Management PDF
Management PDF
Management PDF
Principles of Management
Prepared by
Ahmed Sabbir
Management is defined as
A set of activities (planning and decision making, organizing, leading, controlling) directed
at an organization’s resources (Human, financial, physical and information) with the
aim of achieving organizational goals in an efficient and effective manner. [Griffin]
Management is an intangible part of production which co-ordinates all other factors and takes
the risks of losses.
Expenditure flow
Figure-Interrelationship between Industry/firm and Household or Producer and Consumer
where management is a big concern
By efficient, we mean using resources wisely and in a cost effective way (i.e., achievement of
the ends with least amount of resources). For example, a company produces high quality
products at relatively low costs is efficient. By effective we mean making the right decisions
and successfully implementing them. A firm produces products (that may be efficient in terms
of producing with low cost) that no one wants is not effective. The successful organizations are
both efficient and effective.
What is a Manager?
- Someone whose primary responsibility is to carry out the management process.
- Someone who plans and makes decisions, organizes, leads, and controls
human, financial, physical, and information resources toward attain the organizational
goals efficiently and effectively.
Top Managers
- Small group of executives who manage the organization’s overall goals, strategy
and operating policies.
- It consists of board of directors, president, vice-president, CEOs, etc.
- They are responsible for controlling and overseeing the entire organization.
- They develop goals, strategic plans, company policies, and make decisions on the
direction of the business.
- It is also responsible for maintaining a contact with the outside world.
- It provides guidance and direction.
- The top management is also responsible towards the shareholders for the
performance of the enterprise.
Middle Managers
- Largest group of managers in organization who are primarily responsible for
implementing the policies and plans of the top managers.
- They supervise and co-ordinate the activities of lower level managers.
- They interpret and explain policies from top level management to lower level.
- They are responsible for coordinating the activities within the division or
department.
- It also sends important reports and other important data to top level management.
- They are also responsible for inspiring lower level managers towards better
performance.
- Common middle management titles include plant manager, operations manager and
division head etc.
First-Line Managers
- Managers who supervise and coordinate the activities of operating employees.
- It consists of supervisor, office manager, section head, in-charge, foreman etc.
- The Lower Level management activities includes-
Assigning of jobs and tasks to various workers.
Management in Organization
The management function in organizations is concerned with the achieving organizational goals
through using the available resources efficiently and effectively.
Essentially, the role of managers is to guide the organizations toward goal accomplishment. All
organizations exist for certain purposes or goals, and managers are responsible for combining
and using organizational resources to ensure that their organizations achieve their purposes.
The role of the Management is to move an organization towards its purposes or goals by
assigning activities that organization members perform.
Figure-Management in Organization
Management Process
Basically, Process means a series of activities/operations undertaken/conducted for achieving a
specific objective. Process is a systematic way of doing things. Management is described as a
process. In fact, whatever functions are performed by a manager and the sequence in which
they are performed is designated as management process. A manager is someone whose
primary responsibility is to carry out the management process.
Figure-Management Process
Leading
– Motivating members of the organization to work together to advance the
interests of the organization.
The individual involves in the organization have their own needs and objectives that are
important to them. Through the function of leading, managers help people see that they
can satisfy their own needs and utilize their potentials and at the same time contribute to
the aims of the organization.
Controlling
– Monitoring and correcting ongoing activities to facilitate goal attainment.
To carry out the management functions most effectively, managers rely on a number of
different fundamental management skills, of which the most important are-
1. Technical-Skills necessary to accomplish or understand the specific kind of work being
done in an organization. These skills are especially important for first line managers.
2. Interpersonal-Ability to communicate with, understand and motivate individuals and
groups. As a manager, he or she must be able to get along with subordinates, peers, and
those at higher levels of the organization.
3. Conceptual- The manager’s ability to think in the abstract.
Managers need the mental capacity to:
- Understand organizational goals and its environment.
- How the organization is structured.
- Viewing the organization as system.
This ability allows them to think strategically, to see the “big picture,” and to make
broad-based decisions that serve the overall organization.
4. Diagnostic- The manager’s ability to visualize the most appropriate response to a
situation.
A physician diagnoses a patient’s illness by analyzing symptoms and determining their
probable cause. Similarly, a manager can diagnose and analyze a problem in the
organization by studying its symptoms and then developing a solution.
5. Communication- Communication skills refer to the manager’s abilities both to convey
ideas and information effectively to others and to receive ideas and information
effectively from others.
These skills enable a manager to transmit ideas to subordinates so that they know what
is expected, to coordinate work with peers and colleagues so that they work well
together, and to keep higher-level managers informed about what is going on.
6. Decision-making- The manager’s ability to recognize and define problems and
opportunities correctly and then to select an appropriate course of action to solve the
problems and capitalize on opportunities.
7. Time management skills- The manager’s ability to prioritize work, to work efficiently,
and to delegate appropriately
It is seen from the diagram that the top level managers should have high conceptual and low
technical skill according to area covered by the skill in the figure. Similarly, they also have high
diagonistic skills and low interpersonal skill.
It is also seen mid level managers have both conceptal, technical skill, diagonistic and
interpersonal skill, as they are the operative management. The first line managers should have
high technical and low conceptual skill. Similary, lower level managers need high interpersonal
skill to perform the job effiently and effectively, but they need low diagonostic skills.
Science
Many management problems and issues can be approached in ways that are rational, logical,
objective, and systematic. Managers can gather data, facts, and objective information. They can
use quantitative models and decision-making techniques to arrive at “correct” decisions.
Management is also an art because it requires a blend of intuition, experience, instinct and
personal insight to solve a problem.
There is obviously some differences between two person while managing a same problem,
some use autocratic leadership style, other may use democratic leadership. Also there may be
differences in the act of expressing the agenda and its solution.
So, Management is a science in the sense that there are some established principles and specific
data associated with managing companies successfully. It is an art in that sense, there is
considerable space for individual style and self-expression.
Contribution of F. W Taylor
- Fredric Winslow Taylor [March 20, 1856 – March 21, 1915] is known as Father of
Scientific Management. Scientific management also called Taylorism.
- He is pioneer in the field of labor efficiency.
- Replace rule-of-thumb work methods with methods based on a scientific study of the
tasks.
Fayol’s Principles
Henri Fayol in his book titled "Industrial and General Administration" published in 1916, gave
following 14 principles of management:
1. Division of Work: Division of wok (labor) means dividing the work on the principle
that different workers are best fitted for different jobs depending upon influences arising
from the personal aptitude and skills. The division of work is also known as
specialization. Specialization allows the individual to build up experience, and to
continuously improve his skills. Thereby he can be more productive.
2. Authority: Authority and responsibility must be related and should go together. The
right to issue commands, along with which must go the balanced responsibility for its
function. i.e., there should always be a balance between the authority and responsibility.
Authority without responsibility results in inefficient leadership and irresponsible
behavior, whereas in another case responsibility without authority results in the
ineffective utilization of manpower.
3. Discipline. Employees must obey, but this is two-sided: employees will only obey
orders if management play their part by providing good leadership.
4. Unity of Command. Each worker should have only one boss with no other conflicting
lines of command.
The management principle ‘Unity of command’ means that an individual employee
should receive orders from one manager and that the employee is answerable to that
manager. If tasks and related responsibilities are given to the employee by more than
one manager, this may lead to confusion which may lead to possible conflicts for
employees.
5. Subordination of individual interest (to the general interest). The interests of one
person should not take priority over the interests of the organization as a whole.
6. Unity of Direction. The entire organization should be moving towards a common
objective in a common direction. People engaged in the same kind of activities must
have the same objectives in a single plan. This is essential to ensure unity and
coordination in the enterprise. Unity of command does not exist without unity of
direction but does not necessarily flows from it.
9. Scalar chain (Line of Authority). A hierarchy is necessary for unity of direction. But
lateral communication is also fundamental, as long as superiors know that such
communication is taking place. Scalar chain refers to the number of levels in the
hierarchy from the ultimate authority to the lowest level in the organization. It should
not be over-stretched and consist of too-many levels. A scalar chain is also known as a
chain of command. It corresponds to the formal line of authority and communication
within an organization.
10. Order. Both material order and social order are necessary. The former minimizes lost
time and useless handling of materials. The latter is achieved through organization and
selection. Maintaining order in the workplace maximizes efficiency and coordination. If
a firm does not work in an orderly manner, then it may be the result of inefficiency and
leads to chaos.
The management principle of equity says that all the employees or workers of the
organization must be treated fairly, equally and impartially. Maintaining equity in the
organizations come from the organization’s culture; adopting and maintaining equity
maximizes employee loyalty and trustworthiness.
13. Initiative. Management should take steps to encourage worker initiative, which is
defined as new or additional work activity undertaken through self-direction. Allowing
all personnel to show their initiative in some way is a source of strength for the
organization. Even though it may well involve a sacrifice of ‘personal vanity’ on the part
of many managers.
14. Team Spirit (Esprit de Corps). Management must foster the morale of its employees. He
further suggests that: “real talent is needed to coordinate effort, encourage keenness, use
each person’s abilities, and reward each one’s merit without arousing possible jealousies
and disturbing harmonious relations.”
So, Management must encourage team spirit and unity so that it brings out mutual
loyalty and feeling of pride. Esprit de corps facilitate the union of the employees and
management which creates a feeling of loyalty in the minds of employees and
management also.
Material Order: This order specifies that there should be a proper place for all physical
resources. It states “A proper place for everything and everything at its proper place”. This will
eliminate any kind of confusion regarding the search of material as the place of materials is
already fixed and thus reduces wastage of material, time and efforts.
Social order: This order specifies that there should be a proper place for all human resources in
accordance with their designations. It states “An appointed place for every employee and each
employee at his/her appointed place”.
Definition of Planning
“Planning is the exercise of intelligence to deal with facts and situation as they are and find a
way to solve problem.”
----Jawaharlal Neheru
In the words of Koontz and O’Donnell, “Planning is deciding in advance what to do, how to do
it, when to do it, and who is to do it. Planning bridges the gap from where we are to here we
want to go.”
Planning is the systematic process of establishing a need and then working out the best way to
meet the need, within a strategic framework that enables you to identify priorities and
determines your operational principles.
‘Planning is deciding in the present what to do in future. It is the process of thinking, mapping
out and organizing the activities required to achieve a desired goal.
Planning means thinking about the future so that you can do something about it now.
Planning involves in defining the organization goal (what to be done) and establishing
strategies (how to be done) to achieve sited goal. Some time it is also called primary managerial
function.
1) Provide Direction:
- What the organization want to accomplish (achieve) and how to reach the
establish/sited goals.
- By planning a clear direction comes that to be follow, in order to reach and achieve
goal.
2) Reduce Uncertainty:
- Planning reduce uncertainty by forcing the managers to look ahead, anticipate
changes, consider the impact of changes and develop appropriate response to these
changes.
3) Minimizes waste and redundancy (idleness):
- When work activities are coordinated around established plans redundancy can be
minimized.
Budget
- Budget is the economic translation of a plan.
- Budgeting is simply making sure that there is enough money to cover all of the
outgoings that it will take the business to operate.
Decision making and problem solving are ongoing processes of evaluating situations or
problems, considering alternatives, making choices, and following them up with the necessary
actions.
Kinds of Plan
Strategic Plan:
The plans are set by and for top Management.
A general plan outlining resource allocation, priorities, and action
steps necessary to reach strategic goals
What is to produce, where it produce etc.
Tactical Plan
The plan are set by and for middle management.
Decision regarding quality and pay rising problem.
Operational Plan
The plan are set by and for lower management.
Plans that have a short term focus.
Monthly production target etc.
Mid-Level
Tactical Manager
Lower/1st line
Operational
Manager
Strategic plans are plans that apply to the entire organization, establish the organization’s
overall goals, and seek to position the organization in terms of its environment. Plans that
specify the details of how the overall goals are to be achieved are called operational plans.
How do the two types of plans differ? Strategic plans tend to cover a longer time frame and a
broader view of the organization. Strategic plans also include the formulation of goals, whereas
operational plans define ways to achieve the goals. Also, operational plans tend to cover short
time periods—monthly, weekly, and day-to-day.
Vision-A Long term statement, outlines what a company wants to be in the future.
Mission-A statement of an organization’s fundamental purpose. It describes what you do,
for whom you do it and the benefit, e.g. "To provide consumers with high-quality, price-
competitive widgets to meet their personal, business and recreational needs." It defines the
day-to-day activities of the work they do, and every person who works for the organization
contributes to that mission.
Goal-Broad, long-term aims that define accomplishment of the mission, e.g. "Grow
profitability. Maximize net income by increasing revenues and controlling costs."
Objectives: Specific, quantifiable, realistic targets that measure the accomplishment of a goal over a
specified period of time, e.g. "Increase revenues by x% in 2018. Limit increases in overhead
costs to y%. Achieve a z% reduction in management staff through increased automation."
Goal Objective
Meaning The purpose toward which an Something that one's efforts or actions are
endeavor is directed. intended to attain or accomplish;
purpose; target.
Example I want to achieve success in the field of I want to complete this thesis on genetic
genetic research and do what no one research by the end of this month.
has ever done.
Action Generic action, or better still, an Specific action - the objective supports
outcome towards which we strive. attainment of the associated goal.
Measure Goals may not be strictly measurable Must be measurable and tangible.
or tangible.
Time Longer term Mid to short term
frame
Strategic Management
SWOT Analysis
What are the differences between “Strength” and “opportunity” & “Weakness” and “Threat”
in SWOT analysis?
Strength:
- Strengths are what separates one company's performance from another.
- A company should analyze its advantages, what it does better than competitors,
what special resources or efficient advantages it has, perceptions from the market,
factors leading to sales and profit and unique selling propositions.
- Organizational Strength is a skill or capability that enables an organization to create
and implement its strategies.
- Strength have its control by the organization.
Opportunity
Weakness:
- A weakness is a limitation, fault, or defect in the organisation that will keep it from
achieving its objectives.
- Like Strengths, weakness look inward at the company and focus on resources and
experience.
- Organizational weakness is a skill or capability that does not enable an organization
to choose and implement strategies that support its mission.
Threat
- A threat is any unfavorable situation in the organization’s environment that is
potentially damaging to its strategy. The threat may be a barrier, a constraint, or
anything external that might cause problems, damage or injury.
- It is not under control of the organization.
Strength:
1. Young & energetic teachers with foreign academic degrees.
2. Al most digital campus-WIfi facilities.
3. Good academic environment which noise-free.
4. Well stocked library.
Weakness:
1. Few experienced teachers with Phd/foreign degree.
2. Traditional and outdated curriculum and syllabus.
3. High turnover of teachers and staffs.
4. Limited laboratory facilities
5. Limited access to online resources.
Opportunities
1. Lebukhali Bridge is under construction.
2. Al most 100% government funded.
3. Moderate communication system.
4. Govt. favors the southern part development.
5. Surrounding environment is good.
Threats
1. Far away from district and divisional head quarter.
2. Other universities offer EMBA program in large scale.
3. Roads are not well constructed & still now there is ferry.
4. Conservative attitude of the authorities on business education.
5. Not fully protected from drug addiction and other mishap.
Corporate-level Strategy
- The set of strategic alternatives that an organization chooses from as it manages its
operations simultaneously across several industries and several markets.
- E.g., Single product & different markets
Or, Different product & single market
Or, Different products & different markets.
1. Business-level strategies deal with a particular business unit while corporate strategies deal
with the entire company, which may consist of several business units.
2. Business-level strategies deal with specific issues, such as determining the price of the
products, increasing sales or introducing a new product.
3. Corporate strategies tend to be very broad and are focused on gaining a competitive
advantage in the industry.
4. Corporate strategies will often affect business-level strategies. This is mainly done by
allocating specific resources to particular business units.
5. Business-level strategies are very useful for solving practical problems while corporate
strategies are useful for developing long-term solutions for problems.
6. The business strategy focuses on competing successfully in the market place with other
firms. On the contrary, corporate strategy stresses on increasing profitability and business
growth.
7. Business Strategy is framed by middle-level management which comprises of division, unit
or departmental managers. Conversely, corporate strategy is formulated by top level
managers, i.e. board of directors, CEO, and managing director.
Comparison Chart:
A number of frameworks have been developed for identifying the major strategic alternatives
that organizations should consider when choosing their business-level strategies.
Three important classification schemes are-
1. Porter’s Generic Strategies
2. Miles and Snow Typology
3. Strategy based on the Product Life Cycle
A second classification of strategic opinions was developed by Ramond Miles and Charles
Snow. They suggest that, business level strategies generally fall into one of four categories,
given in below:
Protector-A firm that follows a protector strategy is highly innovative firm that is
constantly seeking out new markets, and new opportunities and is oriented to growth and
risk taking. E.g., Symphony, Grameenphone.
Analyzer-A business that uses an analyzer strategy, in which it attempts to maintain its
current businesses and to be somewhat innovative in new business, combines the elements
of Protector and defender. E.g., IBM, Robi.
Reactor-No clear strategy, reacts to changes in the environment, drift with events. E.g.,
International Harvester Company, Kmart.
- The product life cycle is a model that shows how sales volume changes over the life of
products.
- It was developed by Ramond Vermon.
The four main stages of a product's life cycle and the accompanying characteristics are:
2. Growth Stage
3. Maturity Stage
- During this maturity stage, overall demand growth for a product begins to slow
down, and the number of new firms producing the product begins to decline.
- Costs are lowered as a result of production volumes increasing and experience
curve effects.
- Sales Volume peaks and market saturation reached.
- Prices tend to drop due to the proliferation of competing produts.
- Brand differentiation and feature diversification is emphasized to maintain or
increase market share.
- Industrial profits go down.
The most important strategic issue at the corporate level concerns the extent and nature of
organizational diversification.
Diversification describes the number of different businesses that an organization is engaged in
and the extent to which these businesses are related to one another.
Diversification is the process of reducing risk.
BCG Matrix
- A method of evaluating businesses relative to the growth rate of their market and the
organization’s share of the market.
- These two dimensions reveal likely profitability of the business portfolio in terms of cash
needed to support that unit and cash generated by it.
- The general purpose of the analysis is to help understand, which brands the firm should
invest in and which ones should be divested.
- The matrix classifies the types of businesses that a diversified organization can engage
as:
“Dogs” have small market shares and no growth prospects.
o Dogs are businesses that have a very small share of a market that is not expected
to grow. Because these businesses do not hold much economic promise, the BCG
matrix suggests that organizations either should not invest in them or should
consider selling them as soon as possible..
“Cash cows” have large shares of mature markets.
- The BCG matrix helps managers develop a better understanding of how different
strategic business units contribute to the overall organization. By assessing each SBU on
the basis of its market growth rate and relative market share, managers can make
decisions about whether to commit further financial resources to the SBU or to sell or
liquidate it.
GE Business Screen
- A method of evaluating business in a diversified portfolio along two dimensions, each of
which contains multiple factors:
Industry attractiveness.
Competitive position (strength) of each firm in the portfolio.
- In general, the more attractive the industry and the more competitive a business is, the
more resources an organization should invest in that business.
Strategy of GEBS
Firstly we close the “the losers” and money received from “losers” should be invested to the
“Question mark”. If performance of “Question Mark” improves, it is all right but if does not
improve, we are reclassify the question mark as “Loser” and should also shut down this
“Question mark”. Money earned from these should be re-invested among the “Winner”,
“Average business” and “Profit Producer”. according to the value judgment, expertise and
experience of the managers taking into consideration the stages of product life cycle and other
norms.
The points depicted below, elaborate the fundamental differences between BCG and GE
matrices:
BCG matrix can be understood as the growth-share model that reflects a growth of
business and the market share possessed by the firm. On the other hand, GE matrix is
also termed as multifactor portfolio matrix, which businesses use in making strategic
choices for product lines or business units based on their position in the grid.
BCG matrix is simpler in comparison to GE matrix, as the former is easy to draw and
consist of only four cells, while the latter consist of nine cells.
The two dimensions on which BCG matrix is based are market growth and market
share. In case of BCG Matrix X axis indicated Market share and Y-axis indicates growth
rate. Conversely, industry attractiveness and business strengths are two factors of GE
matrix. In GE Matrix, X axis indicates Competitive Position” which is outcome of six
factors, where Market Share is a vital factors and Y axis represent industry
attractiveness, which is result of 4 factors, where “Market Growth” is an important
factors.
BCG matrix is used by the companies to deploy their resources among various business
units. On the contrary, firms use GE matrix to prioritize investment among various
business units.
In BCG matrix only a single measure is used, whereas in GE matrix multiple measures
are used.
BCG matrix represents two degrees of market growth and market share, i.e. high and
low. In contrast, in GE matrix there are three degrees of business strength, i.e. Good,
Medium, Poor, and industry attractiveness, are high, medium and low.
“Stars” of BCG matrix corresponds to “Winner” in GEBS, “Dogs” corresponds to
“Loser”. Similarly, in BCG Matrix, there is an enterprise named ”Cash Cow” whereas
“Profit Producer” in GEBS is its counterpart.
Comparison Chart:
Basis for
BCG Matrix GE Matrix
Comparison
BCG Martrix, is a growth share model, GE Matrix implies multifactor portfolio matrix, that
Meaning representing growth of business and the assist firm in making strategic choices for product
market share enjoyed by the firm. lines based on their position in the grid.
Number of
Four Nine
cells
Factors Market share and Market growth Industry attractiveness and Business strengths
Objective To help companies deploy their resources To prioritize investment among various business
Mission: To establish Islami banking through the introduction of a welfare oriented banking
system and become a world class bank.
Formulate Strategies
1. Establish a strong Shariah supervisory Committee.
2. Establish and maintain the modern banking techniques
3. Development of the financial system based on Islamic principles which is free from
interest.
4. Professional development of the employee through training of the human resources.
5. Provide adequate logistics to satisfy customers’ need.
6. Diversifying the investment, particularly in the priority sectors and less developed areas
of the country to ensure balanced development.
7. Adopt newer technology and its implementation to ensure sustainable development.
Strength
Opportunities
1. Increasing awareness about Islamic banking and demand for Shariah compliant products
and services.
2. Positive attitude of government and Bangladesh Bank.
3. Opportunities to develop Islamic investment instruments
4. Policy of Bangladesh Bank for operations of Islamic Bank.
5. Larger customer based bank.
6. National and International recognition of the bank.
7. Many branches can be open in remote location.
Threat
1. Increase Non Performing Investment.
2. Increased competition in the market for public deposits.
3. Lots of new banks are coming in the scenario with new service.
4. New Islamic banks introduced their operations
5. Techno-based baking by different banks.
6. Market pressure for lowering the profit/interest rate
7. Volatile global economic scenario.
8. Market distortion in the name of Islami banking
9. Conspiracy of vested corner for barring growth of Islami banking
10. Propaganda of media
11. Change in Policy rapidly.
12. Misconceptions and misunderstandings among the general public about Islamic banking.
Organizing
Definition
“Some people are born with power.
Others, who might not have as much power, need to come together to build collective power in
order to make things happen.
This is organizing.”
"Organizing is the process of identifying and grouping the work to be performed, defining and
delegating responsibility and authority and establishing relationships for the purpose of
enabling people to work most effectively together in accomplishing objectives."
Importance of Organizing
Plan Implementation
Assignment of authority, responsibility and accountability.
Division of labor
Coordinates diverse organizational tasks.
Establish relationship among individuals, groups and departments
Establish formal lines of authority
Allocation and deployment of organizational resources.
The six basic Building Blocks for Organization Structure are given as:
1. Designing Jobs
- Job design is the systematic and purposeful allocation of tasks to individuals and groups
within an organization.
2. Grouping Jobs: Departmentalization/Forming department
Organization Design
Job Design
- Job design is the determination of an individual’s work related responsibilities.
- Job design is the systematic and purposeful allocation of tasks (specifying the contents,
method, and relationships of jobs) to individuals and groups within an organization to
perform the organizational activities in the most efficient and effective manner.
Job Specialization
- The degree to which the overall task of the organization is broken down and divided
into smaller component parts.
- Job specification evolved from the concept of division of labor.
Benefits of Specialization
Workers can become proficient at a task.
Transfer time between tasks is decreased./ No time wasted on in moving from one job to
another
Specialized equipment can be more easily developed.
easily trained for a particular task within short time period
Employee replacement becomes easier.
Limitations of Specialization
Workers who perform highly specialized jobs may become bored and dissatisfied.
The job may be so specialized that it offers no challenge or stimulation.
Anticipated benefits of specialization do not always occur.
1. Job Rotation
- Systematically moving employees from one job to another.
- Most frequent use today is as a training device for skills and flexibility.
2. Job Enlargement
- An increase in the total number of tasks workers perform.
- Job enlargement also known as horizontal loading, expands the number of related task
in a job.
4. Work team
- Work Team allows an entire group to design the work system it will use to perform an
interrelated set of tasks.
- The team itself decides how jobs will be allocated and assigns specific tasks to members,
monitors and controls its own performance and has autonomy over work scheduling.
Departmentalization
Advantages
Skill Development
Economies of Scale
Good Coordination
Disadvantages
Lack of Communication
Employees Identify with Department
Slow Response to External Demands
Narrow Specialists
ii) By Product:
CEO
iii) By Customer:
CEO
iv) By Location:
CEO
Functional Departmentalization
Advantages:
Each department can be staffed by experts in that functional area.
Supervision is facilitated in that managers only need be familiar with a narrow set of
skills.
Coordinating activities inside each department is easier.
Disadvantages
Product Departmentalization
- The grouping of activities around products or product groups.
- A good example of product departmentalization is witnessed in an automobile
manufacturing company. In such a company, we generally see departments like a two-
wheeler department, three-wheeler department, four-wheeler department, heavy
motors department, etc.
Advantages
All activities associated with one product or product group can be easily integrated and
coordinated.
Speed and effectiveness of decision making are enhanced.
Performance of individual products or product groups can be assessed more easily and
objectively.
Disadvantages
Managers in each department may focus on their own product or product group to the
exclusion of the rest of the organization.
Administrative costs may increase due to each department having its own functional-
area experts.
Customer Departmentalization
- Grouping activities to respond to and interact with specific customers and customer
groups.
- For example, customers can be classified under types such as, international or foreign
customers, inland or domestic customers, bulk purchasing or wholesale customers,
retail customers, etc
Advantage
Major advantage is that the organization is able to use skilled specialists to deal with
unique customers or customer groups.
Location Departmentalization
- Location Departmentalization groups jobs on the basis of defined geographic sites or
areas.
- Departmentalization based on the division of an area of operation into different zones
Advantage
- Primary advantage is that it enables the organization to respond easily to unique
customer and/or environmental characteristics in the various regions.
Disadvantage
- Large administrative staff may be needed to keep track of units in scattered locations.
Chain of Command:
- A clear and distinct line of authority among the positions in an organization.
Unity of Command: Each person within an organization must have a clear
reporting relationship to one and only one boss.
Scalar Principle: A clear and unbroken line of authority must extend from the
bottom to the top of the organization.
Span of Management
- Another part of establishing reporting relationships is determining how many people
will report to each manager, i.e., the number of people who report to a particular
manager.
- Sometimes called the span of control.
- In other words, it is number of people supervise by a Manager.
- There is no ideal or optimal span of management.
Flat Organizations
- In flat organization, the span of control is wide, there will be fewer management levels.
Tall Organization
– In Tall Organization, the span of control is narrow, then there will be many management
levels.
– Tall structure is an organizational structure with many levels of hierarchy/Long chain of
command.
– In tall structures, several layers of management come between front-line employees and
upper management.
– Tall Organizations are more expensive because of the number of managers involved.
– In Tall Organization Structure, there is a close control because there are few subordinates.
– In Tall Organization Structure, Decision making is slow because there are many levels of
management.
– Foster more communication problems because of the number of people through whom
information must pass.
• Decentralization
• Centralization
Functional Organization
Advantage:
It allows the organization to staff all important positions with functional experts,
Reduce wastage and ensuring optimum utilization of resources as expertise involved
Quality of the work improved
Figure-Functional Organization
……………………
it is a mXn matrix
Matrix Organization
- An organizational arrangement based on two overlapping bases of
departmentalization (e.g., functional departments and product categories).
- A set of product groups or temporary departments are superimposed across the
functional departments.
Figure-Matrix Organization
Advantages
- They enhance flexibility because teams can be created, redefined, and dissolved as
needed.
- As they assume a major role in decision making, team members are likely to be highly
motivated and committed to the organization
- Employees in a matrix organization have considerable opportunity to learn new skills.
- The matrix design provides an efficient way for the organization to take full advantage
of its human resources.
- The matrix design gives top management a useful vehicle for decentralization.
- It enhance the co-ordination.
Disadvantage
- Employees may be uncertain about reporting relationships,
- Sometimes it creates conflicts in the organization.
- In a matrix, more time may also be required for coordinating task-related activities
The starting point in attracting qualified human resources is planning. HR planning, in turn,
involves job analysis and forecasting the demand and supply of labor.
Human resource planning is a process that identifies current and future human resources needs
for an organization to achieve its goals.
Human resource planning should serve as a link between human resource management and the
overall strategic plan of an organization.
After managers fully understand the jobs to be performed within the organization, they can
start planning for the organization’s future human resource needs. The manager starts by
assessing trends in past human resource usage, future organizational plans, and general
economic trends.
Forecasting the supply of labor is really two tasks: forecasting the internal supply (the number
and type of employees who will be in the firm at some future date) and forecasting the external
supply (the number and type of people who will be available for hiring in the labor market at
large).
The technique most commonly used is the replacement chart, which lists each important
managerial position, who occupies it, how long he or she will probably stay in it before moving
on, and who is now qualified or soon will be qualified to move into the position.
To facilitate both planning and identifying persons for current transfer or promotion, some
organizations also have an employee information system, or skills inventory, which is usually
computerized and contains information on each employee’s education, skills, work experience,
and career aspirations.
Matching Human Resource Supply and Demand: After comparing future demand and internal
supply, managers can make plans to manage predicted shortfalls or overstaffing. If a shortfall is
predicted, new employees can be hired, present employees can be retrained and transferred
into the understaffed area, individuals approaching retirement can be convinced to stay on, or
labor-saving or productivity-enhancing systems can be installed.
Assess trends in
• External labor markets
• Current employees
• Future organizational plans
• General economic trends
Predict demand
- Recruiting is the process of attracting qualified persons to apply for jobs that are open.
Internal Recruiting
- Considering present employees as candidates for openings.
o Promotion from within can help build morale and reduce turnover of high-
quality employees.
o Disadvantage of internal recruiting is its “ripple effect” (when one event
produces effects which spread and produce further effects) of having to
successively fill vacated positions.
• External Recruiting
- Attracting persons from outside the organization.
• Advertising in newspapers
• Interviews
• Employment agencies and search firms
Once the recruiting process has attracted a pool of applicants, the next step is to select whom
to hire. The intent of the selection process is to gather from applicants information that will
predict their job success and then to hire the candidates likely to be most successful. The
organization can gather information only about factors that are predictive of future
performance. The process of determining the predictive value of information is called
validation.
Validation is determining the extent to which a selection device is really predictive of future job
performance.
Application Blanks
- The first step in selection is usually asking the candidate to fill out an application blank.
- Application blanks are an efficient method of gathering information about the
applicant’s previous work history, educational background, and other job-related
demographic data.
- They should not contain questions about areas not related to the job, such as gender,
religion, or national origin.
- Application blank data are generally used informally to decide whether a candidate
merits further evaluation, and interviewers use application blanks to familiarize
themselves with candidates before interviewing them.
Tests
- Tests of ability, skill, aptitude, or knowledge that is relevant to the particular job are
usually the best predictors of job success, although tests of general intelligence or
personality are occasionally useful.
- It must be validated, administered, and scored consistently.
- The testing process must be the same for all candidates
Interviews
- Interviews can be poor predictors of job success due to interviewer biases.
- Interview validity can be improved by training interviewers and using structured
interviews.
- In a structured interview, questions are written in advance, and all interviewers follow
the same question list with each candidate they interview. This procedure introduces
consistency into the interview procedure and allows the organization to validate the
content of the questions to be asked.
Other Techniques
- Employers use physical exams, drug tests, and credit checks to screen prospective
employees.
Sample of Selection Process
Join
- Training & Development refers to a set of programs designed to enhance the Job Performance
of the employees and organizational productivity.
- Most organizations provide regular training and development programs for managers
and employees.
- Objective of the Training must be specific and “SMART” (Specific, Measurable,
Achievable, Relevant, Timely and time-bound)
Training Process
Assessing Training Needs
- The first step in developing a training plan is to determine what needs exist.
- For example, if employees do not know how to operate the machinery necessary to do
their job, a training program on how to operate the machinery is clearly needed.
- As training programs are being developed, the manager should set specific and measurable
goals specifying what participants are to learn. The manager should also plan to evaluate
the training program after employees complete it.
Evaluation of Training
- Training and development programs should always be evaluated.
- Typical evaluation approaches include measuring one or more relevant criteria (such as
attitudes or performance) before and after the training, and determining whether the
criteria changed.
- Trainees may say that they enjoyed the training and learned a lot, but the true test is
whether their job performance improves after their training.
Judgmental Methods
Ranking—compares employees directly with each other.
Ranking has a number of drawbacks.
Difficult to do with large numbers of employees.
Difficult to make comparisons across work groups.
Employees are ranked only on overall performance.
Do not provide useful information for employee feedback.
Rating—compares each employee with a fixed standard.
- Graphic rating scales consist of job performance dimensions to be rated on a standard
scale.
- Behaviorally-anchored rating scale (BARS) is a sophisticated method in which
supervisors construct a rating scale where each point on the scale is associated with
behavioral anchors.
360-degree Feedback-A performance appraisal system in which managers are evaluated by
everyone around them—their boss, their peers, and their subordinates.
Motivation
Motivation is the set of forces that cause people to behave in certain ways.
So, Motivation implies the process of encouraging people to act in order to attain the
desired objectives.
The motivation process progresses through a series of discrete steps. Content, process, and
reinforcement perspectives on motivation address different parts of this process.
- The motivation process begins with a need deficiency. Needs are felt deprivations which the
individual experiences at a given time and act as energizers. Needs is difference between
desired situation and expected situation.
- An unsatisfied need creates tension, which stimulates drives within the individual. These
drives generate a search for particular goals that, if attained, will satisfy the need and lead to
the reduction of tension.
- Next step is finding the different alternatives that can be used to satisfy the needs, which
were felt in first stage. These needs lead to thought processes that guide an employee's
decision to satisfy them and to follow a particular course of action. Action to satisfy needs
and motives accomplishes goals. It can be achieved through reward and punishment.
- Then depending on how well the goal is accomplished their needs and motives are modified.
If an employee’s chosen course of action results in the anticipated out come and reward, that
person is likely to be motivated by the prospect of a similar reward to act the same way in
the future. However, if the employee’s action does not result in the expected reward, he or
she is unlikely to repeat the behavior.
For example, when a worker feels that she is underpaid, she experiences a need for more income.
In response, the worker searches for ways to satisfy the need, such as working harder to try to
earn a raise or seeking a new job. Next, she chooses an option to pursue. After carrying out the
chosen option—working harder and putting in more hours for a reasonable period of time, for
example—she then evaluates her success. If her hard work resulted in a pay raise, she probably
feels good about things and will continue to work hard. But, if no raise has been provided, she is
likely to try another option.
2. Process Perspectives
- Focus on why people choose certain behavioral options to satisfy their needs and how
they evaluate their satisfaction after they have attained their goals.
- Process Perspectives of Motivation includes-
i) Expectancy Theory
ii) Porter-Lawler Extension of Expectancy Theory
iii) Equity Theory
iv) Goal-Setting Theory
Abraham Maslow proposed the hierarchy of needs theory in 1943. He hypothesized that every
human being has an internal hierarchy of five needs.
These needs are:
Physiological needs for basic survival and biological function. e.g., hunger, thirst, shelter,
sex, and other bodily needs.
Security needs for a safe physical and emotional environment. For instance- Job security,
financial security, family security, health security etc.
Belongingness needs relate to social processes. They include the need for love and affection.
Esteem needs for positive self-image/self-respect and recognition and respect from others.
Self-actualization needs for realizing one’s potential for personal growth and development.
Maslow separated the five needs into higher and lower orders. Physiological and safety needs
were lower order and Social, esteem, and self-actualization were categorized as higher-order
needs. Higher order needs are satisfied internally, whereas lower order needs are predominately
satisfied externally.
Assumptions:
This theory assumes that job satisfaction and job dissatisfaction are on two distinct continuums:
Motivational factors (work content) are on a continuum that ranges from satisfaction to
no satisfaction.
Manager who tries to motivate an employee using only hygiene factors, such as pay and good
working conditions, will likely not succeed. To motivate employees and produce a high level of
satisfaction, managers must also offer factors such as responsibility and the opportunity for
advancement (motivation factors).
Motivator
Factors
Hygiene
Factors
Figure-4 Maslow’s Need Theory & Herzberg’s Two Factor theory of motivation
- Theory X and Theory Y are theories of human motivation created and developed by
Douglas McGregor at the MIT Sloan School of Management in the 1960s that have been
used in human resource management, organizational behavior, organizational
communication and organizational development.
- They describe two contrasting models of workforce motivation. Theory X and Theory Y
has to do with the perceptions Managers hold on their employees, not the way they
generally behave.
Assumption:
Douglas McGregor concluded that a manager’s view of human nature is based on one of two sets
of assumptions about people. The first set of assumptions, basically negative, and McGregor
labeled Theory X; a second, basically positive, labeled Theory Y.
Theory X assumptions-
1. Employees inherently dislike work and, whenever possible, will attempt to avoid it.
2. Since employees dislike work, they must be coerced, controlled, or threatened with
punishment to achieve desired goals.
3. Employees will avoid responsibilities and seek formal direction whenever possible.
4. Most workers place security above all other factors associated with work and will display
little ambition.
Theory X assumes that lower-order needs dominate individuals; Theory Y assumes that higher-
order needs dominate individuals. Unfortunately, no evidence confirms that either set of
assumptions is valid. Mcgregor, himself held the belief that Theory Y assumptions are more
valid than theory X. therefore he proposed ideas like perception in decision making,
opportunities for responsible and challenging jobs and good group relations that would maximize
employee’s job motivation.
If correlate it with Maslow’s theory, we can say that Theory X is based on the assumption that
the employees emphasize on the physiological needs and the safety needs; while Theory X is
Psychologist David McClelland advocated Need theory, also popular as Three Needs Theory. This
motivational theory states that the needs for achievement, power, and affiliation significantly influence
the behavior of an individual.
The need for achievement (nAch) is the desire to accomplish a goal or task more
effectively than in the past.
The need for affiliation (nAff) is the desire for human companionship and acceptance.
The need for power (nPow): The desire to be influential in a group and to be in control of
one’s environment.
McClelland stated that we all have these three types of motivation regardless of age, sex, race or
culture.
Similarities:
All are theories of motivation – outlines how to best understand and motivate employees.
They all believe that workers have needs and when these needs are not met, they cause
demotivation.
All indicate that workers have some form of ego (the need for recognition and respect for
the work they’re doing)
They suggest specific things that management can do to help their employees become
self-actualized.
They believe that there is a reason for human specific behavior.
Outcome Valence
Environment
Outcome Valence
Outcome Valence
Ability
Outcome Valence
Assumptions:
i) If performance in an organization results in equitable and fair rewards, people will be
more satisfied.
ii) High performance can lead to rewards and high satisfaction.
Equity Theory
- In 1963, John Stacey Adams introduced the idea that fairness and equity are key
components of a motivated individual. Equity theory is based in the idea that individuals
are motivated by fairness, and if they identify inequities in the input or output ratios of
themselves and their referent group, they will seek to adjust their input to reach their
perceived equity.
- Equity theory contends that people are motivated to seek social equity in the rewards
they receive for performance.
- Equity is an individual’s belief that the treatment he or she receives is fair relative to the
treatment received by others.
This theory is based on the following two assumptions about human behavior:
1. Individuals make contributions (inputs) for which they expect certain outcomes
(rewards).
2. Individuals decide whether or not a particular exchange is satisfactory, by comparing
their inputs and outcomes to those of others, in the form of a ratio. Equity exists when an
individual concludes that his/her own outcome/input ratio is equal to that of other people.
Goal-Setting Theory
- This motivation theory was developed primarily by Edwin Locke and Gary
Latham in 1960.
- It emphasizes that setting specific, challenging performance goals and the
commitment to these goals are key determinants of motivation. Goals describe a
desired future, and these established goals can drive the behavior.
Assumptions
i) Behavior is a result of conscious goals and intentions.
ii) Setting goals influences the behavior of people in organizations.
Characteristics of Goals
- Goal difficulty
An organizational reward system is the formal and informal mechanisms by which employee
performance is defined, evaluated, and rewarded. Rewards that are tied specifically to
performance, of course, have the greatest impact on enhancing both motivation and actual
performance.
Rewards are positive outcomes that are earned as a result of an employee's performance. These
rewards are aligned with organizational goals. When an employee helps an organization in the
achievement of one of its goals, a reward often follows. There are two general types of rewards
that motivate people: intrinsic and extrinsic.
Leaders are
- People who can influence the behaviors of others without having to rely on force.
- People who are accepted as leaders by others.
- The trait approach assumed that a basic set of personal traits that differentiated leaders
from non-leaders could be used to identify leaders and predict who would become
leaders.
- The trait approach was unsuccessful in establishing empirical relationships between traits
and persons regarded as leaders.
- Researchers thought that leadership traits might include intelligence, assertiveness,
above-average height, good vocabulary, attractiveness, self-confidence, and similar
attributes.
Ingredients of leadership:
Four basic ingredients:
i) Leader must know to use power. i.e., Ability to use power effectively and in a
responsible manner.
Compiled by the Santa Clara University and the Tom Peters Group
1. Honest -Display sincerity, integrity, and candor in all your actions. Deceptive behavior
will not inspire trust.
2. Competent - Base your actions on reason and moral principles. Do not make decisions
based on childlike emotional desires or feelings.
3. Forward-looking - Set goals and have a vision of the future. The vision must be owned
throughout the organization. Effective leaders envision what they want and how to get it.
They habitually pick priorities stemming from their basic values.
4. Inspiring - Display confidence in all that you do. By showing endurance in mental,
physical, and spiritual stamina, you will inspire others to reach for new heights. Take
charge when necessary.
5. Intelligent - Read, study, and seek challenging assignments.
6. Fair-minded - Show fair treatment to all people. Prejudice is the enemy of justice.
Display empathy by being sensitive to the feelings, values, interests, and well-being of
others.
7. Broad-minded - Seek out diversity.
8. Courageous - Have the perseverance to accomplish a goal, regardless of the seemingly
insurmountable obstacles. Display a confident calmness when under stress.
9. Straightforward - Use sound judgment to make a good decisions at the right time.
10. Imaginative - Make timely and appropriate changes in your thinking, plans, and
methods. Show creativity by thinking of new and better goals, ideas, and solutions to
problems. Be innovative.
Ohio State studies also suggested that there are two basic leader behaviors or styles:
Initiating-structure behavior—the leader clearly defines the leader-subordinate role
expectations, formalizes communications, and sets the working agenda.
Consideration behavior—the leader shows concern for subordinates and attempts to
establish a friendly and supportive climate.
Initial assumption was that the most effective leaders who exhibit high levels of both behaviors.
Subsequent research indicated that:
Employees of supervisors ranked high on initiating structure were high performers, yet
they expressed low levels of satisfaction and higher absenteeism.
Employees of supervisors ranked high on consideration had low- performance ratings,
yet they had high levels of satisfaction and less absenteeism.
Other situational variables make consistent leader behavior predictions difficult. There is
no universal or “one best way” model of leadership.
The Leadership Grid is a method of evaluating leadership styles. The Grid is used to train
managers so that they are simultaneously more concerned for people and for production.
High
1,9 9,9
Concern for people
5,5
1
1,1
9,1
Low 1 2 3 4 5 6 7 8 9
9
Low Concern for production High
1. Improvised Leadership (1,1): exhibits minimal concern for both production and people. Here
production is very Low and people are not satisfied.
2. Authority-Compliance Leadership (9,1): Highly concerned about production but exhibits little
concern for people;. Here, production is very high but people are not satisfied.
3. Country Club Management (1,9): Thoughtful attention to the needs of people for satisfying
relationships leads to a comfortable, friendly organization atmosphere and work tempo. Here,
production is low but people are enjoying using the space.
4. Team Management (9,9): Maximum concern for both people and production. Work accomplishment
is from committed people. Here, production is very high and people are satisfied and running with
good team spirit.
5. Middle-of-the-Road Management (5,5): maintains adequate concern for both people and
production. Adequate organization performance is possible through balancing the necessity to get out
work with maintaining morale of people at a satisfactory level.
- The model of Robert Tannenbaum and Warren H. Schmidt that underlies research in this field.
- Least-Preferred Coworker Theory, developed by Fred Fiedler, was the first truly
situational theory of leadership.
- This theory suggests that, the appropriate style of leadership varies with situational
favorableness (from the leader’s viewpoint).
- Assumes a task or relationship focus for leaders
High LPC (Least Preferred Coworkers) leaders are more concerned with
interpersonal relationships
Low LPC leaders are more concerned with task relevant problems
- Contingency variables determining situational favorableness:
Leader-member relations—the nature of the relationship between the leader and
the work group.
Task structure—the degree to which the group’s task is defined.
Position Power—the power vested in the leader’s position.
Or, Relationship-oriented
----------------------
Definition of Communication
Communication Process:
In the communication process, information flows from sender to receiver. It is the process by
which a source sends a message to a receiver by means of a channel to produce a response
(effect), in accordance with the intention of the source (feedback).
Transmission Phase
Encoding Message
Decoding Medium
Feedback Phase
Figure-Communication Process
Sender:
- Sender is the person who initiates a message.
- Communication start with the sender who wants to share information.
- Sender must decide on a message to share
- Sender also puts the message into symbols or language, a process called encoding.
Encoding:
- Encoding means converting or translating the idea into perceivable form that can be
communicated to others.
- It is the process of putting thoughts and ideas of the message into symbolic form.
Medium:
- Pathway the message is transmitted on.
- It is means of exchanging/transmitting the message.
- It can be letter, e-mail, telephone etc.
Decoding
- Decoding allows the receiver to understand the message.
- Decoding is the process by which the receiver interprets the message and translates it into
meaningful information.
Receiver
- person getting the message.
- Receiver decodes the massage and received.
Feedback is started by receiver and states that the message is understood or that it must be
re-sent.
Noise refers distraction and interference in the environment in which communication takes
place, simply anything harming the communication process is called noise.
Information richness:
- The amount of information that a communication medium can carry
- The extent to which the medium enables the sender and receiver to reach a common
understanding.
Choice of Communication medium is based on Information richness.
3. Personally Addressed Written Communication: lower richness than the verbal forms, but
still is directed at a given person.
- Personal addressing helps ensure receiver reads it.
- Letters and e-mail are common forms.
- Cannot provide instant feedback to sender but can get feedback later.
- Excellent for complex messages needing follow-up.
4. Impersonal Written Communication: has lowest richness.
- Good for messages to many receivers. Little feedback is expected.
- Newsletters, reports are examples.