PRINCIPLES OF MANAGEMENT (FIRST EDITION) - Pages-6-105

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CHAPTER 1: CONCEPTS AND NATURE OF MANAGEMENT
INTRODUCTION
Management is regarded as the most important of all human activities. It may be called the practice
of consciously and continually shaping organizations. Each and every organization has people who
are entrusted with the responsibility of helping the organization achieve its goals. Those people
are called managers. No organization can carry on its business without management, which is in
turn supervised by managers.
Managing is essential to ensure the co-ordination of individual efforts within an organization. It is

exciting because it deals with setting, seeking and reaching objectives of an organization. Each
and every one of us is a manager and the practice of management is found in every facet of human
endeavor- educational institutions, business, government or non-government organizations,
associations, mosques and families.
Management is universal. Every group effort requires setting objectives, making plans, handling
people, coordinating and controlling activities, achieving goals and evaluating performance
directed towards organizational goals. These activities relate to the utilization of four types of input
or resources from the environment − human, monetary, physical, and informational. Human
resources include managerial talent, labour, and so forth. Monetary resources are the financial
capital the organization uses to finance both ongoing and long-term operations. Physical resources
include raw materials, office and production facilities and equipment. Information resources are
data and other kinds of information utilized by the organization. The job of the manager is to
combine and co-ordinate these resources to achieve the organization’s goals.
Principles of Management Compiled by: Abdikani Ahmed (MPA, BHRML)

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DEFINITION OF MANAGEMENT
Many management experts have tried to define management. But, no definition of management
has been universally accepted. Let us discuss some of the leading definitions of management:
"Management is the process of planning, organizing, leading, and controlling an organization’s

human, financial, physical, and information resources to achieve organizational goals in an
efficient and effective manner".
Management is the art of getting things done with and through others.
"Management is a process of designing and maintaining an environment in which individuals

work together in groups to effectively and efficiently accomplish selected aims".
Elements of definition
Process - represents ongoing functions or primary activities engaged in by managers.
Efficiency - getting the most output from the least amount of inputs.
 “doing things right”
Effectiveness - completing activities so that organizational goals are attained.

 “doing the right things”

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It is impossible to provide a single, comprehensive, universally accepted definition of

management. Because:
i. Management has various aspects, that all of which cannot be represented by a single
definition.
ii. The authors who gave the definitions had different areas of interest or training, and all
defined management from their perspective (engineering, sociology, psychology,
mathematics, etc.)
iii. Management as a discipline is young and there is a lack of clarity of concepts and
principles.
WHO ARE MANAGERS?

Let’s begin by briefly defining the terms manager and the place where managers work—the
organization.
“A manager is someone who works with and through other people by coordinating their work
activities in order to accomplish organizational goals.”
A manager is someone whose primary responsibility is to carry out the management process within
an organization to achieve the organizational goals.

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WHAT MANAGERS DO?

Then let’s look at the manager’s job; specifically, what do managers do?
A manager supervises one or more subordinates. Managers include CEOs, who head top-
management teams of high-ranking executives responsible for planning strategy to achieve top-
level managers might be responsible for thousands of workers. But managers are also found
throughout the lower levels of organizations and often are in charge of just a few subordinates. All
managers face the challenge of helping the organization achieve its goals.
What managers do in organizations are the same:

Managers make decisions.
Managers focus on objectives.
Managers plan and set policies.
They organize.
They communicate with subordinates, colleagues and superiors.
They control organizational activities
ORGANIZATION
Organizations are simply groups with two or more people that share a certain set of goals and
meet at regular times.
Organizations are groups of people, with ideas and resources, working toward common goals.
Why Organizations are needed?
A. Organizations serve society

This is because organizations are social institutions that reflect certain culturally accepted values
and needs. They allow people to live together in civilized way and to accomplish goals as a society.
They serve society by making the world a better and safer and more pleasant place to live.
B. Organizations accomplish objectives

Organizations enable the society to reach certain specified goals that would otherwise be much
harder or even impossible to achieve.

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C. Organizations preserve knowledge

Organizations such as colleges, universities, museums are essential because they store and protect
most of important knowledge the civilization of the world has gathered. They serve as a bridge
between past, present and future generation. They also add knowledge by developing new and
more efficient ways of doing things.
D. Organizations provide careers

They provide their employees with a source of livelihood, personal satisfaction and self—
fulfillment.
CHARACTERISTICS OF MANAGEMENT
For a clear understanding of management, its characteristics may be discussed as below:
Management is accomplished through the efforts of others:

Management is sometimes defined as “getting things done through others’ efforts.” Besides the
manager of a firm, there may be accountants, engineers, system analysts, salesmen and a host of
other employees working but it is the manager’s job to integrate all their activities.
Management is a process:
Management is a process, function or activity. This process continues till the objectives set by
administration are actually achieved. "Management is a social process involving co-ordination of
human and material resources through the functions of planning, organizing, staffing, leading and
controlling in order to accomplish stated objectives".
Management is a universal activity:

Management is not applicable to business undertakings only. It is applicable to political, social,
religious and educational institutions also. Management is necessary when group effort is required.

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Management is purposeful:
Wherever there is management there is a purpose. Management, in fact, deals with the achievement
of something definite, expressed as a goal or objective. Management success is commonly
measured by the extent to which objectives are achieved.
Management is intangible:
It cannot be seen with the eyes. It is evidenced only by the quality of the organization and the
results i.e., profits, increased productivity etc.

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FUNCTIONS OF MANAGEMENT
Management functions are a set of interrelated activities and sometimes called management
process. They are five in number. They are:
1. Planning:
Planning is the process of setting goals and choosing the means to achieve those goals.
Planning is the most fundamental and the most universal of all management functions. If people
working in groups have to perform effectively, they should know in advance what is to be done,
what activities they have to perform in order to do what is to be done, and when it is to be done.
Planning is concerned with 'what', 'how, and 'when' of performance. It is deciding in the present
about the future objectives and the courses of action for their achievement.
It thus involves:
a. Determination of long and short-range objectives;
b. Development of strategies and courses of actions to be followed for the achievement of
these objectives; and
c. Formulation of policies, procedures, and rules, etc., for the implementation of strategies,
and plans.
2. Organizing:
Once a manager has developed a work plan, the next phase of management is to organize the
people and other resources necessary to carry out the plan. Organizing may be referred to as the
process of arranging and allocating work, authority and resources among an organization’s
members so they can achieve the organization’s goals.
Organizing thus involves the following sub-functions:
a. Identification of activities required for the achievement of objectives and implementation
of plans.
b. Grouping the activities so as to create self-contained jobs.
c. Assignment of jobs to employees.
d. Delegation of authority so as to enable them to perform their jobs and to command the
resources needed for their performance.

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3. Staffing:
The next logical step in the management process is to get suitable personnel for working the jobs.
Since the efficiency and effectiveness of an organization significantly depends on the quality of
its personnel and since it is one of the primary functions of management to achieve qualified and
trained people to fill various positions, staffing has been recognized as a distinct function of
management.
Staffing involves filling the positions needed in the organization structure by appointing competent
and qualified persons for the job.
It comprises several sub-functions:
a. Manpower planning involving determination of the number and the kind of personnel
required.
b. Recruitment for attracting adequate number of potential employees to seek jobs in the
enterprise.
c. Selection of the most suitable persons for the jobs under consideration.
d. Placement, induction and orientation.
e. Training and development of employees.
f. Transfers, promotions, termination and layoff.
4. Directing:
Directing is the function of leading the employees to perform efficiently, and contribute their
optimum to the achievement of organizational objectives. Jobs assigned to subordinates have to
be explained and clarified, they have to be provided guidance in job performance and they are to
be motivated to contribute their optimum performance with keenness and enthusiasm.
The function of directing thus involves the following sub-functions:
a. Leadership
b. Motivation
c. Communication

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5. Controlling:
Controlling is the function of ensuring that the divisional, departmental, sectional and individual
performances are consistent with the predetermined objectives and goals. Deviations from
objectives and plans have to be identified and investigated, and correction action taken.
Thus, controlling involves the following process:
a. Measurement of performance against predetermined goals.
b. Identification of deviations from these goals.
c. Corrective action to rectify deviations.
LEVELS OF MANAGEMENT
An enterprise may have different levels of management. Levels of management refer to a line of
demarcation between various managerial positions in an enterprise. The levels of management
depend upon its size, technical facilities, and the range of production.
We generally come across two broad levels of management, viz. (i) administrative management
(i.e., the upper level of management) and (ii) operating management (i.e., the lower level of
management). Administrative management is concerned with "thinking" functions such as
laying down policy, planning and setting up of standards. Operative management is concerned
with the "doing" function such as implementation of policies, and directing the operations to attain
the objectives of the enterprise.
Considering the hierarchy of authority and responsibility, one can identify three levels of
management namely:
1. Top management of a company consists of owners/shareholders, Board of Directors, its
Chairman, President of University, Managing Director, or the Chief Executive, or the
General Manager or Executive Committee having key officers.
Top management: Top management is the ultimate source of authority and it lays down
goals, policies and plans for the enterprise. It devotes more time on planning and
coordinating functions. It is accountable to the owners of the business of the overall
management. It is also described as the policy making group responsible for the overall
direction and success of all company activities.

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The important functions of top management include:

a. To establish the objectives or goals of the enterprise.
b. To make policies and frame plans to attain the objectives laid.
c. To set up an organizational frame work to conduct the operations as per plans.
d. To assemble the resources of money, men, materials, machines and methods to put the
plans into action.
e. To exercise effective control of the operations.
f. To provide overall leadership to the enterprise.
2. Middle management of a company consists of heads of functional departments viz.

Purchase Manager, Production Manager, Marketing Manager, Financial controller, etc. and
Divisional and Sectional Officers working under these Functional Heads.
Middle management: The job of middle management is to implement the policies and
plans framed by the top management. It serves as an essential link between the top
management and the lower level or operative management. They are responsible to the top
management for the functioning of their departments. They devote more time on the
organization and motivation functions of management. Without them the top
management's plans and ambitious expectations will not be fruitfully realized.
The following are the main functions of middle management:

a. To interpret the policies chalked out by top management.
b. To recruit and select suitable operative and supervisory staff.
c. To assign activities, duties and responsibilities for timely implementation of the plans.
d. To compile all the instructions and issue them to supervisor under their control.
e. To motivate personnel to attain higher productivity and to reward them properly.
f. To cooperate with the other departments for ensuring a smooth functioning of the entire
organization.
g. To collect reports and information on performance in their departments.

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3. Lower level or operative management of a company consists of Superintendents,

Foremen, Supervisors, etc.
Lower or operative management: It is placed at the bottom of the hierarchy of
management, and actual operations are the responsibility of this level of management. It
consists of foreman, supervisors, sales officers, accounts officers and so on. They are in
direct touch with the workers. Their authority and responsibility is limited. They pass on
the instructions of the middle management to workers.
They allot various jobs to the workers, evaluate their performance and report to the middle
level management. They are more concerned with direction and control functions of
management. They devote more time in the supervision of the workers.
General Managers and Functional Managers

By scope of activities for which they are responsible, managers are categorized in to General
Managers and Functional Managers.
General Functions
They are responsible for all activities of the organization.
They are the top executive officers of the organization. Their decision affects virtually
broader areas of the organization.
Example, General Manager of bank, President of University and so on.
Functional Managers
Functional managers are responsible for only one organizational activity such as production,
marketing, finance, manpower etc. in other words they are responsible for some specialized areas.

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MANAGERIAL SKILLS
A skill is an individual's ability to translate knowledge into action. Hence, it is manifested in an
individual's performance. Skill is not necessarily inborn. It can be developed through practice and
through relating learning to one's own personal experience and background. In order to be able to
successfully discharge his roles, a manager should possess three major skills. These are conceptual
skill, human skill and technical skill. Conceptual skill deals with ideas, technical skill with things
and human skill with people. While both conceptual and technical skills are needed for good
decision-making, human skill in necessary for a good leader.
1. Technical skill:
Technical skill is the ability to use the specialized knowledge, procedures and techniques of a field
of activities. Accountants, engineers, surgeons all have their technical skills necessary for their
respective professions.
Technical skill enables a person to accomplish the method of performing a particular job. This
may be knowing how to maintain customers, how to conduct a performance appraisal, how to
construct a building or how to perform in the operation theatre.
Technical skills are important especially for first line managers, who spend much of their time
training subordinates and supervising their work-related problems. In order to be effective as
managers and also to command the respect of their sub-ordinates, they must first know how to
perform tasks assigned to their subordinates.
2. Human/Interpersonal skill:
Human skill is the ability to work with, understand, and motivate other people as individuals or in
groups. Managers spend much of their time interacting with people both inside and outside their
organizations. We may recall here Mintzberg's explanation of how top (and middle) managers
spend their time: 59 percent in meetings, 6 percent on the phone, and 3 percent on tours. All of
these managerial activities involve other people.
Because managers deal directly with people, this skill is crucial! Managers with good human skills
are able to get the best out of their people. They know how to communicate, motivate, lead, and
inspire enthusiasm and trust.

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3. Conceptual skills
Conceptual skill is the ability to co-ordinate and integrate all of an organization’s interests and
activities. It requires having the ability to visualize the enterprise as a whole, to envision all the
functions involved in a given situation or circumstance, to understand how its parts depend on one
another, and anticipate how a change in any of its parts will affect the whole. Conceptual skills, in
fact, depend on the manager’s ability to think in the abstract and to view the organization in a
whole manner.
One example of conceptual skill may be that the managing director of a bank visualizes the
importance of better service for its clients which ultimately helps attract a vast number of clients
and an unexpected increase in its deposits and profits.
SKILLS AND MANAGEMENT LEVELS
Technical skill is especially important for first line managers who spend much of their time
training workers and answering questions about work-related problems.
Human skill, although important for managers at all levels, is specially needed by mid-level
managers. Their ability to tap this resource of their subordinates is more important than their own
technical proficiency.
Conceptual skill is mostly needed at the top level. In fact, the importance of conceptual skill
increases as one rises through the ranks of management.

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MANAGERIAL ROLES
Managers fulfill a variety of roles. A role is an organized set of behaviors that is associated with a
particular office or position.
In 1960, Henry Mintzberg conducted a study to understand about the managerial roles. He
identified 10 managerial roles that are common to all managers. These 10 managerial roles are
grouped under: Interpersonal, decisional, and informational roles.
Interpersonal Roles
Managers have to spend considerable amount of time in interacting with other people, both with
their own organizations as well as outside. These people include Peers, subordinates, superiors,
suppliers, customers, government officials and community leaders. All these interactions require
an understanding of interpersonal behavior. Studies show that interacting with people takes up
nearly 80% of manager’s time.

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The important interpersonal roles are:-

1. Figurehead – managers act as symbolic figureheads performing social or legal obligations.
These duties include greeting visitors, signing legal documents, taking important customers
to lunch, attending a subordinates wedding and speaking at functions in schools and
churches. As a manager, you have social, ceremonial and legal responsibilities. You're
expected to be a source of inspiration. People look up to you as a person with authority,
and as a figurehead.
2. Leader – This is where you provide leadership for your team, your department or perhaps
your entire organization; and it's where you manage the performance and responsibilities
of everyone in the group. He must be an ideal leader so that his subordinates follow his
directions and guidelines with respect and dedication.
3. Liaison – Managers must communicate with internal and external contacts. He must be
able to network effectively on behalf of organization. In this role managers build their own
external information system. This can be achieved by attending meetings and professional
conferences, personal phone calls, trade journals and informal personal contacts with
outside agencies.
Informational Roles
A manager, by virtue of his interpersonal contacts, emerges as a source of information about a
variety of issues concerning an organization. In this capacity of information processing, a manager
executes the following three roles:-
1. Monitor – In this role, he regularly seek out information related to organization and
industry, looking for relevant changes in the environment. He monitor his team, in terms
of both their productivity, and their well-being. Managers constantly scanning their internal
and external environment for this purpose.
2. Disseminator – This is where he communicate potentially useful information to his

colleagues and his team. The managers must transmit the information regarding changes

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in policies or other matters to subordinates, their peers and to other members of an

organization.
3. Spokesperson – Managers represent and speak for their organization. In this role he is
responsible for transmitting information about his organization and its goals to the people
outside it.
Decisional Roles
A manager must make decisions and solve organizational problems on the basis of environmental
information’s received. In this respect managers play four important roles:-
1. Entrepreneur – As a manager, he creates and controls change within the organization.
This means solving problems, generating new ideas, and implementing them. Managers,
as entrepreneurs are constantly involved in improving their units and facing the dynamic
technological challenges.
2. Disturbance Handler – When an organization or team hits an unexpected roadblock, it's

the manager who must take charge. He also need to help mediate disputes within it. The
managers are constantly involved as judge in solving conflicts among the employees and
between employees and management.
3. Resource Allocator – He also need to determine where organizational resources are best
applied. This involves allocating funding, as well as assigning staff and other
organizational resources.
4. Negotiator – Managers need to take part in, and direct, important negotiations within his
team, department, or organization. He has to negotiate deals and agreement within and
outside of an organization. He negotiate contracts with unions. Sales managers may
negotiate prices with prime customers. Purchase managers may negotiate prices with
vendors.

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SIGNIFICANCE OF MANAGEMENT
No enterprise can run without management. Some people may say that the main purpose of
management is to make a profit. Management is to establish an environment in which people can
accomplish organizational goals with the least amount of time, money, materials and personal
dissatisfaction.
It is now widely recognized that management is an important factor of growth of any country. The
following points further highlight the significance of management:
Achievements of group goals:
Management makes group efforts more effective. The group as a whole cannot realize its
objectives unless and until there is mutual co-operation and co-ordination among the members of
the group. Management creates team work and team spirit in an organization by developing a
sound organization structure.
Optimum utilization of resources:
Management always concentrates on achieving the objectives of the enterprise. The available
resources of production are put to use in such a way that all sort of wastage and inefficiencies are
reduced to a minimum. Workers are motivated to put in their best performance by the inspiring
leadership. Managers create and maintain an environment conducive to highest efficiency and
performance. Through the optimum use of available resources, management accelerates the
process of economic growth.
Sound organization structure:
Management establishes proper organization structure and avoids conflict between the superiors
and subordinates. This helps in the development of spirit of cooperation and mutual understanding,
and a pleasant environment is provided in the organization.
Provide innovation:
Management gives new ideas, imagination and visions to an enterprise.

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MANAGEMENT: ART OR SCIENCE?

Managing like any other practices - whether engineering, accountancy, law or medicine - is an art.
Artistic application of management know-how is evident. It is understood that managing is doing
things artistically in the light of the realities of a situation. But a modern manager can do better by
using the knowledge, methods, concepts, theories, etc. of managing at his/her work place. As a
matter of fact, these knowledge, methods, concepts, theories related to managing can be treated as
science.
'Art' refers to "the way of doing specific things; it indicates how an objective is to be achieved."
Science may be described- "as a systematic body of knowledge pertaining to an area of study and
contains some general truths explaining past events or phenomena".
Management as Both Science and Art
Science teaches us to know while art teaches us to do. In order to be successful, managers have to
know and do things effectively and efficiently. This requires a unique combination of both science
and art of managing in them.

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REFERENCES /FURTHER READING

1. George R Terry, Principles of Management, Richard D Irwin Inc., Homewood, Illinois,
1968.
2. Daft, R.L. (1997) Management. (4thed.) Texas: The Dryden Press
3. Hicks,H.G. & Gullett, C.R.(1981) Management Singapore: McGraw-Hill, Inc
4. Peretomode, V.F. & Peretomode, O. (2008) Fundamentals of Management and
Organizational Behaviour. Lagos: O.O.P. Publishers LTD
5. Robbins,S.P. & Coulter,M. (1999) Management New Jersey: Prentice –Hall, Inc.
6. Smith, M. (2011) Fundamentals of Management. (2nd Ed.) New York: McGraw-Hill
Higher Education.
7. Drucker, P. (1989). The Practice of Management. Jordan Hill Oxford: Butterworth-
Heinemann.
8. Jones, G. R. & George, J. M. (2003). Contemporary Management. (3rd Ed.). New York:
McGraw Hill.
9. Joseph L. Massie, Essentials of Management, Prentice Hall of India, 1998.

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CHAPTER TWO: EVOLUTION OF MANAGEMENT THOUGHTS
Both theory and history of management are useful to the practicing manager. Theories help us by
organizing information and providing a systematic framework for action. A theory is also a simple
blue print or a road map guiding the manager towards achieving organizational goals. The history
of management theories can help a manager to be aware of the many insights, ideas and scientific
underpinnings that have gone into the making of modern management and the burgeoning of
writings on management at the present day.
Management has been practiced as far back as the olden days when the only means of livelihood
was Agriculture (Subsistence Agriculture). At that time people lived in communal setting made
up of father, wife or wives, sons, daughters, sons-in-law, daughters-in-law, children etc, so there
were enough farm hands or workers. Regardless of what managers were called at that time,
someone had to plan what was to be done, organize the family members and the farming tools and
other materials, lead and direct the workers and impose some controls to ensure that everything
was done well. This task usually fell on the head of the family, the father, who organizes the men
and lead the way while the women follow after them.
The building of the ancient Egyptian Pyramids and the great walls of China gives credence to
the fact that organized endeavours directed by people responsible for planning, organizing, leading
and controlling activities have existed for thousands of years. The construction of a single pyramid
occupied more than more than 100,000 people for 20 years. There were people, who were in
charge; who ensured that there were enough stones at the site, told the workers what was to be
done and organized them. With the ancient Egyptians, the whip, ball and chain were effective ways
of getting things done through people.
Classical Approach
The classical approach is also known as traditional approach, management process approach or
empirical approach. The main features of this approach are as follows:
 It laid emphasis on division of labour and specialization, structure, scalar and functional
processes and span of control.

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 Management is viewed as a systematic network (process) of interrelated functions. The

nature and content of these functions, the mechanics by which each function is performed
and the interrelationship between these function is the core of the classical approach.
 Functions, principles and skills of management are considered universal. They can be
applied in different situations.
 Formal education and training is emphasized for developing managerial skills in would be
managers
The Classical approach was developed through three mainstreams:

Taylor’s Scientific Management, Fayol’s Administrative Management and Weber’s Ideal
Bureaucracy.
SCIENTIFIC MANAGEMENT
Scientific management is defined as the use of the scientific method to define the “one best way”
for a job to be done.
Fredrick W. Taylor (1856-1915)
Started as an apprentice machinist in Philadelphia, USA. He rose to be the chief engineer at the
Midvale Engineering Works and later on served with the Bethlehem Works where he experimented
with his ideas and made the contribution to the management theory for which he is so well known.
Frederick Winslow Taylor well-known as the founder of scientific management was the first to
recognize and emphasis the need for adopting a scientific approach to the task of managing an
enterprise. He tried to diagnose the causes of low efficiency in industry and came to the conclusion
that much of waste and inefficiency is due to the lack of order and system in the methods of
management. He found that the management was usually ignorant of the amount of work that
could be done by a worker in a day as also the best method of doing the job. As a result, it remained
largely at the mercy of the workers who deliberately shirked work. He therefore, suggested that
those responsible for management should adopt a scientific approach in their work, and make use
of "scientific method" for achieving higher efficiency.

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The primary aim of scientific management was maximizing profits and minimizing costs of
production. The guiding principle was “getting the most out of the workers”.
Taylor’s Four Principles of Scientific Management:

1. Study each part of the task scientifically, and develop a best method to perform it.
2. Carefully select workers and train them to perform a task using the scientifically developed
method.
3. Cooperate fully with workers to ensure they use the proper method.
4. Divide work and responsibility so management is responsible for planning work methods
using scientific principles and workers are responsible for executing the work accordingly.
Frank (USA, 1867 - 1924) and Lillian (U.S.A, 1878 - 1912): The ideas of Taylor were also
strongly supported and developed by the famous husband and wife team of Frank and Lillian
Gilbreth. They became interested in wasted motions in work. After meeting Taylor, they combined
their ideas with Taylor's to put scientific management into effect. They made pioneering effort in
the field of motion study and laid the entire foundation of our modern applications of job
simplification, meaningful work standards and incentive wage plans. Mrs. Gilbreth had a unique
background in psychology and management and the couple could embark on a quest for better
work methods. Frank Gilbreth is regarded as the father of motion study. He is responsible for
inculcating in the minds of managers the questioning frame of mind and the search for a better
way of doing things.
Gilbreth's contributions to management thought are quite considerable. His main contributions are:
a) The one best way of doing a job is the way which involves the fewest motions performed
in an accessible area and in the most comfortable position. The best way can be found out
by the elimination of inefficient and wasteful motions involved in the work.
b) He emphasized that training should be given to workers from the very beginning so that
they may achieve competence as early as possible.
c) He suggested that each worker should be considered to occupy three positions - (i) the job
he held before promotion to his present position, (ii) his present position, and (iii) the next
higher position. The part of a worker's time should be spent in teaching the man below him

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and learning from the man above him. This would help him qualify for promotion and help
to provide a successor to his current job.
d) Frank and Lillian Gilberth also gave a thought to the safety of the individuals who work
for the organization.
e) Gilbreth also devised methods for avoiding wasteful and unproductive movements. He laid
down how workers should stand, how his hands should move and so on.
Henry Lawrence Gantt (USA, 1861 - 1919): H.L Gantt was born in 1861. He graduated from
John Hopkins College. For some time, he worked as a draftsman in an iron foundry. In 1884, he
qualified as a mechanical engineer at Stevens Institute. In 1887, he joined the Midvale Steel
Company. Soon, he became an assistant to F.W Taylor. He worked with Taylor from 1887 - 1919
at Midvale Steel Company. He did much consulting work on scientific selection of workers and
the development of incentive bonus systems. He emphasized the need for developing a mutuality
of interest between management and labour. Gantt made four important contributions to the
concepts of management:
1. Gantt chart to compare actual to planned performance. This chart was intended to facilitate
day-to-day production planning.
2. Task-and-bonus plan for remunerating workers indicating a more humanitarian approach.
This plan was aimed at providing extra wages for extra work besides guarantee of
minimum wages. Under this system of wage payment, if a worker completes the work laid
out for him, he is paid a definite bonus in addition to his daily minimum wages. On the
other hand, if a worker does not complete his work, he is paid only his daily minimum
wages.
3. Psychology of employee relations indicating management responsibility to teach and train
workers.
4. Gantt laid great emphasis on leadership. He considered management as leadership function.
He laid stress on the importance of acceptable leadership as the primary element in the
success of any business.

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ADMINISTRATIVE MANAGEMENT THEORY

Henry Fayol was the most important exponent of this theory. The pyramidal form, scalar principle,
unity of command, exception principle, span of control and departmentalisation are some of the
important concepts set forth by Fayol and his followers like Mooney and Reiley, Simon, Urwick,
Gullick etc.
Henry Fayol (France, 1841 - 1925): Henry Fayol was born in 1941 at Constantinople in France.
He graduated as a mining engineer in 1860 from the National School of Mining. After his
graduation, he joined a French Coal Mining Company as an Engineer. After a couple of years, he
was promoted as manager. He was appointed as General Manager of his company in 1888. At that
time, the company suffered heavy losses and was nearly bankrupt. Henry Fayol succeeded in
converting his company from near bankruptcy to a strong financial position and a record of profits
and dividends over a long period.
Industrial Activities Identified by Fayol
Fayol identifies the following six major activities of any industrial or business organizations:
1. Technical (production and manufacturing);
2. Commercial (buying, selling and exchanging);
3. Financial (search for and optimum use of capital);
4. Security (safeguarding property and people);
5. Accounting (including statistics); and
6. Managerial (planning, organization, command, co-ordination and control)
The process of management as an ongoing managerial cycle involving planning, organizing,

directing, co-ordination, and controlling, is actually based on the analysis of general management
by Fayol. Hence, it is said that Fayol established the pattern of management thought and practice.
Even today, management process has general recognition.

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Fayol’s Principles of Management
In addition to these six management activities, Fayol identifies fourteen universal principles of
management which are aimed at showing managers how to carry out their functional duties. He
himself followed them:
1. Division of work: Division of work or specialization alone can give maximum
productivity and efficiency. Both technical and managerial activities can be performed in
the best manner only through division of labour and specialization.
2. Authority and Responsibility: The right to give order is called authority. The obligation
to accomplish is called responsibility. Authority and Responsibility are the two sides of the
management coin. They exist together. They are complementary and mutually
interdependent.
3. Discipline: The objectives, rules and regulations, the policies and procedures must be
honoured by each member of an organization. There must be clear and fair agreement on
the rules and objectives, on the policies and procedures. There must be penalties
(punishment) for non-obedience or indiscipline. No organization can work smoothly
without discipline - preferably voluntary discipline.
4. Unity of Command: In order to avoid any possible confusion and conflict, each member
of an organization must receive orders and instructions only from one superior (boss).
5. Unity of Direction: All members of an organization must work together to accomplish
common objectives.
6. Subordination of individual interest to common good: According to this principle, the
needs of individuals and groups within an organization should not take precedence over
the needs of the organization as a whole.
7. Remuneration: Wages should be equitable and satisfactory to employees and superiors.
8. Centralization: There must be a good balance between centralization and decentralization
of authority and power. Extreme centralization and decentralization must be avoided.
9. Scalar Chain: The unity of command brings about a chain or hierarchy of command
linking all members of the organization from the top to the bottom. Scalar denotes steps.
10. Order: Indicates materials and people should be in the right place at the right time. People,
in particular, should be in the jobs or positions they best suited to.

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11. Equity: An organization consists of a group of people involved in joint effort. Hence,
equity (i.e., justice) must be there. Without equity, we cannot have sustained and adequate
joint collaboration.
12. Stability of Tenure: A person needs time to adjust himself with the new work and
demonstrate efficiency in due course. Hence, employees and managers must have job
security. Security of income and employment is a pre-requisite of sound organization and
management.
13. Initiative: Subordinates should be encouraged to conceive and carryout ideas.
14. Esprit de corps: Team work, a sense of unity and togetherness, should be fostered and
maintained.
BUREAUCRACY
Max Weber (1864-1920): He was a German sociologist. Writing in the early 1900s, Weber
developed a theory of authority structures and described organizational activities on the basis of
authority relations. He described an ideal type of organization that he called a bureaucracy, a form
of organization characterized by division of labour, a clearly defined hierarchy, detailed rules and
regulations, and impersonal relationships.
The Elements of Bureaucracy are:

1. Labour is divided with clear definition of authority and responsibility that are legitimatized
as official duties.
2. Positions are organized in a hierarchy of authority, with each position under the authority
of a higher one.
3. All personnel are selected and promoted based on technical qualifications, which are
assessed by examination or according to training and experience.
4. Administrative acts and decisions are recorded in writing. Recordkeeping provides
organizational memory and continuity over time.
5. Management is separate from the ownership of the organization.
6. Management is subject to rules and procedures that will insure reliable, predictable
behaviour. Rules are impersonal and uniformly applied to all employees.

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BEHAVIOURAL SCHOOL
The school of behavioural management theory involved in recognition on the importance of human
behaviour in organization.
Robert Owen (1771-1858) was a British industrialist who was the first to speak out on behalf of
the organization’s human resources. He carried out experiments and introduced many social
reforms. He believed that workers’ performance was influenced by the total environment in which
they worked. He criticized industrialists who spent huge sums of money repairing their production
machines, but did little to improve the lot of their human machines. Owen worked for the building
up of a spirit of co-operation between the workers and managers. He introduced new ideas of
human relations e.g. shorter work hours, housing facilities, education of children, provision of
canteen, training of workers in hygiene etc.
George Elton Mayo (Australia, 1880 - 1949): Elton Mayo was born in Australia. He was
educated in Logic and Philosophy at St. Peter's College, Adelaide. He led a team of researchers
from Harvard University, which carried out investigation in human problems at the Hawthorne
Plant of Western Electrical Company at Chicago.
Hawthorne Experiment: In 1927, a group of researchers led by Elton Mayo and Fritz
Roethlisberger of the Harvard Business School were invited to join in the studies at the Hawthorne
Works of Western Electric Company, Chicago. The experiment lasted up to 1932. The Hawthorne
Experiments brought out that the productivity of the employees is not the function of only physical
conditions of work and money wages paid to them. Productivity of employees depends heavily
upon the satisfaction of the employees in their work situation.
Mary Parker Follett (1868-1933): She was a social philosopher whose ideas had clear
implications for management practice. Her contribution towards the understanding of group is of
immense value. She believed that groups were the mechanisms through which people could
combine their differing talents for the greater good of the organization, which she defined as the
community in which managers and subordinates could work in harmony. The Managers and
workers should view themselves as partners and as a part of common group. She was convicted
that the traditional and artificial distinction between the managers who give the orders and the

33
workers who take the orders obscured their natural relationships. Manager should rely more on
their expertise and knowledge to lead subordinates than on the formal authority of their position.
Abraham Maslow: He was a humanistic psychologist, proposed a hierarchy of five needs:

physiological, safety, social, esteem and self-actualization. He proposed that man was a wanting
animal whose behaviour was calculated to serve his most pressing needs. A need can be described
as a physiological or psychological deficiency that a person is motivated to satisfy. Maslow further
proposed that man’s need could be placed in a hierarchy of needs. The moment the first need of
man is satisfied he starts thinking of the second need, and then follows his worry about the third
need and the sequence continues till all the needs are satisfied.
1. Physiological Needs: This category includes those needs which a man needs to satisfy first
of all in order to remain alive. It includes food to eat, house to live in, clothes to wear and
sleep for rest.
2. Safety Needs: After having satisfied the physical needs a man thinks of his safety. Safety
needs mean physical, economic and psychological safety. Physical safety means saving
him from accidents, diseases and other unforeseen situations. Economic safety means
security of employment and making provision for old age. Psychological safety means
maintaining his prestige.
3. Social Needs: Man is a social being and wants to live in society with honour. It is, therefore,
necessary that he should have friends and relatives with whom he can share his joys and
sorrows.
4. Esteem and Status Needs: They are called ego needs of man. It means everybody wants to
get a high status which may increase his power and authority.
5. Self-Actualization Needs: Last of all man tries to satisfy his self-actualization need. It
means that a man should become what he is capable of. For example- a musician wants to
be proficient in the art of music, an artist wants to gain proficiency in creating works of art
and similarly, a poet wants to be an expert in the art of writing poems.

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Douglas McGregor (1906-1964): He is best known for his formulation of two sets of
assumptions- Theory X and Theory Y.
According to McGregor, Theory X attitudes, that man was lazy and work was bad were both
pessimistic and counterproductive. Theory X assumes that people have little ambition, dislike
work, want to avoid responsibility, and need to be closely supervised to work effectively.
Theory Y, view that man wanted to work and work was good should become the standard for
humanizing the workplace. Theory Y offers a positive view, assuming that people can exercise
self-direction, accept responsibility and consider work to be as natural as rest of play. McGregor
believed that Theory Y assumptions best captured the true nature of workers and should guide
management practice.
SYSTEM APPROACH TO MANAGEMENT

In the 1960s, a new approach to management appeared which attempted to unify the earlier school
of thoughts. This approach is commonly referred to as ‘System Approach’. The system approach
is based on the generalization that an organization is a system and its components are inter-related
and inter-dependent.
“A system is composed of related and dependent elements which, when in interactions, form a
unitary whole. On other words, a system may be defined as an organized and purposeful entity of
inter-related, inter-dependent and inter-acting elements. It is a goal oriented organism that is
composed of parts interrelated in such a way that the total system is greater than the sum of its
parts. The elements of each system may themselves be sub systems. These sub-systems are
functionally related to each other and to the total system. The basic postulates of the system
approach are as follows:
 An organization is a system consisting of several subsystems. For example, in a business
enterprise production, sales and other departments re the subsystem.
 The position and function of each subsystem can be analyzed only in relation to other
subsystem and to the organization as a whole rather than in isolation.
 An organization is a dynamic system because it is responsive or sensitive to its
environment. It is vulnerable to changes in its environment.

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CONTINGENCY OR SITUATIONAL APPROACH TO MANAGEMENT

Pigors and Myers propagated this approach in 1950. Other contributors include Joan Woodward,
Tom Burns, G.W.Stalker, Paul Lawrence, Jay Lorsch and James Thompson. They analyzed the
relationship between organization and environment. They concluded that managers must keep the
functioning of an organization in harmony with the needs of its members and the external forces.
Management is situational and lies in identifying the important variables in a situation. The basic
theme of contingency approach is that organizations have to cope with different situations in
different ways. There cannot be particular management action which will be suitable for all
situations.
Contingency approach guides the manager to be adaptive to environment. It tells the manager to
be pragmatic and open minded. The contingency approach is an improvement over the systems
approach. It not only examines the relationships between sub-systems of the organization, but also
the relationship between the organization and its environment.
In order to operationalize the contingency approach, managers need to know the alternatives for
different situations. It may be operationalized as a ‘if then’ approach to management. The
environment (If) is an independent variable whereas management (when) is a dependent variable.
In this model, a manager has to take four sequential steps:
 Analyze and understand the situation,
 Examine the applicability or validity of different principles and techniques to the situation
at hand,
 Make the right choice by matching the techniques to the situations,
 Implement the choice.
Different scholars from different disciplines at different periods of time in the history of industrial
revolution, growth and development have contributed to the different schools of management.
Each scholar has taken great pains to stress on his own point of view and point out weaknesses of
other schools. This has created a lot of confusion which has been termed by Harold Koontz "The
Management Theory Jungle." However every theory or approach highlights a particular aspect of
management and helps managers address their tasks with a particular insight. As a relatively young
and growing discipline, management has been undoubtedly benefiting from the contributions of
all these schools of thought.

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REFERENCES/FURTHER READING
1. Basu C. R., Business Organization and Management, 2nd Edition, Tata McGraw- Hill Ltd.
2. Brech, E. F. L., Organization: The Framework of Management, 2nd Edition, Longman.
3. Louis A. Allen, Management and Organisation, McGraw-Hill Kogakusha, Ltd.
4. Laurie J. Mullins, Management and Organizational Behaviour, Pitman.
5. Robbins Stephen P. and Mary Coulter, Management, 2002, Prentice Hall of India.
6. Robbins Stephen P. and Decenzo David A., Fundamentals of Management, 3rd Edition,
Pearson Education Asia.
7. George R. Terry and Stephen G. Franklin; Principles of Management, Delhi: AITBS, 1997.
8. Ivancevich, Donnelly, Gibson, Management Principles and Functions, Delhi: All India
Traveller Book Seller, 1990.
9. Kootnz & O'Donnell, Principles of Management.

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CHAPTER 3: PLANNING AND DECISION-MAKING
MEANING OF PLANNING
Students have already been introduced to five essential managerial functions, namely, planning,
organizing, staffing, leading and controlling. This is also the widely accepted conceptual
framework of management. Planning is the most basic of all managerial functions. It is the process
by which managers establish goals and define the methods by which these goals are to be attained.
A plan is like a map, when following a plan you can always make out how much you have
advanced towards the achievement of your project, goals and how much you will still have to cover
to get to your desired destination. Having knowledge of this is essential for making good decisions
on what next is to be done.
Planning is the process of deciding in advance what is to be done, who is to do it, how it is to be
done and when it is to be done. It is the process of determining a course of action, so as to achieve
the desired results. It helps to bridge the gap from where we are, to where we want to go.
Planning is thus deciding in advance the future state of business of an enterprise, and the means
of attaining it.
Its elements are:
1. What will be done – what are the objectives of business in the short and in the long run?
2. What resources will be required – This involves estimation of the available and potential
resources, estimation of resources required for the achievement of objectives, and filling
the gap between the two, if any.
3. How it will be done – This involves two things: (i) determination of tasks, activities,
projects, programmes, etc., required for the attainment of objectives, and (ii) formulation
of strategies, policies, procedures, methods, standard and budgets for the above purpose.
4. Who will do it – It involves assignment of responsibilities to various managers relating to
contributions they are expected to make for the attainment of enterprise objectives. This is
preceded by the breaking down of the total enterprise objectives into segmental objectives,
resulting into divisional, departmental, sectional and individual objectives.

38
5. When it will be done – It involves determination of the timing and sequence, if any, for
the performance of various activities and execution of various projects and their parts.
IMPORTANCE OF PLANNING
While planning does not guarantee success in organizational objectives, there is evidence that
companies that engaged in formal planning consistently performed better than those with none or
limited formal planning and improved their own performance over a period of time.
There would be no need for planning if material, financial and human resources were unlimited
and cheap. Planners in both private business and public agencies are challenged to spread their
limited resources through intelligent planning.
Some of the reasons as to why planning is considered a vital managerial function are given below:
To help in co-ordination:
Co-ordination is, indeed, the essence of management, the planning is the base of it. Without
planning it is not possible to co-ordinate the different activities of an organization.
To make control effective:
The controlling function of management relates to the comparison of the planned performance
with the actual performance. In the absence of plans, a management will have no standards for
controlling other's performance.
Planning helps in the process of decision making:
Since planning specifies the actions and steps to be taken in order to accomplish organizational
objectives, it serves as a basis for decision-making about future activities.
To secure economy in operation:
Planning involves, the selection of most profitable course of action that would lead to the best
result at the minimum costs.

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Planning puts focus on objectives:
The effectiveness of formal planning is primarily based upon clarity of objectives. Objectives
provide a direction and all planning decisions are directed towards achievement of these
objectives.
THE PLANNING PROCESS
The planning process indicates the major steps that are taken in planning. It is involves a series of
steps. The steps are interrelated and there is no rigid boundary between or among the steps, and
one is base for the other.
The planning process consists of the following steps:
1. Understanding of the existing situation
In preparing plan for their organization managers need to understand and have adequate knowledge
about both the internal and external environment.
2. Forecasting
Since planning is deciding what is to be done in the future, managers need to obtain necessary
information about what the future will look like.
3. Establishing objectives
Organization objectives give direction to the major plans, which, by reflecting these objectives
define the objective of every major department. Objectives specify the expected results, indicate
the end points of what is to be done, where the primary emphasis is to be placed, what is to be
accomplished by organizational network.
4. Determine alternative courses of action
Constructing a list of possible course of action that will lead to objectives.

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5. Evaluating the alternatives
Listing and considering the advantages and disadvantages each of possible course of action.
6. Selecting a course of action (selecting the best solution)
This step refers to selecting the course of action that has the most advantages and fewest
disadvantages.
7. Formulating derivative plan
When decision is made, planning is seldom complete, and a seventh step indicated. Managers often
still need to develop one or more supportive plans to support their basic plan and to explain the
many details involved in reaching a broad major plan. It is clear, therefore, that derivative plans
are essentially required to support the basic or general plan.
8. Numbering plans by budgeting
Converting the activities in plan in to budget. Estimating budget to carry out the plan.
9. Implementing the plan
After the optimum alternative has been selected, the manager needs to develop an action plan to
implement it. The manager must determine who will be involved, what resources will be given,
how the plan will be evaluated, by what date the tasks to be initiated and completed and what
reporting procedures are to be used.
10. Controlling and evaluating the results
Once the plan is implemented, the manager must monitor the progress that is being made, evaluate
the reported results, and make any modifications if necessary.

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TYPES OF PLANS
Many different types of plans are adopted by managers to conduct operations, and monitor and
control organizational activities.
Plans can be classified on different bases or dimensions. The following are the most important
ones:
1. Scope/breadth dimension
2. Repetitiveness
3. Time dimension
CLASSIFICATION OF PLANS BASED ON SCOPE/BREADTH
Based on their scope/breadth plans can be classified into three categories:
 Strategic planning,
 Tactical planning and
 Operational planning.

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1. Strategic Planning
Strategic plans generally involves planning at the top institutional level of an organization.
Strategic plans define the organization’s long-term vision and how the organization intends to
make its vision a reality. In short, strategic planning is the determination of the basic long-term
objectives of an enterprise and the adoption of courses of action and allocation of resources
necessary to achieve these goals.
Strategic planning is prepared by top-level-executives by taking into account internal environment

(strengths and weakness) and external environment (threat and opportunities).
2. Tactical Planning
Tactical planning is done at the level of middle management. It is done to allocate organizational
resources and co-ordinate internal subdivisions of the organization. It is also a process of
determining the contributions that sub-units can make with allocated resources.
Tactical planning is usually more detailed and involves a shorter period of time than strategic
planning.
3. Operational Planning
Finally, operational planning is the process of determining how specific tasks can best be
accomplished on time with available resources. This is also done to cover the day-to-day
operations of an organization.
First-level-managers are responsible for accomplishing the operational planning. Operational

planning is narrow in scope and short lived, usually a few months.

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CLASSIFICATION OF PLANS BASED ON REPETITIVENESS
Plans can also be categorized according to frequency or repetitiveness of use. They are broadly
classified as standing plans and single-use plans.
1. STANDING PLANS
Standing plans are drawn to cover issues that managers face repeatedly. For example, managers
may be facing the problem of late-coming quite often. Managers may, therefore, design a standing
plan to be implemented automatically each time an employee is late for work.
They enable top management to provide a clear guideline for middle and lower level management.
Standing plans include mission or purpose, goal or objective, strategy, policy, procedure,
method, and rule.
Mission or Purpose
Mission can be defined as the purpose of existence of the organization. A mission statement is a
formal short written statement of the purpose of an organization. The mission statement is what
acts as a guide of action for an organization, it spells out the organization’s overall goal, gives a
sense of direction and helps in making decisions. For example, the mission of business generally
is the production and distribution of goods and service. Mission is used interchangeably with
purpose by many writers and authors.
The purpose of an organization is its primary or basic role or function as defined or assigned to it
by the society in which it operates. For instance, the purpose that is the basic function of a business
is to make profit by producing goods for sale to customers or services to their clients within certain
procedures and boundaries set by the society. The purpose of universities is to impart knowledge
to students through research and teaching programmes, banks are expected to keep people’s
money, hospitals are expected to provide health care.
Objective or goals
Objectives are statements of organization targets or the end results that managers seek to achieve.
Organizational objectives reflect management responsibilities and the position in the
organizational structure. At the top-level management, objectives are strategic and related to long-

44
large planning issues, whereas tactical and operational objectives are related to medium and short
range plans respectively.
It is important to note that objectives should be specific, measurable, realistic, achievable, and time
targeted for achievement.
Strategies
Strategies are ways and means to achieve the established objectives. Strategies are major courses
of actions that the organization plans to take in order to achieve objectives.
It channels the resources that will be used to move the organization towards such objectives.
Policies
Policies define an area within which decisions are to be made and ensure that the decision will be
consistent with, and contribute to, an objective. Policies focus on how organizational objectives
will be achieved.
Policies are mainly prepared by top management. Policies should be clear and understandable,
stable over time and communicated to everyone involved.
There are many types of policies. Instances are found in the policies of hiring only university-
trained engineers, promotion from within, encouraging an employee suggestion system for
improved organizational performance, setting competitive prices etc.
Procedures
Procedures establish customary ways for handling certain activities: hiring a clerk, participating in
a co-operative housing society, obtaining a loan from a bank. The major characteristic of a
procedure is that it represents a chronological sequencing of events. It specifies a series of steps
that must be taken to accomplish a task. Specified series of steps one required to take for admission
in the MBA program of Gollis University is an example of procedure.

45
Methods:
Whereas a procedure shows a series of steps to be taken, a method is only concerned with the
single operation, with one particular step, and it tells exactly how this particular step is to be
performed. That is a method is more detailed. Example: how suppliers are selected.
Rules
Rules spell out specifically what employees are supposed to do or not to do. For example, the no-
smoking campaign launched by some organizations is supported by some organizational rules. As
opposed to policies, rules do not permit exercise of individual preference. Instead, rules specify
what actions will be taken (or not taken) and what behaviour is permitted or not.
2. SINGLE-USE PLANS
Single-use plans are prepared for single or unique situations or problems and are normally
discarded or replaced after one use. Generally three types of single-use plans are used. These are
programmes, projects and budgets.
For example, if a company wants to start distributing its products to 3 new areas, the company will
need to have a specific single–use plan for this project. The company cannot use the same plan
that was used in the existing areas they were distributing before. This is because the new areas are
different locations with their own peculiarities different from those of the existing ones in which
the company distributes to before.
Programme
This is a plan covering relatively large set of activities showing major steps required to reach an
objective, the resources to be employed, the individual or organization responsible for each step,
and the order and timing in which the steps will be completed. A programme may be a major or a
minor one or long, medium or short term one. Since it is not used in the same form once its task is
over it belongs to single-use plan category.

46
Project
A project is a particular job that needs to be done in connection with a general programme. So a
single step in a programme is set up as a project. A project has a distinct object and clear-cut
termination. "Projects have the same characteristics as programs but are generally narrower in
scope and less complex. Projects are frequently created to support or complement a program.
Budgets
A budget is a financial document used to project future income and expenses. Budget is a tool used
to control all activities in the organization. Budgets can be regarded as single – use plans, this is
because more often than not managers use the budget–developing process as a guide to making
decisions on how to distribute resources among different activities the organization engages in.
CLASSIFICATION OF PLANS BASED ON TIME
All planning deals with future and future are measured in time hence. Hence, it is convenient and
acceptable to think of different kinds of planning in terms of the time periods for which the
planning is intended. We can classify plans into three based on time as:
 Long-range plans,
 Intermediate plans and
 Short-range planning.
1. Long range Planning:
Long range planning has longer time horizon, it is not concerned with immediate future, but distant
future. It is concerned mainly with the future direction of the organization. The time may range
usually 5 - 10 years.
2. Intermediate range planning:
Intermediate range planning ranges between long and short range planning.
Note: What is long range or what is short range cannot be generally defined. In most of the cases
it depends on the size of the organization and the type of business.

47
3. Short range planning:
Short range plans are not prepared separately they are complementary of long range plans. They
constitute the steps toward the implementation of long range plans. The period is generally 1 year
sometimes it can go up to 2 years.
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".
Decision-making is the process of defining problems, generating alternative solutions, choosing

one alternative, and implementing it.
Although each of us makes decisions every day, it is particularly vital function of managers. It is
enables managers to solve social, economic and political problem.
TYPES OF DECISIONS
Different types of decisions are made by managers, they can be categorized under programmed
and non-programmed decisions. This is based on the nature or type of problem to be dealt with or
opportunities to be tackled.
There are two basic types of decisions—programmed and non-programmed.
Programmed decisions:
Programmed decisions are routine and repetitive and are made within the framework of
organizational policies and rules. These policies and rules are established well in advance to solve

48
recurring problems in the organization. Programmed decisions have short-run impact. They are,
generally, taken at the lower level of management.
These are routines that deal with frequently occurring situations, such as requests for vacations by
employees. In routine situations, it is usually much more efficient for managers to use a
programmed decision than to make a new decision for each similar situation. In programmed
decisions managers make a real decision only once, when the programme is created. Subsequently,
the program itself specifies procedures to follow when similar circumstances arise.
Non-Programmed Decisions:
Non-programmed decisions are decisions taken to meet non-repetitive problems. Non-

programmed decisions are relevant for solving unique/unusual problems in which various
alternatives cannot be decided in advance. A common feature of non-programmed decisions is that
they are novel and non-recurring and therefore, readymade solutions are not available. Since these
decisions are of high importance and have long-term consequences, they are made by top level
management.
Problems such as how to allocate an organization’s resources, what to do when a product is failing;
most problem a manager faces usually requires non-programmed decisions. For instance, how to
manufacture a newer and stronger product to tackle typhoid is a non-programmed decision for
GlaxoSmithKline.
DECISION MAKING PROCESS
A decision is a choice made from two or more alternatives. The decision-making process is
defined as a set of different steps that begins with identifying a problem and decision criteria and
allocating weights to those criteria; moves to developing, analyzing, and selecting an alternative
that can resolve the problem; implements the alternative; and concludes with evaluating the
decision’s effectiveness.
Planning can be considered as a series of sequential steps. These steps are as follows:

49
Stage 1: Recognize, diagnose and define the problem
The first stage of the decision making process is the recognition that a problem exists working
against achieving objectives and finding out the origin of the problem and then describing the real
problem.
Stage 2: Search for, gather and analyze relevant facts or information
Once we have defined our problem, the manager would now decide what he will do about it; to go
about this the manager must first decide what facts they will need to make an accurate decision
and then try to obtain as much of this information as possible to be able to put together possible
solutions (Stoner, 1978).
Stage 3: Develop Alternative Solutions
After identifying and defining a problem and putting together relevant information, managers must
at this stage develop possible alternative solutions from which a choice will be made. These
alternatives represent different responses to the problem.
Stage 4: Evaluate the Alternative Solutions
Once managers have built up a set of options for the solutions, they must source for new
information that will enable them further evaluate each of the alternatives in terms of the goods
and resources of the organization and how it will help solve the problem or confront the
opportunity. This stage has to do with listing the possible outcome of each alternative. Stoner,
1976 put forward that managers based on their intuition, knowledge, experiences each arrange
alternatives in a hierarchy from most preferred to least preferred and decide which alternatives are
most desirable or attractive. This is done after both the positive and negative consequences of all
the alternatives have been examined.
Stage 5: Select the best alternative solutions
The decision maker must choose one of the identified alternatives. The alternative chosen will be
one that best solves all the factors of their problem at the lowest cost to their organization.

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Stage 6: Implement the decision
The process of decision making is not complete if the alternative chosen has not yet being
implemented. Decision implementation involves communicating the chosen option/alternative to
those to be affected by it or the members of the organization and assigning resources and
responsibility in implementing it (Gleuck, 1980).
Stage 7: Evaluate and Control
At these stage managers should set up a procedure for regular, periodic feedback in form of reports
on the progress of the course of action that has been implemented. They should also set up ‘early
warning system’ to let them know as soon as possible of some problem with the action being
implemented (Stoner, 1979); a form of control system.

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DECISION-MAKING CONDITIONS
Decisions are made under one of three conditions: Certainty, Risk, and Uncertainty. These
conditions are based on the amount of knowledge the decision maker has regarding the final
outcome of the decision.
Certainty
Certainty is a situation in which a manager can make accurate decisions because the outcome of
every alternative is known. However, this isn’t characteristic of most managerial decisions.
Under conditions of certainty the manager has enough information to know the outcome of the
decision before it is made.
Risk
Most managerial decisions are made under conditions of risk. Risks exist when the individual has
some information regarding the outcome of the decision but does not know everything when
making decisions under conditions of risk, the manager may find it helpful to use probabilities. To
the degree that probability assignment is accurate, he or she can make a good decision.
Uncertainty
Uncertainty is a condition in which the decision maker chooses a course of action without
complete knowledge of the consequences that will follow implementation.
Under a situation of uncertainty the decision maker has no knowledge concerning the probabilities
associated with different possible outcome.

52
1. Heinz Weihrich and Harold Koontz, "Management: A Global Perspective", McGraw-Hill

International Editions, Tenth Edition, 1994.
2. Griffin, "Management", Boston: Houghton Mifflin Company, 1984.
3. George R. Terry, Stephen G. Franklin, "Principles of Management", Delhi: ALTBS.
Publishers & Distributors, Eighth Edition, 1997.
4. James A.F., R. Edward and Daniel R. Gilbert, Jr., "Management", Prentice-Hall of India
Private Limited, Sixth Edition, 1997.
5. Satya, S. C. (1966). An Introduction to Management: Its Principles and Techniques. The
World Press.
6. Drucker, P. (1989). The Practice of Management. Jordan Hill, Oxford: Butterworth-
Heinemann
McGraw Hill.
8. Robbins, S. P. & Coulter, M. (1996). Management. New Jersey: Prentice-Hall.
9. Stoner, J. A.; Fr., Freeman, R. E. & Gilbert, D. R. (Jr.). (1995). Management. (6th Ed.).
New Jersey: Prentice-Hall

53
CHAPTER FOUR: ORGANIZING
DEFINITION OF ORGANISATION
Every organization is made up of human and physical resources. These resources are brought
together in order to accomplish a predetermined goal. In order to accomplish these objectives,
tasks must be identified, the tools and technology required must be provided and a structure of
relationships must be identified. It is the function of the management to determine the best structure
that will optimize the utilization of resources. Management organizes these resources. The
organization is a means of achieving the best result from concerted effort. Organization deals with
people and their relationship in an enterprise.
According to Louis A Allen, Organization 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.
In the words of Koontz and O'Donnell, "Organization involves the grouping of activities
necessary to accomplish goals and plans, the assignment of these activities to appropriate
departments and the provision of authority, delegation and co-ordination."
A hospital, for example, has organizational needs that are different from those of a university,
which are different from those of a museum. Organizing is what managers do when they design,
structure, and arrange the components of an organization’s internal environment to facilitate
attainment of organizational goals. For example, to meet its goal of delivering high-quality health
care, a hospital may organize both in-and out-patient facilities, locate its emergency room and
trauma centre on the first floor of the building to prevent delays in treating critical patients, prepare
meal schedules, provide room cleaning services, and so forth.

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PRINCIPLES OF ORGANISATION
Co-ordination: Organization involves division of work among people whose efforts must be
coordinated to achieve common goals. Co-ordination is the orderly arrangement of group effort to
provide unity of action in the pursuit of common purpose.
Unity of Command: Each person should be accountable to a single superior. If an individual has
to report to only one supervisor there is a sense of personal responsibility to one person for results.
Span of Management: No superior at a higher level should have more than six immediate
subordinates. The average human brain can effectively direct three to six brains (i.e., subordinates).
Flexibility: The organization is expected to provide built in devices to facilitate growth and
expansion without dislocation. It should not be rigid or inelastic.
Responsibility: Authority should be equal to responsibility i.e., each manager should have enough
authority to accomplish the task
Efficiency: The organization structure should enable the enterprise to attain objectives with the
lowest possible cost.
IMPORTANCE OF ORGANIZATION
Organization, in its simplest sense, means a form of human association for the attainment of
common objectives. Sound organization is quite essential for every enterprise. Organized thoughts
have always been the basis of organized actions. Without sound organization, no management can
manage the various operations of the enterprise.
Some of the principal advantages of organization may be outlined as below:
Facilitates Administration
A properly designed and balanced organization facilitates both management and operation of the
enterprise. It increases management's efficiency and promptness, avoids delay and duplication of
work and motivates the employee to perform their job efficiently.

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Encourages Human use of Human Beings
A sound organization provides for efficient selection, training and development of staff, job
rotation and job enlargement. The organization structure can profoundly affect the people of the
company. Proper organization facilitates the intensive use of human capital.
Stimulates Creativity
Organization stimulates creativity. By providing well-defined areas of work and ensuring

delegation of authority, organization provides sufficient freedom to the managers and encourages
their initiative, independent thinking and creativity.
Reduces Employee Turnover
Organization increases employee satisfaction, ensures better relations between the management
and the workers, and thereby reduces employee turnover.
Reduces Duplication of Activities
Organization avoids delay and duplication of activities and consequent confusion by ensuring
well-defined responsibilities and authority.

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TYPES OF ORGANIZATION
Organizations can be classified into two broad headings - (a) formal and (b) informal
organizations.
Formal organization
Formal organization refers to the structure of relationships deliberately built up by the top
management to realize the objectives. In this form instructions, responsibility, authority,
accountability, lines of command, and positions and authority are clearly defined and declared.
Each person is aware of his duties and authority. Every subordinate is expected to obey his
supervisor in the formal chain of command. Each individual is fitted in the organization like a cog
in the machine. It is designed after careful identification, classification and assignment of business
activities. So, it is conscious creation of relationships.
Informal organization
Informal organization refers to the network of personal and social relationships which arise
spontaneously when people working together interact on personal whims, likes and prejudices.
Such relations are not created by the top management and they are not recognized formally. The
informal groups sometimes run parallel to the formal ones. Informal relations are not portrayed on
organization charts and manuals. An informal organization provides an opportunity to workers to
come close to each other, develop a feeling of cooperation and coordination among themselves.
STEPS IN THE PROCESS OF ORGANISING
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:

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Step 1: 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.
Step 2: 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.
Step 3: 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.
Step 4: 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."

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Step 5: 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.
BASIC CONCEPTS OF ORGANIZING
Organizing involves arranging human and physical resources to help attain organizational
objectives. Organizing is the development of jobs and the arrangement of them in to a structure
that will assure the duties are accomplished in a coordinated way.
WORK SPECIALIZATION
Organizations perform a wide variety of tasks. A fundamental principle to perform these tasks
more effectively is work specialization. The concept of work specialization is traced back to Adam
Smith’s discussion of division of labor and his conclusion was specialization increases employee’s
productivity.
Division of labor is dividing large tasks into a smaller packages of work to be distributed among
several people. Division of labor is the most fundamental principle of organizing. It involves
breaking down a task into its most basic elements, training workers in performing specific duties,
and sequencing activities so that one person’s efforts build on another’s.

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THE SPAN OF MANAGEMENT (SPAN OF CONTROL)
Span of control – this concept refers to how many subordinates a manager can effectively and
efficiently supervise. It is the number of immediate subordinates who report directly to a manager.
According to the classical school of management, the number of subordinates to be controlled by

any executive is from 6 – 8 persons. Others recommended that the span of control use of between
4 – 7 subordinates per manager.
The span of control should be neither too large nor too small.
Types of Span of Control:
Wide Span of Control
Narrow Span of Control
Wide Span of Control
A flat organization structure is characterized by an overall broad span of control, horizontal

dispersion, and fewer hierarchical levels. It is resulted from supervising relatively large number of
subordinates.
Narrow Span of Control
This is when supervisor need to involve closely with subordinates. It is a tall organization structure
characterized by narrow span of management and a relatively large number of hierarchical levels.
The manager manages small number of immediate subordinates.
CENTRALIZATION AND DECENTRALIZATION
In some organizations, top-level managers make all the decisions and the lower level managers
merely carry out the decisions made by top managers. Others push down the decision making
power to the lower level managers who are close to the action.

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Centralization describes the degree to which decision making is concentrated in the upper levels
of the organization. If organization’s key decisions are made at the top with little or no input from
the lower level employees, then the organization is centralized.
Decentralization is the transfer of responsibility from the central government bodies to field units
of the central government and semi-autonomous private or voluntary organizations. It is the
transfer of resources and public functions from a higher level of government to lower ones. Lower-
level managers and subordinates are given the discretion to make decisions.
DEPARTMENTATION
Departmentation refers to the formal structure of the organization, composed of various

departments and managerial positions and their relationships to each other. As an organization
grows, its departments grow and more subunits are created, which in turn add more levels of
management. This often creates less flexibility, adaptability, and unit of action within the firm.
Means of Departmentation
Departmentation results from the division of work and the desire to obtain organization units of
manageable size and to utilize managerial ability. An organization structure and design are shaped
significantly by the departmentation followed. An organizer is free to use any means of
departmentation in constructing an organization structure.
Functional departmentation
Departmentation by function: As mentioned, this is perhaps the most common format for
departmentation. Functional departmentation is one of the most popular ways to group activities
in organization. It is the process of grouping the activities of the organization into separate units
or departments based on the essential functions needed in the organization such ass production,
marketing, finance, personnel and so on.

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Geographic (Territorial) Departmentation
This is grouping of activities based upon location, area or territory. This method becomes feasible
when nearness to local conditions appears to offer advantages such as in terms of saving time and
cost of operation.
Customer Departmentation
Departmentation by customer: This organizational form is used when great emphasis is placed
on effectively serving different customer types. For instance, full-time day students and part-time
night students of graduate business programs in universities usually are different in demographic
profile and personal needs. Wholesale and retail publics are very different in many industries, as
are government and private sector customers.
Product Departmentation
Organizations with diversified products are organized according to their product lines. For each
product manufactured by the enterprise, there is a separate department that looks after its operation.
Each product requires special knowledge and placed under a separate department.
AUTHORITY AND RESPONSIBILITY
Authority, as used here, is the right to act or decide. It describes the relationship between and
among people or groups. A person has authority if he has the right to command and expect
obedience from the subordinate.
"Authority is the right to give order and the power to exact obedience".
Authority is the right inherent in a managerial position to tell people what to do and to expect them
to do it, right to make decisions and carry out actions to achieve organizational goals.
No organization can survive if authority is not vested in some people. In fact, an organization is
nothing but a structure of authority relationships. In business organizations, authority flows from
the top downward. In designing an organization, the authority relationship is clearly defined.

62
Organizational authority is vested in the position not on individuals. The authority is given to an
employee because he needs a degree of authority in order to achieve a given level of productivity
or sales. When the individual resigns, the authority is inherited by another employee who occupies
the position.
Responsibility, on the other hand, is the obligation of an individual to carry out assigned duties to
the best of his or her ability. It is what one expected to perform a duty as required by the superiors
or as prescribed by the job.
Responsibility represents the work or duties assigned to a person by virtue of his position in the
organization. It refers to the mental and physical activities which must be performed to carry out
the task or duty. That means every person who performs some kind of mental or physical activities
as an assigned task has responsibility. In order to enable the subordinates perform his responsibility
well, the superior must clearly tell the former as to what is expected of him.
DELEGATION
Delegation means conferring authority from one manager or organization level to another in order
to accomplish particular assignments. It is the process of allocating tasks to subordinates, giving
them adequate authority to carry out those assignments, and making them obliged to complete the
tasks satisfactorily.
Delegation means devolution of authority on subordinates to make them to perform the assigned
duties or tasks. It is that part of the process of organization by which managers make it possible
for others to share the work of accomplishing organizational objectives. Delegation consists of
granting authority or the right to decision-making in certain defined areas and charging the sub-
ordinate with responsibility for carrying through the assigned tasks.
In the words of F.G. Moore – "Delegation means assigning work to others and gives them authority
to do it."

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FORMS OF ORGANISATION STRUCTURE
Organization requires the creation of structural relationship among different departments and the
individuals working there for the accomplishment of desired goals. The establishment of formal
relationships among the individuals working in the organization is very important to make clear
the lines of authority in the organization and to coordinate the efforts of different individuals in an
efficient manner.
Line organization
This is the simplest and the earliest form of organization. It is also known as "Military",
"traditional", "Scalar" or "Hierarchical" form of organization. The line organization represents the
structure in a direct vertical relationship through which authority flows. Under this, the line of
authority flows vertically downward from top to bottom throughout the organization. The quantum
of authority is highest at the top and reduces at each successive level down the hierarchy. All major
decisions and orders are made by the executives at the top and are handed down to their immediate
subordinates who in turn break up the orders into specific instructions for the purpose of their
execution by another set of subordinates.

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Line and Staff Organization
In line and staff organization, the line authority remains the same as it does in the line organization.
Authority flows from top to bottom. The main difference is that specialists are attached to line
managers to advise them on important matters. These specialists stand ready with their speciality
to serve line mangers as and when their services are called for, to collect information and to give
help which will enable the line officials to carry out their activities better. The staff officers do not
have any power of command in the organization as they are employed to provide expert advice to
the line officers. The combination of line organization with this expert staff constitutes the type of
organization known as line and staff organization.

65
1. Heinz Weihrich and Harold Koontz, "Management: A Global Perspective", McGraw-Hill

International Editions, Tenth Edition, 1994.
2. George R. Terry, Stephen G. Franklin, "Principles of Management", Delhi: A.L.T.B.S.
4. Prasad Manmohan, Management Concepts and Practices, First edition 1998; Himalaya
Publishing House.
Heinemann.
McGraw Hill.
7. Joseph, L. M. & John, D. (1977). Managing: A Contemporary Introduction. (2nd Ed.).
New Jersey: Prentice Hall.
8. Nwachukwu, C.C. (1992). Management: Theory and Practice. Onitsha: Africana-FEP
Publishers.

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CHAPTER FIVE: STAFFING
There are a number of factors that contribute towards the success of an enterprise. These factors
include capital, equipment, manpower, etc. While all these factors are important, the human factor
is the most significant one, since it is the people who have to use all other resources. Without the
productive efforts of workers, the materials and resources will be of no use. Also, if the people
who are in charge of these resources are not sufficiently qualified, then the utilization of these
resources will not be at the optimum.
Most companies consider human resources so important that they create separate department to
handle personnel matters. They recognized that without competent people at all levels,
organizations will either pursue inappropriate goals or find it difficult to achieve the appropriate
goals that have already set. Personnel or human resource departments are given equal importance
to manufacturing, marketing, and finance. The typical human resource manager spends on wage
and salary administration, disciplinary problems, training and development, human resource
planning, employee benefits and a variety of other duties.
Staffing function can be viewed as a series of activities that managers should perform in order to
provide the organization with the right people in the right place.
Staffing is the traditional management function of attraction and selection of the best people and
putting them on jobs where their talents and skills can best be utilized, and retention of these people
through incentives, job training and job enrichment programs in order to achieve both individual
and organizational objectives.
Nature of Staffing Function
The early definitions of staffing narrowly focused on hiring people for vacant positions. Today
staffing is defined more broadly as human resource planning, selection, development and appraisal
aimed at providing the talent necessary for organizational success.

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HUMAN RESOURCE PLANNING
Human Resource Planning is a process of determining and assuming that the organization will
have an adequate number of qualified persons, available at proper times, performing jobs which
meet the needs of the enterprise and which provides satisfaction for the individuals involved.
Human Resource Planning is the process by which an organization ensures that it has the right
number and kinds of people, at the right place and at the right time.
Human Resource Planning Process
Human resource planning refers to a process by which companies ensure that they have the right
number and kinds of people at the right place, at the right time; capable of performing different
jobs efficiently.
The process of HRP broadly involves the following major phases/stages:
1. Forecasting Demand for Human Resource
This is the stage at which the planner estimates number and kinds of employees required in the
future to do the works that enable the organization achieve its objectives.
HR demand forecasting is the process of estimating as closely as possible, how many and what
type of employees the organization will need in each job category by the end of the planning period
to do the work that will have to be done.
Human resource planning starts with the estimation of the number and type of personnel required
at different levels and in different departments.
2. Forecasting Supply of Human Resource

Supply forecast determines whether the HR department will be able to procure the required number
of workers. Supply forecast measures the number of people likely to be available from within and
outside an organization.
One of the important areas of human resources planning is to deal with allocation of persons to
different departments depending upon the work-load and requirements of the departments. While
allocating manpower to different departments, care has to be taken to consider appointments based

68
on promotions and transfers. Allocation of human resource should be so planned that available
manpower is put to full use to ensure smooth functioning of all departments.
3. Estimating Manpower Gaps
Net human resource requirements or manpower gaps can be identified by comparing demand and
supply forecasts. Such comparison will reveal either deficit or surplus of human resources in
future. Deficits suggest the number of persons to be recruited from outside whereas surplus implies
redundant to be redeployed or terminated. Similarly, gaps may occur in terms of knowledge, skills
and aptitudes. Employees deficient in qualifications can be trained whereas employees with higher
skills may be given more enriched jobs.
4. Matching Demand and Supply
It is one of the objectives of human resource planning to assess the demand for and supply of
human resources and match both to know shortages and surpluses on both the side in kind and in
number. This will enable the human resource department to know overstaffing or understaffing.
Once the manpower gaps are identified, plans are prepared to bridge these gaps. Plans to meet the
surplus manpower may be redeployment in other departments and retrenchment in consultation,
with the trade unions. People may be persuaded to quit through voluntarily retirement. Deficit can
be met through recruitment, selection, transfer, promotion, and training plans.
JOB ANALYSIS
It provides you with data on job requirements, which are then used for developing job descriptions
(what the job entails) and job specifications (what kind of people to hire for the job).
Job analysis is the process of getting information about jobs: especially, what the worker does;
how he gets it done; why he does it; skill, education and training required; and relationship to other
jobs.

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Job Description
Job Description: is a written record of the duties, responsibilities and requirements of a particular
job. It is concerned with the job itself and not with the job holders. It is a statement describing the
job in such terms as its title, location, duties, working conditions and hazards.
Writing Job Description

While there is no standard format you must use in writing a job description, most descriptions
contain at least sections on:
a. Job identification, which includes the job title, department, and code number of the job.
The job title identifies and designates the job properly. The department indicate the name
of the department where it is situated-whether it is the maintenance department, mechanical
shop etc. The location gives the name of the place.
b. Job Summary: It is a brief summary, in a sentence or two, explaining the contents of the
job, its hazards or any other specific aspects.
c. Job duties: give us a comprehensive listing or the duties together with some indication of
the frequency of occurrence or percentage of time devoted to each major duty. It is regarded
as the heart of a job.
d. Relation to Other Jobs: It describes the vertical and horizontal relationships of work flow.
It also indicates to whom the jobholder will report and who will report to him.
e. Supervision: Under it is given the number of persons to be supervised along with their job
titles, and the extent of supervision involved – general, intermediate or close supervision.
f. Working conditions usually give us information about the environment in which a job
holder must work. These include cold, heat, dust, wetness, moisture, fumes, odor, oily
conditions, etc. obtaining inside the organization.
g. Social Environment: It specifies the social conditions under which the work will be
performed. In this part the size of work group, interpersonal interactions required to
perform the job and development facilities are mentioned.

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Job Specification
The job specification states the minimum acceptable qualifications that the incumbent must
possess to perform the job successfully. Based on the information acquired through job analysis,
the job specification identifies the knowledge, skills, and abilities needed to do the job effectively.
Individuals possessing the personal characteristics identified in the job specification should
perform the job more effectively than individuals lacking these personal characteristics. The job
specification, therefore, is an important tool in the selection process, for it keeps the selector’s
attention on the list of qualifications necessary for an incumbent to perform the job and assists in
determining whether candidates are qualified.
A Job Specification should include:

a. Physical characteristics, which include health, strength, patience, age-range, body size
height, vision, hearing, voice, eye and height.
b. Psychological and social characteristics such as alertness and ability to concentrate,
flexibility, decision making ability, analytical view, mental ability, pleasing manners,
initiative, conversational ability etc.
c. Mental Characteristics such as general intelligence, memory, judgment, ability to
concentrate, foresight etc.
d. Personal characteristics - These include personal appearance, maturity, patience,
aggressiveness, self-confidence, initiative and drive, leadership qualities, cooperative
spirit, conversational ability, etc.
e. Responsibilities - These include supervision of others, responsibility for safety of others,
etc.
f. Other characteristics - These may include age, sex, education, experience, training
required, fluency in languages and etc.

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RECRUITMENT
After manpower needs have been determined, the next step in the staffing function is recruitment
of candidates for the jobs to be filled. Recruitment is the process of attracting qualified personnel,
matching them with specific and suitable jobs, and assigning them to these jobs. Its aim is to
develop and maintain adequate manpower resources upon which an organization can depend, when
it needs additional employees.
There are basically two sources of supply from where potential employees can be drawn, both at
managerial as well as operative levels. These are:
1. Internal sources
2. External sources.
The extent to which internal sources or the external sources will be used will depend upon the
specific environment of the organization as well as its philosophy of operations. Some companies
prefer to promote from within - for key positions, because these personnel know the company well.
Others prefer to hire from outside, because these personnel do not know the company at all so that
they can bring some new and fresh ideas into the company.
Internal sources
Internal sources are the most obvious sources and are primarily within the organization itself, and
include its present working force. Most organizations have procedures for announcing vacancies,
which may be through bulletin, notice boards, newsletters or word of mouth or personal
recommendations.
External sources
The external sources are varied and many. Most organizations cannot fill their manpower needs
from sources within and hence they must look for outside sources, especially for lower entry jobs,
for expansion and for positions whose specific requirements cannot be met by people within the
organization.

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SELECTION
Selection is a process of choosing the right candidate from a pool of applicants. This process is
established to achieve a good match between the job requirements and the candidate’s skills and
motives. A good match results in increased productivity and quality performance. A bad match is
extremely costly to the company due to cost of training the candidates, the cost of mistakes made
by the candidate and the cost of replacement.
The process of selection leads to employment of persons having the ability and qualifications to
perform the jobs which have fallen vacant in an organization. It divides the candidates for
employment into two categories, namely, those who will be offered employment and those who
will not be. This process is more of 'rejection' since more candidates may be turned away than are
hired. That is why, selection is frequently described as a negative process in contrast with the
positive process of recruitment. The basic purpose of the selection process is choosing right type
of candidates to man various positions in the organization.
INDUCTION
In the words of Armstrong, induction is “the process of receiving and welcoming an employee
when he first joins a company and giving him the basic information he needs to settle down quickly
and start work.
When an individual successfully clears all the steps involved in selection, he is selected. Induction
is concerned with the problem of introducing or orienting a new employee to the organization. It
consists of familiarizing new employees with their jobs, introduction with his fellow workers,
company policies etc. It is considered as a part of the selection process. "A good orientation
programme will leave the employee firmly established in the new job, comfortable and relaxed in
his relations with other members of the department and content with his position in the firm.
Though orientation takes a small amount of time from productive activity, it repays the firm many
times over in better personnel relations". (Layman and Gubellini).
There are two phases of induction training programme. The first phase is generally conducted by
the personnel department. It is concerned with giving the new employee a friendly welcome

73
briefing him in the matters concerned with the company's background, products, health and welfare
plans. He may be taken around the factory and introduced to the security officer, time keeper and
cashier. The employee may then be asked to report to the department concerned. The second phase
of the induction programme is conducted by the head of the department in which he is to work.
The employee is given information regarding production process, work rules, working conditions
etc. The employee is then informed about the customs prevalent in the organization such as dress,
lunch, refreshments, etc. Good induction is a good business for the firm and a basic desire of most,
if not all the new employees.
PLACEMENT
Placement is a process of assigning a specific job to each of the selected candidates. It involves
assigning a specific rank and responsibility to an individual. It implies matching the requirements
of a job with the qualifications of the candidate.
The candidates selected for appointment are to be offered specific jobs. There should be a perfect
matching of the requirements of the job and the abilities/skills of the employee concerned. Only
then effective placement will take place. In practice, right placement is not an easy task. It may
take a long time before a candidate is placed on the right job. Generally, the candidate is appointed
on probation of one year or so.
During this period, he is tried on different jobs. If his performance is satisfactory, he will be offered
a permanent post and placed on the job for which he is most suitable. He may need some training
to do the job better. Therefore, his training needs must also be identified during the probation
period. If during the probation period, an employee is not found suitable, the management may
transfer him to some other job to which he may be expected to do justice. But if the management
cannot offer him a job which he can do well, it may sack him or give him time and training to
improve himself to do the job better.

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TRAINING & DEVELOPMENT
TRAINING
After the selection of people for various jobs, the next function of staffing is to arrange for their
training and development. This is because a person, however carefully selected is not moulded to
specifications and rarely meets the demands of his job adequately. Earlier, it was thought that the
training of personnel was unnecessary on the ground that the new employees would gradually pick
up all the particulars of the job. But as the processes and techniques of production are becoming
more and more complicated, it is being increasingly realized that the formal training is important
not only for new recruits but also for existing employees. Training function, in fact, has become
the corner stone of sound management.
According to Flippo, "Training is the act of increasing the knowledge and skills of an employee
for doing a particular job." Training involves the specific job. Its purpose is to achieve a change in
the behaviour of those trained and to enable them to do their jobs better. Training makes newly
appointed workers fully productive in the minimum of time. Training is equally necessary for the
old employees whenever new machines and equipment are introduced and/or there is change in
the techniques of doing the things. In fact, training is a continuous process. It does not stop
anywhere. The managers are continuously engaged in training their subordinates.
DEVELOPMENT
It is also known as ‘management development’ or ‘executive development’. It is one of the fastest

developing areas in personnel. It is realized that an effective management team may be as
important to the survival of an organization as any tangible item on the balance sheet. Interest in
management development is great partly due to the shortage of well-trained managers. Executive
development or management development is a systematic process of learning and growth by which
managerial personnel gain and apply knowledge, skills, attitudes and insights to manage the work
in their organization effectively and efficiently.
Management development aims at improving the overall effectiveness of managers at their

existing positions as well as preparing them for greater responsibility when they are promoted.

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According to Flippo “executive development includes the process by which managers and
executives acquire not only skills and competency in their present job but also capabilities for
future managerial tasks of increasing difficulty and scope.”
PERFORMANCE APPRAISAL
Performance appraisal is the process of evaluating how effectively employees are fulfilling their
job responsibilities and contributing to the accomplishment of organizational goals. To appraise
performance effectively, a manager must be aware of the specific expectations for a job, monitor
the employee's behaviour and results, compare the observed behaviour and results to expectations,
and measure the match between them. In most cases, a manager should also provide feedback to
employees, a process that can produce strong reactions.
Performance appraisals are extremely important to an organization, although they may be difficult
to conduct. They tell organizations whether their selection methods are right. They demonstrate
where training, development, and motivational programmes are needed and later help to assess
whether these have been effective. As a matter of fact, many organizational policies and practices
are evaluated, in large part, through their impact on performance. Performance appraisals, after
all, are the basis on which managers make decisions about compensation, promotion, and
dismissal. They also use feedback about people's performance to recognize them for a job well
done and motivate them.
JOB CHANGE
One major aspect of human resource management is the movement of personnel within an
organization i.e., their promotion, transfer, demotion and separation. This movement is also
sometimes termed job change.
PROMOTION
Job change usually involves filling vacancies by the internal movement of the existing employees.
These movements are usually of two types: promotions and transfers. Promotion means a change

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involving an employee moving to a position higher than the one formerly occupied. His
responsibility, status and pay also increase. The possibility of advancement often serves as a major
incentive for superior managerial performance, and promotions are the most significant ways to
recognize superior performance.
TRANSFER
Transfer usually means changes in which the pay, status and privileges of the new posts are more
or less the same as the old one. In other words, a transfer is the lateral movement of an employee
to change his present work group, work place or organizational unit. As against it, promotion
means changes in which the pay, status and privileges, of new posts are higher as compared to the
old.
DEMOTION
Demotions is shifting a person to a lower-level position in the hierarchy (less pay and less
responsibility) due to inefficiency or incompetency to meet the assigned task.
It is just the opposite of promotion. It means the reduction or down-grading of an employee in

terms of status, salary and responsibility. It is usually a punitive measure and often a first step
towards discharge or dismissal.
SEPARATION
Despite the best efforts of managers, the organization may lose employees. Separation is the
termination of the relationship between the workers and the organization due to various reasons.
Some will retire, others will depart voluntarily from their jobs (resignation), and still others will
be forced out through layoffs.
Employees who are poor performers can be dismissed.

Employers can determine why employees are leaving by conducting an interview (exit interview)
with the departing employees. The exit interview is an excellent and inexpensive tool for learning
about the reasons of dissatisfaction within the organization and hence for reducing future turnover.

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1. George R. Terry, Stephen G. Franklin, "Principles of Management", Delhi: A.L.T.B.S.

3. Leon C. Megginson; Personnel and Human Resources Administration, (Homewood, Ill,

Irwin, 1977), p. 232.
4. James A. F. Stoner, Freeman, Gilbert Jr. Management, Sixth Edition. (Pentice-Hall of

India, 1997), p. 388-89. Ibid, pp. 392-93.
5. Randall B. Dunham and Jon L. Pierce; Management, (Scott, Foresman and Company
1989), pp. 613-14.

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CHAPTER SIX: DIRECTING
In practice, management is essentially the art and process of getting things done. The managers
have therefore, the responsibility not only of planning and organizing the operations but also of
guiding and supervising the subordinates. This is the managerial function of direction. In the words
of Marshall "Directing involves determining the course, giving orders and instructions and
providing dynamic leadership".
In fact the directing function has three elements: leadership, motivation and communication.
According to Dale, "Direction is telling people what to do and seeing that they do it to the best of
their ability. It is through directing that managers get the work done through people. It consists of:
 Issuing orders and instructions by a superior to his subordinates.

 Guiding, advising and helping subordinates in the proper methods of work.
 Motivating them to achieve goals by providing incentives, good working environment etc.
 Supervising subordinates to ensure compliance with plans".
IMPORTANCE OF DIRECTION
The importance of direction in an organization can be viewed by the fact that every action is
initiated through direction. It is the human element which handles the other resources of the
organization. Each individual in the organization is related with others and his functioning affects
others and, in turn, is affected by others. This makes the functioning of direction all the more
important.
The importance of the direction function is given below:
Direction integrates employees' efforts: The individual efforts needs to be integrated so that the
organization achieves its objectives. No organizational objective can be achieved without the
function of direction.
Direction initiates action: It is through direction that the management makes individuals function
in a particular way to get organizational objectives.

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Direction gets output from individuals: Every individual in the organization has some potentials
and capabilities which can be properly utilized through the function of direction.
Direction facilitates changes: To manage change management must motivate individuals to

accept these changes which can be accomplished through motivation.
LEADERSHIP
I am more afraid of an army of 100 sheep led by a lion than an army of 100 lions led by a sheep.
—Talleyrand
Leadership is the process of influencing others to facilitate the attainment of organizationally

relevant goals.
Leadership is the process of persuading people to work willingly and enthusiastically in order to
achieve goals.

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LEADERSHIP STYLES
From Mahatma Gandhi and Winston Churchill, to Martin Luther King and Steve Jobs, there can
be as many ways to lead people as there are leaders. Fortunately, businesspeople and psychologists
have developed useful frameworks that describe the main ways that people lead.
Psychologist Kurt Lewin developed his framework in the 1930s, and it provided the foundation of
many of the approaches that followed afterwards. He argued that there are three major styles of
leadership:
Autocratic leaders make decisions without consulting their team members, even if their input
would be useful. This can be appropriate when you need to make decisions quickly, when there's
no need for team input, and when team agreement isn't necessary for a successful outcome.
However, this style can be demoralizing, and it can lead to high levels of absenteeism and staff
turnover.

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This type of leadership is practiced by the managers concentrating on power and authority within
themselves. Leader expects high degree of compliance by subordinates. He is rigid and positive in
his approach. Manager exhibiting this type of style has the ability and enforces decision by use of
rewards and fear of punishment. Communication tends to be primarily in one direction from
manager to follower.
The style in a phrase: “Come with me.”
This style is used when leaders tell their employees what they want done and how they want it
accomplished, without getting the advice of their followers.
Democratic or Participative Leadership
In contrast to autocratic leadership, democratic or participative leader consults subordinates,

encourages participation in decision-making. In the process of interaction with subordinates,
democratic leader suggest actions or decisions and obtains views of those under him. He has
respect for subordinate’s views and does not act without their agreement. The leader is supportive.
The style in a phrase: “What do you think?”
This style involves the leader including one or more employees in the decision making process.
However, the leader maintains the final decision making authority.
Laissez-faire Leadership
A leader who practices laissez-faire leadership is also called “free rein” leader who uses his power
very little giving subordinate’s full freedom of action and independence for setting their goals and
means of achieving them. This type of leaders depends heavily on subordinates and see their role
as one of aiding the operation of followers by furnishing required information when asked for and
acts only as contact between various departments and outside agencies (external environment).
The style in a phrase: “Do as you wish”
The leader allows the employees to make the decisions. However, the leader is still responsible for
the decisions that are made. This is used when employees are able to analyze the situation and
determine what needs to be done and how to do it.

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LEADERSHIP THEORIES
An organization has the greatest chance of being successful when all of the employees work toward
achieving its goals. Since leadership involves the exercise of influence by one person over others,
the quality of leadership exhibited by supervisors is a critical determinant of organizational
success. Thus, supervisors study leadership in order to influence the actions of employees towards
the achievement of the goals of the organization.
The leadership theories can be categorized as follows:-
1) Trait theories
2) Behavioural theories
3) Contingency theories
THE TRAIT APPROACH: ARE SOME PEOPLE REALLY "BORN LEADERS"?

Common sense leads us to think that some people have more of "the right stuff' than others, and
are just naturally better leaders. And, if you look at some of the great leaders throughout history,
such as Martin Luther King, Jr., Alexander the Great, and Abraham Lincoln, to name just a few,
it is clear that such individuals certainly have characteristics in common that differ from ordinary
people.
Regardless of whether leaders are born or made... it is clear that leaders are not like other people.
THE BEHAVIOR APPROACH: WHAT DO LEADERS DO?
The great person theory paints a somewhat philosophical picture, suggesting that some people are,
by nature, more likely to being effective leaders than others. However, other approaches to
leadership—particularly, those focusing on what leaders do, rather than who leaders are—paint a
more encouraging picture for those of us who aspire to leadership positions. This orientation is
known as the behavior approach. By emulating the behavior of successful leaders the possibility
exists that just about anyone may become an effective leader.
Two Critical Leadership Behaviors
Precisely what behaviors are key to leadership success? Although the answer to this question is
quite complex, we can safely point to two very important leadership behaviors.

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These were defined as Consideration (People Oriented behavioural Leaders) and Initiating
Structure (Task Oriented Leaders).
The first is showing a concern for people, also known as consideration. In describing your boss,
would you say that he or she cares about you as a person, is friendly, and listens to you when you
want to talk? If so, he or she may be said to demonstrate a high degree of consideration.
The second main type of leadership behavior is showing a concern for getting the job done, also
known as initiating structure. In describing your boss, would you say that he or she gives you
advice, answers your questions, and lets you know exactly what is expected of you? If so, he or
she may be said to have a bent for initiating structure.
CONTINGENCY THEORIES OF LEADER EFFECTIVENESS
It should be clear by now that leadership is a complex process. It involves intricate social
relationships and is affected by a wide range of variables. In general, it may be said that leadership
is influenced by two main factors—the characteristics of the individuals involved, and the nature
of the situations they face. This basic point lies at the heart of several approaches to leadership
known as contingency theories of leader effectiveness. According to this approach, there is no one
best style of leadership. Instead, they suggest that certain leadership styles may prove most
effective under certain conditions. Contingency theories seek to identify the conditions and factors
that determine whether, and to what degree, leaders will enhance the performance and satisfaction
of their subordinates.

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MOTIVATION
What inspires employees to provide excellent service, market a company’s products effectively,
or achieve the goals set for them?
So what motivates people? Why do some employees try to reach their targets and pursue
excellence while others merely show up at work and count the hours?
Motivation is the degree to which an individual both desires and is willing to exert effort toward
attaining job performance. There are many ways motivation plays a role in most organizations.
First, people must be attracted to join an organization and remain in it. Once on the job, employees
must be motivated to exert energy and effort at an acceptable rate.
Motivation has been defined by Michael J Juicus as "the act of stimulating someone or oneself to
get a desired course of action".
In the words of Lewis Allen, "Motivation is the work a manager performs to inspire, encourage
and impel people to take required action".

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THEORIES OF MOTIVATION
Motivation theories are important to managers attempting to be effective leaders.
Maslow’s Hierarchy of Needs
Theory X and Theory Y
Herzberg’s Two Factor Theory
Equity Theory
Maslow’s Hierarchy of Needs
Abraham Maslow is among the most prominent psychologists of the twentieth century. His
hierarchy of needs is an image familiar to most business students and managers. The theory is
based on a simple premise: Human beings have needs that are hierarchically ranked.
There are some needs that are basic to all human beings, and in their absence nothing else matters.
As we satisfy these basic needs, we start looking to satisfy higher order needs. In other words,
once a lower level need is satisfied, it no longer serves as a motivator.
Maslow's need hierarchy specifies that the five needs shown here are activated in order, from
lowest to highest. Each need is triggered after the one immediately below it in the hierarchy is
satisfied.

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Physiological Needs
The most basic of Maslow’s needs are physiological needs. Physiological needs refer to the need
for food, water, and other biological needs. These needs are basic because when they are lacking,
the search for them may overpower all other urges.
Physiological needs are those required to sustain life, such as:
 Air
 Water
 Food
 Sleep
Imagine being very hungry. At that point, all your behavior may be directed at finding food. Once
you eat, though, the search for food ceases and the promise of food no longer serves as a motivator.
Safety Needs
Once physiological needs are satisfied, people tend to become concerned about safety needs. Are
they free from the threat of danger, pain, or an uncertain future?
Such needs might be fulfilled by:
 Living in a safe area
 Medical insurance
 Job security
 Financial reserves
According to Maslow's hierarchy, if a person feels that he or she is in harm's way, higher needs
will not receive much attention.
Social Needs
Social needs refer to the need to bond with other human beings, be loved, and form lasting
attachments with others. In fact, attachments, or lack of them, are associated with our health and
well-being.
Once a person has met the lower level physiological and safety needs, higher level needs become
important, the first of which are social needs. Social needs are those related to interaction with
other people and may include:
 Need for friends
 Need for belonging
 Need to give and receive love

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Esteem Needs
The satisfaction of social needs makes esteem needs more significant. Esteem need refers to the
desire to be respected by one’s peers, feel important, and be appreciated.
Once a person feels a sense of "belonging", the need to feel important arises. Esteem needs may
be classified as internal or external. Internal esteem needs are those related to self-esteem such as
self-respect and achievement. External esteem needs are those such as social status and
recognition.
Some esteem needs are:
 Self-respect
 Achievement
 Attention
 Recognition
 Reputation
Self-Actualization Needs
Finally, at the highest level of the hierarchy, the need for self-actualization refers to “becoming
all you are capable of becoming. “This need manifests itself by the desire to acquire new skills,
take on new challenges, and behave in a way that will lead to the attainment of one’s life goals.
Self-actualized people tend to have needs such as:
 Truth
 Justice
 Wisdom
 Meaning
Self-actualized persons have frequent occurrences of peak experiences, which are energized
moments of profound happiness and harmony. According to Maslow, only a small percentage of
the population reaches the level of self-actualization.

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Theory X and Theory Y of Douglas McGregor
Theory X Theory Y
Douglas McGregor proposed two distinct views of human beings: one basically negative, labeled
Theory X, and the other basically positive, labeled Theory Y. After studying managers’ dealings
with employees, McGregor concluded that their views of the nature of human beings are based on
certain assumptions that mold their behavior.
Under Theory X, managers believe employees inherently dislike work and must therefore be
directed or even coerced into performing it. Under Theory Y, in contrast, managers assume
employees can view work as being as natural as rest or play, and therefore the average person can
learn to accept, and even seek, responsibility.
Theory X assumes that the average person:
 Dislikes work and attempts to avoid it.
 Has no ambition, wants no responsibility, and would rather follow than lead.
 Is self-centered and therefore does not care about organizational goals.
 Resists change.
 Is innocent and not particularly intelligent.
Theory Y makes the following general assumptions:

 Work can be as natural as play and rest.
 People will be self-directed to meet their work objectives if they are committed to them.
 People will be committed to their objectives if rewards are in place that address higher
needs such as self-fulfillment.
 Under these conditions, people will seek responsibility.
 Most people can handle responsibility because creativity and ingenuity are common in the
population.

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Herzberg’s Two Factor Theory

Frederick Herzberg approached the question of motivation in a different way. By asking
individuals what satisfies them on the job and what dissatisfies them, Herzberg came to the
conclusion that aspects of the work environment that satisfy employees are very different from
aspects that dissatisfy them.
Hygiene Factors: There are some job conditions which operate primarily to dissatisfy employees
when these conditions are absent. These factors are also called maintenance factors. When these
factors are present they do not motivate in a strong way, when absent they dis-satisfy, that is why
these factors are called dissatisfiers.
Hygiene factors include:

Pay - The pay or salary structure should be appropriate and reasonable. It must be equal
and competitive to those in the same industry in the same domain.
Company Policies and administrative policies - The company policies should not be too
rigid. They should be fair and clear. It should include flexible working hours, dress code,
breaks, vacation, etc.
Fringe benefits - The employees should be offered health care plans, benefits for the
family members, employee help programmes, etc.
Physical Working conditions - The working conditions should be safe, clean and
hygienic. The work equipment should be updated and well-maintained.

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Interpersonal relations - The relationship of the employees with his peers, superiors and
subordinates should be appropriate and acceptable. There should be no conflict or
humiliation element present.
Job Security - The organization must provide job security to the employees.
In contrast, motivators are factors that are intrinsic to the job, such as achievement, recognition,
interesting work, increased responsibilities, advancement, and growth opportunities. According to
Herzberg’s research, motivators are the conditions that truly encourage employees to try harder.
Motivational factors include:

Recognition - The employees should be praised and recognized for their accomplishments
by the managers.
Sense of achievement - The employees must have a sense of achievement. This depends
on the job. There must be a fruit of some sort in the job.
Growth and promotional opportunities - There must be growth and advancement
opportunities in an organization to motivate the employees to perform well.
Responsibility - The employees must hold themselves responsible for the work. The
managers should give them ownership of the work. They should minimize control but
retain accountability.
Meaningfulness of the work - The work itself should be meaningful, interesting and
challenging for the employee to perform and to get motivated.
Adams' equity theory

John Stacey Adams, a workplace and behavioural psychologist, put forward his Equity Theory on
job motivation in 1963.The Equity theory argues that motivation arises out of simple desire to be
treated fairly. Equity can be defined as an individual’s belief that he is being treated fairly relative
to the treatment of others.
When people feel fairly or advantageously treated they are more likely to be motivated; when they
feel unfairly treated they are highly prone to feelings of disaffection and demotivation. The way
that people measure this sense of fairness is at the heart of Equity Theory.

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John Stacey Adams' equity theory helps explain why pay and conditions alone do not determine
motivation. It also explains why giving one person a promotion or pay-rise can have a demotivating
effect on others.
Employees seek to maintain equity between the inputs that they bring to a job and the outcomes
that they receive from it against the perceived inputs and outcomes of others. The belief in equity
theory is that people value fair treatment which causes them to be motivated to keep the fairness
maintained within the relationships of their co-workers and the organization.
Equity exists when individuals perceive that the ratio of effort to rewards is the same for them as
it is for others to whom they compare themselves.
Inputs
This equity theory term encompasses the quality and quantity of the employees’ contributions to
his or her work. Typical inputs include time, effort, loyalty, hard work, commitment, ability,
adaptability, flexibility, tolerance, determination, enthusiasm, personal sacrifice, trust in superiors,
support from co-workers and colleagues etc.
Outputs
Outputs in equity theory are defined as the positive and negative consequences that an individual
perceives a participant has incurred as a consequence of his/her relationship with another. Outputs
can be both tangible and intangible. Typical outcomes are job security, esteem, salary, employee
benefits, expenses, recognition, reputation, responsibility, sense of achievement, praise, thanks etc.

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Who Is the Referent?

The referent other may be a specific person as well as a category of people. Referents should be
comparable to us—otherwise the comparison is not meaningful. It would be pointless for a student
worker to compare himself to the CEO of the company, given the differences in the nature of inputs
and outcomes. Instead, individuals may compare themselves to someone performing similar tasks
within the same organization or, in the case of a CEO, a different organization.
Inequity exists when individuals perceive that the ratio of efforts to rewards is different for them
than it is for others to whom they compare themselves.
There are two types of inequity:
 Under-reward
 Over-reward
Under-reward occurs when a person believes that he/she is either puts in more efforts than
another, yet receives the same reward, or puts in the same effort as another for a lesser reward. For
example, if an employee works longer hours than his/her coworker, yet they receive the same
salary, the employee would perceive inequity in the form of under-reward.
Conversely, with over-reward, a person will feel that his/her efforts to rewards ratio is higher than
another person’s, such that he is getting more for putting in the same effort, or getting the same
reward even with less effort.

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COMMUNICATION
Communication is the exchange of messages between people for the purpose of achieving
common meanings. Unless common meanings are shared, managers find it extremely difficult to
influence others. Whenever group of people interact, communication takes place.
In the words of Mockler, "Communication is the process of passing information, ideas or even
emotions from one person to another".
Communication is the sharing of information between two or more individuals or groups to reach
a common understanding. Communication has two components: the sharing of information and
the reaching of a common understanding. (This does not mean agreement, rather an understanding
of the message). If people either do not receive the information or understand the meaning, then
communication has not taken place.
THE COMMUNICATION PROCESS
The process of communication consists of the steps summarized here. It begins when a sender has
an idea that he or she wishes to send to a receiver.

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Encoding. The communication process begins when one party has an idea that it wishes to send
to another (either party may be an individual, a group, or an entire organization). It is the sender's
mission to transform the idea into a form that can be sent to and understood by the receiver. This
is what happens in the process of encoding – translating an idea into a form, such as written or
spoken language, that can be recognized by a receiver.
Transmission via Communication Channels. After a message is encoded, it is ready to be

transmitted over one or more channels of communication to reach the desired receiver. There are
many different pathways through which information travels, including telephone lines, radio and
television signals, fiber-optic cables, mail routes, and even the airwaves that carry our voices.
Thanks to modern technology, people can choose from a wide variety of communication channels
to send both visual and oral information. Whichever channel used, the communicator's goal is the
same: to send the encoded message accurately to the desired receiver.
Decoding. Once a message is received, the recipient begins the process of decoding – that is,
converting the message back to the sender’s original form. This can involve many different
processes, such as comprehending spoken and written words or interpreting facial expressions
(omit). To the extent that a sender's message is accurately reconstructed by the receiver, the ideas
understood will be the ones intended.
Feedback. Once a message has been decoded, the process of communication can continue if the
receiver responds with a message to the sender. In other words, the person receiving the message
now becomes the sender of a new message. This new message is then encoded and transmitted
along a communication channel to the intended recipient, who then decodes it. This part of the
communication process is known as feedback – providing information about the impact of
messages on receivers. Receiving feedback allows senders to determine whether their messages
have been correctly understood. Of course, once received, feedback can trigger another idea from
the sender, initiating yet another cycle of communication and triggering yet another round of
feedback. It is because of this cyclical nature that we call Exhibit 1 a continuous communication
process.
Noise. Despite its apparent simplicity, it probably comes as no surprise that the communication
process rarely operates as flawlessly as the feedback loop describes. As we will see, there are many

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potential barriers to effective communication. Noise refers to the factors that distort the clarity of
messages that are encoded, transmitted, and decoded in the communication process. Whether noise
results from unclear wording, a listener's inattentiveness, or static along a telephone line,
ineffective communication is inevitably the result.
Verbal and Non Verbal communication
Verbal communication encompasses any form of communication involving words, spoken, written
or signed. The conversation we have with our co-worker at lunch, the morning news or the sports
page we read in the morning--even the text message you send to your spouse telling him to pick
up some milk is a form of verbal communication.
Objective of every communication is to have people understand what we are trying to convey.
In verbal communication remember the acronym KISS (keep it short and simple).
Verbal Communication is further divided into:

 Oral Communication
 Written Communication
Oral Communication:
In oral communication, Spoken words are used. It includes face-to-face conversations, speech,
telephonic conversation, video, radio, television, voice over internet. In oral communication,
communication is influence by pitch, volume, speed and clarity of speaking.
Written Communication:
In written communication, written signs or symbols are used to communicate. A written message
may be printed or hand written. In written communication message can be transmitted via email,
letter, report, memo etc. Message, in written communication, is influenced by the vocabulary &
grammar used, writing style, precision and clarity of the language used.

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Non-Verbal Communication
Non-verbal communication: Little understood but powerful, non-verbal communication is

interpersonal in nature. It includes any communicational exchange that does not use words or that
uses verbalization to carry more meaning than the strict definition of the words themselves. Body
movements, facial expressions, gestures, sneers and physical contact may all be used.
TYPES OF COMMUNICATION
Formal Communication
Organizations are often described in ways that dictate who may and may not communicate with
whom. The formally prescribed pattern of interrelationships existing between the various units of
an organization is referred to as organizational structure.
The Organizational Chart:
A Summary of Formal Communication Paths
The organizational chart indicates the formal pattern of communication within an organization –
that is, which individuals are required to communicate with each other. The types of messages that
tend to be communicated across different levels are identified here.

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When looking at an organization chart you immediately notice several boxes connected by lines.
Each box represents a particular job, as indicated by the job titles noted. The lines connecting the
boxes show the formal lines of communication between the individuals performing those jobs—
that is, who is supposed to communicate with whom. This particular organization chart is typical
of most in that it shows that people communicate formally with those immediately above them and
below them, as well as those at their own levels.
As you might imagine, the nature of formal communication that occurs differs according to
people's positions in an organization. Even a quick look at Exhibit 1 shows that information flows
in three different directions—upward, downward, and sideways. What type of communication
typically travels in each direction?
Downward Communication:
To answer this question, suppose that you are a supervisor. How would you characterize the formal
communication that occurs between you and your subordinates—that is, communication down the
organization chart? Typically, downward communication consists of instructions, directions and
orders—generally, messages that tell subordinates what they should be doing. We would also
expect to find feedback on past performance flowing in a downward direction. A sales manager,
for example, may tell the members of her sales force what products they should be promoting.
Upward Communication:
When information flows from lower levels to higher levels within an organization, such as
messages from subordinates to their supervisors, it is known as upward communication. Typically,
such messages involve information that managers need to do their jobs, such as data required to
complete projects. This may include suggestions for improvement, status reports, reactions to
work-related issues, and new ideas.
Horizontal Communication:
Within organizations, messages don't only flow up and down the organization chart, but sideways
as well. Horizontal communication is the term used to identify messages that flow laterally, at the
same organizational level. Messages of this type are characterized by efforts at coordination,
attempts to work together. Consider, for example, how a vice president of marketing would have

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to coordinate his or her efforts with people in other departments when launching an advertising
campaign for a new product. This would require the coordination of information with experts from
manufacturing and production (to see when the products will be available) as well as those from
research and development (to see what features people really want).
Informal Communication
Informal communication is communication outside the organization's formally authorized
channels. Informal communication includes all messages transmitted in the work setting other than
those that are generated specifically to fulfil work-related assignments. The nature of such
communication is nowhere described in the formal communication systems, but the organization
could not survive without it.
Heinemann.
2. Fred E. Fiedler, "A Theory of Leadership Effectiveness" McGraw Hill, New York (1967)
3. George R. Terry, "Principles of Management" Richard D. Irwin, Homewood III (1988).
4. Bernard Berelson and Garry A. Steiner "Human Behaviour" Harcourt, Brace & World,
New York (1964)
5. Paul Hersey and Kenneth H. Blanchard, "Management of Organizational Behaviour",
Prentice-Hall, Englewood Cliffs (1988)
6. Dalton E. McFarland, "Management Principles and Practices" Macmillan, New York
(1974)
7. John W. Newstrom and Keith Davis, "Organisational Behaviour: Human Behaviour at
Work" Tata McGraw-Hill, New Delhi (1998)
8. Peter F. Drucker, "Management Tasks, Responsibilities and Practices", Harper & Row,
New York (1974).
9. Scanlon Burt K., "Principles of Management and Organisation Behaviour", John Wiley
and Sons (1973)

99
CHAPTER SEVEN: CONTROLLING
Controlling is the process of ensuring that actual activities conform to planned activities. Planning
and controlling are closely related. In fact, controlling is more pervasive than planning. Controlling
helps managers monitor the effectiveness of their planning, organizing, staffing and leading
activities.
In fact, controlling determines what is being accomplished - that is, evaluating the performance
and, if necessary, taking corrective measures so that the performance takes place according to
plans. Controlling can also be viewed as detecting and correcting significant variations in the
results obtained from planned activities.
From the above definitions it is clear that the managerial function of control consists in a
comparison of the actual performance with the planned performance with the object of discovering
whether all is going on well according to plans and if not why. Remedial action arising from a
study of deviations of the actual performance with the standard or planned performance will serve
to correct the plans and make suitable changes. Controlling is the nature of follow-up to the other
four fundamental functions of management. There can, in fact, be not controlling without previous
planning, organizing, staffing and directing. Controlling cannot take place in a vacuum.
Steps in the Control Process
The basic control process involves the following steps:
1) Establishing standards
2) Measuring and Comparing actual Results against Standards
3) Taking corrective action

100
Step 1: Establishing Standards
The first step in the control process is to establish standards against which results can be measured.
The standards the managers desire to obtain in each key area should be defined as far as possible
in quantitative terms. Standards expressed in general terms should be avoided. Standards need to
be flexible in order to adapt to changing conditions. The standard should emphasis the achievement
of results more than the conformity to rules and methods.
While setting the standards, the following points have to be borne in mind:
a) The standards must be clear and intelligible. If the standards are clear and are understood
by the persons concerned, they themselves will be able to check their performance.
b) Standards should be accurate, precise, acceptable and workable.
c) Standards are used as the criteria or benchmarks by which performance is measured in the
control process. It should not be either too high or too low. They should be realistic and
attainable.
d) Standards should be flexible i.e., capable of being changed when the circumstances require
so.
Step 2: Measuring and Comparing actual Results against Standards
The second step in the control process is to measure the performance and compare it with the
predetermined standards. Measurement of performance can be done by personal observation, by
reports, graphs and statements.
If the control system is well organized, quick comparison of these with the standard figure is quite
possible. This will reveal variations. After the measurement of the actual performance, the actual
performance should be compared with the standards fixed quickly. While comparing the actual
performance with the standards fixed, the manager has to find out not only the extent of variations
but also the causes of variations. This is necessary, because some of the variations may be
unimportant, while others may be important and need immediate corrective action by the manager.
Step 3: Taking Corrective Action
After comparing the actual performance with the prescribed standards and finding the deviations,
the next step that should be taken by the manager is to correct these deviations. Corrective action

101
should be taken without wasting of time so that the normal position can be restored quickly. The
manager should also determine the correct cause for deviation.
IMPORTANCE OF CONTROL
However, the organizations must also monitor whether they are achieving their objectives or-not.
Thus control is an integrated action of an organization or manager. The importance of control in
management may be determined from the following discussion:
Adjustments in Operations:
A control system acts as an adjustment in organizational operations. Every organization has certain
objectives to achieve which becomes the basis for control. It is not only sufficient to have
objectives but also to ensure that these objectives are being achieved by various functions. Control
provides this clue by finding out whether plans are being observed and suitable progress towards
the objectives is being made, and acting, if necessary, to correct any-deviation. This may result
into taking actions more suitable for the achievement of organizational objectives.
Managerial Responsibility:
In every organization, managerial responsibility is created through assignment of activities to

various individuals. This process starts at the top level and goes to the lower levels. However,
when a manager assigns some activities to his subordinates, he remains responsible for that portion
of activities for their ultimate performance. It is quite natural that when a person is responsible for
the performance of his subordinates, he must exercise some control over them.
Psychological Pressure:
Control process puts a psychological pressure on the individuals for better performance. The
performance of the individuals is evaluated in the light of targets set for them. A person is likely
to put better performance if he is aware that his performance will be evaluated. He may feel
pressure to achieve the results according to the standards fixed for him. This is further
complemented by the reward and punishment based on the performance.

102
Organizational Efficiency and Effectiveness:
Proper control ensures organizational efficiency and effectiveness. Various factors of control,
namely, making managers responsible, motivating them for higher performance, and achieving
coordination in their performance, control ensures that the organization works efficiently. The
organization also moves towards effectiveness because of control system. The organization is
effective if it is able to achieve its objectives. Since control focuses on the achievement of
organizational objectives, it necessarily leads to organizational effectiveness.
LEVELS OF CONTROL
Controlling responsibilities differ by managerial level. Accordingly, there are three control levels:
strategic, tactical and operation.
Strategic Control
Strategic control involves monitoring critical environmental factors that could affect the possibility
of strategic plans, assessing the effects of organizational strategic actions, and ensuring that
strategic plans are implemented as intended. Control at the strategic level is mainly the domain of
top-level managers, who generally take an organization wide perspective. For strategic control,
managers often concentrate on relatively long time frames.
Tactical Control
This is a control level that focus on assessing the implementation of tactical plans at department
levels, monitoring associated periodic results, and taking corrective action as necessary. Control
at the tactical level involves mainly middle managers, who are concerned with department level
objectives, programs, and budgets and who concentrate on periodic or middle-term time frames
and often use weekly and monthly reporting phases.
Operational Control
A control type that involves overseeing the implementation of operating plans, monitoring day-to-
day results, and taking corrective action when required. Control at the operating level is largely
the responsibility of lower-level managers, who are concerned with schedules, budgets, rules and

103
specific outputs normally associated with particular individuals. Operating control provides
feedback about what is happening in the very near term to achieve both the short-term and long-
term goals of the organization.
TYPES OF CONTROL
The various steps in the control process indicate that control is necessary to anticipate problems,
adjust plans, and take action as needed.
These are listed below:
1. Pre-controls - These are sometimes called “feed-forward” controls and are preventive in
nature. They are designed to eliminate the cause of any deviation that may occur later and
are established before the activity takes place. For example, if a student is performing
poorly in a course at the beginning of the semester, he should not wait until the end of the
term to make changes in his study habits. He must make adjustments before it is too late.
These controls are meant to make sure that performance objectives are clear and all
resources are available, at the time when needed, to attain these objectives. Most often,
deviations occur because proper planning was not initiated and enforced and proper
resources were not available.
2. Steering controls - The key feature of this control is the capability to take corrective action
when the deviation has taken place but the task has not been completed. The great
advantage of steering control is that corrective actions can be taken early. An early start
with steering controls increases the chances that we will achieve a favorable outcome. For
instance, the sooner the failing student gets tutoring in his course, the better are his chances
of passing the course.
3. Yes/no controls - These controls are designed to check at each checkpoint whether the
activity should be allowed to proceed further or not. These controls are necessary and
useful where a product passes sequentially from one point to another with improvements
added at each step, along the way. These controls stop errors from being compounded.
Quality control checkpoints where inspection will determine whether the activity should
continue or not is an example.

104
METHODS OF CONTROL
There are a variety of control methods. Organizations use the various methods of control with
varying degrees of appropriateness, depending-on how frequently the controls are used.
CONSTANT CONTROLS
These are control methods that are used more frequently or constantly. There are three methods of
control that put in this category.
Self-Control
Under this method of control, employees exert the self-control required to perform their assigned
tasks in the organization. Accordingly, organizations shift control away from management to the
self-control within individual employees. For example, self-control means reporting to work on
time, respecting property, and observing the rights of others.
Group Control
Work groups also are a source of control. By defining the kinds of behavior that are acceptable or
unacceptable, group-defined norms exert a strong influence on individual actions.
Policies/procedures/rules
Policies procedures and rules may concern any number of things-how to make certain decisions,
deal with resource, handle difficult employees and so on.
PERIODIC CONTROLS
These methods of control are used periodically rather than frequently. The methods of periodic
control are as follows:
Information systems:
An information system is a mechanism for collecting, analyzing, and disseminating data in the
form of usable information.
External Audits
This method of control requires the examination of an organization’s finance on a regular basis by
an outside accounting firm.

105
Budget
Budgets are also a method of control. They exercised control by allocating resources across
departments; specifying in advance how allocated resources are to be utilized; and providing a
standard against which planned performance can be compared to actual performance.
OCCASIONAL CONTROL
Unlike the constant control, occasional controls are conducted infrequently. The typical examples
of occasional controls include:
Special Reports
Such reports are prepared when controls indicate a discrepancy or deviation between standards
and performance.
Personal Observation
There are essentially two ways managers can determine what is happening in an organization: rely
on information provided by others or find out themselves.
Project Controls
Various methods have been developed for controlling specific projects.
1. Billy E. Goetz, "Management Planning and Control", McGraw-Hill, New York (1979)
2. George R. Terry, "Principles of Management", Richard D. Irwin, Homewood III (1988).
3. George R. Terry and Stephen G. Franklin, "Principles of Management" AITBS, Delhi
(2000).
4. G. B. Giglione and A.G. Bedein, "Conception of Management Control Theory", Academy
of Management Journal, (June 1974)
5. Harold Koontz, Cyril O'Donnell, and Heinz Weihrich, "Management", McGraw-Hill, New
York (1984).

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6

CHAPTER 1: CONCEPTS AND NATURE OF MANAGEMENT

Managing is essential to ensure the co-ordination of individual efforts within an organization. It is

Principles of Management Compiled by: Abdikani Ahmed (MPA, BHRML)

"Management is the process of planning, organizing, leading, and controlling an organization’s

"Management is a process of designing and maintaining an environment in which individuals

Effectiveness - completing activities so that organizational goals are attained.

Principles of Management Compiled by: Abdikani Ahmed (MPA, BHRML)

It is impossible to provide a single, comprehensive, universally accepted definition of

WHO ARE MANAGERS?

Principles of Management Compiled by: Abdikani Ahmed (MPA, BHRML)

WHAT MANAGERS DO?

What managers do in organizations are the same:

Why Organizations are needed?

A. Organizations serve society

B. Organizations accomplish objectives

Principles of Management Compiled by: Abdikani Ahmed (MPA, BHRML)

C. Organizations preserve knowledge

D. Organizations provide careers

Management is accomplished through the efforts of others:

Management is a universal activity:

Principles of Management Compiled by: Abdikani Ahmed (MPA, BHRML)

Principles of Management Compiled by: Abdikani Ahmed (MPA, BHRML)

Principles of Management Compiled by: Abdikani Ahmed (MPA, BHRML)

Principles of Management Compiled by: Abdikani Ahmed (MPA, BHRML)

Principles of Management Compiled by: Abdikani Ahmed (MPA, BHRML)

The important functions of top management include:

2. Middle management of a company consists of heads of functional departments viz.

The following are the main functions of middle management:

Principles of Management Compiled by: Abdikani Ahmed (MPA, BHRML)

3. Lower level or operative management of a company consists of Superintendents,

General Managers and Functional Managers

Principles of Management Compiled by: Abdikani Ahmed (MPA, BHRML)

Principles of Management Compiled by: Abdikani Ahmed (MPA, BHRML)

SKILLS AND MANAGEMENT LEVELS

Principles of Management Compiled by: Abdikani Ahmed (MPA, BHRML)

Principles of Management Compiled by: Abdikani Ahmed (MPA, BHRML)

The important interpersonal roles are:-

2. Disseminator – This is where he communicate potentially useful information to his

Principles of Management Compiled by: Abdikani Ahmed (MPA, BHRML)

in policies or other matters to subordinates, their peers and to other members of an

2. Disturbance Handler – When an organization or team hits an unexpected roadblock, it's

Principles of Management Compiled by: Abdikani Ahmed (MPA, BHRML)

Achievements of group goals:

Optimum utilization of resources:

Sound organization structure:

Management gives new ideas, imagination and visions to an enterprise.

Principles of Management Compiled by: Abdikani Ahmed (MPA, BHRML)

MANAGEMENT: ART OR SCIENCE?

Management as Both Science and Art

Principles of Management Compiled by: Abdikani Ahmed (MPA, BHRML)

REFERENCES /FURTHER READING

Principles of Management Compiled by: Abdikani Ahmed (MPA, BHRML)

CHAPTER TWO: EVOLUTION OF MANAGEMENT THOUGHTS

Principles of Management Compiled by: Abdikani Ahmed (MPA, BHRML)

 Management is viewed as a systematic network (process) of interrelated functions. The

The Classical approach was developed through three mainstreams:

Fredrick W. Taylor (1856-1915)

Principles of Management Compiled by: Abdikani Ahmed (MPA, BHRML)

Taylor’s Four Principles of Scientific Management:

Principles of Management Compiled by: Abdikani Ahmed (MPA, BHRML)

Principles of Management Compiled by: Abdikani Ahmed (MPA, BHRML)

ADMINISTRATIVE MANAGEMENT THEORY