FUNDAMENTALS

OF
MANAGEMENT

INDEX

PAGE
UNITS TITLE NO’S

2-22
1 INTRODUCTION TO MANAGEMENT

23-39
2 PLANNING AND DECISION MAKING

40-78
3 ORGANISATION AND HRM

79-102
4 LEADING AND MOTIVATION

103-113
5 CONTROLLING

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 1. Introduction to Management
Management:

“To manage is to forecast and plan, to organise, to command, to coordinate and control.”
— Henry Fayol
“Management is the art of knowing what you want to do and then seeing that it is done in
the best and cheapest way.”
— Taylor

“Management is concerned with the systematic organisation of economic resources and its
task is to make these resources productive.”
— Peter F Drucker
NATURE OF MANAGEMENT:


Universal process: Wherever there is human activity, there is management. Without
efficient management, objectives of the company can not be achieved.

Factor of production: Qualified and efficient managers are essential to utilization of labor and
capital.

Goal oriented: The most important goal of all management activity is to accomplish the
objectives of an enterprise. The goals should be realistic and attainable.

Supreme in thought and action: Managers set realizable objectives and then mastermind action on
all fronts to accomplish them. For this, they require full support form middle and lower levels of
management.

Group activity: All human and physical resources should be efficiently coordinated to
attain maximum levels of combined productivity. Without coordination, no work would accomplish
and there would be chaos and retention.

Dynamic function: Management should be equipped to face the changes in business
environment brought about by economic, social, political, technological or human factors. They
must be adequate training so that can enable them to perform well even in critical situations.

Social science: All individuals that a manager deals with, have different levels of sensitivity,
understanding and dynamism.

Important organ of society: Society influences managerial action and managerial actions
influence society. Its managers responsibility that they should also contribute towards the society by
organizing charity functions, sports competition, donation to NGO’s etc.

System of authority: Well-defined lines of command, delegation of suitable authority and
responsibility at all levels of decision-making. This is necessary so that each individual should what
is expected from him and to whom he need to report to.

Profession: Managers need to possess managerial knowledge and training, and have to
conform to a recognized code of conduct and remain conscious of their social and human
obligations.

Process: The management process comprises a series of actions or operations conducted
towards an end.

SCOPE OF MANAGEMENT

Although it is difficult to precisely define the scope of management, yet the following areas
are included in it:


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1. Subject-matter of management: Planning, organizing, directing, coordinating and controlling
are the activities included in the subject matter of management.

2. Functional areas of management: These include:

Financial management includes accounting, budgetary control, quality control, financial
planning and managing the overall finances of an organization.

Personnel management includes recruitment, training, transfer promotion, demotion,
retirement, termination, labor-welfare and social security industrial relations.
Purchasing management includes inviting tenders for raw materials, placing orders, entering
into contracts and materials control.

Production management includes production planning, production control techniques,
quality control and inspection and time and motion studies.
Maintenance management involves proper care and maintenance of the buildings, plant and
machinery.

Transport management includes packing, warehousing and transportation by rail, road and
air. Distribution management includes marketing, market research, price-determination, taking
market risk and advertising, publicity and sales promotion.
Office Management includes activities to properly manage the layout, staffing and
equipment of the office.

Development management involves experimentation and research of production techniques,
markets, etc.
3. Management is an inter-disciplinary approach: For the correct implementation of the
management, it is important to have knowledge of commerce, economics, sociology, psychology
and mathematics.

4. Universal application: The principles of management can be applied to all types of
organizations irrespective of the nature of tasks that they perform.
5. Essentials of management: Three essentials of management are:
Scientific method
Human relations
Quantitative technique
6. Modern management is an agent of change: The management techniques can be modified by
proper research and development to improve the performance of an organization.


IMPORTANCE OF MANAGEMENT


1] Management is goal oriented:- 

Management is concern with achievement of specific goals. It is always directed towards
achievement of objectives. The success of management is measured by the extent to which
objectives are achieved.

2] Management is associated with group efforts:- 

The business comes into existence with certain objectives which are to be achieved by a
group and not by one person alone. Management gets things done by, with and through the efforts
of group members. It co-ordinates the activities and actions of its members towards a common goal.

3] Management is intangible:- 

It is an unseen force, its presence can be evidence by the result of its efforts up to date order
but they generally remain unnoticed, Where as mismanagement is quickly noticed.

4] Management is an activity and not a person or group of person:- 

Management is not people or not a certain class but it is the activity, it is the process of
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planning, organising, directing and controlling to achieve the objectives of the organisation.

5] Management is situational:- 

Management does not advice best way of doing things. Effective management is always
situational. A manager has to apply principles, approaches and techniques of management after
taking into consideration the existing situations. 

6] Management is universal:-
Most of the principles and techniques of management are universal in nature. They can be
applied to government organisation, military, educational institutes, religious institutes etc. They
provide working guidelines which can be adopted according to situations.

7] Management is concern with people:-
Since management involves getting things done through others only human being performed
this activity with the help of planning and control. The element man can not be separated from the
management.

8] Management is the combination of art, science and profession:-
Management makes use of science as well as art. It is science because it collects knowledge
with the methods and data, analyses and measures it and decision is taken with the help of
experiment. It is a systematic body of knowledge. Art means application of knowledge for solving
various problems. In modern times there is separation of ownership and management, so
professional experts are appointed.


FUNCTIONS OF MANAGEMENT:


Planning :
It includes forecasting, formation of objectives, policies, programmes, producer and budget.
It is a function of determining the methods or path of obtaining there objectives. It determines in
advance what should be done, why should be done, when, where, how should be done. This is done
not only for organisation as a whole but also for every division, section and department. Planning is
thinking before doing.


Organising:
It includes departmentation, delegation of authority, fixing of responsibility and
establishment of relationship. It is a function of providing every thing useful to the business
organisation. There are certain resources which are mobilise i.e. man, machine, material, money, but
still there are certain limitations on these resources. A manager has to design and develop a structure
of various relations. This structure, results from identification and grouping work, delegation of
authority and responsibility and establishing relationship.


Staffing:
It includes man power planning, recruitment, selection, placement and training. People are
basically responsible for the progress of the organisation. Right man should be employed for right
job. It also involved training of personnel and proper remuneration.


Directing:
It includes decision making, supervising, guidance etc. It reflects providing dynamic
leadership. When the manager performs these functions, he issues orders and instructions to
supervisors. It also implies the creation of a favorable work, environment motivation, managing
managers, managing workers and managing work environment.

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!
Communication:
Communication provides the vital link in any organisation. Every successful manager has to
develop an effective system of communication. Communication means exchange of facts, ideas and
information between two or more person. It helps in building up high moral.

Controlling:-
It is a process of checking actual performance against standard performance. If there is any
difference or deviation then these differences should be detected and necessary steps should be
taken. It involves three elements:
1. Establishing standard of performance.

2. Measuring actual performance with establishment.
3. Finding out reasons for deviation.

MANAGERIAL ROLES:


1. Figurehead

As head of a department or an organisation, a manager is expected to carry out ceremonial
and/or symbolic duties. A manager represents the company both internally and externally in all
matters of formality.

He is a networker but he also serves as an exemplary role model. He is the one who
addresses people celebrating their anniversaries, attends business dinners and receptions.

2. Leader

In his leading role, the manager motivates and develops staff and fosters a positive work
environment. He coaches and supports staff, enters into (official) conversations with them, assesses
them and offers education and training courses.

3. Liason

A manager serves as an intermediary and a linking pin between the high and low levels. In
addition, he develops and maintains an external network. As a networker he has external contacts
and he brings the right parties together. This will ultimately result in a positive contribution to the
organization.

Information processing

According to Henry Mintzberg, the managerial role involves the processing of information
which means that they send, pass on and analyze information. Managers are linking pins; they are
expected to exchange flows of vertical information with their subordinates and horizontal flows of
information with their fellow managers and the board of directors. Further more, managers have the
responsibility to filter and transmit information that is important for both groups. The following
Mintzberg Managerial Roles fall under process information:

4. Monitor

As a monitor the manager gathers all internal and external information that is relevant to the

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organization. He is also responsible for arranging, analyzing and assessing this information so that
he can easily identify problems and opportunities and identify changes.

5. Disseminator

As a disseminator the manager transmits factual information to his subordinates and to other
people within the organization. This may be information that was obtained either internally or
externally.

6. Spokesman
As a spokesman the manager represents the company and he communicates to the outside
world on corporate policies, performance and other relevant information for external parties.
7. Decision-making

Managers are responsible for decision-making and they can do this in different ways at
different levels. The leadership style is important in decision-making. An authoritarian leader is
sooner inclined to make decisions independently than a democratic leader.
8. Entrepreneur

As an entrepreneur, the manager designs and initiates changes and strategies.
9. Disturbance handler
In his managerial role as disturbance handler, the manager will always immediately respond
to unexpected events and operational breakdowns. He aims for usable solutions.

The problems may be internal or external, for example conflict situations or the scarcity of raw
materials. .
10. Resource allocator
In his resource allocator role, the manager controls and authorizes the use of organizational
resources.

He allocates finance, assigns employees, positions of power, machines, materials and other
resources so that all activities can be well-executed within the organization.
11. Negotiator
As a negotiator, the manager participates in negotiations with other organizations and
individuals and he represents the interests of the organization.

This may be in relation to his own staff as well as to third parties. For example salary
negotiations or negotiations with respect to procurement terms.

LEVELS OF MANAGEMENT:

There are several types of managers. However it is useful to divide them on the basis of
three managerial levels. There are three levels of management:

• Top level management

• Middle level management

• Lower level management

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!

Administrative level consists of top or upper level of management. Operative level consists of
middle level and lower management. Lower level management includes supervisor and foreman.
The level of management depends upon the size of the organisation.

MANAGERIAL SKILLS:

1.Conceptual Skills:-
Conceptual skills are the abilities to think about the creative terms understand and visualise
the future, to organise and translate observation into ideas & concepts. Conceptual skills are
essential to identify and diagnose the problems. This will helpful in determining the goals.


2. Analytical Skills:- [Decision making]
Analytical skills mean ability to work out a complex problem or situation into component.
Analytical skills are required for solving problems and decision making. This is also helpful for
evaluation of performance and arriving at judgment.
3. Human relation Skills:-
Human relation skills represent the ability to understand the behaviour of people, their
problems, their needs, working conditions and motivation to people. These skills are essential in
directing the people and for better coordination.

4. Administrative Skills:-
It involves the implementation of plan and use of available resources to get the desired
output that is profit and to regularise a performance in orderly manner. It is also helpful in co-
ordination of activities.

5. Technical Skills:-
These skills are essential for first line managers. He requires knowledge of a job, ability to
apply the methods and techniques of job. He is responsible for providing technical guidance and

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instructions to subordinates.

6. Computer Skills:-
Computer knowledge is essential for today’s manager i.e. knowledge of hardware &
software. Hardware is technical term & software is ability to adopt the system in an organisation to
attempt goals. In modern days computer is widely used in organisation. Hence today’s’ manager

!
should possess the knowledge of computer. This is helpful in decision making. It also helps to
increase the productivity in the organisation.

7. Communication Skills:-
Communication is systematic process of telling, listing and understanding. This skill
requires the ability of listening and speaking in an effective manner. The manager is responsible for
getting the things done by others. He should be expert in oral and written communication.
Communication skill is essential for getting success. It is depend upon the manager who achieves
the results with efforts of others. Co-ordination can be attained with the help of proper
communication. Success is depends upon proper communication.

CHALLENGES OF MANAGEMENT:

1. Globalization: -
Globalization phenomenon is getting popular these days. Globalization of business refers to
the free flow of goods service, technology, labor, capital information, across the national boundary;
it is closer economic integration among different countries in terms of flow of good service, capital
labor and technology. Globalization is the tendency of expanding business in different countries.
Managers have to work in boundary less world. There is no territory or barrier in export and import
business. Globalization invites global competition. Organizations which were competing locally
with local competitors now they have to compete with global competitors. It is very difficult to
organization to survive and develop in such situation. Organizations should increase quality of
product and reduce cost which is a challenge for manager. Many organizations are becoming global
these days. They are running their business in different countries with different culture, climate, and
geography, political and economic system. It is a challenging work for managers to prepare
executives officers who can run business in such countries.

2. Workforce diversity:
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 Modern organizations are characterized by workforce diversity. Diversified workforce is the
reality of business these days. Organizations are becoming heterogeneous in terms of ethnicity,
gender, nationality, age group, etc. People having different religions, different nationality works
together under one roof. Different people have different nature and they show different behavior
because they come from different background. How to manage such diversified workforce is a great
challenge for managers. If such diversified workforce is managed properly, organization will be
highly benefited because they also bring diversified skill and knowledge. But, if they are not
managed properly, they create serious problem.

3.Quality assurance and productivity:

Quality is the ability of the product to satisfy customers need. How to improve quality of the
product or how to assure customers about the quality of the product has become a great challenge
for management. Quality ensures organizations survival and growth. Organizations use quality to
compete with competitors. Only improving quality of product organizations can face the global
competition. Therefore, there must be continuous improvement in quality. Quality improvement has
no boundary. It is the race without final line. It is said that people buy quality not product. And, to
improve quality is a really a challenge for management. Along, with increasing quality to increase
productivity again is another challenge for management. Organization must try to achieve higher
productivity. Higher productivity only helps to reduce cost. Productivity is the ratio between input
and output. Improved technology, employees, regular skill development and better utilization of
resources helps to increase productivity. Total quality management is the latest approach or needs to
improve quality.

4.Technological advancement:
How to utilize advanced and sophisticated technology has become another challenge for
management. Technology has developed beyond the expectation of anybody in the world over last
100 years. Tremendous advancement has been made in production, distribution and information
technology. Managers must manage all this technology with the development of computer, the face
of information technology has absolutely changed. Introduction of internet, email and other
electronic media, have benefitted organizations in the field of productions, distribution and other
areas of business. Decision making have been facilitated by information technology. Technological
advancement has changed the nature of job. Most of the jobs which were performed by unskilled
and semi-skilled labors previously, now they are performed by skilled labors. Number of white
collar job is increasing and blue collar jobs are decreasing. Organization must train their employees
about new technology. Only with new technology, Organization can compete with other
competitors.

5.Ethics and social responsibility:

Ethics is study of how our decisions affect other people. It is the study of people’s right and
duties. The moral rules the people to make decisions and the nature of relationship among people.
Ethics is to follow social code of conduct, social norms, values and attitude. The decisions made by
managers have a broad reach both inside and outside the organization. So, managers must follow
ethical norms and consider social responsibilities. Managerial decision must be based on ethical
ground. But, these days ethics id\s decreasing in business world. So, many business organizations
have unethical practice. Because of the unethical practice of some business houses, all business
world is blamed.
How to fulfill social responsibility is also a challenge for management. The concept of
corporate social responsibility has developed. Social responsibility means obligation of business
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organizations towards society community, people, share holders, etc. To provide quality product at
affordable price, to develop more and more employment opportunities, to carry out different
development activities in society, to control pollution are some social responsibilities of business
organizations.
6.Innovation and change:
Management must pay attention on innovation and change. Otherwise, they would go out of
business. Rapid innovations are taking place in technology, product and service. Product lifecycle is
getting shorter and shorter. Product needs continuous improvement if the life span is to be made
long. New ideas, new techniques, new methods are being innovated; there must be new inventions
of ideas, new invention of product. Old and outdated product cannot satisfy customers.
There is change in external environment, political and legal, socio-cultural, economic and
technological environment change rapidly. How to adjust with such change, how to keep pace with
such change, how to keep pace with such change that has become challenge for management.
7. Empowerment:
This is the age of empowerment. Role difference between management and workers has
narrowed down. Status between worker and manager is very narrow. Most of the decisions are
taken at operating level. Workers are free to plan and schedule their work. They are given more and
more autonomy and freedom. They participate in major decision making activities. Joint goal
setting and joint performance evaluation has become common. Self managed work team had been
established, more and more information are given to employees, and how to manage such empower
team has become challenge for managers.

EVOLUTION OF MANAGEMENT:

Management started when man started living in groups. It relates to achieve certain
objectives.
According to George management begin in family, and after that it is expanded in tribes &
finally the scope was increased up to urbanisation.
The reference of management was found in Babylonia (civilisation on the bank of Nile
river). After that Egypt provides us with an example of decentralised organisation with little control.
Management thoughts are shown in planning and organising in the construction of Pyramids.
The ancient philosopher first recognised the need for proper methodology for employees’ selection
and training.
Greek provides extensive documentation of management principles. These principles of
management are world wide famous. It is considered as management is an art. It includes
employees’ selection, delegation of authority, time study, motion study etc.
Looking at the entire process of management thoughts, in the early period management was based
on trial basis. There was no exchange of ideas and no practice of communication. Management is
developing science. It grows accordingly to changes in the social & political & economic changes.
There are five stages of evolution of management thoughts.

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1. Pre – Historical Period:
Management is as old as man. Awareness of needs & satisfaction of needs is the part &
parcel of management. In the ancient time in the villages, head of the village plans for the villages.
There was a good labor planning. Villages were isolated. The basic needs in the villages were
satisfied by the persons in the villages. Responsibilities were distributed among the people to satisfy
the basic needs.

2. Organised Society:- (Church & Military)
The next contribution to the development of organisation & management was by roman
church. 1500 years ago Chinese ruler advised government about management of human institutions.
The German public gives contribution towards management thoughts. During this period
management techniques were largely developed in administrative military & state administration.

3. Industrial Revolution:-
This period is known as the period of scientific management. It is proved that management
is related with enterprise & business. In this period lots of technological changes took place. With
the industrial revolution the question of traditional management appears. The traditional
management concept was replaced by professional management.

4. Towards Consolidation:-
This stage mark the beginning of the work of investigation of principles of management i.e.
division of work, authority, responsibility, discipline, scalar chain. These ideas were developed by
‘Henry Fayol’.

5. Recent Development:-
Recently management concepts are based on mathematical analysis. They are based on
linear programming, operational research, PERT (Programme Evaluation and Review Technique),
CPM (Critical Path Method). These techniques are useful in decision making, controlling, problem
solving etc. In today’s competitive world these techniques are essential for controlling the cost that
is why management is called as a separate profession.

CLASSICAL APPROACH:
“Classical approach of management professes the body of management thought based on the
belief that employees have only economical and physical needs and that the social needs & need for
job satisfaction either does not exist or are unimportant. Accordingly it advocates high
specialization of labour,centralized decision making & profit maximization.”
Classical approach is the oldest formal school of thought which began around 1900 and continued
into the 1920s. Its mainly concerned with the increasing the efficiency of workers and organizations
based on management practices, which were an outcome of careful observation.Classical approach

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mainly looks for the universal principles of operation in the striving for economic efficiency.
Classical approach includes scientific & administrative management.

SCIENTIFIC MANAGEMENT:

Scientific management is a part of early management approaches. The chief contributor of

scientific management is F. W. Taylor. He is known as Father of Scientific Management (1856 to
1915) was born in USA.
He did most of his schooling in France & Germany. He couldn’t finish his graduation & join
Midvale Co. (Steel Work). He worked there for 6 years. In 1884 he raised to the position of Chief
Engineers, as mean while he obtained Masters degree in Physics, Mathematics & Engineering.
In 1898, he joined Bethlehem Steel Co. where he did his experiment to increase the loading
capacity of each worker with regards to material handling equipment. At first one worker was
engaged in loading 12.5 tones of iron. But with the help of time & motion study he proved that one
man can load 47.48 tones because of the change in the sise of spade & systematic arrangement of
instruments. With the help of proper planning organisation can earn more profit. Initially the
workers in that company are 500 to 600 because of this the strength of workers reduce to 140 and
profit increased by 78,000 dollars.

Definition:-
Scientific management is concern with exactly knowing what you want men to do & then
see that they are doing in best & cheapest way.

Contribution of F. W. Taylor :-

1) At Midvale Steel Co. he improved proper distribution of work for each worker.
2) In Midvale Steel Co. he analysed the work done by workers in specific job & allotted standard
time.
3) He also made experiments on time study & motion study to decide the work load of each
worker.
4) In Bethlehem Steel Co. he had made experiments with material handling equipment for
increasing the capacity of each worker.
5) In 1901, he presented a paper on differential piece rate system.
6) In 1906, he published article on art of cutting metals.
7) In 1903, he presented important paper on shop management – In that he explained gang boss, 

speed boss, repair boss & inspector.
8) In 1911, he gave the principles of scientific management, for which he is remembered as 

‘Father of Scientific Management’. In that he has explained:- 

i) Friendly relationship between workers & management.

ii) Scientific education to the workers.

iii) Scientific selection of workers so that each worker could be given responsibility 

for the task.

iv) Development of the true science of management with proper analysis in the 

organisation.

Mechanism:-

1. Separation of Planning & Doing:-


Before Taylor’s scientific management a worker used to plan about his work &

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instruments necessary for that. Supervisors’ job was to see how the workers were performing. This
creates a lot of problems. So Taylor has separated planning & doing authority.

2. Functional Foremanship:-
Separation of planning from doing resulted into development of supervision system. In this
system 8 persons were engaged, out of that 4 persons were engaged in planning department. They
are time & cost clerk, routine clerk, instruction card clerk & disciplinarian. In production process 4
personnel were engaged, they are speed boss, repair boss, supervisor & gang boss.

3. Job Analysis:-
It is related with finding out best way of doing. It means that least movements in doing job.
It will lead to complete production in less time & lesser cost. It includes:-
A) Time Study:-
It means determining time required to complete a job in a particular time. The movement
which takes minimum time is the best one.
B) Motion study:-
It means study of movement while performing a job i.e. elimination of wasteful movement
in performing a job, only necessary movements are engaged.
C) Fatigue Study:-
It shows the amount & frequency of rest required, while completing the work. After certain
period of time workers feel fatigue & can’t work with full capacity. Therefore they require rest in
between. When rest is allowed they start working with full capacity.
D) StandardiSation:-
As far as possible standardisation should be maintained in respect of instruments & tools,
period of work, amount of work, working conditions, cost of production etc. these all things are
fixed in advance on the basis of job analysis.
E) Scientific Selection & Training of Workers:-
Taylor has been suggested that worker should be selected on scientific basis taking into
account their education, work experience, attitude & physical strength.
F) Financial Incentives:-
Financial incentives help to motivate workers in maximum efforts. Higher wages lead to
increase in efforts. He applied differential piece rate system. According to him workers have to
complete the work within specified time and then only he will get wages at higher rate per piece &
one does not complete a job gets a lower rate. Wages should be based on individual performance &
not on the position occupied.
G) Economy:-
Techniques of cost estimated & control should be adopted. Waste should be controlled
properly. Profit will be achieved with elimination of wastage. He explained how resources are
wasted.
H) Mental Revolution:-
Scientific management depends upon mutual co-operation between workers & management.
Taylor say’s great revolution takes place in the mental attitude of two parties under scientific
management. He has given systematic design of work. Labour management, co-operation required a
complete mental change on the part of both parties. The workers have specific duties towards
management & vice-a-versa. The method of scientific investigation & knowledge should be
accepted by both parties.
Criticisms:-
In the beginning Taylor’s scientific management was considered as something very unique.
But after some time it was subjected to several criticism.

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1) Taylor’s scientific management was related to production management. It takes practical view 

of management & focuses attention only on the production management. Taylor’s study of
management has become the study of lower level management. He stressed on efficiency on lower
level. He has neglected marketing, financial and decision making aspects completely. 


2) Scientific management is applicable to large scale organisation. It involves high expenditure. It

is a luxury for small scale organisation. It involves research, experiment & analysis. It is difficult
for small scale organisation. 


3) It was also argued that devices of work analysis, time study & motion & fatigue study can’t be
applied in the practical life. 


4) The idea of best way of doing a job was also criticised. Everyone has his own natural style of
work & he can give best only if he is allowed to work in his style. The maximum efficiency will be
attained by the group & not by individual worker. 


5) Wages of workers are not increased in a direct proportion of productivity. It leads to exploitation
to workers. 


6) People are not ready to use the word ‘scientific’. The scientific does not have any significance.
Management is a social science and not an exact science. 


ADMINISTRATIVE MANAGEMENT:

Henry Fayol has been considered as the real father of modern management. He was a French
industrialist and graduated as a mining engineer in 1860. In 1908, Fayol contributed his famous
“functional approach” to the management literature. Fayol’s writings were first published in 1908 in
French, but up to 1918, it was not translated into English. His ideas wee accepted after his death in
1925.
Henry Fayol has written a book for his contribution in which he has explained the problems
managing & organisation from top management point of view. He has used the term administration
instead of management.
Fayol found that activities of industries should be divided into 6 group’s i.e.
1. Technical (production)
2. Commercial (buying, selling and exchange)
3. Financial (optimum use of capital)
4. Security (protection of property)
5. Accounting (including statistics)
6. Managerial (all functions of management)
Fayol also stressed that managers should possess physical, mental, moral, educational and
technical qualities to conduct operations of a business enterprise. While giving management
principles Fayol has emphasised on two things:-
i. The principles of management can be followed in every organisation.
ii. These principles are not fixed. They are flexible.

He has listed certain fundamental principles which are to be adopted by managers in dealing with
sub-ordinates. These 14 principles are world wide applicable.

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1) Division of Work(specialisation):-
A business activity carried out by small scale may be managed & controlled by proprietor.
As business expands, activities grow & need more people to control those activities. Organisation is
jointly managed by a group of person. Fayol has advocated division of work to take the advantage
of specialisation.


2) Authority & Responsibility:-
Authority represents a power enjoyed by a person of his position in the organisation. It may
be for taking decision, spending money or in many other ways. Responsibility is obligation created
upon a person for the use of authority, which is entrusted to him. These two terms are co-related.
Fayol suggested that there must be balance between authority & responsibility.


3) Discipline:-
All the personnel serving in an organisation must follow discipline. Discipline is obedience,
application of behaviour & energy shown by an employee. Discipline may be self employed or
command discipline. Discipline can be obtained lower remuneration, dismissal, demotion of
position. While applying such circumstances proper proof should be taken into account.


4) Unity of Command:-
Each employee should receive order from single superior. In the organisation structure it
should be clearly stated that who is responsible to whom? & who should receive order from whom?

5) Unity of Direction:-
According to this principle each group of activity with some objective must have one head.
There is a difference between unity of command & unity of direction. Direction is concerned with
planning & unity of command is concerned with reporting.


6) Subordination of individual interest to general interest:-
In an organisation individual interest should not be given any importance. The manager
should always keep organisational interest before him & should determine such policies which will

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be beneficial to entire group & not just few personnel. It is responsibility to management to create
common understanding between all.


7) Remuneration:-
Every employee must be paid an adequate remuneration for his services. Remuneration
should be fair & should provide maximum satisfaction to person who is working in the
organisation. Personal factors such as demand for labor, position of the labor & competition as well
as cost of living index should be taken into account. General Economic Conditions should be
considered while deciding the remuneration of an employee. In any case exploitation of the worker
should be avoided.


8) Order:-
Fayol has suggested that at one position one person should be appointed. Each person must
have appropriated position in organisation.


9) Centralisation:-
It means the extent to which authority should be concentrated in the hands of top level
management. It may be centralised or decentralised. There are limitations of complete centralisation
& complete decentralisation. Therefore, there should be proper balance between this two.


10) Scalar Chain: - (Straight line & Command)
It shows the straight line of authority from highest level to lower level for communication.
Scalar chain is the extract of organisation chart & shows the responsibility or position of everybody
in an organisation.


11) Stability of Tenure:-
Effort must be made to keep the employee stuck to organisation so that the labour turnover
can be low by keeping check on administrative cost of organisation. Care must be taken to satisfy
the staff otherwise there will be bad effect & loss of labour.


12) Equity:-
Equity is combination of justice & kindness; equity in treatment & behaviour is liked by
everyone & it brings loyalty in the organisation.


13) Initiative:-
Within the limits of authority & discipline manager should encourage their employees for
taking initiative. Initiative is concern with thinking. Thinking leads to execution of plan. Initiative
increases energy on the part of human being.



14) Espirit De Corps:-
This is a French term. It means manager is like a captain of a team who is responsible to
maintain high moral between all workers. It may be possible by effective communication among all
persons in organisation. His understanding & differences in opinions should not be harmful. The
best way of taking such situation is to establish dialogue between parties. Participation of workers
in the process of decision making is important.

BEHAVIOURAL APPROACH:
Page 16
 Behavioral management theory relies on the notion that managers will better understand the
human aspect to workers and treat employees as important assets to achieve goals. Management
taking a special interest in workers makes them feel like part of a special group.
As time went on, thinking shifted, and management started looking at employee satisfaction
and working conditions as a way to increase productivity. Theorists like Elton Mayo and others
studied employee productivity under different conditions to determine a connection.
Mayo's Hawthorne experiment provides a good example of this. In the Hawthorne
experiment, a group of telephone line workers were separated and observed working in a private
room. During their workday, the group members were given special privileges, like freedom to
leave their workstations, changes in pay rates, and even company-sponsored lunch. What they
discovered was the control group produced more than the other employees. The rationale for this
increased production was that the group felt that management was interested in their well-being.

HAWTHORNE EXPERIMENTS:
Elten Mayo can be called as the Founder of Human relations school. Mayo conducted experiments
at the Department of Industrial research of Harward.
Mayo was of the opinion that an individual is not very important, his personality is important as a
member of the group.
The human relations movement was evolved during 1920’s in the U.S.A. Elten Mayo (1880-1949)
laid the foundations for the human relations approach.
Hawthorne experiments was conducted from 1924 to 1932 at a plant of Western Electric Company,
Chicago was manufacturing Telephone System Bell. It employed 30,000 employees at the time of
experiment. The experiment was conducted in 4 phases.


I] Illumination Experiment :- (Physical, conducting, lighting effect) 


It was undertaken to find out how change in the level of light & physical factor affects
production. Higher illumination will help in increasing the production; decrease in illumination will
lead to decrease in production. 



II] Relay Assembly Test Room:- 

Under this study, two small groups of six female telephone relay assemblers were put in
separate rooms under close observation and control. Frequent changes were made in working
conditions such as working hours, rest periods, hot lunch etc. Over the two years period, it was
concluded that social or human relationship among workers exercised greater influence on
productivity of workers than working conditions. This special attention and treatment given to
workers developed a sense of group pride and belongingness which motivated them to increase their
performance. 



III] Mass Interview Program:- 

During the course of experiment about 20,000 interviews were conducted from 1928 to
1930. For determination of employee’s attitude towards company such as supervision, insurance
plan, promotion, wages etc. & yes & no type of questions were asked. During the course of
interview it was discovered that workers behaviour was influenced by group behaviour. The
programme indicated that productivity can be increased if people allowed talking freely. 



IV] Bank wiring observation room:- 

This experiment was carried from 1931 to 1932 with a view to analysis functioning of small
Page 17
group & its impact on individual behaviour. The group was formed consisting of 14 male members,
9 wire men & two inspectors. Hourly wage rate was based on average output of each worker &
bonus was based on the productivity of group of workers. It was found that the group has
established its own standards of output and social pressure was exercised.

The main conclusions of Hawthorne Experiments are as follows :
1) Social factor in output:- 

Worker is influenced by social factor & the behaviour within the group. Man is a social
animal. Only monetary incentives are not sufficient to increase the production but non-monetary
incentives will also help to increase the production. Means, behaviour within the group will
definitely increase the production. This acts as a motivating factor. 



2) Group Influence:- 

Worker forms a group in the organisation means, they develop informal relationship. They
try to change their behaviour & manager is considered as a part & parcel for that group & not as a
manager. 



3) Leadership:-

Leadership is important for directing group behaviour. But the formal relationship is not
accepted by the workers. Informal relationship which is express in relay assembly test room & bank
wiring observation room is lead to increase the efficiency of the workers.


4) Supervision:-

Supervision is important for determining efficiency of output but friendly supervision helps
to increase the productivity of the workers in the organisation. 



5) Communication:-

In every organisation communication is very important. Workers participation in the process
of decision making helps in increasing the productivity. Workers must communicate freely with
managers to explain their problem. Better understanding between manager & workers develops
positive attitude. 



Criticism:-

1) The Hawthorne experiment is criticised because there is no scientific base. It is based on social
relationship.
2) It was also pointed out that this experiment does not have any guarantee because it has limited
scope.
3) The human relationship approach is criticised on the several bases. It is observed that this
approach try to soft corner of the requirement of the organisation. No attempt was made to
understand human behaviour at work place.
4) As a result of the impact of human relation approach, human relation become fad and fashion
with many people of the organisation. They believe that happy workers are productive workers.
This is not always true.
5) With the passage of time both managers & workers begin to realise disadvantage of the situation.
6) When decisions are made secretly is important which is not possible in the Hawthorne
experiment. 

However, human relationship approach should not be totally neglected. Human psychology
is basically sound & should be properly understood.

Page 18


Quantitative approach in management:

This approach emphases the use of mathematical models in solving many complex
management problems. The quantitative tools and methodologies, known as Operations Research
Techniques are designed to aid in decision making relating to operations and production. This
generally involves the following four steps:
(a) A mathematical model is constructed with variables reflecting the important factors in the
situation to be analyzed.
(b) The decision rules are established and some standards are set for the purpose of comparing the
relative merits of possible courses of actions.
(c) The empirical data is gathered which would relate to the parameters in the models.
(d) The mathematical calculations are executed so as to find a course of action that will maximize
the criterion function.
These operational research techniques are extensively used in many fields. Some of these are:
(i) Capital budgeting,

(ii) Production scheduling

(iii) Planning for manpower development programmes
(iv) Inventory control

(v) Transportation and aircraft scheduling

(vi) Resource allocation

(vii) Queuing theory or waiting line and service problems
(viii) Preventive control and replacement problems
(ix) Competitive problems and problems of game theory.

Systems Approach:

The systems approach to management is a concept which views a company as an

interconnected purposive system that consists of several business sections. The entire system can be
broken into three parts namely - input, process and output.
• Input involves the raw materials, funds, technology, etc.

• The process refers to activities related to management, technology, operations, etc.

• Output are the products, results, etc.

• The response or feedback in a system focuses on the information and data which is utilized
for executing certain operations. These inputs aid in correcting the errors found in the processes.

Page 19
!
It is a management approach which enables the leadership to see the company as a unified
part or a major section of the larger outside corporate environment. Even a small activity in a
section of a company has a substantial effect on other sections of the company. Such a system may
be biological, physical or social, and may enable the management to efficiently determine the long-
term goals of the company. The systems approach states that, for realizing the operations of an
entity, it is essential to see the entity as a whole system.


Elements of a System

Page 20
 A system is made of different subsystems: internal and external. These subsystems are
interconnected and influence each other and the system as a whole. Each of the subsystem interacts
with the adjacent subsystem and they work in synergy for the betterment of the entire system. The
limits within which the internal subsystems function, are determined by the system boundary. The
external subsystems, on the other hand, are those which lie outside the boundary limits, but still
influence the system.


For example:
In a supermarket, the various subsystems are the marketing and advertising, sales, admin
and finance department. These are the internal subsystems that lie within the boundary. The external
subsystem here are the buyers or the customers who visit the store. Only when all these subsystems
work together, the system is said to function effectively.

Open and Closed System

The organization can act as an open or a closed system. An open system is the one where the
elements of the system can interact with the environment. This interaction can involve the transfer
of material, information or manpower. The purchase department in any organization can be an
example of open system. The buyers have to interact with suppliers (environment) and other
internal departments to carry out the purchasing activity.
On the contrary, a closed system is the one which does not interact with the environment at
all. There is no exchange of information, material or manpower between the system and
environment. It is sometimes referred as an 'isolated system'. An assembly line can be treated as a
closed system if it does not interact for supply of raw materials. A research department can also be
an example of closed system.

Contingency Approach:

The contingency approach is a management theory that suggests the most appropriate style
of management is dependent on the context of the situation and that adopting a single, rigid style is
inefficient in the long term. Contingency managers typically pay attention to both the situation and
their own styles and make efforts to ensure both interact efficiently.
The contingency approach contrasts with other forms of leadership, such as trait-based
management, whereby personality and individual make-up predict patterns of management and
responses to given situations over time. Another management approach is style-based app
Contingency theory is beneficial to organisations because of the potential for learning from
specific situations and using these lessons to influence future management of the same or similar
situations. The ability to adapt to external pressures and changes is also an advantage. Contingency
theory may also produce more well-rounded leaders who are able to develop their skills in multiple
areas.

Features of Contingency Theory:

1. Management is situational in nature. The technique of management depends on complexity of the
situation.
2. It is the ‘if and ‘then ‘approach to management, ‘If’ represents the independent variable and
‘then’ represents the dependent management variable or the technique to be adopted in that
situation. ‘If’ workers have strong physiological needs, ‘then’ financial motivators should be
adopted and ‘If’ they have strong higher-order needs, ‘then’ non-financial motivators should be
adopted.
Page 21
3. Management principles are not universal in nature as there is no best style of management.
Management is situational and managerial actions depend upon the environmental circumstances.
4. It helps in understanding the complex organisations as it focuses on multivariate nature of
organisations. It helps an organisation to operate under different environmental conditions. Rather
than having a specific solution to solve problems, it provides a framework where every solution
depends upon the environmental conditions. Same problem can have different solutions at different
points of time and different problems can have same solution at the same point of time.
5. It provides insight into organisation’s adaptability to both internal and external environment. It is
a matter of fitting the internal environment to its external environment.

Evaluation of Contingency Theory:

This theory has proved useful for practicing managers as:
1. It is an integration of different schools of thought; classical, behavioural and systems approach. It
integrates the principles of different schools of thought and applies them contingent upon the needs
of the situation.
2. It is pragmatic in nature as solution to every problem is found after analysing the situation.
3. It follows the technique of multivariate analysis. It thinks of all possible variables or factors that
affect the situation and adopts the best.
4. It is adaptive in nature. It does not presume a pre-designed structure of the organisation but
adopts a structure that helps the organisation adapt to the environment.
5. It helps to design the organisation structure and plan the information decision systems. A small-
sized organisation may be centralised and a large-sized organisation may be decentralised in
structure.
6. It helps to devise motivational and leadership approaches to motivate the workers. Autocratic
style may be adopted to deal with unskilled workers and participative style to deal with skilled
workers. Contingency approach to management is considered as a leading branch of management
thought today.

Limitations of Contingency Theory:

Despite the best that contingency theory offers to the management thought, it is not free
from criticism.
The critics assert that:
1. It does not follow the concept of ‘universality of principles’ which often apply to specific
management situations.
2. It is argued that what contingency theory asserts was asserted by Fayol also. He also talked of
flexibility of management principles. Therefore, the theory has added nothing new to the
management thought.
3. As there is no definite solution to a problem, managers think of alternatives to arrive at the right
choice. This is costly in terms of time and money. It also does not provide theoretical foundation
upon which management principles will be based.
4. It is not possible for managers to determine all the factors relevant to the decision making
situation. Because of constraints of time, money and ability, managers can neither collect complete
information about the environment nor analyse it completely.
Besides, it is not possible to establish perfect relationship amongst these factors. Application
of this theory may, therefore, be a complicated task as decisions are based on limited information.
These criticisms are only theoretical in nature. The theory contributes to the development of
management thought if applied rationally.

Page 22
 2.Planning and Decision Making

GENERAL FRAMEWORK FOR PLANNING:

Planning is a complex and comprehensive process involving a series of overlapping and
interrelated elements or stages, including strategic, tactical, and operational planning. Strategic
planning establishes master plans that shape the destiny of the firm. An example of strategic
planning is when the executive team at Harley-Davidson Inc. planned how to deal with the
demographic shift of their customer base becoming much older. The strategic issue it faced was
whether to change its iconic product line to win over young buyers. A second type of planning is
needed to support strategic planning, such as how to build motorcycles that fit the preferences of
younger motorcyclists.
Tactical planning translates strategic plans into specific goals and plans that are most
relevant to a particular organisational unit. The tactical plans also provide details of how the
company or business unit will compete within its chosen business area. Middle managers have the
primary responsibility for formulating and executing tactical plans. These plans are based on
marketplace realities when developed for a business. Conditions can change rapidly in competitive
fields such as a Korean company suddenly developing a substantially lower-price sports bike. The
scope of tactical plans is broader than operational plans (described next), but not as broad as that of
strategic plans.
A third type of planning is aimed more at day-to-day operations or the nuts and bolts of
doing business. Operational planning identifies the specific procedures and actions required at
lower levels in the organisation. If HarleyDavidson wants to revamp an assembly line to produce
more sports bikes, operational plans would have to be drawn. In practice, the distinction between
tactical planning and operational planning is not clear-cut. However, both tactical plans and
operational plans must support the strategic plan such as revamping manufacturing and marketing
to capture a larger group of young cyclists. The framework presented in Exhibit 4-1 summarises the
elements of planning. With slight modification the model could be applied to strategic, tactical, and
operational planning.
A planner must define the present situation, establish goals and objectives, and analyse the
environment in terms of aids and barriers to goals and objectives. The planner must also develop
action plans to reach goals and objectives, develop budgets, implement the plans, and control the
plans. This chapter examines each element separately. In practice, however, several of these stages
often overlap. For example, a manager might be implementing and controlling the same plan
simultaneously.
Planners frequently start in the middle of the process, proceed forward, and then return to an
earlier step. This change of sequence frequently happens because the planner discovers new
information or because objectives change. Also, many managers set goals before first examining
their current position. To illustrate the general framework for planning we turn to HarleyDavidson,
that is dealing with the planning challenge presented by its aging customer base.
Define the Present Situation:
Knowing where you are is critical to establishing goals for change. Defining the present
situation includes measuring success and examining internal capabilities and external threats.
Harley- Davidson has had a long tradition of success. At one time the motorcycle had a youth-
oriented counterculture mystique. By the mid-2000s, Harley had become a middle-aged nostalgia
brand. Because of so many loyal customers, Harley had been able to turn small product
improvements into sustained growth. Many Harley-Davidson customers own multiple—sometimes
even 12—Harley motorcycles. At the moment the new, bigger Twin Cam engine and six-speed
Page 23
transmission was announced in July 2006, orders began pouring into dealers. Annual sales of $6
billion were forecast. Another capability of Harley is a fast-growing overseas fan base that
perceives the Harley-Davidson in the best possible sense, referring to being powerful and free. Over
one-fifth of Harleys are sold outside the United States. A major external threat facing Harley-
Davidson was the long-time prediction that a demographic time bomb would blow up the company.
The median age of a Harley buyer had leapt from 35 in 1987 to nearly 47 in 2006. The company has
done little to shake its image with people in their twenties as Granddad’s or Grandma’s bike. “They
haven’t kept up with the younger riders,” says a 44-year-old business analyst who owns two
Harleys.

Establish Goals and Objectives

The second step in planning is to establish goals and identify objectives that contribute to
the attainment of goals. (Goals are broader than objectives, whereas objectives function as smaller
goals that support the bigger goals.) A major goal Harley management might establish is to continue
to cultivate people over 30 who prefer the big loud bikes that allow for smooth rides on long trips.
Another goal would be to promote the Harley as a retirement treat, especially for young retirees.
Another goal would be to promote its lower-priced sports bikes in its Buell line. Genevieve Schmitt,
founding editor of WomenRidersNow.com, believes Harley should establish the goal of continuing
to focus on what they do best. She says, “They’ve responded to the needs of smaller, less muscular

Page 24
riders by offering motorcycles with lower motors. They realise women are an up-and-coming
segment and that they need to accommodate them. They don’t market to a specific gender, but are
gender-neutral. They market a lifestyle, with daughters and moms, dads and sons.” Following this
thought Harley might establish the goal of making their marketing more gender neutral.

Analyse the Environment to Forecast Aids and Barriers to Goals and Objectives
As an extension of defining the present situation, the manager or other planner attempts to
predict which internal and external factors will foster or hinder attainment of the desired ends. A
key strength of Harley being able to retain its prominence in the motorcycle business is that its
brand is so well established. The loyal and talented Harley-Davidson workforce will be able to
adapt to any shift toward smaller, sportier bikes. A potential barrier in the environment to the
continued success of Harley is that the Japanese bike makers quickly change to suit the shifting
taste of customers. In contrast, Harley is over 100 years old and much more conservative. Company
management is less than eager to mess with its iconic image. Kent Grayson, a marketing professor
at Northwestern University says, “It’s more than a brand. It’s a culture.” Another barrier to attaining
goals is that European and Japanese motorcycle manufacturers far outsell the Harley Buell line of
smaller bikes in the United States. For example, in 2006 the Japanese company Susuki sold about
27,000 motorcycles with engines in the same class as the Buell line. Harley sold about 4,200 in this
class. Another external threat is that many individuals are concerned about motorcycle safety and
the disturbance to the environment from the loud exhaust blast. The Hell’s Angels image of
motorcyclists is a potential barrier. Yet the barrier is offset somewhat by the fact that many would-
be drivers are attracted to the rebellious image.

Develop Action Plans to Reach Goals and Objectives

Goals and objectives are only wishful thinking until action plans are drawn. An action plan
consists of the specific steps necessary to achieve a goal or objective. The planners must figure out
specifically how they will accomplish such ends as encouraging Harley users to keep motorcycling
until later in life. Other action plans might include more advertising aimed at women, including the
objective of featuring women celebrities in advertisements for Harley-Davidson. Additional action
plans might include free seminars for seniors about the joy of motorcycle driving, and more
extensive promotion of the Buell line.

Develop Budgets
Planning usually results in action plans that require money to implement. Among the
expenses would be larger advertising and promotion budgets geared to seniors and women.
Expenses for expanding the Buell line would be incentives for dealers to purchase them and
increased production, so more Buells could be placed in dealer showrooms. Another budget item
would include safe-driving campaigns to help soften the image of motorcycling being so dangerous.

Implement the Plans

If the plans developed in the previous five steps are to benefit the firm, they must be put to
use. A frequent criticism of planners is that they develop elaborate plans and then abandon them in
favor of conducting business as usual. One estimate is that 70 percent of the time when CEOs fail,
the major cause of failure is poor execution, not poor planning. Poor execution in this study
included not getting things done, being indecisive, and not delivering on commitments.4
Furthermore, execution is considered to be a specific set of behaviours and techniques that
companies need to master in order to maintain a competitive advantage.5 Part of the outstanding
success of Toyota can be attributed to top-level management’s penchant for implementing its many
Page 25
plans. CEO Fujio Cho believes that Toyota can never afford to take its foot off the gas (or relax in
executing its plans). He believes that running Toyota is less like driving a car than “trying to pull a
handcart up a steep hill —there’s always tremendous danger that if we relax, even for a moment, we
could lose momentum and be thrown to the bottom.”6 The Harley managers and specialists seem
poised to execute because their planning sessions heavily emphasise turning plans into action.
HarleyDavidson management desperately wants the success of the Harley line of motorcycles to
continue into the future.

Control the Plans

Planning does not end with implementation, because plans may not always proceed as
conceived. The control process measures progress toward goal attainment and indicates corrective
action if too much deviation is detected. The deviation from expected performance can be negative
or positive. Progress against all of the goals and objectives mentioned above must be measured.
One goal was to hold on to much of the existing customer base. Mark Barnett, an El Paso, Texas,
Harley dealer believes that Harley is attaining this goal. He observes: “When they get into their 30s
and 40s, people slow down and get tired of sports bikes. If you look at the sport bike demographics,
the number on them over 40 is pretty low. As long as people don’t quit riding motorcycles
altogether, they’re going to be our customer when they turn 40.” Company management needs more
time to know if the goal for getting more young riders to purchase sports cycles in the Buell line has
been attained. In Exhibit 4-1, note the phrase “Evaluation and Feedback” on the left. The phrase
indicates that the control process allows for the fine-tuning of plans after their implementation. One
common example of the need for finetuning is a budget that has been set too high or too low in the
first attempt at implementing a plan. A manager controls by making the right adjustment.

Make Contingency Plans

Many planners develop a set of backup plans to be used in case things do not proceed as
hoped. A contingency plan is an alternative plan to be used if the original plan cannot be
implemented or a crisis develops. (The familiar expression “Let’s try plan B” gets at the essence of
contingency planning.) One potential crisis for Harley management would be substantial climate
changes in the form of much more rain, snow, and ice that would make motorcycle riding less
feasible in many parts of the world. Another crisis would be the escalation of motorcycle insurance
premiums to the point that the demand for on-the-road motorcycles would decline sharply.
Contingency plans are often developed from objectives in earlier steps in planning. The plans are
triggered into action when the planner detects, however early in the planning process, deviations
from objectives. Construction projects, such as building an airport hangar, are particularly prone to
deviations from completion dates because so many different contractors and subcontractors are
involved. An exit strategy might be part of the contingency plan. If the demand for both the Harley
big bikes and sports bikes declined to the point of major losses, the Harley facilities and dealerships
might be sold to Suzuki. Harley management, of course, does not envision this crisis.

PLANNING PROCESS:

8 Main Steps Involved in Planning Process

Step # 1. Perception of Opportunities:

Perception of opportunities is not strictly a part of the planning process. But this awareness
of opportunities in the external environment as well as within the organisation is the real starting

Page 26
point for planning. It is important to take a preliminary look at possible future opportunities and see
them clearly and completely.
All managers should know where they stand in the light of their strengths and weaknesses,
understand the problems they wish to solve and know what they gain. Setting objectives depends on
the awareness. Planning requires realistic diagnosis of the opportunity situation.

Step # 2. Establishing Objectives:

This is the second step in the planning process. The major organisational and unit objectives
are set in this stage. This is to be done for the long term as well as for the short range. Objective
specify the expected results and indicate the end points of what is to be done, where the primary
emphasis is to be placed and what is to be accomplished by the various types of plans.
Organisational objectives give direction to the major plans, which by reflecting these
objectives define the objective of every major department. Major objectives, in turn, control the
objectives of subordinate departments and so on down the line. In other words, objectives from a
hierarchy.
The objectives of lesser departments will be more accurate if subdivision managers
understand the overall enterprise objectives and the derivative goals. Managers should also have the
opportunity to contribute their ideal to setting their own goals and those of the organisation.

Step # 3. Planning Premises:

After determination of organisational objectives, the next step is establishing planning
premises that is the conditions under which planning activities will be undertaken. Planning
premises are planning assumptions the expected environmental and internal conditions.
Thus planning premises are external and internal. External premises include total factors in
task environment like political, social, technological, competitors, plans and actions, government
policies. Internal factors include organisation’s policies, resources of various types, and the ability
of the organisation to withstand the environmental pressure. The plans are formulated in the light of
both external and internal factors.
The nature of planning premises differs at different levels of planning. At the top level, it is
mostly externally focused. As one moves down the organisational hierarchy the composition of
planning premises changes from external to internal. The major plans both old and new will
materially affect the future against which the managers at lower units must plan.

Step # 4. Identification of Alternatives:

The fourth step in planning is to identify the alternatives. Various alternatives can be
identified based on the organisational objectives and planning premises. The concept of various
alternatives suggests that a particular objective can be achieved through various actions.
For example, if an organisation has set its objectives to grow further, it can be achieved in
several ways like expanding in the same Field of business or product line diversifying in other
areas, joining hands with other organisations, or taking over another organisation and so on. Within
each category, there may be several alternatives.
The most common problem is not finding alternatives but reducing the number of
alternatives so that the most promising may be analysed. 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.

Page 27
Step # 5. Evaluation of Alternatives:
The various alternative course of action should be analysed in the light of premises and
goals. There are various techniques available to evaluate alternatives. The evaluation is to be done
in the light of various factors. Example, cash inflow and outflow, risks, limited resources, expected
pay back etc..

Step # 6. Choice of Alternative Plans:

This is the real point of decision-making. An analysis and evaluation of alternative courses
will disclose that two or more .ire advisable and beneficial. The fit one is selected.

Step # 7. Formulation of Supporting Plan:

After formulating the basic plan, various plan are derived so as to support the main plan. In
an organisation there can be various derivative plans like planning for buying equipment, buying

raw materials, recruiting and training personal, developing new product etc. These derivative plans
are formulated out of the basic or main plan and almost invariably required to support the basic
plan.

Step # 8. Establishing Sequence of Activities:

After formulating basic and derivative plans, the sequence of activities is determined so
those plans are put into action. After decisions are made and plans are set, budgets for various
periods and divisions can be prepared to give plans more concrete meaning for implementation.
The overall budgets of an enterprise represent the sum total of income and expenses, with
resultant profit or surplus, and budgets of major balance sheet items such as cash and capital

Page 28
expenditures.Each department or programme of a business or other enterprise can have its own
budgets, usually of expenses and capital expenditures, which tie into the overall budget.
If done well, budgets become a means of adding together the various plans and also set
important standards against which planning progress can be measured.

Types of Plans:


1. Strategic Plans

• Apply to the entire organization.

• Establish the organization’s overall goals.

• Seek to position the organization in terms of its environment. • Cover extended periods of time.

2. Operational Plans

• Specify the details of how the overall goals are to be achieved. • Cover short time period.
Fundamentals of Management

!
3. Long-Term Plans
• Plans with time frames extending beyond three years
4.Short-Term Plans
• Plans with time frames on one year or less
5. Specific Plans
• Plans that are clearly defined and leave no room for interpretation
6. Directional Plans
• Flexible plans that set out general guidelines, provide focus, yet allow discretion in
implementation.
7. Single-Use Plan
• A one-time plan specifically designed to meet the need of a unique situation.
8. Standing Plans
• Ongoing plans that provide guidance for activities performed repeatedly.

Page 29
Management by objectives: (MBO)
According to George “MBO is the process where superior & managers of an organization
jointly defines it’s common goals, each individual area of responsibility in the term of results
expected by him & use their measures as a guide for operating the unit & assuming contribution of
each of its members.”
It is new dynamic concept. It is different from traditional management concept. This concept
gives advantages of co-operation and was introduced by Peter Drucker. It is a technique in the
hands of management.

Process of M.B.O.

The M.B.O approach is result oriented approach & based on the idea of effective
participation of all the members for achieving objectives. It includes following steps:-
1) Defining Job: 

Every employee is asked to define his job with the necessary details. The supervisor is also
asked to do the same exercise independently. The job specifies the responsibilities of the each
personnel for attainment of goals. It is finalized in the joint meeting of superior & sub-ordinates. 


2) Setting Objectives: 

In this stage the objectives to be achieved are decided by all concern parties & key results
areas are also finalized. They are prepared on proper background for further action & results are
achieved by the staff. In this process long term & short term objectives are finalized. 


3) DevelopingActionPlan:
Such action plan is based on objectives & useful for suitable follow up for achieving
objectives. The action plan gives clean direction to concern parties & brings unity in the whole
organization. Action plan is prepared jointly. 


4) Conducting Periodical View:

Periodical view is useful for execution of action plan. Such review suggests actual
performance of the plan. If there is any deviation remedial action can be taken. 


5) PerformanceAppraisal:
M.B.O. provides as a tool for performance appraisal to superiors. It helps to improve the
performance of staff in future. Appraisal need to be done with trust & confidence. 


6) Achieving the Objectives:

The important aspect of M.B.O. is to achieve the objectives within the definite limits. These
are achieved with participation of old. For this understanding, communication & co-operation is
required. 


Development of Business Strategies:

1. Gather the facts

To know where you’re heading, you have to know where you are right now. So before you
start looking ahead, you should review the past performance, or the current situation. Look at each
area of the business and determine what worked well, what could have been better and what
opportunities lie ahead.
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 There are many tools and techniques available to help with this process, such as SWOT
(Strength, Weakness, Opportunities and Threats) analysis. You should look internally at your
strengths and weaknesses. And for the opportunities and threats you should look at external factors.
A great framework for looking at external factors is PESTLE (Political, Economic, Social,
Technological, Legal and Environmental). The most important part of this process is involving the
right people to make sure you’re collecting the most relevant information.
2. Develop a vision statement
This statement should describe the future direction of the business and its aims in the
medium to long term. It’s about describing the organisation’s purpose and values. Business gurus
have debated long and hard about what comes first – the vision, or the mission statement. But, in
practice, you could develop both at the same time.
3. Develop a mission statement
Like the vision statement, this defines the organisation’s purpose, but it also outlines its
primary objectives. This focuses on what needs done in the short term to realise the long term
vision. So, for the vision statement, you may want to answer the question: “Where do we want to be
in 5 years?”. For the mission statement, you’ll want to ask the questions:
• What do we do?
• How do we do it?
• Whom do we do it for?
• What value do we bring?


4. Identify strategic objectives 

At this stage, the aim is to develop a set of high-level objectives for all areas of the business.
They need to highlight the priorities and inform the plans that will ensure delivery of the company’s
vision and mission. 

By taking a look back at your review in step one, in particular the SWOT and PESTLE
analysis, you can incorporate any identified strengths and weaknesses into your objectives.
Crucially, your objectives must be SMART (Specific, Measurable, Achievable, Realistic and Time-
related). Your objectives must also include factors such as KPI’s, resource allocation and budget
requirements.

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5. Tactical Plans
Now is the time to put some meat on the bones of your strategy by translating the strategic
objectives into more detailed short-term plans. These plans will contain actions for departments and
functions in your organisation. You may even want to include suppliers.
You’re now focusing on measurable results and communicating to stakeholders what they need to
do and when. You can even think of these tactical plans as short sprints to execute the strategy in
practice.
6. Performance Management
All the planning and hard work may have been done, but it’s vital to continually review all
objectives and action plans to make sure you’re still on track to achieve that overall goal. Managing
and monitoring a whole strategy is a complex task, which is why many directors, managers and
business leaders are looking to alternative methods of handling strategies. Creating, managing and
reviewing a strategy requires you to capture the relevant information, break down large chunks of
information, plan, prioritise, capture the relevant information and have a clear strategic vision.

DECISION MAKING:
Decision-making can be regarded as a problem-solving activity terminated by a solution
deemed to be optimal, or at least satisfactory. It is therefore a process which can be more or less
rational or irrational and can be based on explicit or tacit knowledge and beliefs.
Human performance has been the subject of active research from several perspectives:
Psychological: examining individual decisions in the context of a set of needs, preferences and
values the individual has or seeks.
Cognitive: the decision-making process regarded as a continuous process integrated in the
interaction with the environment.
Normative: the analysis of individual decisions concerned with the logic of decision-making, or
communicative rationality, and the invariant choice it leads to.
A major part of decision-making involves the analysis of a finite set of alternatives described
in terms of evaluative criteria. Then the task might be to rank these alternatives in terms of how
attractive they are to the decision-maker(s) when all the criteria are considered simultaneously.
Another task might be to find the best alternative or to determine the relative total priority of
each alternative (for instance, if alternatives represent projects competing for funds) when all the
criteria are considered simultaneously. Solving such problems is the focus of multiple-criteria
decision analysis (MCDA). This area of decision-making, although very old, has attracted the
interest of many researchers and practitioners and is still highly debated as there are many MCDA
methods which may yield very different results when they are applied on exactly the same data.This
leads to the formulation of a decision-making paradox.
Logical decision-making is an important part of all science-based professions, where
specialists apply their knowledge in a given area to make informed decisions. For example, medical
decision-making often involves a diagnosis and the selection of appropriate treatment. But
naturalistic decision-making research shows that in situations with higher time pressure, higher
stakes, or increased ambiguities, experts may use intuitive decision-making rather than structured
approaches. They may follow a recognition primed decision that fits their experience and arrive at a
course of action without weighing alternatives.

PROBLEM SOLVING:
The term problem solving is used in numerous disciplines, sometimes with different
perspectives, visuals, and often with different terminologies. For instance, it is a mental process in
psychology and a computerized process in computer science. Problems can also be classified into
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two different types (ill-defined and well-defined) from which appropriate solutions are to be made.
Ill-defined problems are those that do not have clear goals, solution paths, or expected solutions. On
the contrary, well-defined problems have specific goals, clearly defined solution paths, and clear
expected solutions. These problems also allow for more initial planning than ill-defined problems.
Solving problems sometimes involves dealing with pragmatics (logic) and semantics
(interpretation of the problem). The ability to understand what the goal of the problem is, and what
rules could be applied, represents the key to solving the problem. Sometimes the problem requires
abstract thinking and coming up with a creative solution.

Programmed & Non Programmed Decisions:

Programmed Decisions:
Decisions related to structured situations, where the problem is more or less routine and
repetitive in nature are known as programmed decisions. For example, problems related to leave are
solved by policy relating to leave rules. Employees who take leave according to leave rules Eire
granted leave and those who do not follow the leave rules may not be granted leave. The routine
problems may not always be simple.
There may be complex routine problems. For example, production department follows a
routine that managers order for inventory when it reaches the re-order point. If there is sudden
increase in demand for the product, managers cannot wait for inventory to reach the re-order point
to make fresh orders. Orders are placed before this level is reached. Ordering inventory is, thus, a
problem of routine nature but ordering inventory before the re-order point is a routine but complex
problem.
In either situation, managers depend on pre-established criteria for taking decisions. Various
policies, schedules and procedures guide these decisions and, therefore, policies and procedures
should be as clear as possible. Since decisions are based on pre-defined standards, they do not
require much of brainstorming and are taken normally by middle and lower-level managers.
Managers do not think of innovative ways to solve the routine problems. Therefore, they can
concentrate on important and crucial activities. These decisions also involve some amount of
certainty, i.e., outcomes of these decisions are, by and large, known.
Various types of programmed decisions are:
(1) Organisational decisions
(2) Operational decisions
(3) Research decisions, and
(4) Opportunity decisions.

Non-Programmed Decisions:
These decisions are taken in unstructured situations which reflect novel, ill-defined and
complex problems. The problems are non-recurring or exceptional in nature. Since they have not
occurred before, they require extensive brainstorming. Managers use skills and subjective judgment
to solve the problems through scientific analysis and logical reasoning.
Subjective judgment is based on assessment of the situation. In objective judgment (in case
of programmed decisions), past experience forms the basis for decision-making. These decisions
involve fair degree of uncertainty since outcomes of decisions are not always known. These
decisions are based on partial ignorance as the alternatives and their outcomes cannot be known in
advance. They are taken in the context of changing, dynamic environmental conditions.
For example, increase in advertising expenditure, effective salesmanship, upgraded
technology, quality controls, brand image and reasonable prices are expected to increase sales and
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profits. If, despite all this, profits are declining, it requires immediate decision-making and such
decisions are non-programmed decisions.
These decisions are taken by top-level managers. As we move up the organisational
hierarchy, the need for taking non-programmed decisions increases.
Different types of non-programmed decisions are:
(1) Personal decisions,
(2) Strategic decisions,
(3) Crisis intuitive decisions, and
(4) Problem-solving decisions.
There is no clear line of demarcation between programmed and non-programmed decisions.
Decisions are neither totally programmed nor non-programmed. They are a combination of both and
lie on continuum of decision; between totally programmed decisions at one end of the continuum
and totally non-programmed decisions at the other end.

Steps in Problem Solving and Decision Making

1) Defining the Problem:

Defining the problem is the problem half solved. Sufficient timing should be spent on
defining the problem. It is very difficult to define the problem. The manager is responsible for
defining the problem. 

E.g.: - Like a doctor, he has to take into account all the symptoms before giving a medicine. A
manager must carefully diagnose the problem & should tackle it tactfully. 


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2) Collection of Data:

Information can be collected from internal sources as well as external sources. Right decisions
depend upon the quality of information collected by the management. 



3) Analysis of the Problems: 

Subject to systematic study depth information should collected & it should be classified
properly. Information is based on facts, speculation& assumption. Normally 98% information
should be based on facts, 2% on speculation, 0% assumption.

4) Finding causes of problems:


This is the most important aspect of understanding the problem. It is complicated process to
find out the exact cause is very essential. 



5) Identification of Resources:

It is necessary to identify available resources & the use of resources for achievements of
goals. The management must make the list of resources that are available for solving the problem. 



6) Development of Criteria for successful Solution:

Criteria should not be established as early as possible. This criteria is useful for choosing the
best alternative & divert the resources accordingly. This criteria is divided into “must & want”. The
must criteria are satisfied first & want criteria later on. 



7) Development of Alternatives:

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 Development of alternatives is most important step in the process of decision making. The
effectiveness in decision making depends upon development of alternatives. 



8) Selection of Alternatives:

In order to select the best alternative following points should be considered i.e. risk,
economy, time, availability of resources. 



9) Implementation of Decisions:

Implementation means putting the selective alternative into action. The process of
implementation starts with assigning the responsibilities. Management must focus on the duties of
the person. He must consider following points:

1. Effective communication
2. Time for Decision Making
3. Acceptance by employee.

BOUNDED RATIONALITY AND INFLUENCES ON DECISION MAKING:

Corporate management is a responsibility that comes with a lot of challenges. Managers are
often required to attend to issues and difficulties that need resolutions, clarity and decisions. A
significant portion of these matters is paltry while others are exceptionally vital to the prosperity of
the organisation, particularly concerning strategic performance and the organisation’s bottom line.
Bounded rationality about decision making proposes that people don’t utilise ideal decision-
making approaches as a result of cognitive limitations in the capacity to understand and oversee
complex information and also a consequence of difficulties related with impediments in information
accessibility. Rather, the idea proposes that people embrace approaches that are more constrained
and which depend upon heuristics to make the decision-making process manageable, which
incorporates the way toward generating and assessing options for conceivable activity.

The above concept presumes that managers, who are for sure leaders, are halfway discerning
and thus would dependably consider the encompassing condition to guarantee that they settle on the
best decisions that will suffice at the moment.

Principles of Bounded Rationality

1. As no one can make a decision affecting the past, decisions must operate for the future and the
future almost in all cases involves uncertainties.

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 2. The capacity of the human mind to perceive, retain and retrieve complete knowledge and
information on past, present and future events is not unlimited. Again, information is neither
readily available nor is it a free commodity. The cost of information collection vis-a-vis its
reliability and relevance is an important consideration.
3. It is difficult to recognize all the alternatives that might be followed to reach a goal, because of
human cognitive constraints. It is neither necessary nor feasible to generate the entire set of
alternatives. The computational capabilities of the decision maker are also limited. In most
cases, not all alternatives can be analyzed, even with the latest analytical techniques and tools
like computers.
4. With all his’ knowledge and intelligence, the average decision maker has his own soft
emotions. He cannot completely shut off his subjective viewpoints from influencing the
decision process.
Because of the limitations mentioned above, a decision maker would rather be more
interested in a choice which is satisfactory and sufficient.
In other words, a manager must settle for limited rationality or “bounded” rationality.
Since it is not possible for managers to be fully rational in practice, they sometimes
compromise with their dislike of risks—their desire to “play it safe”—to interfere with the desire to
reach the best solution under the circumstances.
This has been termed “Satisfying”, that is, choosing a course of action that is satisfactory or
good enough under the circumstances.



GROUP PROBLEM SOLVING AND DECISION MAKING

The problem-solving process involves thoughts, discussions, actions, and decisions that
occur from the first consideration of a problematic situation to the goal. The problems that groups
face are varied, but some common problems include budgeting funds, raising funds, planning
events, addressing customer or citizen complaints, creating or adapting products or services to fit
needs, supporting members, and raising awareness about issues.
Organizational challenges are many times disruptive to productivity. Group problem solving
is the process of bringing together stakeholders who through their analytical decision making
abilities can influence the outcome of the problem. The use of groups in problem solving is
encouraged as groups tend to evaluate diverse solutions and action plans. The core objectives of the
group are identifying the problem and developing solutions. This five-step systematic group
problem solving process provides a defined strategy for a teamwork approach to generating creative
and workable resolutions.

Group Decision Making and Problem Solving Process

1. Define the Problem

Provide history relevant to the problem. Make a comparison: how are things now versus the way
you would like them to be? How long has the problem existed? How frequently does it occur? Who
is affected by the problem?
2. Determine Causes
Look for the cause of the gap between the present (what's now) and the desired (future) state or
resolution.
3. Develop Alternative Approaches

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Brainstorm. (Write exactly what is said. Capturing specific words can be powerful.) Make a list of
as many possible solutions as you can. Do NOT judge correctness or feasibility here. Just list
everything.
4. Assess the Consequences
Ask what possible results may come from each alternative. Who is affected? Who pays? Are there
uncontrollable challenges?
5. Develop Action Plans
Identify what you want success to look like. Use the Action Planning Worksheet to choose feasible
alternatives that are acceptable to the group. Note: This is where most of the work is done!

CREATIVITY AND INNOVATION IN MANAGERIAL WORK

Creativity is imagining. Innovation is doing. There’s no doubt that, no matter what the size,
your business needs to foster creativity and innovation together to stay competitive and to retain
awesome teammates.
Creativity:
Thinking up new things
Creativity is ...“A state of doing, not being”

If you want to be creative you need to do creative things The creative process has two
fundamental stages:- A) Generating ideas ( produce)

Evaluating ideas

Steps to Personal Creativity
1. Believe in yourself
2. Question traditional assumptions
3. Expand your problem-solving styles
4. Practice thinking in new ways 


Innovation:

“Doing new things”
Innovation is about creating value and increasing efficiency, and therefore growing your business.
"Without innovation, new products, new services, and new ways of doing business would never
emerge, and most organizations would be forever stuck doing the same old things the same old
way."

Process of Innovation 

a) Idea generation (Making)
b) idea screening (test )

c) feasibility (Practically)

d) and implementation (Completion)

Turning Ideas Into Opportunities

• Opportunity Recognition:-

• The defining act of entrepreneurship.

• Need to create an environment where people are encouraged to generate ideas...

• Then, the challenge becomes how to “ screen ” ideas to find the best opportunities. Screening
Ideas:-

• Are they Opportunities?
• What important customer problem can you solve?

• How are you going to do it?

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 • How many customers are there that are willing to buy from you? • Why can only you provide
the solution?

• How can you defend against others?


Steps to implement company creativity and innovation management

Communicate clearly to everyone: “We want to innovate.”

Many companies don’t make it clear just how important innovation is and that they value
this type of initiative.
Sporadic speeches and cold memos don’t go well together, at least with effective company
creativity and innovation management.
With the enormous number of collaborative tools available for internal communication, it’s
important to create an innovation platform, defining what the company’s objectives are, what
markets it wants to develop, available technologies and other information.
But this should be a non-limiting guideline:
This is a way to formalize a company’s innovative desire. Create a space for idea discussion,
a place to innovate.
Organize the time to innovate
The Google case has already become famous. It allows its employees to spend 20% of their
time working to dedicate themselves to personal and innovative projects.
But again, if you don’t adequately publicize time available for innovation, your employees
will not feel safe.
There are 4 main company creativity and innovation management models, adopt the most
relevant for your organization’s culture and goals:
• Free time: Each employee chooses if, when and how much time to use on innovative projects
• Time Spent: It’s very similar to the first model. The difference is that it’s evident that the
company values the time it spends on innovation.
• Determined Time: In this case, there are specific events, lectures, contests, and meetings
where employees should focus on creative initiatives.
• Defined Time: Like the Google case, which defines a percentage of the working hours an
organization can use to innovate.
Control activity and results
It’s important that company creativity and innovation management define a way to measure
how much time and resources an organization is using to innovate and what results it’s obtaining.
Thus, it will be possible to improve the innovation policy continuously. By encouraging and
standardizing the practices that generated the most profits or reached other goals established by the
company.
Recognition
Generating innovative ideas is part of an employee’s job, but this doesn’t prevent a company
from recognizing these efforts. It can hand out certificates and even awards in the form of bonuses
and promotions for the project designers that have generated the most profit for the business.

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 3.Organisation and HRM
Principles of Organisation:

1. Principle of unity of objectives:

Organisational goals, departmental goals, and individual goals must be clearly defined. All
goals and objectives must have uniformity. When there is contradiction among different level of
goals desired goals can’t be achieved. Therefore, unity of objectives is necessary

2. Principle of specialisation:
Sound and effective organisation believes on organization. The term specialization is
related to work and employees. When an employee takes special type of knowledge and skill in any
area, it is known as specialization. Modern business organization needs the specialization, skill and
knowledge by this desired sector of economy and thus, efficiency would be established.

3. Principle of coordination:
In an organization many equipment, tools are used. Coordination can be obtained by group
effort that emphasize on unity of action. Therefore, coordination facilitates in several management
concepts

4. Principle of authority:
Authority is the kind of right and power through which it guides and directs the actions of
others so that the organizational goals can be achieved. It is also related with decision making. It is
vested in particular position, not to the person because authority is given by an institution and
therefore it is legal. It generally flows from higher level to lowest level of management. There
should be unbroken line of authority.

5. Principle of responsibility:
Authentic body of an organization is top level management, top level management direct the
subordinates. Departmental managers and other personnel take the direction from top level
management to perform the task. Authority is necessary to perform the work .only authority is not
provided to the people but obligation is also provided. So the obligation to perform the duties and
task is known as responsibility. Responsibility can’t be delegated. It can’t be avoided.

6. Principle of delegation:
Process of transferring authority and creation of responsibility between superior and
subordinates to accomplish a certain task is called delegation of authority. Authority is only
delegated, not responsibilities in all levels of management. The authority delegated should be equal
to responsibility

7. Principle of efficiency:
In enterprise different resources are used. The resources must be used in effective manner.
When the organization fulfil the objectives with minimum cost, it is effective. Organization must
always concentrate on efficiency.

8. Principle of unity of command:

Subordinates should receive orders from single superior at a time and all subordinates

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should be accountable to that superior. More superior leads to confusion, delay and so on.
9. Principle of span of control:
Unlimited subordinates cant be supervised by manager, this principle thus helps to
determine numerical limit if subordinates to be supervised by a manager. This improves efficiency.

10. Principle of balance:

The functional activities their establishment and other performances should be balanced
properly. Authority, centralisation, decentralisation must be balanced equally. This is very
challenging job but efficient management must keep it.
11. Principle of communication:
Communication is the process of transformation of information from one person to another
of different levels. It involves the systematic and continuous process of telling, listening and
understanding opinions ideas, feelings, information, views etc, in flow of information. Effective
communication is important

12. Principle of personal ability:

For sound organization, human resources is important. Employees must be capable. Able
employees can perform higher. Mainly training and development programs must be encouraged to
develop the skill in the employees

13. Principle of flexibility:

Organizational structure must be flexible considering the environmental dynamism.
Sometimes, dramatically change may occur in the organization and in that condition, organization
should be ready to accept the change

14. Principle of simplicity:

This principles emphasizes the simplicity of organizational structure, the structure if organization
should be simple with minimum number of levels do that its member an understand duties and
authorities.

Organizational Design:

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Strategy:
Strategy is the company’s formula for winning. The company’s strategy specifies the goals
and objectives to be achieved as well as the values and missions to be pursued; it sets out the basic
direction of the company. The strategy specifically delineates the products or services to be
provided, the markets to be served, and the value to be offered to the customer. It also specifies
sources of competitive advantage. It is important in the organization design process because it
establishes the criteria for choosing among alternative organizational forms. Each organizational
form enables some activities to be performed well, often at the expense of other activities. Choosing
organizational alternatives inevitably involves making trade-offs. Strategy dictates which activities
are most necessary, thereby providing the basis for making the best trade-offs in the organization
design. Matrix organizations result when two or more activities must be accomplished without
hindering the other. Rather than choosing the “or,” matrix requires an embracing of the “and.”
Companies want to be global and local.

Structure:
The structure of the organization determines the placement of power and authority in the
organization. Structure policies fall into four areas:
• Specialization
• Shape
• Distribution of power
• Departmentalization

Specialization refers to the type and numbers of job specialties used in performing the work.
Shape refers to the number of people constituting the departments (that is, the span of control) at
each level of the structure. Large numbers of people in each department create flat organization
structures with few levels. Distribution of power, in its vertical dimension, refers to the classic
issues of centralization or decentralization. In its lateral dimension, it refers to the movement of
power to the department dealing directly with the issues critical to its mission. Departmentalization
is the basis for forming departments at each level of the structure. The standard dimensions on
which departments are formed are functions, products, workflow processes, markets, customers and
geography. Matrix structures are ones where two or more dimensions report to the same leader at
the same level.

Processes:
Information and decision processes cut across the organization’s structure; if structure is
thought of as the anatomy of the organization, processes are its physiology or functioning.
Management processes are both vertical and horizontal.
Vertical processes, as shown in Figure 2 allocate the scarce resources of funds and talent.

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Vertical processes are usually business planning and budgeting processes.
The needs of different departments are centrally collected, and priorities are decided for the
budgeting and allocation of the resources to capital, research and development, training, and so on.
These management processes are central to the effective functioning of matrix organizations. They
need to be supported by dual or multidimensional information systems.
Horizontal–also known as lateral–processes, as shown in Figure 3, are designed around the
workflow, such as new product development or the entry and fulfillment of a customer order. These

management processes are becoming the primary vehicle for managing in today’s organizations.
Lateral processes can be carried out in a range of ways, from voluntary contacts between members
to complex and formally supervised teams.

Rewards:
The purpose of the reward system is to align the goals of the employee with the goals of the
organization. It provides motivation and incentive for the completion of the strategic direction. The
organization’s reward system defines policies regulating salaries, promotions, bonuses, profit
sharing, stock options, and so forth. A great deal of change is taking place in this area, particularly
as it supports the lateral processes. Companies are now implementing pay-for-skill salary practices,
along with team bonuses or gainsharing systems. There is also the burgeoning practice of offering
nonmonetary rewards such as recognition or challenging assignments.
The Star Model™ suggests that the reward system must be congruent with the structure and
processes to influence the strategic direction. Reward systems are effective only when they form a
consistent package in combination with the other design choices.

Human Resource Management:

This area governs the human resource policies of recruiting, selection, rotation, training, and
development. Human resource policies – in the appropriate combinations – produce the talent
required by the strategy and structure of the organization, generating the skills and mind-sets
necessary to implement the chosen direction. Like the policy choices in the other areas, these
policies work best when they are consistent with the other connecting design areas.
Human resource policies also build the organizational capabilities to execute the strategic
directions. Flexible organizations require flexible people. Cross-functional teams require people
who are generalists and who can cooperate with each other. Matrix organizations need people who
can manage conflict and influence without authority. Human resource policies simultaneously
develop people and organizational capabilities.

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Organizational Structure:
Types of Organizational Structures
Functional
The functional structure is based on an organization being divided up into smaller groups
with specific tasks or roles. For example, a company could have a group working in information
technology, another in marketing and another in finance.
Each department has a manager or director who answers to an executive a level up in the
hierarchy who may oversee multiple departments. One such example is a director of marketing who
supervises the marketing department and answers to a vice president who is in charge of the
marketing, finance and IT divisions.

An advantage of this structure is employees are grouped by skill set and function, allowing
them to focus their collective energies on executing their roles as a department.
One of the challenges this structure presents is a lack of inter-departmental communication,
with most issues and discussions taking place at the managerial level among individual
departments. For example, one department working with another on a project may have different
expectations or details for its specific job, which could lead to issues down the road.
In addition, with groups paired by job function, there’s the possibility employees can
develop “tunnel vision” — seeing the company solely through the lens of the employee’s job
function.
Divisional
Larger companies that operate across several horizontal objectives sometimes use a
divisional organizational structure.
This structure allows for much more autonomy among groups within the organization. One
example of this is a company like General Electric. GE has many different divisions including
aviation, transportation, currents, digital and renewable energy, among others.
Under this structure, each division essentially operates as its own company, controlling its
own resources and how much money it spends on certain projects or aspects of the division.

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 Additionally, within this structure, divisions could also be created geographically, with a
company having divisions in North America, Europe, East Asia, etc.
This type of structure offers greater flexibility to a large company with many divisions,
allowing each one to operate as its own company with one or two people reporting to the parent
company’s chief executive officer or upper management staff. Instead of having all programs
approved at the very top levels, those questions can be answered at the divisional level.

A downside to this type of organizational structure is that by focusing on divisions,

employees working in the same function in different divisions may be unable to communicate well
between divisions. This structure also raises issues with accounting practices and may have tax
implications.
Matrix
A hybrid organizational structure, the matrix structure is a blend of the functional
organizational structure and the projectized organizational structure.
In the matrix structure, employees may report to two or more bosses depending on the
situation or project. For example, under normal functional circumstances, an engineer at a large
engineering firm could work for one boss, but a new project may arise where that engineer’s

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expertise is needed. For the duration of that project, the employee would also report to that project’s
manager, as well as his or her boss for all other daily tasks.

The matrix structure is challenging because it can be tough reporting to multiple bosses and
knowing what to communicate to them. That’s why it’s very important for the employees to know
their roles, responsibilities and work priorities.
Advantages of this structure is that employees can share their knowledge across the different
functional divisions, allowing for better communication and understanding of each function’s role.
And by working across functions, employees can broaden their skills and knowledge, leading to
professional growth within the company.
On the other hand, reporting to multiple managers may add confusion and conflict between
managers over what should be reported. And if priorities are not clearly defined, employees, too,
may get confused about their roles.
Flatarchy
While the previous three types of organizational structures may work for some
organizations, another hybrid organizational structure may be better for startups or small
companies.
Blending a functional structure and a flat structure results in a flatarchy organizational
structure, which allows for more decision making among the levels of an organization and, overall,
flattens out the vertical appearance of a hierarchy.
The best example of this structure within a company is if the organization has an internal
incubator or innovation program. Within this system, the company can operate in an existing
structure, but employees at any level are encouraged to suggest ideas and run with them, potentially
creating new flat teams. Lockheed Martin, according to Forbes, was famous for its skunkworks
project, which helped develop the design of a spy plane.
Google, Adobe, LinkedIn and many other companies have internal incubators where
employees are encouraged to be creative and innovative in order to promote the company’s overall
growth.
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 A benefit of this system is it allows for more innovation company-wide, as well as
eliminating red tape that could stall innovation in a functional structure. As for the negatives, the
structure could be confusing and inconvenient if everyone involved doesn’t agree on how the
structure should be organized.

Departmentalization:
Grouping related functions into manageable units to achieve the objectives of the enterprise
in the most efficient and effective manner is departmentalization. A variety of means can be utilized
for this purpose. The primary forms of departmentalization are by function, process, product,
market, customer, geographic area, and even matrix (also called project organization). In many
organizations, a combination of these forms is used.

Function:
Perhaps the oldest and most common method of grouping related functions is by specialized
function, such as marketing, finance, and production (or operations). Sometimes this form of

departmentalization may create problems if individuals with specialized functions become more
concerned with their own specialized area than with the overall business. An example of
departmentalization by function:

Process:
Departmentalization can also take place by process. This type of departmentalization, which
often exists in manufacturing companies.

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Product:
Whenever specialized knowledge of certain products or services is needed,
departmentalization by product may be best. This usually occurs in large diversified companies.

Market:
When a need exists to provide better service to different types of markets,

departmentalization by market may be the appropriate form. An example of a business serving

nonprofit markets, which uses the market form of departmentalization

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Geographic Area:
When organizations are spread throughout the world or have territories in many parts of a
country, departmentalization by geographic area may provide better service to customers and be
more cost effective.

Combination Approach:

Many organizations, particularly large, physically dispersed and diversified organizations,

utilize several different forms of departmentalization.

Delegation:
Delegation is an administrative process of getting things done by others by giving them
responsibility. All important decisions are taken at top level by Board of Directors. The execution is
entrusted to Chief Executive. The Chief Executive assigns the work to departmental managers
who in I urn delegate the authority to their subordinates. Every superior delegates the authority to
subordinates for getting a particular work done. The process goes to the level where actual work
is executed. The person who is made responsible for a particular work is given the requisite
authority for getting it done.

There is a limit up to which a person can supervise the subordinates. When the number of
subordinates increases beyond it then he will have to delegate his powers to others who perform
supervision for him. A manager is not judged by the work he actually performs on his own but the
work he gets done through others. He assigns duties and authority to his subordinates and ensures
the achievement of desired organizational goals.

Characteristics of Delegation:
Inclination is the assignment of authority to subordinates in a defined area and making them
responsible for the results.
Delegation has the following characteristics:
1. Delegation takes place when a manager grants some of his powers to subordinates.
2. Delegation occurs only when the person delegating the authority himself has that authority i.e. a
manager must possess what he wants to delegate.
3. Only a part of authority is delegated to subordinates.
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4. A manager delegating authority can reduce, enhance or take it back. He exercises full control
over the activities of the subordinates even after delegation.
5. It is only the authority which is delegated and not the responsibility. A manager cannot abdicate
responsibility by delegating authority to subordinates.
Elements of Delegation:
Delegation involves following three elements:
1. Assignment of Responsibility:
The first step in delegation is the assignment of work or duty to the subordinate i.e.
delegation of authority. The superior asks his subordinate to perform a particular task in a given
period of time. It is the description of the role assigned to the subordinate. Duties in terms of
functions or tasks to be performed constitute the basis of delegation process.
2. Grant of Authority:
The grant of authority is the second element of delegation. The delegator grants authority to
the subordinates so that the assigned task is accomplished. The delegation of responsibility with
authority is meaningless. The subordinate can only accomplish the work when he has the authority
required for completing that task.
Authority is derived from responsibility. It is the power, to order or command, delegated
from superior, to enable the subordinate to discharge his responsibility. The superior may transfer it
to enable the subordinate to complete his assigned work properly. There should be a balance
between authority and responsibility. The superior should delegate sufficient authority to do the
assigned work.
3. Creation of Accountability:
Accountability is the obligation of a subordinate to perform the duties assigned to him. The
delegation creates an obligation on the subordinate to accomplish the task assigned to him by the
superior. When a work is assigned and authority is delegated then the accountability is the by-
product of this process.
The authority is transferred so that a particular work is completed as desired. This means
that delegator has to ensure the completion of assigned work. Authority flows downward whereas
accountability flows upward. The downward flow of authority and upward flow of accountability
must have parity at each position of management hierarchy. The subordinate should be made
accountable to only one superior. Single accountability improves work and discipline.
Types of Delegation:
Delegation may be of the following types:
General or Specific Delegation:
When authority is given to perform general managerial functions like planning, organizing,
directing etc., the subordinate managers perform these functions and enjoy the authority required to
carry out these responsibilities. The chief executive exercises overall control and guides the
subordinates from time to time.
The specific delegation may relate to a particular function or an assigned task. The authority
delegated to the production manager for carrying out this function will be a specific delegation.
Various departmental managers get specific authority to undertake their departmental duties.
Formal or Informal Delegation:
Formal delegation of authority is the part of organizational structure. Whenever a task is
assigned to a person then the required authority is also given to him. This type of delegation is part
of the normal functioning of the organization. Every person is automatically given authority as per
his duties. When production manager gets powers to increase production then it is a formal
delegation of authority. Informal delegation does not arise due to position but according to

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circumstances. A person may undertake a particular task not because he has been assigned it but it is
necessary to do his normal work.
Lateral Delegation:
When a person is delegated an authority to accomplish a task, he may need the assistance of
a number of persons. It may take time to formally get assistance from these persons. He may
indirectly contact the persons to get their help for taking up the work by cutting short time of formal
delegation. When the authority is delegated informally it is called lateral delegation.
Reserved Authority and Delegated Authority:
A delegator may not like to delegate every authority to the subordinates. The authority
which he keeps with him is called reserved authority and the authority which is assigned to the
subordinates is delegated authority.
Pre-Requisites for Delegation:
Every superior tries to retain as much authority as possible. The load of work or
circumstances may compel delegation downwards. If the authority is not willingly delegated then it
will not bring desired results. It is important that appropriate authority should go downwards so that
work is undertaken smoothly and efficiently. The process of delegation will be complete only if
following prerequisites are fulfilled.
Willingness to Delegate:
The first prerequisite to delegation is the willingness of the superior to part with his
authority. Unless the superior is psychologically prepared to leave his authority, delegation will not
be effective. If a superior is forced to delegate authority downward without his sweet will, he will
try to devise methods to interfere with the subordinate’s working. He may over shadow the
subordinate to such an extent that every decision is implemented with the approval of the boss or
performance may pass through him with his close scrutiny. It will be better not to delegate authority
unless the superior is mentally prepared to do so.
Climate of Trust and Confidence:
There should be a climate of trust and confidence among superiors and subordinates. The
subordinates should be given enough opportunities or real job situations where they use their talent
and experience. In case they make some mistakes then superiors should guide and correct them. The
superiors should trust their subordinates and should not take them as their competitors. The climate
of trust and confidence will help the subordinates to learn and grow and this will help the process of
delegation.
Faith in Subordinates:
Sometimes the superiors do not delegate authority with the fear that subordinates will not be
able to handle the job independently. They are not confident of the qualities of subordinates and do
not want to take risks. The superior may be over conscious of his skill and competence with the
result that he is hesitant to delegate authority. The superiors should avoid this type of thinking and
attitude. They should have faith in their subordinates and should rather help them in learning the job
properly. After all the superiors also learnt many things from their superiors and present
subordinates are also to take up higher responsibilities. The climate of faith will help the
subordinates to learn the things faster and take up more responsibilities.
Fear of Supervisors:
There is often a fear among superiors that their subordinates may not over take them, once
they are given higher responsibility. This is a case of inferiority complex. The superiors may give
many logics for delegating authority but this fear is one of the important causes. The superiors
should avoid this type of thinking and have positive attitude towards subordinates.
The subordinates should be encouraged to take up more responsibilities and they will have
more respect for the superiors and their ability have faith in their subordinates and should rather
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help them in learning the Job properly. After all the superiors also learnt many things from their
superiors and present subordinates are also to take up higher responsibilities. The climate of faith
will help the subordinates to learn the things faster and take up more responsibilities.

Empowerment:
A management practice of sharing information, rewards, and power with employees so that
they can take initiative and make decisions to solve problems and improve service and performance.

Empowerment is based on the idea that giving employees skills, resources, authority, opportunity,
motivation, as well holding them responsible and accountable for outcomes of their actions, will
contribute to their competence and satisfaction.

Empowerment refers to the delegation of some authority and responsibility to employees

and involving them in the decision-making process, not in mere job activities, but rather at all the
levels of management.
In other words, empowerment implies freedom, power, authority, motivation and
encouragement given to the employees to take decisions related to a specific organizational task. It
is also called as Participative Management, as employees are involved in the decision making. The
purpose of empowerment is to facilitate decision-making at lower levels of the organization where
the employees can offer a unique idea and suggestion about the problem being faced by the
organization at a certain level.
The most common ways of empowerment are participation in boards, stock options,
collective bargaining, job enrichment and enlargement, quality circles, suggestion schemes, total
quality management, self-managed teams, etc.
Empowerment offers several benefits; It brings a sense of ownership to the employee due to
which he personalizes the goals and objectives of the organization and associate his success with his
own abilities. Also, the performance of the employee improves as he attaches self-induced rewards
with his performance by making decisions pertaining to the problem and sees the results (success)
that follow.
Empowerment increases the organization’s responsiveness towards the problems or issues.
Also, there is an increase in the productivity of an employee as he is completely engaged with the
firm and take decisions for the betterment of the organization as a whole.
Empowerment suffers from serious limitations. First, the decisions made might not be in
line with the organizational goals. Second, there could be a lack of coordination among the different
levels of the organization. Third, the superior-subordinate relation might get tensed due to the
violation of authority. Fourth, sometimes it can be counterproductive as the superior might keep a
close watch on the employee to check if the authority is misused. This might increase the
dissatisfaction among the employees.

Centralization:
Centralization refers to the process in which activities involving planning and decision-
making within an organization are concentrated to a specific leader or location. In a centralized
organization, the decision-making powers are retained in the head office, and all other offices
receive commands from the main office. The executives and specialists who make critical decisions
are based in the head office.

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Advantages of Centralization
1. A clear chain of command
A centralized organization benefits from a clear chain of command because every person
within the organization knows who to report to. Junior employees also know who to approach
whenever they have concerns about the organization. On the other hand, senior executives follow a
clear plan of delegating authority to employees who excel in specific functions. The executives also
gain the confidence that when they delegate responsibilities to mid-level managers and other
employees, there will be no overlap. A clear chain of command is beneficial when the organization
needs to execute decisions quickly and in a unified manner.

2. Focused vision
When an organization follows a centralized management structure, it can focus on the
fulfillment of its vision with ease. There are clear lines of communication and the senior executive
can communicate the organization’s vision to employees and guide them towards the achievement
of the vision. In the absence of a centralized management, there will be inconsistencies in relaying
the message to employees because there are no clear lines of authority. Directing the organization’s
vision from the top allows for a smooth implementation of its visions and strategies. The
organization’s stakeholders such as customers, suppliers, and communities also receive a uniform
message.

3. Reduced costs
A centralized organization adheres to standard procedures and methods that guide the
organization, which help reduce office and administrative costs. The main decision-makers are
housed at the company’s head office or headquarters, and therefore, there is no need for deploying
more departments and equipment to other branches. Also, the organization does not need to incur
extra costs to hire specialists for its branches since critical decisions are made at the head office and
then communicated to the branches. The clear chain of command reduces duplication of
responsibilities that may result in additional costs to the organization.

4. Quick implementation of decisions

In a centralized organization, decisions are made by a small group of people and then
communicated to the lower-level managers. The involvement of only a few people makes the
decision-making process more efficient since they can discuss the details of each decision in one
meeting. The decisions are then communicated to the lower levels of the organization for
implementation. However, if lower-level managers are involved in the decision-making process, the
process will take longer and conflicts will arise. It will make the implementation process lengthy
and complicated because some managers may object to the decisions if their input is ignored.

5. Improved quality of work

The standardized procedures and better supervision in a centralized organization result in
improved quality of work. There are supervisors in each department who ensure that the outputs are
uniform and of high quality. The use of advanced equipment reduces potential wastage from manual
work and also helps guarantee high-quality work. Standardization of work also reduces the
replication of tasks that may result in high labor costs.

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Disadvantages of Centralization
1. Bureaucratic leadership
Centralized management resembles a dictatorial form of leadership where employees are
only expected to deliver results according to what the top executives assigned them. Employees are
unable to contribute to the decision-making process of the organization, and they are merely
implementers of decisions made at the higher level. Even when the employees face difficulties in
implementing some of the decisions, the executives will not understand because they are only
decision-makers and not implementers of the decisions. The result of such actions is a decline in
performance because the employees lack the motivation to implement decisions taken by top-level
managers without the input of lower-level employees.

2. Remote control
The organization’s executives are under tremendous pressure to formulate decisions for the
organization, and they lack control over the implementation process. The failure of executives to
decentralize the decision-making process adds a lot of work to their desk. The executives suffer
from a lack of time to supervise the implementation of the decisions. It leads to reluctance on the
part of employees. Therefore, the executives may end up making too many decisions that are either
poorly implemented or ignored by the employees.

3. Delays in work
Centralization results in delays in work as records are sent to and from the head office.
Employees rely on the information communicated to them from the top, and there will be a loss in
man-hours if there are delays in relaying the records. It means that the employees will be less
productive if they need to wait long periods to get guidance on their next projects.

4. Lack of employee loyalty

Employees become loyal to an organization when they are allowed personal initiatives in the
work they do. They can introduce their creativity and suggest ways of performing certain tasks.
However, in centralization, there is no initiative in work because employees perform tasks
conceptualized by top executives. It limits their creativity and loyalty to the organization due to the
rigidity of the work.

Decentralisation:
Transfer of decision making power and assignment of accountability and responsibility for
results. It is accompanied by delegation of commensurate authority to individuals or units at all
levels of an organization even those far removed from headquarters or other centers of power.

1. “Decentralisation refers to tire systematic effort to delegate to the lowest levels all authority
except that which can only be exercised at central points.” —Louis A. Allen

2. “Decentralisation means the division of a group of functions and activities into relatively
autonomous units with overall authority and responsibility for their operation delegate to timd of
cacti unit.’—Earl. P. Strong

3. “Decentralisation is simply a matter of dividing up the managerial work and assigning specific
duties to the various executive skills.” —Newman, summer and Wairen

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Thus, decentralisation is concerned with the decentralisation of decision-making authority to the
lower levels in managerial hierarchy.

Degree of Decentralisation:
The degree of decentralisation is determined by:
(a) Nature of the authority delegated,
(b) How far down in the organisation it is delegated,
(c) How consistently it is delegated.
So, the degree of decentralisation is determined by the authority given. For example,
manager A in a company is given the authority to buy certain material worth Rs. 1500 whereas
manager B is allowed to do similar type of work to the extent of Rs. 4500.
It is clear that the degree of decentralisation is less in case of A. Similarly decisions about
the matters referred, measure the degree of decentralisation depending upon the power to take
decisions vested in an officer without the need of getting consent of somebody else.
Advantages of Decentralisation:
1. Reduces the burden on top executives:
Decentralisation relieves the top executives of the burden of performing various functions.
Centralisation of authority puts the whole responsibility on the shoulders of an executive and his
immediate group. This reduces the time at the disposal of top executives who should concentrate on
other important managerial functions. So, the only way to lessen their burden is to decentralise the
decision-making power to the subordinates.
2. Facilitates diversification:
Under decentralization, the diversification of products, activites and markets etc., is
facilitated. A centralised enterprise with the concentration of authority at the top will find it difficult
and complex to diversify its activities and start the additional lines of manufacture or distribution.
3. To provide product and market emphasis:
A product loses its market when new products appear in the market on account of
innovations or changes in the customers demand. In such cases authority is decentralised to the
regional units to render instant service taking into account the price, quality, delivery, novelty, etc.
4. Executive Development:
When the authority is decentralised, executives in the organisation will get the opportunity
to develop their talents by taking initiative which will also make them ready for managerial
positions. The growth of the company greatly depends on the talented executives.
5. It promotes motivation:
To quote Louis A. Allen, “Decentralisation stimulates the formation of small cohesive
groups. Since local managers are given a large degree of authority and local autonomy, they tend to
weld their people into closely knit integrated groups.” This improves the morale of employees as
they get involved in decision-making process.
6. Better control and supervision:
Decentralisation ensures better control and supervision as the subordinates at the lowest
levels will have the authority to make independent decisions. As a result they have thorough
knowledge of every assignment under their control and are in a position to make amendments and
take corrective action.
7. Quick Decision-Making:
Decentralisation brings decision making process closer to the scene of action. This leads to
quicker decision-making of lower level since decisions do not have to be referred up through the
hierarchy.

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Disadvantages of Decentralisation:
Decentralisation can be extremely beneficial. But it can be dangerous unless it is carefully
constructed and constantly monitored for the good of the company as a whole.
Some disadvantages of decentralisation are:
1. Uniform policies not Followed:
Under decentralisation, it is not possible* to follow uniform policies and standardised
procedures. Each manager will work and frame policies according to his talent.
2. Problem of Co-Ordination:
Decentralisation of authority creates problems of co-ordination as authority lies dispersed
widely throughout the organisation.
3. More Financial Burden:
Decentralisation requires the employment of trained personnel to accept authority, it
involves more financial burden and a small enterprise cannot afford to appoint experts in various
fields.
4. Require Qualified Personnel:
Decentralisation becomes useless when there are no qualified and competent personnel.
5. Conflict:
Decentralisation puts more pressure on divisional heads to realize profits at any cost. Often
in meeting their new profit plans, bring conflicts among managers.

Recentralization:
Recentralization Centralization and decentralization depend on many factors and so the
degree of centralization and decentralization also changes with the changing situation. It should not
be supposed that authority once decentralized is decentralized for ever. Recentralization means back
to centralization . If the situation so demands, the top management may hold back the power or
authority from the lower level managers which were earlier decentralized.

Organizational Culture:
The values and behaviours that contribute to the unique social and psychological environment of an
organization.

Organizational culture includes an organization's expectations, experiences, philosophy, and values

that hold it together, and is expressed in its self-image, inner workings, interactions with the outside world,
and future expectations. It is based on shared attitudes, beliefs, customs, and written and unwritten rules that
have been developed over time and are considered valid. Also called corporate culture, it's shown in

(1) the ways the organization conducts its business, treats its employees, customers, and the wider
community,

(2) the extent to which freedom is allowed in decision making, developing new ideas, and personal
expression,

(3) how power and information flow through its hierarchy, and

(4) how committed employees are towards collective objectives.



It affects the organization's productivity and performance, and provides guidelines on customer care
and service, product quality and safety, attendance and punctuality, and concern for the environment.

Organizational culture is defined as the underlying beliefs, assumptions, values and ways of
interacting that contribute to the unique social and psychological environment of an organization.

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Organizational Climate:
Properties of the business environment in a workplace observed by staff that strongly influence their
actions and job performance. For example, a perceptive business manager might take the trouble to survey
employees about the organizational climate to identify and promote those aspects that are most conducive to
achieving corporate objectives. Also called corporate climate.

According to Campbell, “Organisational climate can be defined as a set of attributes specific to a
particular organisation that may be induced from the way that organisation deals with its members and its
environment. For the individual members within the organisation, climate takes the form of a set of attitudes
and experiences which describe the organisation in terms of both static characteristics (such as degree of
autonomy) and behaviour outcome and outcome- outcome contingencies.”

Organisational Change:
Change is a constant force in every organisation. Sometimes this is because a company is
growing, sometimes a company needs to down-size and other times companies identify a need to
restructure in order to better achieve their goals. While organisations generally understand the need
to embrace change in order to achieve objectives and remain competitive, many struggle to manage
all aspects of this change to ensure that initiatives are smoothly implemented, and that both
individuals and the organisation are appropriately supported throughout. Learning how to manage
the organisational change process is key to achieving the objectives of the change initiative,
regardless of what the change entails.
The simple fact is, change is pivotal in any organisation. Managed poorly, the process
creates major problems for the culture, people and ultimately the entire operation. Managed well, it
provides the platform for growth and success.
A systematic approach to OCM is beneficial when change requires people throughout an
organization to learn new behaviors and skills. By formally setting expectations, employing tools to
improve communication and proactively seeking ways to reduce misinformation, stakeholders are
more likely to buy into a change initially and remain committed to the change throughout any
discomfort associated with it.
Successful OCM strategies include:
• Agreement on a common vision for change -- no competing initiatives.
• Strong executive leadership to communicate the vision and sell the business case for change.
• A strategy for educating employees about how their day-to-day work will change.
• A concrete plan for how to measure whether or not the change is a success -- and follow-up
plans for both successful and unsuccessful results.
• Rewards, both monetary and social, that encourage individuals and groups to take ownership
for their new roles and responsibilities.

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HUMAN RESOURCE MANAGEMENT
INTRODUCTION TO HRM
Human Resource Management (HRM) is an operation in companies designed to maximize employee
performance in order to meet the employer's strategic goals and objectives. More precisely, HRM focuses on
management of people within companies, emphasizing on policies and systems.

In short, HRM is the process of recruiting, selecting employees, providing proper orientation and
induction, imparting proper training and developing skills.

HRM also includes employee assessment like performance appraisal, facilitating proper
compensation and benefits, encouragement, maintaining proper relations with labor and with trade unions,
and taking care of employee safety, welfare and health by complying with labor laws of the state or country
concerned.

The Scope of HRM

The scope of HRM is very wide. It consists of all the functions that come under the banner of human
resource management. The different functions are as follows −

Human Resources Planning:

It is the process by which a company identifies how many positions are vacant and whether the
company has excess staff or shortage of staff and subsequently deals with this need of excess or shortage.

Job Analysis Design:

Job analysis can be defined as the process of noticing and regulating in detail the particular job
duties and requirements and the relative importance of these duties for a given job.

Job analysis design is a process of designing jobs where evaluations are made regarding the data
collected on a job. It gives an elaborate description about each and every job in the company.

Recruitment and Selection:

With respect to the information collected from job analysis, the company prepares advertisements
and publishes them on various social media platforms. This is known as recruitment.

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 A number of applications are received after the advertisement is presented, interviews are conducted
and the deserving employees are selected. Thus, recruitment and selection is yet another essential area of
HRM.

Orientation and Induction:

After the employees are selected, an induction or orientation program is organized. The employees
are updated about the background of the company as well as culture, values, and work ethics of the company
and they are also introduced to the other employees.

Training and Development:

Employees have to undergo a training program, which assists them to put up a better performance on the job.
Sometimes, training is also conducted for currently working experienced staff so as to help them improve
their skills further. This is known as refresher training.

Performance Appraisal:

After the employees have put in around 1 year of service, performance appraisal is organized in order to
check their performance. On the basis of these appraisals, future promotions, incentives, and increments in
salary are decided.

Compensation Planning and Remuneration:

Under compensation planning and remuneration, various rules and regulations regarding compensation and
related aspects are taken care of. It is the duty of the HR department to look into remuneration and
compensation planning.

Features of HRM:

Human Resource Management as a discipline includes the following features −

• It is pervasive in nature, as it is present in all industries.
• It focuses on outcomes and not on rules.
• It helps employees develop and groom their potential completely.
• It motivates employees to give their best to the company.
• It is all about people at work, as individuals as well as in groups.
• It tries to put people on assigned tasks in order to have good production or results.
• It helps a company achieve its goals in the future by facilitating work for competent and well-
motivated employees.
• It approaches to build and maintain cordial relationship among people working at various levels in
the company.

Basically, we can say that HRM is a multi-disciplinary activity, utilizing knowledge and inputs
drawn from psychology, economics, etc.

Human Resource Management is a process of bringing people and organizations together so that the
goals and objectives of each are achieved. In this chapter, we will discuss how important it is to ensure that
the HR functions are properly aligned with the overall business strategy of an organization.

Integrating HR Strategy with Business Strategy:

Today, human resource departments have a more precise, strategic role in companies, and an HR
strategy affects the bottom line. Let us look into HR as part of a complete business strategy.

HR Strategy as Business Strategy:

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 In real world, no margin in the sand is drawn between human resources strategy and business
strategy. A successful business owner understands the strong connection between the two. Progressing
human capital is essential to the longevity and success of a business.

Human resources strategy today includes executive leadership teams conferring with human
resources experts to improvise complementary goals for human resources and the complete business.

HR Strategy and Business Productivity:

The recruitment and selection process in human resources department is paramount to creating a productive
workforce. Maintaining a workforce where employees enjoy high levels of job satisfaction and job security
converts into a workforce that assists in achieving business goals.

Trends Affecting HR and Business Strategy:

Presently, we can say that HR technologies have become an integrated engine in advancing the
broader needs of businesses, supporting far more than the basic transactions, and advancing HR and business
agenda for future.

Human resources information system (HRIS) is integral to the progress of performance management,
recruitment, selection. It also plays a vital role in the rejection of candidates, their promotions and postings,
etc.

Interaction among Executive Leadership:

The best way to cultivate a relationship between HR and C-level executives is by demonstrating the
return on investment (ROI) in human resources activities and practices. This may include explaining the link
between reduction in employee turnover and improvement in job satisfaction that improves the bottom line.

Example:

Till now, we are very clear about integration of HR strategy with business strategy, business
productivity, their interdependencies and the way their relationship influences the organization as a whole.

Let us now take an example to understand the concepts better.

Company X functions from the northeast corner of India. Its functions are limited to the local area only and
they have projected their income and gains on that basis.

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Due to the prevailing restrictions in the area, the Company has to hire its staff from the local population, who
are not professionally qualified. However, the Company ropes in the services of a professionally qualified
experienced CEO, who is a techno-commercial man and has the duty to manage the organization centrally.

The CEO interacts with almost all the staff and arranges for on the job training for them. As the employees
are not professionally qualified, there is little fear that they will change the job after getting trained.

In this case, lack of local competition goes in the Company's favor. The Company however ensures that it
recruits hard working, focused and committed personnel. The salary policy of the Company is such that each
candidate is able to earn enough to meet the basic needs.

TALENT MANAGEMENT:

Talent management indicates the skills of attracting highly skilled workers, integrating new workers,
and improving and retaining current workers to meet the current and future business objectives.

Companies involved in a talent management strategy shift the duties of employees from the human
resources department to all managers throughout the company. It is also called Human Capital
Management (HCM).

Talent management is basically concerned with coordinating, collaborating and managing the
different talents people have to offer within a company. This is done by studying and examining each
individual on the basis of their skills, talent, personality and character in relation to filling a particular
vacancy within the company.

Every individual has different skills to offer and the difficult part for a company is choosing those
individuals who fit in with the existing company culture. Effective HR procedures will be able to identify
these individuals and appoint them appropriately.

Functions of Talent Management:

After gathering all the skilled people required for the job, we need to handle them. This is not
possible without specifying the operations that need to be undertaken in talent management. Various
functions that organizations should perform with the help of HRM and other departments are given below
• Talent requirement analysis

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 • Allocating the talent resources or sources
• Influencing talents towards the organization
• Recruiting or nominating the in house or outsourced talents
• Managing combative salaries or professional fees
• Training and progress of talent pool
• Performance examination of talent
• Career and prosperity planning
• Withholding management

We can conclude that talent management or human capital management is a set of business practices
that manages the planning, acquisition, development, retention and growth of talent in order to achieve
business goals with optimized performance.

Advantages of Effective Talent Management:

If talent management is done properly, it would lead the organization prosper wonderfully, as all the
employees in the firm would be masters in their own department and will give their best to achieve the goals
and objectives of the company. That way, the competency gap between necessary competencies by the
industry and available competencies minimizes significantly.

The main advantages of effective talent management are −

• Continuously grooms the organization's effectiveness and efficiency.
• Helps in achieving the targeted business goals with superior performance.
• Improves organization's overall culture and work climate.
• Provides people with high level of satisfaction with their jobs.
• Improves withholding of talent and reduces people turnover.
• Manages better overall growth of people associated with the organization.

!
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 It is essential that the right candidates having the required skillset are recruited in order to make use
of their skills and utilize them for the development of both the individual as well as the company. This is
possible only with the help of talent management.

"Talent Management" has become one of the most important buzzwords in Corporate HR and
Training today. In this article we will explain the history, principles, and processes of talent management and
help readers understand our research agenda in this important area.

From Personnel to Strategic HR to Talent Management:

Stage 1: Personnel Department:

In the 1970s and 1980s the business function which was responsible for people was called "The
Personnel Department." The role of this group was to hire people, pay them, and make sure they had the
necessary benefits. The systems which grew up to support this function were batch payroll systems. In this
role, the personnel department was a well understood business function.

Stage 2: Strategic HR:

In the 1980s and 1990s organizations realized that the HR function was in fact more important - and
the concepts of "Strategic HR" emerged. During this period organizations realized that the VP of HR had a
much larger role: recruiting the right people, training them, helping the business design job roles and
organization structures (organization design), develop "total compensation" packages which include benefits,
stock options and bonuses, and serving as a central point of communication for employee health and
happiness.

The "Head of Personnel" became the "VP of HR" and had a much more important role in business
strategy and execution. The systems which were built up to support this new role include recuiting and
applicant tracking (ATS), portals, total compensation systems, and learning management systems. In this
role, the HR department now became more than a business function: it is a business partner, reaching out to
support lines of business.

Stage 3: Talent Management:

We are now entering a new era: the emergence of "Talent Management." While strategic HR

continues to be a major focus, HR and L&D organizations are now focused on a new set of strategic

issues:

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• How can we make our recruiting process more efficient and effective by using competencybased"
recruiting instead of sorting through resumes, one at a time?

• How can we better develop managers and leaders to reinforce culture, instill values, and create a
sustainable "leadership pipeline?”

• How do we quickly identify competency gaps so we can deliver training, e-learning, or development
programs to fill these gaps? How can we use these gaps to hire just the right people?

• How do we manage people in a consistent and measurable way so that everyone is aligned, held
accountable, and paid fairly?

• How do we identify high performers and successors to key positions throughout the organization to make
sure we have a highly flexible, responsive organization?

• How do we provide learning that is relevant, flexible, convenient, and timely?

These new, more challenging problems require new processes and systems. They require integration
between the different HR silos -- and direct integration into line of business management processes. Today
organizations are starting to buy, build, and stitch together performance management systems, succession
planning systems, and competency management systems. TheHR function is becoming integrated with the
business in a real-time fashion.

Defining the Talent Management Process:

Organizations are made up of people: people creating value through proven business processes,

innovation, customer service, sales, and many other important activities. As an organization strives

to meet its business goals, it must make sure that it has a continuous and integrated process for

recruiting, training, managing, supporting, and compensating these people. The following chart

shows the complete process:

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Workforce Planning: Integrated with the business plan, this process establishes workforce plans, hiring
plans, compensation budgets, and hiring targets for the year.

Recruiting: Through an integrated process of recruiting, assessment, evaluation, and hiring the business
brings people into the organization.

Onboarding: The organization must train and enable employees to become productive and integrated into
the company more quickly.

Performance Management: By using the business plan, the organization establishes processes to measure
and manage employees.

Training and Performance Support: of course this is a critically important function. Here we provide
learning and development programs to all levels of the organization.

Succession Planning: as the organization evolves and changes, there is a continuous need to move people
into new positions. Succession planning, a very important function, enables managers and individuals to
identify the right candidates for a position. This function also must be aligned with the business plan to
understand and meet requirements for key positions 3-5 years out. While this is often a process reserved for
managers and executives, it is more commonly applied across the organization.

Compensation and Benefits: clearly this is an integral part of people management. Here organizations try to
tie the compensation plan directly to performance management so that compensation, incentives, and
benefits align with business goals and business execution.

Critical Skills Gap Analysis: this is a process we identify as an important, often overlooked function in
many industries and organizations. While often done on a project basis, it can be "business-critical." For
example, today industries like the Federal Government, Utilities, Telecommunications, and Energy are facing
large populations which are retiring. How do you identify the roles, individuals, and competencies which are
leaving? What should you do to fill these gaps? We call this "critical talent management" and many
organizations are going through this now.

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Human Resource Planning

Human Resource Planning (HRP) is the process of foreseeing the requirement of human resources in
an organization. The objective is also to determine how the existing human resources best fit in their jobs.

Thus, it focuses on the basic economics concept of demand and supply in the context of the human
resource capacity of an organization.

Components of HRP

The following are the components of human resource planning −

Current HR Supply

It involves a comprehensive study of human resource strength in the organization with respect to the
numbers, skills, talents, competencies, qualifications, experiences, age, tenures, performance ratings,
designations, grades, compensations, benefits, etc.

At this stage, the consultants may organize extensive interviews with the managers to understand the
critical HR issues they face and basic workforce abilities as crucial for various business processes.

Future HR Demand

All the known HR variables like attrition, lay-offs, foreseeable vacancies, retirements, promotions,
pre-set transfers, etc. are considered while selecting future HR demand. Further, specific unknown workforce
temporaries like competitive factors, resignations, abrupt transfers or dismissals are also involved in the
scope of analysis.

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Demand Forecast

It is important to understand the business strategy and the objectives of the organization in the long
run so that the workforce demand forecast is aligned to the organizational goals.

HR Sourcing Strategy and Implementation

Sourcing strategy and implementation may involve conducting interaction programs with employees,
relocation, talent acquisition, recruitment and outsourcing, talent management, training and coaching, and
revision of policies. The plans are then executed taking into confidence the mangers so as to make the
process of execution smooth and efficient.

Even though HR Planning sounds quite simple as a process of managing the numbers in terms of
human resource needs of the company, the actual exercise may include the HR manager to face many
roadblocks owing to the effect of the current workforce in the company, pressure to meet the business
objectives and prevailing workforce market condition.

Thus, a properly conducted process of HR Planning by an HR Consulting company helps the

company in meeting its aims and objectives in a timely manner with the right HR strength in action.

Job Analysis

It is the process of identifying and choosing elaborated contents of a particular job, thus clearly
defining duties, rules, responsibilities, accountabilities, and skills related to the job.

Job analysis is the process of analyzing the job — what is the demand and requirement for the
job, and not of the individual.

The process of job analysis gives two sets of data −

• Job description − Job description is a written statement including complete information about what
all a job holds, like job title, duties, tasks and responsibilities related to job, working conditions and
hazards, reporting relationships, tools, machines and equipment to be used, and relationships with
other designations.
• Job specification − Job specification includes particulars regarding the capabilities that an individual
should possess to perform the assigned tasks efficiently. This includes educational qualification,
experience, training, appropriate skills, knowledge, and abilities required to perform the job.

Job Design

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 Job design is a continuous and ever-evolving process that is targeted at helping employees in making
adjustments with the changes at the workplace. The end goal is minimizing dissatisfaction and enhancing
motivation and employee engagement at the workplace.

There are various steps involved in job designing, but all these steps follow a logical sequence.
Every step has its own importance and no step can be neglected during the designing process. The sequence
is given below −
• What jobs are to be done or what jobs are a part of the job?
• How are the jobs performed?
• What amount of jobs is required to be done?
• What is the procedure of performing these tasks?

All these questions are considered while arriving upon a clear definition of a specific job, thereby
making it less risky for the one performing the same. A well-defined job creates a feeling of achievement and
a sense of high self-esteem among the employees.

Job Evaluation

In contrast to job specification, job evaluation specifies the relative value or worth of each job in a
company by examining the task and ranking the jobs accordingly.

Job evaluation cab be done by any of the following methods −

• Points rating − Different levels are allotted to the various elements of jobs and then the points
allocated to different levels are summarized to get the point score of the jobs. It forms the basis of
pay structure.
• Factor comparison − A comparison of different independent factors of jobs is done and points are
given to each factor scale of individual job. These points are then aggregated to rank the jobs.
• Job ranking − A job is not broken into factors or elements; instead, it is evaluated as a complete
process and is compared with other jobs. After proper evaluation, jobs are scaled accordingly.
• Paired comparison − Jobs are compared with each other and points are allocated depending on being
‘higher, lesser or equal’. These points are added to prioritize the order of jobs. The jobs with higher
priorities are given more attention as compared to others.

Recruitment and Selection

Recruitment and Selection is an important operation in HRM, designed to maximize employee
strength in order to meet the employer's strategic goals and objectives. In short, Recruitment and Selection is
the process of sourcing, screening, shortlisting and selecting the right candidates for the filling the required
vacant positions.

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In this tutorial, we will discuss the various aspects of Recruitment and Selection such as the
recruitment process, the factors affecting recruitment, recruitment planning, methods of recruitment,
recruitment interviews, selection process and making an offer.

The Scope of Recruitment and Selection

The scope of Recruitment and Selection is very wide and it consists of a variety of operations.
Resources are considered as most important asset to any organization. Hence, hiring right resources is the
most important aspect of Recruitment. Every company has its own pattern of recruitment as per their
recruitment policies and procedures.

The scope of Recruitment and Selection includes the following operations −

• Dealing with the excess or shortage of resources
• Preparing the Recruitment policy for different categories of employees
• Analyzing the recruitment policies, processes, and procedures of the organization
• Identifying the areas, where there could be a scope of improvement
• Streamlining the hiring process with suitable recommendations
• Choosing the best suitable process of recruitment for effective hiring of resources

Any organization wants it future to be in good and safe hands. Hence, hiring the right resource is a
very important task for any organization.

Recruitment is a process of identifying, screening, shortlisting and hiring potential resource for
filling up the vacant positions in an organization. It is a core function of Human Resource Management.

Recruitment is the process of choosing the right person for the right position and at the right time.
Recruitment also refers to the process of attracting, selecting, and appointing potential candidates to meet the
organization’s resource requirements.

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The hiring of the candidates can be done internally i.e., within the organization, or from external
sources. And the process should be performed within a time constraint and it should be cost effective.

Importance of Recruitment

Recruitment is one of the most fundamental activities of the HR team. If the recruitment process is efficient,
then
• The organization gets happier and more productive employees
• Attrition rate reduces.
• It builds a good workplace environment with good employee relationships.
• It results in overall growth of the organization.

Here is a list that shows the purpose and importance of Recruitment in an organization −
• It determines the current and future job requirement.
• It increases the pool of job at the minimal cost.
• It helps in increasing the success rate of selecting the right candidates.
• It helps in reducing the probability of short term employments.
• It meets the organization’s social and legal obligations with regards to the work force.
• It helps in identifying the job applicants and selecting the appropriate resources.
• It helps in increasing organizational effectives for a short and long term.
• It helps in evaluating the effectiveness of the various recruitment techniques.
• It attracts and encourages the applicants to apply for the vacancies in an organization.
• It determines the present futures requirements of the organization and plan according.
• It links the potential employees with the employers.
• It helps in increasing the success ratio of the selection process of prospective candidates.
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 • It helps in creating a talent pool of prospective candidates, which enables in selecting the right
candidates for the right job as per the organizational needs.

Selection is the process of picking or choosing the right candidate, who is most suitable for a vacant
job position in an organization. In others words, selection can also be explained as the process of
interviewing the candidates and evaluating their qualities, which are required for a specific job and then
choosing the suitable candidate for the position.

The selection of a right applicant for a vacant position will be an asset to the organization, which will
be helping the organization in reaching its objectives.

Different authors define Selection in different ways. Here is a list of some of the definitions −
• Employee selection is a process of putting a right applicant on a right job.
• Selection of an employee is a process of choosing the applicants, who have the qualifications to fill
the vacant job in an organization.
• Selection is a process of identifying and hiring the applicants for filling the vacancies in an
organization.
• Employee selection is a process of matching organization’s requirements with the skills and the
qualifications of individuals.

A good selection process will ensure that the organization gets the right set of employees with the
right attitude.

Difference between Recruitment and Selection

The major differences between Recruitment and Selection are as follows −

Recruitment Selection

Recruitment is defined as the process Selection is defined as the process of

of identifying and making the choosing the right candidates for the
potential candidates to apply for the vacant positions.
jobs.

Recruitment is called as a positive Selection is called as a negative process

process with its approach of with its elimination or rejection of as
attracting as many candidates as many candidates as possible for
possible for the vacant jobs identifying the right candidate for the
position.

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 Both recruitment and selection work hand in hand and both play a vital role in the overall growth of
an organization.

Importance of Selection

Selection is an important process because hiring good resources can help increase the overall
performance of the organization. In contrast, if there is bad hire with a bad selection process, then the work
will be affected and the cost incurred for replacing that bad resource will be high.

The purpose of selection is to choose the most suitable candidate, who can meet the requirements of
the jobs in an organization, who will be a successful applicant. For meeting the goals of the organization, it is
important to evaluate various attributes of each candidate such as their qualifications, skills, experiences,
overall attitude, etc. In this process, the most suitable candidate is picked after the elimination of the
candidates, who are not suitable for the vacant job.

The organization has to follow a proper selection process or procedure, as a huge amount of money
is spent for hiring a right candidate for a position. If a selection is wrong, then the cost incurred in induction
and training the wrong candidate will be a huge loss to the employer in terms of money, effort, and also time.
Hence, selection is very important and the process should be perfect for the betterment of the organization.

Advantages of Selection

A good selection process offers the following advantages−

• It is cost-effective and reduces a lot of time and effort.
• It helps avoid any biasing while recruiting the right candidate.
• It helps eliminate the candidates who are lacking in knowledge, ability, and proficiency.
• It provides a guideline to evaluate the candidates further through strict verification and reference-
checking.
• It helps in comparing the different candidates in terms of their capabilities, knowledge, skills,
experience, work attitude, etc.

A good selection process helps in selecting the best candidate for the requirement of a vacant
position in an organization.

Selection Process and Steps

As we have discussed that Selection is very important for any organization for minimizing the losses
and maximizing the profits. Hence the selection procedure should be perfect. A good selection process
should comprise the following steps −

• Employment Interview − Employment interview is a process in which one-on-one session in

conducted with the applicant to know a candidate better. It helps the interviewer to discover the inner
qualities of the applicant and helps in taking a right decision.

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 • Checking References − Reference checking is a process of verifying the applicant’s qualifications
and experiences with the references provided by him. These reference checks help the interviewer
understand the conduct, the attitude, and the behavior of the candidate as an individual and also as a
professional.
• Medical Examination − Medical examination is a process, in which the physical and the mental
fitness of the applicants are checked to ensure that the candidates are capable of performing a job or
not. This examination helps the organization in choosing the right candidates who are physically and
mentally fit.
• Final Selection − The final selection is the final process which proves that the applicant has
qualified in all the rounds of the selection process and will be issued an appointment letter.

A selection process with the above steps will help any organization in choosing and selecting the
right candidates for the right job.

TRAINING AND DEVELOPMENT:

Training can be defined as a refining process done with the selected candidates to make them perfect
and adaptable according to the changing working environment of the company.

The complete process of identifying, selecting, recruiting and training individuals helps them in their
overall professional growth and also contributes to the development of the company.

Career Development:

Career Development is the process by which employees improve through a series of stages, each
associated with a different set of development tasks, activities and relationship.

It can also be defined as an ongoing formalized effort by an organization that aims at developing and
enriching the organization’s human resources in the light of both the employee and the organization’s need.

The Need for Career Development

From a company’s perspective, the failure to encourage employees to please their careers can result
in a shortage of employees to fill open positions, lower employee commitment, and inappropriate use of
money allocated for training and development program.

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 When a company helps employees in developing a career plan, the employees are less inclined to
quit that company. Developing a career can boost the morale of the employee, enhance productivity and help
the company become more efficient.

Career Development-Objectives

Career development has three major objectives −

• To meet the immediate and future human resource requirements of the company on a timely basis.
• To better update the company and the individual about potential career path within the company.
• To utilize existing human resource programs to the fullest by integrating activities and practices that
select, assign, develop, and manage individual careers in alignment with the company’s plan.

Probably, the most important objective of any career development program is to facilitate the tools
and techniques that will enable employees to gauge their potential for success in a career path.

Career development is also essential because career development can minimize unemployment and
provide opportunity on the basis of performance & qualification. It tries to improve the overall personality of
an individual solely as well as when in group.

HRM & Career Development Responsibilities:

Career Development has its duties distributed at various levels and each level is answerable for their
share of responsibilities. We have responsibilities assigned to the organization, employees as well as
mangers.

Career development plays a crucial role in grooming an individual, group as well as the organization
as a whole.

Organization’s Responsibilities:
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 Organization’s responsibilities include instigation and ensuring in the first place that career
development does take place. Specifically, organization’s responsibilities are to enhance career opportunities
and improve interaction between employees.

The organization should promote the conditions and create a surrounding that will facilitate the
development of individual career plans by the employees. Basically, the organization provides information
regarding the mission and policies and helps employee prepare their career development plan and career
path.

Employee’s Responsibilities

The only person who really knows what she or he needs is the individual and these desires differ
from person to person. The duty of an employee varies with his/her designation.

While the individual is ultimately answerable for preparing his or her individual career plan,
experience has shown that people make considerable progress only when they receive some motivation and
direction.

Manager’s Responsibilities

The manager should act as a catalyst and sounding board. The manager should show an employee
how to go about a process and then help the employee understand what is required of him in the position.

The immediate manager facilitates guidance and encouragement. The manager typically verifies the
employee’s readiness for job mobility. Moreover, managers are often the primary source of information
about position openings, training courses, and other development options.

These are the major career development responsibilities an HRM needs to take care of in an
organization.

Career Development Process:

Career planning entails an individual and organizational requirements and options that can be
matched in a variety of ways. Thus, career planning is the process through which employees −
• Become aware of their interests, values, strengths and weakness.
• Collect information about job options within the company.
• Identify and choose career goals.
• Establish action plans to achieve those specific career goals and objectives.

Career development process may sound like just the qualifications that an individual gets throughout
his/her educational field, but here we have unfolded a new side of it, as we see how an individual’s career
gets affected by the place where he/she works.

Career Planning System

Career planning system can be defined as a step by step process of improving as an individual; we
can also call it as a process of self-development.

This system consists of the following four different stages −

Evaluation Process

The evaluation phase includes activities like self-assessment and assessment by the company. The
objective of having evaluation is to understand the employee’s strengths and weaknesses.

Self-Assessment

Self-assessment assists employees in determining their career interest, values, aptitudes and
behavioral tendencies. In order to do self-assessment, employees often take psychological tests and conduct
self-directed searches.
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 Large amount of self-assessment materials is available over the internet and other commercial
outlets. Tests also assist employees identify the relative value they place on work and leisure activities.

Career counselors are often used to help employees in the self-assessment process and translate the
results of psychological tests into measurable goals and activities.

Assessment by the Organization

Organizations have several potential sources of information that also help for assessing employees.
One of the most frequently used sources has been the performance appraisal process.

Direction Phase

The direction phase includes determining the career desired by the employee. What exactly interests
the employee? How can we match the employee’s interest with the desirable job in the organization?

Thus, the steps that should be taken in order to realize their career objectives are −
• Evaluation Process
• Direction Phase
• Goal setting
• Action Planning

The description given above says it all about career planning system. As we can see, not a single
stage can be avoided, as all are interlinked and are crucial to career development.

As we end this chapter, we know what exactly career development is, why HRM needs to deal with
career development management, and how it is important individually as well as for a team.

PERFORMANCE APPRAISAL
Managing employee performance is one of the key elements for organizational success in the present
context of firms. As we know, all the firms are busy trying to adapt to a resource centered view.

As we have been mentioning throughout, firms in the service sector that lay a lot of emphasis on
people need to consider that employee performance is managed in a holistic manner.

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Effective Performance Management and Appraisal

Let us take a look at the effectiveness of performance management and appraisal with the following
points −

A Two-Way Street

Talking about employee performance, we need to remember that it is a two-way process that ties the
manager and the employee with the HR manager playing the role of a mediator.

For instance, any conversation about employee performance has to include the manager and the
employee or the manager and the managed. Thus, it is imperative that both parties to this transaction
understand their responsibilities and work together to ensure that the process is smoothened.

The Role of the Manager

The manager has a duty to make sure that his or her management of the employees is free of biases
and prejudices. Across companies and verticals where the employees feel discriminated against, it has led to
attrition, lower employee morale and in the extreme cases, lawsuits against the company.

Thus, the manager has to walk the talk and not just pay lip service to the company’s policies on
employee performance. During the course of working together as a team, there are bound to be instances
where conversation between the manager and the team and within the team manifests itself.

It is incumbent upon the manager to make sure that such instances do not morph into a corrosive
effect that threatens the very existence of the team as well as degrades the performance of the team as a
whole.

The Role of the Employee

Just as the manager has a responsibility to manage the team effectively, so does the employees have
corresponding responsibilities.

Absenteeism, shirking work, a negative attitude and an indifferent attitude towards work are some
things that the employee must avoid. It is better for the employee to know that once he or she is categorized
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as having an attitude problem, then it would be difficult for the employee to break the perception and
perform effectively.

This does not mean that the employee has to accept whatever comes his or her way silently. The
point here is that the employee must use the channels available for redressal rather than sulking at work if he
or she has grievances about the manager.

Organizational Focus

Though the role of the HR manager and the organization seems to be relatively small, it is a fact that
organizational goals and culture play a very important part in ensuring that employee performance is
managed for the benefit of the organization.

We have seen the centrality of managing employee performance to the progress of the organization.
Here it should be noted that there are fair chances that the centrality leads to degrading the progress, if not
properly checked.

If organizations want to minimize attrition and boost sagging employee morale, the first thing they
can do is to make sure that the employee performance management system is streamlined.

Performance Appraisal Process

The performance appraisal process, simply put, is that time of the year when the employees are
examined on their performance during the last six months or one year depending upon the timeframe that is
set for the same.

The performance appraisal process is conducted between the employee and his or her manager for
the first round and then between the manager and the manager’s manager before going into the third round.
The third round includes the above people as well as the HR manager but excludes the employee.

Managing employee performance within a larger framework of organizational goals is critical for
organizations that count people as their key assets but still, it can be done efficiently as discussed above.

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 4.Leading and Motivation

Leadership:
Leadership is the ability of a company's management to set and achieve challenging goals,
take swift and decisive action, outperform the competition, and inspire others to perform well.
Leadership provides direction for a company. Employees need to know the direction in
which they are headed and who to follow to reach the destination. Leadership involves showing
workers how to effectively perform their responsibilities and regularly supervising the completion
of their tasks. Leadership is also about setting a positive example for staff to follow, by being
excited about the work, being motivated to learn new things, and helping out as needed in both
individual and team activities.

Characteristics of Effective Leadership

Effective leadership includes strong character. Leaders exhibit honesty, integrity,
trustworthiness and ethics. Leaders act in line with how they speak, and earn the right to be
responsible for others’ success in the company.
Strong leadership involves clear communication skills. Leaders speak with and listen to staff
members, respond to questions and concerns, and are empathetic. Leaders use effective
communication skills for moving the company forward and achieving new levels of success.
True leadership sees where the company is headed and plans the steps needed to get there.
Visualizing what is possible, following trends in the industry, and taking risks to grow the business
are all required of leaders.
Productive leadership shows optimism and provides positive energy for staff. Leaders are
helpful by nature and truly concerned about others’ well-being. Leaders find answers to challenges
and are the first to reassure and inspire workers when things do not go according to plan. Leaders
find ways for staff to work together and achieve maximum results in an efficient and effective
manner.

Power and Authority:

Authority is the right given to a manager to achieve the objectives of the organisation. It is a
right to get the things done through others. It is a right to take decisions. It is a right to give orders
to the subordinates and to get obedience from them. A manager cannot do his work without
authority.
A manager gets his authority from his position or post. He gets his authority from the higher
authorities. The lower and middle-level managers get their authority from the top-level managers.
The top-level managers get their authority from the shareholders. Authority always flows
downwards. It is delegated from the top to the bottom.

Power is a broader concept than authority. Power is the ability of a person or a group to influence the
beliefs and actions of other people. It is the ability to influence events. Power can be personal power. A
person gets his personal power from his personality or from his expert knowledge. Doctors, Lawyers,
Engineers, Programmers, etc. get their power from their expertise and professional knowledge. Power can
also be legitimate or official power. This power comes from a higher authority.

In management, authority differs from power in the following ways :-

1. Nature
- Authority is the formal right given to a manager to make decisions or to command.
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- Power is the personal ability to influence others or events.
2. Flow
- Authority flows downwards in the organisation. This is because it is delegated by the superiors to
the subordinates.
- Power can flow in any direction. Even subordinates have power over their superiors, if they can
influence their behaviour. So power can flow upwards, downwards or horizontally.
3. Organisational Charts
- Authority relationships (superior-subordinate relationships) can be shown in the organisation
charts.
- Power relationships cannot be shown in organisation charts.
4. Level of Management
- Authority depends on the level of management. Higher the level of management, higher will be
the authority and vice-versa.
- Power does not depend on the level of management. Power can exist at any level of management.
- Even a lower-level manager or a worker can have power to influence the behaviour of a top-level
manager.
5. Legitimacy
- Authority is always official in nature. So it is legitimate.
- Power need not be official in nature. So it need not be legitimate.
6. Position and Person
- Authority is given to a position or post. The manager gets the authority only when he holds that
position.
- Power resides (lives) in the person who uses it.

Leadership Styles:

A leadership style refers to a leader's characteristic behaviors when directing, motivating,

guiding, and managing groups of people. Great leaders can inspire political movements and social
change. They can also motivate others to perform, create, and innovate.
As you start to consider some of the people who you think of as great leaders, you can
immediately see that there are often vast differences in how each person leads. Fortunately,
researchers have developed different theories and frameworks that allow us to better identify and
understand these different leadership styles.
Here are just a few of the most prominent leadership frameworks and styles that have been
identified.

1. Authoritarian Leadership (Autocratic)

Authoritarian leaders, also known as autocratic leaders, provide clear expectations for what
needs to be done when it should be done, and how it should be done. This style of leadership is
strongly focused on both command by the leader and control of the followers. There is also a clear
division between the leader and the members. Authoritarian leaders make decisions independently
with little or no input from the rest of the group.
Researchers found that decision-making was less creative under authoritarian leadership.
Lewin also concluded that it is harder to move from an authoritarian style to a democratic style than
vice versa. Abuse of this method is usually viewed as controlling, bossy, and dictatorial.
Authoritarian leadership is best applied to situations where there is little time for group
decision-making or where the leader is the most knowledgeable member of the group. The
autocratic approach can be a good one when the situation calls for rapid decisions and decisive
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actions. However, it tends to create dysfunctional and even hostile environments, often pitting
followers against the domineering leader.

2. Participative Leadership (Democratic)

Lewin’s study found that participative leadership, also known as democratic leadership, is
typically the most effective leadership style. Democratic leaders offer guidance to group members,
but they also participate in the group and allow input from other group members. In Lewin’s study,
children in this group were less productive than the members of the authoritarian group, but their
contributions were of a higher quality.
Participative leaders encourage group members to participate but retain the final say in the
decision-making process. Group members feel engaged in the process and are more motivated and
creative. Democratic leaders tend to make followers feel like they are an important part of the team,
which helps foster commitment to the goals of the group.

3. Delegative Leadership (Laissez-Faire)

Researchers found that children under delegative leadership, also known as laissez-faire
leadership, were the least productive of all three groups. The children in this group also made more
demands on the leader, showed little cooperation, and were unable to work independently.
Delegative leaders offer little or no guidance to group members and leave decision-making
up to group members. While this style can be useful in situations involving highly qualified experts,
it often leads to poorly defined roles and a lack of motivation.
Lewin noted that laissez-faire leadership tended to result in groups that lacked direction
where members blamed each other for mistakes, refused to accept personal responsibility, and
produced a lack of progress and work.

4. The Transformational Leadership Style

Transformational leadership is often identified as the single most effective style. This style
was first described during the late 1970s and later expanded upon by researcher Bernard M. Bass.
Some of the key characteristics of his style of leadership are the abilities to motivate and inspire
followers and to direct positive changes in groups.
Transformational leaders tend to be emotionally intelligent, energetic, and passionate. They
are not only committed to helping the organization achieve its goals, but also to helping group
members fulfill their potential.
Research has revealed that this style of leadership resulted in higher performance and more
improved group satisfaction than other leadership styles. One study also found that transformational
leadership led to improved well-being among group members.

5. The Transactional Leadership Style

The transactional leadership style views the leader-follower relationship as a transaction. By
accepting a position as a member of the group, the individual has agreed to obey the leader. In most
situations, this involves the employer-employee relationship, and the transaction focuses on the
follower completing required tasks in exchange for monetary compensation.
One of the main advantages of this leadership style is that it creates clearly defined roles.
People know what they are required to do and what they will be receiving in exchange for
completing these tasks. It also allows leaders to offer a great deal of supervision and direction if it's
needed. Group members may also be motivated to perform well to receive rewards. One of the
biggest downsides is that the transactional style tends to stifle creativity and out-of-the-box
thinking.
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6. Behavioural Leadership:
The behavioural theory of leadership lays emphasis on this fact that the leadership is the
outcome of effective role of behaviour. It relies mainly on the acts of an individual rather than his
traits. Under this approach leadership is described as what leaders do instead of what they are. This
theory states that a leader to be effective should perform his function in such a way that will enable
the group to attain its goals.

7. Situational Leadership Styles

Situational theories of leadership stress the significant influence of the environment and the
situation on leadership. Two of these theories include:
Hersey and Blanchard's leadership styles:
- Hersey and Blanchard's model is one of the best-known situational theories. First published in
1969, this model describes four primary styles of leadership, including:

1. The telling style is characterized by telling people what to do.

2. The selling style involves leaders convincing followers to buy into their ideas and messages.
3. The participating style is marked by allowing group members to take a more active role in the
decision-making process.
4. The delegating style involves taking a hands-off approach to leadership and allowing group
members to make the majority of decisions.
- Blanchard's SLII leadership styles: Later, Blanchard expanded upon the original Hersey and
Blanchard model to emphasize how the developmental and skill level of learners influences the
style that should be used by leaders. Blanchard also described four different learning styles,
including:

1. The directing style involves giving orders and expecting obedience but offers little in the way
of guidance and assistance.
2. The coaching style means giving lots of orders, but leaders also give lots of support.
3. The supporting style is an approach that offers plenty of help, but very little direction.
4. The delegating style is low in both direction and support.

Leadership Skills:

1. Communication
As a leader, you need to be able to clearly and succinctly explain to your employees
everything from organizational goals to specific tasks. Leaders must master all forms
of communication, including one-on-one, departmental, and full-staff conversations, as well as
communication via the phone, email, and social media.
A large part of communication involves listening. Therefore, leaders should establish a
steady flow of communication between themselves and their staff or team members, either through
an open-door policy or regular conversations with workers. Leaders should make themselves
regularly available to discuss issues and concerns with employees. Other skills related to
communication include:
• Active listening
• Articulating
• Business storytelling
• Clarity
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 • Concision
• Correspondence
• Editing
• Explaining
• Expression
• Facilitating group conversations
• Nonverbal communication
• Presentation
• Public speaking
• Reading body language
• Reducing ambiguity
• Verbal communication
• Written communication

2. Motivation
Leaders need to inspire their workers to go the extra mile for their organizations; just paying
a fair salary to employees is typically not enough inspiration (although it is important too). There
are a number of ways to motivate your workers: you may build employee self-esteem through
recognition and rewards, or by giving employees new responsibilities to increase their investment in
the company.
Leaders must learn what motivators work best for their employees or team members to
encourage productivity and passion. Skills related to effective motivation include:

• Allowing employee autonomy

• Asking for input
• Assessing interests of staff
• Convincing
• Mentoring
• Open to employee concerns
• Persuasive
• Providing productive and challenging work
• Providing rewards
• Recognizing others
• Setting effective goals
• Team-building
• Thanking staff
• Understanding employee differences

3. Delegating
Leaders who try to take on too many tasks by themselves will struggle to get anything done.
These leaders often fear that delegating tasks is a sign of weakness, when in fact it is a sign of a
strong leader.
Therefore, you need to identify the skills of each of your employees, and assign duties to
each employee based on his or her skill set. By delegating tasks to staff members, you can focus on
other important tasks. Some skills that make a good delegator include:

• Accepting feedback from employees

• Allotting resources for employees
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 • Assessing employee strengths and weaknesses
• Defining expectations
• Evaluating employee performance
• Identifying measurable outcomes
• Matching the task to the right employee
• Prioritising tasks
• Setting expectations
• Teamwork
• Time management
• Training
• Trust in employees

4. Positivity
A positive attitude can go a long way in an office. You should be able to laugh at yourself
when something doesn't go quite as planned; this helps create a happy and healthy work
environment, even during busy, stressful periods. Simple acts like asking employees about their
vacation plans will develop a positive atmosphere in the office, and raise morale among staff
members. If employees feel that they work in a positive environment, they will be more likely to
want to be at work, and will therefore be more willing to put in the long hours when needed.
Some skills that help make for a positive atmosphere in the workplace include:
• Caring
• Conflict management
• Developing rapport
• Diplomacy
• Encouraging
• Empathetic
• Friendliness
• Helping others
• Humor
• Interpersonal
• Positive reinforcement
• Respect
• Social

5. Trustworthiness
Employees need to be able to feel comfortable coming to their manager or leader with
questions and concerns. It is important for you to demonstrate your integrity – employees will only
trust leaders they respect.
By being open and honest, you will encourage the same sort of honesty in your employees.
Here are some skills and qualities that will help you convey your trustworthiness as a leader:
• Ability to apologise
• Accountability
• Business ethics
• Confidentiality
• Conscientious
• Consistent in behaviour towards employees
• Credibility
• Emotional intelligence
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 • Empathy
• Honesty
• Integrity
• Moral compass
• Reliability
• Respectfulness
• Standing up for what is right
• Thoughtful

6. Creativity
As a leader, you have to make a number of decisions that do not have a clear answer; you
therefore need to be able to think outside of the box.
Learning to try nontraditional solutions, or approaching problems in nontraditional ways,
will help you to solve an otherwise unsolvable problem. Most employees will also be impressed and
inspired by a leader who doesn't always choose the safe, conventional path. Here are some skills
related to creative thinking:

• Analytical
• Cognitive flexibility
• Conceptualisation
• Critical thinking
• Curiosity
• Embracing different cultural perspectives
• Foresight
• Identifying patterns
• Imaginative
• Innovative
• Listening to others’ ideas
• Making abstract connections
• Observation
• Open-mindedness
• Problem solving
• Sound judgment
• Synthesising
• Visionary

7. Feedback
Leaders should constantly look for opportunities to deliver useful information to team
members about their performance. However, there is a fine line between offering employees advice
and assistance, and micromanaging. By teaching employees how to improve their work and make
their own decisions, you will feel more confident delegating tasks to your staff.
Employees will also respect a leader who provides feedback in a clear but empathetic way.
Some skills for giving clear feedback include:

• Being open to receiving feedback

• Building confidence in employees
• Clarity
• Clearly laying out expectations
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 • Coaching
• Following up
• Frequent feedback
• Listening to employees’ responses
• Mentoring
• Positive reinforcement
• Providing specific advice
• Respectful

8. Responsibility
A leader is responsible for both the successes and failures of his or her team. Therefore, you
need to be willing to accept blame when something does not go correctly.
If your employees see their leader pointing fingers and blaming others, they will lose respect
for you. Accept mistakes and failures, and then devise clear solutions for improvement. Here are
some skills and qualities that help leaders convey their responsibility:

• Acknowledging mistakes
• Being open to customer feedback
• Evaluating best solutions
• Forecasting
• Learning from past mistakes
• Listening to feedback from employees and managers
• Project planning
• Reflectiveness
• Resolving problems
• Transparency
• Trouble shooting

9. Commitment
It is important for leaders to follow through with what they agree to do. You should be
willing to put in the extra hours to complete an assignment; employees will see this commitment
and follow your example.
Similarly, when you promise your staff a reward, such as an office party, you should always
follow through. A leader cannot expect employees to commit to their jobs and their tasks if he or
she cannot do the same. Some skills related to commitment in the workplace include:

• Applying feedback
• Commitment to company objectives
• Determination
• Embracing professional development
• Following through
• Keeping promises
• Passion
• Perseverance
• Prioritization
• Professionalism
• Team player
• Work ethic
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10. Flexibility
Mishaps and last-minute changes always occur at work. Leaders need to be flexible,
accepting whatever changes come their way. Employees will appreciate your ability to accept
changes in stride and creatively problem solve.
Similarly, leaders must be open to suggestions and feedback. If your staff is dissatisfied with
an aspect of the office environment, listen to their concern and be open to making necessary
changes. Employees will appreciate a leader's ability to accept appropriate feedback. Skills related
to flexibility include:

• Ability to learn new skills

• Ability to respond to new problems or issues
• Adaptability
• Improvising
• Negotiating
• Open to feedback
• Recognising individuals’ strengths and skills
• Treating employees as individuals

Leader as Mentor and Coach:

MENTOR

Mentors are volunteer for the role because they acknowledge the importance of dedicate the
time to guide a someone new to the task. A Mentor will openly share personal experiences that
contributed to their growth and development, invest the time to listen to the plans of the Mentee,
and develop a plan to work together during a set period of time. Mentors are rarely the Mentee’s
direct manager, although the Mentee’s manager should be a critical part of a successful Mentor
program.
Mentees benefit most from working with the Mentor’s network to gain a broader
understanding of the job and the company. A Mentor often assumes the role of Advocate for the
Mentee as Mentoring can help improve career development, simplify increased responsibility, build
confidence and help individuals learn and grow within an organization.

To grow is fundamentally the act of expanding, an unfolding into greatness. And so
expansiveness is the most important attribute of a great mentoring relationship. Mentoring
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effectiveness is all about clearing an emotional path to make the learning journal as free of
boundaries as possible. Change is a door opened from the inside. But it is the mentoring
relationship that delivers the key to that door.
Mentoring typically falls into two categories: non-directive mentoring, where the mentor
acts as a sounding board, catalyst and role model, and sponsor mentoring, where a senior executive
will promote, oversee and control a protege’s career. Often, a mixture of both models can provide
the most effective support for organizational talent

COACH

In an Harvard Business Review article, Monique Valcour recommends every leader to
practice the basics of coaching.
If you have room in your head for only one nugget of leadership wisdom, make it this one:
the most powerfully motivating condition people experience at work is making progress
at something that is personally meaningful. If your job involves leading others, the implications
are clear: the most important thing you can do each day is to help your team members
experience progress at meaningful work.
To do so, you must understand what drives each person, help build connections
between each person’s work and the organization’s mission and strategic objectives, provide timely
feedback, and help each person learn and grow on an ongoing basis. Regular communication around
development — having coaching conversations — is essential. In fact, according to recent research,
the single most important managerial competency that separates highly effective managers from
average ones is coaching.”
It is common today for a leader to have a professional Executive Coach for personal
development. It is just as important to recognize when a member of your team or a new employee
would benefit from a professional coach.
Leadership Coaches can be internal, often members of the company Human Relations team,
or external, independent contractors with the qualifications and experience most suited to the
individual to be coached. Coaching helps employees make the most of their potential and
performance capabilities by developing skills competence and addressing identified issues.
Coaching initiatives tend to have shorter timelines than mentoring programs, with more finite and
tangible learning objectives
A typical Leadership Coaching program with an external coach is six months or 20-hours of
coaching. Clear goals are identified typically following a 360 Review and professional personality
assessment. The Coachee’s manager is engaged in the process by reviewing goals and providing
feedback to the Coachee and Coach at critical points during the Coaching event.
Forbes magazine published an article William Arruda discussing Why You Need to Hire a Coach…
stating that if you don’t have a coach,

“you could be limiting your career success. That’s because coaches help you identify and
focus on what’s important, which accelerates your success.”

According to coaches.com, the work of a good coach is to:



• Create a safe environment in which people see themselves more clearly;

• Identify gaps between where the client is and where the client needs or wants to be

• Ask for more intentional thought, action and behavior changes than the client would have asked of
him or herself

• Guide the building of the structure, accountability, and support necessary to ensure sustained
commitment.”
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 “Innovative companies understand that coaching can help career-minded
professionals increase their performance at work. They invest in coaching for their senior leaders
and high potentials.

Coaching also has an impact on an organization’s financial performance; according to
an ICF and HCI study, 60% of respondents from organizations with strong coaching cultures
report their revenue to be above average, compared to their peer group.”
Advancement into upper management moves the emphasis of your efforts from the
technical, tactical work, to strategic initiates that often require greater teamwork. These social skills
are not part of the academic program in most engineering and high-tech programs. It is up to the
new manager who has exhibited the technical skills warranting an advancement to know display the
talent to build teams and developing staff. There is now a need for greater focus on interpersonal
skills, relationship building, delegation and collaboration.
When conducting interviews to compile a 360 Review on a newly promoted upper-level
manager I ask contributors to the Review to respond to the following question: “Does this person
stay enmeshed in the detail, in the tactics of the work, or is s/he able to present the big picture, to
inspire others to take greater responsibility and work independently by clearly explaining the
strategy and benefits of long-term goals?”
The most common response to describe someone new to the role is that the individual is just
beginning to engage in greater dialogue with team members, keeping them informed of the overall
progress, while holding them accountable for assigned work.
To be a successful leader, invest the time to learn to recognize young talent, seek
opportunities to allow new staff to test and expand their skills. You can do this by recognizing
opportunities to shine as a Role Model, to serve as a Mentor or find a suitable Mentor for key staff,
and utilize the services of a professional Coach to for yourself and those ready to assume a greater
role in the organization.

Leadership during adversity and crisis

Overcoming Adversity in Leadership: Finding Vision and Calm in the Storm

“Organizational crises” are front page news almost daily. The challenges presented can be
astounding and the ease of information sharing and “communicating” can be both a blessing and a
curse. Navigating these challenges is not easy nor is there any form “checklist” or “playbook” that
has all the answers. I had the privilege of brainstorming with four top women in-house counsel,
each of whom have faced significant legal challenges and crises throughout their careers, about
their insights, wisdom, lessons learned and how organizations today are evolving to prepare for
significant disruptions, legal risks and “unexpected” crises. Collectively, we identified five areas
that separate visionary leadership and crisis response from the pack.
1. Prepare in Advance.
“Failing to prepare is preparing to fail.” John Wooden
Nothing positions an organization or a team to effectively respond to crises better than
preparing in advance and building a foundation for success. “Have a crisis plan in advance and train
key employees in crisis response, including your top executives”, advises Jody Porter, Vice
President and Deputy General Counsel of Toyota Motor North America. “You need to take the time
to think ahead about the potential issues you could face before they happen.” Advance planning
gives the organization an important opportunity to identify key stakeholders and build relationships
in advance that will allow for close collaboration under what may be extraordinarily stressful
circumstances. Jody also noted that organizations need clear processes and “it’s critical that your
organization speak with one voice during a crisis.” Advance planning is the foundation for success
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and will better equip leaders for dealing with the inevitable squalls and bumps in the road that will
occur and, at times, may magnify in the face of significant problems and the accompanying public
scrutiny. “Strong foundations lead to better decision-making,” said Jody, “it’s worth the
investment.”
2. When Faced with Challenges, Be Methodical and Keep Perspective.
“Keep Calm and Carry On.” The British Government
This phrase, originally intended to boost the morale of the British people facing major air
attacks in World War II, can be an inspiring reminder that, in a time of crisis, self-discipline,
fortitude and remaining calm as a team in the face of adversity will pay dividends. “This motto has
served me well and is a guiding principle in managing crisis issues throughout my career,” said
Anjali Chaturvedi, Assistant General Counsel Investigations of Northrop Grumman Corporation.
She added that “it is important to pause, stay composed and do some early issue spotting so that you
can put together the right team and give them the authority to take action.” Being decisive is
important in times of crisis. Of course, how facts and circumstances unfold may require adjustments
to a plan of action - but approaching each challenge calmly, ethically and methodically is critical to
achieving the best result possible. Paralysis and waiting for things to evolve often can sometimes
lead to bigger problems. At the same time, Anjali pointed out, “leaders and their teams should not
jump to conclusions or react without knowing the material facts and thinking through the
implications of any response.”
3. Communicate often. Communicate clearly. Listen.
“The single biggest problem in communication is the illusion that it has taken place.”
-George Bernard Shaw
One of the biggest challenges in any organization or relationship is “communication.” While
nothing and no one is perfect, it often is the “illusion” of communication that gets people in trouble.
Lynn Haaland, PepsiCo Deputy General Counsel, Global Chief Compliance and Ethics Officer and
Chief Counsel, Cybersecurity, believes communication is critical long before a crisis occurs. She
explained that “there needs to be lots of communication before a crisis, including discussion about:
(i) what might be on the horizon, good and bad;
(ii) what you and others are doing to prepare.”
She also believes it is important to “make sure you are building relationships with other key
stakeholders so they understand the role you play in the organization.” The professional
relationships you build internally will serve you well when significant problems arise and you must
quickly work together in a high-stakes setting. In times like these, communication and trusted
relationships become even more essential, and one must communicate effectively early and often –
in clear and unequivocal terms. Lynn noted that “the speed at which any issue can spread increases
the pressure on companies and their counsel to respond quickly and, as appropriate, to reassure
internal and external stakeholders that they are handling the matter appropriately.” Yet Lynn
underscored that while the ease of communication (with email, for example) can help tremendously,
there can be trouble if different stakeholders interpret a risk, a situation or even the same language
differently. These challenges underscore the importance of partnership and regular collaboration
between corporate leaders, lawyers and the communications team; as Lynn pointed out, however,
there is a greater take-away for non-crisis situations too. Don’t assume people understand the
meaning behind your message. Take the time to understand your colleagues, business partners and
customers in your day-to-day dealings so that you are even more adept at communicating
effectively when it really matters.
4. Maintain Perspective and Don’t Rush to Judgment
“Fortune truly helps those who are of good judgment.” Euripides

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 The need to respond quickly and the dangers of rushing to judgment without all the facts is a
delicate balancing act when faced with any significant problem. Christina Ackermann, Executive
Vice President and General Counsel of Valeant Pharmaceuticals International, Inc. said: “you need
to collect facts with rigor before making decisions and involve the right people early without
causing panic in the organization; it’s better to make decisions with facts and not rush poor
decisions.”
Leaders need to be courageous and decisive but, above all, they need to “get it right”
because the outside world has become exceedingly unforgiving if you “get it wrong.” Christina
pointed out that evaluating the facts can be difficult and you cannot always believe what you read -
stories appear in social and news media that are misleading and false at times. Therefore, she said,
“it is key to act with a calm head and don’t overreact” when faced with negative media. She added,
“only set the record straight when truly needed and critical – you don’t want a media war on minor
issues or appear overly defensive; rather, you want to build credibility with the external and investor
community.”
At the outset of any brewing crisis, focus on meticulously, quickly and objectively assessing
the facts without over-reaction or any knee jerk reaction to place blame. It is important to have the
judgment to focus on the bigger picture when facing adversity. In Christina’s experience, the most
significant challenges in overcoming multi-faceted, complex problems often involve “defining the
organization’s objectives while removing emotions from the decision-making and designing a
response strategy that resolves problems while putting a human face on an otherwise faceless
company.”
5. Embrace Adversity, Be Courageous and Use Challenges as an Opportunity to Learn
“Never give up, for that is just the place and time that the tide will turn”
-Harriet Beecher Stowe
Based on our career experience, we all agreed that adversity is inevitable and, in times of
crisis, strong, decisive, fearless, compassionate, visionary and resilient leadership is critical. Is it
reasonable to assume that any one person will embody all these characteristics at the same time?
Perhaps not in every situation. But, we agreed that visionary leaders supported by strong teams with
empowered decision-makers can accomplish anything.

Handling Employee and Customer Complaints:

Complaint:
An expression of dissatisfaction made to an organization, related to its products or services,
or the complaints-handling process itself, where a response or resolution is explicitly or implicitly
expected”

Complaints From Employees

If you are in a position of authority, you will receive complaints from the employees that
work under you. The complaints will range from something very minor in nature, to something very
serious. It's up to a supervisor to figure out if the complaint is legitimate and how to respond to it.
It's not that easy though. Mishandling a complaint can have future and dire consequences. As a
supervisor, there are steps you must take to protect yourself, the employee making the complaint,
and those affected by the complaint if it's about another person.
This article will cover what you need to do as a supervisor when you receive a complaint
from an employee.
Types of Employee Complaints

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 Harassment Favoritism Overworked
Office Tempurature Office Cleanliness Work Hours
Job Duties Policy Changes Micromanagement
Lack of Vacation/Sick
Issues With Co-Workers Pay
Leave

How to handle employee complaints

Resolving employee complaints occurs at the back end of a discovery and investigation
process. You need information to make a reasoned response to an employee grievance. As you
proceed, exhibit leadership by setting examples of steadiness, integrity, justice and control. As the
"Inc." magazine website cautions, your task is more about preventing or stemming injury to your
business than acting as a sounding board for complaints. Complaints can bring benefit by alerting
you to problem areas.

1. Provide your employees with a sense that you take their problems seriously. Implement a
protocol by which authorized individuals, such as supervisors or human resources personnel,
investigate every complaint.

2. Review complaints quickly. Ask a complaining employee to clarify his problem. Specify
issues violating company policy. Identify all individuals involved.

3. Follow a chain of command for employee complaints. Ask a complainant to take his issue to
an immediate supervisor for the supervisor to solve the problem at that level, advises the
Plattsburgh University of New York Procedure for Resolving Employee Workplace Complaints.

4. Require supervisors to bring complaints and resolutions to management for review. Initiate a
final management review of the effects of the supervisor’s decision and of any appeals by the
complaining employee.

5 .Let a complaining employee know how long your investigation and review should take,
advises the website Prime Resources. Gather as much information and perspective as possible.
Inform the employee how you plan to proceed. Schedule a date to meet with the employee again.

6. Discuss complaint issues objectively. Use objectivity to keep emotions in check and to
provide a fertile problem-solving ground.
7. Escalate complaints about discrimination types protected by federal law. Meet with human
resources managers and with attorneys regarding complaints regarding legally protected employee
rights.

Types of Customer Complaints

Customer complaints come in all shapes and sizes. Complaints can be generated by
everything from product malfunctions to improperly trained or uncaring employees. Understanding
the main types of customer complaints is key to handling them correctly.

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Product-Specific
Customers receive products or services that do not operate correctly. This common
complaint can be handled by fixing the product or replacing it with a new one. Customer service
training expert Myra Golden cautions against blaming the customer when a product is faulty.

Wait Times
Long wait times are frustrating to many customers. Whether on the phone or in a store,
lengthy queue times will generate customer complaints simply because time is precious for
customers.

Misunderstanding
Miscommunication, by the customer or the company or both, can trigger complaints.
Minimizing misunderstanding requires knowledgeable associates and accurate marketing materials.
The Small Business advice website morebusiness.com suggests that even when the customer is
clearly confused, treating him with respect helps retain business.

Delivery Error
With online shopping on the rise, delivery errors increase. Upset customers may complain to
the company, but the company may use an independent shipper, complicating complaint resolution.

Personnel
Customers may feel slighted by employees who are rude or uncaring. Golden warns that
customer service representatives and other employees must remain caring and polite even when
dealing with angry customers.

How to Handle Customer Complaints

1. Apologize and be sorry – the first step is to apologize and be truly sorry for what happened.
You must not belittle the complaint since this humiliates the customer and sends them a
message that they’re lying.

2. Listen – when they are speaking, attention needs to be directed towards the customer. Stop
doing what you’re doing (sends a message that nothing will distract you from solving the
problem). Let the customer finish with presenting their problem and don’t make premature
conclusions.

3. Take notes – while the customer is presenting the problem, don’t interrupt but take notes of
what they’re saying since this will later help you in responding and offering a solution (sends
a message that the problem will be dealt with seriously and systematically).

4. Repeat the problem – when the customer is finished, briefly repeat the problem to make sure
you have understood it correctly.

5. Offer a solution – if possible, offer a solution right away, two realistic options, without
giving false promises or exaggerating. If not possible, give a firm promise that everything
will be done to solve the problem in a satisfactory manner.

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 6. Apologize and thank the customer – the conversation must end with a repeat apology and a
thank you to the customer for warning you about the problem. This sends a message that the
customer’s opinion is appreciated.

7. Report to your superior – next step is reporting to your superior, agreeing about the solution,
making a decision and following its progress.

8. Report to the customer – as the final step, you must inform the customer about what was
done to solve the problem, instead of giving that task to a colleague. This sends a message
that you took the problem seriously and personally made sure it was solved. This is
personalized service.

If it becomes evident that the complaint is a result of a systematic inappropriate

procedure or of a permanent deficiency, actions must be taken to introduce new and improved
procedures in order to keep the problem from repeating in the future.
There are customers who get even more upset when they receive an apology. In that
case, stop apologizing and talk as little as possible.

A study conducted by the University of Florida identified five types of customers and their
complaints. Each archetype has different expectations that should be considered in order to
effectively deliver customer support:

1. The Meek Customer

The Meek Customer will avoid submitting a complaint because he or she doesn't want to be
a pain or believes you don't care.
How to Respond: Start a conversation - perhaps during a check-in call or by sending a Net
Promoter Score (NPS) survey - to gauge customer satisfaction, start a dialog, and actively resolve
any complaints.
The Risk: The customer will leave quietly without giving you any indication as to what went
wrong. 91% of unhappy customers who are non-complainers simply leave. Do not view absence of
feedback as a sign of satisfaction.

2. The Aggressive Customer

The exact opposite of the Meek Customer, the Aggressive Customer will loudly voice any
complaints and will not accept excuses.
How to Respond: Thank the customer for sharing their concern and listen. Be polite, agree on the
definition of the problem, and explain what's being done to resolve the situation and when.
The Risk: In heated customer situations, it's easy to become confrontational. Mirroring the
customer's aggressive behavior will only make the situation worse. Thanking the customers for
sharing their concerns lets them know you are sincerely interested in hearing what they have to say
and reaching a mutually-beneficial resolution.

3. The High Roller Customer

Perhaps your enterprise customers, these individuals pay well, and expect premium support.
A High Roller Customer is likely to complain in a reasonable manner, unless he or she is an
Aggressive Customer hybrid.
How to Respond: This customer wants the best. Listen respectfully, acknowledge that a problem
exists, understand the details of the situation, and work to resolve the issue as quickly as possible.
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The Risk: Like The Aggressive Customer, the High Roller Customer doesn't want to hear excuses.
They want the problem resolved in a timely manner.

4. The Rip-Off Customer

Instead of looking for an answer or satisfactory support experience, the Rip-Off Customer is
looking for a handout.
How to Respond: Maintain composure and respond objectively. If the customer constantly and
repetitively says your solution isn't good enough, use accurate quantified data to backup your
response.
The Risk: If not handled correctly, this customer may take advantage of your company and end up
with something he or she doesn't deserve.

5. The Chronic Complainer Customer

The Chronic Complainer Customer is never happy and continuously reports issues.
How to Respond: Although it may be frustrating, it's still your responsibility to provide excellent
support to the Chronic Complainer. He or she wants an apology. Listen respectfully, provide a
sympathetic ear, and put forth an honest effort to correct the situation.
The Risk: It's very likely that the Chronic Complainer will contact support again. However, unlike
the Rip-Off Customer, this customer will accept and appreciate your efforts to fix the situation.
Despite their constant complaints, Chronic Complainers are often repeat customers and will tell
others about positive support experiences.

Team Leadership:

Team:
“A team is a work group that must rely on collaboration if each member is to experience the
optimum success and achievement”
"A team is a small number of people with complementary skills who are committed to a
common purpose, performance goals, and approach for which they are mutually accountable."

Leadership:
“Leadership is a process whereby an individual influences a group of individuals to achieve
a common goal.”

Team Leadership:

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 Any team member can perform the critical leadership functions to assess the current
effectiveness of the team
Team leaders place considerable emphasis on team building and then evaluates their own
performance on the basis of how well they‟ve developed the team.

Team Leadership Skills:

1. Communication
Becoming a strong leader means mastering the art of communication. To reach the level of
manager, you’ll have no doubt demonstrated some level of talent for this; but to set yourself apart as
a leader, you need to make sure truly impactful communication is at the heart of everything you do.
Strong team leadership requires not just regular, but shrewd communication. While transparency on
developments within the company is valuable for team morale and development, a lot can be said
for possessing astute judgement about what you share to keep morale buoyed and your team driven
towards success.

2. Approachability and Availability

As an integral part of your team, you need to be an ever present member of the team, a
presence at the very heart of everything they do.Depending on the demands of your job, there will
always be instances when you're not physically around, but it's imperative your team knows you are
available and approachable so they know they can come to you when it matters. Set up regular one-
on-one’s and catch ups with your team, invest real time in their development and more than
anything, nurture a culture of openness and approachability that fosters trust and respect throughout
the team.

3. Showing Consistency
Everyone has their bad days - days when they feel tired, unmotivated, distracted or less than
100%. Apart from the true leader, of course.
Your team relies on you to be measured and consistent in your role. It means expressly setting a
standard that your team can trust and lean on. That includes everything from the way you address
disciplinary matters through to backing them up on internal issues. Your team needs to know that
they can trust you and know what to expect from you to get the best out of their performance.

4. Organisation
Your team will look to you to be the person who’s on the ball at all times.
From meetings to workloads and, team projects, you need to know what’s going on, who’s doing
what and how to approach the next steps before anyone else does. Not only that, but if operations
run smoothly and everyone knows their responsibilities, then you also need to create solid
guidelines for others to follow. This then makes another key aspect of team leadership easier to
introduce: delegation.

5. The Art of Delegation

Delegation is one of those tasks that anyone can do. But effective and impactful delegation
is an art, and one that only the most effective team leaders can learn to master.
Delegating work doesn’t mean passing on the stuff you don't want to do - it's about lightening your
own workload, making sure the right people are on with the right tasks and empowering team
members at the same time. Becoming a leader at work means you have time pressures in other
areas, so even if your natural inclination is to take on everything placed in front of you, it's just not

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possible, nor beneficial, to you or your team. By delegating new work to others, you give them the
opportunity to expand their portfolio, gain new experiences and grow.
As you delegate, aim to lead from the front. By coaching others through new tasks and experiences,
sharing opportunities within your team and working hard yourself, you’ll enhance your position as a
true leader and help your team become more productive and effective along the way.

6. Confident and Knowledgeable

As a team leader, you need to command an impressive level of knowledge and, carry that off
with confidence.
The two properties are linked - if you know your stuff when it comes to your industry, you'll
feel confident in your performance and your expertise will influence your team. It goes without
saying that any credible leader needs to be respected by his or her team; if that respect is missing, it
can seriously hamper your chances of being a good team leader.

7. Innovate and Inspire

One of the key things that sets leaders apart from managers is the ability to innovate.
By bringing new ideas to processes and looking out for new ways to improve the way your team
works, you lead by example and encourage others to find new ways to get tasks done. You’ll also
inspire those around you to work harder and instil a practice of looking for constant improvement
and development opportunities, the driving force of success.
Leadership may be very different from management, but it’s also something that can be
learnt and developed over time. Set the foundations for an excellent future as a leader, or brush up
on your skills with the right training course. Pareto Law offer a range of leadership training courses
that can help you on your way to team management greatness.
For a more experienced manager, our Leadership and Management Training Course will
equip you with the skills and strategic approaches to motivate and mentor you team. If you’ve got
your eyes set on greatness, but are still starting off in your career, the Team Leader Level 3
Apprenticeship will build and develop on your natural attributes.

Motivation:

A motive is a reason for doing something. Motivation is concerned with the strength and
direction of behaviour and the factors that influence people to behave in certain ways. The term
‘motivation’ can refer variously to the goals individuals have, the ways in which individuals chose
their goals and the ways in which others try to change their behaviour.
Motivating other people is about getting them to move in the direction you want them to go
in order to achieve a result. Motivating yourself is about setting the direction independently and
then taking a course of action that will ensure that you get there. Motivation can be described as
goal-directed behaviour. People are motivated when they expect that a course of action is likely to
lead to the attainment of a goal and a valued reward – one that satisfies their needs and wants.
Well-motivated people engage in discretionary behaviour – in the majority of roles there is
scope for individuals to decide how much effort to exert. Such people may be self-motivated and as
long as this means they are going in the right direction to attain what they are there to achieve, then
this is the best form of motivation. Most of us, however, need to be motivated to a greater or lesser
degree. There are two types of motivation, and a number of theories explaining how it works as
discussed below.

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Types of motivation:
The two types of motivation are intrinsic motivation and extrinsic motivation.

Intrinsic motivation:
Intrinsic motivation can arise from the self-generated factors that influence people’s
behaviour. It is not created by external incentives. It can take the form of motivation by the work
itself when individuals feel that their work is important, interesting and challenging and provides
them with a reasonable degree of autonomy (freedom to act), opportunities to achieve and advance,
and scope to use and develop their skills and abilities. Deci and Ryan (1985) suggested that intrinsic
motivation is based on the needs to be competent and self-determining (that is, to have a choice).
Intrinsic motivation can be enhanced by job or role design. According to an early writer on
the significance of the motivational impact of job design (Katz, 1964): ‘The job itself must provide
sufficient variety, sufficient complexity, sufficient challenge and sufficient skill to engage the
abilities of the worker.’ In their job characteristics model, Hackman and Oldham (1974) emphasized
the importance of the core job dimensions as motivators, namely skill variety, task identity, task
significance, autonomy and feedback.

Extrinsic motivation:
Extrinsic motivation occurs when things are done to or for people to motivate them. These
include rewards, such as incentives, increased pay, praise, or promotion; and punishments, such as
disciplinary action, withholding pay, or criticism.
Extrinsic motivators can have an immediate and powerful effect, but will not necessarily last
long. The intrinsic motivators, which are concerned with the ‘quality of working life’ (a phrase and
movement that emerged from this concept), are likely to have a deeper and longer-term effect
because they are inherent in individuals and their work and not imposed from outside in such forms
as incentive pay.

Relationship Between Motivation, Performance and Engagement:

“The relationship between engagement and motivation is a two way street; improve one and
you also improve the other. So the key to understanding how to benefit from improved levels of
engagement is firstly to understand what motivates us – why do we really do the things we do..? To
understand what really motivates us we need to strip away all the factors which might merely
influence us; in other words, we need to identify what lies at the very heart of our motivation to do
something”
Employees may be motivated on the job by many things, such as a sense of achievement,
recognition, enjoyment of the job, promotion opportunities, responsibility, and the chance for
personal growth. Employee motivation and performance are tied directly to the style of
management that is applied and to principles of positive or negative reinforcement. Employee
engagement is the level of commitment and involvement an employee has towards their
organization and its values. An engaged employee is aware of business context, and works with
colleagues to improve performance within the job for the benefit of the organization. It is a positive
attitude held by the employees towards the organization and its values. The paper focuses on how
employee engagement is an antecedent of job involvement and what should company do to make
the employees engaged.
Motivation is the combination of a person's desire and energy directed at achieving a goal. It
is the cause of action. Influencing people's motivation means getting then to want to do what you
know must be done.
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 Motivation is the combination of a person's desire and energy directed at achieving a goal. It
is the cause of action. Motivation can be intrinsic, such as satisfaction and feelings of achievement;
or extrinsic, such as rewards, punishment, and goal obtainment. Not all people are motivated by the
same thing and over time their motivations might changes.

Motivated employees are the need of any organization for our changing work place.
Motivated employees are more productive so they always help organization to survive in every
field. For a effective managers it must to understand what type of motivates employees within the
context the perform in role. Motivating employees is most complex for example research suggested
that as employees income increase money become less of a motivate also as employees get older
exciting work become more of a motivator.

Content Motivational Theories:

Needs Hierarchy Theory (Maslow’s Theory):

Maslow’s level of hierarchy about human relations and behavioral science approach, his
assumptions are based mainly on theory of ‘Human Needs’, he has defined five level of hierarchy
of needs starting from the biological need and then coming to more intangible ones .

1. Physical needs like food, clothes and shelter

2. Safety needs freedom from fear of insecurity
3. Social needs include a sense of being accepted in the society or environment one finds himself
in.
4. Ego needs include feeling of important and recognition

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 5. Self actualization needs include need or desire for personal fulfillment of individual potential
and activity.

Herzberg’s Two-Factor Theory of Motivation:

In 1959, Frederick Herzberg, a behavioural scientist proposed a two-factor theory or the

motivator-hygiene theory. According to Herzberg, there are some job factors that result in
satisfaction while there are other job factors that prevent dissatisfaction. According to Herzberg, the
opposite of “Satisfaction” is “No satisfaction” and the opposite of “Dissatisfaction” is “No
Dissatisfaction”.

Herzberg’s view of satisfaction and dissatisfaction

Herzberg classified these job factors into two categories-

a. Hygiene factors- Hygiene factors are those job factors which are essential for existence of
motivation at workplace. These do not lead to positive satisfaction for long-term. But if these
factors are absent / if these factors are non-existant at workplace, then they lead to
dissatisfaction. In other words, hygiene factors are those factors which when adequate/
reasonable in a job, pacify the employees and do not make them dissatisfied. These factors
are extrinsic to work. Hygiene factors are also called as dissatisfiers or maintenance
factors as they are required to avoid dissatisfaction. These factors describe the job
environment/scenario. The hygiene factors symbolized the physiological needs which the
individuals wanted and expected to be fulfilled. Hygiene factors include:
• Pay - The pay or salary structure should be appropriate and reasonable. It must be equal
and competitive to those in the same industry in the same domain.
• Company Policies and administrative policies - The company policies should not be too
rigid. They should be fair and clear. It should include flexible working hours, dress code,
breaks, vacation, etc.
• Fringe benefits - The employees should be offered health care plans (mediclaim), benefits
for the family members, employee help programmes, etc.
• Physical Working conditions - The working conditions should be safe, clean and
hygienic. The work equipments should be updated and well-maintained.
• Status - The employees’ status within the organization should be familiar and retained.
• Interpersonal relations - The relationship of the employees with his peers, superiors and
subordinates should be appropriate and acceptable. There should be no conflict or
humiliation element present.
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• Job Security - The organization must provide job security to the employees.
b. Motivational factors-
According to Herzberg, the hygiene factors cannot be regarded as motivators. The
motivational factors yield positive satisfaction. These factors are inherent to work. These
factors motivate the employees for a superior performance. These factors are called
satisfiers. These are factors involved in performing the job. Employees find these factors
intrinsically rewarding. The motivators symbolized the psychological needs that were
perceived as an additional benefit. Motivational factors include:
• Recognition - The employees should be praised and recognized for their
accomplishments by the managers.
• Sense of achievement - The employees must have a sense of achievement. This
depends on the job. There must be a fruit of some sort in the job.
• Growth and promotional opportunities - There must be growth and advancement
opportunities in an organization to motivate the employees to perform well.
• Responsibility - The employees must hold themselves responsible for the work. The
managers should give them ownership of the work. They should minimize control
but retain accountability.
• Meaningfulness of the work - The work itself should be meaningful, interesting and
challenging for the employee to perform and to get motivated.
•
Limitations of Two-Factor Theory

1. The two-factor theory overlooks situational variables.

2. Herzberg assumed a correlation between satisfaction and productivity. But the research
conducted by Herzberg stressed upon satisfaction and ignored productivity.
3. The theory’s reliability is uncertain. Analysis has to be made by the raters. The raters may
spoil the findings by analyzing same response in different manner.
4. No comprehensive measure of satisfaction was used. An employee may find his job
acceptable despite the fact that he may hate/object part of his job.
5. The two factor theory is not free from bias as it is based on the natural reaction of employees
when they are enquired the sources of satisfaction and dissatisfaction at work. They will
blame dissatisfaction on the external factors such as salary structure, company policies and
peer relationship. Also, the employees will give credit to themselves for the satisfaction
factor at work.
6. The theory ignores blue-collar workers. Despite these limitations, Herzberg’s Two-Factor
theory is acceptable broadly.

Theory X and Theory Y (Douglas McGregor Theory):

He divides leadership is two styles labeled theory “X” and theory “Y”. The traditional styles
of leadership and controls stated in theory ‘X’ by McGregor, is exercised to managers on the basis
of his assumptions about human beings. These assumptions as laid down or observed by McGregor
for theory ‘X’ are

Theory “X”:

1. An average human being does not like to work and he tries to avoid it as far as possible. 


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 2. He avoids accepting responsible and challenging tasks, has no ambition but wants security
above all. 


3. Because of this, the employees are to be forced, concerned and threatened with punishments
to make them put their best efforts.

These people would not work sincerely and honestly under democratic conditions.
However the above assumptions re not based on research finding. The autocratic style
basically presumes that workers are generally lazy, avoid work and shrink responsibilities. It is
believed that workers are more interested in money and security based on these assumptions the
leadership styles developed, insists on tighter control and supervision.


Theory of “Y”:

It focuses a totally different set of assumptions about the employees

1. Some employees consider work as natural as play or rest.
2. These employees are capable of directing and controlling performance on their own 


3. They are much committed to the objectives of the organization

4. Higher rewards make these employees more committed to organization.
5. Given an opportunity they not only accept responsibility but also look for opportunities to out
perform others.
6. Most of them highly imaginative, creative and display ingenuity in handling organizational
issues. 


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 5. Controlling

Control:
“Managerial control implies the measurement of accomplishment against the standard and
the correction of deviations to assure attainment of objectives according to plans”.
Koontz And O’Donnell
Controlling function is performed in all types of organizations whether commercial or non
commercial and at all levels i.e. top, middle and supervisory levels of management. Thus, it is a
pervasive function. Controlling should not be considered as the last function of the management.
The controlling function compares the actual performance with predetermined standards,
finds out deviation and attempts to take corrective measures. Eventually, this process helps in
formulation of future plans too. Thus, controlling function helps in bringing the management cycle
back to planning.

Types and Strategies for Control:

Types of control

There are three types of control viz.,

1. Feedback Control: This process involves collecting information about a finished task,
assessing that information and improvising the same type of tasks in the future.
2. Concurrent control: It is also called real-time control. It checks any problem and examines it
to take action before any loss is incurred. Example: control chart.
3. Predictive/ feedforward control: This type of control helps to foresee problem ahead of
occurrence. Therefore action can be taken before such a circumstance arises.
In an ever-changing and complex environment, controlling forms an integral part of the
organization.
Advantages of controlling
▪ Saves time and energy
▪ Allows managers to concentrate on important tasks. This allows better utilization of the
managerial resource.
▪ Helps in timely corrective action to be taken by the manager.
▪ Managers can delegate tasks so routinely chores can be completed by subordinates.

Strategies for control

The type of business strategy you pursue is a key to whether or not your company will have
long-term growth and success. The challenge, however, is that it’s difficult to assess if the strategy
you’ve chosen is the right one or if you need to make adjustments. That process is made easier if
you use the four common types of strategic control to analyze the strategy you’ve put in place to
determine its effectiveness, and to find areas of strength and weakness. Without strategic control,
your company will fail to adapt to any external changes in your industry that require immediate and
corrective action.

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Premise Control
The business strategy you’ve chosen was likely based on some assumptions you made about
what you believed would happen several years in the future. Whether those assumptions are about
your target audience, your competitors, or product development, premise control lets you test those
assumptions to see if they’re still valid. For example, if you own a skateboard company, you may
have assumed that your ideal buyers were Millennials, but you may discover that premise was
flawed after premise control measures reveal that the fastest-growing skateboard consumers are
actually an entire generation younger.

Strategic Surveillance Control

It’s impossible for you to anticipate every external threat that could impact the success of
your business, which is why strategic surveillance control lets you identify information sources that
monitor these external forces. Examples of these information sources are financial journals, trade
magazines, newspapers, economic forums, and industry conferences. These sources are often the
first to identify the potential challenges that businesses in your industry will face, and may even
offer potential responses to these challenges.

Special Alert Control

At some point in time, your company will go through a rough patch that’s triggered by some
kind of unexpected occurrence that impacts your business in a negative way. This could include a
sudden crash in the U.S. stock market, a domestic terrorist attack, or even a natural disaster that
affects your customers’ buying habits. Special alert control helps your business respond to these
events without having to change your entire strategy to deal with this new event. For example, after
the September 11, 2001, terrorist attacks in the U.S., many commercial airlines were forced to adopt
stricter safety protocols to account for the intense fears that passengers had about flying on a plane.

Implementation Control
As you begin to implement a business strategy, you must use implementation control
measures to assess whether or not your plan needs adjustment. Common types of implementation
control include setting performance standards, measuring actual performance, analyzing the reasons
your staff failed to meet specific performance standards, and developing a plan to correct
performance deviations. Implementation control also includes things such as budgets, schedules,
and milestones that the company is trying to achieve.

Steps in Control Process:

Control process involves the following steps as shown in the figure:

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▪ Establishing standards: This means setting up of the target which needs to be achieved to meet
organisational goals eventually. Standards indicate the criteria of performance.
Control standards are categorized as quantitative and qualitative standards. Quantitative
standards are expressed in terms of money. Qualitative standards, on the other hand, includes
intangible items.

▪ Measurement of actual performance: The actual performance of the employee is measured

against the target. With the increasing levels of management, the measurement of performance
becomes difficult.
▪
▪ Comparison of actual performance with the standard: This compares the degree of
difference between the actual performance and the standard.
▪
▪ Taking corrective actions: It is initiated by the manager who corrects any defects in actual
performance.
Controlling process thus regulates companies’ activities so that actual performance conforms
to the standard plan. An effective control system enables managers to avoid circumstances which
cause the company’s loss.

Budgetary control
Meaning:
Budgetary control is the process of determining various actual results with budgeted figures
for the enterprise for the future period and standards set then comparing the budgeted figures with
the actual performance for calculating variances, if any. First of all, budgets are prepared and then
actual results are recorded.
The comparison of budgeted and actual figures will enable the management to find out
discrepancies and take remedial measures at a proper time. The budgetary control is a continuous
process which helps in planning and co-ordination. It provides a method of control too. A budget is
a means and budgetary control is the end-result.
Definitions:
“According to Brown and Howard, “Budgetary control is a system of controlling costs
which includes the preparation of budgets, coordinating the departments and establishing
responsibilities, comparing actual performance with the budgeted and acting upon results to achieve
maximum profitability.”

From the above given definitions it is clear that budgetary control involves the follows:
(a) The objects are set by preparing budgets.
(b) The business is divided into various responsibility centres for preparing various budgets.
(c) The actual figures are recorded.
(d) The budgeted and actual figures are compared for studying the performance of different cost
centres.
(e) If actual performance is less than the budgeted norms, a remedial action is taken immediately.

Objectives of Budgetary Control:

Budgetary control is essential for policy planning and control. It also acts an instrument of
co-ordination.
The main objectives of budgetary control are the follows:

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1. To ensure planning for future by setting up various budgets, the requirements and expected
performance of the enterprise are anticipated.
2. To operate various cost centres and departments with efficiency and economy.
3. Elimination of wastes and increase in profitability.
4. To anticipate capital expenditure for future.
5. To centralise the control system.
6. Correction of deviations from the established standards.
7. Fixation of responsibility of various individuals in the organization.
Essentials of Budgetary Control:
There are certain steps which are necessary for the successful implementation budgetary
control system.
These are as follows:
1. Organisation for Budgetary Control
2. Budget Centres
3. Budget Mammal
4. Budget Officer
5. Budget Committee
6. Budget Period
7. Determination of Key Factor.
1. Organization for Budgetary Control:
The proper organization is essential for the successful preparation, maintenance and
administration of budgets. A Budgetary Committee is formed, which comprises the departmental
heads of various departments. All the functional heads are entrusted with the responsibility of
ensuring proper implementation of their respective departmental budgets.
The Chief Executive is the overall in-charge of budgetary system. He constitutes a budget
committee for preparing realistic budgets A budget officer is the convener of the budget committee
who co-ordinates the budgets of different departments. The managers of different departments are
made responsible for their departmental budgets.
2. Budget Centres:
A budget centre is that part of the organization for which the budget is prepared. A budget
centre may be a department, section of a department or any other part of the department. The
establishment of budget centres is essential for covering all parts of the organization. The budget
centres are also necessary for cost control purposes. The appraisal performance of different parts of
the organization becomes easy when different centres are established.
3. Budget Manual:
A budget manual is a document which spells out the duties and also the responsibilities of
various executives concerned with the budgets. It specifies the relations amongst various
functionaries.
4. Budget Officer:
The Chief Executive, who is at the top of the organization, appoints some person as Budget
Officer. The budget officer is empowered to scrutinize the budgets prepared by different functional
heads and to make changes in them, if the situations so demand. The actual performance of different
departments is communicated to the Budget Officer. He determines the deviations in the budgets
and the actual performance and takes necessary steps to rectify the deficiencies, if any.
He works as a coordinator among different departments and monitors the relevant
information. He also informs the top management about the performance of different departments.
The budget officer will be able to carry out his work fully well only if he is conversant with the
working of all the departments.
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"
5. Budget Committee:
In small-scale concerns the accountant is made responsible for preparation and
implementation of budgets. In large-scale concerns a committee known as Budget Committee is
formed. The heads of all the important departments are made members of this committee. The
Committee is responsible for preparation and execution of budgets. The members of this committee
put up the case of their respective departments and help the committee to take collective decisions if
necessary. The Budget Officer acts as convener of this committee.
6. Budget Period:
A budget period is the length of time for which a budget is prepared and employed. The
budget period depends upon a number of factors. It may be different for different industries or even
it may be different in the same industry or business.

The budget period depends upon the following considerations:

(a) The type of budget i.e., sales budget, production budget, raw materials purchase budget, capital
expenditure budget. A capital expenditure budget may be for a longer period i.e. 3 to 5 years
purchase, sale budgets may be for one year.
(b) The nature of demand for the products.
(c) The timings for the availability of the finances.
(d) The economic situation of the country.
(e) The length of trade cycles.
All the above-mentioned factors are taken into account while fixing period of budgets

7. Determination of Key Factor:

The budgets are prepared for all functional areas. These budgets are interdependent and
inter-related. A proper co-ordination among different budgets is necessary for making the budgetary
control a success. The constraints on some budgets may have an effect on other budgets too. A
factor which influences all other budgets is known as Key Factor or Principal Factor.
There may be a limitation on the quantity of goods a concern may sell. In this case, sales
will be a key factor and all other budgets will be prepared by keeping in view the amount of goods
the concern will be able to sell. The raw material supply may be limited, so production, sales and
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cash budgets will be decided according to raw materials budget. Similarly, plant capacity may be a
key factor if the supply of other factors is easily available.
The key factor may not necessarily remain the same. The raw materials supply may be
limited at one time but it may be easily available at another time. The sales may be increased by
adding more sales staff, etc. Similarly, other factors may also improve at different times. The key
factor also highlights the limitations of the enterprise. This will enable the management to improve
the working of those departments where scope for improvement exists.
Advantages of Budgetary Control:
The budgetary control system help in fixing the goals for the organization as whole and
concerted efforts are made for its achievements. It enables ‘economies in the enterprise.
Some of the advantages of budgetary control are:
1. Maximization of Profits:
The budgetary control aims at the maximization of profits of the enterprise. To achieve this
aim, a proper planning and co ordination of different functions is undertaken. There is a proper
control over various capital and revenue expenditures. The resources are put to the best possible
use.
2. Co-ordination:
The working of different departments and sectors is properly coordinated. The budgets of
different departments have a bearing on one another. The co-ordination of various executives and
subordinates is necessary for achieving budgeted targets.
3. Specific Aims:
The plans, policies and goals are decided by the top management. All efforts are put together
to reach the common goal, of the organization. Every department is given a target to be achieved.
The efforts are directed towards achieving some specific aims. If there is no definite aim then the
efforts will be wasted in pursuing different aims.
4. Tool for Measuring Performance:
By providing targets to various departments, budgetary control provides a tool for
measuring managerial performance. The budgeted targets are compared to actual results and
deviations are determined. The performance of each department is reported to the top management.
This system enables the introduction of management by exception.
5. Economy:
The planning of expenditure will be systematic and there will be economy in spending. The
finances will be put to optimum use. The benefits derived for the concern will ultimately extend to
industry and then to national economy. The national resources will be used economically and
wastage will be eliminated.
6. Determining Weaknesses:
The deviations in budgeted and actual performance will enable the determination of weak
spots. Efforts are concentrated on those aspects where performance is less than the stipulated.
7. Corrective Action:
The management will be able to take corrective measures whenever there is a discrepancy in
performance. The deviations will be regularly reported so that necessary action is taken at the
earliest. In the absence of a budgetary control system the deviations can be determined only at the
end of the financial period.
8. Consciousness:
It creates budget consciousness among the employees. By fixing targets for the employees,
they are made conscious of their responsibility. Everybody knows what he is expected to do and he
continues with his work uninterrupted.
9. Reduces Costs:
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 In the present day competitive world budgetary control has a significant role to play. Every
businessman tries to reduce the cost of production for increasing sales. He tries to have those
combinations of products where profitability is more.
10. Introduction of Incentive Schemes:
Budgetary control system also enables the introduction of incentive schemes of
remuneration. The comparison of budgeted and actual performance will enable the use of such
schemes.

"
Limitations of Budgetary Control:
Despite of many good points of budgetary control there are some limitations of this system.
Some of the limitations are discussed as follows:
1. Uncertain Future:
The budgets are prepared for the future period. Despite best estimates made for the future,
the predictions may not always come true. The future is always uncertain and the situation which is
presumed to prevail in future may change. The change in future conditions upsets the budgets which
have to be prepared on the basis of certain assumptions. The future uncertainties reduce the utility
of budgetary control system.
2. Budgetary Revision Required:
Budgets arc prepared on the assumptions that certain conditions will prevail. Because of
future uncertainties, assumed conditions may not prevail necessitating the revision of budgetary
targets. The frequent revision of targets will reduce the value of budgets and revisions involve huge
expenditures too.
3. Discourage Efficient Persons:
Under budgetary control system the targets are given to every person in the organization.
The common tendency of people is to achieve the targets only. There may be some efficient persons
who can exceed the targets but they will also feel contented by reaching the targets. So budgets may
serve as constraints on managerial initiatives.
4. Problem of Co-ordination:
The success of budgetary control depends upon the co-ordination among different
departments. The performance of one department affects the results of other departments. To
overcome the problem of coordination a Budgetary Officer is needed. Every concern cannot afford
to appoint a Budgetary Officer. The lack of co-ordination among different departments results in
poor performance.
5. Conflict Among Different Departments:
Budgetary control may lead to conflicts among functional departments. Every departmental
head worries for his department goals without thinking of business goal. Every department tries to
get maximum allocation of funds and this raises a conflict among different departments.
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6. Depends Upon Support of Top Management:
Budgetary control system depends upon the support of top management. The management
should be enthusiastic for the success of this system and should give full support for it. If at any
time there is a lack of support from top management then this system will collapse.

Non budgetary control:

Budgeting is the process of preparing budgets whereas budgetary control is a device or
technique of managerial control through budgets. ... Thus, budgetary control is planning in
advance of the various aspects of business can be controlled.
Non-Budgetary control is laying control on your non-budgeted expenses i.e those expenses
which are not defined in normal budgeted expenses. The techniques for these non-budgetary control
are :
1) Statistical data analysis.
2) Break-even analysis or the no profit & no-loss analysis.
3)Gantt Charts
4) PERT (Programmed Evaluation & Review Technique).

Non-Budgetary Control Techniques

There are, of course, many traditional control devices not connected with budgets, although
some may be related to, and used with, budgetary controls. Among the most important of these are
statistical data, special reports and analysis, analysis of break- even points, the operational audit,
and the personal observation.

1 Statistical data:
Statistical analyses of innumerable aspects of a business operation and the
clear presentation of statistical data, whether of a historical or forecast nature are, of course,
important to control. Some managers can readily interpret tabular statistical data, but most
managers prefer presentation of the data on charts.
2 Break- even point analysis:
An interesting control device is the break even chart. This chart depicts the
relationship of sales and expenses in such a way as to show at what volume revenues exactly cover
expenses.
3 Operational audit:
Another effective tool of managerial control is the internal audit or, as it is now
coming to be called, the operational audit. Operational auditing, in its broadest sense, is the regular
and independent appraisal, by a staff of internal auditors, of the accounting, financial, and other
operations of a business.
4 Personal observation:
In any preoccupation with the devices of managerial control, one should never
overlook the importance of control through personal observation.

Effective Organizational Control Systems

The management of any organization must develop a control system tailored to its
organization's goals and resources. Effective control systems share several common characteristics.
These characteristics are as follows:
• A focus on critical points. For example, controls are applied where failure cannot be

tolerated or where costs cannot exceed a certain amount. The critical points include all the
areas of an organization's operations that directly affect the success of its key operations.
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 • Integration into established processes. Controls must function harmoniously within these
processes and should not bottleneck operations.
• Acceptance by employees. Employee involvement in the design of controls can increase
acceptance.
• Availability of information when needed. Deadlines, time needed to complete the project,
costs associated with the project, and priority needs are apparent in these criteria. Costs are
frequently attributed to time shortcomings or failures.
• Economic feasibility. Effective control systems answer questions such as, “How much does
it cost?” “What will it save?” or “What are the returns on the investment?” In short,
comparison of the costs to the benefits ensures that the benefits of controls outweigh the
costs.
• Accuracy. Effective control systems provide factual information that's useful, reliable, valid,
and consistent.
• Comprehensibility. Controls must be simple and easy to understand.

Characteristics of an Effective Control

Controls at every level focus on inputs, processes and outputs. It is very important to have
effective controls at each of these three stages.
Effective control systems tend to have certain common characteristics. The importance of
these characteristics varies with the situation, but in general effective control systems have
following characteristics.
1. Accuracy:
Effective controls generate accurate data and information. Accurate information is essential
for effective managerial decisions. Inaccurate controls would divert management efforts and
energies on problems that do not exist or have a low priority and would fail to alert managers to
serious problems that do require attention.

2. Timeliness:
There are many problems that require immediate attention. If information about such
problems does not reach management in a timely manner, then such information may become
useless and damage may occur. Accordingly controls must ensure that information reaches the
decision makers when they need it so that a meaningful response can follow.

3. Flexibility:
The business and economic environment is highly dynamic in nature. Technological changes
occur very fast. A rigid control system would not be suitable for a changing environment. These
changes highlight the need for flexibility in planning as well as in control.
Strategic planning must allow for adjustments for unanticipated threats and opportunities.
Similarly, managers must make modifications in controlling methods, techniques and systems as
they become necessary. An effective control system is one that can be updated quickly as the need
arises.

4. Acceptability:
Controls should be such that all people who are affected by it are able to understand them
fully and accept them. A control system that is difficult to understand can cause unnecessary
mistakes and frustration and may be resented by workers.
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Accordingly, employees must agree that such controls are necessary and appropriate and will not
have any negative effects on their efforts to achieve their personal as well as organizational goals.

5. Integration:
When the controls are consistent with corporate values and culture, they work in harmony
with organizational policies and hence are easier to enforce. These controls become an integrated
part of the organizational environment and thus become effective.

6. Economic feasibility:
The cost of a control system must be balanced against its benefits. The system must be
economically feasible and reasonable to operate. For example, a high security system to safeguard
nuclear secrets may be justified but the same system to safeguard office supplies in a store would
not be economically justified. Accordingly the benefits received must outweigh the cost of
implementing a control system.

7. Strategic placement:
Effective controls should be placed and emphasized at such critical and strategic control
points where failures cannot be tolerated and where time and money costs of failures are greatest.
The objective is to apply controls to the essential aspect of a business where a deviation
from the expected standards will do the greatest harm. These control areas include production,
sales, finance and customer service.

8. Corrective action:
An effective control system not only checks for and identifies deviation but also is
programmed to suggest solutions to correct such a deviation. For example, a computer keeping a
record of inventories can be programmed to establish “if-then” guidelines. For example, if
inventory of a particular item drops below five percent of maximum inventory at hand, then the
computer will signal for replenishment for such items.

9. Emphasis on exception:
A good system of control should work on the exception principle, so that only important
deviations are brought to the attention of management, In other words, management does not have
to bother with activities that are running smoothly. This will ensure that managerial attention is
directed towards error and not towards conformity. This would eliminate unnecessary and
uneconomic supervision, marginally beneficial reporting and a waste of managerial time.

Establishing control systems

In addition to creating an appropriate organizational structure, effectively executing strategy
depends on the skillful use of organizational control systems. Executives create strategies to try to
achieve their organization’s vision, mission, and goals. Organizational control systems[1] allow
executives to track how well the organization is performing, identify areas of concern, and then take
action to address the concerns. Three basic types of control systems are available to executives: (1)
output control, (2) behavioral control, and (3) clan control. Different organizations emphasize
different types of control, but most organizations use a mix of all three types.
The Essentials of Effective Control system in Management are
1.Suitable: The control system should be appropriate to the nature and needs of the activity. A large
firm calls for controls different from those needed for a small firm.

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 If a superior is to be able to control overall operations, he must find a pattern that will
provide control for individual parts. Budgets, quotas and other techniques may be useful in
controlling separate departments.
2.Timely and Forward Looking: The control system should be such as to enable the subordinates
to inform their superiors expeditiously about the thre atened deviations and failures. The feedback
system should be as short and quick aspossible. If the control reports are not directed at future,
they are of no use as they will not be able to suggest the types of measures to be taken to rectify
the past deviations. A proper system of control should enable the manager concerned to think of
and plan for future also.
3.Objective and Comprehensive: The control system should be both, objective and understandable.
Objective controls specify the expected results in clear and definite terms and leave little room for
argument by the employees. This is necessary both for the smooth working and the effectiveness
of the system.
4.Flexible: The control system should be flexible so that it can be adjusted to suit the needs of any
change in the environment. A sound control system will remain workable even when the plans
change or fail outright. It must be responsive to changing conditions. It should be adaptable to
new developments including the failure of the control system itself. Plans may call for an
automatic system to be backed up by a human system that would operate in an emergency.
5.Economical: Economy is another requirement of every control. The benefit derived from a
control system should be more than the cost involved in implementing it. Asmall company cannot
afford the elaborate control system used by a large company. A control system is justifiable if the
savings anticipated from it exceed the expected costs in its working.
6.Acceptable to Organisation Members: The system should be acceptable to organisation
members. When standards are set unilaterally by upper level managers, there is a danger that
employees will regard those standards as unreasonable or unrealistic.
7.Motivate People to High Performance: A control system is most effective when it motivates
people to high performance. Since most people respond to a challenge, successfully meeting to
tough standard may well provide a greater sense of accomplishment than meeting an easy
standard. However, if a target is so tough that it seems impossible to meet, it will be more likely
to discourage than to motivate effort.
8.Corrective Action: Merely pointing of deviations is not sufficient in a good control system. It
must lead to corrective action to be taken to check deviations from standard through appropriate
planning, organizing and directing. In the words of Koontz and O'Donnell, "An adequate control
system should disclose where failureis occurring, who is responsible for them and what should be
done about them." Acontrol system will be of little use unless it can generate the solution to the
problem responsible for deviation from standards.
9.Reflection of Organisation Pattern: Organization is not merely a structure of duties and function,
it is also an important vehicle of control. In enforcing control the efficiency and the effectiveness
of the organisation must be clearly brought out.
10.Human Factor: A good system of control should find the persons accountable for results,
whenever large deviations take place. They must be guided and directed if necessary.
11.Direct Control: Any control system should be designed to maintain direct contact between the
controller and controlled. Even when there are a number of control systems provided by staff
specialists, the foreman at the first level is still important because he has direct knowledge of
performance.
12.Focus on Strategic Points: A good system of control not only points out the deviations or
exceptions but also pinpoints them where they are important or strategic to his operations.

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