Management Science Notes by N.Aruna Kumari, Asst. Prof.

Humanities & Sciences

INTRODUCTION TO MANAGEMENT AND

ORGANIZATION

Sl. Name of the topic No. of

No. Classes(09)

1 Management:nature, importance, and functions 1

2 Taylor’s scientific management theory

1
3 Fayol’s principles of management

4 Mayo’s Hawthorne experiments

1
5 Maslow’s theory of human needs

6 Douglas McGregor’s theory X and theory Y

1
7 Herzberg’s two-factor theory of motivation

8 System and contingency approach to management 1

9 Planning – meaning, significance, and types of plans

10 Decision making and steps in decision making 1

process

11 Leadership styles
1
12 Social responsibilities of management

13 Organization: features; process&Principles

14 Elements of organization: Organization chart; Span 1

of control - Graicunas formulae; Centralisation
&decentralization

15 Types of mechanistic and organic structures 1

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Management Science Notes by N.Aruna Kumari, Asst. Prof. Humanities & Sciences

1. CONCEPT OF MANAGEMENT

1.1 Introduction to Management:

When human being started group activities for the attainment of common objectives
whenever a group is formed and a group activity is organized to achieve certain common
objectives management is needed to direct, co-ordinate and integrate the individual activities
of a group and secure teams work to accomplish organizational objectives. The objectives of
all business are attained by utilizing the scare resources like men, materials, machines, money
etc.
Management provides stability in the society by changing and modifying the resources in
accordance with the changing environment of the society. In the modern age, more emphasis
is on new inventions for the betterment of human beings. These inventions make old systems
and factors mostly obsolete and inefficient. Management provides integration between
traditions and new inventions and safeguards, society from the unfavourable impact of these
inventions so that continuity in social process is maintained
In process of management, a manage uses human skills, material resources and scientific
methods to perform all the activities leading to the achievement of goods.

Definition:
“Management is knowing exactly what you want men to do and then seeing that they do it the
best and cheapest ways”.
-F.W. Taylor
“Management is defined as the creation and maintenance of an internal environment in an
enterprise where individuals working together in groups, can perform efficiently and
effectively towards the attainment of group goals”.
-Koontz and O’Donell

1.2 Nature of Management:

The study and application of management techniques in managing the affairs of the
organization have changed its nature over the period.
Multidisciplinary: Management is basically multidisciplinary. This implies that, although
management has been developed as a separate discipline, it draws knowledge and concepts
from various disciplines. It draws freely ideas and concepts from such disciplines as
psychology, sociology, anthropology, economics, ecology, statistics, operations research, etc.
Management integrates the ideas and concepts taken from these disciplines and present newer
concepts which can be put into practice for managing the organization.
Dynamic nature of principle: Based on integration and supported by practical evidences,
management has formed certain principles. However, these principles are flexible in nature
and change with the changes in the environment in which an organization exists.

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Relative, not absolute principles:Management principle are relative, not absolute, and they
should be applied as per the need of the organization. Each organization may be different
from others. The difference may exist because of time, place, socio-cultural factors, etc.
Management Science or Art: There is a controversy whether management is science or art.
However, management is both a science and art.
Management as profession: Management has been regarded as profession by many while
many have suggested that it has not achieved the status of a profession.

1.3 Characteristics of Management:

Setting goals for organizations: Goals differ from organization to organization in business,
the basic economic goal is to earn maximum profit, while in service organization like hospital
and educational institution for the basic goal is to provide better service and better education.
Awareness of opportunities and resources: Management have awareness of opportunities and
resources like men, materials, money which assembles and integrates by management.
Management is transformation process: Management is a transformation process consisting
of planning, organizing, staffing, directing and controlling.
Management is universal: The principles and techniques of management are universally
applicable to all group activities performed at any level of organization.
System of authority: System of authority means a hierarchy of command and control.
Managers at different levels possess varying degrees of authority.
Co – Ordination: Various human beings organized in formal groups are endeavouring to
achieve the common organizational objectives, so various departments in the organization
must work in harmony with one another.
Management is Dynamic: The ever-changing social environment directly and indirectly
effect the group activity thus changing environments provide a challenge to management.
Efficient management cannot remain static it must adopt itself to changing conditions.
Management is decision making: The managers are decision makers the marketing managers
decides about how to market, when to market, where to market how to collect funds for
organization.
Management is a profession: Management is not only a science but also an art. Art means
managers must handle the person and things tactfully. Science means achieving objectives
through procedures.

1.4 Importance of Management:

“No ideology, no ism, or political theory can win greater output with less efforts from a given
complex of human and materials resource only sound management and it is on such greater
output that a higher standard of life, more leisure, more amenities for all must necessarily be
found”.
Effective utilization of resources: Management tries to make effective utilization of various
resources. The resources are scarce in nature and to meet the demand of the society, their

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contribution should be maximum for the general interests of the society. Management not
only decides in which alternative a resource be used but also takes actions to utilize it in that
particular alternative in the best way.
To incorporate innovations: Today changes are occurring at a very fast rate in both
technology and social process and structure these changes need to be incorporated to keep the
organizations alive and efficient. Therefore, they require high degree of specialization, high
level of competence, and complex technology. All these require efficient management so that
organizations work in the most efficient way.
Integrating various interest groups: In the organized efforts, there are various interest groups
and they put pressure over other groups for maximum share in the combined output. For
example, in the case of business organization, there are various pressure groups such as
shareholders, employees, government etc. These interest groups have pressure on an
organization.

1.5 Functions of Management:

The process of management consists of certain functions to be performed in a logical
sequence.
Koontz identified planning, organizing, staffing, directing and leading, and controlling are the
major functions of the management.Luther Gullick coined a new term ‘POSDCORB’
indicating P-planning, O-organizing, S-staffing, D-directing, CO-coordinating, R-reporting,
B-budgeting.He also added functions like Reporting and Budgeting.
Other classical thinkers on management suggested two additional functions like innovation
and representation.Innovation is essence of manager’s prime attention and that the manager
of the organization.Henri Fayol lists five functions as elements of management process-
planning, organizing, commanding, coordinating and controlling. Other scientists also
considered motivation, leadership and communication are required.
But the most widely accepted are functions of management given by KOONTZ and
O’DONNEL as follows:

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Management Science Notes by N.Aruna Kumari, Asst. Prof. Humanities & Sciences

PLANNING:
Planning deals with chalking out a future course of action & deciding in advance the most
appropriate course of actions for achievement of pre-determined goals. According to
KOONTZ, “Planning is deciding in advance - what to do, when to do & how to do. It bridges
the gap from where we are & where we want to be”. A plan is a future course of actions. It is
an exercise in problem solving & decision making. Planning is determination of courses of
action to achieve desired goals. Thus, planning is a systematic thinking about ways & means
for accomplishment of pre-determined goals. Planning is necessary to ensure proper
utilization of human & non-human resources. It is all pervasive, it is an intellectual activity
and it also helps in avoiding confusion, uncertainties, risks, wastages etc.

Features of Planning:
1. Planning provides a basis for other functions of management hence, it is called as
Primary Function. Involves selecting the objectives and actions to achieves them
planning stage involves decision making and choosing future courses of action from
the various alternatives
2. It focus on achieving objectives in long-term and short-term
3. As planning is all time process and spread in all levels, it is considered as Pervasive
4. It is considered as continuous process
5. Always focus on future predictions hence it is futuristic.
6. It evolved in decision making

Importance of Planning:
1. Provides decision: Based on the forecasts discussions with tops management authority,
planning provides best decisions along with alternatives. Those decisions help to set the
objectives of an organization. The decisions include framing the policies and processors
to the best utilization of resources.
2. Reduces risk of uncertainty: Perfect planning before done anything helps to reduce risk
and uncertain situation related to market competitions, customer requirements. Planning
helps to make best strategic alternatives for each risk and uncertain conditions.
3. Avoids overlapping and waste tasks: improper organization and coordination leads to
overlapping and wasteful activities by people in the organization. When planning
function acts as perfect decision maker on each role and responsibility the organization
can avoid duplications and waste tasks.
4. Promotes innovative ideas: Planning function always keeps attention on environmental
changes and present scenarios. Hence planning always involves in creating innovative
ideas to frame policies, procedures, programs and strategies. Those innovations carry
forward to the all management and administrative function makes organization healthy
and successful.
5. Set standards for controlling: Controlling is aimless without planning. Planning has to
set the standard of each job performed by the employees with necessary metrics for

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evaluation. Controlling function works on the standards and metrics set by the planning
authority to maintain the activities in effective maner.

Important Elements:
Forecasts: These are the predictions of what going to happen in the future based on the past
and present data. This process is called forecasting.
Objectives: These are set for every individual and department in the organization. The
performance of an individual or a department can be reviewed considering whether they are
achieved or not.
Policies: These specify what can be done or what cannot be done to achieve the given
objectives.
Strategies: These refer to the course of action to be followed and how the resources are to be
deployed to achieve the given objectives.
Programs: These specify what is to be done.
Procedures: These outline how a task is to be carried out.
Schedules: These indicate what is to be done at a given point of time.
Budgets: These are the plans expressed in quantifiable details such as sales budget, expense
budget etc.

Process of Planning consists the following steps:

1. Being aware of opportunity
2. Setting objectives or goals
3. Developing premises
4. Identifying alternative course of actions
5. Evaluating alternative courses
6. Selecting an alternative
7. Implementation of plan
8. Follow-up-action

Limitations of Planning:
1. Leads to rigidity
2. May not work in dynamic environment
3. Reduces creativity
4. Involves in high costs
5. Time consuming
6. No guarantee for success

ORGANIZING:
Organizing is a process(series of steps) of identifying and grouping the work to be performed,
defining and delegating responsibility and authority, and establishing relationships for the

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purpose of accomplishing objectives.It is an essential function that makes the plans

operational by identifying and classifying necessary activities.
Steps in Organizing process:
1. Identification and division of work
2. Departmentalization
3. Assignment of duties
4. Establishing reporting relationships
Importance of Organizing:
1. Benefits of Specialization
2. Clarity on working relationships
3. Effective and ministration
4. Optimum utilization of resources
5. Development of personnel
6. Adaptation to change

STAFFING:
Staffing is a process which includes recruitment, selection, training, placement, appraisal,
promotion, and career planning.In small organizations, all these are taken care of by the
manager himself. But in large organizations, a separate department called Personnel
Department looks after these functions and this is headed by a qualified professional manager
called Personnel Manager.
Panning and organizing functions will take care of what is to be done and how is to be done
whereas Staffing function gives clarity on whom is going to be done. In this process the
department of Human resource has to undergo the following functions to make HR utilisation
effectively.
• Estimating workforce requirements
• Conducting recruitment process
• Selecting right people to the right job at right time
• Conducting performance appraisal
• Caring of Training and development
• Induction and orientation
• Promotions and transfers
• Compensations and incentive benefits
• Seperation

DIRECTING:
This function makes people to do the work in a right manner on the best of their abilities. The
first three function of panning, organizing and staffing are called as thinking functions where
as directing is called as execution function. Directing is a process of issuing orders and
instructions to guide and teach the subordinates the proper methods of work and ensuring that
they perform their jobs as planned.Direction is that inert-personnel aspect of management

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which deals directly with influencing, guiding, supervising, motivating sub-ordinate for the
achievement of organizational goals. Direction has following elements:
Supervision: This implies overseeing the work of subordinates by their superiors. It is the act
of watching & directing work & workers.
Motivation: It means inspiring, stimulating or encouraging the sub-ordinates with zeal to
work. Positive, negative, monetary, non-monetary incentives may be used for this purpose.
The process of stimulating the employees to perform more effectively using their abilities and
full potential is called motivation. The factors of motivation are a) financial b) non-financial.
Leadership:It is a decisive function of the management in which the employees are led and
directed so that the objectives of the organization will be successfully achieved. An effective
manager should also be an effective leader.
Communication:Supervision- implies overseeing the work of subordinates by their
superiors. It is the act of watching & directing work & workers.It is a process of creating,
transmitting and interpreting messages, ideas, facts, opinions, and feelings. The vital
functions of the manager is to communicate to his staff as to what they should do through
orders, meetings, circulars, and notices. This implies communication is a two-way process.
An important part of the communication process is feedback

Features of Directing:
• Directing initiates action
• Continuing function
• Directing takes place at every level
• Directing flows from top to bottom
• It is performance oriented
• It is considered as human element

CONTROLLING:
This function deals with comparing and leading actual performance to standard performance
with corrective measures. It implies measurement of accomplishment against the standards
and correction of deviation if any to ensure achievement of organizational goals. The purpose
of controlling is to ensure that everything occurs in conformities with the standards. An
efficient system of control helps to predict deviations before they actually occur. According
to Theo Haimann, “Controlling is the process of checking whether or not proper progress is
being made towards the objectives and goals and acting if necessary, to correct any
deviation”. According to Koontz &O’Donell “Controlling is the measurement & correction of
performance activities of subordinates in order to make sure that the enterprise objectives and
plans desired to obtain them as being accomplished”. Therefore, controlling has following
steps:
• Establishment of standard performance.
• Measurement of actual performance.
• Comparison of actual performance with the standards and finding out deviation if any.
• Corrective action.

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Nature of controlling:
• This is called as goal oriented process
• Pervasive function
• The quality of backward looking as well as forward looking.
Types of controlling:

2. F.W.TAYLOR’S SCIENTIFIC MANAGEMENT THEORY

Scientific management theory is a theory which analyses and synthesizes

workflows. This theory was proposed by ‘Frederick Winslow Taylor’. Its main
objective is improving economic efficiency especially labor productivity .It
was one of the earliest attempts to apply science to the scientific management

1856-1915

THEORY:
Taylor’s philosophy focused on the belief that “Making people work as hard as they could
was not as efficient as optimizing the way the work was done”
He proposed that by optimizing and simplifying jobs , productivity can be increased.
He also advanced the idea that workers and managers needed to cooperate with one another.
In olden days managers had little contact with workers .Because of this there was no
standardization and also there were no incentives to work as quickly or as efficiency as
possible. Taylor believed that all workers were motivated by money .So he promoted the idea
of ‘’fair day’s pay for fair day’s work’’.

EXAMPLE:
If workers were moving 12 tons of pig iron per day and if they could be
incentivized to try to move 47 tons per day ,only few people can do this work .This is because
of their physical capabilities, so he proposed that work should be assigned based on their
capabilities.

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Taylor's 4 Principles of Scientific Management:

After years of various experiments to determine optimal work methods, Taylor proposed the
1. Replace rule-of-thumb work methods with methods based on a scientific study of the
tasks.
2. Scientifically select, train, and develop each worker rather than passively leaving
them to train themselves.
3. Cooperate with the workers to ensure that the scientifically developed methods are
being followed.
4. Divide work nearly equally between managers and workers, so that the managers apply
scientific management principles to planning the work and the workers actually perform
the tasks.
These principles were implemented in many factories, often increasing productivity by a
factor of three or more. Henry Ford applied Taylor's principles in his automobile factories,
and families even began to perform their household tasks based on the results of time and
motion studies.

The following chart illustrates the functioning of the scheme of the functional foremanship:

DRAWBACKS:
While scientific management principles improved productivity and had a
substantial impact on industry, they also increased the monotony of work. The core job
dimensions of skill variety, task identity, task significance, autonomy, and feedback all were
missing from the picture of scientific management. While in many cases the new ways of
working were accepted by the workers, in some cases they were not. The use of stopwatches
often was a protested issue and led to a strike at one factory where "Taylorism" was being
tested. Complaints that Taylorism was dehumanizing led to an investigation by the United
States Congress. Despite its controversy, scientific management changed the way that work
was done, and forms of it continue to be used today.

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CONCLUSION:
It is believed that through the use of scientific management Taylor increased
productivity on the shop floor by 200 percent. Taylor’s ideas and thoughts were adopted
throughout the world including in France, Russia and Japan. In today’s world scientific
management has been merged with other ideas and is used by managers in the form of time
and motion studies to eradicate wasted motions, incentive schemes based on performance and
hiring the best qualified workers for each job.

3. FAYOL’S PRINCIPLES OF MANAGEMENT

Henri Fayol (1841-1925) was a French management theorist whose theories in management
and organization of labor were widely influential in the beginning of 20th century. He was a
mining engineer who worked for a French mining company Commentry-Fourchamboult-
Decazeville, first as an engineer. Then he moved into general management and became
Managing Director from 1888 to 1918. During his tenure as Managing Director he wrote
various articles on 'administration' and in 1916 the Bulletin de la Société de l’ Industrie
Minérale, printed his "Administration, Industrielle et Générale – Prévoyance, Organisation,
Commandement, Coordination, Contrôle". In 1949 the first English translation appeared:
‘General and Industrial Management’ by Constance Storrs.

The 14 Management Principles from Henri Fayol (1841-1925) are:

1. Division of Work. Specialization allows the individual to build up experience, and to
continuously improve his skills. Thereby he can be more productive.
2. Authority. The right to issue commands, along with which must the balanced
responsibility for its function.
3. Discipline. Employees must obey, but this is two-sided: employees will only obey orders if
management play their part by providing good leadership.
4. Unity of Command. Each worker should have only one boss with no other conflicting
lines of command.
5. Unity of Direction. People engaged in the same kind of activities must have the same
objectives in a single plan. This is essential to ensure unity and coordination in the enterprise.
Unity of command does not exist without unity of direction but does not necessarily flows
from it.

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6. Subordination of individual interest (to the general interest). Management must see that
the goals of the firms are always paramount.
7. Remuneration. Payment is an important motivator although by analyzing a number of
possibilities, Fayol points out that there is no such thing as a perfect system.
8. Centralization (or Decentralization). This is a matter of degree depending on the
condition of the business and the quality of its personnel.
9. Scalar chain (Line of Authority). A hierarchy is necessary for unity of direction. But
lateral communication is also fundamental, as long as superiors know that such
communication is taking place. Scalar chain refers to the number of levels in the hierarchy
from the ultimate authority to the lowest level in the organization. It should not be over-
stretched and consist of too-many levels.
10. Order. Both material order and social order are necessary. The former minimizes lost
time and useless handling of materials. The latter is achieved through organization and
selection.
11. Equity. In running a business a ‘combination of kindliness and justice’ is needed.
Treating employees well is important to achieve equity.
12. Stability of Tenure of Personnel. Employees work better if job security and career
progress are assured to them. An insecure tenure and a high rate of employee turnover will
affect the organization adversely.
13. Initiative. Allowing all personnel to show their initiative in some way is a source of
strength for the organization. Even though it may well involve a sacrifice of ‘personal vanity’
on the part of many managers.
14. Esprit de Corps. Management must foster the morale of its employees. He further
suggests that: “real talent is needed to coordinate effort, encourage keenness, use each
person’s abilities, and reward each one’s merit without arousing possible jealousies and
disturbing harmonious relations.”
Mayo’s Hawthorne experiments

4. ELTON MAYO’S HAWTHRONE EXPERIMENTS

ABOUT THE RESEARCHER:
George Elton Mayo was an Australian born psychologist, industrial researcher and
organisational theorist.
• Lecturer at University of Queensland and University of Pennsylvania.
• Professor of Industrial Research at Harvard University.
• He is best known for his work on the Hawthorne studies and is considered one of the
fathers of Human Relations Movement.

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EXPERIMENT CONDUCTED BY Dr. MAYO:

The Hawthorne Experiments brought out that the productivity of the employees is not the
function of only physical conditions of work and money wages paid to them. Productivity of
employees depends heavily upon the satisfaction of the employees in their work situation.
Mayo’s idea was that logical factors were far less important than emotional factors in
determining productivity efficiency. Furthermore, of all the human factors influencing
employee behaviour, the most powerful were those emanating from the worker’s
participation in social groups. Thus, Mayo concluded that work arrangements in addition to
meeting the objective requirements of production must at the same time satisfy the
employee’s subjective requirement of social satisfaction at his work place.
In 1927, a group of researchers led by Elton Mayo and Fritz Roethlisberger of the Harvard
Business School were invited to join in the studies at the Hawthorne Works of Western
Electric Company, Chicago. The experiment lasted up to 1932.
The Hawthorne experiment consists of four parts. These parts are briefly described below: -
1. Illumination Experiment.
2. Relay Assembly Test Room Experiment.
3. Interviewing Programme.
4. Bank Wiring Test Room Experiment.
1. Illumination Experiment:
In 1927, researchers were trying to determine the optimal amount of lighting,
temperature, and humidity for assembling electronic components at Western Electric's
Hawthorne plant. The results showed that lighting had no consistent effect on
production. Researchers were frustrated to discover that increasing light increased
output, but reducing light also increased output. The common factor, it seemed, was
that something in the work environment was changed, and that positive effects were
then observed.
After thoroughly examining the results, Elton Mayo and his fellow researchers
determined that workers weren't responding to the change in lighting conditions, but
instead were reacting to the fact that they were being observed by the experimenters.
This phenomenon became known as the Hawthorne effect. The workers' awareness
that researchers were measuring their productivity was sufficient to increase
productivity.
2. Relay Assembly Test Room Experiment:
This phase aimed at knowing not only the impact of illumination on production but
also other factors like length of the working day, rest hours, and other physical
conditions. In this experiment, a small homogeneous work-group of six girls was
constituted. These girls were friendly to each other and were asked to work in a very
informal atmosphere under the supervision of a researcher. The investigators asked

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six girls to assemble telephone relays, relay being small with forty separate parts.
They asked them to drop them down the chute when completed.
Productivity and morale increased considerably during the period of the experiment.
Productivity went on increasing and stabilized at a high level even when all the
improvements were taken away and the pre-test conditions were reintroduced. The
researchers concluded that socio-psychological factors such as feeling of being
important, recognition, attention, participation, cohesive work-group, and non-
directive supervision held the key for higher productivity.
3. Mass Interview Programme:
The objective of this programme was to make a systematic study of the employees’
attitudes which would reveal the meaning which their “working situation” has for
them. The researchers interviewed many workers with regard to their opinions on
work, working conditions and supervision. Initially, a direct approach was used
whereby interviews asked questions considered important by managers and
researchers. The researchers observed that the replies of the workmen were guarded.
Therefore, this approach was replaced by an indirect technique, where the interviewer
simply listened to what the workmen had to say. The findings confirmed the
importance of social factors at work in the total work environment.
4. Bank Wiring Test Room Experiment:
This experiment was conducted by Roethlisberger and Dickson with a view to
develop a new method of observation and obtaining more exact information about
social groups within a company and also finding out the causes which restrict output.
The experiment was conducted to study a group of workers under conditions which
were as close as possible to normal. This group comprised of 14 workers. After the
experiment, the production records of this group were compared with their earlier
production records. It was observed that the group evolved its own production norms
for each individual worker, which was made lower than those set by the management.
Because of this, workers would produce only that much, thereby defeating the
incentive system. Those workers who tried to produce more than the group norms
were isolated, harassed or punished by the group. The findings of the study are:-
▪ Each individual was restricting output.
▪ The group had its own “unofficial” standards of performance.
▪ Individual output remained constant over a period of time.
▪ Informal groups play an important role in the working of an organization.
CONCLUSIONS GIVEN BY Dr. MAYO:
After analysing the results from the Hawthorne experiments Mayo concluded that workers
were motivated by more than self-interest and the following had an impact too:

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Psychological Contract
There is an unwritten understanding between the worker and employer regarding what is
expected from them; Mayo called this the psychological contract.
Interest in Workers
A worker’s motivation can be increased by showing an interest in them. Mayo classified
studying the workers (through the experiments) as showing an interest in the workers.
Work is a Group Activity
Work is a group activity; team work can increase a worker’s motivation as it allows people to
form strong working relationships and increases trust between the workers. Work groups are
created formally by the employer but also occur informally. Both informal and formal groups
should be used to increase productivity as informal groups influence the worker’s habits and
attitudes.
Social Aspect of Work
Workers are motivated by the social aspect of work, as demonstrated by the female workers
socialising during and outside work and the subsequent increase in motivation.
Recognise Workers
Workers are motivated by recognition, security and a sense of belonging.
Communication
The communication between workers and management influences workers’ morale and
productivity. Workers are motivated through a good working relationship with management.

CONCLUSION:
The traditional view of how to motivate employees is that you offer monetary rewards (pay
increases, bonuses etc.) for work completion. However, the Hawthorne experiments may
suggest that motivation is more complicated than that. Advocates of the "Hawthorne Effect"
will state that the Hawthorne experiment results show that motivation can be improved
through improving working relationships and social interaction.

5. MASLOW’S THEORY OF HUMAN NEEDS

Maslow's hierarchy of needs is a motivational theory in psychology comprising a five-tier
model of human needs, often depicted as hierarchical levels within a pyramid.
Maslow (1943, 1954) stated that people are motivated to achieve certain needs and that some
needs take precedence over others. Our most basic need is for physical survival, and this will
be the first thing that motivates our behavior. Once that level is fulfilled the next level up is
what motivates us, and so on.
This five-stage model can be divided into deficiency needs and growth needs. The first four
levels are often referred to as deficiency needs (D-needs), and the top level is known as
growth or being needs (B-needs).

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Deficiency needs arise due to deprivation and are said to motivate people when they are
unmet. Also, the motivation to fulfill such needs will become stronger the longer the duration
they are denied. For example, the longer a person goes without food, the more hungry they
will become.
Maslow (1943) initially stated that individuals must satisfy lower level deficit needs before
progressing on to meet higher level growth needs. However, he later clarified that satisfaction
of a needs is not an“all-or-none” phenomenon, admitting that his earlier statements may have
given “the false impression that a need must be satisfied 100 percent before the next need
emerges” (1987, p. 69).

When a deficit need has been 'more or less' satisfied it will go away, and our activities
become habitually directed towards meeting the next set of needs that we have yet to satisfy.
These then become our salient needs. However, growth needs continue to be felt and may
even become stronger once they have been engaged.
Growth needs do not stem from a lack of something, but rather from a desire to grow as a
person. Once these growth needs have been reasonably satisfied, one may be able to reach the
highest level called self-actualization
Every person is capable and has the desire to move up the hierarchy toward a level of self-
actualization. Unfortunately, progress is often disrupted by a failure to meet lower level
needs. Life experiences, including divorce and loss of a job, may cause an individual to
fluctuate between levels of the hierarchy. Therefore, not everyone will move through the
hierarchy in a uni-directional manner but may move back and forth between the different
types of needs.

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The original hierarchy of needs five-stage model includes:

1. Biological and physiological needs - air, food, drink, shelter, warmth, sex, sleep.
2. Safety needs - protection from elements, security, order, law, stability, freedom from fear.
3. Love and belongingness needs - friendship, intimacy, trust, and acceptance, receiving and
giving affection and love. Affiliating, being part of a group (family, friends, work).
4. Esteem needs - which Maslow classified into two categories: (i) esteem for oneself
(dignity, achievement, mastery, independence) and (ii) the desire for reputation or respect
from others (e.g., status, prestige). Maslow indicated that the need for respect or reputation is
most important for children and adolescents and precedes real self-esteem or dignity.
5. Self-actualization needs - realizing personal potential, self-fulfillment, seeking personal
growth and peak experiences. A desire “to become everything one is capable of
becoming”(Maslow, 1987, p. 64).

6. DOUGLAS MCGREGOR’S THEORY X AND THEORY Y

Theory X and Theory Y are theories of human motivation and management. They were
created and developed by Douglas McGregor at the MIT Sloan School of Management in the
1960s. These theories describe two contrasting models of workforce motivation applied by
managers in human resource management, organizational behavior, organizational
communication and organizational development.
According to the models, the two opposing sets of general assumptions of how workers are
motivated form the basis for two different managerial styles. Theory X stresses the
importance of strict supervision, external rewards, and penalties: in contrast, Theory Y
highlights the motivating role of job satisfaction and encourages workers to approach tasks
without direct supervision.

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Assumptions of Theory X:
• An average employee intrinsically does not like work and tries to escape it whenever
possible.
• Since the employee does not want to work, he must be persuaded, compelled, or warned
with punishment so as to achieve organizational goals.
• A close supervision is required on part of managers. The managers adopt a more
dictatorial style.
• Many employees rank job security on top, and they have little or no aspiration/ ambition.
• Employees generally dislike responsibilities.
• Employees resist change.
• An average employee needs formal direction.
Assumptions of Theory Y
• Employees can perceive their job as relaxing and normal. They exercise their physical
and mental efforts in an inherent manner in their jobs.
• Employees may not require only threat, external control and coercion to work, but they
can use self-direction and self-control if they are dedicated and sincere to achieve the
organizational objectives.
• If the job is rewarding and satisfying, then it will result in employees’ loyalty and
commitment to organization.
• An average employee can learn to admit and recognize the responsibility. In fact, he can
even learn to obtain responsibility.
• The employees have skills and capabilities. Their logical capabilities should be fully
utilized. In other words, the creativity, resourcefulness and innovative potentiality of the
employees can be utilized to solve organizational problems.
Comparing Theory X and Theory Y:
1. Motivation: Theory X assumes that people dislike work; they want to avoid it and do
not want to take responsibility. Theory Y assumes that people are self-motivated, and
thrive on responsibility.
2. Management Style and Control: In a Theory X organization, management is
authoritarian, and centralized control is retained, whilst in Theory Y, the management
style is participative: Management involves employees in decision making, but retains
power to implement decisions.
3. Work Organization: Theory X employees tend to have specialized and often
repetitive work. In Theory Y, the work tends to be organized around wider areas of
skill or knowledge, and employees are encouraged to develop their expertise and
make suggestions and improvements.
4. Rewards and Appraisals: Theory X organizations work on a ‘carrot and stick’ basis,
and performance appraisal is part of the overall mechanisms of control and
remuneration. In Theory Y organizations, appraisal is also regular and important, but
is usually a separate mechanism from organizational controls. Theory Y organizations
also give employees frequent opportunities for promotion.

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ELEMENTS OF ORGANIZATION: ORGANIZATION

CHART; SPAN OF CONTROL - GRAICUNAS FORMULAE;
CENTRALISATION &DECENTRALIZATION
Elements of organization:
1. Work Specialization.
2. Departmentalization.
3. Chain of command- Authority , Responsibility , Unity of command.
4. Span of control.
5. Centralization and Decentralization.
6. Formalization.

Organization chart:-Visual presentation

Span of Control:
It is the term used more commonly in business management , particularly human resource
management.
It refers to the number of subordinates a supervisor has.
Graicunas formulae:
1. Direct Single Relationships.
2. Direct Group Relationships.
3. Cross Relationships.

Example:

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(a) Direct Single Relationships:-

G with M, and G with S, i.e. a total of 2 direct single relationships.
(b) Direct Group Relationships:-
G with M in presence of S, and G with S in presence of M, i.e. a total of 2 direct group
relationships.
(c) Cross Relationships:-
M with S, and S with M, i.e. again a total of 2 cross relationships.
Therefore, total number of relationships which Gaurav (G) has to control are:- 2 + 2 + 2 = 6
relationships.
Thus, when the number of subordinates is 2, the number of relationships, which the superior
(boss) has to control is 6. Similarly, when the number of subordinates is 3, the number of
relationships to control will be 18.
Graicunas Formula

Example of Graicunas Formula

Consider this e.g. If a superior has 5 subordinates (n=5) then the number of relationships (r)
which he has to control can be calculated as follows:-
By substituting n=5 in above formulae
We get, r=100
Limitations of Graicunas Theory
The Graicunas Theory is criticised because of the following reasons:-
He gives more importance to the numerical factor.
He gives more importance to the relationships.
Definition of Centralization:

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A pivot location or group of managerial personnel for the planning and decision-making or
taking activities of the organisation is known as Centralization.
Definition of Decentralization:
The assignment of authorities and responsibilities by the top level management to the middle
or low-level management is known as Decentralization.

TYPES OF MECHANISTIC AND ORGANIC STRUCTURES

➢ Mechanistic organization.
➢ Organic organization.
➢ Types of mechanistic and organic structures of organization.
o Line organization
o Line & staff organization.
o Functional organization.
o Committee organization.
o Matrix organization.
o Virtual organization.

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o Cellular organization.
o Team structure
o Boundary less organization.
o Inverted pyramid structure
o Lean and flat organization structure.

MECHANISTIC ORGANIZATION:
❖ Mechanistic organization is hierarchical and bureaucratic.
❖ It is characterized by its (1) highly centralized authority, (2) formalized procedures
and practices, and (3) specialized functions.
❖ Mechanistic organization is relatively easier and simpler to organize.

Structure:
Companies in a mechanistic organization structure typically hold tight control, over
processes and employees; with an iron fist so to speak. Rules are implemented and rarely
deviated from while there is also a very clear chain of command to delegate responsibilities
and power throughout the organization. Again, it is manufacturing companies that are well
known for this type of structure but there are other groups that benefit from mechanistic
organization like universities.

ORGANIC ORGANIZATION:
❖ Organic organization is characterized by (1) Flatness communications and
interactions are horizontal (2) Low specialization wherever it is most
useful(3) Decentralization: great deal of formal and informal participation in
decision making.

STRUCTURE:
Companies in an organic organization structure typically have a more open
communication and contribution to tasks at hand. The structure of the business is
more adaptable and flexible to changes. The environment is unpredictable but because
of the freedom afforded the employees and management it is better maintained. Good
examples of this type of structure would be Google and the coveted positions that lie
within the Face book Corporation. Organic organizations have quickly realized that a
happy workplace makes for a happy employee.

LINE ORGANIZATION STRUCTURE:

❖ Business or industry structure with self contained department’s . Authority travels
downwards from top and accountability upwards from bottom along the chain of
command and each department manager has control over his or her department’s
affair and employees.

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❖ This is the simplest and oldest. The authority flows from top to the lower levels.
This organization is a vertical structure where one person delegates authority to
his subordinate and who in turn delegates to his subordinate and so on.
❖ Authority flows vertically from top level person to all the persons responsible for
the execution of work. Responsibility, on the other hand, flows upwards.
❖ Everybody is responsible for his work and is accountable to his boss.
❖ Since authority and responsibility flow in an ‘unbroken straight line’, it is called
line organization.
❖ Line organization is of two types:
1. Pure line organization.
2. Departmental line organization.

MERITS OF LINE ORGANIZATION STRUCTURE:

The line organization has the following good points:
1. Simplicity
2. Identification of Authority and Responsibility
3. Co-ordination
4. Effective Communication
5. Economical
6. Quick Decisions
7. Unity of Command
8. Effective Control and Supervision
9. Executive Development and flexibility.

DEMERITS OF LINE ORGANIZATION STRUCTURE:

1. Excess work
2. Lack of coordination.
3. Lack of specialization.

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4. Improper communication.
5. Instability.

SUITABILITY OF LINE ORGANIZATION STRUCTURE:

This form of organization is followed in military establishments. The ‘Commander-in-Chief
is at the top with various other officers at the lower levels. The officers at downward
positions derive authority from the top. The modern military organizations do not entirely
rely on line organization. They have staff wings like intelligence, medical and so on.

FUNCTIONAL ORGANIZATION STRUCTURE:

❖ F.W.Taylor, who is better known as the father of scientific management
developed the concept of ‘Functional Organization’.
❖ As the very name suggests, functional organization implies that the
organization should be based on various functions.
❖ The principle of specialization embodies the concept that both the workers and
the supervisors can develop a higher degree of proficiency by separating the
manual from the mental requirements.

MERITS OF FUNCTIONAL ORGANIZATION STRUCTURE:

1. Specialization.
2. Increased efficiency.
3. Limited duties.
4. Scope of expansion.
5. Flexibility.

DEMERITS OF FUNCTIONAL ORGANIZATION STRUCTURE:

Despite of the above advantages ,these organizations suffer from following disadvantages :
1. Conflict in authority.
2. Difficulty in Pin pointing responsibility.
3. Expensive.
4. Discipline is lacked.
5. Lack of coordination.

LINE AND STAFF ORGANIZATION STRUCTURE:

❖ The line and staff organization is an improvement over the above mentioned
two systems i.e., line organization and functional organization. The line

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organization concentrates too much on control whereas the functional system

divides the control too much.
❖ The need was, therefore, for a system that will ensure a proper balance
between the two. The need has been fulfilled by line and staff organization.

❖ The staff is usually of three types :

1. Personal staff.
2. Specialized staff.
3. General staff.
MERITS OF LINE ORGANIZATION STRUCTURE:

1. Specialization.
2. Better decision.
3. Less burden on line officers.
4. Advancement of research.
5. Training for line officers.

DEMERITS OF LINE ORGANIZATION STRUCTURE:

1. Conflict b/n line and staff authorities.
2. Lack of responsibility.
3. The system is quiet expensive.
4. More reliance on staff.
COMMITTEE ORGANIZATION STRUCTURE:
❖ A number of persons may come together to take a decision, decide a course of action,
advise line officers on some matters, it is a committee form of organization.
❖ It is a method of collective thinking, corporate judgment and common decision. A
committee is not a separated type of organization as such. But it is a method of
attaching persons or groups to line departments for advice and guidance in business
planning and execution.
❖ A group of competent and interested persons pool their thoughts for facilitating
decision making process.
❖ The thinking of varied persons is pooled together through deliberations and
discussions and common decisions are reached.
❖ Because of collective information and analysis, committees are more likely to come
up with solutions to complex problems.
The committees are set up for the following reasons:

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1. The committees provide a forum for exchanging ideas among organizational

members.
2. The exchange of ideas among members may generate some suggestions and
recommendations which may be useful for the organization.
3. There can be proper discussion on present problems and efforts are made to find
solutions
TYPES OF COMMITTEES:
1. Formal and informal committees.
2. Advisory committees.
3. Line committees.

MERITS OF COMMITTEE ORGANIZATION STRUCTURE:

1. Pooling of opinions.
2. Better coordination.
3. Balancing of views.
4. Motivation.
5. Better communication.
6. Executive training.
7. Dispersion of power.
DEMERITS OF COMMITTEE ORGANIZATION STRUCTURE:
1. Delay
2. Compromise.
3. No accountability.
4. Strained relations.
5. Lack of effectiveness.
6. No accountability.

MATRIX ORGANIZATION STRUCTURE:

❖ A matrix organizational structure is one of the most complicated reporting
structures a company can implement.

❖ A matrix organizational structure is a company structure in which the reporting

relationships are set up as a grid, or matrix, rather than in the traditional hierarchy.
In other words, employees have dual reporting relationships - generally to both a
functional manager and a product manager.

Features of matrix organization:

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❖ Matrix organization is a hybrid structure of functional and project

organizations.
❖ Functional manager has authority over of the functional objectives of the
project.
❖ Project manager has authority over the administrative objectives of the project.
❖ There is problem of the unity of command.

SUITABILITY OF MATRIX ORGANIZATION STRUCTURE:

This form of organization is suitable for multi-project organizations. It is mainly used for
large construction companies, that construct huge residential and commercial projects at
different places at the same time

MERITS OF MATRIX ORGANIZATION STRUCTURE:

1. Sound decisions.
2. Development of skills.
3. Responds to change in environment
4. Specialization.
5. Optimum utilization of resources.
6. Motivation.
7. Higher efficiency.
8. Strategic planning.
DEMERITS OF MATRIX ORGANIZATION STRUCTURE:
1. Increase in work load
2. Higher operational cost
3. Absence of unity of command.
4. Difficulty of balance.
5. Power struggle.
6. Complexity.
7. Shifting of responsibility.

VIRTUAL ORGANIZATION STRUCTURE:

❖ This organization is also known as digital organization, network organization
or modular organization.
❖ Simply speaking, a virtual organization is a network of cooperation made
possible by Information and Communication Technology, which is flexible
and comes to meet the dynamics of the market.

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❖ The virtual organization is a social network in which all the horizontal and
vertical boundaries are removed. it is a boundary less organization. The ICT is
the backbone of virtual organization.
❖ It is the ICT that coordinates the activities, combines the workers’ skills and
resources with an objective to achieve the common goal set by a virtual
organization.
❖ Managers in these organizations coordinate and control external relations with
the help of computer network links.
❖ The virtual form of organization is increasing in India also. Nike, Reebok,
Puma, Dell Computers, etc., are the prominent companies working virtually.
Characteristics of virtual organization:
1. Flat organization
2. Dynamic
3. Informal communication.
4. Power flexibility.

MERITS OF VIRTUAL ORGANIZATION STRUCTURE:

1. It saves time, travel expenses and eliminates lack of access to experts.
2. Virtual teams can be organised whether or not members are in reasonable proximity to
each other.
3. Use of outside experts without incurring expenses for travel, logging and downtime.
4. Dynamic team membership allows people to move from one project to another.
5. Employee can be assigned to multiple, concurrent teams.
6. Teams’ communication and work reports are available online to facilitate swift
responses to the demands of the (global) market.

MERITS OF VIRTUAL ORGANIZATION STRUCTURE:

1. The lack of physical interactions with its associated verbal and non-verbal cues and also
the synergies that often accompany face-to-face interaction
2. Non-availability of paraverbal and non-verbal cues such as voice, eye movement, facial
expression, and body language which help in better communication.
3. Ability to work even if the virtual teams are miles apart and the members have never or
rarely met each other face-to-face.

TEAM STRUCTURE:

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❖ One of the newest forms of business organization is the team-based lateral organizational
structure.
❖ A team based lateral structure is an organizational chart that groups employees on the
same employment level into teams that perform specific job functions.
❖ This structure combines the low-overhead, minimal management structure of a lateral
structure with the team efforts common to a hybrid structure.
❖ One organizational chart for team structures in a business includes one top manager that
supervises lower managers; each lower manager supervises a team that generally lacks
ranks. Each team member has a specific role to fill and a specific task to work toward a
common goal with other team members. One team has a specific task to accomplish,
while another team that has the same rank works on another task. Both teams are part of
a larger goal.
❖ Teams in team structure theory need to have cohesion in order to work together, a term
sometimes known as synergy. The goal of managers in a team structure is to take this
synergy to motivate teams to achieve a common goal.

MERITS OF TEAM ORGANIZATION STRUCTURE:

1. Team-based organizations filter decision making down to all levels of management,
while traditionally structured organizations rely on top management to make
decisions.
2. Team-based organizations require that all employees participate in the decision-
making process.
3. Employees feel they are part of the total organization, rather than members of an
individual department. Consequently, team-based organizations run more efficiently
and effectively, giving them a competitive edge in today's global market.
DEMERITS OF TEAM ORGANIZATION STRUCTURE:

1. Recognition for individual achievement within a hierarchical organization is a

motivator and a factor in determining compensation. However, team-based
organizations value team performance over individual performance. This lack of
focus on the individual can be a disadvantage of team-based organizations, since
participants seek recognition for their individual contributions
2. Motivating individuals in a team-based organization can be more challenging.
3. In addition, team-based organizations are decentralized rather than hierarchical. This
lack of centralization is another disadvantage of team-based organizations, because
decentralization can lead to coordination and control problems for management.
BOUNDARY LESS ORGANIZATION STRUCTURE:
❖ Boundary less organizations “transcend the rigid lines of bureaucracy and
divisional boundaries within a corporation and ignore the borders where the
corporation itself is separated from its markets, customers and stake holders.

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❖ Boundary less organizations will often make use of the latest technology and tools
to facilitate the breaking down of traditional borders, such as virtual collaboration
and flexible working.
❖ With regard to employees, they may have more responsibility for their own
projects and targets and be more able to achieve results in a way that’s appropriate
for the project at hand.
❖ Because many boundary less organizations are dispersed across geographic
borders, employees may be from different cultures and countries but must work
together.
❖ Because of this, boundary less organizations require a strong set of core values
and a strong vision.
❖ Employees no longer work in isolation but work as part of a team on broad,
company-wide projects, quality management, just-in-time methods, lean
production, and supply-chain management,
❖ Sometimes boundary organizations still require boundary-spanning activities.
These help to focus groups and keep everyone on task. These boundary-spanning
activities need to be as flexible as the groups they support because they
restructure as often as the company does.
MERITS OF BOUNDARY LESS ORGANIZATION STRUCTURE:
1. Good integration.
2. Coordination is improved.
3. Adaptable to environmental changes.
DEMERITS OF BOUNDARY LESS ORGANIZATION STRUCTURE:
1. Difficult to overcome political and authority boundaries.
2. Time taking.

INVERTED PYRAMID ORGANIZATION STRUCTURE:

❖ The traditional business is styled in the form of a pyramid with the chief
executive officer at the top, senior executives underneath, and so on. There are
many layers in the management structure, which reflects who reports to whom.
In the inverted management pyramid .
❖ Customers have the most important role in driving the business. It also gives the
front line employees a similar ability as they are closest to the customers. Since
the customers are considered primary, it also helps to improve the business.
❖ The flow of communication from the customers and within the enterprise
improves vastly.
❖ Once the inverted pyramid idea is accepted, the role of management needs to
undergo a change: From a commanding role, it should become a supporting
one.

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❖ The inverted pyramid is a metaphor for a reversal of traditional management

practices. Employees who are closest to clients or production processes are
placed at the top and managers at the bottom.
❖ The employee is empowered with greater decision-making authority and
freedom of action. The manager becomes a facilitator spearheading a team
effort. In theory, overall organizational performance becomes faster, more
adaptable and more effective.
MERITS OF INVERTED PYRAMID ORGANIZATION STRUCTURE:

1. In this structure the customers are given the first preference

2. Front line employees are given more responsibility and authority in the organization
than the top management because they are closest to the customers.
3. Decentralization of authority and responsibility place a very important role in prompt
and timely decisions.
4. The inverted pyramid structure motivates the employees as they are placed in a better
position than the top management.

MERITS OF INVERTED PYRAMID ORGANIZATION STRUCTURE:

1. This structure may be dangerous because the role of top management is shifted to
supporting one from that of commanding one which ultimately leads to the direction
less- organization.
2. In this structure there is absence of clear authority and responsibility levels as a
result of which people become confused and business veers out of control.
3. Frontline supervisor cannot make strategies regarding organizations even though
they have proper understanding of the customers because they are not equipped to do
so

LEAN AND FLAT ORGANIZATION STRUCTURE:

❖ A flat organization will have relatively few layers or just one layer of management. This
means that the “Chain of Command” from top to bottom is short and the “span of control
is wide”.
❖ Span of control refers to the number of employees that each manager is responsible for. If
a manager has lots of employees reporting to them, their span of control is said to be wide.
❖ A manager with a small number of direct reports has a narrow span of control. Due to the
small number of management layers, flat organizations are often small organizations.
❖ Flat structures work well for small businesses or those with a small number of job roles.
However a business with a flat structure needs to ensure that each manager's span of
control does not become too wide so that they can not manage their direct reports
effectively.
MERITS OF LEAN AND FLAT ORGANIZATION STRUCTURE:

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1. Greater communication between management and workers.

2. Better team sprit as fewer management layers increase interaction between employees
on different levels.
3. Less bureaucracy and easier decision making.
4. Fewer management layers may reduce costs as managers cost more than non managers.
Also employees at higher levels in the organisation expect to be paid more than those
on lower levels.

MERITS OF LEAN AND FLAT ORGANIZATION STRUCTURE:

1. Employees may have more than one manager as there are a number of managers at the
same level in the organization
2. May hinder the growth of the organization especially if managers have wide spans of
control.
3. Structure limited to small organizations such as partnerships, co-operatives and private
limited companies.
4. Lack of layers may reduce opportunities for high level strategic management

***

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