MAM1B/MAT1B/CPW2A/CPZ2B/ BPC4B/BPG4C/ PRINCIPLES OF MANAGEMENT. Unit :I-V

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1 MAM1B/MAT1B/CPW2A/CPZ2B/ BPC4B/BPG4C/ PRINCIPLES OF MANAGEMENT Unit :I-V

2 Unit I-Syllabus Management-definition Importance of Management Nature and scope of Management Process of Management Role of a Manager Levels of Management Scientific Management Contribution to Management by different schools of thought 2

3 Management DEFINITION OF MANAGEMENT Management is the art of getting things done through people. -Mary Parker Follet Management is the art of knowing exactly what you want your men to do and then seeing that they do it in the best and cheapest way. -F.W.Taylor hylejo 3

4 Importance of Management Systematic Approach Mobilisation of Natural Resources Division of Work Selection of Right man for the Right job Manpower Development Inducement of workers Stability to tenure Integration of Business Activities 4

5 Nature of Management Universal activity On going Process Both science and art Social process Integrated approach Goal oriented Intangible Profession Factor of Production 5

6 Scope of Management SCOPE OF MANAGEMENT Production Management Personnel Management Marketing Management Financial Management 6

7 Process of Management Planning Planning Organising Staffing Controlling Organising Directing Co-ordinating Controlling Coordinating Staffing Directing 7

8 Role of a Manager To have contacts To supervise To attain targets To delegate authority To hold meetings To act as a leader To ensure proper use of resources To undertake trips To make Decision To act as a spokesman To resolve Conflicts To handle crisis 8

9 Levels of Management Top Management Middle Management Supervisory or Lower Management 9

10 Scientific Management F.W.Taylor is regarded as the father of scientific management His ideas on scientific management were brought out as a book titled Principles of Scientific Management in the year 1911 Features of Scientific Management Replacement of Thumb rule Scientific selection, placement,training and development Harmonious relationship between the workers and the management Maximum and not restricted output 10

11 Techniques of Scientific Management Work study Scientific task planning Scientific selection, placement and training of workers Standardisation and Simplification Mental Revolution 11

12 Taylor s Differential Piece Rate System 12

13 Henry Fayol s 14 Principles of Management 13

14 Mc Gregor s X and Y Theories X Theory:-Negative Approach-Do what I say-rule of Thumb Method Y Theory:-Positive Approach-Do As they wish-free lien Method 14

15 Elton Mayo Experiments Illumination Experiments Relay Assembly Test room Interview Programme Bank wiring group observation Hawthrone Experiments Social factors influence production more than Physical factors Monetary incentives do not induce workers Workers do not react as individuals but as members of a group Informal leadership influence co-workers Acceptance of views by management encourages worker to work hard 15

16 Management by Objective Peter Drucker is known for developing the concept of MBO Technique by which the superior and subordinate jointly identify the objectives to be achieved STAGES IN MBO MBO Establishment of Objectives Periodical Review Final Review 16

17 Advantages of MBO Promotes better communication Provides opportunity to subordinates to fix their own targets Subordinates feel motivated and show keen interest in attainment of target Enables subordinate to know whether he is proceeding in the right direction Disadvantages of MBO Meeting of Superior and Subordinate at regular intervals is must for setting the objective Periodic review involves lot of time Mostly concerned with lower levels of management 17

18 Unit II-Syllabus Planning-Definition Nature of Planning Importance of Planning Types of Planning Steps in Planning Objectives of Planning Policies Decision making-meaning,nature, Importance, Process Types of Decision, Situations,Factors considered and Techniques 18

Planning Planning is deciding the best alternative among others to perform different managerial operations in order to achieve the predetermined goal.

19 Planning Planning is deciding the best alternative among others to perform different managerial operations in order to achieve the predetermined goal. -Henry Fayol Planning is deciding in advance what to do, how to do I, when to do it and who is to do it.it bridges the gap from where we are to where we want to go. -Koontz and O Donnell 19

20 Nature of Planning Primary functions of management Goal-Oriented All-Pervasive Intellectual activity Future oriented Integrated approach Continuous process 20

21 Importance and Limitations of Planning IMPORTANCE OF PLANNING LIMITATIONS OF PLANNING Focus on objective Helps to avoid No work or Work pressure situations Avoid wastage of Resources Ensures efficiency and effectiveness Reduces risk and uncertainty Provides Co-ordination Uncertain Nature Expensive Rigidity Loss of Initiative Ignorance of Subordinate s interest Complacent attitude Facilitates control 21

22 Types of Planning Methods of Planning Repeated use plans Single use plans Objectives Policies Procedure Rules Strategies Programmes Budgets 22

23 Steps in Planning Identifying Business Opportunities Establishment of Objectives Determination of Planning Premises Selecting the Best course of action Evaluating the Alternative course of action Identifying alternative course of action Formulation of Derivative plans Periodic Evaluation and Review 23

24 Objectives of Planning Maximum Profit Higher Market share Customer Satisfaction Cordial Management-Labour relationships Greater Productivity Cost Control Favourable Employee attitudes Product Diversification 24

Policies Policies provide ready answers to questions pertaining the issue ESSENTIALS OF GOOD POLICY Should not be vague Should be Sound and Logical Should conform to ethical or moral values Should be

25 Policies Policies provide ready answers to questions pertaining the issue ESSENTIALS OF GOOD POLICY Should not be vague Should be Sound and Logical Should conform to ethical or moral values Should be fair and without bias Should not be two policies relating to same issue Should be reviewed and revised periodically FACTORS DETERMINING POLICY-MAKING Beliefs and Values of the owners of business Government Regulations Availability of funds Technology to be adopted Market Trends 25

26 Decision Making Decision-making is a process of selection from a set of alternative courses of action which is thought to fulfil the objective of the decision-problem more satisfactorily than others. -Haynes and Massie Decision-making is the selecting of an alternative, from two or more alternatives, to determine an opinion or a course of action. -George Terry 26

27 Characteristics of Decision-making Goal-Oriented activity Existence of alternative course of action Positive or Negative Decision not to decide Both science and an art Situational Voluntary or induced Complex Mental Exercise Ongoing activity 27

28 Importance and Limitations of Decision-making IMPORTANCE OF DECISION-MAKING LIMITATIONS OF DECISION MAKING Adoption of Best course of action Optimum use of Enterprise resources Finding solution to a problem Promotes Efficiency Resolving conflicts Lack of Knowledge Indecisiveness Failure to make correct diagnosis Quick Decision Unavailability of necessary information Resistance Making decision by itself 28

29 Decision-Making Process Identifying and Understanding the problem Making an analysis of the problem Identifying alternative solutions Implementing the decision Selecting the best solution Evaluating alternative solutions Review 29

30 Decision-Making Types Organisational Decision Personal Decision Strategic Decision Routine Decision Policy Decision Operating Decision Programmed Decision Non-Programmed Decision Individual Decision Group Decision 30

31 Decision-Making Situations Three types of Decision situations Certainty Risk Uncertainty CERTAINITY RISK UNCERTAINITY HIGH LOW MANAGERIAL CONTROL 31

32 Factors Considered in Decision-making Decisionmaking Tangible Intangible Profits Production Sales Purchase Inventory level Consumer Satisfaction Employee Attitude Manager- Subordinate relationship 32

33 Methods or Techniques of Decision Making 33

34 Unit III-Syllabus Organisation-Definition Process and Importance of organisation Types of Organisation Principles of Organisation Formal and Informal Organisation Organisational Structure and Chart Span of Control Departmentalisation-Meaning, Importance and Basis Policies-Meaning and Types, Procedure, Forecasting 34

Organisation Organising is the process of identifying and grouping the work to be performed, defining and delegating responsibility and authority, and establishing relationships for the purpose of

35 Organisation Organising is the process of identifying and grouping the work to be performed, defining and delegating responsibility and authority, and establishing relationships for the purpose of enabling people to work most effectively together in accomplishing objectives. -Allen Organisation is the structural framework within which the various efforts are coordinated and related to each other. -Theo Haimann 35

36 Process of Organisation Division of Work Grouping of Activities Assignment of work Delegation of Authority Creation of Accountability Defining Relationships 36

37 Importance of Organisation Implementing Plans Benefits of Specialisation Creativity Optimum utilisation of Resources Adaptation to change Development of Personnel Effective Administration Team work Continuity 37

38 Types of Organisation Line Organisation Line and Staff Organisation Functional Organisation Committee Organisation Project Organisation Matrix Organisation 38

39 Principles of Organisation Objective Flexibility Division of work Simplicity Organisation Authority and Responsibility Unity of Direction Delegation Unity of command Balance 39

40 Formal and Informal Organisation S.NO BASIS FORMAL INFORMAL 1 Structure Formal structure No formal structure 2 Origin Consciously and deliberately created 3 Emphasis Official authorityresponsibility structure Arises spontaneously People and their relationship 4 Power Attached to Position Attached to person 5 Organisational Chart Can be presented Cannot be presented 6 Authority and Responsibility Authority flows downwards and Responsibility flows downwards No flow of Authority and Responsibility 7 Stability Permanent and stable Unstable 40

41 Organisational Structure and Chart ORGANISATIONAL STRUCTURE Organizational structure is a system that consists of explicit and implicit institutional rules and policies designed to outline how various work roles and responsibilities are delegated, controlled and coordinated. Organizational structure also determines how information flows from level to level within the company. ORGANISATIONAL CHART The organization chart is a diagram showing graphically the relation of one official to another, or others, of a company. It is also used to show the relation of one department to another, or others, or of one function of an organization to another, or others. 41

42 Cont., ORGANISATION CHART 42

43 Span of Control Span of control," also known as management ratio, refers to the number of subordinates controlled directly by a superior. V.A.Graicuna s Theory of Span of Management identifies three types of Superior-Subordinate relationships namely 1) Direct Single relationships 2) Direct Group Relationships 3) Cross Relationships 43

Departmentalisation Departmentation is the process of dividing and grouping the activities and employees of an enterprise into departments.

44 Departmentalisation Departmentation is the process of dividing and grouping the activities and employees of an enterprise into departments. In other words Departmentalisation (or simply Departmentation) refers to the grouping of operating tasks into jobs, the combining of jobs into effective work groups and the combining of groups into divisions often termed as Departments. In a manufacturing concern, total work may be divided into the following departments (a)purchase (b)production (c)marketing (d)personnel (e)finance 44

45 Importance of Departmentalisation Identity Better assessment of performance Better control over subordinates Division of work Responsibility is fixed Freedom to act Scope for expansion 45

46 Basis Of Departmentalisation Departmentation by Functions Departmentation by Products Departmentation by Territory Departmentation by Customers Departmentation by Numbers and Time

Policies A policy is a deliberate system of principles to guide decisions and achieve rational outcomes. A policy is a statement of intent, and is implemented as a procedure or protocol.

47 Policies A policy is a deliberate system of principles to guide decisions and achieve rational outcomes. A policy is a statement of intent, and is implemented as a procedure or protocol. Policies are generally adopted by a governance body within an organization. Policies can assist in both subjective and objective decision making. ADVANTAGES OF POLICIES Guide in Decision making Saves time Ensure Consistency Prevent misusing of authority DISADVANTAGES OF POLICIES Do not provide solution to all problems Do not provide instant solution Becomes outdated due to passage of time No scope for creative thinking 47

48 Types of Policies External Policies Internal Policies Appealed Policies Explicit Policies Implicit Policies 48

Procedures Procedure refers to a fixed, step-by-step sequence of activities or course of action, with definite start and end points that must be followed in the same order to correctly perform a task.

49 Procedures Procedure refers to a fixed, step-by-step sequence of activities or course of action, with definite start and end points that must be followed in the same order to correctly perform a task. It is a particular way of accomplishing something as in a repetitive approach, process or cycle to accomplish an end result. ADVANTAGES OF PROCEDURES Provides sequence of operations Systematic Performance Ensure Consistency Ensure Co-ordination DISADVANTAGES OF PROCEDURES Results in Delay Creates Confusion Outdated Procedures Lack of review exercise 49

Forecasting/Budgets A budget is an estimation of revenue and expenses over a specified future period of time; it is compiled and re-evaluated on a periodic basis.

50 Forecasting/Budgets A budget is an estimation of revenue and expenses over a specified future period of time; it is compiled and re-evaluated on a periodic basis. In case of companies and organizations, a budget is an internal tool used by management and is often not required for reporting by external parties. ADVANTAGES OF FORECASTING Determine future course of action Prepared for a specific period Easy Measurement of Performance More realistic Facilitates Budgetary control DISADVANTAGES OF FORECASTING Availability of Limited resources Less concentration on quality of work Affect Initiative 50

51 Unit IV-Syllabus Authority-Meaning, Sources and Limitations Responsibility-Meaning and Limitations Difference between Authority and Responsibility Delegation of Authority-Meaning Principles of Delegation Importance of Delegation Centralisation vs Decentralisation 51

Authority Authority is the right to perform or command. It allows its holder to act in certain designated ways and to directly influence the actions of others through orders.

52 Authority Authority is the right to perform or command. It allows its holder to act in certain designated ways and to directly influence the actions of others through orders. Authority also allows its holder to allocate the organization s resources to achieve organizational objectives. LIMITATIONS OF AUTHORITY It is not unlimited It should not be harsh Only necessary authority can be delegated Some officers do not know the extent of their authority 52

53 Source of Authority Formal Authority Theory Acceptance Theory Competence Theory 53

54 Responsibility Responsibility is the obligation of a subordinate to carry out the duties assigned to him. It may be Continuous in nature. It is the result of superior-subordinate relationship, which implies that a subordinate s obligations in any business unit will arise basically from his relationship with his superior who is given the authority to get something done. LIMITATIONS OF RESPONSIBILITY It can be assigned only to human beings It is possible only when there exist a superior-subordinate relationship If Authority exceeds Responsibility there will be misuse of authority/power If Responsibility exceeds authority, successful completion of task is not possible 54

55 Difference Between Authority And Responsibility S.NO BASIS AUTHORITY RESPONSIBILITY 1 Meaning Authority is the power or right to give orders, make decisions, and enforce obedience. 2 Nature It is power. It is a duty 3 Functions Here, orders and commands play a vital role. 4 Duration It stays for a longer period Responsibility is the state or fact of having a duty to deal with work assigned. Here, duties and obedience play a vital role. It has a shorter duration 5 Direction flow Flow downwards Flow upwards 6 Delegation Can be delegated to others Cannot be delegated to others 55

56 Delegation of Authority Delegation means assigning work to others and giving them authority to do it. - F.G.More Delegation of authority merely means the granting of authority to subordinates to operate within prescribed limits. - Haimann 56

57 Principles of Delegation Delegation to go by expected results Responsibility is absolute Authority to match responsibility Unity of Command Clarification of the limits of authority 57

58 Importance of Delegation Effective Management Employee s Development Relief to Managers Base for Hierarchy Better Co-ordination Reduces work load Specialisation Job Satisfaction Prompt Decision Business Expansion 58

59 Limitations of Delegation PROBLEMS OF SUPERIORS Desire for Domination Superiority Complex PROBLEMS OF SUBORDINATES Lack of Self-Confidence Fear of Criticisms ORGANISATIONAL PROBLEMS Lack of Resources Multiplicity of Command Lack of Confidence Desire for Spoon feeding Lack of able managers Personal Incompetence Fear That subordinate might outshine Lack of Enthusiasm Lack of Incentives Absence of proper control system Mutual Distrust 59

60 Centralisation Vs Decentralisation S.NO BASIS CENTRALISATION DECENTRALISATION 1 Meaning Retention of powers and authority with respect to planning and decisions, with the top management, is known as Centralization. Dissemination of authority, responsibility and accountability to the various management levels, is known as Decentralization. 2 Involves Systematic and consistent reservation of authority. Systematic dispersal of authority. 3 Communication Flow Vertical Open and Free 4 Decision Making Slow Comparatively faster 60

61 Cont., S.NO BASIS CENTRALISATION DECENTRALISATION 5 Advantage Proper coordination and Leadership Sharing of burden and responsibility 6 Power of decision making Lies with the top management. Multiple persons have the power of decision making. 7 Reasons Inadequate control over the organization Considerable control over the organization 8 Best suited for Small sized organization Large sized organization 61

62 Unit V- Syllabus Direction-Definition Nature,Purpose and Techniques of Direction Co-ordination-Definition Nature and Importance of Co-ordination Principles of co-ordination and requisites for effective Co-ordination Controlling-Definition Nature and Importance of controlling Characteristics of Good control system,control process and Techniques 62

Direction Direction is a complex function that includes all those activities, which are designed to encourage a subordinate to work effectively and

63 Direction Direction is a complex function that includes all those activities, which are designed to encourage a subordinate to work effectively and efficiently. -Konntz and O Donnell Directing deals with the steps a manager takes to get subordinates and others to carry out plans. -Newman and Warren 63

64 Nature of Direction It concerns the human factor in organisation Inseparable from other functions Performed at all levels Determines Performance Result Oriented Follows hierarchy Continuous process 64

65 Purpose of Direction To activate human factor To improve communication relationship To Provide Guidance To Motivate employees To Ensure effective control To Promote Efficiency To improve human relation To adapt to change To Ensure Growth and Stability 65

66 Techniques of Direction Delegation Supervision Communication Motivation Leadership 66

67 Co-ordination Co-ordination is the orderly arrangement of group effort to provide unity of action in pursuit of a common purpose. -Mooney and Reily Co-ordination is the orderly synchronising of the efforts of the subordinates to provide the proper amount, timing and quality of execution so that their unified efforts lead to the stated objective, namely, the common purpose of the enterprise. -Haimann 67

68 Nature of Co-ordination Integrates Group efforts Aims at attaining common goals Continuous Process Pervasive Function Responsibility of all Managers Deliberate Function 68

69 Importance and Limitations of Co-ordination IMPORTANCE OF CO-ORDINATION Encourages team spirit Gives proper direction Facilitates motivation Avoid Overlapping of activities Makes optimum utilization of resources LIMITATIONS OF CO-ORDINATION More Employees Clash of Interest Lack of Co-operative spirit Division Of work Too many activities Leads to higher efficiency Improves goodwill of the organization 69

70 Principles of Co-ordination Co-ordination Principle of direct personal contact Principle of early beginning Principle of Reciprocity Principle of Continuity 70

71 Requisites for Excellent Co-ordination Planning Committees Direct Contact Liaison Officers Co-ordination Effective Communication Task Forces Organisational structure Leadership 71

Controlling Control is the continuing process of measuring the actual results of the operations of an organisation in relation to the results which were planned.

72 Controlling Control is the continuing process of measuring the actual results of the operations of an organisation in relation to the results which were planned. -Brech Management control is the process by which managers assure that resources are obtained and used effectively in accomplishment of the organisation s objective. -Roberts Anthony 72

73 Nature of Controlling Backward Looking Pervasive Function Gives meaning to Planning Involves appraisal Forward looking too Continuous Process 73

74 Importance and Limitations of Controlling IMPORTANCE OF CONTROLLING LIMITATIONS OF CONTROLLING Efficient use of resources Judging accuracy of standards Successful implementation of plans Attainment of enterprise objectives Scope for Delegation Lack of good system of communication Resistance from employees Expensive Delay in taking Corrective action Improving employee motivation Ensures order and Discipline Facilitates co-ordination 74

75 Characteristics of Good System Of Control Simplicity Suitability Objectivity Flexibility Economical Usefulness Forward Looking Promptness Supported by employees 75

76 Management by Exception Management by Exception is technique where only significant deviations from a budget or plan are brought to the attention of management. ADVANTAGES OFMBE Helps manager to devote more time Scope for wider span Helps to make better decision Motivates subordinates to perform better Utilisation of available talent DISADVANTAGES OF MBE No parameter to differentiate Important from unimportant deviations MBE cannot be applied by all organisations Leads to dispersal of Authority 76

77 Control Process and Important Control Techniques Establishment of Standards Measurement of Actual Performance and Making Comparisons CONTROL PROCESS Finding out Deviations CONTROLLING TECHNIQUES Taking Corrective Actions 77

UNIT 3 ORGANIZING. 1. A) Explain the nature and purpose of organization. (Nov'06)

UNIT 3 ORGANIZING. 1. A) Explain the nature and purpose of organization. (Nov'06) UNIT 3 ORGANIZING 1. A) Explain the nature and purpose of organization. (Nov'06) Definition of Organization Koontz and O'Donnell define organizing as "the grollij1ng of activities necessary to attain objectives,