Essentials of Management eNotes
Nature of Management
Meaning
Management is a purposive activity. It is something that directs group efforts towards the attainment of certain pre-determined goals. It is the process of working with and through others to effectively achieve the goals of the organization, by efficiently using limited resources in the changing world. Of course, these goals may vary from one enterprise to another. E.g.: For one enterprise it may be launching of new products by conducting market surveys and for other it may be profit maximization by minimizing cost.
Defination
Management is a universal phenomenon. It is a very popular and widely used term. All organizations - business, political, cultural or social are involved in management because it is the management which helps and directs the various efforts towards a definite purpose.
According to Harold Koontz, “Management is an art of getting things done through and with the people in formally organized groups. It is an art of creating an environment in which people can perform and individuals and can co-operate towards attainment of group goals”.
According to F.W. Taylor, “Management is an art of knowing what to do, when to do and see that it is done in the best and cheapest way”.
Importance & Functions
It helps in Achieving Group Goals
Optimum Utilization of Resources
Reduces Costs
Establishes Sound Organization
Establishes Equilibrium
Essentials for Prosperity of Society
Managements as Art, Science & Profession
Management as Art-
Art implies application of knowledge & skill to trying about desired results. An art may be defined as personalized application of general theoretical principles for achieving best possible results. Art has the following characters –
Practical Knowledge
Personal Skill
Creativity
Perfection through practice Goal Oriented
Managements as Art, Science & Profession
Management as Science-
Science is a systematic body of knowledge pertaining to a specific field of study that contains general facts which explains a phenomenon. It establishes cause and effect relationship between two or more variables and underlines the principles governing their relationship. These principles are developed through scientific method of observation and verification through testing.
Universal Acceptance Principles
Experimentation & Observation
Cause & Effect Relationship
Test of Validity & Predictability
Managements as Art, Science & Profession
Management as Profession-
Over a large few decades, factors such as growing size of business unit, separation of ownership from management, growing competition etc have led to an increased demand for professionally qualified managers. The task of manager has been quite specialized. As a result of these developments the management has reached a stage where everything is to be managed Professionally.
Specialized Knowledge
Formal Education & Training
Social Obligations
Code of Conduct
Representative Association
UNIT II
PLANNING
DEFINITION
According to Koontz O'Donnel - "Planning is an intellectual process, the conscious determination of courses of action, the basing of decisions on purpose, acts and considered estimates".
NATURE AND PURPOSE OF PLANNING
Nature of Planning
1.Planning is goal-oriented: Every plan must contribute in some positive way towards the accomplishment of group objectives. Planning has no meaning without being related to goals.
2.Primacy of Planning: Planning is the first of the managerial functions. It precedes all other management functions.
3.Pervasiveness of Planning: Planning is found at all levels of management. Top management looks after strategic planning. Middle management is in charge of administrative planning. Lower management has to concentrate on operational planning.
4.Efficiency, Economy and Accuracy: Efficiency of plan is measured by its contribution to the objectives as economically as possible. Planning also focuses on accurate forecasts.
5.Co-ordination: Planning co-ordinates the what, who, how, where and why of planning.
Without co-ordination of all activities, we cannot have united efforts.
6.Limiting Factors: A planner must recognize the limiting factors (money, manpower etc) and formulate plans in the light of these critical factors.
7.Flexibility: The process of planning should be adaptable to changing environmental conditions.
8.Planning is an intellectual process: The quality of planning will vary according to the quality of the mind of the manager
Features of Planning
It is primary function of management.
It is an intellectual process
Focuses on determining the objectives
Involves choice and decision making
It is a continuous process
It is a pervasive function
a) Perception of Opportunities:
Although preceding actual planning
and therefore not strictly a part of
the planning process, awareness of an opportunity is the real starting
point for planning. It includes
a preliminary look at possible
future opportunities and the ability
to see them clearly and completely,
knowledge of where we stand in the light of our strengths and weaknesses, an understanding of why we wish to solve
uncertainties, and a vision of what we expect to gain. Setting realistic objectives depends on this awareness. Planning
requires realistic diagnosis of the opportunity situation.
b) Establishing Objectives:
The first step in planning itself is
to establish objectives for the entire enterprise and then for each subordinate unit. Objectives
specifying the results expected indicate the end points of what is to be done, where the primary
emphasis is to be placed, and what is to be accomplished by the network of strategies, policies,
procedures, rules, budgets
and programs.
Enterprise objectives should give
direction to the nature of all major plans which, by reflecting these objectives, define the objectives of major departments. Major department objectives, in turn, control the
objectives of subordinate departments, and so on down the line. The objectives of lesser departments will
be better framed, however, if subdivision managers understand the overall enterprise objectives and the implied
derivative goals and if they are given an opportunity to contribute their ideas to them and to the setting of their own goals.
c) Considering the Planning
Premises:
Another logical step in planning is to establish, obtain
agreement to utilize and disseminate critical
planning premises. These are forecast data of a factual nature, applicable
basic policies, and existing company
plans. Premises, then, are planning assumptions – in other words, the expected environment of plans in
operation. This step leads to one of the major principles of planning.
The more individuals charged with
planning understand and agree to utilize consistent planning premises, the more coordinated enterprise planning will be.
Planning premises include far more
than the usual basic forecasts of population, prices, costs, production, markets, and similar
matters.
Because the future environment of
plans is so complex, it would not be profitable or realistic to make assumptions about every detail
of the future environment of a plan.
Since agreement to utilize a given set
of premises is important to coordinate
planning, it becomes a major
responsibility of managers, starting with those at the top, to make sure that subordinate managers understand the
premises upon which they are expected to plan. It is not unusual for chief executives in well- managed companies to force
top managers with differing views, through
group deliberation, to arrive at a set of major premises that all can accept.
d) Identification of alternatives:
Once the organizational objectives
have been clearly stated and the planning premises have been developed, the manager should list as many available
alternatives as possible for reaching those objectives.
The focus of this step is to search
for and examine alternative courses of action, especially those not immediately apparent. There is
seldom a plan for which reasonable
alternatives do not exist, and quite often an alternative that is not obvious proves
to be the best.
The more common problem is not finding
alternatives, but reducing the number of alternatives so that the most promising may be analyzed. Even with
mathematical techniques and the computer,
there is a limit to the number of alternatives that may be examined. It is
therefore usually necessary
for the planner to reduce by preliminary examination the number of alternatives to those promising the most
fruitful possibilities or by mathematically eliminating, through the process
of approximation, the least promising ones.
e) Evaluation of alternatives
Having sought out alternative courses
and examined their strong and weak points, the
following step is to evaluate them by weighing the various factors in
the light of premises and goals. One
course may appear to be the most profitable but require a large cash outlay and
a slow payback; another may be less
profitable but involve less risk; still another may better suit the company in long–range objectives.
If the only objective were to examine
profits in a certain business immediately, if the future were not uncertain, if cash position and
capital availability were not worrisome, and if most factors could be reduced to definite data, this
evaluation should be relatively easy. But typical planning is replete with uncertainties, problems of capital
shortages, and intangible factors, and so evaluation is usually very difficult, even with relatively
simple problems. A company may wish to enter
a new product line primarily for purposes of prestige; the forecast of expected
results may show a clear financial
loss, but the question is still open as to whether the loss is worth
the gain.
f) Choice of alternative plans
An evaluation of alternatives must include an evaluation of the premises
on which the alternatives
are based. A manager usually finds that some premises are unreasonable and can therefore be excluded from further
consideration. This elimination process helps the manager determine
which alternative would best accomplish organizational objectives.
g) Formulating of Supporting Plans
After decisions are made and plans are set, the final
step to give them meaning is to numberize them
by converting them to budgets. The overall budgets of an enterprise represent
the sum total of income and expenses
with resultant profit or surplus and budgets of major balance– sheet items such as cash and capital
expenditures. Each department or program of a business or other enterprise can have its own budgets, usually of
expenses and capital expenditures, which tie into the overall budget.
If this process is done well, budgets
become a means of adding together the various plans and also important standards
against which planning
progress can be measured.
h) Establishing sequence of activities
Once plans that furnish the organization with both
long-range and short-range direction have been
developed, they must be implemented. Obviously, the organization can not
directly benefit from planning
process until this step is performed.
MANAGEMENT BY OBJECTIVES (MBO)
MBO
was first popularized by Peter Drucker
in 1954 in his book 'The practice of Management’.
It is a process of agreeing within an organization so that management and employees buy into the objectives and
understand what they are. It has a precise and written description objectives ahead, timelines for their motoring
and achievement.
The employees and manager agree to what the employee
will attempt to achieve in a period ahead and the employee
will accept and buy into the objectives.
Definition
“MBO is a process whereby the superior and the mangers
of an organization jointly identify its common
goals, define each individual’s major area of responsibility in terms of
results expected of him, and use
these measures as guides for operating the unit and assessing the contribution of each of its members.”
Features of MBO
1. MBO is concerned with goal setting and planning for individual managers and theirunits.
2. The essence of MBO is a process of joint goal setting between a supervisor and a subordinate.
3.
Managers work with their subordinates to establish the performance goals that are consistent with their higher
organizational objectives.
4. MBO focuses attention on appropriate goals and plans
.5. MBO facilitates control through the periodic development and subsequent evaluation of individual goals and plans.
DECISION MAKING
The
word decision has been derived
from the Latin word "decidere" which means "cutting off". Thus, decision
involves cutting off of alternatives between those that are desirable and those that are not desirable.
In the words of George R. Terry, "Decision-making
is the selection based on some criteria from
two or more possible alternatives".
Characteristics of Decision Making
·
Decision making implies that there are various alternatives and the most desirable alternative is chosen to solve the problem or to arrive at expected results.
·
The decision-maker has freedom
to choose an alternative.
·
Decision-making may not be completely rational but may be judgemental
and emotional.
·
Decision-making is goal-oriented.
·
Decision-making is a
mental or intellectual process because
the final decision is made by the decision-maker.
·
A decision may be
expressed in words or may be
implied from behaviour.
·
Choosing from among the alternative courses
of operation implies
uncertainty about the final result
of each possible course of operation.
·
Decision making is rational. It is taken only after a thorough analysis
and reasoning and weighing the consequences of the various alternatives.
DECISION MAKING
PROCESS
The decision
making process is presented in the figure
below:
1. Specific
Objective: The need for decision making arises in
order to achieve certain specific objectives.
The starting point in any analysis of decision making involves the
determination of whether a decision needs to be made.
2. Problem
Identification: A problem is a felt need, a
question which needs a solution. In the words
of Joseph L Massie "A good decision is dependent upon the recognition of the right
problem". The objective
of problem identification is that if the problem
is precisely and specifically
identifies, it will provide a clue in finding a possible solution. A problem
can be identified clearly, if managers
go through diagnosis and analysis of the problem.
Diagnosis: Diagnosis is the process
of identifying a problem from its signs and symptoms. A symptom is a condition or set
of conditions that indicates the existence of a problem. Diagnosing
the real problem implies knowing the
gap between what is and what ought to be, identifying the reasons
for the gap and understanding the problem in
relation to higher objectives of the organization.
Analysis: Diagnosis gives rise to analysis. Analysis of a problem
requires:
·
Who would make decision?
·
What information would be needed?
·
From where the information is available?
Analysis helps
managers to gain an insight
into the problem.
3. Search for
Alternatives: A problem can be solved in several
ways; however, all the ways cannot be
equally satisfying. Therefore, the decision maker must try to find out the
various alternatives available in order
to get the most satisfactory result of a decision. A decision maker can use several sources for identifying alternatives:
·
His own past experiences
·
Practices followed
by others and
·
Using creative techniques.
4. Evaluation of
Alternatives: After the various alternatives are
identified, the next step is to evaluate
them and select the one that will meet the choice criteria. /the decision maker
must check proposed alternatives
against limits, and if an alternative does not meet them, he can discard it. Having narrowed down the
alternatives which require serious consideration, the decision maker will go for evaluating how each alternative may
contribute towards the objective supposed to be achieved
by implementing the decision.
5. Choice of
Alternative: The evaluation of various alternatives
presents a clear picture as to how
each one of them contribute to the
objectives under question. A comparison is made among the likely
outcomes of various
alternatives and the best one is
chosen.
6. Action: Once the alternative is selected, it is put into action. The actual
process of decision making ends with the choice of
an alternative through which the objectives can be achieved.
7. Results: When the decision is put into action, it brings certain results.
These results must correspond with
objectives, the starting point of decision process, if good decision has been made and implemented properly. Thus,
results provide indication whether decision making and its implementation is proper.
ORGANIZING PROCESS
Organization is the process of
establishing relationship among the members of
the enterprise. The
relationships are created in terms of authority and responsibility. To organize
is to harmonize, coordinate or
arrange in a logical and orderly manner. Each member in the organization is assigned a specific responsibility or duty to perform and is granted
the corresponding authority to
perform his duty. The managerial function of organizing consists in making a rational division of work into
groups of activities and tying together the positions representing grouping of activities so as to achieve a rational,
well coordinated and orderly structure
for the accomplishment of work. According to Louis A Allen, "Organizing
involves identification and grouping the activities to be performed
and dividing them among the individuals and creating authority
and responsibility relationships among them for the accomplishment of organizational objectives." The various
steps involved in this process
are:
a) Determination of Objectives:
It is the first step in building up
an organization. Organization is always related to certain objectives. Therefore, it is essential for
the management to identify the objectives before starting any activity. Organization structure is
built on the basis of the objectives of the enterprise. That means, the structure of the organization
can be determined by the management only after
knowing the objectives to be accomplished through the organization. This step helps the management not only in framing the
organization structure but also in achieving the enterprise objectives with minimum cost and efforts.
Determination of objectives will consist in deciding as to why the proposed organization is to be set up and, therefore,
what will be the nature of the work
to be accomplished through the organization.
b) Enumeration of Objectives:
If the members of the group are to
pool their efforts effectively, there must be proper division of the major activities. The first step in organizing
group effort is the division of the total job
into essential activities. Each job should be properly classified and grouped.
This will enable the people to know
what is expected of them as members of the group and will help in avoiding duplication of efforts. For example, the
work of an industrial concern may be divided into the following major functions – production, financing, personnel, sales, purchase, etc.
c) Classification of Activities:
The next step will be to classify
activities according to similarities and common purposes and functions and taking the human and material resources into
account. Then, closely related and
similar activities are grouped into divisions and departments and the
departmental activities are further
divided into sections.
d) Assignment of Duties:
Here, specific job assignments are made to different subordinates for ensuring a certainty
of work performance. Each individual should be given a specific job to do
according to his ability and made
responsible for that. He should also be given the adequate authority to do the job assigned to him. In the words of
Kimball and Kimball - "Organization
embraces the duties of designating
the departments and the personnel that are to carry on the work, defining their functions and specifying the relations that are to exist between
department and individuals."
e) Delegation of Authority:
Since so many individuals work in the
same organization, it is the responsibility of
management to lay down structure
of relationship in the organization. Authority without responsibility is a dangerous thing and
similarly responsibility without authority is an empty vessel. Everybody should clearly know to whom he is accountable; corresponding to the responsibility authority is delegated
to the subordinates for enabling
them to show work performance. This will help in the smooth
working of the enterprise by facilitating delegation of responsibility and authority.
ORGANIZATION STRUCTURE
An organization structure is a
framework that allots a particular space for a particular department or an individual and shows its
relationship to the other. An organization structure shows the authority
and responsibility relationships between the various
positions in the organization
by showing who reports to whom. It is an established pattern of relationship
among the components of the organization.
March and Simon have stated that-"Organization structure consists simply of those aspects of pattern of behavior in the organization that are relatively stable and change only slowly." The structure of an organization is generally shown on an organization chart. It shows the authority and responsibility relationships between various positions in the organization while designing the organization structure, due attention should be given to the principles of sound organization
PRINCIPLES OF ORGANIZATION STRUCTURE
Modern organizational structures have
evolved from several organizational theories,
which have identified certain principles as basic to any organization structure.
a)
Line and Staff Relationships:
Line authority refers to the scalar
chain, or to the superior-subordinate linkages, that extend throughout the hierarchy (Koontz,
O'Donnell and Weihrich). Line employees are responsible
for achieving the basic or strategic objectives of the organization, while
staff plays a supporting role to line employees and provides services. The relationship between
line and staff
is crucial in organizational structure, design and efficiency. It is also an important
aid to information processing and coordination.
b)
Departmentalization:
Departmentalization is a process of
horizontal clustering of different types of functions and activities on any one level of the hierarchy.
Departmentalization is conventionally based on
purpose, product, process,
function, personal things
and place.
c)
Span of Control:
This refers to the number of specialized activities or individuals
supervised by one person. Deciding the span of control is
important for coordinating different types of activities effectively.
d)
De-centralization and Centralization:
De-centralization refers to decision
making at lower levels in the hierarchy of authority. In contrast, decision making in a centralized type of
organizational structure is at higher levels. The degree of centralization and de-centralization depends on the
number of levels of hierarchy, degree of coordination, specialization and span of control.
Every organizational structure contains both
centralization and de-centralization, but to varying degrees. The extent of this can be determined by identifying how much of the decision
making is concentrated at
the top and how much is delegated to lower levels. Modern organizational structures show a strong tendency
towards de-centralization.
FORMAL AND INFORMAL
ORGANIZATION
The formal organization refers to the
structure of jobs and positions with clearly defined functions and relationships as prescribed by the top management.
This type of organization is built by
the management to realize objectives of an enterprise and is bound by rules,
systems and procedures. Everybody is
assigned a certain responsibility for the performance of the given task and given the required amount of
authority for carrying it out. Informal organization, which does not appear on the organization chart,
supplements the formal organization in achieving organizational goals effectively and efficiently. The working of
informal groups and leaders is not as simple as it may
appear to be. Therefore, it is
obligatory for every manager to study thoroughly
the working pattern of informal relationships in the organization and to use
them for achieving organizational objectives.
FORMAL ORGANIZATION
Chester I Bernard
defines formal organization as -"a system of consciously coordinated activities
or forces of two or more persons. It refers to the structure of well-defined
jobs, each bearing a definite measure
of authority, responsibility and accountability." The essence of formal organization is conscious common purpose and comes
into being when persons–
(i) Are able to communicate with each other
(ii) Are willing to act and
(iii) Share a purpose.
The formal organization is built around
four key pillars.
They are:
·
Division of labor
·
Scalar and functional processes
·
Structure and
·
Span of control
Thus, a formal
organization is one resulting from planning where
the pattern of structure has already
been determined by the top management.
Characteristic Features
of formal organization
·
Formal organization structure
is laid down by the top management to achieve organizational goals.
·
Formal organization prescribes the relationships amongst
the people working
in the organization.
·
The organization structures is
consciously designed to enable the people of the organization to work together
for accomplishing the common objectives of the enterprise
·
Organization structure
concentrates on the jobs to be performed and not the individuals who are to perform
jobs.
·
In a formal organization,
individuals are fitted into jobs and positions and work as per the managerial decisions. Thus, the formal relations
in the organization arise from the pattern of
responsibilities that are created by the
management.
·
A formal organization is bound by rules, regulations and procedures.
·
In a formal organization,
the position, authority, responsibility and accountability of each level
are clearly defined.
·
Organization structure
is based on division of labor and specialization to achieve efficiency in operations.
·
A formal organization is deliberately impersonal. The organization does not take into consideration the sentiments of organizational members.
·
The authority and responsibility relationships created by the organization structure are to be honored
by everyone.
·
In a formal organization, coordination proceeds
according to the prescribed pattern.
Advantages of formal organization
·
The formal organization structure
concentrates on the jobs to be performed. It, therefore, makes
everybody responsible for a given task.
·
A formal organization is bound by rules, regulations and procedures. It thus ensures
law and order in the organization.
·
The organization structure enables
the people of the organization to work together
for accomplishing the common objectives of the enterprise
Disadvantages or criticisms of formal organization
·
The formal organization does not take into consideration the sentiments of organizational members.
·
The formal organization
does not consider the goals
of the individuals. It is designed to achieve the goals of the organization only.
·
The formal organization is bound by rigid rules,
regulations and procedures. This makes the achievement of goals difficult.
INFORMAL ORGANIZATION
Informal organization refers to the
relationship between people in the organization based on personal attitudes, emotions, prejudices, likes, dislikes
etc. an informal organization is an organization
which is not established by any formal authority, but arises from the personal
and social relations of the people.
These relations are not developed according to procedures and regulations laid down in the
formal organization structure; generally large
formal groups give rise to small
informal or social groups. These groups may be based on same taste, language, culture or some other factor. These groups
are not pre-planned, but they develop automatically within the organization according to its environment.
Characteristics features
of informal organization
·
Informal organization is not
established by any formal authority. It is unplanned and arises spontaneously.
·
Informal organizations reflect
human relationships. It arises from the personal and social relations
amongst the people working in the organization.
·
Formation of informal
organizations is a natural process. It is not based on rules, regulations and procedures.
·
The inter-relations amongst the
people in an informal organization cannot be shown in an organization chart.
·
In the case of informal organization, the people cut across formal channels of communications and communicate amongst
themselves.
·
The membership of informal
organizations is voluntary. It arises spontaneously and not by deliberate or conscious
efforts.
·
Membership of informal groups can be overlapping as a
person may be member of a number of informal
groups.
·
Informal organizations are
based on common taste, problem, language, religion, culture, etc. it is influenced by the personal
attitudes, emotions, whims, likes and dislikes etc. of the people
in the organization.
Benefits of Informal
organization
·
It blends with the formal organization to make it more effective.
·
Many things which cannot be achieved
through formal organization can be achieved
through informal organization.
·
The presence of informal
organization in an enterprise makes
the managers plan and act more carefully.
·
Informal organization acts as a means by which the
workers achieve a sense of security and belonging. It provides social satisfaction to group members.
·
An informal organization has a powerful
influence on productivity and job satisfaction.
·
The informal leader lightens
the burden of the formal manager
and tries to fill in the gaps in the manager's ability.
·
Informal organization helps the
group members to attain
specific personal objectives.
·
Informal organization is the best means
of employee communication. It is very fast.
DIFFERENCES BETWEEN FORMAL AND INFORMAL ORGANIZATION
|
Formal Organization |
Informal Organization |
|
1. Formal organization is established with
the explicit aim of achieving well-defined goals. |
1. Informal organization springs on its own. Its
goals are ill defined and intangible. |
|
2. Formal organization is bound together by authority relationships among members. A hierarchical structure is created, constituting top management, middle
management and supervisory management. |
2. Informal organization is characterized by a generalized sort of power
relationships. Power in informal organization has bases other than rational legal
right. |
|
3. Formal organization recognizes certain tasks which are to be carried out to achieve its goals. |
3. Informal organization does not have any well-defined tasks. |
|
4. The roles
and relationships of people in formal organization are impersonally
defined |
4. In informal organization the relationships among people are interpersonal. |
|
5. In formal organization, much emphasis is placed on efficiency, discipline, conformity,
consistency and control. |
5. Informal organization is characterized by relative freedom, spontaneity, by relative freedom, spontaneity, homeliness and warmth. |
|
6. In formal organization, the social and psychological needs and interests of members of the organization get little attention. |
6. In informal organization the sociopsychological needs, interests and aspirations of members get
priority. |
|
7. The communication system
in formal organization follows certain pre-determined patterns and
paths. |
7. In informal organization, the communication pattern is haphazard, intricate and natural. |
|
8. Formal organization is relatively slow to respond and adapt to changing situations and realities. |
8.
Informal organization is dynamic and very vigilant. It is sensitive to its surroundings. |
DEPARTMENTATION BY DIFFERENT STRATEGIES
DEPARTMENTATION refers to the process of grouping activities into departments. Departmentation is the process of grouping
of work activities into departments, divisions, and other homogenous units.
Key Factors
in Departmentation
·
It should facilitate control.
·
It should ensure proper
coordination.
·
It should take into consideration the benefits of specialization.
·
It should not result
in excess cost.
·
It should give due consideration to Human Aspects.
Departmentation takes place in various
patterns like departmentation by functions, products,
customers, geographic location,
process, and its combinations.
a) FUNCTIONAL DEPARTMENTATION
Functional departmentation is the process
of grouping activities by functions performed. Activities can be grouped according to function (work being
done) to pursue economies of scale by
placing employees with shared skills and knowledge into departments for example
human resources, finance, production,
and marketing. Functional departmentation can be used in all types of organizations.
Advantages:
·
Advantage of specialization
·
Easy control over functions
·
Pinpointing training
needs of manager
·
It is very simple process of grouping activities.
Disadvantages:
·
Lack of responsibility for the end
result
·
Overspecialization or lack of general management
·
It leads to increase
conflicts and coordination problems among
departments.
a) PRODUCT DEPARTMENTATION
Product departmentation is the
process of grouping activities by product line. Tasks can also be grouped according to a specific
product or service, thus placing all activities related to the product or the service under one
manager. Each major product area in the corporation is under the authority of a senior manager who is specialist in,
and is responsible for, everything related to the product
line. Dabur India Limited is the India’s
largest Ayurvedic medicine
manufacturer is an example of company that uses product departmentation.
Its structure is based on its varied
product lines which include Home care, Health care, Personal care and Foods.
SPAN
OF CONTROL
Span of Control
means the number of subordinates that can be managed efficiently and effectively by a
superior in an organization. It suggests how the relations are designed between a superior and a subordinate in an organization.
Factors Affecting Span of control:
a)
Capacity of Superior:
Different ability and capacity of leadership, communication affect management of subordinates.
b)
Capacity of Subordinates:
Efficient and trained
subordinates affects the degree of span of management.
c)
Nature of Work:
Different types of work require
different patterns of management.
d)
Degree of Centralization or Decentralization:
Degree of centralization or decentralization affects the
span of management by affecting the degree
of involvement of the superior
in decision making.
e)
Degree of Planning:
Plans which can provide rules, procedures in doing the
work higher would be the degree of span of management.
f)
Communication Techniques:
Pattern of communication, its means, and media affect the time requirement in managing subordinates and consequently span of management.
g)
Use of Staff Assistance:
Use of Staff assistance in reducing the work load of
managers enables them to manage more number
of subordinates.
h)
Supervision of others:
If subordinate receives supervision form several other personnel besides
his direct supervisor. In such a case, the work load
of direct superior is reduced and he can supervise more number of persons.
CENTRALIZATION AND DECENTRALIZATION
CENTRALIZATION:
It is the process of transferring and
assigning decision-making authority to higher levels of an organizational
hierarchy. The span of control of top managers is relatively broad, and there are relatively many tiers in the organization.
Characteristics
·
Philosophy / emphasis on: top-down control, leadership, vision,
strategy.
·
Decision-making: strong,
authoritarian, visionary, charismatic.
·
Organizational change:
shaped by top, vision of leader.
·
Execution: decisive, fast, coordinated. Able to respond quickly
to major issues
and changes.
·
Uniformity. Low risk of dissent or conflicts between
parts of the organization.
Advantages of Centralization
·
Provide Power and prestige for manager
·
Promote uniformity of
policies, practices and decisions
·
Minimal extensive controlling procedures and practices
·
Minimize duplication of function
Disadvantages of Centralization
·
Neglected functions for mid. Level,
and less motivated beside personnel.
·
Nursing supervisor functions as
a link officer between nursing director and first-line management.
DECENTRALIZATION:
It is the process of transferring and
assigning decision-making authority to lower levels of an organizational hierarchy. The span of control of top
managers is relatively small, and there are relatively few tears in the organization, because there is more autonomy in the lower
ranks.
Characteristics
·
Philosophy / emphasis on: bottom-up, political, cultural and learning dynamics.
·
Decision-making: democratic, participative, detailed.
·
Organizational change:
emerging from interactions, organizational dynamics.
·
Execution: evolutionary, emergent. Flexible to adapt to minor issues
and changes.
·
Participation, accountability. Low risk of not-invented-here behavior.
Three Forms of decentralization
·
De-concentration. The weakest form of decentralization. Decision making authority is redistributed to lower or regional
levels of the same central
organization.
·
Delegation. A more extensive form of decentralization. Through delegation the responsibility
for decision-making are transferred to semi-autonomous organizations not wholly
controlled by the central organization, but ultimately accountable to it.
·
Devolution. A third type of decentralization is devolution. The authority for
decision- making is transferred completely to autonomous organizational units.
Advantages of Decentralization
·
Raise morale and promote
interpersonal relationships
·
Relieve from the daily administration
·
Bring decision-making close to action
·
Develop Second-line managers
·
Promote employee’s enthusiasm and coordination
·
Facilitate actions
by lower-level managers
Disadvantages of Decentralization
·
Top-level administration may feel it would decrease
their status
·
Managers may not permit full and maximum utilization of highly qualified
personnel
·
Increased costs.
It requires more managers and large staff
·
It may lead to overlapping and duplication of effort
Centralization and Decentralization are two opposite
ways to transfer
decision-making power and to change the organizational structure of organizations accordingly.
There must be a good balance between
centralization and decentralization of authority and power. Extreme centralization and decentralization must be avoided.
DELEGATION OF AUTHORITY
A manager alone cannot perform all
the tasks assigned to him. In order to meet the targets, the manager
should delegate authority. Delegation of Authority
means division of authority and powers downwards to the
subordinate. Delegation is about entrusting someone else to do parts of your job. Delegation of authority can be
defined as subdivision and sub- allocation of powers to the subordinates in order to achieve effective results.
Elements of Delegation
1.
Authority
- in context of a business organization, authority
can be defined as the power and right
of a person to use and allocate the resources efficiently, to take decisions
and to give orders so as to achieve
the organizational objectives. Authority must be well- defined. All people who have the authority should know
what is the scope of their authority is and they shouldn’t misutilize it. Authority is the right to give
commands, orders and get the things done.
The top level management has greatest authority. Authority always flows from
top to bottom. It explains how a
superior gets work done from his subordinate by clearly explaining what is expected of him and how he should
go about it. Authority should be accompanied
with an equal amount of responsibility. Delegating the authority to
someone else doesn’t imply escaping
from accountability. Accountability still rest with the person having the
utmost authority.
2.
Responsibility
- is the duty of the person to complete the task
assigned to him. A person who is
given the responsibility should ensure that he accomplishes the tasks assigned
to him. If the tasks for which he was
held responsible are not completed, then he should not give explanations or excuses. Responsibility without adequate
authority leads to discontent and
dissatisfaction among the person. Responsibility flows from bottom to top. The
middle level and lower level management holds more responsibility. The person held responsible for a job is answerable for it. If he
performs the tasks assigned as expected, he is bound for praises. While if he doesn’t
accomplish tasks assigned
as expected, then also he is answerable for that.
3.
Accountability
- means giving explanations for any variance in the
actual performance from the
expectations set. Accountability cannot be delegated. For example, if ’A’ is
given a task with sufficient
authority, and ’A’ delegates this task to B and asks him to ensure that task is done well, responsibility rest with ’B’, but accountability still rest with ’A’. The top level
management is most accountable. Being accountable means
being innovative as the person will
think beyond his scope of job. Accountability ,in short, means being answerable
for the end result. Accountability
can’t be escaped. It arises
from responsibility.
DELEGATION PROCESS
The steps involved in delegation are given below
1. Allocation of duties – The delegator first tries to define the task and duties to the subordinate. He also has to define the result expected from the subordinates. Clarity of duty as well as result expected has to be the first step in delegation.
2.
Granting
of authority – Subdivision of authority
takes place when a superior divides and shares his authority with the subordinate. It is for this
reason; every subordinate should be
given enough independence to carry the task given to him by his superiors. The managers at all levels delegate
authority and power which is attached to their job positions. The subdivision of powers is very important
to get effective results.
3.
Assigning
of Responsibility and Accountability – The
delegation process does not end once
powers are granted to the subordinates. They at the same time have to be obligatory towards the duties assigned to
them. Responsibility is said to be the factor or obligation of an individual to carry out his duties in best of
his ability as per the directions of
superior. Therefore, it is that which gives effectiveness to authority. At the
same time, responsibility is absolute
and cannot be shifted.
4. Creation of accountability – Accountability, on the others hand, is the obligation of the individual to carry out his duties as per the standards of performance. Therefore, it is said that authority is delegated, responsibility is created and accountability is imposed. Accountability arises out of responsibility and responsibility arises out of authority. Therefore, it becomes important that with every authority position an equal and opposite responsibility should be attached.
Succession Planning
Succession planning allows you to fully understand the duties and responsibilities of your management staff so you can train internal candidates to be ready to step into a promotion immediately should you experience management turnover.
Strategic Staffing
Strategic staffing involves a combination of short-term, long-term and succession planning. This plan takes the company's business plans into account to ensure that goals can be met from a talent perspective.
Staffing - Objectives
•Needs Assessment.
•Hiring and Job Placement.
•Training and Assimilation.
•Efficient Workforce Development.
•Effective Business Operations.
•Workforce Longevity.
Directing
Directing is the process in which a superior provides instructions, guidance and counselling to its subordinate so as to motivate and lead them for the successful achievement of objectives.
Characteristics of Directing
Initiates action: Directing initiates action through instructions supervision and motivation to achieve goals.
All pervasive: Directing takes place in every organization, and at every level of management.
Continuous process: Directing is a continuous process and takes place throughout the life of an organization.
Flows downward: Directing flows downward from superior to subordinate.
Importance of Directing
Initiates action: Directing helps to initiate action towards attainment of desired objective.
Integrates efforts: It integrates individual efforts as group effort to achieve organizational objectives.
Provide leadership and motivation; Directing motivates and provides effective leadership to employees to realise their full potential.
Brings changes: Directing introduces changes in the organization through proper communication, motivation and leadership.
Maintain stability: Balance and stability in the organization could be maintained through effective directing.
Principles of Directing
Maximum individual contribution: Through effective directing a manager must help the employee to realise his full potential, and contribute maximum towards the achievement of organizational goals.
Harmony of objectives: Through effective directing, managers must provide harmony between employee’s individual objectives and organizational objectives.
Unity of command: Employees must get instructions and direction from one superior for effective directing.
Appropriateness of direction technique: A manager must choose different direction tools according to the situation for effective direction.
Managerial communication: Communication should be in accordance with subordinate need for effective direction.
Use of informal organization: For effective direction managers should use informal organization for building cordial relationships with subordinates.
Leadership: A manager must possess good leadership qualities to influence subordinates.
Follow through: Manager must review employee’s performance for effective directing.
Elements of direction
These are grouped into four categories:
Supervision
Motivation
Leadership
Communication
Supervision
Supervision involves overseeing and guiding the efforts of human and other resources with an objective to accomplish the desired objectives.
It means overseeing what is being done by subordinates and giving instruction to ensure optimum utilisation of resources and achievement of work targets.
Importance of Supervision
Supervisor maintains friendly relationships with workers.
Connects management plans and ideas to workers and represents workers grievances and problems to management.
Helps to maintain unity amongst workers.
By giving instructions and motivating workers helps in achievement of targets.
Provides training to the workers and builds them as an efficient and skilled team of workers.
Helps in bringing out untapped energies of employees and builds up high morale.
Suggests ways and means to develop new skills.
Motivation
A stimulator used by managers to make people act in a desired way to achieve organizational goals.
The Related terms in motivation are:
Motive: It is the inner state of an individual which directs his behaviour towards a goal.
Motivation: It is the process of stimulating people into action.
Motivators: These are The techniques used for motivating people.
Features of Motivation
Motivation is an internal feeling: It is the urge or desire to satisfy needs or wants which influences human behavior.
Motivation produces goal-directed behaviour: All actions are directed to achieve specific goals.
Motivation may be positive or negative: Positive motivators are like high salaries that influence constructively while negative motivators are like punishments that inculcates fear in the employees.
Motivation is a complex process: It involves dealing with people of different types and expectations.
Motivation Process
Unsatisfied need
↓
Tension
↓
Drives
↓
Search behavior
↓
Satisfied need
↓
Reduction of tension
Unsatisfied Want: The motivation process begins with an individual's unsatisfied need.
Tension: As the desire goes unsatisfied, frustration builds up in the individual's mind.
Motives/Drives: Frustration motivates the individual to seek out alternatives to meet his needs.
Search Behaviour: He selects one of several options and begins acting in accordance with it.
Satisfied Needs: After a period of time, he evaluates whether or not his need has been met.
Reduced Tension: Once the need is met, the individual's frustration and tension are relieved.
Example: Assume a person wishes to advance in his or her career. This makes him uneasy, and he begins to look for other ways to advance in his career. He may consider working harder and bettering his performance. After consistently working hard, he may receive recognition and a promotion, which will finally satisfy his desire and alleviate his frustration.
Importance of Motivation
Improves Performance: It satisfies employee’s needs resulting in higher level of performance contributing towards organizational goals.
Develops a positive attitude: Motivation techniques eliminate negativity and create a desire to realize maximum potential.
Reduces employee turnover: A satisfied employee prefers to remain loyal to the organization leading to a lesser number of people quitting the organization.
Reduces absenteeism: Motivation helps to make the workplace a source of pleasure and provides the workers with a pleasant experience resulting in increased level of commitment from employees towards work.
Brings change smoothly: A motivated staff accepts changes with much lesser resistance.
Maslow's Need Hierarchy Theory of Motivation
This theory was given by Abraham Maslow in 1943, and is based on human needs.
Assumptions
Satisfaction of needs influences people's behaviour.
Needs are in hierarchical order.
Once need is satisfied only, the next higher need can motivate individuals.
Satisfaction of lower-level needs motivates to move to the next level of need.
Hierarchy of needs
According to Maslow need hierarchy theory, employees need and wants can be categorised as a hierarchy of five needs:
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Basic Physiological Needs: It includes basic needs like hunger, thirst, shelter, sleep, etc.
Safety/ Security Needs: It includes needs of security and protection like job security, etc.
Affiliation/ Social/ Belonging Needs: It includes needs like affection, sense of belongingness, friendship, etc.
Esteem Needs: It includes needs like self respect autonomy, status, recognition, etc.
Self Actualization Needs: It includes needs that drive to realize a dream.
Financial and Non Financial Incentives
Incentives are the means to satisfy an employee's needs and motives. These can be:
Financial
Non-Financial
Financial Incentives
Incentives offered to employees which are either in direct monetary form or can be valued in monetary terms.
Types of Financial Incentives
Pay and allowances: These include salary, dearness allowance and other allowances paid to employees.
Productivity linked wage incentives: Wages paid at different rates to increase productivity.
Bonus: Incentive offered above the wages or salary.
Profit Sharing: Providing a fixed percentage of profit to employees.
Co-partnership/ Stock option: Shares offered to employees at a price which is lower than the market price.
Retirement benefits: Benefits offered after retirement such as provident fund, pension, etc.
Perquisites: Benefits over and above the salary offered such as car allowance, housing, medical aid, etc.
Non-Financial Incentives
Incentives which are given to provide psychological and emotional satisfaction rather than monetary satisfaction.
Types of Non-Financial Incentives
Status: It is the level of authority, responsibility and recognition an employee commands in the organization.
Organizational climate: Characteristics influencing an individual's behaviour such as individual autonomy, reward orientation, consideration to employees, etc.
Career advancement opportunity: Opportunities of growth and development in the organization to the higher level.
Job enrichment: It refers to a variety of work offered to challenge the knowledge and skills of highly motivated employees.
Employee recognition programmes: It involves recognising and appreciating the contribution of employees in public.
Job security: It refers to the certainty and stability offered in a job about future income and work.
Employee participation: Involvement of employees in the decision making process, seeking their advice or suggestions.
Employee empowerment: Opportunities provided to employees to take decisions independently and perform jobs assigned to them.
Leadership
Leadership is the process of influencing the behaviour of people in such a way that they voluntarily work towards the achievement of organizational objectives.
Features of Leadership
It is the ability of an individual to influence others.
It tries to transform the behaviour of the subordinates.
It indicates interpersonal relationship between leader and followers.
It is exercised to achieve organizational goals.
It is a continuous process.
Importance of Leadership
It influences people's behavior to have a positive attitude.
It provides opportunities to subordinates to fulfill their needs and wants and build confidence.
It helps employees in understanding the need for changes and introduction of changes smoothly.
It clarifies and eliminates conflicts effectively through healthy discussions.
It trains and develops employees to handle managerial work.
Qualities of a Good Leader
Physical features: Should be fit and presentable with positive energy.
Knowledge: Should have required knowledge and competence.
Integrity: Must possess a high level of integrity and honesty.
Initiative: Should grab opportunity and use it to the advantage of organization.
Communication skills: Must possess skill to communicate and convince people effectively.
Motivation skills: Should motivate the individuals to improve their performance.
Self confidence: Should have a high level of confidence to handle difficult situations.
Decisiveness: Should be decisive and remain firm on decisions.
Social skills: Should be social and friendly with his colleagues and subordinates.
Leadership Styles
Autocratic leadership: in this style of leadership, a leader takes all the decisions on his own and gives orders to his or her subordinate to implement them.
Democratic leadership: In this style of leadership a leader takes decisions after consulting with subordinates and encourages them to participate in decision making.
Laissez faire leader: In this style of leadership a leader gives freedom to his subordinate to take decisions and execute work assigned to them and the leader acts as observer or guide.
Communication
It is the process of exchange of information between two or more people with an aim to create common understanding.
Elements of Communication Process
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Sender: The person who conveys his thoughts or ideas.
Message: Content intended to be communicated.
Encoding: Process of converting message into communication.
Media: Path through which an encoded message is transmitted to the receiver.
Decoding: It is the process of converting the encoded message in a readable format.
Receiver: The person who receives a communication message from the sender.
Feedback: It refers to the information or suggestions provided by the receiver to the sender in context to the communication or message he received.
Noise: The hindrances and obstruction to communication.
Importance of Communication
Basis of coordination: Acts as a basis to coordinate their efforts of employees by explaining organizational goals.
Smooth working of an enterprise: It makes interaction among all individuals possible helping smooth and unrestricted working of an enterprise.
Basis of decision making: Communication acts as a medium for providing information needed for decision making.
Increases managerial efficiency: Helps managers to convey important information to subordinates to enable them to perform with efficiency.
Cooperation and industrial peace: The two way communication promotes cooperation and mutual understanding between the management and workers.
Effective leadership: Effective communication enables a manager to lead and influence his or her subordinate.
Boosts morale and provides motivation: Managers understand and satisfy employees' needs and motives by effective communication.
Formal and Informal Communication
The process of communication within an organization may be
Formal or
Informal.
Formal communication
It flows through official channels designed in the organization chart to communicate official information between employees.
Formal communication is classified as:
Vertical communication: It is the formal two-way communication between superior and subordinate and the communication flows upward or downward.
Horizontal communication: It is the formal two-way communication between employees working at the same level of authority.
Formal Communication Networks
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Single chain: Communication flows from superior to his immediate subordinate.
Wheel: Superior acts as a hub of information and all subordinates communicate through the superior only.
Circular: Employees communicate with his or her adjoining people.
Free flow: All employees are free to communicate with each other without any restrictions.
Inverted V: An employee communicates with his or her immediate superior but may also communicate with his/her superior’s superior.
Informal communication
Communication between employees who are not officially related to each other is called informal communication, this type of communication may flow in any direction thus it is also called 'grapevine'.
The informal communication spreads information rapidly and sometimes generates rumors.
Grapevine Network
Grapevine communication, also known as informal communication, is a communication that develops as a result of social interaction among employees and spreads without following the formal communication path. The types of grapevine communication networks are as follows.
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Single Strand Network: An employee communicates with other employees in sequence. That is, one person communicates with another, who then communicates with yet another. Hence, information is passed through a line of persons.
Gossip Network: In a gossip network, one person spreads information to a large number of people. An employee communicates with all on a selective basis. Such as gossip about the new employee who recently joined the organization etc.
Probability Network: In a probability network, an individual shares information with other people at random. That is, the individual is unconcerned about who he shares the information with.
Cluster Network: Information in this network is first shared between two people who trust each other. One of them then passes the information on to another, who then passes it on to another, and so the information spreads.
Barriers to Communication
A. Semantic Barriers:
Problems and obstructions in the encoding and decoding of messages into words or impressions.
Reasons of semantic barriers are:
Badly expressed message: It involves the message with inadequate vocabulary, use of wrong words, omission of important words, or framing the message improperly, etc., that may distort the understanding and readability of the message.
Symbols with different meanings: Words with multiple meanings may change the intended meaning of the message, such as idol and idle, the word value having two meanings(price and importance), deer and dear.
Faulty translations: Incorrect translations may change the meaning of the message. For example, the meaning of certain words may change in a translation of an instruction from English to Hindi.
Unclarified assumptions: Sender and receiver may follow different assumptions while understanding the message resulting in different understanding of the message.
Technical jargon: Meaning of a message may not be clear if technical words are used in the communication with the workers who may not be familiar. For example the word drawings have separate meanings for a commerce person and a person from non-commerce background.
Body language and gesture decoding: Mismatch between body movement or gestures may convey wrong meaning. As in your face expression reveals anger, while your hand movements reveal otherwise.
B. Psychological Barriers:
Sender or receiver's state of mind may influence the meaning of the message.
Reasons of psychological barriers are:
Premature evaluation: Judgemental or biased nature of the receiver may result in premature evaluation. For example the listener/receiver may assume in advance that his boss is going to shout at him, this may lead to biasness in listening.
Lack of attention: Sender's or receiver’s pre-occupation of mind with other thoughts may result in ineffective communication.
Loss by transmission and poor retention: Passing of messages through various levels of communication and poor retention may result in transmission of inaccurate information.
Distrust: Distrust between sender or receiver may distort information.
C. Organizational Barriers:
Organizational authority relationships, rules and regulations, may result in communication barriers.
Reasons of organizational barriers are:
Organizational policy: Policies may not support free flow of communication.
Rules and regulations: Strict rules and regulations may result in delay of information, such as following a certain path for communication etc.
Status: A status conscious manager, hampering the effectiveness of communication between him and his subordinates.
Complexity in organizational structure: organization with too many levels may result in delay or distort of communication due to several filter points.
Organizational facilities: Improper facilities may affect free flow of communication and may create problems. A free and effective flow of communication requires the presence of certain organizational facilities such as social gatherings, complaint boxes, and transparency in operations, etc. The absence of such facilities hinders the flow of information
D. Personal Barriers:
These barriers arise due to the personal factors on the part of both, the sender and the receiver which may affect effective communication.
Reasons of personal barriers are:
Fear of challenge to authority: Superior may not share any information with the subordinates that may affect his authority.
Lack of confidence of superior on his subordinates: Sometimes superiors aren’t confident enough about their subordinates, and hence he may not welcome any take suggestions or opinions given by the subordinates.
Unwillingness to communicate: Subordinates unwillingness to communicate with their superiors may lead to ineffective communication.
Lack of proper incentives: Lack of incentives may discourage employees from taking initiative or sharing information.
Measures to Improve Communication Effectiveness
Clarify the ideas before communication: Superiors must have a clear and detailed understanding of the message before it is communicated to the subordinates.
Communicate according to the needs of the receiver: Sender must consider receiver's education, knowledge and understanding level while communicating message.
Consult others before communicating: Superiors must involve subordinates while taking decisions and making plans for effective communication.
Be aware of languages, tone and content of message: Sender must use proper language and tone while transmitting message to the receiver.
Convey things of help and value to listeners: Sender must consider the interests and needs of the receiver while transmitting messages.
Ensure proper feedback: Feedback from receiver ensures that the message is received or understood with the same intended meaning.
Communicate for present as well as future: Superiors must communicate with the subordinates about the present and future goals of the organization.
Follow ups: Regular follow ups and reviews make communication effective.
Be a good listener: Communicator must be a patient and attentive listening to understand the receiver’s problem related to understanding and implementing message
Controlling
Controlling consists of verifying whether everything occurs in conformities with the plans adopted, instructions issued and principles established.
Controlling ensures that there is effective and efficient utilization of organisational resources so as to achieve the planned goals. Controlling measures the deviation of actual performance from the standard performance, discovers the causes of such deviations and helps in taking corrective actions.
Definitions of Controlling
Control consists in verifying whether everything occurs in confirmatory with the plan adopted, the instruction issued and principles established. It has for object to point our weaknesses and errors in order to rectify them and prevent recurrence. It operates on everything, things, people, action.”
Henri Fayol
“Controlling is the process which check the performance against standards. It makes sure that organisation goals and objectives are being met.”
Theo Haimann and William Scott
Give the Meaning of 'controlling'
Controlling is the process of comparing the actual performance with the standards set by the company to ensure that all the activities are happening according to the plan and if any deviations are found, then corrective action needs to be taken.
The steps in controlling are as follows:
Establishing standards: It is the first step in controlling which involves setting up standards based on which the actual performance will be measured.
Measurement of actual performance: After setting up a standard, the next step is to determine actual performance. The performance should be measured in a reliable and objective manner. Several ways of measuring performance are performance reports, observation and sample checking.
Comparison of actual performance with standards: This step involves comparing the actual performance with the standard, and finding out any deviations from the standard performance.
Analysing deviations: This step involves analysing the deviations that were obtained after measuring the actual performance. There can be a chance that some amount of deviation is seen, it is normal to have deviations, the business needs to define the range of normal deviations.
Detailed analysis needs to be done to find out the cause of the deviation and deal with it properly. Management by exception needs to be followed to address such deviations.
Taking corrective steps: In this step, which is the final step of controlling, corrective actions are required when the deviations are not within the normal range i.e. exceeds the normal range.
Importance of Controlling
Controlling is regarded as an important management function. Thus, it is something that every manager needs to perform in order to exercise control over his subordinates. Proper controlling measures are often found to be helpful in improving the effectiveness of the other functions of the management.
Controlling ensures efficient and effective use of the resources of the organisation in order to achieve the organisational objectives.
The success of an organisation thus rests on effective controlling. Let us look at some of the points which show the importance of controlling in an organisation
1. Achieving organisational objectives: Controlling is implemented with the purpose of taking care of the organisational objectives. Controlling detects any kind of deviation and accordingly corrective actions are implemented.
This helps in reducing the gap between expected and actual results and in this way helps in achieving the organisational objectives.
2. Coping with changes: An organisation has to put up with many changes in the environment, which can be emergence of new products and technologies, change in government regulations or changes in strategies of the competitors.
3. Efficient use of resources: Controlling allows the manager in minimising the wastage of resources and ensuring proper utilisation of the available resources that leads to effective performance by the organisation.
4. Determining the accuracy of standards: Managers always compare the work done with a set of provided standards defined for the work and determine whether the set of standards are effective or there is a need for improvement in the standards that will lead to more accurate determination of process efficiency.
5. Helps in decision making: Controlling helps the managers in determining the gap between thinking and actual implementation. It leads to better decision making and improves the overall performance of the organization.
6. Motivates employees: In an organisation employees are also aware that their performance is judged using some set of standards.
Periodic and systematic evaluation of the employee performance and accordingly rewarding the deserving employees in the form of bonus, increment or promotion leads to the employees getting more motivated in order to perform for the organisation.
7. Maintains discipline and order: Controlling brings about order and discipline in the regular operations of the organization. Employees are also bound by the rules which reduces unprofessional behavior in the organization.
8. Improves coordination: Controlling provides a common direction to all the activities of the organisation and also aligns employee action with organisational goals, thus ensuring optimum performance.
What is Management by Objective ?
The process of setting objectives in the organization to give a sense of direction to the employees is called as Management by Objectives.
It refers to the process of setting goals for the employees so that they know what they are supposed to do at the workplace.
Management by Objectives defines roles and responsibilities for the employees and help them chalk out their future course of action in the organization.
Management by objectives guides the employees to deliver their level best and achieve the targets within the stipulated time frame.
Need for Management by Objectives (MBO)
- The Management by Objectives process helps the employees to understand their duties at the workplace.
- KRAs are designed for each employee as per their interest, specialization and educational qualification.
- The employees are clear as to what is expected out of them.
- Management by Objectives process leads to satisfied employees. It avoids job mismatch and unnecessary confusions later on.
- Employees in their own way contribute to the achievement of the goals and objectives of the organization. Every employee has his own role at the workplace. Each one feels indispensable for the organization and eventually develops a feeling of loyalty towards the organization. They tend to stick to the organization for a longer span of time and contribute effectively. They enjoy at the workplace and do not treat work as a burden.
- Management by Objectives ensures effective communication amongst the employees. It leads to a positive ambience at the workplace.
- Management by Objectives leads to well defined hierarchies at the workplace. It ensures transparency at all levels. A supervisor of any organization would never directly interact with the Managing Director in case of queries. He/She would first meet his reporting boss who would then pass on the message to his senior and so on. Every one is clear about his position in the organization.
- The MBO Process leads to highly motivated and committed employees.
- The MBO Process sets a benchmark for every employee. The superiors set targets for each of the team members. Each employee is given a list of specific tasks.
Limitations of Management by objectives Process
- It sometimes ignores the prevailing culture and working conditions of the organization.
- More emphasis is being laid on targets and objectives. It just expects the employees to achieve their targets and meet the objectives of the organization without bothering much about the existing circumstances at the workplace. Employees are just expected to perform and meet the deadlines. The MBO Process sometimes do treat individuals as mere machines.
- The MBO process increases comparisons between individuals at the workplace. Employees tend to depend on nasty politics and other unproductive tasks to outshine their fellow workers. Employees do only what their superiors ask them to do. Their work lacks innovation, creativity and sometimes also becomes monotonous.
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