T
-$$RO-C1
(eginning Dates Em#hasis
C,-.C-, -$$RO-C1
cientific
Management
?IIEs
Traditional rules of thumb are re#laced b% #recise
#rocedures develo#ed after careful stud% of an
individual at 5or*!
-dministrative
Management
?@CEs
Gives idea about the #rimar% functions of
management and The ?C $rinci#les of
-dministration
(ureaucratic
Management
?@BEs
Re#laces traditional leadershi# and charismatic
leadershi# 5ith legal leadershi#
(E1-J.OR-, -$$RO-C1
1uman
Relations
?@DEs 5or*ersA attitudes are associated 5ith #roductivit%
(ehavioral
cience
?@FEs
Gives idea to understand human behavior in the
organization!
0K-"T.T-T.JE -$$RO-C1
Management
cience
'O#eration
research)
?@CEs
Kses mathematical and statistical a##roaches to
solve management #roblems!
$roduction
and O#erations
Management
?@CEs
This a##roach focuses on the o#eration and
control of the #roduction #rocess that transforms
resources into finished goods and services
RECE"T DEJE,O$EME"T
LTEM
-$$RO-C1
?@FEs
Considers the organization as a s%stem that
transforms in#uts into out#uts 5hile in constant
interaction 5ith itsA environment!
CO"T."GE"CL
-$$RO-C1
?@GEs
-##lies management #rinci#les and #rocesses as
dictated b% the uni/ue characteristics of each
situation!
C O NTR I +UT I ON OF F A 7OL A N D T A 7 L OR
+!:! Ta%lor and 1enr% +a%ol are generall% regarded as the founders of scientific
management and administrative management and both #rovided the bases for science and art
of management!
T8'o*91 S.%e!$%-%. M!"e#e!$
+rederic* :inslo5 Ta%lor 5ell-*no5n as the founder of scientific management 5as the first to
recognize and em#hasis the need for ado#ting a scientific a##roach to the tas* of managing an
enter#rise! 1e tried to diagnose the causes of lo5 efficienc% in industr% and came to the
conclusion that much of 5aste and inefficienc% is due to the lac* of order and s%stem in the
methods of management! 1e found that the management 5as usuall% ignorant of the amount of
5or* that could be done b% a 5or*er in a da% as also the best method of doing the &ob! -s a
result3 it remained largel% at the merc% of the 5or*ers 5ho deliberatel% shir*ed 5or*! 1e
therefore3 suggested that those res#onsible for management should ado#t a scientific a##roach
in their 5or*3 and ma*e use of Mscientific methodM for achieving higher efficienc%! The scientific
method consists essentiall% of
'a) Observation
'b) Measurement
'c) E6#erimentation and
'd) .nference!
1e advocated a thorough #lanning of the &ob b% the management and em#hasized the necessit%
of #erfect understanding and co-o#eration bet5een the management and the 5or*ers both for
the enlargement of #rofits and the use of scientific investigation and *no5ledge in industrial
5or*! 1e summed u# his a##roach in these 5ords>
cience3 not rule of thumb
1armon%3 not discord
Co-o#eration3 not individualism
Ma6imum out#ut3 in #lace of restricted out#ut
The develo#ment of each man to his greatest efficienc% and #ros#erit%!
E'e#e!$1 o- S.%e!$%-%. M!"e#e!$5 The techni/ues 5hich Ta%lor regarded as its essential
elements or features ma% be classified as under>
?! cientific Tas* and Rate-setting3 5or* im#rovement3 etc!
B! $lanning the Tas*!
D! Jocational election and Training
C! tandardization 'of 5or*ing conditions3 material e/ui#ment etc!)
F! #ecialization
G! Mental Revolution!
?! S.%e!$%-%. T1: !& R$e2Se$$%!" ()o*: 1$0&8)5 :or* stud% ma% be defined as the
s%stematic3 ob&ective and critical e6amination of all the factors governing the o#erational
efficienc% of an% s#ecified activit% in order to effect im#rovement!
:or* stud% includes!
'a) Me$ho&1 S$0&85 The management should tr% to ensure that the #lant is laid out in the best
manner and is e/ui##ed 5ith the best tools and machiner%! The #ossibilities of eliminating or
combining certain o#erations ma% be studied!
'b) Mo$%o! S$0&85 .t is a stud% of the movement3 of an o#erator 'or even of a
machine) in #erforming an o#eration 5ith the #ur#ose of eliminating useless motions!
'c) T%#e S$0&8 ()o*: #e10*e#e!$)5 The basic #ur#ose of time stud% is to determine the
#ro#er time for #erforming the o#eration! uch stud% ma% be conducted after the motion stud%!
(oth time stud% and motion stud% hel# in determining the best method of doing a &ob and the
standard time allo5ed for it!
'd) F$%"0e S$0&85 .f3 a standard tas* is set 5ithout #roviding for measures to eliminate fatigue3
it ma% either be be%ond the 5or*ers or the 5or*ers ma% over strain themselves to attain it! .t is
necessar%3 therefore3 to regulate the 5or*ing hours and #rovide for rest #auses at scientificall%
determined intervals!
'e) R$e21e$$%!"5 Ta%lor recommended the differential #iece 5age s%stem3 under 5hich 5or*ers
#erforming the standard tas* 5ithin #rescribed time are #aid a much higher rate #er unit than
inefficient 5or*ers 5ho are not able to come u# to the standard set!
B! P'!!%!" $he T1:5 1aving set the tas* 5hich an average 5or*er must strive to #erform to
get 5ages at the higher #iece-rate3 necessar% ste#s have to be ta*en to #lan the #roduction
thoroughl% so that there is no bottlenec*s and the 5or* goes on s%stematicall%!
D! Se'e.$%o! !& T*%!%!"5 cientific Management re/uires a radical change in the methods
and #rocedures of selecting 5or*ers! .t is therefore necessar% to entrust the tas* of selection to
a central #ersonnel de#artment! The #rocedure of selection 5ill also have to be s%stematised!
$ro#er attention has also to be devoted to the training of the 5or*ers in the correct methods of
5or*!
C! S$!&*&%,$%o!5 tandardization ma% be introduced in res#ect of the follo5ing!
'a) Too'1 !& e;0%p#e!$5 (% standardization is meant the #rocess of bringing about uniformit%!
The management must select and store standard tools and im#lements 5hich 5ill be nearl% the
best or the best of their *ind!
'b) Spee&5 There is usuall% an o#timum s#eed for ever% machine! .f it is e6ceeded3 it is li*el% to
result in damage to machiner%!
'c) Co!&%$%o!1 o- Wo*:5 To attain standard #erformance3 the maintenance of standard
conditions of ventilation3 heating3 cooling3 humidit%3 floor s#ace3 safet% etc!3 is ver% essential!
'd) M$e*%'15 The efficienc% of a 5or*er de#ends on the /ualit% of materials and the method of
handling materials!
F! Spe.%'%,$%o!5 cientific management 5ill not be com#lete 5ithout the introduction of
s#ecialization! Knder this #lan3 the t5o functions of A#lanningA and AdoingA are se#arated in the
organization of the #lant! The Nfunctional foremenA are s#ecialists 5ho &oin their heads to give
thought to the #lanning of the #erformance of o#erations in the 5or*sho#! Ta%lor suggested
eight functional foremen under his scheme of functional foremanshi#!
'a) The Ro0$e C'e*:5 To la% do5n the se/uence of o#erations and instruct the 5or*ers
concerned about it!
'b) The I!1$*0.$%o! C*& C'e*:5 To #re#are detailed instructions regarding different as#ects of
5or*!
'c) The T%#e !& Co1$ C'e*:5 To send all information relating to their #a% to the 5or*ers and to
secure #ro#er returns of 5or* from them!
'd) The Shop D%1.%p'%!*%!> To deal 5ith cases of breach of disci#line and absenteeism!
'e) The G!" +o115 To assemble and set u# tools and machines and to teach the 5or*ers to
ma*e all their #ersonal motions in the /uic*est and best 5a%!
'f) The Spee& +o115 To ensure that machines are run at their best s#eeds and #ro#er tools are
used b% the 5or*ers!
'g) The Rep%* +o115 To ensure that each 5or*er *ee#s his machine in good order and
maintains cleanliness around him and his machines!
'h) The I!1pe.$o*5 To sho5 to the 5or*er ho5 to do the 5or*!
G! Me!$' Re(o'0$%o!5 -t #resent3 industr% is divided into t5o grou#s management and
labour! The ma&or #roblem bet5een these t5o grou#s is the division of sur#lus! The
management 5ants the ma6imum #ossible share of the sur#lus as #rofitH the 5or*ers 5ant3 as
large share in the form of 5ages! Ta%lor has in mind the enormous gain that arises from higher
#roductivit%! uch gains can be shared both b% the management and 5or*ers in the form of
increased #rofits and increased 5ages!
4e!*8 F8o'91 1/ P*%!.%p'e1 o- M!"e#e!$5
The #rinci#les of management are given belo5>
?! D%(%1%o! o- )o*:5 Division of 5or* or s#ecialization alone can give ma6imum #roductivit% and
efficienc%! (oth technical and managerial activities can be #erformed in the best manner onl%
through division of labour and s#ecialization!
B! A0$ho*%$8 !& Re1po!1%3%'%$85 The right to give order is called authorit%! The obligation to
accom#lish is called res#onsibilit%! -uthorit% and Res#onsibilit% are the t5o sides of the
management coin! The% e6ist together! The% are com#lementar% and mutuall% interde#endent!
D! D%1.%p'%!e5 The ob&ectives3 rules and regulations3 the #olicies and #rocedures must be
honoured b% each member of an organization! There must be clear and fair agreement on the
rules and ob&ectives3 on the #olicies and #rocedures! There must be #enalties '#unishment) for
non-obedience or indisci#line! "o organization can 5or* smoothl% 5ithout disci#line - #referabl%
voluntar% disci#line!
C! U!%$8 o- Co##!&5 .n order to avoid an% #ossible confusion and conflict3 each member of
an organization must received orders and instructions onl% from one su#erior 'boss)!
F! U!%$8 o- D%*e.$%o!5 -ll members of an organization must 5or* together to accom#lish
common ob&ectives!
G! E#ph1%1 o! S03o*&%!$%o! o- Pe*1o!' I!$e*e1$ $o Ge!e*' o* Co##o! I!$e*e1$5 This is
also called #rinci#le of co-o#eration! Each shall 5or* for all and all for each! General or common
interest must be su#reme in an% &oint enter#rise!
O! Re#0!e*$%o!5 +air #a% 5ith non-financial re5ards can act as the best incentive or motivator
for good #erformance! E6#loitation of em#lo%ees in an% manner must be eliminated! ound
scheme of remuneration includes ade/uate financial and nonfinancial incentives!
I! Ce!$*'%,$%o!5 There must be a good balance bet5een centralization and decentralization of
authorit% and #o5er! E6treme centralization and decentralization must be avoided!
@! S.'* Ch%!5 The unit% of command brings about a chain or hierarch% of command lin*ing
all members of the organization from the to# to the bottom! calar denotes ste#s!
?E! O*&e*5 +a%ol suggested that there is a #lace for ever%thing! Order or s%stem alone can
create a sound organization and efficient management!
??! E;0%$85 -n organization consists of a grou# of #eo#le involved in &oint effort! 1ence3 e/uit%
'i!e!3 &ustice) must be there! :ithout e/uit%3 5e cannot have sustained and ade/uate &oint
collaboration!
?B! S$3%'%$8 o- Te!0*e5 - #erson needs time to ad&ust himself 5ith the ne5 5or* and
demonstrate efficienc% in due course! 1ence3 em#lo%ees and managers must have &ob securit%!
ecurit% of income and em#lo%ment is a #re-re/uisite of sound organization and management!
?D! E1p*%$ o- Co2ope*$%o!5 Es#rit de cor#s is the foundation of a sound organization! Knion is
strength! (ut unit% demands co-o#eration! $ride3 lo%alt% and sense of belonging are res#onsible
for good #erformance!
?C! I!%$%$%(e5 Creative thin*ing and ca#acit% to ta*e initiative can give us sound managerial
#lanning and e6ecution of #redetermined #lans!
O R G A N I Z A T I ON A N D E N V I R O N M E N T A L F A CT O R S
-n organization is a grou# of #eo#le intentionall% organized to accom#lish a common or set of
goals!
T8pe1 o- +01%!e11 O*"!%,$%o!1
:hen organizing a ne5 business3 one of the most im#ortant decisions to be made is choosing
the structure of a business!
) So'e P*op*%e$o*1h%p1
The vast ma&orit% of small business starts out as sole #ro#rietorshi#s ! ! ! ver% dangerous! These
firms are o5ned b% one #erson3 usuall% the individual 5ho has da%-to-da% res#onsibilit% for
running the business! ole #ro#rietors o5n all the assets of the business and the #rofits
generated b% it! The% also assume Mcom#lete #ersonalM res#onsibilit% for all of its liabilities or
debts! .n the e%es of the la53 %ou are one in the same 5ith the business!
Me*%$15
Easiest and least e6#ensive form of o5nershi# to organize!
ole #ro#rietors are in com#lete control3 5ithin the la53 to ma*e all decisions!
ole #ro#rietors receive all income generated b% the business to *ee# or reinvest!
$rofits from the business flo5-through directl% to the o5nerAs #ersonal ta6 return!
The business is eas% to dissolve3 if desired!
De#e*%$15
Knlimited liabilit% and are legall% res#onsible for all debts against the business!
Their business and #ersonal assets are ?EEP at ris*!
1as almost been abilit% to raise investment funds!
-re limited to using funds from #ersonal savings or consumer loans!
1ave a hard time attracting high-caliber em#lo%ees3 or those that are motivated b% the
o##ortunit% to o5n a #art of the business!
Em#lo%ee benefits such as o5nerAs medical insurance #remiums are not directl% deductible
from business income '#artiall% deductible as an ad&ustment to income)!
3) P*$!e*1h%p1
.n a $artnershi#3 t5o or more #eo#le share o5nershi# of a single business! ,i*e #ro#rietorshi#s3
the la5 does not distinguish bet5een the business and its o5ners! The $artners should have a
legal agreement that sets forth ho5 decisions 5ill be made3 #rofits 5ill be shared3 dis#utes 5ill
be resolved3 ho5 future #artners 5ill be admitted to the #artnershi#3 ho5 #artners can be bought
out3 or 5hat ste#s 5ill be ta*en to dissolve the #artnershi# 5hen needed! Les3 its hard to thin*
about a Mbrea*-u#M 5hen the business is &ust getting started3 but man% #artnershi#s s#lit u# at
crisis times and unless there is a defined #rocess3 there 5ill be even greater #roblems! The%
also must decide u# front ho5 much time and ca#ital each 5ill contribute3 etc!
Me*%$15
$artnershi#s are relativel% eas% to establishH ho5ever time should be invested in develo#ing
the #artnershi# agreement!
:ith more than one o5ner3 the abilit% to raise funds ma% be increased!
The #rofits from the business flo5 directl% through to the #artnersA #ersonal ta6es!
$ros#ective em#lo%ees ma% be attracted to the business if given the incentive to become a
#artner!
De#e*%$15
$artners are &ointl% and individuall% liable for the actions of the other #artners!
$rofits must be shared 5ith others!
ince decisions are shared3 disagreements can occur!
ome em#lo%ee benefits are not deductible from business income on ta6 returns!
The #artnershi#s have a limited lifeH it ma% end u#on a #artner 5ithdra5al or death!
.) Co*po*$%o!1
- cor#oration3 chartered b% the state in 5hich it is head/uartered3 is considered b% la5 to be a
uni/ue Mentit%M3 se#arate and a#art from those 5ho o5n it! - cor#oration can be ta6edH it can be
suedH it can enter into contractual agreements! The o5ners of a cor#oration are its
shareholders! The shareholders elect a board of directors to oversee the ma&or #olicies and
decisions! The cor#oration has a life of its o5n and does not dissolve 5hen o5nershi# changes!
Me*%$15
hareholders have limited liabilit% for the cor#orationAs debts or &udgments against the
cor#orations!
Generall%3 shareholders can onl% be held accountable for their investment in stoc* of the
com#an%! '"ote ho5ever3 that officers can be held #ersonall% liable for their actions3 such as
the failure to 5ithhold and #a% em#lo%ment ta6es!)
Cor#orations can raise additional funds through the sale of stoc*!
- cor#oration ma% deduct the cost of benefits it #rovides to officers and em#lo%ees!
Can elect cor#oration status if certain re/uirements are met! This election enables
com#an% to be ta6ed similar to a #artnershi#!
De#e*%$15
The #rocess of incor#oration re/uires more time and mone% than other forms of
organization!
Cor#orations are monitored b% federal3 state and some local agencies3 and as a result ma%
have more #a#er5or* to com#l% 5ith regulations!
.ncor#orating ma% result in higher overall ta6es! Dividends #aid to shareholders are not
deductible form business income3 thus this income can be ta6ed t5ice!
&) <o%!$ S$o.: Co#p!85
,imited financial resources 7 heav% burden of ris* involved in both of the #revious forms of
organization has led to the formation of &oint stoc* com#anies these have limited dilutives!
The ca#ital is raised b% selling shares of different values! $ersons 5ho #urchase the shares are
called shareholder! The managing bod% *no5n asH (oard of DirectorsH is res#onsible for #olic%
ma*ing im#ortant financial 7 technical decisions!
There are t5o main t%#es of &oint stoc* Com#anies!
'i) $rivate limited com#an%!
'ii) $ublic limited com#an%
'i) $rivate limited com#an%> This t%#e com#an% can be formed b% t5o or more #ersons! Te
ma6imum number of member shi# is limited to FE! .n this transfer of shares is limited to
members onl%! The government also does not interfere in the 5or*ing of the com#an%!
'ii) $ublic ,imited Com#an%> .ts is one 5hose membershi# is o#en to general #ublic! The
minimum number re/uired to form such com#an% is seven3 but there is no u##er limit! uch
com#an%<s can advertise to offer its share to genera #ublic through a #ros#ectus! These #ublic
limited com#anies are sub&ected to greater control 7 su#ervision of control!
Me*%$15
The liabilit% being limited the shareholder bear no Ric*7 therefore more as ma*e #ersons
are encouraged to invest ca#ital!
(ecause of large numbers of investors3 the ris* of loss is divided!
9oint stoc* com#anies are not affected b% the death or the retirement of the shareholders!
D%1&(!$"e15
.t is difficult to #reserve secrec% in these com#anies!
.t re/uires a large number of legal formalities to be observed!
,ac* of #ersonal interest!
e) P03'%. Co*po*$%o!15
- #ublic cor#oration is 5holl% o5ned b% the Government centre to state! .t is established usuall%
b% a #ecial -ct of the #arliament! #ecial statute also #rescribes its management #attern
#o5er duties 7 &urisdictions! Though the total ca#ital is #rovided b% the Government3 the% have
se#arate entit% 7 en&o% inde#endence in matters related to a##ointments3 #romotions etc!
Me*%$15
These are e6#ected to #rovide better 5or*ing conditions to the em#lo%ees 7 su##orted to
be better managed!
0uic* decisions can be #ossible3 because of absence of bureaucratic control!
More 1e6ibilit% as com#ared to de#artmental organization!
ince the management is in the hands of e6#erienced 7 ca#able directors 7 managers3
these ate managed more efficientl% than that of government de#artments!
De#e*%$15
-n% alteration in the #o5er 7 Constitution of Cor#oration re/uires an amendment in the
#articular -ct3 5hich is difficult 7 time consuming!
$ublic Cor#orations #ossess mono#ol% 7 in the absence of com#etition3 these are not
interested in ado#ting ne5 techni/ues 7 in ma*ing im#rovement in their 5or*ing!
-) Go(e*!#e!$ Co#p!%e15
- state enter#rise can also be organized in the form of a 9oint stoc* com#an%H - government
com#an% is an% com#an% in 5hich of the share ca#ital is held b% the central government or
#artl% b% central government 7 #art% b% one to more state governments! .t is managed b the
elected board of directors 5hich ma% include #rivate individuals! These are accountable for its
5or*ing to the concerned ministr% or de#artment 7 its annual re#ort is re/uired to be #laced
ever %ear on the table of the #arliament or state legislatures along 5ith the comments of the
government to concerned de#artment!
Me*%$15
.t is eas% to form!
The directors of a government com#an% are free to ta*e decisions 7 are not bound b%
certain rigid rules 7 regulations!
De#e*%$15
Misuse of e6cessive freedom cannot be ruled out!
The directors are a##ointed b% the government so the% s#end more time in #leasing their
#olitical masters 7 to# government officials3 5hich results in inefficient management!
C L A S S I F IC A T IO N O F E NV I R O N M EN T A L F A C T O R S
On the basis of the e6tent of intimac% 5ith the firm3 the environmental factors ma% be classified
into different t%#es namel% internal and e6ternal!
1) INTERNAL ENVIRONMENTAL FACTORS
The internal environment is the environment that has a direct im#act on the business! The
internal factors are generall% controllable because the com#an% has control over these factors!
.t can alter or modif% these factors! The internal environmental factors are resources3
ca#abilities and culture!
%) Re1o0*.e15
- good starting #oint to identif% com#an% resources is to loo* at tangible3 intangible and human
resources!
Tangible resources are the easiest to identif% and evaluate> financial resources and #h%sical
assets are identifies and valued in the firm<s financial statements!
.ntangible resources are largel% invisible3 but over time become more im#ortant to the firm than
tangible assets because the% can be a main source for a com#etitive advantage! uch
intangible recourses include re#utational assets 'brands3 image3 etc!) and technological assets
'#ro#rietar% technolog% and *no5-ho5)!
1uman resources or human ca#ital are the #roductive services human beings offer the firm in
terms of their s*ills3 *no5ledge3 reasoning3 and decision-ma*ing abilities!
%%) Cp3%'%$%e15
Resources are not #roductive on their o5n! The most #roductive tas*s re/uire that resources
collaborate closel% together 5ithin teams! The term organizational ca#abilities are used to refer
to a firm<s ca#acit% for underta*ing a #articular #roductive activit%! Our interest is not in
ca#abilities #er se3 but in ca#abilities relative to other firms! To identif% the firm<s ca#abilities 5e
5ill use the functional classification a##roach! - functional classification identifies organizational
ca#abilities in relation to each of the #rinci#al functional areas!
%%%) C0'$0*e5
.t is the s#ecific collection of values and norms that are shared b% #eo#le and grou#s in an
organization and that hel#s in achieving the organizational goals!
2) E=TERNAL ENVIRONMENT FACTORS
.t refers to the environment that has an indirect influence on the business! The factors are
uncontrollable b% the business! The t5o t%#es of e6ternal environment are micro environment
and macro environment!
) MICRO ENVIRONMENTAL FACTORS
These are e6ternal factors close to the com#an% that have a direct im#act on the organizations
#rocess! These factors include>
%) Sh*eho'&e*1
-n% #erson or com#an% that o5ns at least one share 'a #ercentage of o5nershi#) in a com#an%
is *no5n as shareholder! - shareholder ma% also be referred to as a Mstoc*holderM! -s
organization re/uires greater in5ard investment for gro5th the% face increasing #ressure to
move from #rivate o5nershi# to #ublic! 1o5ever this movement unleashes the forces of
shareholder #ressure on the strateg% of organizations!
%%) S0pp'%e*1
-n individual or an organization involved in the #rocess of ma*ing a #roduct or service available
for use or consum#tion b% a consumer or business user is *no5n as su##lier! .ncrease in ra5
material #rices 5ill have a *noc* on affect on the mar*eting mi6 strateg% of an organization!
$rices ma% be forced u# as a result! - closer su##lier relationshi# is one 5a% of ensuring
com#etitive and /ualit% #roducts for an organization!
%%%) D%1$*%30$o*1
E n t it % t hat bu % s non -com#eting # r odu c t s o r # r o duc t- li nes3 5 a r ehouses them3 and resells them
to r e t a il e r s or direct to the end use r s or cus t o m e r s is *no5n as distributor! Most distributors
# r o v ide s trong m an#o 5 er and cash su##o r t t o the su## li er or m an u f ac t u r e rA s # romotional
efforts! The% usuall% also #rovide a r an g e o f s e rv ices ' such as #roduct in f o rm a t ion3 es t im a t e s 3
t echn ical su##o rt 3 a f te r- s a les se r v ices3 c r ed it ) to their customers! Often getting #roducts to the
end customers can be a ma&or issue for firms! The distributors used 5ill determine the final #rice
of the #roduct and ho5 it is #resented to the end customer! :hen selling via retailers3 for
e6am#le3 the retailer has control over 5here the #roducts are dis#la%ed3 ho5 the% are #riced
and ho5 much the% are #romoted in-store! Lou can also gain a com#etitive advantage b% using
changing distribution channels!
%() C01$o#e*1
- #e r son3 c o m #an % 3 or other e n t it % 5 hich bu % s g oods and se r v ices # roduced b% another #erson3
com#an%3 or other entit% is *no5n as customer! Organizations survive on the basis of meeting
the needs3 5ants and #roviding benefits for their customers! +ailure to do so 5ill result in a
failed business strateg%!
() Co#pe$%$o*1
- com#an% in the same indus tr % or a similar industr% 5hich o f f e r s a similar # r oduct o r se r v ice is
*no5n as com#etitor! The #resence of one or more com#etitors can reduce the # r ices o f g oods
and se r v ices as the co m #an ies a ttem#t to ga in a larger m a r* et sh a r e! C o m #e t it ion a lso re/uires
com#anies to become more efficient in o r d e r t o reduce cos t s ! +ast-food restaurants McDonaldAs
and (urger 2ing are com#etitors3 as are Coca-Cola and $e#si3 and : a l- M a r t and T a rg e t!
(%) Me&%
$ositive or adverse media attention on an organisations #roduct or service can in some cases
ma*e or brea* an organisation!! Consumer #rogrammes 5ith a 5ider and more direct audience
can also have a ver% #o5erful and #ositive im#act3 hforcing organisations to change their
tactics!
3) MACRO ENVIRONMENTAL FACTORS
-n organizationAs macro environment consists of nons#ecific as#ects in the organizationAs
surroundings that have the #otential to affect the organizationAs strategies! :hen com#ared to a
firmAs tas* environment3 the im#act of macro environmental variables is less direct and the
organization has a more limited im#act on these elements of the environment!
The macro environment consists of forces that originate outside of an organization and
generall% cannot be altered b% actions of the organization! .n other 5ords3 a firm ma% be
influenced b% changes 5ithin this element of its environment3 but cannot itself influence the
environment! The curved lines in +igure ? indicate the indirect influence of the environment on
the organization!
Macro environment includes #olitical3 economic3 social and technological factors! - firm
considers these as #art of its environmental scanning to better understand the threats and
o##ortunities created b% the variables and ho5 strategic #lans need to be ad&usted so the firm
can obtain and retain com#etitive advantage!
%) Po'%$%.' F.$o*1
$olitical factors include government regulations and legal issues and define both formal and
informal rules under 5hich the firm must o#erate! ome e6am#les include>
ta6 #olic%
em#lo%ment la5s
environmental regulations
trade restrictions and tariffs
#olitical stabilit%
%%) E.o!o#%. F.$o*1
Economic factors affect the #urchasing #o5er of #otential customers and the firmAs cost of
ca#ital! The follo5ing are e6am#les of factors in the macroeconom%>
economic gro5th
interest rates
e6change rates
inflation rate
%%%) So.%' F.$o*1
ocial factors include the demogra#hic and cultural as#ects of the e6ternal macro environment!
These factors affect customer needs and the size of #otential mar*ets! ome social factors
include>
health consciousness
#o#ulation gro5th rate
age distribution
career attitudes
em#hasis on safet%
%() Te.h!o'o"%.' F.$o*1
Technological factors can lo5er barriers to entr%3 reduce minimum efficient #roduction levels3
and influence outsourcing decisions! ome technological factors include>
R7D activit%
automation
technolog% incentives
rate of technological change
TR E ND S A N D C 4 A LL E N GES O F M A N A GE M E N T I N G L O + A L
S C E N A R I O
The management functions are #lanning and decision ma*ing3 organizing! leading3 and
controlling Q are &ust as relevant to international managers as to domestic managers!
.nternational managers need to have a clear vie5 of 5here the% 5ant their firm to be in the
futureH the% have to organize to im#lement their #lans> the% have to motivate those 5ho 5or* lot
themH and the% have to develo# a##ro#riate control mechanisms!
) P'!!%!" !& De.%1%o! M:%!" %! G'o3' S.e!*%o
To effectivel% #lan and ma*e decisions in a global econom%3 managers must have a broad-
based understanding of both environmental issues and com#etitive issues! The% need to
understand local mar*et conditions and technological factor that 5ill affect their o#erations! -t
the cor#orate level3 e6ecutives need a great deal of information to function effectivel%! :hich
mar*ets are gro5ingR :hich mar*ets are shrin*ingR :hich are our domestic and foreign
com#etitors doing in each mar*etR The% must also ma*e a variet% of strategic decisions about
their organizations! +or e6am#le3 if a firm 5ishes to enter mar*et in +rance3 should it bu% a local
firm there3 build a #lant3 or see* a strategic allianceR Critical issues include understanding
environmental circumstances3 the role of goals and #lanning in a global organization3 and ho5
decision ma*ing affects the global organization!
3) O*"!%,%!" %! G'o3' S.e!*%o
Managers in international businesses must also attend to a variet% of organizing issues! +or
e6am#le3 General Electric has o#erations scattered around the globe!The firm has made the
decision to give local managers a great deal of res#onsibilit% for ho5 the% run their business! .n
contrast3 man% 9a#anese firms give managers of their foreign o#erations relativel% little
res#onsibilit%! -s a result3 those managers must fre/uentl% travel bac* to 9a#an to #resent
#roblems or get decisions a##roved! Managers in an international business must address the
basic issues of organization structure and design3 managing change3 and dealing 5ith human
resources!
.) Le&%!" %! G'o3' S.e!*%o
:e noted earlier some of the cultural factors that affect international organizations! .ndividual
managers must be #re#ared to deal 5ith these and other factors as the% interact #eo#le from
different cultural bac*grounds !u#ervising a grou# of five managers3 each of 5hom is from a
different state in the Knited tates3 is li*el% to be much sim#ler than su#ervising a grou# of five
managers3 each of 5hom is from a different culture! Managers must understand ho5 cultural
factors affect individuals! 1o5 motivational #rocesses var% across cultures3 ho5 the role of
leadershi# changes in different cultures3 ho5 communication varies across cultures3 and ho5
inter#ersonal and grou# #rocesses de#end on cultural bac*ground!
&) Co!$*o''%!" %! G'o3' S.e!*%o
+inall%3 managers in international organizations must also be concerned 5ith control! Distances3
time zone differences3 and cultural factors also #la% a role in control! +or e6am#le3 in some
cultures3 close su#ervision is seen as being a##ro#riate3 5hereas in other cultures3 it is not ,i*e-
5ise3 e6ecutives in the Knited tates and 9a#an ma% find it difficult to communicate vital
information to one another because of the time zone differences! (asic control issues for the
international manager revolve around o#erations management #roductivit%3 /ualit%3 technolog%
and information s%stems!
UNIT II
PLANNING
D E F I N I T I ON
-ccording to 2oontz OADonnel - M$lanning is an intellectual #rocess3 the conscious
determination of courses of action3 the basing of decisions on #ur#ose3 acts and considered
estimatesM!
N ATURE AND PU RPOSE OF PL AN NI NG
N$0*e o- P'!!%!"
?! P'!!%!" %1 "o'2o*%e!$e&5 Ever% #lan must contribute in some #ositive 5a% to5ards the
accom#lishment of grou# ob&ectives! $lanning has no meaning 5ithout being related to goals!
B! P*%#.8 o- P'!!%!"5 $lanning is the first of the managerial functions! .t #recedes all other
management functions!
D! Pe*(1%(e!e11 o- P'!!%!"5 $lanning is found at all levels of management! To#
management loo*s after strategic #lanning! Middle management is in charge of administrative
#lanning! ,o5er management has to concentrate on o#erational #lanning!
C! E--%.%e!.8> E.o!o#8 !& A..0*.85 Efficienc% of #lan is measured b% its contribution to the
ob&ectives as economicall% as #ossible! $lanning also focuses on accurate forecasts!
F! Co2o*&%!$%o!5 $lanning co-ordinates the 5hat3 5ho3 ho53 5here and 5h% of #lanning!
:ithout co-ordination of all activities3 5e cannot have united efforts!
G! L%#%$%!" F.$o*15 - #lanner must recognize the limiting factors 'mone%3 man#o5er etc) and
formulate #lans in the light of these critical factors!
O! F'e?%3%'%$85 The #rocess of #lanning should be ada#table to changing environmental
conditions!
I! P'!!%!" %1 ! %!$e''e.$0' p*o.e115 The /ualit% of #lanning 5ill var% according to the
/ualit% of the mind of the manager!
P0*po1e o- P'!!%!"
-s a managerial function #lanning is im#ortant due to the follo5ing reasons>-
?! To #!"e 38 o3@e.$%(e15 -ll the activities of an organization are designed to achieve
certain s#ecified ob&ectives! 1o5ever3 #lanning ma*es the ob&ectives more concrete b% focusing
attention on them!
B! To o--1e$ 0!.e*$%!$8 !& .h!"e5 +uture is al5a%s full of uncertainties and changes!
$lanning foresees the future and ma*es the necessar% #rovisions for it!
D! To 1e.0*e e.o!o#8 %! ope*$%o!5 $lanning involves3 the selection of most #rofitable course
of action that 5ould lead to the best result at the minimum costs!
C! To he'p %! .o2o*&%!$%o!5 Co-ordination is3 indeed3 the essence of management3 the
#lanning is the base of it! :ithout #lanning it is not #ossible to co-ordinate the different activities
of an organization!
F! To #:e .o!$*o' e--e.$%(e5 The controlling function of management relates to the
com#arison of the #lanned #erformance 5ith the actual #erformance! .n the absence of #lans3 a
management 5ill have no standards for controlling otherAs #erformance!
G! To %!.*e1e o*"!%,$%o!' e--e.$%(e!e115 Mere efficienc% in the organization is not
im#ortantH it should also lead to #roductivit% and effectiveness! $lanning enables the manager to
measure the organizational effectiveness in the conte6t of the stated ob&ectives and ta*e further
actions in this direction!
Fe$0*e1 o- P'!!%!"
.t is #rimar% function of management!
.t is an intellectual #rocess
+ocuses on determining the ob&ectives
.nvolves choice and decision ma*ing
.t is a continuous #rocess
.t is a #ervasive function
C'11%-%.$%o! o- P'!!%!"
On the basis of content
trategic $lanning
.t is the #rocess of deciding on ,ong-term ob&ectives of the organization!
.t encom#asses all the functional areas of business
Tactical $lanning
.t involves conversion of detailed and s#ecific #lans into detailed and s#ecific
action #lans!
.t is the blue #rint for current action and it su##orts the strategic #lans!
On the basis of time #eriod
,ong term #lanning
Time frame be%ond five %ears!
.t s#ecifies 5hat the organization 5ants to become in long run!
.t involves great deal of uncertaint%!
.ntermediate term #lanning
Time frame bet5een t5o and five %ears!
.t is designed to im#lement long term #lans!
hort term #lanning
Time frame of one %ear or less!
.t #rovide basis for da% to da% o#erations!
P L A N N I N G P R O C ESS
The various ste#s involved in #lanning are given belo5
) Pe*.ep$%o! o- Oppo*$0!%$%e15
-lthough #receding actual #lanning and therefore not strictl% a #art of the #lanning
#rocess3 a5areness of an o##ortunit% is the real starting #oint for #lanning! .t includes a
#reliminar% loo* at #ossible future o##ortunities and the abilit% to see them clearl% and
com#letel%3 *no5ledge of 5here 5e stand in the light of our strengths and 5ea*nesses3 an
understanding of 5h% 5e 5ish to solve uncertainties3 and a vision of 5hat 5e e6#ect to gain!
etting realistic ob&ectives de#ends on this a5areness! $lanning re/uires realistic diagnosis of
the o##ortunit% situation!
3) E1$3'%1h%!" O3@e.$%(e15
The first ste# in #lanning itself is to establish ob&ectives for the entire enter#rise and then
for each subordinate unit! Ob&ectives s#ecif%ing the results e6#ected indicate the end #oints of
5hat is to be done3 5here the #rimar% em#hasis is to be #laced3 and 5hat is to be accom#lished
b% the net5or* of strategies3 #olicies3 #rocedures3 rules3 budgets and #rograms!
Enter#rise ob&ectives should give direction to the nature of all ma&or #lans 5hich3 b%
reflecting these ob&ectives3 define the ob&ectives of ma&or de#artments! Ma&or de#artment
ob&ectives3 in turn3 control the ob&ectives of subordinate de#artments3 and so on do5n the line!
The ob&ectives of lesser de#artments 5ill be better framed3 ho5ever3 if subdivision managers
understand the overall enter#rise ob&ectives and the im#lied derivative goals and if the% are
given an o##ortunit% to contribute their ideas to them and to the setting of their o5n goals!
.) Co!1%&e*%!" $he P'!!%!" P*e#%1e15
-nother logical ste# in #lanning is to establish3 obtain agreement to utilize and disseminate
critical #lanning #remises! These are forecast data of a factual nature3 a##licable basic #olicies3
and e6isting com#an% #lans! $remises3 then3 are #lanning assum#tions in other 5ords3 the
e6#ected environment of #lans in o#eration! This ste# leads to one of the ma&or #rinci#les of
#lanning!
The more individuals charged 5ith #lanning understand and agree to utilize consistent #lanning
#remises3 the more coordinated enter#rise #lanning 5ill be!
$lanning #remises include far more than the usual basic forecasts of #o#ulation3 #rices3 costs3
#roduction3 mar*ets3 and similar matters!
(ecause the future environment of #lans is so com#le63 it 5ould not be #rofitable or realistic to
ma*e assum#tions about ever% detail of the future environment of a #lan!
ince agreement to utilize a given set of #remises is im#ortant to coordinate #lanning3 it
becomes a ma&or res#onsibilit% of managers3 starting 5ith those at the to#3 to ma*e sure that
subordinate managers understand the #remises u#on 5hich the% are e6#ected to #lan! .t is not
unusual for chief e6ecutives in 5ell- managed com#anies to force to# managers 5ith differing
vie5s3 through grou# deliberation3 to arrive at a set of ma&or #remises that all can acce#t!
&) I&e!$%-%.$%o! o- '$e*!$%(e15
Once the organizational ob&ectives have been clearl% stated and the #lanning #remises
have been develo#ed3 the manager should list as man% available alternatives as #ossible for
reaching those ob&ectives!
The focus of this ste# is to search for and e6amine alternative courses of action3 es#eciall%
those not immediatel% a##arent! There is seldom a #lan for 5hich reasonable alternatives do
not e6ist3 and /uite often an alternative that is not obvious #roves to be the best!
The more common #roblem is not finding alternatives3 but reducing the number of alternatives
so that the most #romising ma% be anal%zed! Even 5ith mathematical techni/ues and the
com#uter3 there is a limit to the number of alternatives that ma% be e6amined! .t is therefore
usuall% necessar% for the #lanner to reduce b% #reliminar% e6amination the number of
alternatives to those #romising the most fruitful #ossibilities or b% mathematicall% eliminating3
through the #rocess of a##ro6imation3 the least #romising ones!
e) E('0$%o! o- '$e*!$%(e1
1aving sought out alternative courses and e6amined their strong and 5ea* #oints3 the
follo5ing ste# is to evaluate them b% 5eighing the various factors in the light of #remises and
goals! One course ma% a##ear to be the most #rofitable but re/uire a large cash outla% and a
slo5 #a%bac*H another ma% be less #rofitable but involve less ris*H still another ma% better suit
the com#an% in longrange ob&ectives!
.f the onl% ob&ective 5ere to e6amine #rofits in a certain business immediatel%3 if the future 5ere
not uncertain3 if cash #osition and ca#ital availabilit% 5ere not 5orrisome3 and if most factors
could be reduced to definite data3 this evaluation should be relativel% eas%! (ut t%#ical #lanning
is re#lete 5ith uncertainties3 #roblems of ca#ital shortages3 and intangible factors3 and so
evaluation is usuall% ver% difficult3 even 5ith relativel% sim#le #roblems! - com#an% ma% 5ish to
enter a ne5 #roduct line #rimaril% for #ur#oses of #restigeH the forecast of e6#ected results ma%
sho5 a clear financial loss3 but the /uestion is still o#en as to 5hether the loss is 5orth the gain!
-) Cho%.e o- '$e*!$%(e p'!1
-n evaluation of alternatives must include an evaluation of the #remises on 5hich the
alternatives are based! - manager usuall% finds that some #remises are unreasonable and can
therefore be e6cluded from further consideration! This elimination #rocess hel#s the manager
determine 5hich alternative 5ould best accom#lish organizational ob&ectives!
") Fo*#0'$%!" o- S0ppo*$%!" P'!1
-fter decisions are made and #lans are set3 the final ste# to give them meaning is to numberize
them b% converting them to budgets! The overall budgets of an enter#rise re#resent the sum
total of income and e6#enses 5ith resultant #rofit or sur#lus and budgets of ma&or balance
sheet items such as cash and ca#ital e6#enditures! Each de#artment or #rogram of a business
or other enter#rise can have its o5n budgets3 usuall% of e6#enses and ca#ital e6#enditures3
5hich tie into the overall budget!
.f this #rocess is done 5ell3 budgets become a means of adding together the various #lans and
also im#ortant standards against 5hich #lanning #rogress can be measured!
h) E1$3'%1h%!" 1e;0e!.e o- .$%(%$%e1
Once #lans that furnish the organization 5ith both long-range and short-range direction have
been develo#ed3 the% must be im#lemented! Obviousl%3 the organization can not directl% benefit
from #lanning #rocess until this ste# is #erformed!
T7PES OF PL ANS A COM PONENTS OF PL ANNI NG
.n the #rocess of #lanning3 several #lans are #re#ared 5hich are *no5n as com#onents of
#lanning!
$lans can be broadl% classified as
) S$*$e"%. p'!1
3) T.$%.' p'!1
.) Ope*$%o!' p'!1
O#erational #lans lead to the achievement of tactical #lans3 5hich in turn lead to the attainment
of strategic #lans! .n addition to these three t%#es of #lans3 managers should also develo# a
contingenc% #lan in case their original #lans fail!
) S$*$e"%. p'!15
- strategic #lan is an outline of ste#s designed 5ith the goals of the entire organization as a
5hole in mind3 rather than 5ith the goals of s#ecific divisions or de#artments! .t is further
classified as
%) M%11%o!5
! The mission is a statement that reflects the basic #ur#ose and focus of the organization 5hich
normall% remain unchanged! The mission of the com#an% is the ans5er of the /uestion > 5h%
does the organization e6istsR
$ro#erl% crafted m iss ion s t a te m e n t s se rve as filters to se#arate 5hat is im#ortant from 5hat is
not3 clearl% state 5hich m a r* e t s 5 ill be served and ho53 and communicate a sense of intended
direction to the entire o rgan iz a t ion!
Mission of +ord> 45e are a global3 diverse famil% 5ith a #roud inheritance3 #roviding e6ce#tional
#roducts and services!
%%) O3@e.$%(e1 o* "o'15
(oth goal and ob&ective can be defined as statements that reflect the end to5ards 5hich the
organization is aiming to achieve! 1o5ever3 there are significant differences bet5een the t5o! -
goal is an abstract and general umbrella statement3 under 5hich s#ecific ob&ectives can be
clustered! Ob&ectives are statements that describeQin #recise3 measurable3 and obtainable
terms 5hich reflect the desired organization<s outcomes!
%%%) S$*$e"%e15
trateg% is the determination of the basic long term ob&ectives of an organization and the
ado#tion of action and collection of action and allocation of resources necessar% to achieve
these goals!
trategic #lanning begins 5ith an organizationAs mission! trategic #lans loo* ahead over the
ne6t t5o3 three3 five3 or even more %ears to move the organization from 5here it currentl% is to
5here it 5ants to be! Re/uiring multilevel involvement3 these #lans demand harmon% among all
levels of management 5ithin the organization! To#-level management develo#s the directional
ob&ectives for the entire organization3 5hile lo5er levels of management develo# com#atible
ob&ectives and #lans to achieve them! To# managementAs strategic #lan for the entire
organization becomes the frame5or* and sets dimensions for the lo5er level #lanning!
3) T.$%.' p'!15
- tactical #lan is concerned 5ith 5hat the lo5er level units 5ithin each division must do3
ho5 the% must do it3 and 5ho is in charge at each level! Tactics are the means needed to
activate a strateg% and ma*e it 5or*!
Tactical #lans are concerned 5ith shorter time frames and narro5er sco#es than are strategic
#lans! These #lans usuall% s#an one %ear or less because the% are considered short-term goals!
,ong-term goals3 on the other hand3 can ta*e several %ears or more to accom#lish! "ormall%3 it
is the middle managerAs res#onsibilit% to ta*e the broad strategic #lan and identif% s#ecific
tactical actions!
.) Ope*$%o!' p'!1
The s#ecific results e6#ected from de#artments3 5or* grou#s3 and individuals are the
o#erational goals! These goals are #recise and measurable! 4$rocess ?FE sales a##lications
each 5ee* or 4$ublish BE boo*s this /uarter are e6am#les of o#erational goals!
-n o#erational #lan is one that a manager uses to accom#lish his or her &ob res#onsibilities!
u#ervisors3 team leaders3 and facilitators develo# o#erational #lans to su##ort tactical #lans
'see the ne6t section)! O#erational #lans can be a single-use #lan or a standing #lan!
%) S%!"'e201e p'!1 a##l% to activities that do not recur or re#eat! - one-time
occurrence3 such as a s#ecial sales #rogram3 is a single-use #lan because it deals 5ith
the 5ho3 5hat3 5here3 ho53 and ho5 much of an activit%!
P*o"*##e> $rogramme consists of an ordered list of events to be follo5ed to
e6ecute a #ro&ect!
+0&"e$> - budget #redicts sources and amounts of income and ho5 much the% are
used for a s#ecific #ro&ect!
%%) S$!&%!" p'!1 are usuall% made once and retain their value over a #eriod of %ears
5hile undergoing #eriodic revisions and u#dates! The follo5ing are e6am#les of ongoing
#lans>
Po'%.8> - #olic% #rovides a broad guideline for managers to follo5 5hen dealing 5ith
im#ortant areas of decision ma*ing! $olicies are general statements that e6#lain ho5
a manager should attem#t to handle routine management res#onsibilities! T%#ical
human resources #olicies3 for e6am#le3 address such matters as em#lo%ee hiring3
terminations3 #erformance a##raisals3 #a% increases3 and disci#line!
P*o.e&0*e> - #rocedure is a set of ste#-b%-ste# directions that e6#lains ho5
activities or tas*s are to be carried out! Most organizations have #rocedures for
#urchasing su##lies and e/ui#ment3 for e6am#le! This #rocedure usuall% begins 5ith
a su#ervisor com#leting a #urchasing re/uisition! The re/uisition is then sent to the
ne6t level of management for a##roval! The a##roved re/uisition is for5arded to the
#urchasing de#artment! De#ending on the amount of the re/uest3 the #urchasing
de#artment ma% #lace an order3 or the% ma% need to secure /uotations and8or bids
for several vendors before #lacing the order! (% defining the ste#s to be ta*en and
the order in 5hich the% are to be done3 #rocedures #rovide a standardized 5a% of
res#onding to a re#etitive #roblem!
R0'e> - rule is an e6#licit statement that tells an em#lo%ee 5hat he or she can and
cannot do! Rules are 4do and 4donAt statements #ut into #lace to #romote the safet%
of em#lo%ees and the uniform treatment and behavior of em#lo%ees! +or e6am#le3
rules about tardiness and absenteeism #ermit su#ervisors to ma*e disci#line
decisions ra#idl% and 5ith a high degree of fairness!
&) Co!$%!"e!.8 p'!1
.ntelligent and successful management de#ends u#on a constant #ursuit of ada#tation3
fle6ibilit%3 and master% of changing conditions! trong management re/uires a 4*ee#ing all
o#tions o#en a##roach at all times Q thatAs 5here contingenc% #lanning comes in!
Contingenc% #lanning involves identif%ing alternative courses of action that can be im#lemented
if and 5hen the original #lan #roves inade/uate because of changing circumstances!
2ee# in mind that events be%ond a managerAs control ma% cause even the most carefull%
#re#ared alternative future scenarios to go a5r%! Kne6#ected #roblems and events fre/uentl%
occur! :hen the% do3 managers ma% need to change their #lans! -ntici#ating change during the
#lanning #rocess is best in case things donAt go as e6#ected! Management can then develo#
alternatives to the e6isting #lan and read% them for use 5hen and if circumstances ma*e these
alternatives a##ro#riate!
O + <E CT I VES
Ob&ectives ma% be defined as the goals 5hich an organisation tries to achieve!
Ob&ectives are described as the end- #oints of #lanning! -ccording to 2oontz and OADonnell3 Man
ob&ective is a term commonl% used to indicate the end #oint of a management #rogramme!M
Ob&ectives constitute the #ur#ose of the enter#rise and 5ithout them no intelligent #lanning can
ta*e #lace!
Ob&ectives are3 therefore3 the ends to5ards 5hich the activities of the enter#rise are aimed!
The% are #resent not onl% the end-#oint of #lanning but also the end to5ards 5hich organizing3
directing and controlling are aimed! Ob&ectives #rovide direction to various activities! The% also
serve as the benchmar* of measuring the efficienc% and effectiveness of the enter#rise!
Ob&ectives ma*e ever% human activit% #ur#oseful! $lanning has no meaning if it is not related to
certain ob&ectives!
Fe$0*e1 o- O3@e.$%(e1
The ob&ectives must be #redetermined!
- clearl% defined ob&ective #rovides the clear direction for managerial effort!
Ob&ectives must be realistic!
Ob&ectives must be measurable!
Ob&ectives must have social sanction!
-ll ob&ectives are interconnected and mutuall% su##ortive!
Ob&ectives ma% be short-range3 medium-range and long-range!
Ob&ectives ma% be constructed into a hierarch%!
A&(!$"e1 o- O3@e.$%(e1
Clear definition of ob&ectives encourages unified #lanning!
Ob&ectives #rovide motivation to #eo#le in the organization!
:hen the 5or* is goal-oriented3 un#roductive tas*s can be avoided!
Ob&ectives #rovide standards 5hich aid in the control of human efforts in an
organization!
Ob&ectives serve to identif% the organization and to lin* it to the grou#s u#on 5hich its
e6istence de#ends!
Ob&ectives act as a sound basis for develo#ing administrative controls!
Ob&ectives contribute to the management #rocess> the% influence the #ur#ose of the
organization3 #olicies3 #ersonnel3 leadershi# as 5ell as managerial control!
P*o.e11 o- Se$$%!" O3@e.$%(e1
Ob&ectives are the *e%stone of management #lanning! .t is the most im#ortant tas* of
management! Ob&ectives are re/uired to be set in ever% area 5hich directl% and vitall% effects
the survival and #ros#erit% of the business! .n the setting of ob&ectives3 the follo5ing #oints
should be borne in mind!
Ob&ectives are re/uired to be set b% management in ever% area 5hich directl% and vitall%
affects the survival and #ros#erit% of the business!
The ob&ectives to be set in various areas have to be identified!
:hile setting the ob&ectives3 the #ast #erformance must be revie5ed3 since #ast
#erformance indicates 5hat the organization 5ill be able to accom#lish in future!
The ob&ectives should be set in realistic terms i!e!3 the ob&ectives to be set should be
reasonable and ca#able of attainment!
Ob&ectives must be consistent 5ith one and other!
Ob&ectives must be set in clear-cut terms!
+or the successful accom#lishment of the ob&ectives3 there should be effective
communication!
M A N A GE M E N T + 7 O + <E CT I V E S (M+ O)
M(O 5as first #o#ularized b% $eter Druc*er in ?@FC in his boo* AThe #ractice of
Management<! .t is a #rocess of agreeing 5ithin an organization so that management and
em#lo%ees bu% into the ob&ectives and understand 5hat the% are! .t has a #recise and 5ritten
descri#tion ob&ectives ahead3 timelines for their motoring and achievement!
The em#lo%ees and manager agree to 5hat the em#lo%ee 5ill attem#t to achieve in a #eriod
ahead and the em#lo%ee 5ill acce#t and bu% into the ob&ectives!
De-%!%$%o!
4M(O is a #rocess 5hereb% the su#erior and the mangers of an organization &ointl% identif% its
common goals3 define each individual<s ma&or area of res#onsibilit% in terms of results e6#ected
of him3 and use these measures as guides for o#erating the unit and assessing the contribution
of each of its members!
Fe$0*e1 o- M+O
?! M(O is concerned 5ith goal setting and #lanning for individual managers and their units!
B! The essence of M(O is a #rocess of &oint goal setting bet5een a su#ervisor and a
subordinate!
D! Managers 5or* 5ith their subordinates to establish the #erformance goals that are
consistent 5ith their higher organizational ob&ectives!
C! M(O focuses attention on a##ro#riate goals and #lans!
F! M(O facilitates control through the #eriodic develo#ment and subse/uent evaluation of
individual goals and #lans!
S$ep1 %! M+O5
The t%#ical M(O #rocess consists of>
?) Establishing a clear and #recisel% defined statement of ob&ectives for the em#lo%ee
B) Develo#ing an action #lan indicating ho5 these ob&ectives are to be achieved
D) Revie5ing the #erformance of the em#lo%ees
C) -##raising #erformance based on ob&ective achievement
1) Se$$%!" o3@e.$%(e15
+or Management b% Ob&ectives 'M(O) to be effective3 individual managers must understand the
s#ecific ob&ectives of their &ob and ho5 those ob&ectives fit in 5ith the overall com#an%
ob&ectives set b% the board of directors!
The managers of the various units or sub-units3 or sections of an organization should *no5 not
onl% the ob&ectives of their unit but should also activel% #artici#ate in setting these ob&ectives
and ma*e res#onsibilit% for them!
Management b% Ob&ective 'M ( O ) s%stems3 ob&ectives are 5ritten do5n for each level of the
organization3 and individuals are given s#ecific aims and targets!
Managers need to identif% and set o b & ec t iv es bo th for themselves3 their units3 and their
organizations!
2) De(e'op%!" .$%o! p'!1
-ctions #lans s#ecif% the actions needed to address each of the to# organizational issues and
to reach each of the associated goals3 5ho 5ill com#lete each action and according to 5hat
timeline! -n overall3 to#-level action #lan that de#icts ho5 each strategic goal 5ill be reached is
develo#ed b% the to# level management! The format of the action #lan de#ends on the ob&ective
of the organization!
3) Re(%e)%!" P*o"*e115
$erformance is measured in terms of results! 9ob #erformance is the net effect of an em#lo%eeAs
effort as modified b% abilities3 role #erce#tions and results #roduced! Effort refers to the amount
of energ% an em#lo%ee uses in #erforming a &ob! -bilities are #ersonal characteristics used in
#erforming a &ob and usuall% do not fluctuate 5idel% over short #eriods of time! Role #erce#tion
refers to the direction in 5hich em#lo%ees believe the% should channel their efforts on their &obs3
and the% are defined b% the activities and behaviors the% believe are necessar%!
/) Pe*-o*#!.e pp*%1'5
$erformance a##raisals communicate to em#lo%ees ho5 the% are #erforming their &obs3 and
the% establish a #lan for im#rovement! $erformance a##raisals are e6tremel% im#ortant to both
em#lo%ee and em#lo%er3 as the% are often used to #rovide #redictive information related to
#ossible #romotion! -##raisals can also #rovide in#ut for determining both individual and
organizational training and develo#ment needs! $erformance a##raisals encourage
#erformance im#rovement! +eedbac* on behavior3 attitude3 s*ill or *no5ledge clarifies for
em#lo%ees the &ob e6#ectations their managers hold for them! .n order to be effective3
#erformance a##raisals must be su##orted b% documentation and management commitment!
A&(!$"e1
Motivation .nvolving em#lo%ees in the 5hole #rocess of goal setting and increasing
em#lo%ee em#o5erment! This increases em#lo%ee &ob satisfaction and commitment!
(etter communication and Coordination +re/uent revie5s and interactions bet5een
su#eriors and subordinates hel#s to maintain harmonious relationshi#s 5ithin the
organization and also to solve man% #roblems!
Clarit% of goals
ubordinates have a higher commitment to ob&ectives the% set themselves than those
im#osed on them b% another #erson!
Managers can ensure that ob&ectives of the subordinates are lin*ed to the organizationAs
ob&ectives!
L%#%$$%o!1
There are several limitations to the assum#tive base underl%ing the im#act of managing b%
ob&ectives3 including>
.t over-em#hasizes the setting of goals over the 5or*ing of a #lan as a driver of outcomes!
.t underem#hasizes the im#ortance of the environment or conte6t in 5hich the goals are set!
That conte6t includes ever%thing from the availabilit% and /ualit% of resources3 to relative
bu%-in b% leadershi# and sta*e-holders!
Com#anies evaluated their em#lo%ees b% com#aring them 5ith the MidealM em#lo%ee! Trait
a##raisal onl% loo*s at 5hat em#lo%ees should be3 not at 5hat the% should do!
:hen this a##roach is not #ro#erl% set3 agreed and managed b% organizations3 self-centered
em#lo%ees might be #rone to distort results3 falsel% re#resenting achievement of targets that
5ere set in a short-term3 narro5 fashion! .n this case3 managing b% ob&ectives 5ould be
counter#roductive!
S T R A T EG I ES
The term Atrateg%A has been ada#ted from 5ar and is being increasingl% used in
business to reflect broad overall ob&ectives and #olicies of an enter#rise! ,iterall% s#ea*ing3 the
term Atrateg%A stands for the 5ar-art of the militar% general3 com#elling the enem% to fight as
#er out chosen terms and conditions!
-ccording to 2oontz and OA Donnell3 Mtrategies must often denote a general #rogramme of
action and de#lo%ment of em#hasis and resources to attain com#rehensive ob&ectivesM!
trategies are #lans made in the light of the #lans of the com#etitors because a modern
business institution o#erates in a com#etitive environment! The% are a useful frame5or* for
guiding enter#rise thin*ing and action! - #erfect strateg% can be built onl% on #erfect *no5ledge
of the #lans of others in the industr%! This ma% be done b% the management of a firm #utting
itself in the #lace of a rival firm and tr%ing to estimate their #lans!
Ch*.$e*%1$%.1 o- S$*$e"8
.t is the right combination of different factors!
.t relates the business organization to the environment!
.t is an action to meet a #articular challenge3 to solve #articular #roblems or to attain
desired ob&ectives!
trateg% is a means to an end and not an end in itself!
.t is formulated at the to# management level!
.t involves assum#tion of certain calculated ris*s!
S$*$e"%. P'!!%!" P*o.e11 A S$*$e"%. Fo*#0'$%o! P*o.e11
?! I!p0$ $o $he O*"!%,$%o!> Jarious .n#uts '$eo#le3 Ca#ital3 Management and Technical
s*ills3 others) including goals in#ut of claimants 'Em#lo%ees3 Consumers3 u##liers3
toc*holders3 Government3 Communit% and others)need to be elaborated!
B! I!&01$*8 A!'81%1> +ormulation of strateg% re/uires the evaluation of the attractiveness
of an industr% b% anal%zing the e6ternal environment! The focus should be on the *ind of
com#action 5ithin an industr%3 the #ossibilit% of ne5 firms entering the mar*et3 the
availabilit% of substitute #roducts or services3 the bargaining #ositions of the su##liers3
and bu%ers or customers!
D! E!$e*p*%1e P*o-%'e> Enter#rise #rofile is usuall% the starting #oint for determining 5here
the com#an% is and 5here it should go! To# managers determine the basic #ur#ose of
the enter#rise and clarif% the firm<s geogra#hic orientation!
C! O*%e!$$%o!> V'0e1> !& V%1%o! o- E?e.0$%(e1> The enter#rise #rofile is sha#ed b%
#eo#le3 es#eciall% e6ecutives3 and their orientation and values are im#ortant for
formulation the strateg%! The% set the organizational climate3 and the% determine the
direction of the firm though their vision! Conse/uentl%3 their values3 their #references3
and their attitudes to5ard ris* have to be carefull% e6amined because the% have an
im#act on the strateg%!
F! M%11%o! (P0*po1e)> M@o* O3@e.$%(e1> !& S$*$e"%. I!$e!$> Mission or $ur#ose is the
ans5er to the /uestion> :hat is our businessR The ma&or Ob&ectives are the end #oints
to5ards 5hich the activates of the enter#rise are directed! trategic intent is the
commitment 'obsession) to 5in in the com#etitive environment3 not onl% at the to#-level
but also throughout the organization!
G! P*e1e!$ !& F0$0*e E?$e*!' E!(%*o!#e!$> The #resent and future e6ternal
environment must be assessed in terms of threats and o##ortunities!
O! I!$e*!' E!(%*o!#e!$> .nternal Environment should be audited and evaluated 5ith
res#ect to its resources and its 5ea*nesses3 and strengths in research and
develo#ment3 #roduction3 o#eration3 #rocurement3 mar*eting and #roducts and services!
Other internal factors include3 human resources and financial resources as 5ell as the
com#an% image3 the organization structure and climate3 the #lanning and control s%stem3
and relations 5ith customers!
I! De(e'op#e!$ o- A'$e*!$%(e S$*$e"%e1> trategic alternatives are develo#ed on the
basis of an anal%sis of the e6ternal and internal environment! trategies ma% be
s#ecialize or concentrate! -lternativel%3 a firm ma% diversif%3 e6tending the o#eration into
ne5 and #rofitable mar*ets! Other e6am#les of #ossible strategies are &oint ventures3
and strategic alliances 5hich ma% be an a##ro#riate strateg% for some firms!
@! E('0$%o! !& Cho%.e o- S$*$e"%e1> trategic choices must be considered in the light
of the ris* involved in a #articular decision! ome #rofitable o##ortunities ma% not be
#ursued because a failure in a ris*% venture could result in ban*ru#tc% of the firm!
-nother critical element in choosing a strateg% is timing! Even the best #roduct ma% fail if
it is introduced to the mar*et at an ina##ro#riate time!
?E! Me&%0#ASho*$ R!"e P'!!%!"> I#p'e#e!$$%o! $h*o0"h Ree!"%!ee*%!" $he
O*"!%,$%o! S$*0.$0*e> Le&e*1h%p !& Co!$*o'> .m#lementation of the trateg%
often re/uires reengineering the organization3 staffing the organization structure and
#roviding leadershi#! Controls must also be installed monitoring #erformance against
#lans!
??! Co!1%1$e!.8 Te1$%!" !& Co!$%!"e!.8 P'!!%!"> The last *e% as#ect of the strategic
#lanning #rocess is the testing for consistenc% and #re#aring for contingenc% #lans!
T 7PES OF S T R A T EG I ES
-ccording to Michel $orter3 the strategies can be classified into three t%#es! The% are
a) Cost leadershi# strateg%
b) Differentiation strateg%
c) +ocus strateg%
The follo5ing table illustrates $orterAs generic strategies>
) Co1$ Le&e*1h%p S$*$e"8
This generic strateg% calls for being the lo5 cost #roducer in an industr% for a given level of
/ualit%! The firm sells its #roducts either at average industr% #rices to earn a #rofit higher than
that of rivals3 or belo5 the average industr% #rices to gain m a r* e t sha r e ! .n the event of a #rice
5ar3 the firm can maintain some #rofitabilit% 5hile the com#etition suffers losses! Even 5ithout a
#rice 5ar3 as the industr% matures and #rices decline3 the firms that can #roduce more chea#l%
5ill remain #rofitable for a longer #eriod of time! The cost leadershi# strateg% usuall% targets a
broad mar*et!
ome of the 5a%s that firms ac/uire cost advantages are b% im#roving #rocess efficiencies3
gaining uni/ue access to a large source of lo5er cost materials3 ma*ing o#timal outsourcing and
v e rt ical in t e g r a t ion dec isions3 or avoiding some costs altogether! .f com#eting firms are unable
to lo5er their costs b% a similar amount3 the firm ma% be able to sustain a com#etitive
advantage based on cost leadershi#!
+irms that succeed in cost leadershi# often have the follo5ing internal strengths>
-ccess to the ca#ital re/uired to ma*e a significant investment in #roduction assetsH this
investment re#resents a barrier to entr% that man% firms ma% not overcome!
*ill in designing #roducts for efficient manufacturing3 for e6am#le3 having a small
com#onent count to shorten the assembl% #rocess!
1igh level of e6#ertise in manufacturing #rocess engineering!
Efficient distribution channels!
Each generic strateg% has its ris*s3 including the lo5-cost strateg%! +or e6am#le3 other firms
ma% be able to lo5er their costs as 5ell! -s technolog% im#roves3 the com#etition ma% be able
to lea#frog the #roduction ca#abilities3 thus eliminating the com#etitive advantage! -dditionall%3
several firms follo5ing a focus strateg% and targeting various narro5 mar*ets ma% be able to
achieve an even lo5er cost 5ithin their segments and as a grou# gain significant mar*et share!
3) D%--e*e!$%$%o! S$*$e"8
- differentiation strateg% calls for the develo#ment of a #roduct or service that offers uni/ue
attributes that are valued b% customers and that customers #erceive to be better than or
different from the #roducts of the com#etition! The value added b% the uni/ueness of the
#roduct ma% allo5 the firm to charge a #remium #rice for it! The firm ho#es that the higher #rice
5ill more than cover the e6tra costs incurred in offering the uni/ue #roduct! (ecause of the
#roductAs uni/ue attributes3 if su##liers increase their #rices the firm ma% be able to #ass along
the costs to its customers 5ho cannot find substitute #roducts easil%!
+irms that succeed in a differentiation strateg% often have the follo5ing internal strengths>
-ccess to leading scientific research!
1ighl% s*illed and creative #roduct develo#ment team!
trong sales team 5ith the abilit% to successfull% communicate the #erceived strengths
of the #roduct!
Cor#orate re#utation for /ualit% and innovation!
The ris*s associated 5ith a differentiation strateg% include imitation b% com#etitors and changes
in customer tastes! -dditionall%3 various firms #ursuing focus strategies ma% be able to achieve
even greater differentiation in their mar*et segments!
.) Fo.01 S$*$e"8
The focus strateg% concentrates on a narro5 segment and 5ithin that segment attem#ts to
achieve either a cost advantage or differentiation! The #remise is that the needs of the grou#
can be better serviced b% focusing entirel% on it! - firm using a focus strateg% often en&o%s a
high degree of customer lo%alt%3 and this entrenched lo%alt% discourages other firms from
com#eting directl%!
(ecause of their narro5 mar*et focus3 firms #ursuing a focus strateg% have lo5er volumes and
therefore less bargaining #o5er 5ith their su##liers! 1o5ever3 firms #ursuing a differentiation-
focused strateg% ma% be able to #ass higher costs on to customers since close substitute
#roducts do not e6ist!
+irms that succeed in a focus strateg% are able to tailor a broad range of #roduct develo#ment
strengths to a relativel% narro5 mar*et segment that the% *no5 ver% 5ell!
ome ris*s of focus strategies include imitation and changes in the target segments!
+urthermore3 it ma% be fairl% eas% for a broad-mar*et cost leader to ada#t its #roduct in order to
com#ete directl%! +inall%3 other focusers ma% be able to carve out sub-segments that the% can
serve even better!
A Co#3%!$%o! o- Ge!e*%. S$*$e"%e1
These generic strategies are not necessaril% com#atible 5ith one another! .f a firm attem#ts to
achieve an advantage on all fronts3 in this attem#t it ma% achieve no advantage at all! +or
e6am#le3 if a firm differentiates itself b% su##l%ing ver% high /ualit% #roducts3 it ris*s
undermining that /ualit% if it see*s to become a cost leader! Even if the /ualit% did not suffer3 the
firm 5ould ris* #ro&ecting a confusing image! +or this reason3 Michael $orter argued that to be
successful over the long-term3 a firm must select onl% one of these three generic strategies!
Other5ise3 5ith more than one single generic strateg% the firm 5ill be Mstuc* in the middleM and
5ill not achieve a com#etitive advantage!
$orter argued that firms that are able to succeed at multi#le strategies often do so b% creating
se#arate business units for each strateg%! (% se#arating the strategies into different units
having different #olicies and even different cultures3 a cor#oration is less li*el% to become Mstuc*
in the middle!M
1o5ever3 there e6ists a vie5#oint that a single generic strateg% is not al5a%s best because
5ithin the same #roduct customers often see* multi-dimensional satisfactions such as a
combination of /ualit%3 st%le3 convenience3 and #rice! There have been cases in 5hich high
/ualit% #roducers faithfull% follo5ed a single strateg% and then suffered greatl% 5hen another
firm entered the mar*et 5ith a lo5er-/ualit% #roduct that better met the overall needs of the
customers!
PO L I C I ES
Po'%.%e1 are general statements or understandings that guide managers< thin*ing in
decision ma*ing! The% usuall% do not re/uire action but are intended to guide managers in their
commitment to the decision the% ultimatel% ma*e!
The first ste# in the #rocess of #olic% formulation3 as sho5n in the diagram belo53 is to
ca#ture the values or #rinci#les that 5ill guide the rest of the #rocess and form the basis on
5hich to #roduce a statement of issues! The statement of issues involves identif%ing the
o##ortunities and constraints affecting the local housing mar*et3 and is to be #roduced b%
thoroughl% anal%zing the housing mar*et! The *it #rovides the user 5ith access to a housing
data base to facilitate this anal%sis!
The statement of issues 5ill #rovide the basis for the formulation of a set of housing goals and
ob&ectives3 designed to address the #roblems identified and to e6#loit the o##ortunities 5hich
#resent themselves!
The ne6t ste# is to identif% and anal%ze the various #olic% o#tions 5hich can be a##lied to
achieve the set of goals and ob&ectives! The o#tions available to each local government 5ill
de#end on local circumstances as much as the broader conte6t and each local authorit% 5ill
have to develo# its o5n uni/ue a##roach to addressing the housing needs of its residents!
-n im#lementation #rogram for realizing the #olic% recommendations must then be #re#ared3
addressing budgetar% and #rogramming re/uirements3 and allocating roles and res#onsibilities!
+inall%3 the im#lementation of the housing strateg% needs to be s%stematicall% monitored
and evaluated against the stated goals and ob&ectives3 and the various com#onents of the
strateg% modified or strengthened3 as re/uired!
-t each ste# of the 5a%3 each com#onent of the strateg% needs to be discussed and debated3
and a #ublic consultation #rocess engaged in! The e6tent of consultation and the #artici#ants
involved 5ill var% 5ith each ste#!
E11e!$%'1 o- Po'%.8 Fo*#0'$%o!
The essentials of #olic% formation ma% be listed as belo5>
- #olic% should be definite3 #ositive and clear! .t should be understood b% ever%one in
the organization!
- #olic% should be translatable into the #ractices!
- #olic% should be fle6ible and at the same time have a high degree of #ermanenc%!
- #olic% should be formulated to cover all reasonable antici#atable conditions!
- #olic% should be founded u#on facts and sound &udgment!
- #olic% should conform to economic #rinci#les3 statutes and regulations!
- #olic% should be a general statement of the established rule!
I#po*$!.e o- Po'%.%e1
$olicies are useful for the follo5ing reasons>
The% #rovide guides to thin*ing and action and #rovide su##ort to the subordinates!
The% delimit the area 5ithin 5hich a decision is to be made!
The% save time and effort b% #re-deciding #roblems and
The% #ermit delegation of authorit% to mangers at the lo5er levels!
D E C I S I ON M A B IN G
The 5ord decision has been derived from the ,atin 5ord MdecidereM 5hich means
Mcutting offM! Thus3 decision involves cutting off of alternatives bet5een those that are desirable
and those that are not desirable!
.n the 5ords of George R! Terr%3 MDecision-ma*ing is the selection based on some criteria from
t5o or more #ossible alternativesM!
Ch*.$e*%1$%.1 o- De.%1%o! M:%!"
Decision ma*ing im#lies that there are various alternatives and the most desirable
alternative is chosen to solve the #roblem or to arrive at e6#ected results!
The decision-ma*er has freedom to choose an alternative!
Decision-ma*ing ma% not be com#letel% rational but ma% be &udgemental and emotional!
Decision-ma*ing is goal-oriented!
Decision-ma*ing is a mental or intellectual #rocess because the final decision is made b%
the decision-ma*er!
- decision ma% be e6#ressed in 5ords or ma% be im#lied from behaviour!
Choosing from among the alternative courses of o#eration im#lies uncertaint% about the final
result of each #ossible course of o#eration!
Decision ma*ing is rational! .t is ta*en onl% after a thorough anal%sis and reasoning and
5eighing the conse/uences of the various alternatives!
T 7PES OF D E C I S IO N S
) P*o"*##e& !& No!2P*o"*##e& De.%1%o!15 1erbert imon has grou#ed organizational
decisions into t5o categories based on the #rocedure follo5ed! The% are>
%) P*o"*##e& &e.%1%o!15 $rogrammed decisions are routine and re#etitive and are
made 5ithin the frame5or* of organizational #olicies and rules! These #olicies and rules
are established 5ell in advance to solve recurring #roblems in the organization!
$rogrammed decisions have short-run im#act! The% are3 generall%3 ta*en at the lo5er
level of management!
%%) No!2P*o"*##e& De.%1%o!15 "on-#rogrammed decisions are decisions ta*en to
meet non-re#etitive #roblems! "on-#rogrammed decisions are relevant for solving
uni/ue8 unusual #roblems in 5hich various alternatives cannot be decided in advance! -
common feature of non-#rogrammed decisions is that the% are novel and non-recurring
and therefore3 read%made solutions are not available! ince these decisions are of high
im#ortance and have long-term conse/uences3 the% are made b% to# level management!
3) S$*$e"%. !& T.$%.' De.%1%o!15 Organizational decisions ma% also be classified as
strategic or tactical!
%) S$*$e"%. De.%1%o!15 (asic decisions or strategic decisions are decisions 5hich are of
crucial im#ortance! trategic decisions a ma&or choice of actions concerning allocation of
resources and contribution to the achievement of organizational ob&ectives! Decisions
li*e #lant location3 #roduct diversification3 entering into ne5 mar*ets3 selection of
channels of distribution3 ca#ital e6#enditure etc are e6am#les of basic or strategic
decisions!
%%) T.$%.' De.%1%o!15 Routine decisions or tactical decisions are decisions 5hich are
routine and re#etitive! The% are derived out of strategic decisions! The various features
of a tactical decision are as follo5s>
Tactical decision relates to da%-to-da% o#eration of the organization and has to
be ta*en ver% fre/uentl%!
Tactical decision is mostl% a #rogrammed one! Therefore3 the decision can be
made 5ithin the conte6t of these variables!
The outcome of tactical decision is of short-term nature and affects a narro5 #art
of the organization!
The authorit% for ma*ing tactical decisions can be delegated to lo5er level
managers because> first3 the im#act of tactical decision is narro5 and of short-
term nature and econd3 b% delegating authorit% for such decisions to lo5er-level
managers3 higher level managers are free to devote more time on strategic
decisions!
D E C I S I ON M A B IN G P R O C ESS
The decision ma*ing #rocess is #resented in the figure belo5>
1. Spe.%-%. O3@e.$%(e5 The need for decision ma*ing arises in order to achieve certain s#ecific
ob&ectives! The starting #oint in an% anal%sis of decision ma*ing involves the determination of
5hether a decision needs to be made!
2. P*o3'e# I&e!$%-%.$%o!5 - #roblem is a felt need3 a /uestion 5hich needs a solution! .n the
5ords of 9ose#h , Massie M- good decision is de#endent u#on the recognition of the right
#roblemM! The ob&ective of #roblem identification is that if the #roblem is #recisel% and
s#ecificall% identifies3 it 5ill #rovide a clue in finding a #ossible solution! - #roblem can be
identified clearl%3 if managers go through diagnosis and anal%sis of the #roblem!
D%"!o1%15 Diagnosis is the #rocess of identif%ing a #roblem from its signs and
s%m#toms! - s%m#tom is a condition or set of conditions that indicates the e6istence of a
#roblem! Diagnosing the real #roblem im#lies *no5ing the ga# bet5een 5hat is and
5hat ought to be3 identif%ing the reasons for the ga# and understanding the #roblem in
relation to higher ob&ectives of the organization!
A!'81%15 Diagnosis gives rise to anal%sis! -nal%sis of a #roblem re/uires>
:ho 5ould ma*e decisionR
:hat information 5ould be neededR
+rom 5here the information is availableR
-nal%sis hel#s managers to gain an insight into the #roblem!
D! Se*.h -o* A'$e*!$%(e15 - #roblem can be solved in several 5a%sH ho5ever3 all the 5a%s
cannot be e/uall% satisf%ing! Therefore3 the decision ma*er must tr% to find out the various
alternatives available in order to get the most satisfactor% result of a decision! - decision ma*er
can use several sources for identif%ing alternatives>
1is o5n #ast e6#eriences
$ractices follo5ed b% others and
Ksing creative techni/ues!
C! E('0$%o! o- A'$e*!$%(e15 -fter the various alternatives are identified3 the ne6t ste# is to
evaluate them and select the one that 5ill meet the choice criteria! 8the decision ma*er must
chec* #ro#osed alternatives against limits3 and if an alternative does not meet them3 he can
discard it! 1aving narro5ed do5n the alternatives 5hich re/uire serious consideration3 the
decision ma*er 5ill go for evaluating ho5 each alternative ma% contribute to5ards the ob&ective
su##osed to be achieved b% im#lementing the decision!
F! Cho%.e o- A'$e*!$%(e5 The evaluation of various alternatives #resents a clear #icture as to
ho5 each one of them contribute to the ob&ectives under /uestion! - com#arison is made
among the li*el% outcomes of various alternatives and the best one is chosen!
G! A.$%o!5 Once the alternative is selected3 it is #ut into action! The actual #rocess of decision
ma*ing ends 5ith the choice of an alternative through 5hich the ob&ectives can be achieved!
O! Re10'$15 :hen the decision is #ut into action3 it brings certain results! These results must
corres#ond 5ith ob&ectives3 the starting #oint of decision #rocess3 if good decision has been
made and im#lemented #ro#erl%! Thus3 results #rovide indication 5hether decision ma*ing and
its im#lementation is #ro#er!
Ch*.$e*%1$%.1 o- E--e.$%(e De.%1%o!1
-n effective decision is one 5hich should contain three as#ects! These as#ects are given
belo5>
A.$%o! O*%e!$$%o!5 Decisions are action-oriented and are directed to5ards relevant and
controllable as#ects of the environment! Decisions should ultimatel% find their utilit% in
im#lementation!
Go' D%*e.$%o!5 Decision ma*ing should be goal-directed to enable the organization to meet
its ob&ectives!
E--e.$%(e %! I#p'e#e!$$%o!5 Decision ma*ing should ta*e into account all the #ossible
factors not onl% in terms of e6ternal conte6t but also in internal conte6t so that a decision
can be im#lemented #ro#erl%!
R ATI ON AL DE CI SI ON M ABI NG M ODEL
The Rational Decision Ma*ing Model is a model 5hich emerges from Organizational (ehavior!
The #rocess is one that is logical and follo5s the orderl% #ath from #roblem identification
through solution! .t #rovides a structured and se/uenced a##roach to decision ma*ing! Ksing
such an a##roach can hel# to ensure disci#line and consistenc% is built into %our decision
ma*ing #rocess!
The S%?2S$ep R$%o!' De.%1%o!2M:%!" Mo&e'
?! Define the #roblem!
B! .dentif% decision criteria
D! :eight the criteria
C! Generate alternatives
F! Rate each alternative on each criterion
G! Com#ute the o#timal decision
1) De-%!%!" $he p*o3'e#
This is the initial ste# of the rational decision ma*ing #rocess! +irst the #roblem is identied and
then defined to get a clear vie5 of the situation!
2) I&e!$%-8 &e.%1%o! .*%$e*%
Once a decision ma*er has defined the #roblem3 he or she needs to identif% the decision criteria
that 5ill be im#ortant in solving the #roblem! .n this ste#3 the decision ma*er is determining
5hat<s relevant in ma*ing the decision!
This ste# brings the decision ma*er<s interests3 values3 and #ersonal #references into the
#rocess!
.dentif%ing criteria is im#ortant because 5hat one #erson thin*s is relevant3 another ma% not!
-lso *ee# in mind that an% factors not identified in this ste# are considered as irrelevant to the
decision ma*er!
3) We%"h$ $he .*%$e*%
The decision-ma*er 5eights the #reviousl% identified criteria in order to give them correct #riorit%
in the decision!
/) Ge!e*$e '$e*!$%(e1
The decision ma*er generates #ossible alternatives that could succeed in resolving the
#roblem! "o attem#t is made in this ste# to a##raise these alternatives3 onl% to list them!
5) R$e e.h '$e*!$%(e o! e.h .*%$e*%o!
The decision ma*er must criticall% anal%ze and evaluate each one! The strengths and 5ea*ness
of each alternative become evident as the% com#ared 5ith the criteria and 5eights established
in second and third ste#s!
C) Co#p0$e $he op$%#' &e.%1%o!
Evaluating each alternative against the 5eighted criteria and selecting the alternative 5ith the
highest total score!
D E C I S I ON M A B IN G UND ER V A R I O U S C O ND I T I O N S
The conditions for ma*ing decisions can be divided into three t%#es! "amel% a) Certaint%3 b)
Kncertaint% and c) Ris*
Jirtuall% all decisions are made in an environment to at least some uncertaint% 1o5everH the
degree 5ill var% from relative certaint% to great uncertaint%! There are certain ris*s involved in
ma*ing decisions!
) Ce*$%!$85
.n a situation involving certaint%3 #eo#le are reasonabl% sure about 5hat 5ill ha##en 5hen the%
ma*e a decision! The information is available and is considered to be reliable3 and the cause
and effect relationshi#s are *no5n!
3) U!.e*$%!$8
.n a situation of uncertaint%3 on the other hand3 #eo#le have onl% a meager database3 the% do
not *no5 5hether or not the data are reliable3 and the% are ver% unsure about 5hether or not the
situation ma% change!
Moreover3 the% cannot evaluate the interactions of the different variables! +or e6am#le3 a
cor#oration that decides to e6#and its O#eration to an unfamiliar countr% ma% *no5 little about
the countr%3 culture3 la5s3 economic environment3 and #olitics! The #olitical situation ma% be
volatile that even e6#erts cannot #redict a #ossible change in government!
.) R%1:
.n a situation 5ith ris*s3 factual information ma% e6ist3 but it ma% be incom#lete! ?o im#rove
decision ma*ing One ma% estimate the ob&ective #robabilit% of an outcome b% using3 for
e6am#le3 mathematical models On the other hand3 sub&ective #robabilit%3 based on &udgment
and e6#erience ma% be used
-ll intelligent decision ma*ers dealing 5ith uncertaint% li*e to *no5 the degree and nature of the
ris* the% are ta*ing in choosing a course of action! One of the deficiencies in using the
traditional a##roaches of o#erations research for #roblem solving is that man% of the data used
in model are merel% estimates and others are based on #robabilities! The ordinar% #ractice is to
have staff s#ecialists conic u# 5ith best estimates!
Jirtuall% ever% decision is based on the interaction of a number of im#ortant variables3 man% of
5hich has e an element of uncertaint% but3 #erha#s3 a fairl% high degree of #robabilit%! Thus3 the
5isdom of launching a ne5 #roduct might de#end on a number of critical variables> the cost of
introducing the #roduct3 the cost of #roducing it3 the ca#ital investment that 5ill he re/uired3 the
#rice that can be set for the #roduct3 the size of the #otential mar*et3 and the share of the total
mar*et that it 5ill re#resent!
UNIT III
ORGANIZING
DEFINITION
-ccording to 2oontz and OADonnell3 MOrganization involves the grou#ing of activities
necessar% to accom#lish goals and #lans3 the assignment of these activities to a##ro#riate
de#artments and the #rovision of authorit%3 delegation and co-ordination!M
Organization involves division of 5or* among #eo#le 5hose efforts must be co-ordinated to
achieve s#ecific ob&ectives and to im#lement #re-determined strategies!
N A TUR E OR C 4 A R A CT E R I S T I C S O F O R G A N I Z I N G
+rom the stud% of the various definitions given b% different management e6#erts 5e get
the follo5ing information about the characteristics or nature of organization3
(1) D%(%1%o! o- Wo*:5 Division of 5or* is the basis of an organization! .n other 5ords3 there can
be no organization 5ithout division of 5or*! Knder division of 5or* the entire 5or* of business is
divided into man% de#artments !The 5or* of ever% de#artment is further sub-divided into sub-
5or*s! .n this 5a% each individual has to do the saran 5or* re#eatedl% 5hich graduall% ma*es
that #erson an e6#ert!
(2) Coo*&%!$%o!5 Knder organizing different #ersons are assigned different 5or*s but the aim
of all these #ersons ha##ens to be the some - the attainment of the ob&ectives of the enter#rise!
Organization ensures that the 5or* of all the #ersons de#ends on each other<s 5or* even
though it ha##ens to be different! The 5or* of one #erson starts from 5here the 5or* of another
#erson ends! The non-com#letion of the 5or* of one #erson affects the 5or* of ever%bod%!
Therefore3 ever%bod% com#letes his 5or* in time and does not hinder the 5or* of others! .t is
thus3 clear that it is in the nature of an organization to establish coordination among different
5or*s3 de#artments and #osts in the enter#rise!
(3) P'0*'%$8 o- Pe*1o!15 Organization is a grou# of man% #ersons 5ho assemble to fulfill a
common #ur#ose! - single individual cannot create an organization!
(/) Co##o! O3@e.$%(e15 There are various #arts of an organization 5ith different functions to
#erform but all move in the direction of achieving a general ob&ective!
(5) We''2&e-%!e& A0$ho*%$8 !& Re1po!1%3%'%$85 Knder organization a chain is established
bet5een different #osts right from the to# to the bottom! .t is clearl% s#ecified as to 5hat 5ill be
the authorit% and res#onsibilit% of ever% #ost! .n other 5ords3 ever% individual 5or*ing in the
organization is given some authorit% for the efficient 5or* #erformance and it is also decided
simultaneousl% as to 5hat 5ill be the res#onsibilit% of that individual in case of unsatisfactor%
5or* #erformance!
(C) O*"!%,$%o! %1 S$*0.$0*e o- Re'$%o!1h%p5 Relationshi# bet5een #ersons 5or*ing on
different #osts in the organization is decided! .n other 5ords3 it is decided as to 5ho 5ill be the
su#erior and 5ho 5ill be the subordinate! ,eaving the to# level #ost and the lo5est level #ost
ever%bod% is somebod%As su#erior and somebod%As subordinate! The #erson 5or*ing on the to#
level #ost has no su#erior and the #erson 5or*ing on the lo5est level #ost has no subordinate!
(D) O*"!%,$%o! %1 M.h%!e o- M!"e#e!$5 Organization is considered to be a machine of
management because the efficienc% of all the functions de#ends on an effective organization! .n
the absence of organization no function can be #erformed in a #lanned manner! .t is a##ro#riate
to call organization a machine of management from another #oint of vie5! .t is that machine in
5hich no #art can afford tube ill-fitting or non-functional! .n other 5ords3 if the division of 5or* is
not done #ro#erl% or #osts are not created correctl% the 5hole s%stem of management
colla#ses!
(E) O*"!%,$%o! %1 U!%(e*1' P*o.e115 Organization is needed both in business and non-
business organizations! "ot onl% this3 organization 5ill be needed 5here t5o or mom than t5o
#eo#le 5or* &ointl%! Therefore3 organization has the /ualit% of universalit%! '@) Organization is a
D%namic $rocess> Organization is related to #eo#le and the *no5ledge and e6#erience of the
#eo#le undergo a change! The im#act of this change affects the various functions of the
organizations! Thus3 organization is not a #rocess that can be decided for all times to come but
it undergoes changes according to the needs! The e6am#le in this case can be the creation or
abolition of a ne5 #ost according to the need!
IM PO R T A NC E OR A D V A N T A GES O F O R G A N I Z I N G
Organization is an instrument that defines relations among different #eo#le 5hich hel#s
them to understand as in 5ho ha##ens to be their su#erior and 5ho is their subordinate! This
information hel#s in fi6ing res#onsibilit% and develo#ing coordination! .n such circumstances the
ob&ectives of the organization can be easil% achieved! That is 5h%3 it is said that Organization .s
a mechanism of management! .n addition to that it hel#s in the other functions of management
li*e #lanning3 staffing3 leading3 controlling3 etc! The im#ortance of organization or its merits
becomes clear from the follo5ing facts3
(1) I!.*e1e I! M!"e*%' E--%.%e!.85 - good and balanced organization hel#s the managers
to increase their efficienc%! Managers3 through the medium of organization3 ma*e a #ro#er
distribution of the 5hole 5or* among different #eo#le according to their abilit%!
(2) P*ope* U$%'%,$%o! o- Re1o0*.e15 Through the medium of organization o#timum utilization
of all the available human and material resources of an enter#rise becomes #ossible! :or* is
allotted to ever% individual according to his abilit% and ca#acit% and conditions ant created to
enable him to utilize his abilit% to the ma6imum e6tent! +or e6am#le3 if an em#lo%ee #ossesses
the *no5ledge of modem machiner% but the modem machiner% is not available in the
organization3 in that case3 efforts are made to ma*e available the modem machiner%!
(3) So0!& Co##0!%.$%o! Po11%3'e5 Communication is essential for ta*ing the right decision
at the right time! 1o5ever3 the establishment of a good communication s%stem is #ossible onl%
through an organization! .n an organization the time of communication is decided so that all the
useful information reaches the officers concerned 5hich! in turn3 hel#s the decision-ma*ing!
(/) F.%'%$$e1 Coo*&%!$%o!5 .n order to attain successfull% the ob&ectives of the organization3
coordination among various activities in the organization is essential! Organization is the onl%
medium 5hich ma*es coordination #ossible! Knder organization the division of 5or* is made in
such a manner as to ma*e all the activities com#lementar% to each other increasing their inter-
de#endence! .nter-de#endence gives rise to the establishment of relations 5hich3 in turn3
increases coordination!
(5) I!.*e1e %! Spe.%'%,$%o!5 Knder organization the 5hole 5or* is divided into different
#arts! Com#etent #ersons are a##ointed to handle all the sub-5or*s and b% handling a
#articular 5or* re#eatedl% the% become s#ecialists! This enables them to have ma6imum 5or*
#erformance in the minimum time 5hile the organization gets the benefit of s#ecialization!
(C) 4e'p-0' %! E?p!1%o!5 - good organization hel#s the enter#rise in facing com#etition! :hen
an enter#rise starts ma*ing available good /ualit% #roduct at chea# rates3 it increases the
demand for its #roducts! .n order to meet the increasing demand for its #roducts an organization
has to e6#and its business! On the other hand3 a good organization has an element of fle6ibilit%
5hich far from im#eding the e6#ansion 5or* encourages it!
O R G A N I Z I N G P R O C ESS
Organization is the #rocess of establishing relationshi# among the members of the
enter#rise! The relationshi#s are created in terms of authorit% and res#onsibilit%! To organize is
to harmonize3 coordinate or arrange in a logical and orderl% manner! Each member in the
organization is assigned a s#ecific res#onsibilit% or dut% to #erform and is granted the
corres#onding authorit% to #erform his dut%! The managerial function of organizing consists in
ma*ing a rational division of 5or* into grou#s of activities and t%ing together the #ositions
re#resenting grou#ing of activities so as to achieve a rational3 5ell coordinated and orderl%
structure for the accom#lishment of 5or*! -ccording to ,ouis - -llen3 MOrganizing involves
identification and grou#ing the activities to be #erformed and dividing them among the
individuals and creating authorit% and res#onsibilit% relationshi#s among them for the
accom#lishment of organizational ob&ectives!M The various ste#s involved in this #rocess are>
) De$e*#%!$%o! o- O3@e.$%(e15
.t is the first ste# in building u# an organization! Organization is al5a%s related to certain
ob&ectives! Therefore3 it is essential for the management to identif% the ob&ectives before starting
an% activit%! Organization structure is built on the basis of the ob&ectives of the enter#rise! That
means3 the structure of the organization can be determined b% the management onl% after
*no5ing the ob&ectives to be accom#lished through the organization! This ste# hel#s the
management not onl% in framing the organization structure but also in achieving the enter#rise
ob&ectives 5ith minimum cost and efforts! Determination of ob&ectives 5ill consist in deciding as
to 5h% the #ro#osed organization is to be set u# and3 therefore3 5hat 5ill be the nature of the
5or* to be accom#lished through the organization!
3) E!0#e*$%o! o- O3@e.$%(e15
.f the members of the grou# are to #ool their efforts effectivel%3 there must be #ro#er
division of the ma&or activities! The first ste# in organizing grou# effort is the division of the total
&ob into essential activities! Each &ob should be #ro#erl% classified and grou#ed! This 5ill enable
the #eo#le to *no5 5hat is e6#ected of them as members of the grou# and 5ill hel# in avoiding
du#lication of efforts! +or e6am#le3 the 5or* of an industrial concern ma% be divided into the
follo5ing ma&or functions #roduction3 financing3 #ersonnel3 sales3 #urchase3 etc!
.) C'11%-%.$%o! o- A.$%(%$%e15
The ne6t ste# 5ill be to classif% activities according to similarities and common #ur#oses
and functions and ta*ing the human and material resources into account! Then3 closel% related
and similar activities are grou#ed into divisions and de#artments and the de#artmental activities
are further divided into sections!
&) A11%"!#e!$ o- D0$%e15
1ere3 s#ecific &ob assignments are made to different subordinates for ensuring a
certaint% of 5or* #erformance! Each individual should be given a s#ecific &ob to do according to
his abilit% and made res#onsible for that! 1e should also be given the ade/uate authorit% to do
the &ob assigned to him! .n the 5ords of 2imball and 2imball - MOrganization embraces the
duties of designating the de#artments and the #ersonnel that are to carr% on the 5or*3 defining
their functions and s#ecif%ing the relations that are to e6ist bet5een de#artment and
individuals!M
e) De'e"$%o! o- A0$ho*%$85
ince so man% individuals 5or* in the same organization3 it is the res#onsibilit% of
management to la% do5n structure of relationshi# in the organization! -uthorit% 5ithout
res#onsibilit% is a dangerous thing and similarl% res#onsibilit% 5ithout authorit% is an em#t%
vessel! Ever%bod% should clearl% *no5 to 5hom he is accountableH corres#onding to the
res#onsibilit% authorit% is delegated to the subordinates for enabling them to sho5 5or*
#erformance! This 5ill hel# in the smooth 5or*ing of the enter#rise b% facilitating delegation of
res#onsibilit% and authorit%!
O R G A N I Z A T I ON S TRUC T UR E
-n organization structure is a frame5or* that allots a #articular s#ace for a #articular
de#artment or an individual and sho5s its relationshi# to the other! -n organization structure
sho5s the authorit% and res#onsibilit% relationshi#s bet5een the various #ositions in the
organization b% sho5ing 5ho re#orts to 5hom! .t is an established #attern of relationshi# among
the com#onents of the organization!
March and imon have stated that-MOrganization structure consists sim#l% of those as#ects of
#attern of behavior in the organization that are relativel% stable and change onl% slo5l%!M The
structure of an organization is generall% sho5n on an organization chart! .t sho5s the authorit%
and res#onsibilit% relationshi#s bet5een various #ositions in the organization 5hile designing
the organization structure3 due attention should be given to the #rinci#les of sound organization!
S%"!%-%.!.e o- O*"!%,$%o! S$*0.$0*e
$ro#erl% designed organization can hel# im#rove team5or* and #roductivit% b% #roviding a
frame5or* 5ithin 5hich the #eo#le can 5or* together most effectivel%!
Organization structure determines the location of decision-ma*ing in the organization!
ound organization structure stimulates creative thin*ing and initiative among organizational
members b% #roviding 5ell defined #atterns of authorit%!
- sound organization structure facilitates gro5th of enter#rise b% increasing its ca#acit% to
handle increased level of authorit%!
Organization structure #rovides the #attern of communication and coordination!
The organization structure hel#s a member to *no5 5hat his role is and ho5 it relates to
other roles!
PRINCIPLES OF ORGANIZATION STRUCTURE
Modern organizational structures have evolved from several organizational theories3
5hich have identified certain #rinci#les as basic to an% organization structure!
) L%!e !& S$-- Re'$%o!1h%p1>
,ine authorit% refers to the scalar chain3 or to the su#erior-subordinate lin*ages3 that
e6tend throughout the hierarch% '2oontz3 OADonnell and :eihrich)! ,ine em#lo%ees are
res#onsible for achieving the basic or strategic ob&ectives of the organization3 5hile staff #la%s a
su##orting role to line em#lo%ees and #rovides services! The relationshi# bet5een line and staff
is crucial in organizational structure3 design and efficienc%! .t is also an im#ortant aid to
information #rocessing and coordination!
3) Dep*$#e!$'%,$%o!>
De#artmentalization is a #rocess of horizontal clustering of different t%#es of functions
and activities on an% one level of the hierarch%! De#artmentalization is conventionall% based on
#ur#ose3 #roduct3 #rocess3 function3 #ersonal things and #lace!
.) Sp! o- Co!$*o'>
This refers to the number of s#ecialized activities or individuals su#ervised b% one
#erson! Deciding the s#an of control is im#ortant for coordinating different t%#es of activities
effectivel%!
&) De2.e!$*'%,$%o! !& Ce!$*'%,$%o!>
De-centralization refers to decision ma*ing at lo5er levels in the hierarch% of authorit%! .n
contrast3 decision ma*ing in a centralized t%#e of organizational structure is at higher levels! The
degree of centralization and de-centralization de#ends on the number of levels of hierarch%3
degree of coordination3 s#ecialization and s#an of control!
Ever% organizational structure contains both centralization and de-centralization3 but to var%ing
degrees! The e6tent of this can be determined b% identif%ing ho5 much of the decision ma*ing
is concentrated at the to# and ho5 much is delegated to lo5er levels! Modern organizational
structures sho5 a strong tendenc% to5ards de-centralization!
F O R M A L A N D I N F O R M A L O R G A N IZ A T I ON
The formal organization refers to the structure of &obs and #ositions 5ith clearl% defined
functions and relationshi#s as #rescribed b% the to# management! This t%#e of organization is
built b% the management to realize ob&ectives of an enter#rise and is bound b% rules3 s%stems
and #rocedures! Ever%bod% is assigned a certain res#onsibilit% for the #erformance of the given
tas* and given the re/uired amount of authorit% for carr%ing it out! .nformal organization3 5hich
does not a##ear on the organization chart3 su##lements the formal organization in achieving
organizational goals effectivel% and efficientl%! The 5or*ing of informal grou#s and leaders is not
as sim#le as it ma% a##ear to be! Therefore3 it is obligator% for ever% manager to stud%
thoroughl% the 5or*ing #attern of informal relationshi#s in the organization and to use them for
achieving organizational ob&ectives!
FORMAL ORGANIZATION
Chester . (ernard defines formal organization as -Ma s%stem of consciousl% coordinated
activities or forces of t5o or more #ersons! .t refers to the structure of 5ell-defined &obs3 each
bearing a definite measure of authorit%3 res#onsibilit% and accountabilit%!M The essence of formal
organization is conscious common #ur#ose and comes into being 5hen #ersons
'i) -re able to communicate 5ith each other
'ii) -re 5illing to act and
'iii) hare a #ur#ose!
The formal organization is built around four *e% #illars! The% are>
Division of labor
calar and functional #rocesses
tructure and
#an of control
Thus3 a formal organization is one resulting from #lanning 5here the #attern of structure has
alread% been determined b% the to# management!
Ch*.$e*%1$%. Fe$0*e1 o- -o*#' o*"!%,$%o!
+ormal organization structure is laid do5n b% the to# management to achieve organizational
goals!
+ormal organization #rescribes the relationshi#s amongst the #eo#le 5or*ing in the
organization!
The organization structures is consciousl% designed to enable the #eo#le of the organization
to 5or* together for accom#lishing the common ob&ectives of the enter#rise
Organization structure concentrates on the &obs to be #erformed and not the individuals 5ho
are to #erform &obs!
.n a formal organization3 individuals are fitted into &obs and #ositions and 5or* as #er the
managerial decisions! Thus3 the formal relations in the organization arise from the #attern of
res#onsibilities that are created b% the management!
- formal organization is bound b% rules3 regulations and #rocedures!
.n a formal organization3 the #osition3 authorit%3 res#onsibilit% and accountabilit% of each
level are clearl% defined!
Organization structure is based on division of labor and s#ecialization to achieve efficienc%
in o#erations!
- formal organization is deliberatel% im#ersonal! The organization does not ta*e into
consideration the sentiments of organizational members!
The authorit% and res#onsibilit% relationshi#s created b% the organization structure are to be
honored b% ever%one!
.n a formal organization3 coordination #roceeds according to the #rescribed #attern!
A&(!$"e1 o- -o*#' o*"!%,$%o!
The formal organization structure concentrates on the &obs to be #erformed! .t3 therefore3
ma*es ever%bod% res#onsible for a given tas*!
- formal organization is bound b% rules3 regulations and #rocedures! .t thus ensures la5 and
order in the organization!
The organization structure enables the #eo#le of the organization to 5or* together for
accom#lishing the common ob&ectives of the enter#rise
D%1&(!$"e1 o* .*%$%.%1#1 o- -o*#' o*"!%,$%o!
The formal organization does not ta*e into consideration the sentiments of organizational
members!
The formal organization does not consider the goals of the individuals! .t is designed to
achieve the goals of the organization onl%!
The formal organization is bound b% rigid rules3 regulations and #rocedures! This ma*es the
achievement of goals difficult!
INFORMAL ORGANIZATION
.nformal organization refers to the relationshi# bet5een #eo#le in the organization based
on #ersonal attitudes3 emotions3 #re&udices3 li*es3 disli*es etc! an informal organization is an
organization 5hich is not established b% an% formal authorit%3 but arises from the #ersonal and
social relations of the #eo#le! These relations are not develo#ed according to #rocedures and
regulations laid do5n in the formal organization structureH generall% large formal grou#s give
rise to small informal or social grou#s! These grou#s ma% be based on same taste3 language3
culture or some other factor! These grou#s are not #re-#lanned3 but the% develo# automaticall%
5ithin the organization according to its environment!
Ch*.$e*%1$%.1 -e$0*e1 o- %!-o*#' o*"!%,$%o!
.nformal organization is not established b% an% formal authorit%! .t is un#lanned and arises
s#ontaneousl%!
.nformal organizations reflect human relationshi#s! .t arises from the #ersonal and social
relations amongst the #eo#le 5or*ing in the organization!
+ormation of informal organizations is a natural #rocess! .t is not based on rules3 regulations
and #rocedures!
The inter-relations amongst the #eo#le in an informal organization cannot be sho5n in an
organization chart!
.n the case of informal organization3 the #eo#le cut across formal channels of
communications and communicate amongst themselves!
The membershi# of informal organizations is voluntar%! .t arises s#ontaneousl% and not b%
deliberate or conscious efforts!
Membershi# of informal grou#s can be overla##ing as a #erson ma% be member of a
number of informal grou#s!
.nformal organizations are based on common taste3 #roblem3 language3 religion3 culture3 etc!
it is influenced b% the #ersonal attitudes3 emotions3 5hims3 li*es and disli*es etc! of the
#eo#le in the organization!
+e!e-%$1 o- I!-o*#' o*"!%,$%o!
.t blends 5ith the formal organization to ma*e it more effective!
Man% things 5hich cannot be achieved through formal organization can be achieved through
informal organization!
The #resence of informal organization in an enter#rise ma*es the managers #lan and act
more carefull%!
.nformal organization acts as a means b% 5hich the 5or*ers achieve a sense of securit% and
belonging! .t #rovides social satisfaction to grou# members!
-n informal organization has a #o5erful influence on #roductivit% and &ob satisfaction!
The informal leader lightens the burden of the formal manager and tries to fill in the ga#s in
the managerAs abilit%!
.nformal organization hel#s the grou# members to attain s#ecific #ersonal ob&ectives!
.nformal organization is the best means of em#lo%ee communication! .t is ver% fast!
.nformal organization gives #s%chological satisfaction to the members! .t acts as a safet%
valve for the emotional #roblems and frustrations of the 5or*ers of the organization because
the% get a #latform to e6#ress their feelings!
.t serves as an agenc% for social control of human behavior!
DIFFERENCES +ETWEEN FORMAL AND INFORMAL ORGANIZATION
Fo*#' O*"!%,$%o! I!-o*#' O*"!%,$%o!
?! +ormal organization is established 5ith the e6#licit
aim of achieving 5ell-defined goals!
?! .nformal organization s#rings on its
o5n! .ts goals are ill defined and
intangible!
B! +ormal organization is bound together b%
authorit% relationshi#s among members! -
hierarchical structure is created3 constituting to#
management3 middle management and su#ervisor%
management!
B! .nformal organization is characterized
b% a generalizedsort of #o5er
relationshi#s! $o5er in informal
organization has bases other than
rational legal right!
D! +ormal organization recognizes certain tas*s
5hich are to be carried out to achieve its goals!
D! .nformal organization does not have
an% 5ell-defined tas*s!
C! The roles and relationshi#s of #eo#le in formal
organization are im#ersonall% defined
C! .n informal organization the
relationshi#s among #eo#le are
inter#ersonal!
F! .n formal organization3 much em#hasis is #laced
on efficienc%3 disci#line3 conformit%3 consistenc% and
control!
F! .nformal organization is characterized
b% relative freedom3 s#ontaneit%3 b%
relative freedom3 s#ontaneit%3
homeliness and 5armth!
G! .n formal organization3 the social and
#s%chological needs and interests of members of the
organization get little attention!
G! .n informal organization the
socio#s%chological needs3 interests and
as#irations of members get #riorit%!
O! The communication s%stem in formal organization
follo5s certain #re-determined #atterns and #aths!
O! .n informal organization3 the
communication #attern is ha#hazard3
intricate and natural!
I! +ormal organization is relativel% slo5 to res#ond
and ada#t to changing situations and realities!
I! .nformal organization is d%namic and
ver% vigilant! .t is sensitive to its
surroundings!
L I N E A N D S T A F F A U T4 O R I T 7
.n an organization3 the line authorit% flo5s from to# to bottom and the staff authorit% is
e6ercised b% the s#ecialists over the line managers 5ho advise them on im#ortant matters!
These s#ecialists stand read% 5ith their s#ecialt% to serve line mangers as and 5hen their
services are called for3 to collect information and to give hel# 5hich 5ill enable the line officials
to carr% out their activities better! The staff officers do not have an% #o5er of command in the
organization as the% are em#lo%ed to #rovide e6#ert advice to the line officers! The AlineA
maintains disci#line and stabilit%H the AstaffA #rovides e6#ert information! The line gets out the
#roduction3 the staffs carries on the research3 #lanning3 scheduling3 establishing of standards
and recording of #erformance! The authorit% b% 5hich the staff #erforms these functions is
delegated b% the line and the #erformance must be acce#table to the line before action is ta*en!
The follo5ing figure de#icts the line and staff authorit%>
T8pe1 o- S$--
The staff #osition established as a measure of su##ort for the line managers ma% ta*e the
follo5ing forms>
?! $ersonal taff> 1ere the staff official is attached as a #ersonal assistant or adviser to the line
manager! +or e6am#le3 -ssistant to managing director!
B! #ecialized taff> uch staff acts as the fountainhead of e6#ertise in s#ecialized areas li*e R
7 D3 #ersonnel3 accounting etc!
D! General taff> This categor% of staff consists of a set of e6#erts in different areas 5ho are
meant to advise and assist the to# management on matters called for e6#ertise! +or e6am#le3
+inancial advisor3 technical advisor etc!
Fe$0*e1 o- '%!e !& 1$-- o*"!%,$%o!
Knder this s%stem3 there are line officers 5ho have authorit% and command over the
subordinates and are accountable for the tas*s entrusted to them! The staff officers are
s#ecialists 5ho offer e6#ert advice to the line officers to #erform their tas*s efficientl%!
Knder this s%stem3 the staff officers #re#are the #lans and give advice to the line officers
and the line officers e6ecute the #lan 5ith the hel# of 5or*ers!
The line and staff organization is based on the #rinci#le of s#ecialization!
A&(!$"e1
.t brings e6#ert *no5ledge to bear u#on management and o#erating #roblems! Thus3 the
line managers get the benefit of s#ecialized *no5ledge of staff s#ecialists at various
levels!
The e6#ert advice and guidance given b% the staff officers to the line officers benefit the
entire organization!
-s the staff officers loo* after the detailed anal%sis of each im#ortant managerial activit%3
it relieves the line managers of the botheration of concentrating on s#ecialized functions!
taff s#ecialists hel# the line managers in ta*ing better decisions b% #roviding e6#ert
advice! Therefore3 there 5ill be sound managerial decisions under this s%stem!
.t ma*es #ossible the #rinci#le of undivided res#onsibilit% and authorit%3 and at the same
time #ermits staff s#ecialization! Thus3 the organization ta*es advantage of functional
organization 5hile maintaining the unit% of command!
.t is based u#on #lanned s#ecialization!
,ine and staff organization has greater fle6ibilit%3 in the sense that ne5 s#ecialized
activities can be added to the line activities 5ithout disturbing the line #rocedure!
D%1&(!$"e1
Knless the duties and res#onsibilities of the staff members are clearl% indicated b%
charts and manuals3 there ma% be considerable confusion throughout the organization
as to the functions and #ositions of staff members 5ith relation to the line su#ervisors!
There is generall% a conflict bet5een the line and staff e6ecutives! The line managers
feel that staff s#ecialists do not al5a%s give right t%#e of advice3 and staff officials
generall% com#lain that their advice is not #ro#erl% attended to!
,ine managers sometimes ma% resent the activities of staff members3 feeling that
#restige and influence of line managers suffer from the #resence of the s#ecialists!
The staff e6#erts ma% be ineffective because the% do not get the authorit% to im#lement
their recommendations!
This t%#e of organization re/uires the a##ointment of large number of staff officers or
e6#erts in addition to the line officers! -s a result3 this s%stem becomes /uite e6#ensive!
-lthough e6#ert information and advice are available3 the% reach the 5or*ers through
the officers and thus run the ris* of misunderstanding and misinter#retation!
ince staff managers are not accountable for the results3 the% ma% not be #erforming
their duties 5ell!
,ine mangers deal 5ith #roblems in a more #ractical manner! (ut staff officials 5ho are
s#ecialists in their fields tend to be more theoretical! This ma% ham#er coordination in
the organization!
D E P A R T M E N T A T I ON + 7 D I FF E R E N T S T R A T EG I ES
DE$-RTME"T-T.O" refers to the #rocess of grou#ing activities into de#artments!
De#artmentation is the #rocess of grou#ing of 5or* activities into de#artments3 divisions3 and
other homogenous units!
2e% +actors in De#artmentation
.t should facilitate control!
.t should ensure #ro#er coordination!
.t should ta*e into consideration the benefits of s#ecialization!
.t should not result in e6cess cost!
.t should give due consideration to 1uman -s#ects!
De#artmentation ta*es #lace in various #atterns li*e de#artmentation b% functions3 #roducts3
customers3 geogra#hic location3 #rocess3 and its combinations!
) FUNCTIONAL DEPARTMENTATION
+unctional de#artmentation is the #rocess of grou#ing activities b% functions #erformed!
-ctivities can be grou#ed according to function '5or* being done) to #ursue economies of scale
b% #lacing em#lo%ees 5ith shared s*ills and *no5ledge into de#artments for e6am#le hu m an
r esou r ce s 3 finance3 #roduction3 and ma r* e t in g! + unctional de#artmentation can be used in all
t%#es of organizations!
A&(!$"e15
-dvantage of s#ecialization
Eas% control over functions
$in#ointing training needs of manager
.t is ver% sim#le #rocess of grou#ing activities!
D%1&(!$"e1>
,ac* of res#onsibilit% for the end result
Overs#ecialization or lac* of general management
.t leads to increase conflicts and coordination #roblems among de#artments!
3) PRO DUCT DEPARTMENTATION
$roduct de#artmentation is the #rocess of grou#ing activities b% #roduct line! Tas*s can
also be grou#ed according to a s#ecific #roduct or service3 thus #lacing all activities related to
the #roduct or the service under one manager! Each ma&or #roduct area in the cor#oration is
under the authorit% of a senior manager 5ho is s#ecialist in3 and is res#onsible for3 ever%thing
related to the #roduct line! Dabur .ndia ,imited is the .ndia<s largest -%urvedic medicine
manufacturer is an e6am#le of com#an% that uses #roduct de#artmentation! .ts structure is
based on its varied #roduct lines 5hich include 1ome care3 1ealth care3 $ersonal care and
+oods!
A&(!$"e1
.t ensures better customer service
Kn#rofitable #roducts ma% be easil% determined
.t assists in develo#ment of all around managerial talent
Ma*es control effective
.t is fle6ible and ne5 #roduct line can be added easil%!
D%1&(!$"e1
.t is e6#ensive as du#lication of service functions occurs in various #roduct divisions
Customers and dealers have to deal 5ith different #ersons for com#laint and information
of different #roducts!
.) CUSTOM ER DEPARTMENTATION
Customer de#artmentation is the #rocess of grou#ing activities on the basis of common
customers or t%#es of customers! 9obs ma% be grou#ed according to the t%#e of customer
served b% the organization! The assum#tion is that customers in each de#artment have a
common set of #roblems and needs that can best be met b% s#ecialists! KCO is the one of the
largest commercial ban*s of .ndia is an e6am#le of com#an% that uses customer
de#artmentation! .ts structure is based on various services 5hich includes 1ome loans3
(usiness loans3 Jehicle loans and Educational loans!
A&(!$"e1
.t focused on customers 5ho are ultimate su##liers of mone%
(etter service to customer having different needs and tastes
Develo#ment in general managerial s*ills
D%1&(!$"e1
ales being the e6clusive field of its a##lication3 co-ordination ma% a##ear difficult
bet5een sales function and other enter#rise functions!
#ecialized sales staff ma% become idle 5ith the do5n5ard movement of sales to an%
s#ecified grou# of customers!
&) G EOGR AP4I C DEPARTMENTATION
Geogra#hic de#artmentation is the #rocess of grou#ing activities on the basis of
territor%! .f an organizationAs customers are geogra#hicall% dis#ersed3 it can grou# &obs based
on geogra#h%! +or e6am#le3 the organization structure of Coca-Cola ,td has reflected the
com#an%<s o#eration in various geogra#hic areas such as Central "orth -merican grou#3
:estern "orth -merican grou#3 Eastern "orth -merican grou# and Euro#ean grou#
A&(!$"e1
1el# to cater to the needs of local #eo#le more satisfactoril%!
.t facilitates effective control
-ssists in develo#ment of all-round managerial s*ills
D%1&(!$"e1
Communication #roblem bet5een head office and regional office due to lac* of means of
communication at some location
Coordination bet5een various divisions ma% become difficult!
Distance bet5een #olic% framers and e6ecutors
.t leads to du#lication of activities 5hich ma% cost higher!
e) PROCESS DEPARTMENTATION
Geogra#hic de#artmentation is the #rocess of grou#ing activities on the basis of #roduct
or service or customer flo5! (ecause each #rocess re/uires different s*ills3 #rocess
de#artmentation allo5s homogenous activities to be categorized! +or e6am#le3 (o5ater
Thunder (a%3 a Canadian com#an% that harvests trees and #rocesses 5ood into ne5s#rint and
#ul#! (o5ater has three divisions namel% tree cutting3 chemical #rocessing3 and finishing '5hich
ma*es ne5s#rint)!
Dep*$#e!$$%o! 38 p*o.e115 2
A&(!$"e1
S Oriented to5ards end result!
S $rofessional identification is maintained!
S $in#oints #roduct-#rofit res#onsibilit%!
D%1&(!$"e
S Conflict in organization authorit% e6ists!
S $ossibilit% of disunit% of command!
S Re/uires managers effective in human relation
-) MARTI= DEPARTMENTATION
.n actual #ractice3 no single #attern of grou#ing activities is a##lied in the organization
structure 5ith all its levels! Different bases are used in different segments of the enter#rise!
Com#osite or h%brid method forms the common basis for classif%ing activities rather than one
#articular method3! One of the mi6ed forms of organization is referred to as matri6 or grid
organization<s -ccording to the situations3 the #atterns of Organizing varies from case to case!
The form of structure must reflect the tas*s3 goals and technolog% if the originations the t%#e of
#eo#le em#lo%ed and the environmental conditions that it faces! .t is not unusual to see firms
that utilize the function and #ro&ect organization combination! The same is true for #rocess and
#ro&ect as 5ell as other combinations! +or instance3 a large hos#ital could have an accounting
de#artment3 surger% de#artment3 mar*eting de#artment3 and a satellite center #ro&ect team that
ma*e u# its organizational structure!
A&(!$"e1
Efficientl% manage large3 com#le6 tas*s
Effectivel% carr% out large3 com#le6 tas*s
D%1&(!$"e1
Re/uires high levels of coordination
Conflict bet5een bosses
Re/uires high levels of management s*ills
SP AN OF CONTR OL
#an of Control means the number of subordinates that can be managed efficientl% and
effectivel% b% a su#erior in an organization! .t suggests ho5 the relations are designed bet5een
a su#erior and a subordinate in an organization!
F. $ o*1 A -- e. $% !" S p! o- .o! $ * o ' 5
a) Ca#acit% of u#erior>
Different abilit% and ca#acit% of leadershi#3 communication affect management of
subordinates!
b) Ca#acit% of ubordinates>
Efficient and trained subordinates affects the degree of s#an of management!
c) "ature of :or*>
Different t%#es of 5or* re/uire different #atterns of management!
d) Degree of Centralization or Decentralization>
Degree of centralization or decentralization affects the s#an of management b% affecting
the degree of involvement of the su#erior in decision ma*ing!
e) Degree of $lanning>
$lans 5hich can #rovide rules3 #rocedures in doing the 5or* higher 5ould be the degree
of s#an of management!
f) Communication Techni/ues>
$attern of communication3 its means3 and media affect the time re/uirement in
managing subordinates and conse/uentl% s#an of management!
g) Kse of taff -ssistance>
Kse of taff assistance in reducing the 5or* load of managers enables them to manage
more number of subordinates!
h) u#ervision of others>
.f subordinate receives su#ervision form several other #ersonnel besides his direct
su#ervisor! .n such a case3 the 5or* load of direct su#erior is reduced and he can
su#ervise more number of #ersons!
Sp! o- .o!$*o' %1 o- $)o $8pe15
1. N**o) 1p! o- .o!$*o'5 "arro5 #an of control means a single manager or su#ervisor
oversees fe5 subordinates! This gives rise to a tall organizational structure!
A&(!$"e15
S Close su#ervision
S Close control of subordinates
S +ast communication
D%1&(!$"e15
S Too much control
S Man% levels of management
S 1igh costs
S E6cessive distance bet5een lo5est level and highest level
2. W%&e 1p! o- .o!$*o'5 :ide s#an of control means a single manager or su#ervisor oversees
a large number of subordinates! This gives rise to a flat organizational structure!
A&(!$"e15
S More Delegation of -uthorit%
S Develo#ment of Managers
S Clear #olicies
D%1&(!$"e15
S Overloaded su#ervisors
S Danger of su#eriors loss of control
S Re/uirement of highl% trained managerial #ersonnel
S (loc* in decision ma*ing
CENTR ALI Z ATI O N AND DECEN TR ALI Z ATI ON
CENTRALIZATION5
.t is the #rocess of transferring and assigning decision-ma*ing authorit% to higher levels
of an organizational hierarch%! The s#an of control of to# managers is relativel% broad3 and
there are relativel% man% tiers in the organization!
Ch*.$e*%1$%.1
$hiloso#h% 8 em#hasis on> to#-do5n control3 lea d e r sh i#3 vision3 s tr a t e g % !
D ec is ion -m a * ing> strong3 authoritarian3 visionar%3 cha r is m a t ic!
O rg an iz a t ional cha n g e> sha#ed b% to#3 vision of leader!
E6ecution> decisive3 fast3 coordinated! -ble to res#ond /uic*l% to ma&or issues and changes!
Kniformit%! ,o5 ris* of dissent or conflicts bet5een #arts of the organization!
A&(!$"e1 o- Ce!$*'%,$%o!
$rovide $o5er and #restige for manager
$romote uniformit% of #olicies3 #ractices and decisions
Minimal e6tensive controlling #rocedures and #ractices
Minimize du#lication of function
D%1&(!$"e1 o- Ce!$*'%,$%o!
"eglected functions for mid! ,evel3 and less motivated beside #ersonnel!
"ursing su#ervisor functions as a lin* officer bet5een nursing director and first-line
management!
DECENTRALIZATION5
.t is the #rocess of transferring and assigning decision-ma*ing authorit% to lo5er levels of
an organizational hierarch%! The s#an of control of to# managers is relativel% small3 and there
are relativel% fe5 tears in the organization3 because there is more autonom% in the lo5er ran*s!
Ch*.$e*%1$%.1
$hiloso#h% 8 em#hasis on> bottom-u#3 #olitical3 c u lt u r al and le a r n ing d %namics!
D ec is ion -m a * ing> democratic3 #artici#ative3 detailed!
O rg an iz a t ional cha n g e> emerging from interactions3 organizational d%namics!
E6ecution> evolutionar%3 emergent! +le6ible to ada#t to minor issues and changes!
$artici#ation3 accountabilit%! ,o5 ris* of not-invented-here behavior!
Th*ee Fo*#1 o- &e.e!$*'%,$%o!
De2.o!.e!$*$%o!! The 5ea*est form of decentralization! Decision ma*ing authorit% is
redistributed to lo5er or regional levels of the same central organization!
De'e"$%o!! - more e6tensive form of decentralization! Through delegation the
res#onsibilit% for decision-ma*ing are transferred to semi-autonomous organizations not
5holl% controlled b% the central organization3 but ultimatel% accountable to it!
De(o'0$%o!! - third t%#e of decentralization is devolution! The authorit% for decision-
ma*ing is transferred com#letel% to autonomous organizational units!
A&(!$"e1 o- De.e!$*'%,$%o!
Raise morale and #romote inter#ersonal relationshi#s
Relieve from the dail% administration
(ring decision-ma*ing close to action
Develo# econd-line managers
$romote em#lo%ee<s enthusiasm and coordination
+acilitate actions b% lo5er-level managers
D%1&(!$"e1 o- De.e!$*'%,$%o!
To#-level administration ma% feel it 5ould decrease their status
Managers ma% not #ermit full and ma6imum utilization of highl% /ualified #ersonnel
.ncreased costs! .t re/uires more managers and large staff
.t ma% lead to overla##ing and du#lication of effort
Centralization and Decentralization are t5o o##osite 5a%s to transfer decision-ma*ing #o5er
and to change the organizational structure of organizations accordingl%!
There must be a good balance bet5een centralization and decentralization of authorit% and
#o5er! E6treme centralization and decentralization must be avoided!
D E L E G A T I ON OF A U T4 O R I T 7
- manager alone cannot #erform all the tas*s assigned to him! .n order to meet the
targets3 the manager should delegate authorit%! Delegation of -uthorit% means division of
authorit% and #o5ers do5n5ards to the subordinate! Delegation is about entrusting someone
else to do #arts of %our &ob! Delegation of authorit% can be defined as subdivision and sub-
allocation of #o5ers to the subordinates in order to achieve effective results!
Elements of Delegation
?! A0$ho*%$8 - in conte6t of a business organization3 authorit% can be defined as the #o5er and
right of a #erson to use and allocate the resources efficientl%3 to ta*e decisions and to give
orders so as to achieve the organizational ob&ectives! -uthorit% must be 5ell- defined! -ll
#eo#le 5ho have the authorit% should *no5 5hat is the sco#e of their authorit% is and the%
shouldn<t misutilize it! -uthorit% is the right to give commands3 orders and get the things
done! The to# level management has greatest authorit%! -uthorit% al5a%s flo5s from to# to
bottom! .t e6#lains ho5 a su#erior gets 5or* done from his subordinate b% clearl% e6#laining
5hat is e6#ected of him and ho5 he should go about it! -uthorit% should be accom#anied
5ith an e/ual amount of res#onsibilit%! Delegating the authorit% to someone else doesn<t
im#l% esca#ing from accountabilit%! -ccountabilit% still rest 5ith the #erson having the utmost
authorit%!
B! Re1po!1%3%'%$8 - is the dut% of the #erson to com#lete the tas* assigned to him! - #erson
5ho is given the res#onsibilit% should ensure that he accom#lishes the tas*s assigned to
him! .f the tas*s for 5hich he 5as held res#onsible are not com#leted3 then he should not
give e6#lanations or e6cuses! Res#onsibilit% 5ithout ade/uate authorit% leads to discontent
and dissatisfaction among the #erson! Res#onsibilit% flo5s from bottom to to#! The middle
level and lo5er level management holds more res#onsibilit%! The #erson held res#onsible
for a &ob is ans5erable for it! .f he #erforms the tas*s assigned as e6#ected3 he is bound for
#raises! :hile if he doesn<t accom#lish tas*s assigned as e6#ected3 then also he is
ans5erable for that!
D! A..o0!$3%'%$8 - means giving e6#lanations for an% variance in the actual #erformance from
the e6#ectations set! -ccountabilit% cannot be delegated! +or e6am#le3 if <-< is given a tas*
5ith sufficient authorit%3 and <-< delegates this tas* to ( and as*s him to ensure that tas* is
done 5ell3 res#onsibilit% rest 5ith <(<3 but accountabilit% still rest 5ith <-<! The to# level
management is most accountable! (eing accountable means being innovative as the #erson
5ill thin* be%ond his sco#e of &ob! -ccountabilit% 3in short3 means being ans5erable for the
end result! -ccountabilit% can<t be esca#ed! .t arises from res#onsibilit%!
D E L E G A T I ON P R O C ESS
The ste#s involved in delegation are given belo5
?! A''o.$%o! o- &0$%e1 F The delegator first tries to define the tas* and duties to the
subordinate! 1e also has to define the result e6#ected from the subordinates! Clarit% of
dut% as 5ell as result e6#ected has to be the first ste# in delegation!
B! G*!$%!" o- 0$ho*%$8 F ubdivision of authorit% ta*es #lace 5hen a su#erior divides
and shares his authorit% 5ith the subordinate! .t is for this reasonH ever% subordinate
should be given enough inde#endence to carr% the tas* given to him b% his su#eriors!
The managers at all levels delegate authorit% and #o5er 5hich is attached to their &ob
#ositions! The subdivision of #o5ers is ver% im#ortant to get effective results!
D! A11%"!%!" o- Re1po!1%3%'%$8 !& A..o0!$3%'%$8 F The delegation #rocess does not
end once #o5ers are granted to the subordinates! The% at the same time have to be
obligator% to5ards the duties assigned to them! Res#onsibilit% is said to be the factor or
obligation of an individual to carr% out his duties in best of his abilit% as #er the directions
of su#erior! Therefore3 it is that 5hich gives effectiveness to authorit%! -t the same time3
res#onsibilit% is absolute and cannot be shifted!
C! C*e$%o! o- ..o0!$3%'%$8 F -ccountabilit%3 on the others hand3 is the obligation of the
individual to carr% out his duties as #er the standards of #erformance! Therefore3 it is
said that authorit% is delegated3 res#onsibilit% is created and accountabilit% is im#osed!
-ccountabilit% arises out of res#onsibilit% and res#onsibilit% arises out of authorit%!
Therefore3 it becomes im#ortant that 5ith ever% authorit% #osition an e/ual and o##osite
res#onsibilit% should be attached!
Therefore ever% manager3 i!e!3 the delegator has to follo5 a s%stem to finish u# the delegation
#rocess! E/uall% im#ortant is the delegatee<s role 5hich means his res#onsibilit% and
accountabilit% is attached 5ith the authorit% over to here!
S T A F F I N G
taffing involves filling the #ositions needed in the organization structure b% a##ointing
com#etent and /ualified #ersons for the &ob!
The staffing #rocess encom#asses man #o5er #lanning3 recruitment3 selection3 and training!
) M!po)e* *e;0%*e#e!$15
Man#o5er $lanning 5hich is also called as 1uman Resource $lanning consists of
#utting right number of #eo#le3 right *ind of #eo#le at the right #lace3 right time3 doing the right
things for 5hich the% are suited for the achievement of goals of the organization! The #rimar%
function of man #o5er #lanning is to anal%ze and evaluate the human resources available in the
organization3 and to determine ho5 to obtain the *inds of #ersonnel needed to staff #ositions
ranging from assembl% line 5or*ers to chief e6ecutives!
3) Re.*0%$#e!$5
Recruitment is the #rocess of finding and attem#ting to attract &ob candidates 5ho are
ca#able of effectivel% filling &ob vacancies!
9ob descri#tions and &ob s#ecifications are im#ortant in the recruiting #rocess because the%
s#ecif% the nature of the &ob and the /ualifications re/uired of &ob candidates!
.) Se'e.$%o!5
electing a suitable candidate can be the biggest challenge for an% organization! The
success of an organization largel% de#ends on its staff! election of the right candidate builds
the foundation of an% organizationAs success and hel#s in reducing turnovers!
&) T*%!%!" !& De(e'op#e!$5
Training and Develo#ment is a #lanned effort to facilitate em#lo%ee learning of &ob-
related behaviors in order to im#rove em#lo%ee #erformance! E6#erts sometimes distinguish
bet5een the terms 4training and 4develo#mentH 4training denotes efforts to increase em#lo%ee
s*ills on #resent &obs3 5hile 4develo#ment refers to efforts oriented to5ard im#rovements
relevant to future &obs! .n #ractice3 though3 the distinction is often blurred 'mainl% because
u#grading s*ills in #resent &obs usuall% im#roves #erformance in future &obs)!
R E CRU I T M E N T P R O C ESS
Recruitment is the #rocess of finding and attem#ting to attract &ob candidates 5ho are
ca#able of effectivel% filling &ob vacancies! The recruitment #rocess consists of the follo5ing
ste#s
.dentification of vacanc%
$re#aration of &ob descri#tion and &ob s#ecification
election of sources
-dvertising the vacanc%
Managing the res#onse
) I&e!$%-%.$%o! o- (.!.85
The recruitment #rocess begins 5ith the human resource de#artment receiving re/uisitions
for r e c r u itm e nt f rom an% de#artment of the com#an%! These contain>
S $osts to be filled
S "umber of #ersons
S Duties to be #erformed
S 0ualifications re/uired
3) P*ep*$%o! o- @o3 &e1.*%p$%o! !& @o3 1pe.%-%.$%o!5
- &ob descri#tion is a list of the general tas*s3 or functions3 and res# o ns ib ili t ies o f a #osition!
.t ma% often include to 5hom the #osition re#orts3 s#ecifications such as the / ua li f ic a t ions o r
s*ills needed b% the #erson in the &ob3 or a s a la r % r ange! - &ob s#ecification describes the
*no5ledge3 s*ills3 education3 e6#erience3 and abilities %ou believe are essential to #erforming a
#articular &ob!
.) Se'e.$%o! o- 1o0*.e15
Ever% organization has the o#tion of choosing the candidates for its r e c r u itm e n t
# r ocesses f rom t5o *inds of sources> internal and e6ternal sources! The sources 5ithin the
organization itself 'li*e transfer of em#lo%ees from one de#artment to other3 #romotions) to fill a
#osition are *no5n as the internal sources of recruitment! Recruitment candidates from all the
other sources 'li*e outsourcing agencies etc!) are *no5n as the e6ternal sources of
the r ec r u it m e n t !
&) A&(e*$%1%!" $he (.!.85
-fter choosing the a##ro#riate sources3 the vacanc% is communicated to the candidates
b% means of a suitable media such as television3 radio3 ne5s#a#er3 internet3 direct mail etc!
e) M!"%!" $he *e1po!1e5
-fter receiving an ade/uate number of res#onses from &ob see*ers3 the sieving #rocess
of the resumes begins! This is a ver% essential ste# of the recruitment selection #rocess3
because selecting the correct resumes that match the &ob #rofile3 is ver% im#ortant! "aturall%3 it
has to be done rather com#etentl% b% a #erson 5ho understands all the res#onsibilities
associated 5ith the designation in its entiret%! Candidates 5ith the given s*ill set are then
chosen and further called for intervie5! -lso3 the a##lications of candidates that do not match
the #resent nature of the #osition but ma% be considered for future re/uirements are filed
se#aratel% and #reserved!
The recruitment #rocess is immediatel% follo5ed b% the selection #rocess!
<O+ A N A L 7S I S
<o3 A!'81%1 is the #rocess of describing and recording as#ects of &obs and s#ecif%ing
the s*ills and other re/uirements necessar% to #erform the &ob!
The out#uts of &ob anal%sis are
a) 9ob descri#tion
b) 9ob s#ecification
<o3 De1.*%p$%o!
- &ob descri#tion '9D) is a 5ritten statement of 5hat the &ob holder does3 ho5 it is done3 under
5hat conditions it is done and 5h% it is done! .t describes 5hat the &ob is all about3 thro5ing light
on &ob content3 environment and conditions of em#lo%ment! .t is descri#tive in nature and
defines the #ur#ose and sco#e of a &ob! The main #ur#ose of 5riting a &ob descri#tion is to
differentiate the &ob from other &obs and state its outer limits!
Co!$e!$1
- &ob descri#tion usuall% covers the follo5ing information>
9ob title> Tells about the &ob title3 code number and the de#artment 5here it is done!
9ob summar%> - brief 5rite-u# about 5hat the &ob is all about!
9ob activities> - descri#tion of the tas*s done3 facilities used3 e6tent of su#ervisor% hel#3
etc!
:or*ing conditions> The #h%sical environment of &ob in terms of heat3 light3 noise and
other hazards!
ocial environment> ize of 5or* grou# and inter#ersonal interactions re/uired to do the
&ob!
<o3 Spe.%-%.$%o!
9ob s#ecification summarizes the human characteristics needed for satisfactor% &ob com#letion!
.t tries to describe the *e% /ualifications someone needs to #erform the &ob successfull%! .t
s#ells out the im#ortant attributes of a #erson in terms of education3 e6#erience3 s*ills3
*no5ledge and abilities '2-s) to #erform a #articular &ob! The &ob s#ecification is a logical
outgro5th of a &ob descri#tion! +or each &ob descri#tion3 it is desirable to have a &ob
s#ecification! This hel#s the organization to find 5hat *inds of #ersons are needed to ta*e u#
s#ecific &obs!
Co!$e!$1
- &ob s#ecification usuall% covers the follo5ing information>
Education
E6#erience
*ill3 2no5ledge3 -bilities
:or* Orientation +actors
-ge
SE L E CT I ON P R O C ESS
electing a suitable candidate can be the biggest challenge for an% organisation! The
success of an organization largel% de#ends on its staff! election of the right candidate builds
the foundation of an% organizationAs success and hel#s in reducing turnovers!
Though there is no fool #roof selection #rocedure that 5ill ensure lo5 turnover and high #rofits3
the follo5ing ste#s generall% ma*e u# the selection #rocess-
) I!%$%' S.*ee!%!"
This is generall% the starting #oint of an% em#lo%ee selection #rocess! .nitial creening
eliminates un/ualified a##licants and hel#s save time! -##lications received from various
sources are scrutinized and irrelevant ones are discarded!
3) P*e'%#%!*8 I!$e*(%e)
.t is used to eliminate those candidates 5ho do not meet the minimum eligibilit% criteria laid
do5n b% the organization! The s*ills3 academic and famil% bac*ground3 com#etencies and
interests of the candidate are e6amined during #reliminar% intervie5! $reliminar% intervie5s are
less formalized and #lanned than the final intervie5s! The candidates are given a brief u# about
the com#an% and the &ob #rofileH and it is also e6amined ho5 much the candidate *no5s about
the com#an%! $reliminar% intervie5s are also called screening intervie5s!
.) F%''%!" App'%.$%o! Fo*#
-n candidate 5ho #asses the #reliminar% intervie5 and is found to be eligible for the &ob is
as*ed to fill in a formal a##lication form! uch a form is designed in a 5a% that it records the
#ersonal as 5ell #rofessional details of the candidates such as age3 /ualifications3 reason for
leaving #revious &ob3 e6#erience3 etc!
&) Pe*1o!' I!$e*(%e)
Most em#lo%ers believe that the #ersonal intervie5 is ver% im#ortant! .t hel#s them in obtaining
more information about the #ros#ective em#lo%ee! .t also hel#s them in interacting 5ith the
candidate and &udging his communication abilities3 his ease of handling #ressure etc! .n some
Com#anies3 the selection #rocess com#rises onl% of the .ntervie5!
e) Re-e*e!.e1 .he.:
Most a##lication forms include a section that re/uires #ros#ective candidates to #ut do5n
names of a fe5 references! References can be classified into - former em#lo%er3 former
customers3 business references3 re#utable #ersons! uch references are contacted to get a
feedbac* on the #erson in /uestion including his behaviour3 s*ills3 conduct etc!
-) +.:"*o0!& Ve*%-%.$%o!
- bac*ground chec* is a revie5 of a #ersonAs commercial3 criminal and 'occasionall%) financial
records! Em#lo%ers often #erform bac*ground chec*s on em#lo%ers or candidates for
em#lo%ment to confirm information given in a &ob a##lication3 verif% a #ersonAs identit%3 or
ensure that the individual does not have a histor% of criminal activit%3 etc!3 that could be an issue
u#on em#lo%ment!
") F%!' I!$e*(%e)
+inal intervie5 is a #rocess in 5hich a #otential em#lo%ee is evaluated b% an em#lo%er for
#ros#ective e m # lo % m ent in their o rg an iz a t ion! During this #rocess3 the em#lo%er ho#es to
determine 5hether or not the a##licant is suitable for the &ob! Different t%#es of tests are
conducted to evaluate the ca#abilities of an a##licant3 his behaviour3 s#ecial /ualities etc!
e#arate tests are conducted for various t%#es of &obs!
h) Ph81%.' E?#%!$%o!
.f all goes 5ell3 then at this stage3 a #h%sical e6amination is conducted to ma*e sure that the
candidate has sound health and does not suffer from an% serious ailment!
%) <o3 O--e*
- candidate 5ho clears all the ste#s is finall% considered right for a #articular &ob and is
#resented 5ith the &ob offer! -n a##licant can be dro##ed at an% given stage if considered unfit
for the &ob!
E#p'o 8ee I !&0.$% o! A O*% e!$$% o!
Orientation or induction is the #rocess of introducing ne5 em#lo%ees to an organization3 to their
s#ecific &obs 7 de#artments3 and in some instances3 to their communit%!
$ur#oses of Orientation
Orientation isnAt a nicet%T .t is used for the follo5ing #ur#oses>
?! To Reduce tartu#-Costs>
$ro#er orientation can hel# the em#lo%ee get Mu# to s#eedM much more /uic*l%3 thereb%
reducing the costs associated 5ith learning the &ob!
B! To Reduce -n6iet%>
-n% em#lo%ee3 5hen #ut into a ne53 strange situation3 5ill e6#erience an6iet% that can
im#ede his or her abilit% to learn to do the &ob! $ro#er orientation hel#s to reduce an6iet% that
results from entering into an un*no5n situation3 and hel#s #rovide guidelines for behaviour and
conduct3 so the em#lo%ee doesnAt have to e6#erience the stress of guessing!
D! To Reduce Em#lo%ee Turnover>
Em#lo%ee turnover increases as em#lo%ees feel the% are not valued3 or are #ut in
#ositions 5here the% canAt #ossibl% do their &obs! Orientation sho5s that the organization values
the em#lo%ee3 and hel#s #rovide tools necessar% for succeeding in the &ob!
C! To ave Time for u#ervisor 7 Co-:or*ers>
im#l% #ut3 the better the initial orientation3 the less li*el% su#ervisors and co-5or*ers
5ill have to s#end time teaching the em#lo%ee!
F! To Develo# Realistic 9ob E6#ectations3 $ositive -ttitudes and 9ob atisfaction>
.t is im#ortant that em#lo%ees learn earl% on 5hat is e6#ected of them3 and 5hat to
e6#ect from others3 in addition to learning about the values and attitudes of the organization!
:hile #eo#le can learn from e6#erience3 the% 5ill ma*e man% mista*es that are unnecessar%
and #otentiall% damaging!
-n orientation #rogram #rinci#all% conve%s D t%#es of information3 namel%>
a) General information about the dail% 5or* routine to be follo5ed
b) - revie5 of the organization<s histor%3 founders3 ob&ectives3 o#erations 7 #roducts or
services3 as 5ell as ho5 the em#lo%ee<s &ob contributes to the organization<s needs!
c) - detailed #resentation of the organization<s #olicies3 5or* rules 7 em#lo%ee benefits!
T)o B%!&1 o- O*%e!$$%o!
There are t5o related *inds of orientation! The first 5e 5ill call Overvie5 Orientation3 and deals
5ith the basic information an em#lo%ee 5ill need to understand the broader s%stem he or she
5or*s in!
Overvie5 Orientation includes hel#ing em#lo%ees understand>
Management in general
De#artment and the branch
.m#ortant #olicies
General #rocedures 'non-&ob s#ecific)
.nformation about com#ensation
-ccident #revention measures
Em#lo%ee and union issues 'rights3 res#onsibilities)
$h%sical facilities
Often3 Overvie5 Orientation can be conducted b% the #ersonnel de#artment 5ith a little hel#
from the branch manager or immediate su#ervisor3 since much of the content is generic in
nature!
The second *ind of orientation is called 9ob-#ecific Orientation3 and is the #rocess that is used
to hel# em#lo%ees understand>
+unction of the organization3
Res#onsibilities3
E6#ectations3
Duties
$olicies3 #rocedures3 rules and regulations
,a%out of 5or*#lace
.ntroduction to co-5or*ers and other #eo#le in the broader organization!
9ob s#ecific orientation is best conducted b% the immediate su#ervisor3 and8or manager3 since
much of the content 5ill be s#ecific to the individual! Often the orientation #rocess 5ill be
ongoing3 5ith su#ervisors and co-5or*ers su##l%ing coaching!
C A RR ER D EVE L O P M E N T
C*ee* &e(e'op#e!$ not onl% im#roves &ob #erformance but also brings about the
gro5th of the #ersonalit%! .ndividuals not onl% mature regarding their #otential ca#acities but
also become better individuals!
$ur#ose of develo#ment
Management develo#ment attem#ts to im#rove managerial #erformance b% im#arting
2no5ledge
Changing attitudes
.ncreasing s*ills
The ma&or ob&ective of develo#ment is managerial effectiveness through a #lanned and a
deliberate #rocess of learning! This #rovides for a #lanned gro5th of managers to meet the
future organizational needs!
De(e'op#e!$ P*o.e115
The develo#ment #rocess consists of the follo5ing ste#s
1. Se$$%!" De(e'op#e!$ O3@e.$%(e15
.t develo#s a frame5or* from 5hich e6ecutive need can be determined!
2. A1.e*$%!%!" De(e'op#e!$ Nee&15
.t aims at organizational #lanning 7 forecast the #resent and future gro5th!
3. De$e*#%!%!" De(e'op#e!$ Nee&15
This consists of
-##raisal of #resent management talent
Management Man#o5er .nventor%
The above t5o #rocesses 5ill determine the s*ill deficiencies that are relative to the future
needs of the organization!
/. Co!&0.$%!" De(e'op#e!$ P*o"*#15
.t is carried out on the basis of needs of different individuals3 differences in their attitudes
and behavior3 also their #h%sical3 intellectual and emotional /ualities! Thus a com#rehensive
and 5ell conceived #rogram is #re#ared de#ending on the organizational needs and the
time 7 cost involved!
5. P*o"*# E('0$%o!5
.t is an attem#t to assess the value of training in order to achieve organizational ob&ectives!
T R A I N I N G
Training is a #rocess of learning a se/uence of #rogrammed behaviour! .t im#roves the
em#lo%eeAs #erformance on the current &ob and #re#ares them for an intended &ob!
$ur#ose of Training>
?) To im#rove $roductivit%> Training leads to increased o#erational #roductivit% and increased
com#an% #rofit!
B) To im#rove 0ualit%> (etter trained 5or*ers are less li*el% to ma*e o#erational mista*es!
D) To im#rove Organizational Climate> Training leads to im#roved #roduction and #roduct
/ualit% 5hich enhances financial incentives! This in turn increases the overall morale of the
organization!
C) To increase 1ealth and afet%> $ro#er training #revents industrial accidents!
F) $ersonal Gro5th> Training gives em#lo%ees a 5ider a5areness3 an enlarged s*ill base and
that leads to enhanced #ersonal gro5th!
te#s in Training $rocess>
?) .dentif%ing Training needs> - training #rogram is designed to assist in #roviding solutions for
s#ecific o#erational #roblems or to im#rove #erformance of a trainee!
Organizational determination and -nal%sis> -llocation of resources that relate to
organizational goal!
O#erational -nal%sis> Determination of a s#ecific em#lo%ee behaviour re/uired for a
#articular tas*!
Man -nal%sis> 2no5ledge3 attitude and s*ill one must #ossess for attainment of
organizational ob&ectives
B) Getting read% for the &ob> The trainer has to be #re#ared for the &ob! -nd also 5ho needs to
be trained - the ne5comer or the e6isting em#lo%ee or the su#ervisor% staff!
$re#aration of the learner>
$utting the learner at ease
tating the im#ortance and ingredients of the &ob
Creating interest
$lacing the learner as close to his normal 5or*ing #osition
+amiliarizing him 5ith the e/ui#ment3 materials and trade terms
D) $resentation of O#eration and 2no5ledge> The trainer should clearl% tell3 sho53 illustrate and
/uestion in order to conve% the ne5 *no5ledge and o#erations! The trainee should be
encouraged to as* /uestions in order to indicate that he reall% *no5s and understands the &ob!
C) $erformance Tr% out> The trainee is as*ed to go through the &ob several times! This graduall%
builds u# his s*ill3 s#eed and confidence!
F) +ollo5-u#> This evaluates the effectiveness of the entire training effort
TRAINING MET4ODS
Training methods can be broadl% classified as on-the-&ob training and off-the-&ob taining
) O!2$he2@o3 $*%!%!"
On the &ob training occurs 5hen 5or*ers #ic* u# s*ills 5hilst 5or*ing along side e6#erienced
5or*ers at their #lace of 5or*! +or e6am#le this could be the actual assembl% line or offices
5here the em#lo%ee 5or*s! "e5 5or*ers ma% sim#l% G1h&o)H or observe fello5 em#lo%ees
to begin 5ith and are often given instruction manuals or interactive training #rogrammes to 5or*
through!
3) O--2$he2@o3 $*%!%!"
This occurs 5hen 5or*ers are $:e! )8 -*o# $he%* p'.e o- )o*: to be trained! This ma%
ta*e #lace at training agenc% or local college3 although man% larger firms also have their o5n
training centres! Training can ta*e the form of lectures or self-stud% and can be used to develo#
more general s*ills and *no5ledge that can be used in a variet% of situations!
The various t%#es of off-the-&ob training are
'i) .nstructor #resentation> The trainer orall% #resents ne5 information to the trainees3 usuall%
through lecture! .nstructor #resentation ma% include classroom lecture3 seminar3 5or*sho#3 and
the li*e!
'ii) Grou# discussion> The trainer leads the grou# of trainees in discussing a to#ic!
'iii) Demonstration> The trainer sho5s the correct ste#s for com#leting a tas*3 or sho5s an
e6am#le of a correctl% com#leted tas*!
'iv) -ssigned reading> The trainer gives the trainees reading assignments that #rovide ne5
information!
'v) E6ercise> The trainer assigns #roblems to be solved either on #a#er or in real situations
related to the to#ic of the training activit%!
'vi) Case stud%> The trainer gives the trainees information about a situation and directs them to
come to a decision or solve a #roblem concerning the situation!
'vii) Role #la%> Trainees act out a real-life situation in an instructional setting!
'viii) +ield visit and stud% tour> Trainees are given the o##ortunit% to observe and interact 5ith
the #roblem being solved or s*ill being learned!
C A R EER S T A GES
:hat #eo#le 5ant from their careers also varies according to the stage of oneAs career!
:hat ma% have been im#ortant in an earl% stage ma% not be im#ortant in a later one! +our
distinct career stages have been identified> trial3 establishment8advancement3 mid-career3 and
late career! Each stage re#resents different career needs and interests of the individual
) T*%' 1$"e5 The trial stage begins 5ith an individualAs e6#loration of career-related matters
and ends usuall% at about age BF 5ith a commitment on the #art of the individual to a #articular
occu#ation! Kntil the decision is made to settle do5n3 the individual ma% tr% a number of &obs
and a number of organizations! Knfortunatel% for man% organizations3 this trial and e6#loration
stage results in high level of turnover among ne5 em#lo%ees! Em#lo%ees in this stage need
o##ortunities for self-e6#loration and a variet% of &ob activities or assignments!
3) E1$3'%1h#e!$ S$"e5 The establishment8advancement stage tends to occur bet5een ages
BF and CC! .n this stage3 the individual has made his or her career choice and is concerned 5ith
achievement3 #erformance3 and advancement! This stage is mar*ed b% high em#lo%ee
#roductivit% and career gro5th3 as the individual is motivated to succeed in the organization and
in his or her chosen occu#ation! O##ortunities for &ob challenge and use of s#ecial
com#etencies are desired in this stage! The em#lo%ee strives for creativit% and innovation
through ne5 &ob assignments! Em#lo%ees also need a certain degree of autonom% in this stage
so that the% can e6#erience feelings of individual achievement and #ersonal success!
.) M%& C*ee* C*%1%1 S03 S$"e5 The #eriod occurring bet5een the mid-thirties and mid-forties
during 5hich #eo#le often ma*e a ma&or reassessment of their #rogress relative to their original
career ambitions and goals!
&) M%!$e!!.e 1$"e> The mid-career stage3 5hich occurs roughl% bet5een the ages CF and
GC3 has also been referred to as the maintenance stage! This stage is t%#ified b% a continuation
of established #atterns of 5or* behavior! The #erson is no longer tr%ing to establish a #lace for
himself or herself in the organization3 but see*s to maintain his or her #osition! This stage is
vie5ed as a mid-career #lateau in 5hich little ne5 ground is bro*en! The individual in this stage
ma% need some technical u#dating in his or her field! The em#lo%ee should be encouraged to
develo# ne5 &ob s*ills in order to avoid earl% stagnation and decline!
e) L$e2.*ee* 1$"e5 .n this stage the career lessens in im#ortance and the em#lo%ee #lans for
retirement and see*s to develo# a sense of identit% outside the 5or* environment!
PE RF O R M A NC E A P P R A I S A L
$ e rf o rm ance a# # r a isal is the #rocess of obtaining3 anal%zing and recording information
about the relative 5orth of an em#lo%ee! The focus of the #erformance a##raisal is measuring
and im#roving the actual #erformance of the em#lo%ee and also the future #otential of the
em#lo%ee! .ts aim is to measure 5hat an em#lo%ee does!
Ob&ectives of $erformance a##raisal>
To revie5 the #erformance of the em#lo%ees over a given #eriod of time!
To &udge the ga# bet5een the actual and the desired #erformance!
To hel# the management in e6ercising organizational control!
1el#s to strengthen the relationshi# and communication bet5een su#erior subordinates
and management em#lo%ees!
To diagnose the strengths and 5ea*nesses of the individuals so as to identif% the training
and develo#ment needs of the future!
To #rovide feedbac* to the em#lo%ees regarding their #ast #erformance!
$rovide information to assist in the other #ersonal decisions in the organization!
$rovide clarit% of the e6#ectations and res#onsibilities of the functions to be #erformed b%
the em#lo%ees!
To &udge the effectiveness of the other human resource functions of the organization such
as recruitment3 selection3 training and develo#ment!
To reduce the grievances of the em#lo%ees!
P*o.e11 o- pe*-o*#!.e pp*%1'5
) E1$3'%1h%!" pe*-o*#!.e 1$!&*&15
The first ste# in the p*o.e11 o- pe*-o*#!.e pp*%1' is the setting u# of the
standards 5hich 5ill be used to as the base to com#are the actual #erformance of the
em#lo%ees! This ste# re/uires setting the criteria to &udge the #erformance of the em#lo%ees as
successful or unsuccessful and the degrees of their contribution to the organizational goals and
ob&ectives! The standards set should be clear3 easil% understandable and in measurable terms!
.n case the #erformance of the em#lo%ee cannot be measured3 great care should be ta*en to
describe the standards!
3) Co##0!%.$%!" $he 1$!&*&15
-fter establishing the standards3 it is the res#onsibilit% of the management to
communicate the standards to all the em#lo%ees of the organization!
The em#lo%ees should be informed and the standards should be clearl% e6#lained to the! This
5ill hel# them to understand their roles and to *no5 5hat e6actl% is e6#ected from them! The
standards should also be communicated to the a##raisers or the evaluators and if re/uired3 the
standards can also be modified at this stage itself according to the relevant feedbac* from the
em#lo%ees or the evaluators!
.) Me10*%!" $he .$0' pe*-o*#!.e5
The most difficult #art of the $ e rf o rm ance a# # ra isal # rocess is measuring the actual
#erformance of the em#lo%ees that is the 5or* done b% the em#lo%ees during the s#ecified
#eriod of time! .t is a continuous #rocess 5hich involves monitoring the #erformance throughout
the %ear! This stage re/uires the careful selection of the a##ro#riate techni/ues of
measurement3 ta*ing care that #ersonal bias does not affect the outcome of the #rocess and
#roviding assistance rather than interfering in an em#lo%ees 5or*!
&) Co#p*%!" $he .$0' )%$h $he &e1%*e& pe*-o*#!.e5
The actual #erformance is com#ared 5ith the desired or the standard #erformance! The
com#arison tells the deviations in the #erformance of the em#lo%ees from the standards set!
The result can sho5 the actual #erformance being more than the desired #erformance or3 the
actual #erformance being less than the desired #erformance de#icting a negative deviation in
the organizational #erformance! .t includes recalling3 evaluating and anal%sis of data related to
the em#lo%ees< #erformance!
e) D%1.011%!" *e10'$15
The *e10'$ o- $he pp*%1' is communicated and discussed 5ith the em#lo%ees on
one-to-one basis! The focus of this discussion is on communication and listening! The results3
the #roblems and the #ossible solutions are discussed 5ith the aim of #roblem solving and
reaching consensus! The feedbac* should be given 5ith a #ositive attitude as this can have an
effect on the em#lo%ees< future #erformance! The #ur#ose of the meeting should be to solve the
#roblems faced and motivate the em#lo%ees to #erform better!
-) De.%1%o! #:%!"5
The last ste# of the #rocess is to ta*e decisions 5hich can be ta*en either to im#rove the
#erformance of the em#lo%ees3 ta*e the re/uired corrective actions3 or the related 1R decisions
li*e re5ards3 #romotions3 demotions3 transfers etc!
DEFI NI TI ON
UNIT IV
DIRECTING
IA.$%($%!" &e'1 )%$h $he 1$ep1 #!"e* $:e1 $o "e$ 1032o*&%!$e1 !& o$he*1
$o .**8 o0$ p'!1I 2 Ne)#! !& W**e!.
Directing concerns the total manner in 5hich a manager influences the actions of subordinates!
.t is the final action of a manager in getting others to act after all #re#arations have been
com#leted!
Ch*.$e*%1$%.1
Elements of Management
Continuing +unction
$ervasive +unction
Creative +unction
,in*ing function
Management of 1uman +actor
S.ope o- D%*e.$%!"
.nitiates action
Ensures coordination
.m#roves efficienc%
+acilitates change
-ssists stabilit% and gro5th
E'e#e!$1 o- D%*e.$%!"
The three elements of directing are
Motivation
,eadershi#
Communication
CR E A T I V I T 7 A N D I NN O V A T I ON
Often used interchangeabl%3 the% should to be considered se#arate and distinct!
Creativit% can be described as #roblem identification and idea generation and innovation is
considered as idea selection3 develo#ment and commercialization!
Creativit% is creation of ne5 ideas and .nnovation is im#lementation of the ne5 ideas!
There cannot be innovation 5ithout creativit%! There can be creativit% 5ithout innovation but it
has no value!
te#s involved in creativit%
) P*ep*$%o!5 This is the first stage at 5hich the base for creativit% and innovation is definedH
the mind is #re#ared for subse/uent use in creative thin*ing! During #re#aration the individual is
encouraged to a##reciate the fact that ever% o##ortunit% #rovides situations that can educate
and e6#eriences from 5hich to learn!
The creativit% as#ect is *indled through a /uest to become more *no5ledgeable! This can be
done through reading about various to#ics and8or sub&ects and engaging in discussions 5ith
others! Ta*ing #art in brainstorming sessions in various fo ru m s l i*e #rofessional and trade
association seminars3 and ta*ing time to stud% other countries and cultures to identif% viable
o##ortunities is also #art of #re#aration! Of im#ortance is the need to cultivate a #ersonal abilit%
to listen and learn from others!
3) I!(e1$%"$%o!5 This stage of enhancing entre#reneurial creativit% and innovation involves the
business o5ner ta*ing time to stud% the #roblem at hand and 5hat its various com#onents are!
.) T*!1-o*#$%o!5 The information thus accumulated and ac/uired should then be sub&ected
to convergent and divergent thin*ing 5hich 5ill serve to highlight the inherent similarities and
differences! Convergent thin*ing 5ill hel# identif% as#ects that are similar and connected 5hile
divergent thin*ing 5ill highlight the differences! This t5in manner of thin*ing is of #articular
im#ortance in realizing creativit% and innovation for the follo5ing reasons>
One 5ill be able to s*im the details and see 5hat the bigger #icture is
the situation8#roblemAs com#onents can be reordered and in doing so ne5 #atterns can
be identified!
.t 5ill hel# visualize a number of a##roaches that can be used to simultaneousl% tac*le
the #roblem and the o##ortunit%!
OneAs decision-ma*ing abilities 5ill be bettered such that the urge to ma*e sna#
decisions 5ill be resisted!
&) I!.03$%o!5 -t this stage in the /uest for creativit% and innovation it is im#erative that the
subconscious reflect on the accumulated information3 i!e! through incubation3 and this can be
im#roved or augmented 5hen the entre#reneur>
Engages in an activit% com#letel% unrelated to the #roblem8o##ortunit% under scrutin%!
Ta*es time to da%dream i!e! letting the mind roam be%ond an% restrictions self-im#osed
or other5ise!
Rela6 and #la%
tud% the #roblem8o##ortunit% in a 5holl% different environment
e) I''0#%!$%o!5 This ha##ens during the incubation stage and 5ill often be s#ontaneous! The
realizations from the #ast stages combine at this instance to form a brea*through!
-) Ve*%-%.$%o!5 This is 5here the entre#reneur attem#ts to ascertain 5hether the creativit% of
thought and the action of innovation are trul% effective as antici#ated! .t ma% involve activities
li*e simulation3 #iloting3 #rotot%#e building3 test mar*eting3 and various e6#eriments! :hile the
tendenc% to ignore this stage and #lunge headlong 5ith the brea*through ma% be tem#ting3 the
transformation stage should ensure that the ne5 idea is #ut to the test!
M OTIV ATI ON AN D S ATI SF ACTI ON
MOTIVATION
MMotivationM is a ,atin 5ord3 meaning Mto moveM! 1uman motives are internalized goals 5ithin
individuals! Motivation ma% be defined as those forces that cause #eo#le to behave in certain
5a%s! Motivation encom#asses all those #ressures and influences that trigger3 channel3 and
sustain human behavior! Most successful managers have learned to understand the conce#t of
human motivation and are able to use that understanding to achieve higher standards of
subordinate 5or* #erformance!
-ccording to 2oontz and OADonnell3 MMotivation is a class of drives3 needs3 5ishes and similar
forcesM!
NATURE AND C4ARACTERISTICS OF MOTIVATION
$s%chologists generall% agree that all behavior is motivated3 and that #eo#le have reasons for
doing the things the% do or for behaving in the manner that the% do! Motivating is the 5or* a
manager #erforms to ins#ire3 encourage and im#el #eo#le to ta*e re/uired action!
The characteristics of motivation are given belo5>-
Mo$%($%o! %1 ! I!$e*!' Fee'%!"
Motivation is a #s%chological #henomenon 5hich generates in the mind of an individual the
feeling that he lac*s certain things and needs those things! Motivation is a force 5ithin an
individual that drives him to behave in a certain 5a%!
Mo$%($%o! %1 Re'$e& $o Nee&1
"eeds are deficiencies 5hich are created 5henever there is a #h%siological or #s%chological
imbalance! .n order to motivate a #erson3 5e have to understand his needs that call for
satisfaction!
Mo$%($%o! P*o&0.e1 Go'2D%*e.$e& +eh(%o0*
Goals are an%thing 5hich 5ill alleviate a need and reduce a drive! -n individualAs behavior is
directed to5ards a goal!
Mo$%($%o! .! 3e e%$he* Po1%$%(e o* Ne"$%(e
$ositive or incentive motivation is generall% based on re5ard! -ccording to +li##o - M#ositive
motivation is a #rocess of attem#ting to influence others to do %our 5ill through the #ossibilit% of
gain or re5ardM!
"egative or fear motivation is based on force and fear! +ear causes #ersons to act in a certain
5a% because the% are afraid of the conse/uences if the% donAt!
IMPORTANCE OF MOTIVATION
- managerAs #rimar% tas* is to motivate others to #erform the tas*s of the organization!
Therefore3 the manager must find the *e%s to get subordinates to come to 5or* regularl% and on
time3 to 5or* hard3 and to ma*e #ositive contributions to5ards the effective and efficient
achievement of organizational ob&ectives! Motivation is an effective instrument in the hands of a
manager for ins#iring the 5or* force and creating confidence in it! (% motivating the 5or* force3
management creates M5ill to 5or*M 5hich is necessar% for the achievement of organizational
goals! The various benefits of motivation are>-
Motivation is one of the im#ortant elements in the directing #rocess! (% motivating the
5or*ers3 a manager directs or guides the 5or*ersA actions in the desired direction for
accom#lishing the goals of the organization!
:or*ers 5ill tend to be as efficient as #ossible b% im#roving u#on their s*ills and *no5ledge
so that the% are able to contribute to the #rogress of the organization thereb% increasing
#roductivit%!
+or #erforming an% tas*s3 t5o things are necessar%! The% are> 'a) abilit% to 5or* and 'b)
5illingness to 5or*! :ithout 5illingness to 5or*3 abilit% to 5or* is of no use! The 5illingness
to 5or* can be created onl% b% motivation!
Organizational effectiveness becomes3 to some degree3 a /uestion of managementAs abilit%
to motivate its em#lo%ees3 to direct at least a reasonable effort to5ards the goals of the
organization!
Motivation contributes to good industrial relations in the organization! :hen the 5or*ers are
motivated3 contented and disci#lined3 the frictions bet5een the 5or*ers and the
management 5ill be reduced!
Motivation is the best remed% for resistance to changes! :hen changes are introduced in an
organization3 generall%3 there 5ill be resistance from the 5or*ers! (ut if the 5or*ers of an
organization are motivated3 the% 5ill acce#t3 introduce and im#lement the changes 5hole
heartil% and hel# to *ee# the organization on the right trac* of #rogress!
Motivation facilitates the ma6imum utilization of all factors of #roduction3 human3 #h%sical
and financial resources and thereb% contributes to higher #roduction!
Motivation #romotes a sense of belonging among the 5or*ers! The 5or*ers feel that the
enter#rise belongs to them and the interest of the enter#rise is their interests!
Man% organizations are no5 beginning to #a% increasing attention to develo#ing their
em#lo%ees as future resources u#on 5hich the% can dra5 as the% gro5 and develo#!
SATISFACTION
Em#lo%ee satisfaction '9ob satisfaction) is the terminolog% used to describe 5hether
em#lo%ees are ha##% and contented and fulfilling their desires and needs at 5or*! Man%
measures #ur#ort that em#lo%ee satisfaction is a factor in em#lo%ee motivation3 em#lo%ee goal
achievement3 and #ositive em#lo%ee morale in the 5or*#lace!
Em#lo%ee satisfaction3 5hile generall% a #ositive in %our organization3 can also be a do5ner if
mediocre em#lo%ees sta% because the% are satisfied 5ith %our 5or* environment!
+actors contributing to em#lo%ee satisfaction include treating em#lo%ees 5ith res#e c t 3 #roviding
regular e m # lo % ee r ec o g n it ion3 e m #o 5 e r ing e m # lo % ees3 offering above industr%-average benefits
and com#ensation3 #roviding em#lo%ee #er*s and com#an% activities3 and #ositive management
5ithin a success frame5or* of goals3 measurements3 and e6#ectations!
Em#lo%ee satisfaction is often measured b% anon%mous e m # lo % ee sa t is f a c t ion su r v e % s
administered #eriodicall% that gauge em#lo%ee satisfaction in areas such as>
management3
understanding of mission and vision3
em#o5erment3
team5or*3
communication3 and
Co5or*er interaction!
The facets of em#lo%ee satisfaction measured var% from com#an% to com#an%!
- second method used to measure em#lo%ee satisfaction is meeting 5ith small grou#s of
em#lo%ees and as*ing the same /uestions verball%! De#ending on the culture of the com#an%3
either method can contribute *no5ledge about em#lo%ee satisfaction to managers and
em#lo%ees!
<O+ DESIGN
.t is the #rocess of :or* arrangement 'or rearrangement) aimed at reducing or
overcoming &ob dissatisfaction and em#lo%ee alienation arising from re#etitive and
mechanistic tas*s! Through &ob design3 organizations tr% to raise #roductivit% levels
b% offering non-monetar% re5ards such as greater satisfaction from a sense of #ersonal
achievement in meeting the increased challenge and res#onsibilit% of oneAs 5or*!
A p p * o . h e 1 $ o @ o 3 & e 1 % " ! % !
. ' 0 & e 5
< o 3 E ! ' * " e # e ! $ 5 9 o b e n l a r g e m e n t c h a n g e s t h e & o b s t o i
n c l u d e m o r e a n d 8 o r d i f f e r e n t t a s * s ! 9 o b e n l a r g e m e n t s h o u l d a d d
i n t e r e s t t o t h e 5 o r * b u t m a % o r m a % n o t g i v e e m # l o % e e s m o r e r e s #
o n s i b i l i t % !
< o 3 R o $ $ % o ! 5 9 o b r o t a t i o n m o v e s e m # l o % e e s f r o m o n e t a s *
t o a n o t h e r ! . t d i s t r i b u t e s t h e g r o u # t a s * s a m o n g a n u m b e r o f e m # l
o % e e s !
< o 3 E ! * % . h # e ! $ 5 9 o b e n r i c h m e n t a l l o 5 s e m # l o % e e s t o a
s s u m e m o r e r e s # o n s i b i l i t % 3 a c c o u n t a b i l i t % 3 a n d i n d e # e n d e n c e
5 h e n l e a r n i n g n e 5 t a s * s o r t o a l l o 5 f o r g r e a t e r # a r t i c i # a t i o n a n d
n e 5 o # # o r t u n i t i e s !
T7PES OF MOTIVATION TEC4NI6UES
.f a manager 5ants to get 5or* done b% his em#lo%ees3 he ma% either hold out a #romise of a
re5ard '#ositive motivation) or he8she ma% install fear 'negative motivation)! (oth these t%#es
are 5idel% used b% managements!
) Po1%$%(e Mo$%($%o!5
This t%#e of motivation is generall% based on re5ard! - #ositive motivation involves the
#ossibilit% of increased motive satisfaction! -ccording to +li##o - M$ositive motivation is a
#rocess of attem#ting to influence others to do %our 5ill through the #ossibilit% of gain or
re5ardM! .ncentive motivation is the M#ullM mechanism! The recei#t of a5ards3 due recognition
and #raise for 5or*-5ell done definitel% lead to good team s#irit3 co-o#eration and a feeling of
ha##iness!
$ositive motivation include>-
$raise and credit for 5or* done
:ages and alaries
-##reciation
- sincere interest in subordinates as individuals
Delegation of authorit% and res#onsibilit%
3) Ne"$%(e Mo$%($%o!5
This t%#e of motivation is based on force and fear! +ear causes #ersons to act in a certain 5a%
because the% fear the conse/uences! "egative motivation involves the #ossibilit% of decreased
motive satisfaction! .t is a M#ushM mechanism! The im#osition of #unishment fre/uentl% results in
frustration among those #unished3 leading to the develo#ment of malada#tive behaviour! .t also
creates a hostile state of mind and an unfavourable attitude to the &ob! 1o5ever3 there is no
management 5hich has not used the negative motivation at some time or the other!
M O TI V A T I ON T4 EO R I ES
ome of the motivation theories are discussed belo5
) M.G*e"o*J1 Theo*8 = !& Theo*8 75
McGregor states that #eo#le inside the organization can be managed in t5o 5a%s! The
first is basicall% negative3 5hich falls under the categor% U and the other is basicall% #ositive3
5hich falls under the categor% L! -fter vie5ing the 5a% in 5hich the manager dealt 5ith
em#lo%ees3 McGregor concluded that a manager<s vie5 of the nature of human beings is based
on a certain grou#ing of assum#tions and that he or she tends to mold his or her behavior
to5ards subordinates according to these assum#tions!
Knder the assum#tions of theor% U >
Em#lo%ees inherentl% do not li*e 5or* and 5henever #ossible3 5ill attem#t to avoid it!
(ecause em#lo%ees disli*e 5or*3 the% have to be forced3 coerced or threatened 5ith
#unishment to achieve goals!
Em#lo%ees avoid res#onsibilities and do not 5or* fill formal directions are issued!
Most 5or*ers #lace a greater im#ortance on securit% over all other factors and dis#la%
little ambition!
.n contrast under the assum#tions of theor% L >
$h%sical and mental effort at 5or* is as natural as rest or #la%!
$eo#le do e6ercise self-control and self-direction and if the% are committed to those
goals!
-verage human beings are 5illing to ta*e res#onsibilit% and e6ercise imagination3
ingenuit% and creativit% in solving the #roblems of the organization!
That the 5a% the things are organized3 the average human being<s brain#o5er is onl%
#artl% used!
On anal%sis of the assum#tions it can be detected that theor% U assumes that lo5er-order
needs dominate individuals and theor% L assumes that higher-order needs dominate
individuals! -n organization that is run on Theor% U lines tends to be authoritarian in nature3 the
5ord 4authoritarian suggests such ideas as the 4#o5er to enforce obedience and the 4right to
command! .n contrast Theor% L organizations can be described as 4#artici#ative3 5here the
aims of the organization and of the individuals in it are integratedH individuals can achieve their
o5n goals best b% directing their efforts to5ards the success of the organization!
3) A3*h# M1'o)J1 GNee& 4%e**.h8 Theo*8H5
One of the most 5idel% mentioned theories of motivation is the hierarch% of needs theor%
#ut forth b% #s%chologist -braham Maslo5! Maslo5 sa5 human needs in the form of a
hierarch%3 ascending from the lo5est to the highest3 and he concluded that 5hen one set of
needs is satisfied3 this *ind of need ceases to be a motivator!
-s #er his theor% these needs are>
(%) Ph81%o'o"%.' !ee&15
These are im#ortant needs for sustaining the human life! +ood3 5ater3 5armth3 shelter3 slee#3
medicine and education are the basic #h%siological needs 5hich fall in the #rimar% list of need
satisfaction! Maslo5 5as of an o#inion that until these needs 5ere satisfied to a degree to
maintain life3 no other motivating factors can 5or*!
(%%) Se.0*%$8 o* S-e$8 !ee&15
These are the needs to be free of #h%sical danger and of the fear of losing a &ob3 #ro#ert%3 food
or shelter! .t also includes #rotection against an% emotional harm!
(%%%) So.%' !ee&15
ince #eo#le are social beings3 the% need to belong and be acce#ted b% others! $eo#le tr% to
satisf% their need for affection3 acce#tance and friendshi#!
(%() E1$ee# !ee&15
-ccording to Maslo53 once #eo#le begin to satisf% their need to belong3 the% tend to 5ant to be
held in esteem both b% themselves and b% others! This *ind of need #roduces such satisfaction
as #o5er3 #restige status and self-confidence! .t includes both internal esteem factors li*e self-
res#ect3 autonom% and achievements and e6ternal esteem factors such as states3 recognition
and attention!
(() Nee& -o* 1e'-2.$0'%,$%o!5
Maslo5 regards this as the highest need in his hierarch%! .t is the drive to become 5hat one is
ca#able of becomingH it includes gro5th3 achieving one<s #otential and self-fulfillment! .t is to
ma6imize one<s #otential and to accom#lish something!
-ll of the needs are structured into a hierarch% and onl% once a lo5er level of need has been
full% met3 5ould a 5or*er be motivated b% the o##ortunit% of having the ne6t need u# in the
hierarch% satisfied! +or e6am#le a #erson 5ho is d%ing of hunger 5ill be motivated to achieve a
basic 5age in order to bu% food before 5orr%ing about having a secure &ob contract or the
res#ect of others!
- business should therefore offer different incentives to 5or*ers in order to hel# them fulfill each
need in turn and #rogress u# the hierarch%! Managers should also recognize that 5or*ers are
not all motivated in the same 5a% and do not all move u# the hierarch% at the same #ace! The%
ma% therefore have to offer a slightl% different set of incentives from 5or*er to 5or*er!
.) F*e&e*%.: 4e*,3e*"J1 #o$%($%o!2h8"%e!e $heo*85
+rederic* has tried to modif% Maslo5<s need 1ierarch% theor%! 1is theor% is also *no5n
as t5o-factor theor% or 1%giene theor%! 1e stated that there are certain satisfiers and
dissatisfiers for em#lo%ees at 5or*! .ntrinsic factors are related to &ob satisfaction3 5hile e6trinsic
factors are associated 5ith dissatisfaction! 1e devised his theor% on the /uestion> 4:hat do
#eo#le 5ant from their &obsR 1e as*ed #eo#le to describe in detail3 such situations 5hen the%
felt e6ce#tionall% good or e6ce#tionall% bad! +rom the res#onses that he received3 he concluded
that o##osite of satisfaction is not dissatisfaction! Removing dissatisf%ing characteristics from a
&ob does not necessaril% ma*e the &ob satisf%ing! 1e states that #resence of certain factors in
the organization is natural and the #resence of the same does not lead to motivation! 1o5ever3
their non-#resence leads to de-motivation! .n similar manner there are certain factors3 the
absence of 5hich causes no dissatisfaction3 but their #resence has motivational im#act!
E6am#les of 1%giene factors are>
ecurit%3 status3 relationshi# 5ith subordinates3 #ersonal life3 salar%3 5or* conditions3
relationshi# 5ith su#ervisor and com#an% #olic% and administration!
E6am#les of Motivational factors are>
Gro5th #ros#ectus &ob advancement3 res#onsibilit%3 challenges3 recognition and achievements!
&) V%.$o* V*oo#J1 E?pe.$!.8 $heo*85
The most 5idel% acce#ted e6#lanations of motivation have been #ro#ounded b% Jictor
Jroom! 1is theor% is commonl% *no5n as e6#ectanc% theor%! The theor% argues that the
strength of a tendenc% to act in a s#ecific 5a% de#ends on the strength of an e6#ectation that
the act 5ill be follo5ed b% a given outcome and on the attractiveness of that outcome to the
individual to ma*e this sim#le3 e6#ectanc% theor% sa%s that an em#lo%ee can be motivated to
#erform better 5hen there is a belief that the better #erformance 5ill lead to good #erformance
a##raisal and that this shall result into realization of #ersonal goal in form of some re5ard!
Therefore an em#lo%ee is>
Motivation V Jalence 6 E6#ectanc%!
The theor% focuses on three things>
Efforts and #erformance relationshi#
$erformance and re5ard relationshi#
Re5ards and #ersonal goal relationshi#
e) C'8$o! A'&e*-e*J1 ERG Theo*85
-lderfer has tried to rebuild the hierarch% of needs of Maslo5 into another model named
ERG i!e! E6istence Relatedness Gro5th! -ccording to him there are D grou#s of core needs
as mentioned above! The e6istence grou# is concerned mainl% 5ith #roviding basic material
e6istence! The second grou# is the individuals need to maintain inter#ersonal relationshi# 5ith
other members in the grou#! The final grou# is the intrinsic desire to gro5 and develo#
#ersonall%! The ma&or conclusions of this theor% are >
.n an individual3 more than one need ma% be o#erative at the same time!
.f a higher need goes unsatisfied than the desire to satisf% a lo5er need intensifies!
.t also contains the frustration-regression dimension!
-) M.C'e''!&J1 Theo*8 o- Nee&15
David McClelland has develo#ed a theor% on three t%#es of motivating needs >
'i) "eed for $o5er
'ii) "eed for -ffiliation
'iii) "eed for -chievement
(asicall% #eo#le for high need for #o5er are inclined to5ards influence and control! The% li*e to
be at the center and are good orators! The% are demanding in nature3 forceful in manners and
ambitious in life! The% can be motivated to #erform if the% are given *e% #ositions or #o5er
#ositions!
.n the second categor% are the #eo#le 5ho are social in nature! The% tr% to affiliate themselves
5ith individuals and grou#s! The% are driven b% love and faith! The% li*e to build a friendl%
environment around themselves! ocial recognition and affiliation 5ith others #rovides them
motivation!
$eo#le in the third area are driven b% the challenge of success and the fear of failure! Their
need for achievement is moderate and the% set for themselves moderatel% difficult tas*s! The%
are anal%tical in nature and ta*e calculated ris*s! uch #eo#le are motivated to #erform 5hen
the% see at least some chances of success!
McClelland observed that 5ith the advancement in hierarch% the need for #o5er and
achievement increased rather than -ffiliation! 1e also observed that #eo#le 5ho 5ere at the
to#3 later ceased to be motivated b% this drives!
") S$.e8 A&#1J E;0%$8 Theo*85
-s #er the e/uit% theor% of 9! tace% -dams3 #eo#le are motivated b% their beliefs about
the re5ard structure as being fair or unfair3 relative to the in#uts! $eo#le have a tendenc% to use
sub&ective &udgment to balance the outcomes and in#uts in the relationshi# for com#arisons
bet5een different individuals! -ccordingl%>
.f #eo#le feel that the% are not e/uall% re5arded the% either reduce the /uantit% or /ualit% of
5or* or migrate to some other organization! 1o5ever3 if #eo#le #erceive that the% are re5arded
higher3 the% ma% be motivated to 5or* harder!
h) S:%!!e*J1 Re%!-o*.e#e!$ Theo*85
(!+! *inner3 5ho #ro#ounded the reinforcement theor%3 holds that b% designing the
environment #ro#erl%3 individuals can be motivated! .nstead of considering internal factors li*e
im#ressions3 feelings3 attitudes and other cognitive behavior3 individuals are directed b% 5hat
ha##ens in the environment e6ternal to them! *inner states that 5or* environment should be
made suitable to the individuals and that #unishment actuall% leads to frustration and de-
motivation! 1ence3 the onl% 5a% to motivate is to *ee# on ma*ing #ositive changes in the
e6ternal environment of the organization!
L E A D E R S 4 I P
De-%!%$%o!
,eadershi# is defined as influence3 the art or #rocess of influencing #eo#le so that the%
5ill strive 5illingl% and enthusiasticall% to5ard the achievement of grou# goals!
- ,eaders act to hel# a grou# attain ob&ectives through the ma6imum a##lication of its
ca#abilities!
- ,eaders must instill values 5hether it be concern for /ualit%3 honest% and
calculated ris* ta*ing or for em#lo%ees and customers!
.m#ortance of ,eadershi#
?! -id to authorit%
B! Motive #o5er to grou# efforts
D! (asis for co o#eration
C! .ntegration of +ormal and .nformal Organization!
L E A D E R S 4 I P S T 7 L ES
The leadershi# st%le 5e 5ill discuss here are>
a) -utocratic st%le
b) Democratic t%le
c) ,aissez +aire t%le
) A0$o.*$%. 1$8'e
Manager retains as much #o5er and decision-ma*ing authorit% as #ossible! The manager does
not consult em#lo%ees3 nor are the% allo5ed to give an% in#ut! Em#lo%ees are e6#ected to obe%
orders 5ithout receiving an% e6#lanations! The motivation environment is #roduced b% creating
a structured set of re5ards and #unishments!
-utocratic leadershi# is a classical leadershi# st%le 5ith the follo5ing characteristics>
Manager see*s to ma*e as man% decisions as #ossible
Manager see*s to have the most authorit% and control in decision ma*ing
Manager see*s to retain res#onsibilit% rather than utilize com#lete delegation
Consultation 5ith other colleagues in minimal and decision ma*ing becomes a solitar%
#rocess
Managers are less concerned 5ith investing their o5n leadershi# develo#ment3 and #refer
to sim#l% 5or* on the tas* at hand!
-dvantages
Reduced stress due to increased control
- more #roductive grou# ;5hile the leader is 5atching<
.m#roved logistics of o#erations
+aster decision ma*ing
Disadvantages
hort-termistic a##roach to management!
Manager #erceived as having #oor leadershi# s*ills
.ncreased 5or*load for the manager
$eo#le disli*e being ordered around
Teams become de#endent u#on their leader
3) De#o.*$%. S$8'e
Democratic ,eadershi# is the leadershi# st%le that #romotes the sharing of res#onsibilit%3
the e6ercise of delegation and continual consultation!
The st%le has the follo5ing characteristics>
Manager see*s consultation on all ma&or issues and decisions!
Manager effectivel% delegate tas*s to subordinates and give them full control and
res#onsibilit% for those tas*s!
Manager 5elcomes feedbac* on the results of intiatives and the 5or* environment!
Manager encourages others to become leaders and be involved in leadershi# develo#ment!
-dvantages
$ositive 5or* environment
uccessful initiatives
Creative thin*ing
Reduction of friction and office #olitics
Reduced em#lo%ee turnover
Disadvantages
Ta*es long time to ta*e decisions
Danger of #seudo #artici#ation
,i*e the other st%les3 the democratic st%le is not al5a%s a##ro#riate! .t is most successful
5hen used 5ith highl% s*illed or e6#erienced em#lo%ees or 5hen im#lementing o#erational
changes or resolving individual or grou# #roblems!
.) L%11e,2F%*e S$8'e
This +rench #hrase means 4leave it be and is used to describe a leader 5ho leaves
his8her colleagues to get on 5ith their 5or*! The st%le is largel% a Mhands offM vie5 that tends to
minimize the amount of direction and face time re/uired!
-dvantages
"o 5or* for the leader
+rustration ma% force others into leadershi# roles
-llo5s the visionar% 5or*er the o##ortunit% to do 5hat the% 5ant3 free from interference
Em#o5ers the grou#
Disadvantages
.t ma*es em#lo%ees feel insecure at the unavailabilit% of a manager!
The manager cannot #rovide regular feedbac* to let em#lo%ees *no5 ho5 5ell the% are
doing!
Managers are unable to than* em#lo%ees for their good 5or*!
The manager doesn<t understand his or her res#onsibilities and is ho#ing the em#lo%ees
can cover for him or her!
L E A D E R S 4 I P T4 EO R I ES
The various leadershi# theories are
) G*e$ M! Theo*85
A110#p$%o!1
,eaders are born and not made!
Great leaders 5ill arise 5hen there is a great need!
De1.*%p$%o!
Earl% research on leadershi# 5as based on the stud% of #eo#le 5ho 5ere alread% great leaders!
These #eo#le 5ere often from the aristocrac%3 as fe5 from lo5er classes had the o##ortunit% to
lead! This contributed to the notion that leadershi# had something to do 5ith breeding!
The idea of the Great Man also stra%ed into the m%thic domain3 5ith notions that in times of
need3 a Great Man 5ould arise3 almost b% magic! This 5as eas% to verif%3 b% #ointing to #eo#le
such as Eisenho5er and Churchill3 let alone those further bac* along the timeline3 even to
9esus3 Moses3 Mohammed and the (uddah!
D%1.011%o!
Gender issues 5ere not on the table 5hen the AGreat ManA theor% 5as #ro#osed! Most leaders
5ere male and the thought of a Great :oman 5as generall% in areas other than leadershi#!
Most researchers 5ere also male3 and concerns about androcentric bias 5ere a long 5a% from
being realized!
3) T*%$ Theo*85
A110#p$%o!1
$eo#le are born 5ith inherited traits!
ome traits are #articularl% suited to leadershi#!
$eo#le 5ho ma*e good leaders have the right 'or sufficient) combination of traits!
De1.*%p$%o!
Earl% research on leadershi# 5as based on the #s%chological focus of the da%3 5hich 5as of
#eo#le having inherited characteristics or traits! -ttention 5as thus #ut on discovering these
traits3 often b% stud%ing successful leaders3 but 5ith the underl%ing assum#tion that if other
#eo#le could also be found 5ith these traits3 then the%3 too3 could also become great leaders!
McCall and ,ombardo '?@ID) researched both success and failure identified four #rimar% traits
b% 5hich leaders could succeed or AderailA>
Emotional stabilit% and com#osure> Calm3 confident and #redictable3 #articularl% 5hen under
stress!
-dmitting error> O5ning u# to mista*es3 rather than #utting energ% into covering u#!
Good inter#ersonal s*ills> able to communicate and #ersuade others 5ithout resort to negative
or coercive tactics!
.ntellectual breadth> -ble to understand a 5ide range of areas3 rather than having a narro5 'and
narro5-minded) area of e6#ertise!
.) +eh(%o*' Theo*85
A110#p$%o!1
,eaders can be made3 rather than are born!
uccessful leadershi# is based in definable3 learnable behavior!
De1.*%p$%o!
(ehavioral theories of leadershi# do not see* inborn traits or ca#abilities! Rather3 the% loo* at
5hat leaders actuall% do!
.f success can be defined in terms of describable actions3 then it should be relativel% eas% for
other #eo#le to act in the same 5a%! This is easier to teach and learn then to ado#t the more
e#hemeral AtraitsA or Aca#abilitiesA!
&) P*$%.%p$%(e Le&e*1h%p5
A110#p$%o!1
.nvolvement in decision-ma*ing im#roves the understanding of the issues involved b%
those 5ho must carr% out the decisions!
$eo#le are more committed to actions 5here the% have involved in the relevant decision-
ma*ing!
$eo#le are less com#etitive and more collaborative 5hen the% are 5or*ing on &oint
goals!
:hen #eo#le ma*e decisions together3 the social commitment to one another is greater
and thus increases their commitment to the decision!
everal #eo#le deciding together ma*e better decisions than one #erson alone!
De1.*%p$%o!
- $artici#ative ,eader3 rather than ta*ing autocratic decisions3 see*s to involve other #eo#le in
the #rocess3 #ossibl% including subordinates3 #eers3 su#eriors and other sta*eholders! Often3
ho5ever3 as it is 5ithin the managersA 5him to give or den% control to his or her subordinates3
most #artici#ative activit% is 5ithin the immediate team! The /uestion of ho5 much influence
others are given thus ma% var% on the managerAs #references and beliefs3 and a 5hole
s#ectrum of #artici#ation is #ossible
e) S%$0$%o!' Le&e*1h%p5
A110#p$%o!1
The best action of the leader de#ends on a range of situational factors!
De1.*%p$%o!
:hen a decision is needed3 an effective leader does not &ust fall into a single #referred st%le! .n
#ractice3 as the% sa%3 things are not that sim#le!
+actors that affect situational decisions include motivation and ca#abilit% of follo5ers! This3 in
turn3 is affected b% factors 5ithin the #articular situation! The relationshi# bet5een follo5ers and
the leader ma% be another factor that affects leader behavior as much as it does follo5er
behavior!
The leadersA #erce#tion of the follo5er and the situation 5ill affect 5hat the% do rather than the
truth of the situation! The leaderAs #erce#tion of themselves and other factors such as stress
and mood 5ill also modif% the leadersA behavior!
-) Co!$%!"e!.8 Theo*85
A110#p$%o!1
The leaderAs abilit% to lead is contingent u#on various situational factors3 including the
leaderAs #referred st%le3 the ca#abilities and behaviors of follo5ers and also various
other situational factors!
De1.*%p$%o!
Contingenc% theories are a class of behavioral theor% that contend that there is no one best 5a%
of leading and that a leadershi# st%le that is effective in some situations ma% not be successful
in others!
-n effect of this is that leaders 5ho are ver% effective at one #lace and time ma% become
unsuccessful either 5hen trans#lanted to another situation or 5hen the factors around them
change!
Contingenc% theor% is similar to situational theor% in that there is an assum#tion of no sim#le
one right 5a%! The main difference is that situational theor% tends to focus more on the
behaviors that the leader should ado#t3 given situational factors 'often about follo5er behavior)3
5hereas contingenc% theor% ta*es a broader vie5 that includes contingent factors about leader
ca#abilit% and other variables 5ithin the situation!
") T*!1.$%o!' Le&e*1h%p5
A110#p$%o!1
$eo#le are motivated b% re5ard and #unishment!
ocial s%stems 5or* best 5ith a clear chain of command!
:hen #eo#le have agreed to do a &ob3 a #art of the deal is that the% cede all authorit% to
their manager!
The #rime #ur#ose of a subordinate is to do 5hat their manager tells them to do!
De1.*%p$%o!
The transactional leader 5or*s through creating clear structures 5hereb% it is clear 5hat is
re/uired of their subordinates3 and the re5ards that the% get for follo5ing orders! $unishments
are not al5a%s mentioned3 but the% are also 5ell-understood and formal s%stems of disci#line
are usuall% in #lace!
The earl% stage of Transactional ,eadershi# is in negotiating the contract 5hereb% the
subordinate is given a salar% and other benefits3 and the com#an% 'and b% im#lication the
subordinateAs manager) gets authorit% over the subordinate!
:hen the Transactional ,eader allocates 5or* to a subordinate3 the% are considered to be full%
res#onsible for it3 5hether or not the% have the resources or ca#abilit% to carr% it out! :hen
things go 5rong3 then the subordinate is considered to be #ersonall% at fault3 and is #unished for
their failure '&ust as the% are re5arded for succeeding)!
h)T*!1-o*#$%o!' Le&e*1h%p5
A110#p$%o!1
$eo#le 5ill follo5 a #erson 5ho ins#ires them!
- #erson 5ith vision and #assion can achieve great things!
The 5a% to get things done is b% in&ecting enthusiasm and energ%!
De1.*%p$%o!
:or*ing for a Transformational ,eader can be a 5onderful and u#lifting e6#erience! The% #ut
#assion and energ% into ever%thing! The% care about %ou and 5ant %ou to succeed!
Transformational ,eaders are often charismatic3 but are not as narcissistic as #ure Charismatic
,eaders3 5ho succeed through a belief in themselves rather than a belief in others!
One of the tra#s of Transformational ,eadershi# is that #assion and confidence can easil% be
mista*en for truth and realit%!
Transformational ,eaders3 b% definition3 see* to transform! :hen the organization does not
need transforming and #eo#le are ha##% as the% are3 then such a leader 5ill be frustrated! ,i*e
5artime leaders3 ho5ever3 given the right situation the% come into their o5n and can be
#ersonall% res#onsible for saving entire com#anies!
C O M M U N IC A T I ON
Communication is the e6change of messages bet5een #eo#le for the #ur#ose of
achieving common meanings! Knless common meanings are shared3 managers find it
e6tremel% difficult to influence others! :henever grou# of #eo#le interact3 communication ta*es
#lace! Communication is the e6change of information using a shared set of s%mbols! .t is the
#rocess that lin*s grou# members and enables them to coordinate their activities! Therefore3
5hen managers foster effective communication3 the% strengthen the
connections bet5een em#lo%ees and build coo#eration! Communication also functions to build
and reinforce interde#endence bet5een various #arts of the organization! -s a lin*ing
mechanism among the different organizational subs%stems3 communication is a central feature
of the structure of grou#s and organizations! .t hel#s to coordinate tas*s and activities 5ithin
and bet5een organizations!
DEFINITION
-ccording to 2oontz and OADonnell3 MCommunication3 is an intercourse b% 5ords3 letters
s%mbols or messages3 and is a 5a% that the organization members shares meaning and
understanding 5ith anotherM!
T4E COMMUNICATION PROCESS
Communication is im#ortant in building and sustaining human relationshi#s at 5or*!
Communication can be thought of as a #rocess or flo5! (efore communication can ta*e #lace3 a
#ur#ose3 e6#ressed as a message to be conve%ed is needed! .t #asses bet5een the sender and
the receiver! The result is transference of meaning from one #erson to another!
The figure belo5 de#icts the communication #rocess! This model is made u# of seven #arts>
'?) ource3 'B) Encoding3 'D) Message3 'C) Channel3 'F) Decoding3 'G) Receiver3 and 'O)
+eedbac*!
) So0*.e5
The source initiates a message! This is the origin of the communication and can be an
individual3 grou# or inanimate ob&ect! The effectiveness of a communication de#ends to a
considerable degree on the characteristics of the source! The #erson 5ho initiates the
communication #rocess is *no5n as sender3 source or communicator! .n an organization3 the
sender 5ill be a #erson 5ho has a need or desire to send a message to others! The sender has
some information 5hich he 5ants to communicate to some other #erson to achieve some
#ur#ose! (% initiating the message3 the sender attem#ts to achieve understanding and change
in the behaviour of the receiver!
3) E!.o&%!"5
Once the source has decided 5hat message to communicate3 the content of the message must
be #ut in a form the receiver can understand! -s the bac*ground for encoding information3 the
sender uses his or her o5n frame of reference! .t includes the individualAs vie5 of the
organization or situation as a function of #ersonal education3 inter#ersonal relationshi#s3
attitudes3 *no5ledge and e6#erience! Three conditions are necessar% for successful encoding
the message!
S:%''5 uccessful communicating de#ends on the s*ill %ou #osses! :ithout the re/uisite
s*ills3 the message of the communicator 5ill not reach the re/uisite s*illsH the message
of the communicator 5ill not reach the receiver in the desired form! OneAs total
communicative success includes s#ea*ing3 reading3 listening and reasoning s*ills!
A$$%$0&e15 Our attitudes influence our behaviour! :e hold #redis#osed ideas on a
number of to#ics and our communications are affected b% these attitudes!
B!o)'e&"e5 :e cannot communicate 5hat 5e donAt *no5! The amount of *no5ledge
the source holds about his or her sub&ect 5ill affect the message he or she see*s to
transfer!
.) The Me11"e5
The message is the actual #h%sical #roduct from the source encoding! The message contains
the thoughts and feelings that the communicator intends to evo*e in the receiver! The message
has t5o #rimar% com#onents>-
The Co!$e!$5 The thought or conce#tual com#onent of the message is contained in the
5ords3 ideas3 s%mbols and conce#ts chosen to rela% the message!
The A--e.$5 The feeling or emotional com#onent of the message is contained in the
intensit%3 force3 demeanour 'conduct or behaviour)3 and sometimes the gestures of the
communicator!
&) The Ch!!e'5
The actual means b% 5hich the message is transmitted to the receiver 'Jisual3 auditor%3 5ritten
or some combination of these three) is called the channel! The channel is the medium through
5hich the message travels! The channel is the observable carrier of the message!
Communication in 5hich the senderAs voice is used as the channel is called oral communication!
:hen the channel involves 5ritten language3 the sender is using 5ritten communication! The
senderAs choice of a channel conve%s additional information be%ond that contained in the
message itself! +or e6am#le3 documenting an em#lo%eeAs #oor #erformance in 5riting conve%s
that the manager has ta*en the #roblem seriousl%!
-) De.o&%!"5
Decoding means inter#reting 5hat the message means! The e6tent to 5hich the decoding b%
the receiver de#ends heavil% on the individual characteristics of the sender and receiver! The
greater the similarit% in the bac*ground or status factors of the communicators3 the greater the
#robabilit% that a message 5ill be #erceived accuratel%! Most messages can be decoded in
more than one 5a%! Receiving and decoding a message are a t%#e of #erce#tion! The decoding
#rocess is therefore sub&ect to the #erce#tion biases!
") The Re.e%(e*5
The receiver is the ob&ect to 5hom the message is directed! Receiving the message means one
or more of the receiverAs senses register the message - for e6am#le3 hearing the sound of a
su##lierAs voice over the tele#hone or seeing the boss give a thumbs-u# signal! ,i*e the sender3
the receiver is sub&ect to man% influences that can affect the understanding of the message!
Most im#ortant3 the receiver 5ill #erceive a communication in a manner that is consistent 5ith
#revious e6#eriences! Communications that are not consistent 5ith e6#ectations is li*el% to be
re&ected!
h) Fee&3.:5
The final lin* in the communication #rocess is a feedbac* loo#! +eedbac*3 in effect3 is
communication travelling in the o##osite direction! .f the sender #a%s attention to the feedbac*
and inter#rets it accuratel%3 the feedbac* can hel# the sender learn 5hether the original
communication 5as decoded accuratel%! :ithout feedbac*3 one-5a% communication occurs
bet5een managers and their em#lo%ees! +aced 5ith differences in their #o5er3 lac* of time3 and
a desire to save face b% not #assing on negative information3 em#lo%ees ma% be discouraged
from #roviding the necessar% feedbac* to their managers!
G0%&e'%!e1 -o* e--e.$%(e Co##0!%.$%o!
'i) enders of message must clarif% in their minds 5hat the% 5ant to communicate! $ur#ose of
the message and ma*ing a #lan to achieve the intended end must be clarified!
'ii) Encoding and decoding be done 5ith s%mbols that are familiar to the sender and the
receiver of the message!
'iii) +or the #lanning of the communication3 other #eo#le should be consulted and encouraged
to #artici#ate!
'iv) .t is im#ortant to consider the needs of the receivers of the information! :henever
a##ro#riate3 one should communicate something that is of value to them3 in the short run as
5ell as in the more distant future!
'v) .n communication3 tone of voice3 the choice of language and the congruenc% bet5een 5hat
is said and ho5 it is said influence the reactions of the receiver of the message!
'vi) Communication is com#lete onl% 5hen the message is understood b% the receiver! -nd one
never *no5s 5hether communication is understood unless the sender gets a feedbac*!
'vii)The function of communication is more than transmitting the information! .t also deals 5ith
emotions that are ver% im#ortant in inter#ersonal relationshi#s bet5een su#eriors3
subordinates and colleagues in an organization!
'viii) Effective communicating is the res#onsibilit% not onl% of the sender but also of the
receiver of the information!
+ A RR I E R S T O E F F E CT I VE C O M M U N IC A T I ON
(arriers to communication are factors that bloc* or significantl% distort successful
communication! Effective managerial communication s*ills hel#s overcome some3 but not all3
barriers to communication in organizations! The more #rominent barriers to effective
communication 5hich ever% manager should be a5are of is given belo5>
) F%'$e*%!"5
+iltering refers to a sender mani#ulating information so it 5ill be seen more favourabl% b%
the receiver! The ma&or determinant of filtering is the number of levels in an organizationAs
structure! The more vertical levels in the organizationAs hierarch%3 the more o##ortunities for
filtering! ometimes the information is filtered b% the sender himself! .f the sender is hiding some
meaning and disclosing in such a fashion as a##ealing to the receiver3 then he is MfilteringM the
message deliberatel%! - manager in the #rocess of altering communication in his favour is
attem#ting to filter the information!
3) Se'e.$%(e Pe*.ep$%o!5
elective #erce#tion means seeing 5hat one 5ants to see! The receiver3 in the
communication #rocess3 generall% resorts to selective #erce#tion i!e!3 he selectivel% #erceives
the message based on the organizational re/uirements3 the needs and characteristics3
bac*ground of the em#lo%ees etc! $erce#tual distortion is one of the distressing barriers to the
effective communication! $eo#le inter#ret 5hat the% see and call it a realit%! .n our regular
activities3 5e tend to see those things that #lease us and to re&ect or ignore un#leasant things!
elective #erce#tion allo5s us to *ee# out dissonance 'the e6istence of conflicting elements in
our #erce#tual set) at a tolerable level! .f 5e encounter something that does not fit out current
image of realit%3 5e structure the situation to minimize our dissonance! Thus3 5e manage to
overloo* man% stimuli from the environment that do not fit into out current #erce#tion of the
5orld! This #rocess has significant im#lications for managerial activities! +or e6am#le3 the
em#lo%ment intervie5er 5ho e6#ects a female &ob a##licant to #ut her famil% ahead of her
career is li*el% to see that in female a##licants3 regardless of 5hether the a##licants feel that
5a% or not!
.) E#o$%o!15
1o5 the receiver feels at the time of recei#t of information influences effectivel% ho5 he
inter#rets the information! +or e6am#le3 if the receiver feels that the communicator is in a &ovial
mood3 he inter#rets that the information being sent b% the communicator to be good and
interesting! E6treme emotions and &ubilation or de#ression are /uite li*el% to hinder the
effectiveness of communication! - #ersonAs abilit% to encode a message can become im#aired
5hen the #erson is feeling strong emotions! +or e6am#le3 5hen %ou are angr%3 it is harder to
consider the other #ersonAs vie5#oint and to choose 5ords carefull%! The angrier %ou are3 the
harder this tas* becomes! E6treme emotions such as &ubilation or de#ression - are most li*el%
to hinder effective communication! .n such instances3 5e are most #rone to disregard our
rational and ob&ective thin*ing #rocesses and substitute emotional &udgments!
&) L!"0"e5
Communicated message must be understandable to the receiver! :ords mean different
things to different #eo#le! ,anguage reflects not onl% the #ersonalit% of the individual but also
the culture of societ% in 5hich the individual is living! .n organizations3 #eo#le from different
regions3 different bac*grounds3 and s#ea* different languages! $eo#le 5ill have different
academic bac*grounds3 different intellectual facilities3 and hence the &argon the% use varies!
Often3 communication ga# arises because the language the sender is using ma% be
incom#rehensible3 vague and indigestible! ,anguage is a central element in communication! .t
ma% #ose a barrier if its use obscures meaning and distorts intent! :ords mean different things
to different #eo#le! -ge3 education and cultural bac*ground are three of the more obvious
variables that influence the language a #erson uses and the definitions he or she gives to
5ords! Therefore3 use sim#le3 direct3 declarative language!
#ea* in brief sentences and use terms or 5ords %ou have heard from %ou audience! -s much
as #ossible3 s#ea* in the language of the listener! Do not use &argon or technical language
e6ce#t 5ith those 5ho clearl% understand it!
e) S$e*eo$8p%!"5
tereot%#ing is the a##lication of selective #erce#tion! :hen 5e have #reconceived
ideas about other #eo#le and refuse to discriminate bet5een individual behaviours3 5e are
a##l%ing selective #erce#tion to our relationshi# 5ith other #eo#le! tereot%#ing is a barrier to
communications because those 5ho stereot%#e others use selective #erce#tion in their
communication and tend to hear onl% those things that confirm their stereot%#ed images!
Conse/uentl%3 stereot%#es become more dee#l% ingrained as 5e find more MevidenceM to
confirm our original o#inion! tereot%#ing has a convenience function in our inter#ersonal
relations! ince #eo#le are all different3 ideall% 5e should react and interact 5ith each #erson
differentl%! To do this3 ho5ever3 re/uires considerable #s%chological effort! .t is much easier to
categorize 'stereot%#e) #eo#le so that 5e can interact 5ith them as members of a #articular
categor%! ince the number of categories is small3 5e end u# treating man% #eo#le the same
even though the% are /uite different! Our communications3 then3 ma% be directed at an
individual as a member of a categor% at the sacrifice of the more effective communication on a
#ersonal level!
-) S$$01 D%--e*e!.e5
The organizational hierarch% #ose another barrier to communication 5ithin organization3
es#eciall% 5hen the communication is bet5een em#lo%ee and manager! This is so because the
em#lo%ee is de#endent on the manager as the #rimar% lin* to the organization and hence more
li*el% to distort u#5ard communication than either horizontal or do5n5ard communication!
Effective su#ervisor% s*ills ma*e the su#ervisor more a##roachable and hel# reduce the ris* of
#roblems related to status differences! .n addition3 5hen em#lo%ees feel secure3 the% are more
li*el% to be straightfor5ard in u#5ard communication!
") U1e o- Co!-'%.$%!" S%"!'15
- sender is using conflicting signals 5hen he or she sends inconsistent messages! -
vertical message might conflict 5ith a nonverbal one! +or e6am#le3 if a manager sa%s to his
em#lo%ees3 M.f %ou have a #roblem3 &ust come to me! M% door is al5a%s o#enM3 but he loo*s
anno%ed 5henever an em#lo%ee *noc*s on his doorM! Then 5e sa% the manager is sending
conflicting messages! :hen signals conflict3 the receivers of the message have to decide 5hich3
if an%3 to believe!
h) Re'0.$!.e $o Co##0!%.$e5
+or a variet% of reasons3 managers are sometimes reluctant to transmit messages! The reasons
could be>-
The% ma% doubt their abilit% to do so!
The% ma% disli*e or be 5ear% of 5riting or tal*ing to others!
The% ma% hesitate to deliver bad ne5s because the% do not 5ant to face a negative
reaction!
:hen someone gives in to these feelings3 the% become a barrier to effective communications!
%) P*o@e.$%o!5
$ro&ection has t5o meanings!
'a) $ro&ecting oneAs o5n motives into others behavior! +or e6am#le3 managers 5ho are
motivated b% mone% ma% assume their subordinates are also motivated b% it! .f the
subordinateAs #rime motive is something other than mone%3 serious #roblems ma% arise!
'b) The use of defense mechanism to avoid #lacing blame on oneself! -s a defense
mechanism3 the #ro&ection #henomenon o#erates to #rotect the ego from un#leasant
communications! +re/uentl%3 individuals 5ho have a #articular fault 5ill see the same fault in
others3 ma*ing their o5n fault seem not so serious!
@) The I4'o E--e.$I5
The term Mhalo effectM refers to the #rocess of forming o#inions based on one element from a
grou# of elements and generalizing that #erce#tion to all other elements! +or e6am#le3 in an
organization3 a good attendance record ma% cause #ositive &udgments about #roductivit%3
attitude3 or /ualit% of 5or*! .n #erformance evaluation s%stem3 the halo effect refers to the
#ractice of singling out one trait of an em#lo%ee 'either good or bad) and using this as a basis
for &udgments of the total em#lo%ee!
C4ANNELS OF COMMUNICATION
) Fo*#' Co##0!%.$%o!
+ormal communication follo5s the route formall% laid do5n in the organization structure!
There are three directions in 5hich communications flo5> do5n5ard3 u#5ard and laterall%
'horizontal)!
%) Do)!)*& Co##0!%.$%o!
Do5n5ard communication involves a message travelling to one or more receivers at the lo5er
level in the hierarch%! The message fre/uentl% involves directions or #erformance feedbac*!
The do5n5ard flo5 of communication generall% corres#onds to the formal organizational
communications s%stem3 5hich is usuall% s%non%mous 5ith the chain of command or line of
authorit%! This s%stem has received a great deal of attention from both managers and behavioral
scientists since it is crucial to organizational functioning!
%%) Up)*& Co##0!%.$%o!
.n u#5ard communication3 the message is directed to5ard a higher level in the hierarch%! .t is
often ta*es the form of #rogress re#orts or information about successes and failures of the
individuals or 5or* grou#s re#orting to the receiver of the message! ometimes em#lo%ees also
send suggestions or com#laints u#5ard through the organizationAs hierarch%!
The u#5ard flo5 of communication involves t5o distinct manager-subordinate activities in
addition to feedbac*>
The #artici#ation b% em#lo%ees in formal organizational decisions!
Em#lo%ee a##eal is a result against formal organization decisions! The em#lo%ee a##eal is
a result of the industrial democrac% conce#t that #rovides for t5o-5a% communication in
areas of disagreement!
%%%) 4o*%,o!$' Co##0!%.$%o!
:hen ta*es #lace among members of the same 5or* grou#3 among members of 5or* grou#s at
the same level3 among managers at the same level or among an% horizontall% e/uivalent
#ersonnel3 5e describe it as lateral communications! .n lateral communication3 the sender and
receiver's) are at the same level in the hierarch%! +ormal communications that travel laterall%
involve em#lo%ees engaged in carr%ing out the same or related tas*s!
The messages might concern advice3 #roblem solving3 or coordination of activities!
3) I!-o*#' Co##0!%.$%o! o* G*pe(%!e
.nformal communication3 generall% associated 5ith inter#ersonal communication3 5as #rimaril%
seen as a #otential hindrance to effective organizational #erformance! This is no longer the
case! .nformal communication has become more im#ortant to ensuring the effective conduct of
5or* in modern organizations!
$robabl% the most common term used for the informal communication in the 5or*#lace is
4gra#evine and this communication that is sent through the organizational gra#evine is often
considered gossi# or rumor! :hile gra#evine communication can s#read information /uic*l%
and can easil% cross established organizational boundaries3 the information it carries can be
changed through the deletion or e6aggeration crucial details thus causing the information
inaccurate even if it<s based on truth!
The use of the organizational gra#evine as an informal communication channel often results
5hen em#lo%ees feel threatened3 vulnerable3 or 5hen the organization is e6#eriencing change
and 5hen communication from management is restricted and not forthcoming!
O R G A N I Z A T I O N A L CULTUR E
O*"!%,$%o!' .0'$0*e is an idea in the field of o r gan iz a t ional s t ud ies and m an a g e m e n t
5hich describes the #s%cholog%3 attitudes3 e6#eriences3 beliefs and values '#ersonal and
cultural values) of an organization! .t has been defined as Mthe s#ecific collection of values and
norms that are shared b% #eo#le and grou#s in an organization and that control the 5a% the%
interact 5ith each other and 5ith s t a * eho lde r s o utside the organization!M
E L E M E NT S OF O R G A N I Z A T I O N A L CULT U R E
9ohnson and choles described a cultural 5eb3 identif%ing a number of elements that
can be used to describe or influence Organizational Culture>
The si6 elements are>
a) tories> The #ast events and #eo#le tal*ed about inside and outside the com#an%! :ho
and 5hat the com#an% chooses to immortalize sa%s a great deal about 5hat it values3
and #erceives as great behavior!
b) Rituals and Routines> The dail% behavior and actions of #eo#le that signal acce#table
behavior! This determines 5hat is e6#ected to ha##en in given situations3 and 5hat is
valued b% management!
c) %mbols> The visual re#resentations of the com#an% including logos3 ho5 #lush the
offices are3 and the formal or informal dress codes!
d) Organizational tructure> This includes both the structure defined b% the organization
chart3 and the un5ritten lines of #o5er and influence that indicate 5hose contributions
are most valued!
e) Control %stems> The 5a%s that the organization is controlled! These include financial
s%stems3 /ualit% s%stems3 and re5ards 'including the 5a% the% are measured and
distributed 5ithin the organization!)
f) $o5er tructures> The #oc*ets of real #o5er in the com#an%! This ma% involve one or
t5o *e% senior e6ecutives3 a 5hole grou# of e6ecutives3 or even a de#artment! The *e%
is that these #eo#le have the greatest amount of influence on decisions3 o#erations3 and
strategic direction!
T7PES OF ORGANIZATIONAL CULTURE
Deal and 2enned% argue organizational culture is based on based on t5o elements>
?! Fee&3.: Spee&> 1o5 /uic*l% are feedbac* and re5ards #rovided 'through 5hich the
#eo#le are told the% are doing a good or a bad &ob)!
B! De"*ee o- R%1:> The level of ris* ta*ing 'degree of uncertaint%)!
The combination of these t5o elements results in -o0* $8pe1 o- .o*po*$e .0'$0*e1>
) To0"h2G08 C0'$0*e o* M.ho C0'$0*e '+ast feedbac* and re5ard3 high ris*)>
tress results from the high ris* and the high #otential decrease or increase of the
re5ard!
+ocus on no53 individualism #revails over team5or*!
T%#ical e6am#les> advertising3 bro*erage3 s#orts!
The most im#ortant as#ect of this *ind of culture is big re5ards and /uic* feedbac*! This *ind of
culture is mostl% associated 5ith /uic* financial activities li*e bro*erage and currenc% trading! .t
can also be related 5ith activities3 li*e a s#orts team or branding of an athlete3 and also the
#olice team! This *ind of culture is considered to carr% along3 a high amount of stress3 and
#eo#le 5or*ing 5ithin the organization are e6#ected to #ossess a strong mentalit%3 for survival
in the organization!
3) Wo*: 4*&AP'8 4*& '+ast feedbac* and re5ard3 lo5 ris*)>
tress results from /uantit% of 5or* rather than uncertaint%!
+ocus on high-s#eed action3 high levels of energ%!
T%#ical e6am#les> sales3 restaurants3 soft5are com#anies!
This t%#e of organization does not involve much ris*3 as the organizations alread% consist of a
firm base along 5ith a strong client relationshi#! This *ind of culture is mostl% o#ted b% large
organizations 5hich have strong customer service! The organization 5ith this *ind of culture is
e/ui##ed 5ith s#ecialized &argons and is /ualified 5ith multi#le team meetings!
.) +e$ 7o0* Co#p!8 C0'$0*e 'lo5 feedbac* and re5ard3 high ris*)>
tress results from high ris* and dela% before *no5ing if actions have #aid off!
+ocus on long-term3 #re#aration and #lanning!
T%#ical e6am#les> #harmaceutical com#anies3 aircraft manufacturers3 oil #ros#ecting
com#anies!
.n this *ind of culture3 the com#an% ma*es big and im#ortant decisions over high sta*es
endeavors! .t ta*es time to see the conse/uence of these decisions! Com#anies that #ostulate
e6#erimental #ro&ects and researches as their core business3 ado#t this *ind of culture! This
*ind of culture can be ado#ted b% a com#an% designing e6#erimental militar% 5ea#ons for
e6am#le!
&) P*o.e11 C0'$0*e 'lo5 feedbac* and re5ard3 lo5 ris*)>
tress is generall% lo53 but ma% come from internal #olitics and stu#idit% of the s%stem!
+ocus on details and #rocess e6cellence!
T%#ical e6am#les> bureaucracies3 ban*s3 insurance com#anies3 #ublic services!
This t%#e of culture does not include the #rocess of feedbac*! .n this *ind of culture3 the
organization is e6tremel% cautious about the adherence to la5s and #refer to abide b% them!
This culture #rovides consistenc% to the organization and is good for #ublic services!
One of the most difficult tas*s to underta*e in an organization3 is to change its 5or* culture! -n
organizational culture change re/uires an organization to ma*e amendments to its #olicies3 its
5 o r * # lace e t h ics and its m ana g e m e n t s % s t e m ! .t needs to start right from its base functions
5hich includes su##ort functions3 o#erations and the #roduction floor3 5hich finall% affects the
overall out#ut of the organization! .t re/uires a com#lete overhaul of the entire s%stem3 and not
man% organizations #refer it as the #rocess is a long and tedious one3 5hich re/uires #atience
and endurance! 1o5ever3 5hen an organization succeeds in ma*ing a change on such a
massive level3 the results are almost al5a%s #ositive and fruitful! The different t%#es of
organizational cultures mentioned above must have surel% hel#ed %ou to understand them! Lou
can also ado#t one of them for %our o5n organization3 ho5ever3 #ersistence and #atience is
ultimatel% of the essence!
MANAGING CULTURAL DIVERSIT7
E6#erts indicate that business o5ners and managers 5ho ho#e to create and manage an
effective3 harmonious multicultural 5or* force should remember the im#ortance of the follo5ing>
etting a good e6am#leQThis basic tool can be #articularl% valuable for small business
o5ners 5ho ho#e to establish a health% environment for #eo#le of different cultural
bac*grounds3 since the% are generall% able to 5ield significant control over the businessAs
basic outloo* and atmos#here!
Communicate in 5ritingQCom#an% #olicies that e6#licitl% forbid #re&udice and discriminator%
behavior should be included in em#lo%ee manuals3 mission statements3 and other 5ritten
communications! 9orgensen referred to this and other similar #ractices as Minternal
broadcasting of the diversit% message in order to create a common language for all
members of the organization!M
Training #rogramsQTraining #rograms designed to engender a##reciation and *no5ledge
of the characteristics and benefits of multicultural 5or* forces have become ubi/uitous in
recent %ears! MT5o t%#es of training are most #o#ular> a5areness and s*ill-building3M 5rote
Co6! MThe former introduces the to#ic of managing diversit% and generall% includes
information on 5or* force demogra#hics3 the meaning of diversit%3 and e6ercises to get
#artici#ants thin*ing about relevant issues and raising their o5n self-a5areness! The s*ill-
building training #rovides more s#ecific information on cultural norms of different grou#s and
ho5 the% ma% affect 5or* behavior!M "e5 em#lo%ee orientation #rograms are also ideal for
introducing 5or*ers to the com#an%As e6#ectations regarding treatment of fello5 5or*ers3
5hatever their cultural or ethnic bac*ground!
Recognize individual differencesQ:riting in The Com#lete M(- Com#anion3 contributor
Rob Goffee stated that Mthere are various dimensions around 5hich differences in human
relationshi#s ma% be understood! These include such factors as orientation to5ards
authorit%H acce#tance of #o5er ine/ualitiesH desire for orderliness and structureH the need to
belong to a 5ider social grou# and so on! -round these dimensions researchers have
demonstrated s%stematic differences bet5een national3 ethnic3 and religious grou#s!M Let
Goffee also cautioned business o5ners3 managers3 and e6ecutives to recognize that
differences bet5een individuals can not al5a%s be traced bac* to easil% understood
differences in cultural bac*ground> MDo not assume differences are al5a%s Acultural!A There
are several sources of difference! ome relate to factors such as #ersonalit%3 a#titude3 or
com#etence! .t is a mista*e to assume that all #erceived differences are cultural in origin!
Too man% managers tend to fall bac* on the eas% Ae6#lanationA that individual behavior or
#erformance can be attributed to the fact that someone is A.talianA or Aa CatholicA or Aa
5oman!A uch conclusions are more li*el% to reflect intellectuall% laz% rather than culturall%
sensitive managers!M
-ctivel% see* in#ut from minorit% grou#sQoliciting the o#inions and involvement of minorit%
grou#s on im#ortant 5or* committees3 etc!3 is beneficial not onl% because of the
contributions that the% can ma*e3 but also because such overtures confirm that the% are
valued b% the com#an%! erving on relevant committees and tas* forces can increase their
feelings of belonging to the organization! Conversel%3 relegating minorit% members to
su#erfluous committees or #ro&ects can trigger a do5n5ard s#iral in relations bet5een
different cultural grou#s!
Revam# re5ard s%stemsQ-n organizationAs #erformance a##raisal and re5ard s%stems
should reinforce the im#ortance of effective diversit% management3 according to Co6! This
includes assuring that minorities are #rovided 5ith ade/uate o##ortunities for career
develo#ment!
Ma*e room for social eventsQCom#an% s#onsored social eventsQ#icnics3 softball games3
volle%ball leagues3 bo5ling leagues3 Christmas #arties3 etc!Qcan be tremendousl% useful in
getting members of different ethnic and cultural bac*grounds together and #roviding them
5ith o##ortunities to learn about one another!
+le6ible 5or* environmentQCo6 indicated that fle6ible 5or* environmentsQ5hich he
characterized as a #ositive develo#ment for all 5or*ersQcould have #articularl% Mbeneficial
to #eo#le from nontraditional cultural bac*grounds because their a##roaches to #roblems
are more li*el% to be different from #ast norms!M
DonAt assume similar values and o#inionsQGoffee noted that Min the absence of reliable
information there is a 5ell-documented tendenc% for individuals to assume that others are
Ali*e them!A .n an% setting this is li*el% to be an ina##ro#riate assum#tionH for those 5ho
manage diverse 5or* forces this tendenc% to5ards Acultural assimilationA can #rove
#articularl% damaging!M
Continuous monitoringQE6#erts recommend that business o5ners and managers establish
and maintain s%stems that can continuall% monitor the organizationAs #olicies and #ractices
to ensure that it continues to be a good environment for all em#lo%ees! This3 5rote
9orgensen3 should include Mresearch into em#lo%eesA needs through #eriodic attitude
surve%s!M
M.ncreased diversit% #resents challenges to business leaders 5ho must ma6imize the
o##ortunities that it #resents 5hile minimizing its costs3M summarized Co6! MThe multicultural
organization is characterized b% #luralism3 full integration of minorit%-culture members both
formall% and informall%3 an absence of #re&udice and discrimination3 and lo5 levels of inter-
grou# conflictW! The organization that achieves these conditions 5ill create an environment in
5hich all members can contribute to their ma6imum #otential3 and in 5hich the Avalue in diversit%
A can be full% realized!M
DEFINITION
UNIT V
CONTROLLING
Control is the #rocess through 5hich managers assure that actual activities conform to
#lanned activities!
.n the 5ords of 2oontz and OADonnell - MManagerial control im#lies measurement of
accom#lishment against the standard and the correction of deviations to assure attainment of
ob&ectives according to #lans!M
N$0*e K P0*po1e o- Co!$*o'
Control is an essential function of management
Control is an ongoing #rocess
Control is for5ard 5or*ing because #as cannot be controlled
Control involves measurement
The essence of control is action
Control is an integrated s%stem
C O NTR OL P R O C ESS
The basic control #rocess involves mainl% these ste#s as sho5n in +igure
) The E1$3'%1h#e!$ o- S$!&*&15
(ecause #lans are the %ardstic*s against 5hich controls must be revised3 it follo5s logicall% that
the first ste# in the control #rocess 5ould be to accom#lish #lans! $lans can be considered as
the criterion or the standards against 5hich 5e com#are the actual #erformance in order to
figure out the deviations!
E6am#les for the standards
$rofitabilit% standards> .n general3 these standards indicate ho5 much the com#an%
5ould li*e to ma*e as #rofit over a given time #eriod- that is3 its return on investment!
Mar*et #osition standards> These standards indicate the share of total sales in a
#articular mar*et that the com#an% 5ould li*e to have relative to its com#etitors!
$roductivit% standards> 1o5 much that various segments of the organization should
#roduce is the focus of these standards!
$roduct leadershi# standards> These indicate 5hat must be done to attain such a
#osition!
Em#lo%ee attitude standards> These standards indicate 5hat t%#es of attitudes the
com#an% managers should strive to indicate in the com#an%<s em#lo%ees!
ocial res#onsibilit% standards> uch as ma*ing contribution to the societ%!
tandards reflecting the relative balance bet5een short and long range goals!
3) Me10*e#e!$ o- Pe*-o*#!.e5
The measurement of #erformance against standards should be on a for5ard loo*ing basis so
that deviations ma% be detected in advance b% a##ro#riate actions! The degree of difficult% in
measuring various t%#es of organizational #erformance3 of course3 is determined #rimaril% b%
the activit% being measured! +or e6am#le3 it is far more difficult to measure the #erformance of
high5a% maintenance 5or*er than to measure the #erformance of a student enrolled in a
college level management course!
.) Co#p*%!" Me10*e& Pe*-o*#!.e $o S$$e& S$!&*&15
:hen managers have ta*en a measure of organizational #erformance3 their ne6t ste# in
controlling is to com#are this measure against some standard! - standard is the level of activit%
established to serve as a model for evaluating organizational #erformance! The #erformance
evaluated can be for the organization as a 5hole or for some individuals 5or*ing 5ithin the
organization! .n essence3 standards are the %ardstic*s that determine 5hether organizational
#erformance is ade/uate or inade/uate!
&) T:%!" Co**e.$%(e A.$%o!15
-fter actual #erformance has been measured com#ared 5ith established #erformance
standards3 the ne6t ste# in the controlling #rocess is to ta*e corrective action3 if
necessar%! Corrective action is managerial activit% aimed at bringing organizational #erformance
u# to the level of #erformance standards! .n other 5ords3 corrective action focuses on correcting
organizational mista*es that hinder organizational #erformance! (efore ta*ing an% corrective
action3 ho5ever3 managers should ma*e sure that the standards the% are using 5ere #ro#erl%
established and that their measurements of organizational #erformance are valid and reliable!
-t first glance3 it seems a fairl% sim#le #ro#osition that managers should ta*e corrective action
to eliminate #roblems - the factors 5ithin an organization that are barriers to organizational goal
attainment! .n #ractice3 ho5ever3 it is often difficult to #in#oint the #roblem causing some
undesirable organizational effect!
+ARRIERS FOR CONTROLLING
There are man% barriers3 among the most im#ortant of them>
Control activities can create an undesirable overem#hasis on short-term #roduction as
o##osed to long- term #roduction!
Control activities can increase em#lo%eesA frustration 5ith their &obs and thereb% reduce
morale! This reaction tends to occur #rimaril% 5here management e6erts too much
control!
Control activities can encourage the falsification of re#orts!
Control activities can cause the #ers#ectives of organization members to be too narro5
for the good of the organization!
Control activities can be #erceived as the goals of the control #rocess rather than the
means b% 5hich corrective action is ta*en!
RE6UIREMENTS FOR EFFECTIVE CONTROL
The re/uirements for effective control are
a) Control should be tailored to #lans and #ositions
This means that3 all control techni/ues and s%stems should reflect the #lans the% are designed
to follo5! This is because ever% #lan and ever% *ind and #hase of an o#eration has its uni/ue
characteristics!
b) Control must be tailored to individual managers and their res#onsibilities
This means that controls must be tailored to the #ersonalit% of individual managers! This
because control s%stems and information are intended to hel# individual managers carr% out
their function of control! .f the% are not of a t%#e that a manager can or 5ill understand3 the% 5ill
not be useful!
c) Control should #oint u# e6ce#tions as critical #oints
This is because b% concentration on e6ce#tions from #lanned #erformance3 controls based on
the time honored e6ce#tion #rinci#le allo5 managers to detect those #laces 5here their
attention is re/uired and should be given! 1o5ever3 it is not enough to loo* at e6ce#tions3
because some deviations from standards have little meaning and others have a great deal of
significance!
d) Control should be ob&ective
This is because 5hen controls are sub&ective3 a manager<s #ersonalit% ma% influence &udgments
of #erformance inaccurac%! Ob&ective standards can be /uantitative such as costs or man hours
#er unit or date of &ob com#letion! The% can also be /ualitative in the case of training #rograms
that have s#ecific characteristics or are designed to accom#lish a s#ecific *ind of u#grading of
the /ualit% of #ersonnel!
e) Control should be fle6ible
This means that controls should remain 5or*able in the case of changed #lans3 unforeseen
circumstances3 or outsight failures!Much fle6ibilit% in control can be #rovided b% having
alternative #lans for various #robable situations!
f) Control should be economical
This means that control must 5orth their cost! -lthough this re/uirement is sim#le3 its #ractice is
often com#le6! This is because a manager ma% find it difficult to *no5 5hat a #articular s%stem
is 5orth3 or to *no5 5hat it costs!
g) Control should lead to corrective actions
This is because a control s%stem 5ill be of little benefit if it does not lead to corrective action3
control is &ustified onl% if the indicated or e6#erienced deviations from #lans are corrected
through a##ro#riate #lanning3 organizing3 directing3 and leading!
T7PES OF CONTROL S7STEMS
The control s%stems can be classified into three t%#es namel% feed for5ard3 concurrent and
feedbac* control s%stems!
) Fee& -o*)*& .o!$*o'15 The% are #reventive controls that tr% to antici#ate #roblems and ta*e
corrective action before the% occur! E6am#le a team leader chec*s the /ualit%3 com#leteness
and reliabilit% of their tools #rior to going to the site!
3) Co!.0**e!$ .o!$*o'15 The% 'sometimes called screening controls) occur 5hile an activit% is
ta*ing #lace! E6am#le the team leader chec*s the /ualit% or #erformance of his members
5hile #erforming!
.) Fee&3.: .o!$*o'15 The% measure activities that have alread% been com#leted! Thus
corrections can ta*e #lace after #erformance is over! E6am#le feedbac* from facilities
engineers regarding the com#leted &ob!
+UDGETAR7 CONTROL
De-%!%$%o!> (udgetar% Control is defined as Mthe establishment of budgets3 relating the
res#onsibilities of e6ecutives to the re/uirements of a #olic%3 and the continuous com#arison of
actual 5ith budgeted results either to secure b% individual action the ob&ective of that #olic% or to
#rovide a base for its revision!
S'%e!$ -e$0*e15
. O3@e.$%(e15 Determining the ob&ectives to be achieved3 over the budget #eriod3 and the
#olic%'ies) that might be ado#ted for the achievement of these ends!
3. A.$%(%$%e15 Determining the variet% of activities that should be underta*en for achievement of
the ob&ectives!
.. P'!15 Dra5ing u# a #lan or a scheme of o#eration in res#ect of each class of activit%3 in
#h%sical a 5ell as monetar% terms for the full budget #eriod and its #arts!
&. Pe*-o*#!.e E('0$%o!5 ,a%ing out a s%stem of com#arison of actual #erformance b% each
#erson section or de#artment 5ith the relevant budget and determination of causes for the
discre#ancies3 if an%!
e. Co!$*o' A.$%o!5 Ensuring that 5hen the #lans are not achieved3 corrective actions are ta*enH
and 5hen corrective actions are not #ossible3 ensuring that the #lans are revised and ob&ective
achieved
CLASSIFICATION OF +UDGETS
(udgets ma% be classified on the follo5ing bases
a) +ASED ON TIME PERIOD5
(%) Lo!" Te*# +0&"e$
(udgets 5hich are #re#ared for #eriods longer than a %ear are called ,ongTerm
(udgets! uch (udgets are hel#ful in business forecasting and for5ard #lanning!
Eg> Ca#ital E6#enditure (udget and R7D (udget!
'ii) Sho*$ Te*# +0&"e$
(udgets 5hich are #re#ared for #eriods less than a %ear are *no5n as hortTerm
(udgets! uch (udgets are #re#ared in cases 5here a s#ecific action has to be
immediatel% ta*en to bring an% variation under control!
Eg> Cash (udget!
b) +ASED ON CONDITION5
(%) +1%. +0&"e$
- (udget3 5hich remains unaltered over a long #eriod of time3 is called (asic
(udget!
'ii) C0**e!$ +0&"e$
- (udget3 5hich is established for use over a short #eriod of time and is related to
the current conditions3 is called Current (udget!
c) +ASED ON CAPACIT75
(%) F%?e& +0&"e$
.t is a (udget designed to remain unchanged irres#ective of the level of activit%
actuall% attained! .t o#erates on one level of activit% and less than one set of
conditions! .t assumes that there 5ill be no change in the #revailing conditions3 5hich
is unrealistic!
'ii) F'e?%3'e +0&"e$
.t is a (udget3 5hich b% recognizing the difference bet5een fi6ed3 semi variable and
variable costs is designed to change in relation to level of activit% attained! .t consists
of various budgets for different levels of activit%
d) +ASED ON COVERAGE5
(%) F0!.$%o!' +0&"e$
(udgets3 5hich relate to the individual functions in an organization3 are *no5n as
+unctional (udgets3 e!g! #urchase (udget3 ales (udget3 $roduction (udget3 #lant
Ktilization (udget and Cash (udget!
'ii) M1$e* +0&"e$
.t is a consolidated summar% of the various functional budgets! .t serves as the basis
u#on 5hich budgeted $rofit 7 ,oss -ccount and forecasted (alance heet are built
u#!
+UD GE T A R 7 C O NTR OL T E C4N I 6 U ES
The various t%#es of budgets are as follo5s
%) Re(e!0e !& E?pe!1e +0&"e$15
The most common budgets s#ell out #lans for revenues and o#erating e6#enses in
ru#ee terms! The most basic of revenue budget is the sales budget 5hich is a formal and
detailed e6#ression of the sales forecast! The revenue from sales of #roducts or services
furnishes the #rinci#al income to #a% o#erating e6#enses and %ield #rofits! E6#ense budgets
ma% deal 5ith individual items of e6#ense3 such as travel3 data #rocessing3 entertainment3
advertising3 tele#hone3 and insurance!
%%) T%#e> Sp.e> M$e*%'> !& P*o&0.$ +0&"e$15
Man% budgets are better e6#ressed in /uantities rather than in monetar% terms! e!g!
direct-labor-hours3 machine-hours3 units of materials3 s/uare feet allocated3 and units #roduced!
The Ru#ee cost 5ould not accuratel% measure the resources used or the results intended!
%%%) Cp%$' E?pe!&%$0*e +0&"e$15
Ca#ital e6#enditure budgets outline s#ecificall% ca#ital e6#enditures for #lant3
machiner%3 e/ui#ment3 inventories3 and other items! These budgets re/uire care because the%
give definite form to #lans for s#ending the funds of an enter#rise! ince a business ta*es a
long time to recover its investment in #lant and e/ui#ment3 '$a%bac* #eriod or gestation #eriod)
ca#ital e6#enditure budgets should usuall% be tied in 5ith fairl% long-range #lanning!
%() C1h +0&"e$15
The cash budget is sim#l% a forecast of cash recei#ts and disbursements against 5hich
actual cash Me6#erienceM is measured! The availabilit% of cash to meet obligations as the% fall
due is the first re/uirement of e6istence3 and handsome business #rofits do little good 5hen tied
u# in inventor%3 machiner%3 or other noncash assets!
() V*%3'e +0&"e$5
The variable budget is based on an anal%sis of e6#ense items to determine ho5
individual costs should var% 5ith volume of out#ut!
ome costs do not var% 5ith volume3 #articularl% in so short a #eriod as ? month3 G
months3 or a %ear! -mong these are de#reciation3 #ro#ert% ta6es and insurance3 maintenance of
#lant and e/ui#ment3 and costs of *ee#ing a minimum staff of su#ervisor% and other *e%
#ersonnel! Costs that var% 5ith volume of out#ut range from those that are com#letel% variable
to those that are onl% slightl% variable!
The tas* of variable budgeting involves selecting some unit of measure that reflects
volumeH ins#ecting the various categories of costs 'usuall% b% reference to the chart of
accounts)H and3 b% statistical studies3 methods of engineering anal%ses3 and other means3
determining ho5 these costs should var% 5ith volume of out#ut!
(%) Ze*o +1e& +0&"e$5
The idea behind this techni/ue is to divide enter#rise #rograms into M#ac*agesM
com#osed of goals3 activities3 and needed resources and then to calculate costs for each
#ac*age from the ground u#! (% starting the budget of each #ac*age from base zero3 budgeters
calculate costs afresh for each budget #eriodH thus the% avoid the common tendenc% in
budgeting of loo*ing onl% at changes from a #revious #eriod!
A&(!$"e1
There are a number of advantages of budgetar% control>
Com#els management to thin* about the future3 5hich is #robabl% the most im#ortant
feature of a budgetar% #lanning and control s%stem! +orces management to loo* ahead3
to set out detailed #lans for achieving the targets for each de#artment3 o#eration and
'ideall%) each manager3 to antici#ate and give the organization #ur#ose and direction!
$romotes coordination and communication!
Clearl% defines areas of res#onsibilit%! Re/uires managers of budget centre<s to be
made res#onsible for the achievement of budget targets for the o#erations under their
#ersonal control!
$rovides a basis for #erformance a##raisal 'variance anal%sis)! - budget is basicall% a
%ardstic* against 5hich actual #erformance is measured and assessed! Control is
#rovided b% com#arisons of actual results against budget #lan! De#artures from budget
can then be investigated and the reasons for the differences can be divided into
controllable and non-controllable factors!
Enables remedial action to be ta*en as variances emerge!
Motivates em#lo%ees b% #artici#ating in the setting of budgets!
.m#roves the allocation of scarce resources!
Economises management time b% using the management b% e6ce#tion #rinci#le!
P*o3'e#1 %! 30&"e$%!"
:hilst budgets ma% be an essential #art of an% mar*eting activit% the% do have a number
of disadvantages3 #articularl% in #erce#tion terms!
(udgets can be seen as #ressure devices im#osed b% management3 thus resulting in>
a) bad labour relations
b) inaccurate record-*ee#ing!
De#artmental conflict arises due to>
a) dis#utes over resource allocation
b) de#artments blaming each other if targets are not attained!
.t is difficult to reconcile #ersonal8individual and cor#orate goals!
:aste ma% arise as managers ado#t the vie53 M5e had better s#end it or 5e 5ill lose itM!
This is often cou#led 5ith Mem#ire buildingM in order to enhance the #restige of a
de#artment!
Res#onsibilit% versus controlling3 i!e! some costs are under the influence of more than
one #erson3 e!g! #o5er costs!
Managers ma% overestimate costs so that the% 5ill not be blamed in the future should
the% overs#end!
N O N 2+UD GE T A R 7 C O NTR OL T E C4N I 6 U ES
There are3 of course3 man% traditional control devices not connected 5ith budgets3 although
some ma% be related to3 and used 5ith3 budgetar% controls! -mong the most im#ortant of these
are> statistical data3 s#ecial re#orts and anal%sis3 anal%sis of brea*- even #oints3 the o#erational
audit3 and the #ersonal observation!
%) S$$%1$%.' &$5
tatistical anal%ses of innumerable as#ects of a business o#eration and the clear #resentation
of statistical data3 5hether of a historical or forecast nature are3 of course3 im#ortant to control!
ome managers can readil% inter#ret tabular statistical data3 but most managers #refer
#resentation of the data on charts!
%%) +*e:2 e(e! po%!$ !'81%15
-n interesting control device is the brea* even chart! This chart de#icts the relationshi# of sales
and e6#enses in such a 5a% as to sho5 at 5hat volume revenues e6actl% cover e6#enses!
%%%) Ope*$%o!' 0&%$5
-nother effective tool of managerial control is the internal audit or3 as it is no5 coming to be
called3 the o#erational audit! O#erational auditing3 in its broadest sense3 is the regular and
inde#endent a##raisal3 b% a staff of internal auditors3 of the accounting3 financial3 and other
o#erations of a business!
%() Pe*1o!' o31e*($%o!5
.n an% #reoccu#ation 5ith the devices of managerial control3 one should never overloo* the
im#ortance of control through #ersonal observation!
() PERT5
The $rogram 'or $ro&ect) Evaluation and Revie5 Techni/ue3 commonl% abbreviated $ERT3 is a
is a method to anal%ze the involved tas*s in com#leting a given #ro&ect3 es#eciall% the time
needed to com#lete each tas*3 and identif%ing the minimum time needed to com#lete the total
#ro&ect!
(%) GANTT C4ART5
- Gantt chart is a t%#e of bar cha rt t hat illustrates a # r o & ect schedu le! Gantt charts illustrate the
start and finish dates of the t e rm inal e le m en t s and summar% elements of a # r o & e c t ! Terminal
elements and summar% elements com#rise the 5o r * b r e a * do 5 n s tr u c t u re o f the #ro&ect! ome
Gantt charts also sho5 the de#endenc% ' i!e!3 #recedence net5or*) relationshi#s bet5een
activities!
P R O DUCT I V I T 7
$roductivit% refers to the ratio bet5een the out#ut from #roduction #rocesses to its in#ut!
$roductivit% ma% be conceived of as a measure of the technical or engineering efficienc% of
#roduction! -s such /uantitative measures of in#ut3 and sometimes out#ut3 are em#hasized!
T8p%.' P*o&0.$%(%$8 C'.0'$%o!1
Measures of size and resources ma% be combined in man% different 5a%s! The three common
a##roaches to defining #roductivit% based on the model of +igure B are referred to as #h%sical3
functional3 and economic #roductivit%! Regardless of the a##roach selected3 ad&ustments ma%
be needed for the factors of diseconom% of scale3 reuse3 re/uirements churn3 and /ualit% at
deliver%!
) Ph81%.' P*o&0.$%(%$8
This is a ratio of the amount of #roduct to the resources consumed 'usuall% effort)! $roduct ma%
be measured in lines of code3 classes3 screens3 or an% other unit of #roduct! T%#icall%3 effort is
measured in terms of staff hours3 da%s3 or months! The #h%sical size also ma% be used to
estimate soft5are #erformance factors 'e!g!3 memor% utilization as a function of lines of code)!
3) F0!.$%o!' P*o&0.$%(%$8
This is a ratio of the amount of the functionalit% delivered to the resources consumed
'usuall% effort)! +unctionalit% ma% be measured in terms of use cases3 re/uirements3 features3 or
function #oints 'as a##ro#riate to the nature of the soft5are and the develo#ment method)!
T%#icall%3 effort is measured in terms of staff hours3 da%s3 or months! Traditional measures of
+unction $oints 5or* best 5ith information #rocessing s%stems! The effort involved in
embedded and scientific soft5are is li*el% to be underestimated 5ith these measures3 although
several variations of +unction $oints have been develo#ed that attem#t to deal 5ith this issue!
.) E.o!o#%. P*o&0.$%(%$8
This is a ratio of the value of the #roduct #roduced to the cost of the resources used to
#roduce it! Economic #roductivit% hel#s to evaluate the economic efficienc% of an organization!
Economic #roductivit% usuall% is not used to #redict #ro&ect cost because the outcome can be
affected b% man% factors outside the control of the #ro&ect3 such as sales volume3 inflation3
interest rates3 and substitutions in resources or materials3 as 5ell as all the other factors that
affect #h%sical and functional measures of #roductivit%! 1o5ever3 understanding economic
#roductivit% is essential to ma*ing good decisions about outsourcing and subcontracting! The
basic calculation of economic #roductivit% is as follo5s>
Economic $roductivit% V Jalue8Cost
PRO+LEMS IN MEASUREMENT OF PRODUCTIVIT7 OF BNOWLEDGE WORBERS
$roductivit% im#lies measurement3 5hich in turn3 is an essential ste# in the control
#rocess! -lthough there is a general agreement about the need for im#roving #roductivit%3 there
is little consensus about the fundamental causes of the #roblem and 5hat to do about them!
The blame has been assigned to various factors! ome #eo#le #lace it on the greater #ro#ortion
of less s*illed 5or*ers 5ith res#ect to the total labor force3 but others disagree! There are those
5ho see cutbac* in research and the em#hasis on immediate results as the main cul#rit!
-nother reason given for the #roductivit% dilemma is the gro5ing affluence of #eo#le3 5hich
ma*es them less ambitious! till others cite the brea*do5n in famil% structure3 the 5or*ers<
attitudes3 and government #olicies and regulations! -nother #roblem is that the measurement
of s*ills 5or* is relativel% eas%3 but it becomes more difficult for *no5ledge 5or*! The difference
bet5een the t5o *inds is the relative use of *no5ledge and s*ills!
C OST C O NTR OL
Cost control is the measure ta*en b% management to assure that the cost ob&ectives set
do5n in the #lanning stage are attained and to assure that all segments of the organization
function in a manner consistent 5ith its #olicies!
S$ep1 %!(o'(e& %! &e1%"!%!" p*o.e11 o- .o1$ .o!$*o' 181$e#5
S E1$3'%1h%!" !o*#15 To e6ercise cost control it is essential to establish norms3 targets or
#arameters 5hich ma% serve as %ardstic*s to achieve the ultimate ob&ective! These
standards3 norms or targets ma% be set on the basis of research3 stud% or #ast actual!
S App*%1'5 The actual results are com#ared 5ith the set norms to ascertain the degree of
utilization of men3 machines and materials! The deviations are anal%zed so as to arrive at
the causes 5hich are controllable and uncontrollable!
S Co**e.$%(e #e10*e15 The variances are revie5ed and remedial measures or revision of
targets3 norms3 standards etc!3 as re/uired are ta*en!
A&(!$"e1 o- .o1$ .o!$*o'
S (etter utilization of resources
S To #re#are for meeting a future com#etitive #osition!
S Reasonable #rice for the customers
S +irm standing in domestic and e6#ort mar*ets!
S .m#roved methods of #roduction and use of latest manufacturing techni/ues 5hich have
the effect of rising #roductivit% and minimizing cost!
S (% a continuous search for im#rovement creates #ro#er climate for the increase
efficienc%!
S .m#roves the image of com#an% for long-term benefits!
S .m#rove the rate of return on investment!
P URC 4 A SE C O N T R OL
$urchase control is an element of material control! Material #rocurement is *no5n as the
#urchase function! The functional res#onsibilit% of #urchasing is that of the #urchase manager
or the #urchaser! $urchasing is an im#ortant function of materials management because in
#urchase of materials3 a substantial #ortion of the com#an%As finance is committed 5hich affects
cash flo5 #osition of the com#an%! uccess of a business is to a large e6tent influenced b% the
efficienc% of its #urchase organization! The advantages derived from a good and ade/uate
s%stem of the #urchase control are as follo5s>
) Co!$%!0o01 (%'3%'%$8 o- #$e*%'15 .t ensures the continuous flo5 of materials! so
#roduction 5or* ma% not be held u# for 5ant of materials! - manufacturer can com#lete
schedule of #roduction in time!
3) P0*.h1%!" o- *%"h$ ;0!$%$85 $urchase of right /uantit% of materials avoids loc*ing u# of
5or*ing ca#ital! .t minimizes ris* of sur#lus and obsolete stores! .t means there should not be
#ossibilit% of overstoc*ing and understoc*ing!
.) P0*.h1%!" o- *%"h$ ;0'%$85 $urchase of materials of #ro#er /ualit% and s#ecification avoids
5aste of materials and loss in #roduction! Effective #urchase control #revents 5astes and
losses of materials right from the #urchase till their consum#tions! .t enables the management to
reduce cost of #roduction!
&) E.o!o#8 %! p0*.h1%!"5 The #urchasing of materials is a highl% s#ecialized function! (%
#urchasing materials at reasonable #rices3 the efficient #urchaser is able to ma*e a valuable
contribution to the success of a business!
e) Wo*:1 1 %!-o*#$%o! .e!$*e5 .t serves as a function centre on the materials *no5ledge
relating to #rices3 sources of su##l%3 s#ecifications3 mode of deliver%3 etc! (% #roviding
continuous information to the management it is #ossible to #re#are #lanning for #roduction!
-) De(e'op#e!$ o- 301%!e11 *e'$%o!1h%p5 $urchasing of materials from the best mar*et and
from reliable su##liers develo#s business relationshi#s! The result is that there ma% be smooth
su##l% of materials in time and so it avoid dis#utes and financial losses!
") F%!&%!" o- '$e*!$%(e 1o0*.e o- 10pp'85 .f a #articular su##lier fails to su##l% the materials
in time3 it is #ossible to develo# alternate sources of su##l%! the effect of this is that the
#roduction 5or* is not disturbed!
h) F%?%!" *e1po!1%3%'%$%e15 Effective #urchase control fi6 the res#onsibilities of o#erating units
and individuals connected 5ith the #urchase3 storage and handling of materials!
.n short3 the basic ob&ective of the effective #urchase control is to ensure continuit% of su##l% of
re/uisite /uantit% of material3 to avoid held u# of #roduction and loss in #roduction and at the
same time reduces the ultimate cost of the finished #roducts!
M A I NT E N A N C E C O NTR OL
Maintenance de#artment has to e6cercise effective cost control3 to carr% out the
maintenance functions in a #re-s#ecified budget3 5hich is #ossible onl% through the follo5ing
measures>
+irst line su#ervisors must be a##rised of the cost information of the various materials so that
the ob&ective of the management can be met 5ithout e6tra e6#enditure on maintenance
functions
- monthl% revie5 of the budget #rovisions and e6#enditures actuall% incurred in res#ect of each
center8sho# 5ill #rovide guidlines to the de#artmental head to e6ercise better cost control!
The total e6#enditure to be incurred can be uniforml% s#read over the %ear for better budgetar%
control! ho5ever3 the same ma% not be true in all cases #articularl% 5here overhauling of
e/ui#ment has to be carried out due to unforseen brea*do5ns! some budgetar% #rovisions must
be set aside3 to meet out unforeseen e6igencies!
The controllable elements of cost such as man#o5er cost and material cost can be discussed
5ith the concerned #ersonnel3 5hich ma% hel# in reducing the total cost of maintenance!
Em#hasis should be given to reduce the overhead e6#enditures3 as other e6#enditures cannot
be com#romised!
.t is observed through studies that the man#o5er cost is normall% fi6ed3 but the same 5a%
increase due to overtime cost! ho5ever3 the material cost3 5hich is the #rime factor in
maintenance cost3 can be reduced b% timel% ins#ections designed3 to detect failures! .f the
ins#ection is carried out as #er schedule3 the total failure of #arts ma% be avoided3 5hich
other5ise 5ould increase the maintenance cost! the #ro#er handling of the e/ui#ment b% the
o#erators also reduces the fre/uenc% of re#air and material re/uirements! O#erators3 5ho
chec* their e/ui#ment regularl% and use it 5ithin the o#erating limits3 can hel# avoid man%
un5anted re#airs! .n the same 5a% a good record of e/ui#ment failures8 maintenance 5ould
indicate the nature of failures3 5hich can then be corrected even #ermanentl%!
6 U A L I T 7 C O NT R OL
0ualit% control refers to the technical #rocess that gathers3 e6amines3 anal%ze 7 re#ort
the #rogress of the #ro&ect 7 conformance 5ith the #erformance re/uirements
The 1$ep1 %!(o'(e& %! ;0'%$8 .o!$*o' p*o.e11 *e
?) Determine 5hat #arameter is to be controlled!
B) Establish its criticalit% and 5hether %ou need to control before3 during or after results are
#roduced!
D) Establish a s#ecification for the #arameter to be controlled 5hich #rovides limits of
acce#tabilit% and units of measure!
C) $roduce #lans for control 5hich s#ecif% the means b% 5hich the characteristics 5ill be
achieved and variation detected and removed!
F) Organize resources to im#lement the #lans for /ualit% control!
G) .nstall a sensor at an a##ro#riate #oint in the #rocess to sense variance from
s#ecification!
O) Collect and transmit data to a #lace for anal%sis!
I) Jerif% the results and diagnose the cause of variance!
@) $ro#ose remedies and decide on the action needed to restore the status /uo!
?E) Ta*e the agreed action and chec* that the variance has been corrected!
A&(!$"e1 !& &%1&(!$"e1
-dvantages include better #roducts and services ultimatel% establishing a good
re#utation for a com#an% and higher revenue from having more satisfied customers!
Disadvantages include needing more man #o5er8o#erations to maintain /ualit% control
and adding more time to the initial #rocess!
P L A N N I N G OPE RA T I O N S
-n ope*$%o!' p'!!%!" is a subset of strategic 5or* #lan! .t describes short-term 5a%s
of achieving milestones and e6#lains ho53 or 5hat #ortion of3 a strategic #lan 5ill be #ut into
o#eration during a given o#erational #eriod3 in the case of commercial a##lication3 a fiscal %ear
or another given budgetar% term! -n o#erational #lan is the basis for3 and &ustification of an
annual o#erating budget re/uest! Therefore3 a five-%ear strategic #lan 5ould need five
o#erational #lans funded b% five o#erating budgets!
O#erational #lans should establish the activities and budgets for each #art of the organization
for the ne6t ? D %ears! The% lin* the strategic #lan 5ith the activities the organization 5ill
deliver and the resources re/uired to deliver them!
-n o#erational #lan dra5s directl% from agenc% and #rogram strategic #lans to describe agenc%
and #rogram missions and goals3 #rogram ob&ectives3 and #rogram activities! ,i*e a strategic
#lan3 an o#erational #lan addresses four /uestions>
:here are 5e no5R
:here do 5e 5ant to beR
1o5 do 5e get thereR
1o5 do 5e measure our #rogressR
The O$ is both the first and the last ste# in #re#aring an o#erating budget re/uest! -s the first
ste#3 the O$ #rovides a #lan for resource allocationH as the last ste#3 the O$ ma% be modified to
reflect #olic% decisions or financial changes made during the budget develo#ment #rocess!
O#erational #lans should be #re#ared b% the #eo#le 5ho 5ill be involved in im#lementation!
There is often a need for significant cross-de#artmental dialogue as #lans created b% one #art of
the organization inevitabl% have im#lications for other #arts!
O#erational #lans should contain>
clear ob&ectives
activities to be delivered
/ualit% standards
desired outcomes
staffing and resource re/uirements
im#lementation timetables
a #rocess for monitoring #rogress!