Principles and Practices of Management

National Institute of Business Management

Chennai - 020

FIRST SEMESTER EMBA/ MBA

Subject: Principles and Practices of Management

Attend any 4 questions. Each question carries 25 marks

(Each answer should be of minimum 2 pages / of 300 words)

1. Explain the principles of Scientific Management by Taylor.

2. Explain the major steps in planning.
3. Explain the limitations of Planning.
4. Examine the objectives of manpower Planning.
5. A selection process involves a number of steps.What are the .Explain the
steps.
6. Describe the methods of performance appraisal.

25 x 4=100 marks

Note: Answered all Questions, Please consider any best 4 Answers of it.

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2) Explain the major steps in planning.

DEFINITIONS OF PLANNING

Planning as a process which involves the determination of future course of action,

that is why an action, what action, how to take action, and when to take action.

Terry has defined planning in terms of future course of action.

He says that:

Planning is the selection and relating of facts and making and using of
assumptions regarding the future in the visualization and formalization of proposed
activities believed necessary to achieve desired result.

STEPS IN PLANNING

It is not possible to prescribe a certain fixed process of planning for all

organizations or for all types of plans. Here the steps are given for a major plan.

The major steps in planning are the following:

1. Perception of Opportunities. It is related with the awareness of the opportunities

for deciding whether a programme should at all be carried on. Any organisational
activity requires the help of environment that is social factors.

2. Establishing Objectives in fact, the first step in planning process is the

determination of organisation objectives. These objectives set the pattern of the
proposed course of action and the purpose of the future action is to arrive at these
objectives.

3. Establishing Planning Premises. Premises are the various factors that affect
planning. There are several factors which affect the organisational functioning.
These are political factors, ethical standards, government controls, fiscal policy,
price, demand and availability of various factors of production.

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The information is collected in respect of these. Their analysis leads to make

certain forcasts and the limitations are determined within which proposed course of
action is to be undertaken.

4. Determining Alternative Course of Action. An action can be performed in

several ways. However, a particular way is the most suitable for the organisation
keeping its limitations in view. The management should try to find out these
alternatives. The various available alternatives should be examined in the light of
planning premises which reduce the number of alternatives which can be evaluated
for selection.

5. Evaluating Alternatives Courses. The various alternatives are evaluated in the

light of objectives and premises. This process presents a difficult problem, because
a particular alternative may be best from one point of view but not from other
points. A number of methods in Operations Research have been developed to
evaluate the various alternatives, which will be discussed later on in this part.

6. Selecting the Best Course. After evaluating the various alternatives, the most fit
alternative is selected. Sometimes, the evaluation shows that more than one
alternative is equally good. In such a case, a manager chooses several rather than
one and combines them in action

7. Formulating Derivating Plans. In the organization, various activities contribute

to Organizational objectives. After formulating the basic plan, various plans are
derived for departments, units, activities, etc. In fact, there are invariable-derivative
plans to be constructed to support the basic plan.

8. Establishing the Sequence of Activities. After formulating basic and derivative

plans, the sequence of various activities is determined. This helps in executing the
plans and provides continuity in the operation.

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3) Explain the limitations of Planning.

Limitations of Planning

Planning as a fundamental function of management is essential but there are

practical limitations to its use. The reasons why people fail planning emphasize the
practical difficulties encountered in planning. Thus, effective planning is not an
easy task.

A number of limits within which planning has to operate make this undertaking
difficult. Awareness of the factors, probably, helps in removing many difficulties
in planning.

1. Lack of Accurate Information. The first basic limitation of planning is the lack
of accurate information and facts relating to future. Planning concerns future
activity and its quality will be determined by the quality of forecast of future
events.

2. Problems of Change. The problem of change is more complex in long-range

planning. Present conditions tend to weigh heavily in planning, and by
overshadowing future needs, may sometimes result in error of judgment. Such
factors as changing technology, consumer tastes and desires, business conditions,
and many others change rapidly and often unpredictably. In such conditions,
planning activities taken in one period may not be relevant for another period
because the conditions in two periods are quite different.

3. Failure of People. There are many reasons why people fail in planning, at both
the formulation level as well as implementation level. Some of the major failures
are lack of commitment to planning, failure to develop sound strategies, lack of
clear and meaningful objectives, tendency to overlook planning premises, failure to
see the scope of the plan, failure to see planning as a rational approach, excessive
reliance on the past experience, failure to use the principle of limiting factor, lack
of top management support, lack of delegation of authority, lack of adequate
control techniques, and resistance to change. These factors are responsible for
either inadequate planning or wrong planning in the organizations concerned.

4. Inflexibilities. Managers while going through the planning process have to work
in a set of given variables. These variables may be more in terms of organizational
or external. These often provide considerably less flexibility in planning action.

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(i) Internal Inflexibilities. Major internal inflexibilities that may limit planning are
related to human psychology, organizational policies and procedures, and long-
term capital investment.

The first internal inflexibility is in the form of human psychology in that

most of the people have regard for the present rather than for future.

Second type of internal inflexibility emerges because of organizational

policies and procedures. Once these are established, they are difficult to
change. Such problems are more common in bureaucratic organizations
where rules and procedures are the matters of prime concerns.

Third type of internal inflexibility comes because of long-term capital

investment. Long-term planning is not a process of making future decisions,
but a means of reflecting the future in todays decisions.

(ii) External Inflexibilities. Beside the internal inflexibilities managers are

confronted with much external inflexibility and they do not have control over
these. These factors may be social, technological, legal, labour union,
geographical, and economic.

5. Rigidity in Planning. The planning stifles employee initiative and forces

managers into rigid or straightjacket mode of executing their work. In fact, rigidity
may make managerial work more difficult than it need be. This may result in it
delay in work performance, lack of initiative, and lack of adjustment with changing
environment.

6. Time and Cost Factors. Planning suffers because of time and cost factors. Time
is a limiting factor for every manager in the organization and if they are busy in
preparing elaborate reports and instructions beyond certain, level, they are risking
their effectiveness excessive time spent on securing information and trying to fit all
of it into a compact plan is dysfunctional in the organization.

The planning also involves cost on the part of the organization. Costs increase in
planning if it becomes more detailed, because more information is gathered.

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5) A selection process involves a number of steps.What are they? Explain the

steps.

SELECTION

Selection is a deliberate effort of the organization to select a fixed number of

personnel from a large number of applicants.

Selection Process

A selection process involves a number of steps. The basic idea is to solicit

maximum possible information about the candidates to ascertain their suitability
for employment. Since the type of information required for various positions may
vary, it is possible that selection process may have different steps for various
positions.

For example, more information is required for the selection of managerial

personnel as compared to workers. Similarly, various steps of selection process
may be different for various organizations because their selection practices may
differ.

For example, some organizations conduct selection tests of various types while
Others may not use these. However, a standard selection process has the following
steps: screening application forms, selection tests, interview, checking of
references, physical examination, approval by appropriate authority and placement.

Below is a discussion of the various steps.

1. Screening of Applications:

Prospective employees have to fill up some sort of application forms. These forms
have variety of information about the applicants like their personal bio-data,
achievements, experience, etc.

2. Selection Tests:

Many organizations hold different kinds of selection tests to know more about the
candidates or to reject the candidates who cannot be called for interview etc.

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3. Interview:

Selection tests are normally followed by personal interview of the candidates.

4. Checking of References:

Many organizations ask the candidates to provide the names of referees from
whom more information about the candidates can be solicited.

5. Physical Examination:

Physical examination is carried out to ascertain he physical standards and fitness of

prospective employees. The practice of physical examination varies a great deal
both in terms of coverage and timing.

6. Approval by Appropriate Authority:

On the basis of the above steps, suitable candidates are recommended for selection
by the selection committee or personnel department.

7. Placement:

After all the formalities are completed, the candidates are placed on their jobs
initially on probation basis. The probation period may range from three months to
two years.

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6) Describe the methods of performance appraisal.

Methods of Performance Appraisal

There are various methods of performance appraisal. In fact, each organization

may have its own unique system and method of appraisal.

Trait Approach

Trait approach of evaluation is quite old. For many years, and even today,
employees have been evaluated against standards of personal traits and work
characteristics.

1. Ranking Ranking is the oldest and simplest method of appraisal in which a

person is ranked against others on the basis of certain traits and characteristics.

2. Paired Comparison Paired comparison method is a slight variation of ranking

system designed to increase its value for use in the large groups. In this method,
each person is compared with other persons taking only one at a time.

3. Grading In this method, certain categories of abilities or performance are

defined well in advance and persons are put in particular category depending on
their traits and characteristics.

4. Forced-choice method The forced-choice rating method contains a series of

groups of statements, and the rater checks how effectively the statement describes
each individual being evaluated.

5. Critical Incident Method In this method, only critical incidents and behaviour
associated with these incidents are taken for evaluation.

6. Graphic Rating Scale This method assesses the degree of certain qualities
required for a job. The central idea behind this scaling is to provide the rater with a
continuum representing varying degrees of a particular quality.

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Appraisal by Results or Objectives

The basic idea behind this appraisal is that the organization is concerned with the
achievement of objectives through the contributions of the individual managers
rather than merely their traits.

Though there may be some variations, usually the appraisal by results goes through
the following process.

1. Appraisal by result is a joint process between superior and his subordinates.

2. The subordinate prepares his plan for specific period usually for one year in the
light of the overall plan provided by his superior. The final plan is prepared
through mutual consultation.

3. Through mutual consultation, both of them decide the evaluation criteria that are
what factors will be taken up for evaluation of subordinates performance. The
supporting role of superior is also finalized so that the subordinate is clear about
the various supports he will get.

4. At the end of specified period, normally one year, the superior makes a
performance evaluation of subordinate on the basis of mutually agreed criteria.

5. Superior discusses the results of his evaluation with the subordinate; corrective
actions, if necessary, are suggested; and mutually agreed targets for the next period
are set.

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1) Explain the principles of Scientific Management by Taylor.

Principles of Scientific Management

1. Separation of Planning and Doing. Before Taylors scientific management, a

worker himself used to decide how he had to work and what instruments were
necessary. Thus, he planned his work also, and there was gang boss to supervise
his work. Taylor has emphasized that planning function should be separated from
actual performance and should be given to specialists.

2. Functional Foremanship. Taylor has evolved functional foremanship to

supervise and giving various directions. In this system, eight persons are involved
to direct the activities of workers. Out of these, four persons (i) route clerk, (ii)
instruction card clerk, (iii) time and cost clerk, and (iv) disciplinarian are related
with planning function and the remaining four (a) speed boss, (b) inspector, (c)
maintenance foreman, and (d) gang boss are concerned with operating function.
This is totally against the principle of unity of command as shown in the following
chart.

3. Job analysis. There is one best way of doing a job, which requires least
movements, consequently less time and cost. In every industry, this way should be
determined which involves time, motion, and fatigue study.

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(i) Time study.

Time study involves the determination of time a movement takes to complete. The
movement, which takes minimum time, is the best. This helps in determining fair
work for a particular period.

(ii) Motion study.

Motion study involves the study of movements in parts, which are involved in
doing a job and thereby eliminating the wasteful movement and performing only
necessary movements. This helps in reducing the fatigue of workers.

(iii) Fatigue study.

This indicates that the workers feel fatigued after putting in work for a certain
period and they are not able to do the work at their full capacity. Thus, they should
be provided appropriate rest at appropriate intervals. The fatigue study shows the
time and frequency of rest.

4. Standardization.

Standardization is to be maintained in respect of instruments and tools, period of

work, amount of work, working conditions, cost of production, etc. These things
should be fixed in advance based on various experiments.

5. Scientific selection and training.

Selection of workers should be on scientific basis, and their education, experience,

aptitude, physical strength, etc., should be adequately considered. A worker should
be given work for which he is physically and technically most suitable. Training
should be provided to workers to make them more efficient.

6. Financial incentives.

Workers can be motivated by financial incentives. If provision exists to earn higher

wages by putting higher efficiency, workers will put more work. Taylor himself
applied differential piece-rate system, which is of a highly motivating nature. The
wage should be based on individual performance and on the position, which he
occupies. The rate should be fixed on accurate knowledge and not on estimation.
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7. Economy.

While applying scientific management, not only scientific and technical aspects
should be considered but adequate consideration should be given to profit and
economy. For this purpose, techniques of cost estimates and control should be
adopted.

8. Bilateral Mental Revolution.

Scientific management depends upon the co-operation between management and

workers. For this co-operation, there should be a mental change in both parties
from conflict to co-operation. Taylor feels that this is the most important factor in
executing scientific management.

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4) Examine the objectives of manpower Planning.

MANPOWER PLANNING

Planning for manpower resources is a major managerial responsibility to ensure

adequate supply of personnel at the right time both in terms of their quality and
aptitude and effective utilization of these personnel.

Mac Beath had divided manpower planning into two parts: planning of manpower
requirements and planning of manpower supplies. He defines manpower planning
as follows:

Manpower planning involves two stages. The first stage is concerned with the
details of planning manpower requirements for all types and levels of employees
throughout the period of the plan and the second stage is concerned with planning
of manpower supplies to provide the organization with the right types of people
from all sources to meet the planned requirements.

Objectives of Manpower Planning

1. Manpower planning enables an organization to forecast its manpower

requirement.
2. Manpower planning helps the organization to match its manpower with skills
necessary for achieving its objectives.
3. Manpower planning helps the organization to know how its personnel are
employed and how their skills are being used.
4. Systematic manpower planning facilitates similar approach in other aspects of
staffing.

MANPOWER PLANNING PROCESS

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Manpower planning considers matching all jobs and individuals in future. Since
there is enough time, the organization can achieve this by taking systematic
manpower planning. The process of manpower planning entails consideration of
several steps with relevant inputs before the manpower demand can be arrived at,
on the one hand, and identification of the sources of supply to meet the demand
taking into account the several constraints on the other hand.

1. Projecting Manpower Requirements:

The first essential step in manpower planning is to forecast organization structure

that will meet the future needs of the organization. The basic exercise that has to be
undertaken in this context is to arrive at the scale of business activity over a time
period.

2. Job Analysis:

Job analysis can be directed along the following lines:

(i) What is the basic objective of the job? What is the purpose of the segment of the
Organization to which the job is related?

(ii) What types of plans and projects are undertaken in this job?

(iii) What types of decisions are to be made by the incumbent on the job?

(iv) What is the authority of the job? How many subordinates will work under
him? Can this job alter the present organization structure? If yes, in what way?

(v) What type of personnel does the incumbent contact?

(vi) What are the requirements of personal attributes of incumbent in terms of

education, training, experience, apprenticeship, physical strength, mental
capabilities, social skills, etc.

3. Manpower Inventory:

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Manpower inventory is related to the identification of key personnel in the

organization and cataloguing their characteristics without reference to the present
positions held by them. It provides information about present and future personnel
being available in the organization.

(i) The first step in manpower inventory is the determination of personnel whose
inventory is to be prepared.

(ii) After determination of personnel to be included in manpower inventory,

detailed information about them is collected. The information may be factual
regarding age, education, experience, employment records, merit rating history,
health status, retirement data, results of psychological and other tests etc.

(iii) The third step of manpower inventory involves appraisal of personnel included
in inventory. This will give the information about present and potential talents of
each individual.

(iv) After appraising all personnel included in manpower inventory, detailed study
will be made of those individuals who have high potential for promotion and
holding of key positions in the organization.

4. Identification of Gap between Available and Required Manpower:

When all these exercises are undertaken, the organization is in a position to

determine the actual needs of personnel and their availability. These factors will,
however, be affected by the rate of loss of personnel. Therefore, the additional
requirement of personnel will be equal to manpower required and manpower
available without considering loss of personnel.

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