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INDUSTRIAL MANAGEMENT

1.0 NATURE AND FUNCTIONS OF MANAGEMENT

Management is defined as the Science and Art of making intended things happen
in any organization. It is thus an executive function. The basic managerial
functions are given below.

• Planning
• Organizing
• Staffing
• Directing
• Motivation
• Co-ordination
• Controlling

1.1 IMPORTANCE OF MANGEMENT

Truly speaking, no enterprise can survive without management, even if it


possesses huge money, excellent machinery and expert manpower, because
without management, it will be all confusion and nobody will know what to do and
when to do.

1.To maintain discipline and to keep control over the employees of various
sections.

2.To distribute work and machines among the workers in such a way to secure
maximum output.

3. To keep co-operation among the staff at various levels.

4. To improve efficiency, management keeps scientific watch and strict inspection

5. To suggest new ideas as improvement.

6. To arrange the efficient storing and recording.

7. Management creates a vital, dynamic and life giving force to the enterprise.

8. To provide good training to the staff for attaining high skills in all fields.

9. To impart the instructions timely and to provide constant guidance.

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10. Management tackles business problems and provides a tool for the best way
of doing things.

11. Management only can meet the challenge of change.

1.2 DEFINITION OF MANAGEMENT

Management means to manage men, machines, money and materials (The four
Ms) to achieve certain goals and objectives. It is a function of an industrial
undertaking which plans, organizes, directs and controls various activities of the
organization.

1.3 MANAGEMENT AS A SCIENCE

Management is a science because the management techniques are susceptible


to measurement and factual determination.

F.W Taylor is the father of Scientific Management.

Scientific Management is referred as

1. Science, not rule of thumb,


2. Harmony, not discord,
3. Co-operation, not individualism,
4. Maximum output,
5. The development of each worker to his greatest efficiency and prosperity.

1.4 MANAGEMENT AS AN ART

Management is an art because it means coordinating and getting things done


through others (people).

1.5 DIFFERENCE BETWEEN MANAGEMENT AND ADMINISTRATION

ADMINISTRATION MANAGEMENT
1. Administration is a determinative Management is an Executive function.
function
2. Administration predetermines the Management is concerned with
specific goals and lays down the broad carrying out the broad policies laid
areas within which these goals are to down by the administration
attained
3. Forming various departments in the To keep the co-ordination among the
organization staff of various levels
4. Fixing of authority and To distribute work and machines

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responsibilities of various employees among the workers in such a way as to
secure maximum output
5. Maintaining peace and discipline To maintain discipline and keep control
over the employees of various
department
6. Taking timely decisions with respect To suggest new ideas and
to various activities to maximize profit improvements

1.6 LEVELS OF MANAGEMENT

A large industrial organization need several managers, each wiTH specific


qualifications and specialities.

Mainly the management of the concern may consist of three levels.

(A) Top Level management

1. Board of directors
2. Managing Director or Executive Director
3. General Manager
4. Proprietor
5. Financiers
6. Shareholders.

Top level management deal with overall, long range objectives and policies,
make long plans and maintain public relation contacts. For large scale industries,
along with the board of Director. It also includes President or Chairman, and
Vice president of the Company.

(B) Middle level management

Middle level management keeps closer contact with day to day results and
makes the plans that will aid in achieving objectives set by Top level manager.
They include departmental heads such as production manger, purchase
manager, sales manager, personnel manager, superintendent etc.

(C) Lower level management

They are also known as supervisory level managers, who plan day to day
activities and put policies in effect with the objectives set down by Top and
Middle level managers.

They include foreman, supervisors, chargemen, inspectors etc.

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(D) Roles and responsibility

Authority (Roles) means right to command and power to act. Since top man in
the organization cannot do each and everything himself, a definite chain of
responsibility and authority is provided from top executive to each employee.
Line of responsibility should be made very clear in order to facilitate ready flow of
communication and control.

Authority empowers the superior to make a subordinate to do the work. Every


one in the industrial organisation from top level downwards, possess some
authority to secure co-operation from subordinates. When authority is given,
subordinates should accept the responsibility in fulfilling the objective of the firm.
Roles and responsibility must go together, if the goals of organization are to be
achieved efficiently.

Whenever any employee is made responsible for a particular work, he must be


given due authority and also to direct and control the efforts in completing that
work. Every one in the organization structure must understand the limits of his
roles and responsibility. That is to say he should know where his roles and
responsibility starts and stops.

Roles and responsibility of different management is given below

1. Top level management


a. Top management approves the decisions of the middle level management
b. It can issue orders and instructions and lay down guideline which must be
followed.
c. The chief executive position includes the interpreting of organizational policies
and communicating the goals of the organization.
d. The chief executive thinks and takes decisions for the long-run welfare of the
enterprise.

2. Middle level management


a. To run the details of the organization, leaving the top managers as free as
possible of their responsibilities.
b. To implement the policies of the top management
c. To achieve co-ordination between the sub-units under their charge.
d. To build up a contented and efficient staff where reward is given according to
capacity and merit and not according to chance or length of service.
e. To build a team spirit where all are working to provide a product or service
wanted by the society.

3. Lower level management


They represent a link between the management and the workers.

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2.0 DEVELOPMENT OF DIFFERENT SCHOOLS OF MANAGEMENT
THOUGHT

2.1 Scientific Management :


Scientific management may be defined as the “Art of knowing exactly what is to
be done and the best way of doing it.”
In short it is the application of scientific principles and methods to management.

Frederick Winslow Taylor


Fredrick Winslow Taylor is know as the founder of Scientific Management.
Taylor laid the foundation for modern scientific management between 1880 and
1890. He reformed the management through a thoughtful and systematic
approach to its problems. Taylor found that much of waste (man, time, energy,
efficiency etc) is due to the lack of order and system in the management. He
emphasized that usually management was ignorant about the amount of work
performed by a worker in a day and also about the best way of doing the job,
hence it remained at the mercy of workers. Taylor therefore suggested that
management should adopt scientific methods for achieving higher efficiency.
Some of his significant achievements were
- Work study
- Standardization of tools and equipment or workmen and working conditions
- Incentive scheme
- Principles of management
- Application of scientific methods.

Essentials of scientific management


i) To find out waste and its cost
ii) To eliminate waste
iii) To pay uniform wages with reduced labour cost
iv) To increase purchasing power of customer by lowering unit cost.

Main elements of scientific management


a. Recognize the problem, analyze and define objectives
b. Collect and analyze the required data
c. Select alternatives
d. Evaluate and review each alternatives
e. Test conclusions and if required correct actions
f. Take selected action and
g. Formulate and test principles based on experimental results of all
the cases,

Criticism:

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Scientific management was an innovation and received tremendous opposition.
Opposition to this change retarded the spread of the basic idea of scientific
management in the beginning, Primary resistance came from management itself
instead of workers community which was not prepared to discard old rules of
thumb in favour of scientific approach. An another cause for opposition was the
feeling that scientific management treated workers like cogs in a well-oiled
machine and that the system destroyed humanistic practices in industry. Later
on when, with the use of scientific management, greater efficiency was achieved
in industrial operations and productivity increased, principles of scientific
management started spreading rapidly throughout the industry,

2.2 Henry Fayol’s Contribution:

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Henry Fayol, a French industrialist and manager, was one of the first writers who
propounded his theory of management. He is regarded as the father of modern
management theory, because he was the first who suggested the functions of
management. These functions have been recognized as the main task of
manager in modern management theories. Management thoughts of Fayol can
be classified into the following three categories

1. Functions of management
2. Principles of management
3. Abilities required from the managers

Six activities identified by Henry Fayol


Fayol analyzed the process of management as he had observed it first hand. His
conclusions was that all work done in business enterprises can be divided into six
groups. He believed that if any kind of business was to operate successfully,
these six functions had to be performed. If any one was neglected, the
enterprise would suffer accordingly. The six activities were:

1. Technical activities (Production, manufacture, adaptation)


2. Commercial activities (buying, selling, exchange)
3. Financial activities (search for optimum use of capital)
4. Security activities (protection of property and persons)
5. Accounting activities (stock taking, balance sheets, costs, statistics)
6. Managerial (administrative) activities (planning, organization, command,
co-ordination and control)

Principles laid down by Henry Fayol


Fayol devoted most of his attention to the managerial activities. In doing so he
enunciated certain principles which hold ground (with suitable modifications) to
this day. The principles laid down by him were
1. Division of work
2. Authority and responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual to general interest
7. Remuneration
8. Centralization of authority
9. Scalar chain
10. Order
11. Equity of treatment
12. Stability
13. Initiative
14. Esprit de corps. (In union there is strength)

Criticism

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Fayol saw management as one of six basic activities, that is technical,
commercial, financial, security, accounting and managerial activities. However,
our concept of management should be modified to say that management is the
planning, organizing, command, co-ordination and control of technical, financial,
security and accounting activities. A second modification is in terms of our
understanding of what makes people work at maximum productivity; we should
substitute motivation for command. It is true that a manager must direct,
command and order to get things done. But he also encourages, communicates,
develops, and stimulates.

2.3 Behavioural scientists contributions

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Hawthrone studies
Elton Mayo and F.J Roethlisberger undertook the famous experiments at the
Hawthrone plant of the western electric company between 1927 and 1932. Mayo
and his colleagues found that changing illumination for the test group, modifying
rest period, shortening workdays and varying incentive pay systems did not seem
to explain changes in productivity. They came to the conclusion that factors
other than these were responsible for the changes in productivity. They found
that the improvement in productivity was due to such factors as morale, in “sense
of belonging” which came about due to improved interrelationships between
members of a work group, and effective management. Effective management
was a kind of managing that would understand human behavior, especially group
behaviour and serve it through such skills as motivating, counseling, leading and
communicating. This phenomenon, arising basically from people being noticed
has been known as the Hawthrone effect.

The Hawthrone studies previously emphasized that humans are social, that
business operations are not merely a matter of machinery and method but also of
gearing these with the social system to develop a complete socio-technical
system.

Elton Mayo’s contribution


He was born in Australia and trained in psychology and recognized as the “father
of Human Relations Approach”. Mayo led the team, which conducted the study
at Western Electrics Hawthrone plant to evaluate the attitudes and psychological
relations of workers in on the job situations. His idea was that logical factors were
far less important than emotional factors in determining production efficiency.
Mayo concluded that work arrangements in addition to meeting the objective
requirements of production must at the same time satisfy employee’s subjective
requirements of social satisfaction at his work place. He was of the opinion that
the cause of increase in productivity of the workers is not a single factor like
changing working hours or rest pauses, but a combination of these and several
other factors such as less restrictive methods of supervision giving autonomy to
the workers allowing the formation of small cohesive groups of workers,
cooperation between workers and management, opportunity to be heard,
participation in decision making etc.,

Main aspects

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• It draws concept from psychology, sociology, human relations, inter-
personnel relationships, satisfaction of workers needs etc
• Since management is getting things done through people the managers
must have a basic understanding of human behaviour and human
relations in all its aspects, particularly in the context of work groups and
organizations
• Management must study inter-personnel relations among people
• Greater production and higher motivation can be achieved only through
good human relations
• Motivation, leadership, communication, participative management and
group dynamics are the core of this school of thought,

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3.0 MANAGEMENT PROCESS AND FUNCTION

3.1 PLANNING
Planning is primary function of management to ensure proper utilization of human
and material resources in an enterprise to realize profits. Planning is a process
of deciding the business targets and charting out the path of attaining those
targets. It can be described as the process of thinking before doing

3.1.1 Need for Planning


In designing an environment for the effective performance of individuals working
together in groups, a manager’s most essential task is to see that everyone
understands the group’s purposes and objectives and its methods of attaining
them. If the effort of group is to be effective, people must know what they are
expected to accomplish. This is the function of planning, most basic of all the
managerial function. Planning involves selecting missions and objectives and the
actions to achieve them. Planning bridges the gap from where we are to where
we want to go.

Planning and Control are inseparable - Siamese twins of management. Any


attempt to control without plans is meaningless, since there is no way for people
to tell whether they are going unless they first know where they want to go.
Therefore planning and controlling has to go hand in hand.

3.1.2 Objectives of planning

Objectives are defined as the important ends towards which organizational and
individual activities are directed. The goal of every manager is to create a
surplus. Objectives should be understandable and measurable. However, it has
been observed that stretched goals lead to higher performance than easy ones.
Objectives need to be met by a specific time; therefore managers must develop
plans to meet short, intermediate and long term objectives. They can be frames
as per following alternatives. Short-term Vs Long term, Profit margin Vs
Competitive position, Proft Vs Non-profit objective, or low-risk environment Vs
High-risk environment. Other types of objectives could be
• Profitability objectives
• Marketing objectives
• Productivity objectives
• Physical and financial objectives
• Quality objectives.

3.1.3 Types of plans


Plans can be classified as
1) purposes or missions
2) Objectives or goals
3) Strategies
4) Policies

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5) Procedures
6) Rules
7) Programs and
8) Budgets

Strategies : Broad areas of an enterprise operation, normally its in light of


competitions. The firm has to decide on its growth goal and desired profitability.
Form a framework for guiding, thinking and action.

Policies : General statements that guide decision-making. Policies encourage


discretion and initiative within limits. Policies define an area within which a
decision is to be made and ensure that the decision will be consistent with, and
contribute to an objective. Policies help decide issues before they become
problems, make it unnecessary to analyze the same situation every time it comes
up, and unify other plans, thus permitting managers to delegate authority and still
maintain control over what their subordinates do.

Procedures : Establish a required method of handling future activities, they are


guides to action. They are guides to action, rather than to thinking, and they
detail the exact manner in which certain activities must be accomplished.
Procedure often cut across department lines.

Rules : Specific required action, allowing no discretion. They are usually the
simplest type of plan. “ No smoking” is a rule that allows no deviation from a
state course of action. The essence of rule is that it reflects a managerial
decision that some certain action must or must not be taken.

Programs: Programs are a complex of goals, policies, procedure, rules, task


assignments, steps to be taken, resources to be employed, and other elements
necessary to carry out a given course of action; they are ordinarily supported by
budgets.

Budgets: A budget is a statement of expected results expressed in numerical


terms. It may be called a numberized program. In fact, the financial operating
budget is often called a profit plan. A budget may be expressed in financial
terms; in terms of labor-hours units of product, or machine hours or in any other
numerically measurable term. It may be deal with operations, as the expense
budget does; it may reflect capital outlays, as the capital expenditures budget
does; or it may show cash flow, as the cash budget does.

3.1.4 Steps in Planning

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Establishing verifiable goals : Determine the current situation, including
examination of resources, market trends, economic indicators, and competitors.

Establishing planning premises : The next logical step in planning is to


establish circulate and obtain agreement to utilize critical planning premises such
as forecasts, applicable basic policies, and existing company plans. They are
assumptions about the environment in which the plan is to be carried out.
Forecasting is importing in premising: What kinds of markets will there be? What
volume of sale? What prices? What products? What tax rate and polices? What
wage rates? etc.,

Deciding the planning period :


Depending on the situation, the next logical and important step in planning is to
decide the planning period.

Finding alternative courses of action: The next step in planning is to search for
and examine alternative course of action, especially those not immediately
apparent. There is seldom a plan for which reasonable alternatives do not exist
and quite often an alternative that is not obvious proves to be the best. The more
common problem is not finding alternatives but reducing the number of
alternatives so that the most promising may be analyzed. Even with
mathematical techniques and the computer, there is a limit to the number of
alternatives that can be thoroughly examined. The planner must usually make a
preliminary examination to discover the most fruitful possibilities.

Evaluating and selecting a course of action: After seeking out alternative


courses and examining their strong and weak points, the next step is to evaluate
the alternatives by weighing them in light of premises and goals. One course
may appear to be the most profitable but it may require a large cash outlay and
have a slow payback; another may look less profitable but may involve less risk;
still another may better suit the company’s long range objectives.

There are so many alternative courses in most situations and so many variables
and limitations to be considered that evaluation can be exceedingly difficult.
Selecting a course is a point at which the plan is adopted-the real point of
decision making. Occasionally, an analysis and evaluation of alternative courses
will disclose that two or more are advisable, and the manager may decide to
follow several courses rather than the one best course.

Developing derivative plans : When a decision is made, planning is seldom


complete, and a seventh step is indicated. Derivative plans are most invariably
required to support the basic plan.

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Measuring and controlling the progress : After decisions are made and plans
are set, the final step in giving them meaning, as was indicated in the of types of
plans, is to numberize them by converting them into budgets by which the
progress can be controlled and measured. The overall budgets of an enterprise
represent the sum total of income and expenses, with resultant profit or surplus,
and the budgets of major balance sheet items such as cash and capital
expenditures. Each department or program of a business or some other
enterprise can have its own budgets, usually of expenses and capital
expenditures, which tie into the overall budget. Budgets become a means of
adding the various plans and set important standards against which planning
progress can be measured.

3.1.5 Limitations of planning

Planning is not a perfect measure against risk as reliability of forecasts are


inversely proportional to time. Planning is very costly and must justify its
existence and often delays action. Planning may give a false sense of security
as standing plans are repetitive and lead to resistance to change.

3.1.6 Making Planning effective –Importance of the Following

Co-ordination: co-ordination means weaving together the segments of an


organization into a coherent whole in such a way that all parts operate at the
most efficient level and produce maximum profit. Co-ordination unifies the
purposes and efforts of the employees working in a concern. It can be achieved
through co-ooperation, good human relations, understanding and
communication.

Communication: Communication serves as a linking process by which parts of


an organization are tied together. Communicating means transmitting
instructions and information within the organization and to outside customers. In
effective and improper communication lead to mistrust, confusion and strikes.

Proper Climate: The present and future external environment must be assessed
in terms of threats and opportunities. The evaluation focuses on Economic,
social, political, legal, demographic and geographic factors, Technological
developments and Competitive products and services on the market.
The firm’s internal environment is evaluated in respect to its resources and its
strengths and weakness in R&D, Production, Marketing, Human and financial
resources etc.,

3.2 ORGANIZING

3.2.1 Purpose of organization

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Sound organization can contribute greatly to the success of the enterprise. A
properly designed and balanced organization will facilitate both management and
operation of the enterprise for smooth functioning with growth. Organization is a
tool of management which leads to division of work and responsibilities. It
defines and fixes the duties and responsibilities of employees. Organisation is a
step towards the achievement of established goals.

3.2.2 Process of organization


The process of organization may be described as the managerial function of
organising. The important steps involved in the process of organization are:
h. Consideration of objectives
i. Grouping of activities into departments
j. Identifying Key Departments
k. Determining levels of Decision making
l. Determining the span of management
m. Setting up co-ordination Mechanism

Consideration of objectives :
Objectives decide as to why the proposed organization to be set up (purpose)
and what will be the nature of work to be accomplished through the organization.

Grouping of activities into departments:


To achieve the objectives, the process of organization is divided into functions,
sub-functions and further sub-functions to be performed by individual. This
principle is followed to avoid duplication, confusion and wastage of men,
machinery and money.

Identifying Key Departments:


Activities of similar nature are grouped under departments, sections or divisions.
These may be grouped on the basis of use, co-ordination, policy and control etc.;
There may be different departments in an enterprise like Personnel, Finance,
Purchase, Production, Sales etc.

Determining levels of Decision-making:


Specific job assignments are made to different persons for ensuring a certainty of
work performance. Right man is put on the right job.

Determining the span of management


While the purpose of organizing is to make human cooperation effective, the
reason for levels of organization is the limitation of the span of management. In
other words organization level exist because there is a limit to the number of
persons a manger can supervise effectively, even though this limit varies
depending on situations. A wide span of management is associated with few
organizational levels, a narrow span, with many levels.

Setting up co-ordination Mechanism:

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Provision of right type of physical facilities and environment is essential for the
smooth running and prosperity of the organization which include machinery,
tools, proper lighting, ventilating, heating, cooling, reasonable working hours, rest
intervals, safety devices, human approach by management etc.,

3.2.3 Principles of organizing


There is considerable agreement among management scholars and practitioners
about a number of principles underlying the science of organizing. These
principles are truths of general applicability and are more in the nature of
essential criteria for effective organizing. The most essential guiding principles
are:

Objectives
Specialization
Span of Control
Exception
Scalar Principle
Unity of command
Delegation
Responsibility
Authority
Efficiency
Simplicity
Flexibility
Balance
Unity of Direction

Objectives: Since the objectives of the enterprise have an important bearing on


the organization structure, only those objectives should be taken up and
accomplished for which there is real need in the organization eg., measures may
be taken to increase productivity, improve product quality etc.

Specialization: The organization structure should be formulated in such a way


that the activities of the enterprise are divided according to the different functions
and the same are assigned to person according to their specialization. This
means that effective organization must include specialization.

Span of control : This refers to the number of subordinates that report to an


executive or the number of subordinates that an executive can supervise directly.
Depending upon the conditions of the business enterprise, the span of control
may vary from 2 to 20 and an executive must not have more subordinates
looking to him for guidance, as an executive will have limited time and energy
available for his activities.

Exception : Only exceptionally complex matters should be referred to the


executives for their decision and matters of routine nature should be decided by
the subordinates themselves. This is necessary, because the executives at a

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higher level instead of spending their time for deciding routine matters
concentrate on more important matters.

Scalar Principle: The clearer the line of authority from the ultimate management
position in an enterprise to every subordinate position, the clearer will be the
responsibility for decision making and the more effective will be organizational
communication.

Unity of command : The more complete an individual’s reporting relationships


to a single superior, the smaller the problem of conflicting instructions and the
greater the feeling of personal responsibility for results.

Delegation : Delegation is said to be existing when an executive instead of doing


all the thinking for the unit himself passes down to his subordinates any tasks on
which they can take themselves and perform it efficiently and effectively. By
doing so executives gives a chance to his sub-ordinates to think and develop and
keeps himself free to deal with managerial responsibilities such as handling
special problems if any, coordinating, planning improvement etc.,

Responsibilities: The responsibilities to their superiors for performance is


absolute and superiors cannot escape responsibility for the organization activities
of their subordinates.

Authority
The responsibility for actions cannot be greater than that implied by the authority
delegated, nor should it be less. Authority and responsibility should be coexisting
and both must be present for smooth functioning of the organization, the entire
process of delegation can become ineffective unless authority delegated is
commensurate with responsibility.

Efficiency : The more a position or a department has a clear definition of the


results expected, activities to be undertaken and the authority delegated and has
an understanding of authority and informational relationships with other positions,
the more adequately and efficiently the responsible individual can contribute
towards accomplishing enterprise objectives.

Simplicity:
The organization structure should be simple with a minimum number of levels. If
the organization structure has a large number of levels, the problem of effective
co-ordination and communication may arise.

Flexibility: Organizational flexibility specifies the capacity to adjust work


assignments, personnel and facilities to temporary changes in the volume of

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work. Flexibility is the ability to bend and blend without experience any serious
setback.

Balance: The application of principles must be balanced to ensure the overall


effectiveness of the structure in meeting enterprise objectives.

Unity of Direction: The more an organization structure and its delegations of


authority enable mangers to design and maintain an environment for
performance, the more they will help the leadership abilities of those managers.
Accordingly, each group of activities with the same objective must have one head
and one plan.

3.2.4 Types of Organization


The structure of one industrial organization differs from that of another
organization and it depends upon
- Size of the organization
- Nature of the product being manufactured
- Complexity of the problems being faced
- Organisation structure marks line of authority, responsibility and co-
ordination.

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A few commonly known forms of organization types are
a) Line, Military or Scalar organization
b) Functional organization
c) Line and staff organization

Line organisation
It is a simplest form of organization structure. It was called military organization
because it resembled to olden military organization. Line organization is based
upon relative authority and responsibility rather than on the nature and kind of
operation or activities. The authority flows directly from the works manager (WM
to Superintendent to Foremen and from them to workers. Line organization is
direct and different levels know to whom they are accountable. The immediate
superior gives orders to the subordinates, assigns duties, dismisses and takes
disciplinary action against them. Any enterprise that starts small probably starts
with a line type of organization. Line organization is suitable for small concerns
free from all complexities and automatic and continuous process industries such
as paper, sugar, textile, etc.

Advantages :

It is simple and easy to understand


It is flexible, easy to expand and contract
It makes clear division of authority
There is clear channel of communication, with no confusion at all
It encourages speedy action
It is strong in discipline as it fixes responsibility on an individual
It is capable of developing the all round executive at the higher levels of authority.

Disadvantages:

It neglects specialists
It overloads a few key executives
It requires a high type of supervisory personnel to meet the challenges imposed
in the absence of specialists as advisors
It is limited to very small concerns
It encourages dictatorial way of working
In line organizations provisions are seldom made to train, develop and replace
top executives
Due to lack of specialization perhaps there is more wastage of materials and
man-hours.

Line and staff organization


Line organization gradually developed to shape as the line and staff organization.
Taylor’s functional organization hastened its development. As the industry grew
in size and complexity, the line executives could not perform all other functions
such as R&D, planning, distribution, legal. Public relations etc besides looking

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after production. They arouse the need for employing special executives to assist
line executives and they were known as STAFF as they were recruited to
perform staff or specialist functions. The line executives retain supervisory
authority and control over the work of their subordinates whereas the staff
executives relieve line executives of certain specialized work and advise on
matter referred to them. The final decision whether to accept and implement the
recommendations of the staff executive remain in the hands of the line executive.

Advantages
Expert advice from specialist staff executives can be made use of
Line executives are relieved of some of their loads and are thus able to devote
more attention towards production.
Less wastage of material, man and machine hours
Quality of product is improved
There is no confusion as exists in functional organization
Line and staff organization possesses practically all the advantages of both the
line and functional organization.

Disadvantages
Product cost will increase because of high salaries of staff executives
At times the staff department may infringe upon the rights and responsibilities of
the line organization, thus weakening the line organization when its (i.e, staff
department’s) true function strengthen this organization.
Line and staff organization may get confusion in case functions are not clear
Frictions are jealousies of developed between line and staff executives may
cause harm to enterprises.
Line executives if they start depending too much on staff executives may lose
loose their initiative drive and ingenuity.

Functional organization
F.W. Taylor suggested functional organization because it was difficult to final
round persons qualified to work at middle management levels in the line
organization. Functional organization is also a line type of organization with the
difference that instead of one foreman there are eight functional foremen, four of
them located on the shopfloor and the remaining four in the office, but everyone
having direct and equal authority over the workers. Each functional foreman who
is a specialist in an activity is incharge of one function.

Advantages
• Since a foreman is responsible for one function, he can perform his duties
in a better manner
• Functional organization makes use of specialists to give expert advise to
workers
• It relives line executives of routine, specialized decision
• Expert guidance reduces the number of accidents and wastage of
materials, man and machine hours.

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• It relieves pressure of need to search a large number of all-round
executives.
• Quality of work is improved.

Disadvantages
• Coordination of the efforts of various functional foreman is difficult.
• It is difficult to maintain discipline as each worker is responsible to eight
foremen
• It is very difficult to fix up the responsibility to any one foreman in case
something goes wrong.
• Workers always remain confused about the authority and activity of each
foreman
• It makes industrial relationships more complex
• Workers are not given opportunity to make use of their ingenuity, initiative
and drive.
• All round executives cannot be developed.

3.2.5 Delegation and Decentralization

Purpose of Delegation and Decentralization


Any manager may delegate authority to his subordinate. Delegation may thus be
highly individualized relationship. When delegation is used systematically and
extensively throughout an organization the arrangement may be described as
decentralization. In decentralized organization, authority and decision making
have been pushed downward throughout the organization. Decentralization thus
necessitates delegation, but delegation, on the other hand, might be used by a
particular manager without being part of decentralization program.

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Differentiate between Authority and Power

AUTHORITY POWER
Institutionalized right of a superior to Ability of person to influence another
command and compel his subordinate person
to perform of certain act
It rests in position. With the change in Rests in the individual. Hence, even
position, the authority of the individual when his position changes, his power
also changes remains intact.
Delegated to an individual by his Earned by an individual through its
superior own efforts
Well defined, shown on the Undefined, inconspicuous and infinite
organization chart and commensurate
with responsibility
What exists in the eye of law What exists in fact
Serves as a basis of formal Serves as a basis of informal
organization organization

Distinction between Delegation and Decentralization

Delegation
Authority and responsibility must be delegated throughout a firm to promote the
efficiencies of an organizational structure. Delegation of authority is necessary
wherever a manger must rely on another to help accomplish an objective.

Delegation means conferring authority from one manger or organizational unit to


another in order to accomplish particular assignments. Although authority and
responsibility may be delegated by a manager, they can never be abdicated.

Delegation has a dual characteristic. As a result of delegation, the subordinate


receives authority from the superior, but at the same time the superior retains all
original authority.

Customarily, delegation is considered as coming from a higher to a lower level,


but it can also be from a lower to higher level or between levels on the same
plan. Thus, delegation can be downward, upward, or sideward.

Decentralization
Organization authority is merely the discretion conferred on people to use their
judgement to make decisions and issue instructions. Decentralization is the
tendency to disperse decision-making authority in an organized structure. It is a
fundamental aspect of delegation, to the extent that authority is not delegated, it
is centralized.

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There could be absolute centralization of authority in one person implying no
subordinate managers and therefore no structured organization. On the other
hand, there cannot be absolute decentralization, for if managers delegated all
their authority, their status as managers would cease, their positions would be
eliminated and there would be no organization.

Advantages of effective delegation

• The effective delegation relieves the burden on senior management, to


speed up the decision making process etc.,
• Effective delegation contributes to growth of individual (subordinate) and
overall morale.

Advantages of Decentralization

• A decentralized organization structure stresses delegation of decision –


making and lightens the load of top managers.
• The development of generalists rather than specialists is encouraged,
thereby facilitating succession into positions of general managers.
• Intimate personal ties and relationships are promoted, resulting in greater
employee enthusiasm and co-ordination.
• Familiarity with important aspects of special work is readily acquired.
• Efficiency is increased since mangers are near the activities for which they
are held responsible and trouble spots can be located and remedied
easily.
• For multiunit enterprises keyed to geographic dispersion, full advantage of
local conditions can be obtained.
• Plans can be tried out on an experimental basis in one plant, modified and
proven before being supplied to similar plants of a company.
• Risks involving possible losses of personnel, facilities and plants are
spread out.

3.3 Direction : Principles of Direction

The principles to be observed by Management in direction of its subordinates are


as follows:
a) harmony of objectives : The management should bring out co-ordination of
individual objectives of the subordinates working in the organization with those of
the enterprise. Directing should be such that it would make the subordinates
identify themselves with the company and integrate their objectives with those of
the company.

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b) Maximum individual contribution : The technique of direction adopted by
the management should be such that it should be in a position to inspire the
employees to contribute their maximum for the achievement of the enterprise
objectives.

c) Unit of command :This principle requires that the employees should receive
orders and institutions only from one superior. The violation of this principle may
lead to disorder, confusion and indiscipline which may affect the efficiency of
business

d) Direct supervision : Every superior must maintain direct contact with his
subordinates. Personal touch and face to face communication with the
subordinates ensure successful direction. Further, direct supervision also
develops feed-back information.

e) Flow of information : Effective direction is largely dependent upon the flow of


information and the efficiency with which it is disseminated among the
subordinates. The management may be helped if it uses both formal and
informal channels of communication.

f) Appropriateness of direction technique : The technique that is used by the


management for direction should be appropriate so as to ensure effective
direction. The techniques that are normally used are I) consultative 2) free-rein
and 3) autocratic and these should be selected according to circumstances.

g) Efficiency of direction : The Principle requires that there should be an


effective network of communication, effective supervision, farsighted leadership
and good motivation for ensuring the success of direction.

h) Comprehension : According to this principle, how much information is


correctly understood by subordinates is more important than what is said and
how it is said. This principle can be observed only if the management makes
provision for a proper feed-back system of communication.

i) Effective leadership : It is necessary for the boss to possess the qualities of a


good leader for getting the work done by the subordinates. Subordinates also
would be happy if they get effective leadership from their boss. The boss should
guide and counsel the workers not only on the work problems but also on the
personal problems of his subordinates.

j) Effective motivation : The workers, if they are properly induced and


motivated, will volunteer themselves for the accomplishment of the goals.
Hence, direction should be such that it inspires the workers to contribute their
maximum with enthusiasm for the purpose of the organization.

k) Follow through : Direction is not only telling subordinates what they should
do but also seeing to it that they do it in the desired way. This requires the

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management to provide continuous guidance, supervision, advice and help to the
subordinates in their activities.

Direction of the management

Direction is a vital managerial function and also is the essence of management.


For the effective implementation of any administrative decision, planning,
organizing and staffing are not enough the manager must stimulate action by
giving direction to his subordinates through orders and also supervise their work
to ensure that the plans and policies achieve the desired actions and results.
Planning and organizing are concerned only with the preparations for work
performance and it is direction which alone stimulates the organization and its
staff to execute the plans. Hence, it is also called management in action.

Order giving
An order is a fundamental tool used by the management for directing its
subordinates. It may be stated that the terms “order” , “instruction”, “Directive”
and “command” are used interchangeably. An order can be issued by a superior
only and he has the right to enforce the order to be followed by his subordinates.
According to Koontz and O’Donnell, “ As a directional technique, an instruction is
understood to be a charge by a superior requiring a subordinate to act or refrain
from acting in a given circumstance”.

Characteristics of good order


The characteristics of a good order are as follows
a) an order should be reasonable and enforceable
b) it should be clear and easily understandable
c) it should be compatible with the purpose and objectives of the enterprise
d) it should be complete
e) it should stimulate willing, enthusiastic acceptance by the subordinate.
f) preferably, the order should be in writing
g) the tone of the order should be appropriate; and
h) it should specify the time within which the order should be carried out and
completed.

Techniques of simplification of direction

The techniques of direction that are used by the mangers are as follows:

a) Consultative direction : Under this method, the executive takes a decision


and issues a direction only after consultation his subordinates regarding the
feasibility and workability of the problem. One advantage of this method is that
as the subordinate also has been consulted about the feasibility and workability
of the problem, his best co-operation and enthusiasm can be secured in carrying
out the direction. This method however, suffers from one disadvantage, i.e., at

25
time, the subordinate may consider it his right to be consulted before the
executive takes a decision.

b) Free-rein direction : Under this method, the subordinate is encouraged and


enabled to show his own initiative and give independent thought to the solution of
the problem. The manager assigns the task in general terms and not in a
specific way. The subordinates must take the initiative and find a solution to the
task assigned and carry it out. This technique of direction may profitability be
used only if the subordinate is highly educated, efficient and sincere.

c) Autocratic direction : Under this method , the subordinates the not allowed
to take any initiative in solving the problem. The executive himself solves the
problem and gives orders to his subordinates with instructions as to how and
what is to be done by them.

3.4 Communication

Introduction
Communication is the art of developing and attaining understanding between
people. It is process of exchanging information and feeling between two or more
people, and is essential to effective management.

Communication is the transfer of information from a sender to a receiver, with the


information being understood by the receiver.

Process of Communication

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There are seven steps in the process of communication. They are:

Step 1: Sender – planner


The communication or message sender must conceptualize the message
mentally before it is encoded. This is planning of the communication process

Step 2: Encoding
Encoding involves selecting the medium through which to communicate the
planned message. The object of encoding is to select the best medium that will
be most accurately comprehend by the receiver. The goal is mutuality of
understanding between sender and receiver; lack of mutuality results in
misunderstanding and improper response to the message.

Step 3: Message and medium


This step involves the actual transmission of the conceptualized message.

Step 4: Receiving
This simply involves the physical reception of the message, hearing, seeing,
feeling, sensing and so on.

Step5 and 6 : Decoding and response


Decoding is the receiver’s interpretation of the message. It involves the mental
process of asking: what does this mean to me? And what should I do about it?
This is affected by many factors, such as perception of the sender, past
experience within similar communication, interpretation of body language, etc.

Step 7 : Feed back


The receiver’s reaction to the message is a form of communication back to the
sender and follows on the same step-by-step process

Types of communication

a) Formal and Informal

b) Written and Verbal

c) Upward, Downward and Horizontal

Formal communication
It implies the flow of information along the lines of hierarchy formally established
in each enterprise. Orders by superiors to subordinates, reports and suggestions
by subordinates to superiors as per the routine evolved in the administration,
constitute formal communication

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Informal communication.
It has no procedural basis, but is associated with expression of gesture, smile,
nod, glance etc., without any formalities. Informal communication is not official or
authoritative but spontaneous expression of ideas. It is often termed as
“Grapevine”.

Written communication
It means transmission of messages in the form of letters, memos, circulars,
boards, magazines, reports, instruction cards, publications etc. Written
communications are preferred for following merits:
i) When lengthy messages are to be conveyed
ii) When the sender and the receiver are at distant places
iii) When the communication is to be clear without ambiguity.
iv) Written communication constitute reliable records for future reference
v) Written messages can be quoted as legal evidence if the situation
demands.

Verbal or oral communication


It is the conveying of messages through spoken words, visual media, gestures
etc.

Oral orders, face to face interviews, personal conversation, lectures, discussions


at meetings etc are examples of oral communication. The verbal communication
will be more effective and in emergencies it is the only mode of quick
communication and also less expensive. It can be easily grasped and if doubt
arises it can be clarified then and there.

Downward communication
It signifies the transmission of orders, instructions etc., from the upper levels of
management to the subordinates of the organization. The object of the
communication from top to lower levels is to pass orders, information,
instructions.

Upward communication
It is the flow of facts from the lower layers of the organization to the top levels of
authority such as reports, suggestions, grievances, representations etc. The
purpose is to inform the superiors about the work and difficulties encountered by
them, suggestions they have in mind about improvements grievances which they
desire to settle etc.

Horizontal communication
This is interchange of ideas among the managers at the same level and other
personnel of the same rank. Consultations between managers, meetings of
workers of the same class to discuss a problem, belong to this mode of
communication.

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Barriers of communication:
A barrier to successful communication does not permit the transmission of
accurate and full information at the receiving end. It breaks down, obstructs,
delays, distorts and tends to give another colour to the information by the time it
reaches the destination. The various barriers to communication are:
• Long and ill-instructed channels of communications
• Heavy work-loads at certain levels in the organization structure.
• Attitude-either not to hear or to hear what one expects to hear
• Prestige and superiority complex
• Sender and receiver having different perception
• Sender unable to symbolize the information correctly
• Prejudiced and biased attitude of the receiver
• Receiver unable to get the information (subject to different meanings)
clarified.
• Receiver ignoring conflicting information
• Receiver tending to evaluate information from his own angle
• Receiver emotionally upset.

Measures to improve communication

• Sending direct and simple messages


• Feedback system to know whether the message has been understood
correctly or not
• Using many communication channels
• Adopting face-to-face communication
• Be sensitive to the private world of the receiver, try to predict the impact of
what you say on his feelings and attitude and tailor your message to fit
receiver’s vocabulary, interests and values
• Time the message carefully. Communicate when the receiver is motivated
to listen and he is not worried about other things
• Reinforce the words with actions, eg., employees are more likely to accept
the change when they themselves participate in the process of change.
• Introduce a proper amount of redundancy in the message, i.e, some
amount of repetition of information so that the information is not
misunderstood
• Create cordial and peaceful atmosphere in the organization.

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Transactional analysis
One of the most insightful and certainly one of the most popular approaches to
understanding interpersonal communication is that of transactional analysis
which is an approach to or a means for analyzing and improving transactions
between people.

Definition :
Transactional Analysis is a technique for examining the nature of the
interpersonal communication between two individuals and to analyze whether or
not effective communication is taking place. Every piece of conversation is
treated as a transaction.

Theory of Dr. Eric Berne

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Transactional Analysis is a theory developed by Dr. Eric Berne in the 1950's.
Originally trained in psychoanalysis, Berne wanted a theory which could be
understood and available to everyone and began to develop what came to be
called Transactional Analysis (TA). Transactional Analysis is a social psychology
and a method to improve communication. The theory outlines how we have
developed and treat ourselves, how we relate and communicate with others, and
offers suggestions and interventions which will enable us to change and grow.
Transactional Analysis is underpinned by the philosophy that:

• people can change


• we all have a right to be in the world and be accepted

Initially criticised by some as a simplistic model, Transactional Analysis is now


gathering worldwide attention. It originally suffered much from the popularised
writings in the 1960's. Also, summarised explanations, such as this, which can
only touch on some of the concepts in Transactional Analysis, led their readers to
believe that there was very little to it. Many did not appreciate the duration and
complexity of the training.

Today there is greater understanding of Transactional Analysis. More and more


people are taking the four to five year part-time training courses to qualify, and
increasingly universities are accrediting these courses for masters degrees.
Those taking training include psychiatrists, organizational and management
consultants, teachers, social workers, designers, engineers and the clergy.

Today Transactional Analysis is used in psychotherapy, organisations,


educational and religious settings. Books have been written for all ages, from
children through to adults, by people all over the world. Transactional Analysis is
truly an international theory relating to a diverse range of cultures.

Theoretical concepts within the Transactional Analysis world are constantly being
challenged and developed making it a rich dynamic process. Berne died in July
1970 at the age of 60. However, Transactional Analysis has not stood still and
continues to develop and change, paralleling the processes we encourage in
ourselves and others.

Three Ego states in human being and their characteristics

There three ego states are


1. Parent ego state
2. Adult ego state
3. Child ego state

All of us transact from all three states from time to time, each one of us generally
tends to have a dominant ego from which we transact most of the time. The

31
parent ego is authoritarian (protective and critical), the adult ego is rational
(mature and objective) and the child ego is impulsive (immature, joyful and
rebellious).

Transactional Analysis first order structural model

Berne devised the concept of ego states to help explain how we are made up,
and how we relate to others. These are drawn as three stacked circles and they
are one of the building blocks of Transactional Analysis. They categorise the
ways we think, feel and behave and are called Parent, Adult, and Child. Each
ego state is given a capital letter to denote the difference between actual parents,
adults and children.

Parent ego state

This is a set of feelings, thinking and behaviour that we have copied from our
parents and significant others.

As we grow up we take in ideas, beliefs, feelings and behaviours from our


parents and caretakers. If we live in an extended family then there are more
people to learn and take in from. When we do this, it is called introjecting and it is
just as if we take in the whole of the care giver. For example, we may notice that
we are saying things just as our father, mother, grandmother may have done,
even though, consciously, we don't want to. We do this as we have lived with this
person so long that we automatically reproduce certain things that were said to
us, or treat others as we might have been treated.

As we grow up we take in ideas, beliefs, feelings and behaviours from our


parents and caretakers. If we live in an extended family then there are more

32
people to learn and take in from. When we do this, it is called introjecting and it is
just as if we take in the whole of the care giver. For example, we may notice that
we are saying things just as our father, mother, grandmother may have done,
even though, consciously, we don't want to. We do this as we have lived with this
person so long that we automatically reproduce certain things that were said to
us, or treat others as we might have been treated.

Adult ego state

The Adult ego state is about direct responses to the here and now. We deal with
things that are going on today in ways that are not unhealthily influenced by our
past.

The Adult ego state is about being spontaneous and aware with the capacity for
intimacy. When in our Adult we are able to see people as they are, rather than
what we project onto them. We ask for information rather than stay scared and
rather than make assumptions. Taking the best from the past and using it
appropriately in the present is an integration of the positive aspects of both our
Parent and Child ego states. So this can be called the Integrating Adult.
Integrating means that we are constantly updating ourselves through our every
day experiences and using this to inform us.

In this structural model, the Integrating Adult ego state circle is placed in the
middle to show how it needs to orchestrate between the Parent and the Child ego
states. For example, the internal Parent ego state may beat up on the internal
Child, saying "You are no good, look at what you did wrong again, you are
useless". The Child may then respond with "I am no good, look how useless I am,
I never get anything right". Many people hardly hear this kind of internal dialogue
as it goes on so much they might just believe life is this way. An effective
Integrating Adult ego state can intervene between the Parent and Child ego
states. This might be done by stating that this kind of parenting is not helpful and
asking if it is prepared to learn another way. Alternatively, the Integrating Adult
ego state can just stop any negative dialogue and decide to develop another
positive Parent ego state perhaps taken in from other people they have met over
the years.

Child ego state

The Child ego state is a set of behaviours, thoughts and feelings which are
replayed from our own childhood.

Perhaps the boss calls us into his or her office, we may immediately get a
churning in our stomach and wonder what we have done wrong. If this were
explored we might remember the time the head teacher called us in to tell us off.
Of course, not everything in the Child ego state is negative. We might go into
someone's house and smell a lovely smell and remember our grandmother's

33
house when we were little, and all the same warm feelings we had at six year's of
age may come flooding back.

Both the Parent and Child ego states are constantly being updated. For example,
we may meet someone who gives us the permission we needed as a child, and
did not get, to be fun and joyous. We may well use that person in our imagination
when we are stressed to counteract our old ways of thinking that we must work
longer and longer hours to keep up with everything. We might ask ourselves "I
wonder what X would say now". Then on hearing the new permissions to relax
and take some time out, do just that and then return to the work renewed and
ready for the challenge. Subsequently, rather than beating up on ourselves for
what we did or did not do, what tends to happen is we automatically start to give
ourselves new permissions and take care of ourselves.

Alternatively, we might have had a traumatic experience yesterday which goes


into the Child ego state as an archaic memory that hampers our growth. Positive
experiences will also go into the Child ego state as archaic memories. The
positive experiences can then be drawn on to remind us that positive things do
happen.

The process of analysing personality in terms of ego states is called structural


analysis. It is important to remember that ego states do not have an existence of
their own, they are concepts to enable understanding. Therefore it is important to
say "I want some fun" rather than "My Child wants some fun". We may be in our
Child ego state when we say this, but saying "I" reminds us to take responsibility
for our actions.

contamination of the Adult ego state

The word contamination for many conjures up the idea of disease. For instance,
we tend to use the word for when bacteria has gone into milk. Well, this is similar
to the case with the contaminated Integrating Adult ego state. This occurs when
we talk as if something is a fact or a reality when really this is a belief. Racism is
an example of this. The Integrating Adult ego state is contaminated in this case
by the Parent ego state. If we are white we might have lived with parents or
significant others who said such things as "Black people take our jobs". Growing
up it is likely, that having no real experience to go by, we believed this. We might
also have been told that Black people are aggressive. In our Child ego state may
well lodge some scared feelings about Black people and in this ego state we may
start to believe "All Black people are scary". This would mean that there would be
a double contamination of the Integrating Adult ego state. However, we would
think that such statements were facts rather than beliefs and when this happens
we say that this is Integrating Adult ego syntonic. That is, they fit with the
Integrating Adult ego state and only those people outside of our situation and
sometimes outside of our peer group or culture can see that, objectively, such
beliefs are just that and therefore they can be changed.

34
Transactional Analysis - The Descriptive Model

This model shows how we function or behave with others. The model used here
is divided up into nine and we have used S. Temple's (1999) term "mode" as it
differentiates it from the structural ego state model mentioned above. We colour
the different modes in red and green for those who find colour helpful as a tool.
Effective communication comes from the green modes, (just as with traffic lights
we get the go ahead when the green light comes on), and ineffective
communication come from the red modes (as with the red traffic light). When we
come from the red modes we invite a negative response, and vice versa from the
green modes.

3.5 Motivation:

Motivation is the need or drive within an individual that drives him or her towards
goal oriented action. The extent of drive depends on the perceived level of
satisfaction that can be achieved by the goal. Motivation refers to the drive and
effort to satisfy a want or goal.

Need for Motivation:


The aim of motivation is instigation to do work by all the employees working in
any organization so that more results are attained through less efforts. Effects of
motivation comes to all acts of the organization. Any concern may have best
instruments, raw materials in sufficient quality and sufficient persons and
finances but their proper use is not possible till the working persons do not use
them properly.

Kinds of motivation

Positive motivation : Positive motivation means worker may be instigated to


work with some facilities or giving some prize so that the may do good or more
than was done previously and with less supervision. Prize or facilities may be

35
financial or non financial. To give more wages for work is the financial
motivation, while appraisal of the worker’s work, promotion, appreciation etc. are
non-financial position.

Negative motivation : This is based on punishment or fines if the labours is not


encouraged for work. For less work or for not doing work he must be punished or
fined, This is of two kinds, the financial or non-financial.

3.5.1 Theories of Motivation:

Maslows’s hierarchy of human needs


One of the most widely mentioned theories of motivation is the hierarchy of
needs theory put forth by psychologist Abraham Maslow. Maslow saw human
needs in the form of a hierarchy ascending from the lowest to the highest, and he
concluded that when one set of needs is satisfied, this kind of need ceases to be
a motivator.

1. Physiological needs : These are the basic needs for sustaining human life
itself, such as food, water, warmth, shelter and sleep. Untill these needs are
satisfied to the degree necessary to maintain life other needs will not motivate
people.

2. Security, or safety needs : These are the needs to be free of physical


danger and of the fear of losing a job, property, food or shelter.

3. Affiliation, or acceptance needs : Since people are social beings, they need
to belong, to be accepted by others.

36
4. Esteem needs: According to Maslow, once people being to satisfy their need
to belong; they tend to want to beheld in esteem both by themselves and by
others. This kind of need produces such satisfaction as power, prestige, status
and self –confidence.

5. Need for self actualization : Maslow regards this as the highest need in the
hierarchy. It is the desire to become what one is capable of becoming to
maximize one’s potential and to accomplish something.

Maslow’s concept of a hierarchy to needs has been subjected to considerable


research. Edward Lowler and Lloyd Suttle found little evidence to support
Maslow’s theory that human need form a hierarchy. They did note, however, that
there were two levels of needs –biological and other needs and other needs
would emerge only when biological needs were reasonably satisfied. They found
that at predominated, while in other self-actualization needs were strongest.

McGregor’s Theory “X” and Theory “Y” :

Douglas MC Gergor developed a philosophical view of humankind with his


Theory X and Theory Y. These are two opposing perceptions about how people
view human behaviour at work and organizational life.

Theory X
People have an inherent dislike for work and will avoid it whenever possible
People must be coerced, controlled, directed or threatened with punishment in
order to get them to achieve the organizational objectives.
People prefer to be directed, do not want responsibility, and have little or no
ambition
People seek security above all these.

With Theory X assumptions, management’s role is to coerce and control


employees.

Theory Y
Work is as natural as play and rest

37
People will exercise self –direction if they are committed to the objectives (the are
NOT lazy).
Commitment to objectives is a function of the rewards associated with their
achievement
People learn to accept and seek responsibility
Creativity, ingenuity, and imagination are widely distributed among the
population. People are capable of using these abilities to solve an organizational
problem.
People have potential.

With Theory Y assumptions, management’s role is to develop the potential in


employees and help them to release that potential towards common goals.

Theory X is the view that traditional management has taken towards the
workforce. Many organizations are now taking the enlightened view of Theory Y.
A boss can be viewed as taking the Theory X approach, while a leader takes the
Theory Y approach.

Herzberg’s Theory of motivation

Frederick Herzberg and his associates categorized various needs of individuals


into two groups
1. Dissatisfies and
2. Satisfiers

Dissatisfiers : In the first group of needs are such things as company policy and
administration, supervision, working conditions, interpersonal relations, salary,
job security and personal life. These were found by Herzberg and his associates
to be only dissatisfied and not motivators. If they exist in a work environment in
high quantity and quality, they yield no dissatisfaction. Their existence does not
motivate in the sense of yielding satisfaction; their lack of existence would,
however, result in dissatisfaction. Herzberg called them maintenance, hygiene or
job context factors.

Satisfiers: In the second group, Herzberg listed certain satisfiers all related to
job content. They include achievement, recognition, challenging work,
Advancement and growth in the job. Their existence will yield feelings of
satisfaction or no satisfaction.

38
The satisfiers and disatisfiers identified by Herzberg are similar to the factors
suggested by Maslow as shown in the figure below.

The first group of factors, the dissatisfiers, will not motivate people in an
organization, yet they must be present or dissatisfaction will arise. The second
group, the job contents factors, Herzberg found to be the real motivators because
they have the potential of yielding a sense of satisfaction.

3.6 Co-ordination and control.

Need and importance of co-ordination.


A large-scale business consists of a number of departments in which a large
number of persons employed. Each department and employee has to contribute
harmoniously towards realizing the objective of the concern. Generally, the
larger the size of the enterprise, the greater is the need for co-ordination. The
need for co-ordination arises because of the following factors.

1. Large-scale business enterprises employing a large number of persons


require to co-ordinate the efforts or interests of individuals in pursuit of a common
purpose. Each individual is a unique and distinct personality and has his own
way of doing things. The departments and self-directed efforts of individual
members of the enterprise may move in opposite direction due to which the
enterprise may find it difficult to achieve its objectives. Sometimes, the method
adopted by an individual for going anything may even be detrimental to the
interests of the concern as a whole. It may also lead to chaos in the
organization. It is, therefore, necessary to acquaint the individual member in
clear terms with the enterprise goals and the methods to achieve them.

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2. If the efforts of employees are closely co-ordinate, their total accomplishment
will be far greater than the sum total of individual achievements. Co-ordination by
preventing duplication of efforts increases total production.

3. Large business enterprises consists of a number of departments such as


production, purchase sales, finance, personnel etc. Departmental heads who are
in charge of these departments are often in conflict with each other. To realize
the enterprise objectives, all departmental heads must act as well-balance team.
But very often, the departmental heads give so much importance to their
departmental objectives that they neglect the enterprise objective. Hence, to
make all departmental heads function as well-balanced team to realize the
enterprise objectives, there is need for co-ordination.

4. An enterprise employs persons of different types. Though they may be


working in the same type of work, some of them may have a strong personality,
others may be just frail. Some may be well-qualified and quick to grasp; while
some others may not be adequately qualified and also cannot grasp quickly. To
bring about a balance between these different degrees of qualities, there is need
for co-ordination.

5. The need for co-ordination is also felt because of the existence of line and
staff structure of organization in which the members often may not be clear as to
their basic role. There may be confusion as to where the staff authority ends and
line authority begins. Further, there may be friction between the line and staff
officers. All these would lead to the violation of the principle of unity of command.
Hence, there is need for the management to co-ordinate the functions of line and
staff authority.

6. Various other functions of management such as planning, organizing, staffing,


etc. can be effectively performed by means of co-ordination. It is said that co-
ordination is the key to these functions. Mooney and Reiley have rightly stated
that “Co-ordination is a force without which attainment of enterprise objectives
become difficult, if not impossible”. The importance of the function of co-
ordination in the management of an enterprise is so much that now it is not
regarded as a separate function of management. According to Koontz and
O‘Donnel, co-ordination is the very essence of management.

Tools for co-ordination

In order to make co-ordination effective, it should be based on certain


fundamental principles. They are:

1. Early start : There should be co-ordination even in the early stages of


planning and policy making. For example, there should be consultant among the
concerned officials while preparing the plan itself. By this, the task of adjustment

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and integration in the process of implementation of the plan will be easier and
also there would be any resistance from the concerned officials.

2. Direct contact: Co-ordination is easier by direct personal contract among the


people concerned. One special advantage of direct personal contact is that the
concerned persons can avoid misunderstanding or misinterpretation.
Co-ordination can be achieved more easily by direct interpersonal, vertical and
horizontal relationships of people in a business undertaking.

3. Continuity: Co-ordination is the basis of an organization structure and so long


as the enterprise continues to function, co-ordination is a must. Co-ordination
must start from the stage of planning and should go on all the time as it is a
continuous process.

4. Dynamism: There may be changes in the external environment, which


influences the activities of the business. Further, internal actions and decisions
may be changed or altered depending upon circumstances. In view of this,
co-ordination to modified to suit the changes in the external environment and
internal actions and decisions. In other words, co-ordination should not be rigid.
The achievement of co-ordination itself modifies the strength of the contending
forces and will create new conditions.

5. Simplified organization : The management may consider rearrangement or


reorganization of departments in order to have better co-ordination among the
department heads. The operations and functions which are closely related and
connected may be put under the charge of one executive and this would
facilitate the taking of necessary action for better co-ordination, even dissimilar
activities may also be put under one executive for ensuring effective
co-ordination.

6. Clear-cut objectives: Another requisite for securing effective co-ordination in


an enterprise is the clear-cut objective. The manager of different departments
should be clearly explained the objectives of the enterprise and also they should
be prevailed upon to work for the achievement of the common objective of the
enterprise. A clear cut objective and its effective communication to the heads of
different departments is bound to produce uniformity of action.

7. Clear definition of authority and responsibility : A clear definition of


authority and responsibility for each individual and department also facilitates
effective co-ordination in an enterprise. Clear-cut authority helps in reducing
conflicts among the different officers and also helps in making them carry out
their job with unit of purpose. Further, a clearly defined authority helps the
manager in case they violate the limits and for any other irregularities.

8. Effective communication ; For proper co-ordination there is also a need for


effective communication. Through communication, individual and departmental
differences can be resolved. Further effective communication helps in discussing

41
changes, adjustment of programmes, programmes future etc. In addition, there
will be a possibility for directing the efforts of the entire staff harmoniously
towards the realization of enterprise objectives, the various devices used for
communication are the personal contact, written communications, committee
meetings and group meetings.

9. Effective leadership: Effective leadership also helps in proper


communication. By effective leadership, co-ordination of the activities of the
people at all stages is ensured. Further, it creates confidence in the subordinates
and enhances their morale.

10. Effective supervisions : Though it is the duty of the top executive to see
that the subordinates perform their work as planned, he may entrust the task to
the supervisors. With the help of supervisors, any deviation from the planned
course of action can be easily located and immediate steps may be taken to
ensure that the activities of subordinates conform to the planned activities. Thus,
supervisors can also play an important role in achieving effective co-ordination.

3.6.1 Techniques of control

Establishing standards :
Plans are the yardsticks against which managers devise controls, the first step in
the control process logically would be to establish plan. Since plans vary in detail
and complexity, and the mangers cannot usually watch everything, special
standards are established. Standards are simply criteria of performance. They
are the selected points in an entire planning programme at which measures of
performance are made so that mangers can receive signals about how things are
going and thus do not have to watch every step in the execution of plans. Every
objective, every goal, every activity, every policy , every budget become
standards against which actual or expected performance might be measured.
The types of standards are a) Physical standards, b)cost standards, c) capital
standards d) Revenue standard e) program standards f) intangible standards
7) goals as standards and strategic plans as control points for strategic control.

Checking and comparing performance with standards


If standards are appropriately drawn and if means are available for determining
exactly what subordinates are doing, appraisal of actual or expected performance
is fairly easy. There are many activities for which it is difficult to develop accurate
standards. It may be quite simple to establish labour0hour standards for the
production of a mass-produced item, and it may be quite simple to measure
performance against these standards, but if the item is custom-made, the

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appraisal of performance may be a formidable task because standards are
difficult to set.

Taking corrective measure


An adequate system will disclose where failures are occurring and who is
responsible for them, and it will ensure that some corrective action is taken.
Control is justified only if deviations from plans are corrected through appropriate
planning, organizing, staffing and leading.

Budgeting and budgetary control


Budgeting is the formulation of plans for a given future period in numerical terms.
As such, budgets are statements of anticipated results, either in financial terms-
as in revenue and expense and capital budgets-or in non-financial terms as in
budgets of direct-labour-hours, materials, physical sales volumes, or units of
production. It has sometimes been said for example, that financial budgets
represent the dollarizing of plans. The various types of functional budgets are a)
Master budget b) Sales budget c) Production Budget e) Financial Budget f)
Capital Expenditure Budget g) Cash Budget h) Material and purchase budget I)
Direct labour budget.

As we have already discussed the budget as an” estimate of future requirements


about the activities of the concern for a particular period”, therefore, a process
known as budgetary control is very helpful which is a “process of comparing the
actual result with the corresponding budget data to know the actual cause of
differences”.

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4.0 Human Resources Management

4.1 Personnel Management


Personnel management may be defined as the planning, organizing, Directing
and controlling of the procurement, Development, compensation, Integration and
Maintenance of people (i.e., employees) for the purpose of contributing to the
organizational goals.

Functions of personnel management

Based on the definition of Personnel Management , it is generally recognized that


the following areas of the work situation in an industry are the province of the
Personnel Department, i.e., Personnel Manager and the staff of his department.
a) Procurement and Maintenance of adequate work-force as regards to both
number and quality of personnel.
b) Education and training of present employees
c) Maintaining satisfactory Personal contacts and employee relationships
e) Maintaining satisfactory group relationships
f) Maintaining employees safety
g) Maintaining employees health
h) Maintaining employees service activities (employee welfare)

Planning Manpower requirements

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Man power requirements are determined by comparing the supply against the
predicted demand and looking for manpower in future. This would give the
number of people recruited or made redundant and will form the basis for the
manpower plan. However the assumptions for the supply and demand forecasts
have to be modified for improved manpower utilization while drawing the
manpower plan.

Planning job requirements and description


Job description is a broad statement of the purpose, duties and responsibilities of
a job or position.

Job evaluation:
Equity in salaries of the persons working on the same job is essential in an
organization. Differences in pay lead to resentment which in turn increases
labour turnover; therefore a planned comparison of jobs is necessary to restrict
the concurrence of such situations. At this stage Job Evaluation technique
comes to help of the management.

Job evaluation is a systematic process of evaluating different jobs of an


organization. Job evaluation decides the relative values of different jobs in an
organization and helps to formulate an appropriate and uniform wage structure,
clarifying the responsibility and authority connected with the job. It also provides
a basis for recruitment, selection, training, promotion and transfer of the
employees, adding to job satisfaction and minimizing the labour turnover.

Methods commonly used in job evaluation are 1) Ranking method 2)


Classification method, 3) factor comparison method and point method.

Recruitment : The first step in the development of a concern’s personnel activity


is to employ the right type of persons to operate the organization. If the
organization does not possess right kind of people, it leads to lowered production
and employee morale and increased absenteeism and labour turn-over.
Employing people is one of the most critical steps in the establishment and
growth of a business. Recruitment may be described as the process of getting
potential employees willing to apply for a job with the concern or firm.

Selection : After attracting a number of applicants through various source, the


next stage is the selection process. The difference procedural steps involved in
the selection process are
a) Job description
b) Application forms
c) Employment tests
d) Interviewing
e) Physical examination and
f) Induction or orientation

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Training : Training of employee is an absolute necessity . Training is an ever-
continuing process in all concerns and it is employed as technique of control.
The main of object of all individual training is to prepare employees to do
efficiently in their field or to do another job equally well. Training imparts
knowledge and develop employees aptitude and skill. It also prepares an
individual so that he can accomplish his individual task efficiently and effectively.

Today due to modern advancement and mass production a very high skill is
required which can only be developed by proper training. In short training is a
must for fitting employees to the job.

Placement : Once the selection and training are over, placement of employees
is to be made with due care. Many industries stop with selection of employees.
Few industries go for training of employees and only a very few industries
consider and adopt placement of employees. Placement of employees is placing
the right man for the right job. There should not be a square peg in round role.
The employees must be fitted in right job. A good turner is to be placed to work
on turning job. If a proper placement of employees is not given due weight age
the industries going to face loss in many things. So after the selection and
training employees, placement of employees is to be made.

Counseling : For each job, the right man should be selected. The task of filling
jobs with right people is known as vocational selection. The employee should
have the job, which suits him. The task of guiding person as to what sort of job he
should have is known as counseling or vocational selection. An analysis of the
occupations, which they may adopt, is undertaken with a view to find out the
factors necessary for success at these jobs. Intelligence tests are designed to
indicate the mental caliber of the candidates and on the basis of the result some
jobs are dropped from consideration as being higher or lower than the candidates
general mental level.

Merit rating or performance appraisal : Job evaluation evaluates the job, Merit
rating assess the merit of the person doing the job. Merit rating determines the
extent to which an employee meets job requirements. Merit rating decides the
reward an employee should get in addition to his wages, depending upon the
merits. Merit rating is a systematic and orderly approach to assess the relative
worth of an employee working in an organization in terms of his job performance,
integrity, leadership, intelligence, behaviour etc., Merit rating is commonly
referred to as Employee Rating, Employee appraisal or staff reporting. Methods
used are a) Rating scale method b) Check list method

Career Planning : Career planning means helping the employees to plan their
career in terms of their capacities within the context of organizational needs. It is
described as devising and organizational system of career movement and growth
opportunities from the point of entry of an individual in employment to the point of
his retirement.

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4.2 Leadership :

Leadership is the ability to get desirable action, voluntarily and without force from
The followers. Leadership means to inspire confidence and trust so that there is
maximum co-operation from the employees within the control of a manager.
Leadership may also be defined as the process of influencing a group in a
particular situation at a given point of time and in a specific set of circumstances
that stimulate people to strive willingly to attain objectives of an enterprise.

Difference leadership styles

a) Authoritarian or Autocratic Leader


This type of leaders drive their workers through command and by developing fear
in them. Such leaders give orders; assign duties, and responsibilities without
consulting their employees or caring for their opinion.

b) Democratic or Consultative leader


These leaders always work according to the wishes of their followers. They
frame the policies and procedures in consultation with their workers. Democratic
leadership motivates subordinates to work and improve their attitude towards
work. It promotes healthier relations between workers and management. It
minimizes grievances and raises the morale of the workers.

c) Persuasive Leaders :
Such leaders influence his followers due to their personal contacts, to join with
them in getting the things done. He gives directions personally and whole lot of

47
workers responds to his call, because they love and respect him and have full
confidence in him.

d) Functional Leaders :
Such leaders because of their expert knowledge and win the confidence of their
followers by their superior knowledge.

e) Free Rein or Laissez-Faire Leaders


These leaders do not lead the subordinates, but leaves them entirely to
themselves. The responsibility for accomplishing most of the work lies on the
shoulders of the subordinates. The subordinates group establishes its own goals
and solves its own problems. The contribution, he intervenes least and avoids
power. This sort of leadership can work only if the subordinates are highly
educated, brilliant and they possess good sense if responsibility.

f) Labour leaders
These leaders come to prominence due to their qualities of speech, behaviour
and action. They are capable to convince the people and bring them around their
view point. They then organize themselves into trade unions.

g) Administrative leaders
These leaders obtain this position by virtue of their ability, experience and
association with the organization. These leaders are responsible for formulating
or assistance in the formulation of policies. Programmes and plans of the industry
and are also responsible for its execution. They should work in close co-
operation with the worker leaders.

Qualities of Good leader

a) Intelligences and Technical Knowledge


A good leader must have an intelligence which is more than that of his followers.
He must be able to understand and solve the problem in accordance with the
prevailing situation. He must also be technically sound, i.e. planning,
organization, co-ordination and control.

b) Initiative
He must initiate good activities and must be capable of taking initiative.

c) Decisiveness
He must be able to make proper decision at proper time ad must stick to it. Lack
of decisiveness results in loss of efficiency.

d) Persuasiveness
Pursuance is also a good quality of a leaders which helps him in implementing
his decision, order etc.

e) Responsibility

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A leader must be able to know and fee his responsibilities. He must not shrink
his responsibilities and must be in a position to take the burden of decisions on
his shoulder.

f) Ability to inspire.
A leader has to inspire his inspire his men so as to get the work done from them.
Best inspiration is from the conduct and personality of the leader and the
standards set by him

g) Social Consciousness
He must always realize that he is dealing with human beings, who are also
having feelings of social status and self respect.

h) Positive attitude
He should always have a positive attitude towards the problems of the industry
and workers.

i) Other qualities
a) Faith and respect from followers b) Enthusiasm c) Affection d) Skill in
imparting instructions e)Vigilant f)Open mindedness g)Independent thinking.

Supervisors role in the organization and functions and qualities of good


supervisor

Supervisor is a member of lower level management. His role of functions can


be categorized as technical functions and personal functions.

i) Technical functions are


a) Planning and organizing – He has to plan for the present and future works
of his sections. He has to obtain the right type of raw materials at right
time and in right quantity. The object of planning is to ensure full utilization
of Men, Materials and Machines.
b) Maintenance of records – like productions, progress of productions,
wastage of materials, time taken for production, status and efficiency of
machines etc. He has to send regular reports to his superior (works
manager) about observations and actions taken by him.
c) Maintenance of quality - He is responsible for the quality of production.
To maintain the quality, he has to look after the proper placement of men.
That is right person for the right job and taking more care regarding the
quality of raw material, tools, equipments etc., so that quality of the
product is maintained as per standards.
d) Maintenance of machines – Supervisor is responsible for proper
maintenance of machines, equipments, tools etc. in his department. He is
expected to know certain basic points regarding the maintenance of
machines as per operation and maintenance manuals.

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e) Maintenance of control – Effective supervision means control at many
points right from the control of men to control of wastages of materials.
Wastages can be minimized, if supervisor is careful. He should analyze
the working before the start production so that there is minimum wastages.
f) Maintenance of working condition – This is most important in the part of
supervision. Every supervisor has to look after lighting, ventilation and
cleanliness of his section. He should ensure safer working conditions by
providing proper guards and fencing and advice the workers regarding
safety practices.

ii) Personal functional

a) Selection of workers - Earlier days, supervisor did not have a say in selection
of workers. But now-a-days the supervisor is given a place in the recruitment
committee for the selection of workers. During the selection, supervisor should
bear in mind the standards, experience, qualification etc. of the candidate to be
selected.

b) Training and development – After selection, supervisor has to ensure that the
training is imparted to the workers about operations, manufacturing processes
etc.

c) Placement - After training, suitable placement to the worker is made by the


supervisor, since he knows the job details and number of persons required to
perform that job.

d) Induction – This is inducting the workers for a particular job, and help him to
adjust for the new

e) Communication – It is an important function of the supervisor and supervisor


with bad communication abilities may result in workers failure in performing a
particular job. Hence he should be able to convey the correct information,
instructions which are complete in all respects without ambiguity in simple
language so that work is performed successfully.

f) Job evaluation and consideration of merits - Supervisors of big organization are


expected to help in job evaluation of workers, where strength is considerably
high. When there are large number of workers in a factory, it will be difficult for
the management to know about the individual performance and their merits and
hence supervisor should make suitable recommendations after job evaluation.

g) Dealing with employers and employees – This is a difficult job on part of the
supervisor and should be handled tactfully. Supervisors should listen to the
problem of workers, solve the problems and redress the problem, at the same
time he has to fulfill requirements of production while dealing with the higher

50
executives and implement their directions without affecting the sentiment of
workers.

4.2.1 Team Building

Definition of Team
A team is a small number of people with complementary skills who are committed
to a common purpose, common performance goals, and an approach for which
they hold themselves mutually accountable.

Importance of Team Building


A team includes few people, same as a small group described in the previous
chapter, because the interaction and influence processes, vital for a team to
function, can only occur when the number of members is small. When more
people are involved, there will be difficulty in interacting and influencing each
other. Teams include people with mix of skills appropriate to the task to de done.
Having a common purpose and common approach is particularly important for
teams, because it is often the approach that differentiates one team from others.

Characteristics of Effective Teams


The following are the important features of teams
• They are empowered to share various management and leadership
functions
• They plan, control and improve their own work processes.
• They set their own goals and inspect their own work
• They often create their own schedules and review their performance as
group.
• They may prepare their own budgets and coordinate their work with other
departments
• They usually orders materials, keep inventories and deal with suppliers
• They are frequently responsible for acquiring any new training they might
need.

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• They may hire their own replacement or assume responsibility for
disciplining their own members.
• Team work depends on cooperation, trust , training and rewards.

Types of teams

In view of their wide spread popularity, various types of teams have come to stay.
Teams can be classified by functions they discharge. The most common type of
teams are work teams, problem solving teams, management teams and virtual
teams.

Work Teams are primarily concerned with the work done by the organizations,
such as developing and manufacturing new products, providing services for
customers and so on. Their principal focus is on using the organisation’s
resources effectively. Towards this end, work teams are highly empowered.

Problem Solving Teams are temporary teams established to attack specific


problems in the work place. After solving the problems, the team is usually
disbanded, allowing members to return to their normal work. Problem solving
teams are often cross-functional, meaning that team members come from
different functional areas. They offer recommendations for others to implement.

Management Teams consists of managers from various areas and co-ordinate


work teams. They are relatively permanent because their work does not end with
the completion of a particular project or the resolution of a problem.
Management teams must concentrate on the teams that have the most impact on
overall corporate performance. Their primary job is to coach and counsel other
teams to be self managing by making decisions within the teams. Second most
important tasks of management teams is to co-ordinate work between work
teams that are interdependent in some manner.

Virtual Teams are the teams that may never actually meet together in the same
room their activities take place on the computer via teleconferring and other
electronic information systems. Engineers in U.S for example can contact
audibly and visually with counterparts all around the globe, sharing files via
internet, electronic mail and other communication network. Decisions are made
much faster with electronic communication systems and team members can
move in or out of a team as the issues demand.

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4.2.2 Creativity

Definition of creativity
Organizational culture promotes creativity and innovation. Creativity refers to the
process by which novel but situationally appropriate outcomes are brought about.
The essence of creativity is the element of freshness, originality and novelty that
is also appropriate to the context.

What is Creativity?

An Ability. A simple definition is that creativity is the ability to imagine or invent


something new. As we will see below, creativity is not the ability to create out of
nothing (only God can do that), but the ability to generate new ideas by
combining, changing, or reapplying existing ideas. Some creative ideas are
astonishing and brilliant, while others are just simple, good, practical ideas that
no one seems to have thought of yet.

Believe it or not, everyone has substantial creative ability. Just look at how
creative children are. In adults, creativity has too often been suppressed through
education, but it is still there and can be reawakened. Often all that's needed to
be creative is to make a commitment to creativity and to take the time for it.

An Attitude. Creativity is also an attitude: the ability to accept change and


newness, a willingness to play with ideas and possibilities, a flexibility of outlook,
the habit of enjoying the good, while looking for ways to improve it. We are
socialized into accepting only a small number of permitted or normal things, like
chocolate-covered strawberries, for example. The creative person realizes that
there are other possibilities, like peanut butter and banana sandwiches, or
chocolate-covered prunes.

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A Process. Creative people work hard and continually to improve ideas and
solutions, by making gradual alterations and refinements to their works. Contrary
to the mythology surrounding creativity, very, very few works of creative
excellence are produced with a single stroke of brilliance or in a frenzy of rapid
activity. Much closer to the real truth are the stories of companies who had to
take the invention away from the inventor in order to market it because the
inventor would have kept on tweaking it and fiddling with it, always trying to make
it a little better.

The creative person knows that there is always room for improvement.

Importance of creative thinking


When we need to come up with an idea to solve a problem, it would be helpful to
do some research to see what other people have thought about the topic. If there
are already good solutions that can be used, then we don't have to waste our
time to reinvent the wheel. But even if the problem has not been solved, we need
to understand more about the relevant topic to obtain more background
information. If you are a scientist who wants to design a better robot, you need to
know what other people have done and where the current limitations are. If you
have to help market a product, you need to know more about the target audience
and the product in question, and to learn more about advertising. Whatever topic
we are interested in, there is a lot of information that we can gather. Some of the
information might be specific, like how much time and money do you have for
making the robot. Other information might be general, like the principles
governing machine vision, speech recognition, etc.. You need to find some
systematic way to gather and organize the relevant material.

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4.3 Labourers participation in Management

For higher productivity and sound industrial relations, it is extremely important to


give the workers the place of partners in industry. The workers must be
increasingly associated with the management of industrial undertaking so that
they develop an awareness of problems of industry and begin to feel that they
have a positive contribution to make to the operation of their units. Such
association with management should gradually give place to labour participation
in Management. Several methods have been suggested and tried for ensuring
workers participation in management. More important among them are
1) Co-partnership 2) Suggestions scheme 3) Joint consultation.

Discipline
Employee discipline is the backbone of industrial relations. In fact the function of
management is to keep an enterprise going on smoothly, efficiently and
profitably. Discipline means orderliness, obedience and maintenance of proper
subordination among employees and a check or restrain on the liberty of
individual. It is the training that corrects, moulds and strengthens the individual
behaviour. It is also a force which promotes an individual or group to observe
certain rules, regulations and procedures that are considered necessary for the
attainment of an objective. There are two types of discipline negative discipline
and positive discipline.

Negative discipline is the traditional aspect of discipline and is identified with


ensuring that subordinates adhere strictly to rules and punishment is meted out in
the event of disobedience or indiscipline.

In Positive discipline subordinates comply with the rules not from fear of
punishment, but from the desire to cooperate in achieving the common goal of
the organization.

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Production
Production in any process or procedure developed to transform a set of input
elements like men, materials, capital, information and energy into a specified set
of output elements like finished products and services in proper quantity and
quality, thus achieving the objectives of an enterprise. The essence of
production is the creation of goods, may be by the transformation of raw material
or by assembling so many small parts (as in TV or Scooter manufacturing).
Production in every day life can be noticed in factories, hospitals, offices etc. The
four recognized factors of production are nature, labour, capital and enterprise.

Quality Control

Quality: Quality is a relative term and is generally explained with reference to


the end use of the product. It is the fitness for purpose.

Control : Control is a system for measuring and checking (inspecting) a


phenomenon. It suggests when to inspect, how often to inspect and how much
to inspect. In addition, it incorporates a feed back mechanism which explores the
causes of poor quality and takes corrective action

Productivity
Productivity is a method of reduction in wastage of resources. Resources may
be men, material, machines Money, Power, Space, Time etc. Productivity
implies the development of an attitude of mind and constant urge to find better,
cheaper, easier, quicker and safer means of doing a job, manufacturing a product
or providing a service.

Productivity is the ratio of output to input of the factor of production. Output is


obtained by the combined input of number of factors such as Men, Materials,
Money, management, methods of production, etc. The most common unit of
Input is man hours. The productivity due to this is known as “ Labour
Productivity”. It is given by P = O/M, where P = Labour productivity, O = Unit of
output, M = Man hours Input.

Difference between Production and Productivity

Production is a sequence of technical processes. It is defined as an organized


activity of transforming raw material into finished products. It is also defined as
the total number of products produced in unit time. If 5000 units are produced in
a year, the production is 5000 units.

Productivity is increased to have better standard of living. If productivity is


increased, then the production is increased. On the other hands, if the
production is increased, the productivity may or may not be increased. This is

56
understood by the following example. There are two firms manufacturing similar
products with the same input resources like Money, Men, Machines, Materials
etc. If one firm A is producing 5500 units in a year, and the other firm B is
producing 5000 units in a year, then we say the productivity of firm B. Hence
productivity, an element of efficiency is added to resources.

Factors affecting productivity can be classified into external factors and internal
factors.

a)External factors
National resources, Availability of capital, Taxation, Government laws, Market
competition, Technical and Training facilities

b) Internal factors
Plant layout, material handling, product design, workstudy techniques, quality
control, management techniques

How to increase productivity


To increase productivity in an industrial enterprise, the following should be
minimized.
Wastage of material, machine breakdowns, wastage on part of men and
machines, excessive handling, poor management, poor working conditions and
political interference.

Measurement of productivity
Productivity is the ratio of output to input. The units may be in terms of money,
man-hours, materials etc.,

a) In terms of Money

Productivity = Output in Revenues from Production


------------------------------------------------------------------
Expenditure on Laobur, capital on raw material

Or Productivity = Profit
-----------------
Investment

b) In terms of Indirect Labour to Direct Labour

Productivity = Number of indirect labour hours to serve direct labour


-------------------------------------------------------------------------
Number of direct labour hours.

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c) In terms of standards hours

Productivity = Production in standard hours


________________________
Actual Man hours

This is also known as Machine Productivity

d) Materials Productivity

Productivity = Material cost


___________
Numbers of units produced.

e) Selling, Distribution or Administration Productivity

Productivity = Selling, distribution or Administrative cost


______________________________

Total cost

Prevention of accidents.
An Industrial accident may be defined as an event, detrimental to the health of
man, suddenly occurring and originating from external sources which is
associated with the performance of a paid job, accompanied by a injury, followed
by disability or even death. An accident my happen to any employee under
certain circumstances.

An accident is an unplanned incident and for each such incident there is usually a
specific cause or causes if one could but discover them. Accident may be
caused due to
1. Technical causes - unsafe conditions which includes mechanical and
environmental factors
2. Human causes – unsafe acts like personal factors.

Accident prevention is highly essential in an industry, in order to


i) prevent injury to and premature death of employees
ii) reduce operating and production costs
iii) have good employer-employee relations
iv) high up the morale of employees.
Above all, prevention of accidents is a true humanitarian concern.

Role of management

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Accident prevention does not occur by itself, there should be consistent
implementation of safety programmes emphasizing the need for the following
where the role of management is necessary.

1. Safer workplace layout and working conditions


2. Safe material handling
3. Personal protective devices
4. Safety measures essential in industry

Safety Committee

A safety committee may consists of executive, supervisors and shop floor worker.
It was observed that those organizations which had safety committees had less
accident than those without such committees. The safety committee aid in
developing safety consciousness as well as it is a policy making body on safety
matters. The safety manager requires a degree of firmness and ready
discrimination to exclude personal and union matters.

Safety committees should be assigned with the following responsibilities.

1) it should be assigned specific problems and duties such as planning safety


rules and publicizing them etc
2) Its members should be asked to go to the shop floor and observe the
workers regarding safety practice.
3) It should be asked to report periodically about any further improvements
required regarding safety.

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5.0 Industrial Relations and Industrial legislations

5.1 Industrial Relations

Introduction: Industrial relation represents the relationship between the employer


and employees in an Industrial undertaking. If these relations are strained,
industrial disputes occur and industrial progress suffers. The employer suffer
losses, the workers do not get wages. Hence in the interest of both the employer
and employees, as well as society in general, industrial relations should be
cordial and harmonious.

Industrial Disputes :

Strike – A common form of Industrial dispute is strike which means abstaining


from work until the demands are met. Usually strikes are done for one of the
following purposes

a) getting their demands sanctioned


b) Preventing changes, which is harmful to the workers
c) Getting recognition for the union.

Sit down strike – In this, workers go to the work place, but refuse to work. They
do not leave the premises of the factory until the strike is over.

Go slow or slow down – In this, workers continue to work, but at a much slower
rate, thus slowing down the production. Since they do not totally abstain from
work, they are entitled to pay for the period of slow down

Picketting – The workers or their sympathizers place themselves at the


entrances of the factory, causing obstruction to people who want to go in or come
out. These person are termed “pickets” and the method is know as “picketing”

Gherao – In this workers enters the room or chamber of the officer, and do not
allow the officer to leave his room for a considerably long period so as to press
for their demands.

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Lockout – It is opposite procedure of strike and consists of closing of factory by
the employer because of a dispute with the employees and refusal of entry to
them.

Causes of Industrial Disputes


a) If industrial work is done under severe restrictions and control, the worker
looses his freedom and discontented
b) If the workers feel that the remuneration they get for their labour is not
sufficient.
c) If the employer refuses to pay bonus
d) If the employer refuses to recognize trade union
e) Due to retrenchment and discharge of employees
f) Due to unsatisfactory working conditions, hours of work, lack of welfare
measures.

Settlement of Industrial Disputes

The methods adopted are

a) Collective Bargaining - the process of direct negotiation on a collective or


group basis between the representatives of employers and their employees for
the settlement of disputes. The mutual rights and obligations of both parties, that
are agreed to them through negotiations are set down in the form of an
agreement or contract, which is legally binding on them. The matters generally
dealt through collective bargaining are
i) Recognition of union
ii) Workers participation in the management
iii) Wages and other benefits
iv) Procedure for disciplinary action
v) Accident and safety
vi) Hours of employment
vii) Pension, sickness, medical facilities etc.

b) Conciliation and Mediation.


If collective bargaining fails, this method is adopted. Conciliation consists of a
series of conferences, including informal sitting between representatives of two
parties, which are designed to create a friendly atmosphere with give and take
attitude to settle the differences. When the conferences are held with an outsider
as chairman, the process is known as “Mediation”. The presence of an outsider
or third party acts as a moderating influence on the two contending parties.

c) Arbitration
When the above two methods fail, then this method can be adopted. In this a
third person is chosen as the ‘Arbitrator” by agreement between the employer
and employees. He gives a hearing to both parties and offers his solution to the
dispute.

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In case of “Voluntary Arbitration” the obligation to abide by his decision is moral
one. Under compulsory Arbitration, the parties have to abide by it under
compulsion of law.

5.2 Trade Unions

Most of the workers are ignorant and require guidance and advice from persons
who have the genuine interest of the workers. Each worker, by himself is unable
to fight against the injustice done to him. As a group, the workers can organize
themselves, and can settle terms with the employers in a better way.

The association formed by the workers is known as “ Trade Union”. Trade union
may be defined as an association or union of workers engaged in particular
trade and formed chiefly with the object of helping the members in times of
distress and getting their grievances settled and legitimate rights established.

History of Trade Union Movement in India.


In old management, the workers faced all sorts of difficulties and had many
grievances. When they represented individually to the management, the
grievances were not redressed, rather they were even punished. This wrong
attitude of the management resulted in the workers to join and collectively
approach the management and get their grievances redressed. Thus the trade
union movement started.

Indian Trade union Act 1947


As per this act, any seven or more workers in a factory may form a union and by
subscribing their names can apply for registration with Registrar of Trade Union.

Registration

Rights and Liabilities


i) To collect the membership fees in the premises of the factory
ii) To put notices of the union in the premises of the factory
iii) To use general funds for specific purpose
iv) To conduct strike by peaceful methods
v) To raise funds for political purpose at the option of members
vi) To send the Registrar every year, an audited settlement of receipt and
expenditure.

Recognition
If the employer refuses to recognize a trade union, the mater is referred to the
labour court, appointed by the Government.

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5.3 The Indian Factory Act, 1948

Definition :
The Act defines the followings:
Adult, adolescent, child, calendar year, young person, week, power, prime
mover, transmission machine, manufacturing process, worker, factory and
occupier.

License and Registration


Before a factory can be started, previous permission must be obtained by a
factory inspector and the factory has to be registered along with the license fees.

Health Provisions :
This act prescribed the following provisions to maintain the health of the workers
and reducing the possibilities of injuries to the workers.

i) Cleanliness : Every factory should be kept clean from gases and fumes

ii) Ventilation and temperature : Adequate ventilation and prevention of


excessive temperature. This is only possible by circulation of the fresh air in the
work room and by insulating the hot parts of the machinery.

iii) Artificial humidification : In case of artificial humidification, the process,


must be of prescribed standard and water used for such humidification shall be
clean and free from dust.

iv) Over crowding : No room in the factory shall be over crowded. This can be
prevented by providing sufficient space to the worker.

v) Lighting : Sufficient and suitable lighting whether artificial or natural or both


shall be maintained at working place or passage.

vi) Drinking water : Drinking water should be made available during the working
hours and they should be kept at suitable points

vii) Bath rooms: If the works in the factory involves the dirt, sufficient bath
rooms shall be provided.

viii) Latrines and urinals : There must be separate latrines and urinals for
female and male workers. There must be one Latrine for every 2- female

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workers and one latrine for 20 to 100 male workers. They should be constructed
in prescribed norms.

ix) Spittoons : Sufficient number of spittoons shall be kept at convenient places


and they shall be cleaned and washed regularly.

Safety provisions

The following safety provisions must be provided and maintained.

1) Fencing of machinery
The following should be properly fenced
1. Every moving part of machine fly wheel
2. Head race and tail race water turbine.
3. Every part of an electric generator, a motor or rotary convertor, every part
of the transmission should be safeguarded.

2) Work on or near machinery in motion


No woman or young workers are allowed to clean or lubricate any part of prime
mover or transmission machinery when it is in motion. This work is done by
specially trained adult male worker wearing tight fitting clothing.

Devices for cutting of power from running machines in emergency shall be


provided.

3) Casing machinery
To prevent injuries to the worker every set screw, bolt or key on any revolving
shaft, spindle, wheel or pinion shall be sunk, encased or otherwise effectively
guarded. Every toothed or friction gearing shall be completely encased.

4) Hoists and lifts


Every hoist and lift shall be tested and inspected for its strength before use and it
should be marked with maximum safe working load. They should be sufficiently
protected by an enclosure fitted with gates

5) Lifting machines, chains ropes etc


Cranes crab winches, pulley blocks etc, are the lifting machines, these should be
of good construction and adequate strength. They should be maintained well
and they should be inspected once in a year atleast.

6) Revolving machinery
In case of revolving machineries, a notice should be affixed as regards its
peripheral speed and as regards the speed of the shaft of the spindle upon which
the grinding wheel is mounted.

7) Excessive weights

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No person should be allowed to lift the heavy machinery, which may cause him
injury, and they should be allowed to lift the weight as prescribed by the State
Government

8) Protection of eyes
To protect the eyes against watching and dressing the metal or stone the goggles
and screens should be used.

9) Precautions against dangerous fumes


No person shall be allowed to enter the space where there is a dangerous fume
as it causes risk to the person.

Suitable precautions should be taken as prescribed to protect the workers


against dangerous fumes

10) Precautions against fire


To protect the worker against fire, suitable precautions as prescribed should be
provided.

Welfare Provisions
Under this provision following facilities should be provided.

i) Washing facilities – Adequate and suitable washing facilitiy for male and
female should be provided separately.

ii) Sitting facilities – Suitable arrangements for sitting should be provided for the
workers who work in standing position.

iii) First aid appliances – At least one first aid box containing the prescribed
contents for every 150 workers should be provided. Foe every 500 workers there
should be one ambulance room with necessary equipments.

iv) Canteen – A canteen should be provided in a factory where 250 workers are
working

v) Shelter, rest rooms and lunch rooms – This facility should be provided in a
factory where more than 150 workers are working with suitable drinking water
facility.

vi) Creches – If there are more than 30 female workers suitable room or rooms
should be provided for the use of their children.

vii) Welfare Office – Welfare officers should be appointed in factories employing


more than 500 workers.

65
Working hours
i) Hours of works : No worker is allowed to work in a factory for more than 48
hours in a week. There is at least half an hour interval for 5 hours of working.
Working hours should not be more than 10 ½ hours per day inclusive of rest
intervals. It may be extended to 12 hours with the special permission of the Chief
Inspector.

ii) Holidays : No worker is allowed to work, for more than 10 days continuously
without a holiday, and there is a holiday on Sunday unless the worker enjoys
holidays for whole day immediately after three days or before three days of
Sunday

iii) Over time wages : If a worker works for more than 9 hours per day or
48hours per week he should be paid over time wages for over time at twice the
rate of his ordinary wages.

iv) Restriction on double employment : Double employment is not allowed to


any employee.

v) Employment of women : Female workers are only allowed to work in


between 6.00 a.m. to 7 p.m.

Employment of young persons


No child under 14 years of age shall be allowed to work in any factory. A child
who has even completed his 14 years of age shall not be allowed to work in a
factory unless he carries while at work a token giving reference to certificate of
fitness, which is given by a certifying surgeon after examining him. No child shall
be permitted to work for more than four hours on any day; and during the night,
i.e, 10 p.m. to 6 a.m.

Register of child workers indicating their particulars and nature of work shall be
maintained by the factory manager and be made available to Inspector at all
times during hours of work.

Annual leave with wages


The worker should be paid for the holiday in week. If a worker works
continuously for 240 calendar days he is entitled to get earned leave benefit.

Dangerous operations
Proper safeguard should be provided against any dangerous operation which
causes the injury to the worker. Such dangerous operations may also be
restricted and in such cases women workers, adolescents, children are prohibited
to work.

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Accidents and diseases
If a worker is met with an accident which causes him bodily injury and due to
which he is unable to work for more than 48 hours immediately following the
accident, the manager of a factory or the doctor who is attending the patient has
to send the report to the factory inspector.

Penalties
In case of any contravention of any of the provision of this act, the occupier and
factory manager shall each be guilty of an offence and punishable with upto 2
years of imprisonment or fine up to Rs.100,000 or both.

If contravention continues after conviction, there will be a fine of Rs. 1000 per
day. After being convicted for an offence, if the person does contravention of the
same provision again, he shall be punishable with imprisonment upto 3 years, a
fine upto Rs.10000 3 lakhs or both.

An occupier Manger shall be punishable with imprisonment upto 6 months or fine


upto Rs.10,000 or both if he fails to produce register or other documents on
demand by Inspector and prevents any factory worker from being examined by
the Inspector. If any worker contravenes any provision of the act, he shall be
punishable with fine upto Rs. 500.

No worker should misuse any appliance provided for the purpose of securing
health, safety and employee welfare, if done so he shall be punished with up to 3
months imprisonment of a fine of Rs.100 or both.

No Inspector should disclose any information relating to manufacturing


processes, etc which comes to his knowledge in course of his official duties. An
inspector who does so shall have up to 6 months of imprisonment or a fine of Rs.
1000 or both.

Miscellaneous
The manager of the factory may appeal to the next higher authority against the
order of the factory inspector within 30 days from the date of serving the order.

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5.4 Payment of wages Act 1936

The payment of Wages Act was enacted in 1936 and it came into force in March
1937. The Act was passed to give effect to the recommendations of Royal
commission on Labour.

Object
The object of this Act is to regulate the payment of wages to the specified classes
of persons employed in certain industries and to remove irregularities in payment
of wages and unauthorized deductions from wages by the employers.

This Act defines the


i) Industrial establishment and
ii) Wages

Definition
Industrial establishment means any
i) Tram way service or motor transport service
ii) Air transport service
iii) Dock, Jetty
iv) Mine, quarry or oil filed
v) Plantation
vi) Workshop, where articles are produced with a view to their use
vii) Establishment, where construction, development or maintenance of
buildings, roads, bridges, canals, or water works relating to generation,
transmission and distribution of electricity is being carried out.

Wages means all remuneration expressed in terms of money payable to persons,


while in employment and includes a) basic wages b) D.A c) Bonus d) Payment
under any award or order of court e) Over time allowance f) Leave salary

Main provisions of the Act are as mentioned under:

Methods of payment of wages

1) Responsibility of payment of wages


Ever employer shall be responsible for the payment to the persons employed by
him at all wages required to be paid under this act.

2) Time of payment of wages


Any industrial establishment employing less than 1000 workers must make the
payment of wages before the expiry of 7th day after the last day of the wage
period.

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If there are more than 1000 workers, the wages should be paid before the expiry
of 10th day after the last day of the wages period.

If an employee is terminated, his wages should be paid before the expiry of the
second day from the day on which the employee is terminated.

The payment should be done in current coins and in currency rates and not in
kind.

3) Fixation of wage period.


The wage period is fixed by the person who is responsible for the payment of
wages and this period will not exceed one month.

4) Maintenance of Register and Record


The employer should maintain the registers and records giving details of
payment and deductions if any and these registers should be maintained at
least for a period of 3 years from the date of entry.

Deductions from wages

The payment made by the employed person to the employee is considered as


deduction.

Any deduction made in the wages should be authorized by the Act.

The following deduction may be made:


i) Fines 2) Deduction for absence from duty 3) Deductions for damage
made by the workers 4) Deduction for the house accommodation 5) Deduction
for income tax 6) Deduction for recovery of advance made to him 7) Deduction
for P.F and payments co-operatives to societies.

Fines

Fine should not be imposed on worker till it is approved by the prescribed


authority.

While imposing fine on an employee a sufficient times should be given to him to


show against the fine.

The maximum fine amount should not exceed thirty second part of the wage in
on wage period.

The fine should be recovered within 60 days from the date of imposing the fine
on an employee.

The fine recovered should be entered in register.

69
Inspection under the Act
Inspectors of Factories or otherwise appointed shall be responsible for the
enforcement of the Act. Such an inspector may examine or make enquiry to
ascertain whether the provision of this act are being observed. Inspector may
enter, inspect or search any factory premises and supervise the payment of
wages for the purpose of carrying out the objects of the act. The inspector can
seize such registers or other documents relevant in respect of an offence under
this Act.

Violation of the Act


Violation of the Act is subjected for punishment with a fine to the extent of
Rs. 500 to Rs. 1,000 and imprisonment of 3 months.

5.4 Workmen’s Compensation Act 1923

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This Act provides compensation to the employees for injury by accidents. Thus
this Act protects the workers as far as possible from hardship arising from
accidents. It came into force from 1st July 1924.

This act defines the following


1) Dependent 2) Partial Disablement 3) Total Disablement 4) Wages
and 5) Workman

Definition

i) Dependent means any of the following relatives of a deceased workman


namely,
a) a wife, a minor legitimate son and unmarried legitimate daughters, or a
widowed mother
b) If wholly or in part dependent on the earnings of the workman at the
time of his death, a husband , a parent other than a widowed mother, a
minor legitimate son , and unmarried legitimate daughter, a daughter
legitimate if married and a minor or if widowed, a minor brother, an
unmarried or widowed sister, a widowed daughter-in-law, a minor child
of deceased son.

ii) Partial Disablement : means, where the disablement is of temporary nature,


disablement as reduces the earning capacity of a workman in any employment in
which he was engaged at the time of the accident resulting in the disablement,
and, where the disablement is of a permanent nature, such disablement as
reduces his earning capacity in every employment which he was capable of
undertaking at that time.

iii) Total Disablement: It means such disablement whether of a temporary or


permanent nature, which incapacitates a workman from all work which he was
capable of performing at the time of accident resulting in such disablement.
Permanent total disablement shall be deemed to result from injuries where the
aggregate percentage loss of earning capacity amounts to one hundred percent
or more.

iv) Wages: It includes any privilege or benefits, which is capable of being


estimated in money other than traveling allowance or any other contributions paid
towards pension etc.

v) Workman : It means any person (other than a person whose employment is


of a casual nature and is employed otherwise than for the purpose of employers
trade or business) who is employed in any such capacity on monthly wages not
exceeding Rs. 500, which has been amended to Rs. 1000 from May 1976 by the
Government.

5.6 Employees State Insurance Act 1948

71
Introduction
This Act provides benefits to the workers working in a factory in case of sickness,
maternity and employment injury and makes provision for certain other materials.

Object
The benefits given to the workers under the Workmen’s Compensation Act of
1948 did not reach them due to the following reasons.

i) Lack of finance always made it impossible to file suit in the court of law
for claiming compensation for injury.
ii) The Act recognized only a very small number of diseases. There was
much delay in payment due to the clumsy administration.

With a view to remove these difficulties and defects met with the Compensation
Act, the Government of India passed the Employee’s State Insurance Act, in
1948.

Definitions

The law defines the following

Contribution :
Contribution of employee covered by this law is as specified in the law.

The contribution of employee depends on the rate of his emoluments and it is


deducted from his wages by the employer.

The responsibility of paying the employer’s and employee’s shares of contribution


is placed on the Principal employer.

The central and State Governments and local bodies give grants to the State
Insurance Fund.

Every Principal employer maintains the records, the submits and returns in
prescribed form

Inspectors are appointed by corporation to inspect the records and to investigate


the defects if any.

Benefits:
Following are the benefits provided by this Act.

72
i) Sickness Benefit : This benefit if extended to a person in case of his sickness
for the period not more than 56 days in the continuous period of 365 days. This
is given as the periodical payment.

ii) Maternity Benefit : This is made in the form of periodical payments to a


women in case of her confinement duly certified in the manner specified in the
Act.

iii) Disablement Benefit : This is extended to the insured workers who receive
injuries during their employment which cause disablement.

For the temporary disablement which lasts for more than seven days the amount
of benefit will be fixed at half of the average wages for the period of disablement.

In case of permanent disablement the persons are entitled to get pension for life.

iv) Dependents Benefits : If a person dies due to his (employment ) injury his
dependents will be paid benefit amount not exceeding one half of the amount
payable to the diseased person in case of permanent total disablement.

v) Medical Benefit : Free medical care is extended to the injured person during
his sickness period.

vi) Funeral Benefit : Payment not exceeding Rs. 1000 is made for the funeral of
the insured person, if he dies.
Scope:
If there is any dispute it will be set right by the Employee’s Insurance court. This
has all the powers of the civil court. An appeal may be filed in high court only
against the order of the insurance court within 60 days from the date an order.

Administration :
A medical benefit council is set up to advise on matters relating to administration
of medical benefits. Such council can investigate complaints against medical
practitioner (attending the workmen) in connection with medical treatment and
attendance

Contribution:
Contribution towards making the fund is mainly from the Employer and
Employees of the undertaking; though Central and State Governments also give
grants and donations in the funds. The employer deducts employees
contribution from their salaries and the same along with his own share, shall
submit in a bank nominated for the purpose. The ESI corporation may appoint
Inspectors to check the particulars about the amount submitted by the employer.

Finance and Audit


The Act makes provisions for creation of fund called Employee’s State Insurance
fund. The fund is created mainly by the contribution made by the employer and

73
the employees. The fund is held and administered by the corporation and utilized
for payment of benefits and provisions of medical treatment to workmen and their
families; establishment and maintenance of ESI hospitals and dispensaries etc,
payment of fees, allowances, salaries, etc to officers and servants of the
corporation and for many other purposes related to proper functioning of ESI
corporation.

Adjudication of disputes and claims


State Government shall constitute Employees Insurance court to decide all
matters, questions and disputes arising from the Insurance of workmen. Whether
any person is an employee within the meaning of this Act and if he has to pay the
contribution. Rate of contribution to be paid by principal employer. Rate of
wages of an employee. Right of any workman to any benefit and as to the
amount and duration thereof. Any dispute between the employer and ESI
corporation.

Penalties
For the false statement and representation there will be 3 months imprisonment
or Rs. 500 fine or both.
For failure to pay the contribution there will be six months imprisonment of
Rs.1000 fine or both.

Employee’s Provident Fund Act 1952

Introduction
This Act was passed in February 1952 and it came into effect from Nov. 1952.

74
It applies to every factory employing 20 or more persons. The Government can
also introduce the scheme in any other establishment employing less than 20
persons by giving at least ten months ‘notice’.

Provision
This Act makes provision for the future of the individual worker when he retires
and in case of his death in services, the benefit is extended to the dependent.

Salient features of Employees Provident Fund Scheme


The scheme is administered by a Board of Trustees at the Centre and similar
boards in States. The salient features of the Act is follows:

i) Contribution : The employee should contribute, as per this act, 8.4% of his
basic wage and dearness allowance etc. Employers are also to contribute at a
similar statutory rate. The employers are held responsible for remitting to the
fund, their respective contributions as well as the contributions of their
employees. The Government shall pay interest on the provident fund
contributions at a rate to be specified by it.

ii) The amount standing to the credit of any member in the fund shall not in any
way be capable of being assigned or charged and shall not be liable to
attachment under any degree or order of the court in respect of any debt due
from him.

iii) The amount standing to the credit of any member in the P.F at the time of his
death shall be paid to the nominee.

iv) The Government shall appoint the inspector to see that the Act is
participated.

v) Violation of the Act leads to 6 months imprisonment or Rs.1,000 as penalty or


both.

vi) The Act was amended in 1956 and gives power to Government to extend it to
new factories, establishments, also.

Industrial Disputes Act, 1947

This is an Act to make provision for the investigation and settlement of industrial
dispute and for certain other purposes.

1. Average Pay : It is the average of the wages payable to the workmen

75
a. In 3 complete months for monthly paid workman
b. In 4 complete weeks for weekly paid workman
c. In 12 full working days for daily paid workman

Preceding the date on which the average pay becomes payable, when the
worker has worked for less than this period, then the average pay is calculated
as the average of the wages payable to a workman during the period he actually
worked.

2. Award : “Award” means an interim or a final determination by an labour court,


Industrial tribunal or National Industrial tribunal.

3. Employer : Employee means


a.) In relation to an industry carried on by or under the authority of any
department of the central or state government, the authority prescribed in
this behalf or where no authority prescribed in this behalf or where no
authority prescribed in this behalf or where no authority is prescribed, the
head of the department.
b.) In relation to an industry, carried on by or on behalf of a local authority,
the chief executive officer of that authority.

4. Industry:
“Industry” means any business, trade, undertaking, manufacture or calling of
employers. It includes any calling service, employment, handicraft or industrial
occupation.

5. Industrial Dispute
“Industrial Dispute” means any dispute or difference between
Employers and employers or
Employers and workman or
Workman and workman or which is connected with:
The employment , or non-employment or the conditions of labour.

6. Dismissal of workers
A worker dismissed after obtaining the written permission from the regional
conciliation officer by the employer does not validate the dismissal but only
removes the ban on the right of the employer, his agent or manger to dismiss the
worker, even then dismissal may be industrial dispute.

7. Suspension of workman
A workman may be suspended pending enquiry and disciplinary action. If after
enquiry misconduct is proved, the worker is dismissed and is not entitled to any
wages of the suspension period.

In case when a worker is fully exonerated after the enquiry, he would remain in
service and would be entitled to his full wages of the suspension period.

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8. Closure
In case of “closure” employer closes the business and this closure means the
final and irrevocable termination of the business itself.

9. Lockout
“Lockout” means
a) closing of a place of employment
b) suspension of work or
c) refusal to continue to employ any number of persons employed.

The lockout indicates the closure of the place of business and not the closure of
the business itself as in “closure”.

Experience has shown the “lockout” is the weapon of employer to compel the
employees to accept his proposals, just in the reply of the strike, the weapon of
the employees to compel the employer to accept their demands.

10. Retrenchment
It is the termination of the service of a workman for any reason whatever except
as a punishment inflicted by way of disciplinary action.

It does not involve retirement of worker or termination of the service of a worker


on the ground of continued ill health.

11. Settlement
“Settlement” means a settlement, arrived at during the conciliation proceedings
and includes a written agreement between the employer and workmen.

12. Strike
“Strike” is refusal under a common understanding of any number of workers to
continue to work or to accept employment.

13. Workman
“Workman” means any person (including an apprentice) employed in any industry
to do any skilled or unskilled manual, supervisory, technical or electrical work for
hire or reward.

Authorities under this Act


1. Work committee
A works committee is constituted in any industrial establishment in which 100 or
more workers are employed and have been employed on any in the preceding 12
months by an employer.

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This committee consists of representatives of employer and workers but the
number of representatives of the employee should not be more than that of
worker.

Main duty of works committee is to promote the measures for securing and
preserving amity and good relations between the employers and workers

2. Conciliation officers
Conciliation officers are appointed by the State Govt. for the industries in a
specified area permanently or for a limited period.

Main duty of conciliation officer is to mediate in the settlement of industrial


disputes.

3. Board of conciliation
A board of conciliation is constituted by the State Governments by notification in
the official gazette.

It consists of a Chairman and two or four other members. Chairman is an


independent person and members are persons appointed in equal numbers to
represent the parties of the dispute.

The duty of the board is to promote the settlement of an industrial dispute.

Power of the board.


i) A member of the board can enter the premises of the establishment for the
purpose of enquiry into any industrial dispute after and reasonable notice.
ii) Every board has the same powers as vested in a civil court
iii) Every enquiry of a board is treated to be a judicial proceeding within the
meaning of sections 193 and 228 of the India Penal Code.

4. Courts of enquiry
These courts of enquiry are also appointed by the State Government by
notification in the official gazette, to inquire into any matter appearing to be
connected with industrial dispute. After conducting the enquiry into the matters
referred, they report to the Government within 6 months from the commencement
of its enquiry.

5. Labour courts
State Government constitute Labour courts for the adjudication of industrial
dispute for any matter specified in the second schedule.

The matter specified in the second schedule are


a) The legality of an order passed by an employer
b) The application and interpretation of standing orders.

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c) Discharge and dismissal of workers including reinstatement or grants of relief
to workmen wrongly dismissed.
d) Withdrawal of any customary privilege.

6. Industrial Tribunals.
State Government may also constitute one or more Industrial Tribunals for the
adjudication of industrial disputes.

A tribunal shall consist of one person only to be appointed and he should have
the minimum qualification as required for that of labour courts.

The tribunal adjudicates of industrial disputes relating to any matter in the second
schedule (jurisdiction of labour courts) or the third schedule. The third schedule
mentions the following matters.

a. Wages including the period and mode of payment


b. Compensatory and other allowances
c. Hours of work and rest intervals
d. Leave with wages and holidays
e. Bonus, profits sharing, provident fund and gratuity.
f. Classification by grades
g. Rules or discipline
h. Rationalisation
i. Retrenchment of workers and closure of establishment.

7. National tribunals
Central Government may constitute one or more National Industrial Tribunals for
adjudication of disputes involving question of national importance

It consists of only one person and who should have the qualifications as
mentioned for that of labour courts.

It can also take up the industrial disputes which are of such a nature that
industrial establishments situated in more than one state are likely to be
increased in or affected by such disputes.

No person can continue in the office of the presiding officer of a Labour court,
Tribunal or National Tribunal after he has attained the age of sixty five years.

Strikes and Lock outs

Strikes
No persons employed in a publicity utility services shall go on strike:
a. Without giving a notice of strike to the employer, within 6 weeks before striking
or
b. Within 14 days of giving such notice or

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c. Before the date mentioned in the notice or during the pendency of conciliation
proceedings

Lock outs
No employer carrying on any public utility service shall lock out
a) Without giving a notice of lockout to the workers in a prescribed form within 6
weeks before locking out.
b) Within 14 days of giving such notice
c) Before the date specified in the notice
d) During the pendency of any arbitrary conciliation proceedings.

Penalty of illegal strikes and lock outs


Any worker, who commences or continues strike, which is illegal under this act,
shall be punishable with imprisonment upto six months of fine upto Rs. 1000 or
both.

Penalty for instigation


Any person who instigates other to take part in strike or lockout which is illegal
under this act, shall be punishable with imprisonment upto six months or fine upto
Rs. 1000 or both.

Continuous service
As per section 25-B a workman shall be deemed to be in continuous service
under an employer. If during a period of twelve calendar months preceding the
date with reference to which calculations is to be made, actually worked for not
less than
a) 190 days in the case of a workman employed below the ground in a
time and
b) 240 days in other cases

The number of days in which a workman has actually worked under an employer
shall include the days on which:
a. He has been on leave with full wages earned in the previous years
b. He has been absent due to temporary disablement caused by
accident arising of and in the course of his employment
c. In the case of female, she has been on maternity leave upto 12
weeks.

Lay –off
“Lay off” means the failure, refusal or inability of an employer on account of
shortage of coal, power or raw materials of the accumulation of stock or the
breakdown of machinery or for any other reasons to give employment or
workman and who has been retrenched.

A. Right of workmen laid off for compensation

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Whenever a workman who has completed more than one year of continuous
service under an employer is laid off, he shall be paid by the employer for all
days during which he is so laid off ( for a maximum period of 45 days),
compensation equal to 50% of the total of the basic wages and dearness
allowance.

Provided that if a person so laid off is retrenched, then the compensation paid to
the workman for having been laid off during the preceding 12 months may be set
off against compensation payable for retrenchment.

B. Workmen not entitled to compensation in certain cases


No compensation shall be payable to a workman who has been laid off in
following conditions
a) if he refuses to accept any alternative employment in the same establishment
or in any other establishment belonging to the same employer situated within 8
Kms from the establishment to which he belongs:

b) If he does not present himself for work at the establishment at the appointed
time during normal working hours at least once a day.

c) If such laying off is due to strike or slowing down of production on the part of
workmen in another part of the establishment.

Retrenchment
As per section 25-F, no workman employed in an industry who has put in more
than one year’s continuous service under an employer shall be retrenched until:
a) The workman has been given one month’s notice in writing indicating the
reason of retrenchment and the period of notice, wages for the period of notice:
Provided that no such notice shall be necessary if the retrenchment is under an
agreement which specifies a date of the termination of service.
b) The workman has been paid at the time of retrenchment, compensation which
shall be equivalent to 15 days average pay for every completed year of
continuous service or any part thereof in excess of 6 months.

Closure of an undertaking
Where an undertaking is closed down for any reason whatsoever, every man
who has completed the continuous service of at least one year in that
undertaking, is entitled to notice and compensation in accordance with the
provisions of section 25-F (i.e. as if the workman had been retrenched). This
compensation shall be paid before such closure. He should also be served with
a notice as mentioned earlier.

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