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MODULE 2
 SYLLABUS

2.1 Planning –Types of Plans – Goals and Plans – Management by

Objectives (MBO) – Contemporary Issues in Planning

2.2 Designing Organizational Structure – Departmentalization –

Cross Functional Teams – Mechanistic & Organic Structures –
Contingency Factors affecting Structural Choice – An Overview
of Contemporary Organizational designs

2.3 Importance of HRM – HRM Process

2.4 Leadership – Contingency Theories of Leadership –

Contemporary Views of Leadership

2.5 Controlling – Control Process – Tools for Measuring

Organizational Performance – Contemporary Issues in Control
 ORGANIZATION
Meaning
An organization is a group individuals contributing there
efforts towards achieving a common goal.
Definition
According to Gray Johns, Organizations are social
interventions for accomplishing goals through group efforts.
 Functions of Organization
▪ Determination of Activities:
It includes the deciding and division of various activities required to achieve the objectives of the organization.
The entire work is divided into various parts and again each part is sub-divided into various sub-parts. For
example, the purchase work may be divided into requisition of items, placing of an order, storage and so on.
▪ Grouping of Activities:
The next function of organization is that the identical activities are grouped under one individual or a
department. The activities of sales such as canvassing, advertisements and debt collection activities are
grouped under one department i.e., sales department.
• Allotment of Duties to Specified Persons:
In order to ensure effective performance, the grouped activities are allotted to specified persons. In other
words, the purchasing activities are assigned to the Purchase Manager; the production activities are assigned to
Production Manager; the sales activities are assigned to Sales Manager and the like. Besides, adequate staff
members are appointed under the specified persons. The specified persons are specialized in their respective
fields. If there is any need, appropriate training would be provided to such persons.
• Delegation of Authority:
Assignment of duties or allotment of duties to specified persons is followed by delegation of authority. It will
be very difficult for a person to perform the duties effectively, if there is no authority to do it. While delegating
a authority, responsibilities are also fixed. Thus, the Production Manager may be delegated with the authority
to produce the goods and fixed with the responsibility of producing quality goods.

• Defining Relationship:
When a group of persons is working together for a common goal, it becomes necessary to define the
relationship among them in clear terms. If it is done, each person will know who is his boss, from whom he has
to receive orders and to whom he is answerable. In another sense, each boss should know what authority he has
and over which person.

• Co-Ordination of Various Activities:

The delegated authority and responsibility should be co-ordinated by the Chief Managerial Staff. The reason is
that there must be a separate and responsible person to see whether all the activities are going on to accomplish
the objectives of the organization or not.
 Organizational Behavior
▪ Meaning
Organizational Behavior word has been consisted of two different words
"Organization" and "Behavior". Organization means a disciplined and regulatory
process by which planned objective turns into realistic. On the other hand, Here.
Behavior means human behaviors inside a organization.
In a nutshell, organizational behavior is the study of how human behavior affects an
organization. Organizational behavior aims to learn how an organization operates through
the behaviors of its members. Instead of taking a strictly numerical approach to determine
an organization’s operations, it takes a more psychological approach.
 Definition
▪ Fred Luthans said as "Organization Behavior is directly concerned with the
understanding prediction and control of human behavior in organization”.
▪ Stephen P. Robbins states as "Organizational Behavior studies the impact that
individuals, groups and structure have on behavior within organization for the purpose
applying such knowledge toward improving n organizations effectiveness."
 Features /Characteristics / Nature of OB

▪ OB seeks to fulfil both employees’ needs and organizational objectives.

▪ OB is both a science and an art. The systematic knowledge about human behavior is a
science. The application of behvioural knowledge and skills clearly leans towards being
an art.

▪ OB is an action-oriented and goal-directed discipline. It provides a rational thinking about

people and their behavior

▪ OB is inter-disciplinary field of study. It tries to synthesize knowledge drawn from various

behavioral and social sciences such as Psychology, Sociology, Anthropology, Political-
science, Economics, etc. In fact, OB is an applied behavioral sciences.
 Scope Of OB
▪ How to create effective groups and teams
▪ Employee Motivation
▪ Impact of personality on performance
▪ Management of conflict and stress
▪ Individual behavior, Group behavior, power and politics, attitude and learning
▪ Organizational development
 Key Elements Of OB
The key elements in organizational behavior are people, structure technology and the environment in which
the organizations operates. When people join together in an organization to accomplish an objective, some
kind of structure is required. People also use technology to help get the job done, so there is an interaction of
people, structure and the technology. In addition, these elements are influenced by the external environment,
and they influence it.
• People: People make up the internal social system of the organization. They consist of individuals and
groups. There are formal and informal groups. Groups are dynamic. They form, change and disband.
Organizations exist to serve people, rather than people existing to serve organizations.

• Structure: Structure defines the formal relationships of people in organizations. Different jobs are required
to accomplish all of an organization's activities. There are managers and employees, accountants and
assemblers. These people have to be related in some structural way so that their work can be effectively
coordinated. These relationships create complex problems of co-operation, negotiation and decision-
making.

• Technology: Technology provides the resources with which people work and affects the tasks that they
perform. The technology used has a significant influence in working relationships. The great benefit of
technology is that it allows people to do more and better work, but it also restricts people in various ways. It
has costs as well as benefits.

• Environment: All organizations operate within an external environment A single organization does not
exist alone. It is part of a larger system that contains many other elements such as Govt, the family, and
other organizations.
Levels Of OB
Management And Its Functions
1. Planning
Planning is future-oriented and determines an organization’s direction. It is a rational and systematic way of
making decisions today that will affect the future of the company. It is a kind of organized foresight as well as
corrective hindsight. It involves predicting of the future as well as attempting to control the events. It involves
the ability to foresee the effects of current actions in the long run in the future.
2.Organizing
Organizing requires a formal structure of authority and the direction and flow of such authority through which
work subdivisions are defined, arranged and coordinated so that each part
relates to the other part in a united and coherent manner so as to attain the prescribed objectives.
3. Staffing
Staffing is the function of hiring and retaining a suitable work-force for the enterprise both at managerial as well
as non-managerial levels. It involves the process of recruiting , training, developing, compensating and
evaluating employees and maintaining this workforce with proper incentives and motivations. Since the human
element is the most vital factor in the process of management , it is important to recruit the right personnel.
4. Directing
The directing function is concerned with leadership, communication, motivation, and supervision so that the
employees perform their activities in the most efficient manner possible, in order to achieve the desired goals.
5. Controlling
The function of control consists of those activities that are undertaken to ensure that the events do not deviate
from the pre-arranged plans. The activities consist of establishing standards for work performance, measuring
performance and comparing it to these set standards and taking corrective actions as and when needed, to
correct any deviations.
PLANNING
 Planning In Detail
Peter Drucker has defined planning :
“Planning is the continuous process of making present entrepreneurial decisions
systematically and with best possible knowledge of their futurity, organizing
systematically the efforts needed to carry out these decisions and measuring the results of
these decisions against the expectations through organized and systematic feedback”.
▪ Purpose of Planning
1. Provides directions
2. Reduce uncertainty
3. Reduce wastage
4. Sets the standards of controlling
Planning Types
❑ Strategic Planning
Strategic plans are all about why things need to happen, defines “It’s big picture, long-term thinking. It
starts at the highest level with defining a mission and casting a vision.”
Strategic planning includes a high-level overview of the entire business. It’s the foundational basis of the
organization and will dictate long-term decisions. The scope of strategic planning can be anywhere from
the next two years to the next 10 years. Important components of a strategic plan are vision, mission and
values.

❑ Tactical Planning
Tactical plans are about what is going to happen, defines “Basically at the tactical level, there are focused,
specific, and short-term plans, where the actual work is being done, that support the high-level strategic
plans.”
Tactical planning supports strategic planning. It includes tactics that the organization plans to use to
achieve what’s outlined in the strategic plan. Often, the scope is less than one year and breaks down the
strategic plan into actionable chunks. Tactical planning is different from operational planning in that
tactical plans ask specific questions about what needs to happen to accomplish a strategic goal; operational
plans ask how the organization will generally do something to accomplish the company’s mission.
❑ Operational Planning
Operational plans are about how things need to happen. This type of planning typically describes the
day-to-day running of the company. Operational plans are often described as single use plans or ongoing
plans. Single use plans are created for events and activities with a single occurrence (such as a single
marketing campaign). Ongoing plans include policies for approaching problems, rules for specific
regulations and procedures for a step-by-step process for accomplishing particular objectives.

❑ Contingency Planning
Contingency plans are made when something unexpected happens or when something needs to be
changed. Business experts sometimes refer to these plans as a special type of planning.
Contingency planning can be helpful in circumstances that call for a change. Although managers should
anticipate changes when engaged in any of the primary types of planning, contingency planning is
essential in moments when changes can’t be foreseen. As the business world becomes more complicated,
contingency planning becomes more important to engage in and understand.
 Advantages Of Planning
▪ Better Utilization of Resources:
One of the main advantage of planning is the better utilization of resources of the business.
All the resources are first identified and then operations are planned. All resources are put
to best possible uses.
▪ Better Co-ordination:
The objectives of the organization being common, all efforts are made to achieve these
objectives by a concerted effort of all. The duplication in efforts is avoided. Planning will
lead to better co-ordination in the organization which will ultimately lead to better results.
• Facilitates Control:
Planning and control are inseparable. Planning helps in setting objectives and laying down performance
standards. This will enable the management to cheek performance of subordinates. The deviations in
performance can be rectified at the earliest by taking remedial measures.

• Facilitates Delegation:
Under planning process, delegation of powers is facilitated. The goals of different persons are fixed. They
will be requiring requisite authority for getting the things clone. Delegation of authority is facilitated
through planning process.

• Attention on Objectives:
Planning helps in clearly laying down objectives of the organization. The whole attention of management
is given towards the achievement of those objectives. There can be priorities in objectives, important
objectives to be taken up first and others to be followed after them.

• Encourages Innovations and Creativity:

A better planning system should encourage managers to devise new ways of doing the things. It helps
innovative and creative thinking among managers because they will think of many new things while
planning. It is a process which will provide awareness for individual participation and will encourage an
atmosphere of frankness which will help in achieving better results.
 Limitations Of Planning
▪ Lack of Reliable Data:
Planning is based on various facts and figures supplied to the planners. If the data on
which decisions are based are not reliable then decisions based on such information
will also be unreliable. Planning will lose its value if reliable facts and figures are not
supplied.
▪ Time Consuming Process:
Practical utility of planning is sometimes reduced by the time factor. Planning is a
time- consuming process and actions on various operations may be delayed because
proper planning has not yet been done. The delay may result in loss of opportunities.
When time is of essence then advance planning loses its utility. Under certain
circumstances an urgent action is needed then one cannot wait for the planning process
to complete.
• Expensive:
The planning process is very expensive. The gathering of information and testing of various courses of
action involve greater amounts of money. Sometimes, expenses are so prohibitive that small concerns
cannot afford to use planning. The long-term planning is a luxury for most of the concerns because of
heavy expenses. The utility derived from planning in no case should be less than expenditure incurred on
it.

• Resistance to Change:
Most of the persons, generally, do not like any change. Their passive outlook to new ideas becomes a
limitation to planning. McFarland writes. “The principal psychological barrier is that executives, like most
people have more regard for the present than for the future. The present is not only more certain than the
future, it is also more desirable. Resistance to change is commonly experienced phenomenon in the
business world. Planning often implies changes which the executive would like to ignore, hoping they
would not materialize.” The notion that things planned for future are unlikely to happen is not based on
logical thinking. It is the planning which helps in minimizing future uncertainties.

• External Factors may Reduce Utility:

Besides internal factors there are external factors too which adversely affect planning. These factors may
be economic, social, political, technological or legal. The general national and international climate also
acts as limitation on the planning process.
 Steps In Planning Process
▪ 1) Setting Objectives
• This is the primary step in the process of planning which specifies the objective of an organization,
i.e. what an organization wants to achieve.
• The planning process begins with the setting of objectives.
• Objectives are end results which the management wants to achieve by its operations.
• Objectives are specific and are measurable in terms of units.
• Objectives are set for the organization as a whole for all departments, and then departments set their
own objectives within the framework of organizational objectives.
Example:
▪ A mobile phone company sets the objective to sell 2,00,000 units next year, which is double the
current sales.
(2) Developing Planning Premises

•Planning is essentially focused on the future, and there are certain events which are expected to affect the
policy formation.
•Such events are external in nature and affect the planning adversely if ignored.
•Their understanding and fair assessment are necessary for effective planning.
•Such events are the assumptions on the basis of which plans are drawn and are known as planning
premises.
Example:
The mobile phone company has set the objective of 2,00,000 units sale on the basis of forecast done on the
premises of favorable Government policy towards digitisation of transactions.

(3) Identifying Alternative Courses of Action

•Once objectives are set, assumptions are made.
•Then the next step is to act upon them.
•There may be many ways to act and achieve objectives.
•All the alternative courses of action should be identified.
Example:
The Mobile company has many alternatives like reducing price, increasing advertising and promotion,
after sale service etc.,
(4) Evaluating Alternative Course of Action
•In this step, the positive and negative aspects of each alternative need to be evaluated in the light of
objectives to be achieved.
•Every alternative is evaluated in terms of lower cost, lower risks, and higher returns, within the planning
premises and within the availability of capital.
Example:
The mobile phone company will evaluate all the alternatives and check its pros and cons.

(5) Selecting One Best Alternative

•The best plan, which is the most profitable plan and with minimum negative effects, is adopted and
implemented.
•In such cases, the manager’s experience and judgement play an important role in selecting the best
alternative.
Example:
Mobile phone company selects more T.V advertisements and online marketing with great after sales
service.
(6) Implementing the Plan
•This is the step where other managerial functions come into the picture.
•This step is concerned with “DOING WHAT IS REQUIRED”
•In this step, managers communicate the plan to the employees clearly to convert the plans into action.
•This step involves allocating the resources, organizing for labor and purchase of machinery.
Example:
Mobile phone company hires salesman on a large scale, creates T.V advertisement, and starts online
marketing activities and set up service workshops.

(7) Follow Up Action

•Monitoring the plan constantly and taking feedback at regular intervals is called follow-up.
•Monitoring of plans is very important to ensure that the plans are being implemented according to the
schedule.
•Regular checks and comparisons of the results with set standards are done to ensure that objectives are
achieved.
Example:
A proper feedback mechanism was developed by the mobile phone company throughout its branches so
that the actual customer response, revenue collection, employee response, etc. could be known.
Elements of Planning
 Goals & Plans
▪ Goals : It specify future ends. A desired future state that the organization attempts to
realize.
▪ Plans : specify the means to future ends. A blueprint specifying the resource
allocations, schedules, and other actions necessary for attaining goals
Goals and plans have become general concepts in our society. A goal is a desired future
state that the organization attempts to realize. Goals are important because organizations
exist for a ,purpose and goals define and state that purpose. A plan is a blueprint for goal
achievement and specifies the necessary resources, allocations, schedules tasks, and
other actions. Goals specify future ends; plans specify today’s means. The word
planning usually incorporates both ideas; it means determining the organization’s goals
and defining the means for achieving them. In nutshell both are inter-related to each
other.
 Goals
▪ Meaning
Organizational goals are strategic objectives that a company's management establishes to
outline expected outcomes and guide employees' efforts. Goals help define a company's
purpose, assist its business growth and achieve its financial objectives. Setting specific
organizational goals can also help a company measure their organization's progress and
determine the tasks that must be improved to meet those business goals.
 Types Of Goals
▪ Financial Goals: Related to the expected internal financial performance of the
organization
▪ Strategic Goal: Related to the performance of the firm relative to factors in its
external environment (competitors)
▪ Stated goals versus Real goal: Broadly-worded official statements of the
organization (intended to the public consumption) that may be irrelevant to its real
goals (which actually goes on in organization)
 Plan
▪ Plans specify the means to future ends. A blueprint specifying the resource allocations,
schedules, and other actions necessary for attaining goals
▪ A plan is important because it's the foundation to help you helping you
project objectives and achieve your ultimate goals. Having a plan helps you define the
full scope of a project but it also helps you stay focused, set goals and objectives, meet
deadlines, measure success and debrief the entire project.
 Types Of Plan
▪ Long term Plan : Plans with time frame extending beyond three years
▪ Short term plan: Plans with time frame of one year and less.
▪ Specific Plan: Plans which are clearly defined and leave no room for interpretation
▪ Directional Plan: Flexible plans that set out general guidelines and provide focus, yet
allow discretion and implementation
▪ Single use plan: A one time plan specifically designed to meet the need of a unique
situation
▪ Standing Plan: Ongoing plans that provide guidance for activities performed
repeatedly.
 How To Make Planning More Effective ?

▪ Top management support

▪ Simple
▪ Flexible
▪ Feasible
▪ Linked to long term objective
▪ Consistency
 Setting Goals & Developing Plans
A. Traditional Goal setting
➢ Goals are set by the top level
management
➢ Goals are broken into sub-goals
for each organizational level
➢ Goals are indented to direct,
guide, and constrain from above
➢ Goals lose clarity and focus as
lower level managers attempt to
interpret and define the goals for
their areas of responsibility.
B. Maintaining the hierarchy of goals
➢ The integrated network of goals that
results from establishing a clearly
defined hierarchy of organizational
goal.
➢ Achievement of lower level goals is
the means by which to reach higher
level goals.
 c. Management by Objective (MBO)
▪ What is an objective ?
“It is a future target or end result that an organization wishes to achieve.”
Objectives refer to specific, measurable ends. They are identifiable goals towards which
all organizational activities are directed. They are the end results of the organization's
operations. Objectives are the specific targets or standards against which actual
performance can be measured.
 MBO
▪ Management by objectives (MBO) is a strategic management model that aims to
improve the performance of an organization by clearly defining objectives that are
agreed to by both management and employees.
▪ MBO requires all levels of management to agree on clearly defined quantitative
and/or qualitative objectives. These targets then need to be periodically reviewed by
higher levels of management.
▪ The core concept of MBO is planning, which means that an organization and its
members are not merely reacting to events and problems but are instead being
proactive. MBO requires that employees set measurable personal goals based upon
the organizational goals.
 MBO–STEPS
The strategy was formulated by Peter Drucker in the 1950s, detailing five steps that organizations should
follow.
1. The first step is to either determine or revise organizational objectives for the entire company. This broad
overview should be derived from the firm’s mission and vision.
2. The second step is to translate the organizational objectives to employees. Drucker used the acronym
SMART (specific, measurable, acceptable, realistic, time-bound) to express the concept.
3. Step three is stimulating the participation of employees in setting individual objectives. After the
organization's objectives are shared with employees, from the top to the bottom, employees should be
encouraged to help set their own objectives to achieve these larger organizational objectives. This gives
employees greater motivation since they have greater empowerment.
4. Step four involves monitoring the progress of employees. In step two, a key component of the objectives
was that they are measurable in order for employees and managers to determine how well they are met.
5. The fifth step is to evaluate and reward employee progress. This step includes honest feedback on what
was achieved and not achieved for each employee
 Benefits of Management by Objectives

▪ Management by objectives helps employees appreciate their on-the-job roles and

responsibilities.
▪ The MBO approach usually results in better teamwork and communication.
▪ It provides the employees with a clear understanding of what is expected of them. The
supervisors set goals for every member of the team, and every employee is provided with a
list of unique tasks.
▪ Managers help ensure that subordinates’ goals are related to the objectives of the
organization.
▪ It provides a means to identify and plan for the achievement of goals.
▪ Organization also able to gain more efficiency, save resources, and increase organizational
morale if goals are properly set.
 Limitations of Management by Objectives

▪ Management by objectives often ignores the organization’s existing ethos and working
conditions.
▪ The managers sometimes over-emphasize the target setting, as compared to operational
issues, as a generator of success.
▪ Time-Consuming
▪ It is Difficult to Implement in a Situation of Change
▪ Problems of MBO being effective at the lowest level. Theoretically, MBO is supposed to
percolate throughout the organization right down to the lowest level since the manager as
well as the worker at each level have set their own agreed upon objectives. However, in
reality, the workers or managers at the lower levels often do not have the full freedom to
set their own objectives.
▪ Other organizational problems which includes conflict, work pressure, expensive, lack of
training , poor planning.
Contemporary Issues in Planning
▪ Planning may create rigidity
▪ Environmental scanning
▪ Planning cannot be developed for dynamic environment
▪ Formal plans cannot be replace intuition and creative
▪ Planning focus manager’s attention on todays competition not
tomorrow's survival.
ORGANIZATIONAL
STRUCTURE
 Organizational Structure
▪ An organizational structure is a system that outlines how certain activities are
directed in order to achieve the goals of an organization. These activities can include
rules, roles, and responsibilities.
▪ The organizational structure also determines how information flows between levels
within the company.
▪ An organization can be structured in many different ways, depending on its
objectives. The structure of an organization will determine the modes in which it
operates and performs. Organizational structure allows the expressed allocation of
responsibilities for different functions and processes to different entities such as
the branch, department, workgroup, and individual.
 Types Of Organizational Structure
1. Hierarchical org structure
▪ The pyramid-shaped organizational chart is known as a hierarchical org. chart. It’s the
most common type of organizational structure––the chain of command goes from the top
(e.g., the CEO or manager) down (e.g., entry-level and low-level employees) and each
employee has a supervisor.
• Better defines levels of authority and responsibility
• Shows who each person reports to or who to talk to about specific projects
• Motivates employees with clear career paths and chances for promotion
2. Functional org. structure

Similar to a hierarchical organizational structure, a functional org structure starts with positions with the
highest levels of responsibility at the top and goes down from there. Primarily, though employees are
organized according to their specific skills and their corresponding function in the company. Each separate
department is managed independently. In nutshell functional org. is based on functions performed according
the specialization.

•Allows employees to focus on their role

•Encourages specialization

•Help teams and departments feel self-determined

3. Divisional org. structure

In divisional organizational structures, a company’s divisions have control over their own resources,
essentially operating like their own company within the larger organization. Each division can have its own
marketing team, sales team, IT team, etc. This structure works well for large companies as it empowers the
various divisions to make decisions without everyone having to report to just a few executives. So in short it
is based on product line & product specialization.
4. Geographic divisional org structure

Divisions are separated by region, territories, or districts, offering more effective localization and
logistics.
•Helps large companies stay flexible
•Allows for a quicker response to industry changes or customer needs
•Promotes independence, autonomy, and a customized approach

5. Matrix org structure

A matrix organizational structure is a workplace format in which employees report to two or more m
managers rather than one manager overseeing every aspect of a project.
• A matrix organizational chart looks like a grid, and it shows cross-functional teams that form for
special projects
• Employees are assigned a job or a project outside their own department for a relatively temporary
period. These teams are made up of people with diverse expertise who have come together and formed
a team to attain a specific goal.
6. Hybrid Organizations

Hybrid organizations are a combination of values and elements which are based on social impacts in
different sectors like private, public, etc. and revenue generation. Basically, when organizations combine
to fulfil the common social and profit generating goals, such organizations are known as hybrid
organizations. It is also a combination of functional and product organizations.

5. Project-Based Organizations

Project-based organizations are temporary in nature and are developed to fulfil some defined set of results
for a project. These types of organizations have team members having different skill sets from different
functions or areas. Specific resources like budget, time, and manpower are assigned in a particular project
until its completion. After the completion of the project, the manpower of the project goes back to the
respective departments. For example; in the case of IT companies where there are lots of projects like
designing and developing software for any college. To handle this, different teams of different functions of
the IT department like planning, designing, developing, testing, etc. come into play are allocated
respective tasks

For more Org. Structure types, Refer to your Assignement.1

 Organizational Design
▪ ‘Organizational Design’ encompasses restructuring and restructuring roles, hierarchy level,
terms, and conditions as per business or organizational needs.
▪ The very process of organizational design is aimed at finding any type of defective or
dysfunctional elements related to an organization’s system, organization structure, process,
and work culture. Identification of these elements leads to their rectification so that they can
better fulfil an organization’s objective.
▪ It clarifies different aspects like authority, the responsibility of tasks and its limitations,
reporting structure, a flaw of information, etc. With the help of organizational design, one
can identify and eliminate any kind of duplicity in work, inefficient work, poor customer
dealing, blame games, obstacles in the decision-making process, shortfalls in systems, and
processes which result in the decline of efficiency of the employees, lack of trust among
superiors and subordinates, etc.
 Elements Of Organizational Design
1. Chain Of Command/Line Of Command
In this, the authority and power are delegated
from top to bottom i.e. in an organization top
management gives instructions to the bottom
team and all the employees at each level.
Further, the accountability of an employee’s
job flows upward to the management. It gives
clarity of the reporting structure in an
organization.
2. Span Of Control

Span Of Control demonstrates how wide is the area of the direct control of supervisors over their
subordinates which is directly related to how many subordinates (in numbers) report to a senior or
supervisor; which, in turn, depends on the number of tasks performed at different levels. In case of
more tasks, the span of control will be wider. It also depends on other aspects like geographical
location, the ability of the team and superior, the complexity of tasks, etc.
3. Centralization & Decentralization

• Centralization refers to centralizing an organizational system where planning and decision-making authority
is allotted either to a single person or the top management. A decentralized organization is the one where
planning and decision-making are handed over to middle or low-levels.
• Centralization and decentralization are organizational design elements deciding the degree which decision-
making is made at one central level or at various levels by employees. For example, all major budget
decisions would filter to the chief executive officer and chief financial officer in a centralized fashion.
Customer service decisions might be decentralized giving those interacting with customer directions on
how to handle issues but the authority to make certain decisions.
4. Specialization
Work specialization is the first of the elements of organization structure. Business leaders must consider
the job tasks and specific duties associated with given positions. Dividing work tasks among different jobs
and assigning them to definite levels, is the role of work specialization elements. Leaders should be careful
to not overly specialize in any one job because this can lead to boredom and fatigue. This results in slower
work and even errors. Managers may have jobs assigned and adjust the roles depending on how
specialized the job in one area is.
5. Formalization

Formalization refers to the process of specifying or mentioning rules, procedures, and duties to the employees
as an individual as well as to the teams, departments, units, and the whole organization by managers in
written form too. Formalization indicates the goals and vision of an organization, tasks, hierarchy and
relationships, authority and responsibilities, different processes, and work methods.

A formal organization emphasizes on job roles, responsibilities, and assigning work to the individuals as per
the requirement of roles. These are controlled by rules and procedures.
An informal organization emphasizes on individuals, and the job responsibilities are designed based on
individual employee skills and preferences irrespective of the department in which he/she is working. An
individual can be assigned the role of different departments as well based on self-interest, skills, etc.
Smaller organizations tend to have informal elements where large organizations formalize roles more
specifically. The reason smaller organizations use less formal standards is that employees may serve multiple
roles as necessary. Bigger organizations need to formalize elements to ensure the right stuff gets done on time
and correctly.

Formalization might also be seen with specific job duties. For example, there may be a very specific way that
payroll is done to ensure that everyone gets paid on time, with the correct withholding. The sales department
might not be very formalized, and might allow each representative to find his organic process so that he may
succeed.
6. Departmentalization and Compartments
“Departmentalization” is the process of dividing organizational functions into different departments as per
specializations of jobs or responsibilities so that the common tasks can be handled by specialized teams.
In rigid departmentalization, there is almost no interaction between different teams and each team works as per
their area of specialization. In contrast, in loose departmentalization, the teams are free to interact with each other
and can work together for common tasks. Departmentalization and compartments are two other components of
organizational design. Departments are often a group of workers with the same overall functions. They are often
broken down by broad categories such as functional, product, geographical, process and customer. Common
departments include accounting, manufacturing, customer service and sales.
Compartments might have teams with different department members that are put together for efficiency. For
example, a company delivering IT services to other businesses might have teams assigned to each company. Each
team might have a project manager, a graphic designer, a coding specialist, a security specialist, a client rep and
service provider.
 Essential Steps for Designing a Suitable Organizational
Structure

1.Clearly defined objectives

2. Determining activities
3. Assigning duties
4. Delegating authority
5. Co-ordinating activities
6. Providing physical facilities and right environment :The success of an organization depends upon the
provision of proper physical facilities and right environment. Whereas it is important to have right persons
on right jobs, it is equally important to have right working environment. This is necessary for the smooth
running and the prosperity of the enterprise.
7. Establishment of structural relationship for overall control
 Departmentalization

▪ Departmentalization or Departmentation is a process wherein jobs/teams are combined together into

functional units called as departments on the basis of their area of specialization, to achieve the goals of
the organization. So, in this way, the entire organization is divided into parts, i.e. departments which
comprise of a group of employees, who carry out activities of similar nature.
▪ The top-level executives, groups activities in various departments, such as production, marketing,
finance, human resource, research and development, etc. These departments are headed by senior
executives, called as managers of the respective department. The departmental managers can delegate
tasks and duties to the subordinates, and they are accountable to the chief executive for the performance
of the department.
 Types of Departmentalization
▪ Functional departmentalization
Most companies practice functional departmentalization. An example is the Production department, HR
department, Accounts department, Marketing department and IT department.
▪ Product departmentalization
To departmentalize on a product basis means to establish each major product in a product line as an
independent unit within the overall structure of the company.
▪ Departmentalization by Territory
Departmentalization by Territory method is followed where; unless to local conditions appear to offer
advantages, such as low cost of operation and opportunities to capitalize on attractive local conditions as
they arise. Territorial departmentalization is especially popular for sales where division appears feasible
according to some geographic market segregation.
▪ Customer departmentalization
Customer departmentalization is where the organization’s activities are ready to respond to and interact with
specific customers or customer groups. This organizational form is used when the great emphasis is placed
on effectively serving different customer types.

▪ Matrix departmentalization
Matrix departmentalization attempts to combine functional and task force (project) departmentalization
designs to improve the synchronization of multiple components for a single activity to improve the
economics of scale, and to better serve the customer and company.

▪ Process departmentalization
Process departmentalization is practiced in many factories with assembly line. The employees are grouped
into a team to take care of a specific process.
 Cross Functional Teams
▪ Cross functional teams are groups
consisting of people from different
functional areas of the company –
for example, marketing, product,
sales, and customer success. These
can be working groups, where each
member belongs to their functional
team as well as the cross functional
team.
▪ Cross functional teams help
organizations put their customers
first, by encouraging effective
communication across teams.
Bringing people together with
different perspectives can improve
problem solving and lead to smarter,
more sustainable decision making.
 Benefits of Cross Functional Teams
• Improved coordination across functional areas
• Increased innovation in product and process
• Engaged employees
• Developing management skills
• Build team spirit
• Foster stronger work relationships
 Disadvantages Of Cross Working Team
▪ Lack of Trust
Working with others outside one’s department requires putting faith into the abilities and willingness of
someone new. Trust between different parts of the organization can be established only through a series of
promises kept
▪ Technology Disconnect
It is not uncommon for different departments to rely on different technologies for collaboration and
information management. This can impede the progress of cross functional teams and make working
together unnecessarily difficult.
▪ Too Much or Too Little Communication
When a team comes together, they need to establish the right cadence of communication for the group. If
people are not well enough informed and in the loop, balls can be dropped and deadlines missed. On the
other hand, too many meetings or an avalanche of emails can hurt productivity.
▪ Temporary Nature
Cross-functional teams often are temporary in nature, set up only to achieve a specific goal. This puts the
team members under intense pressure to show results quickly, which isn’t always possible because teams
need time to understand the project, formulate strategies and begin work. They also need time to build
rapport with each other and learn to work together. They also might face unforeseen complications that
require time to resolve, and a temporary setup might not allow time for adequate solutions.

▪ Coordination and Skills Issues

When cross-functional teams comprise workers from different departments, they’re likely to remain focused
on the interests of their primary departments. This can result in a lack of coordination between them.
Problems with coordination also occur when members of the team are not clear about their duties and
responsibilities in the team. If members with the proper skills needed for the project are not included in the
team, it might not be possible to meet the project’s objectives.

▪ High Expectations
companies often establish cross-functional teams for a particular goal, there are often more expectations
from them than from usual teams. They’re expected to do their jobs exceptionally well and their
achievements are under scrutiny from other departments. Additionally, while cross-functional team
members might be capable in their respective departments, they might not be trained to deal with the
specific issues needed for the particular project.
 Mechanistic And Organic Structures
Mechanistic
▪ The mechanistic organizational structure is the most
common business structure and is typically used in a
manufacturing environment. This type of organizational
structure is bureaucratic, which means it employs a highly
centralized authority figure. A set of formal procedures,
functions and processes are implemented throughout the
organization under a mechanistic organizational structure.
▪ Employees tend to work separately on their own tasks,
which are handed down through a chain of command.
Company-wide decisions are left to employees who reside
at the top of the hierarchical chain and communication is
passed from the top down. Written communication tends
to dominate within this type of structure.
 Organic
▪ An organic organizational structure is a flat organization that
allows for horizontal communications and interactions and is more
suited to creative businesses. This type of organizational structure
is decentralized, giving employees at all levels a chance to
participate in business-related decision making.

▪ Businesses with an organic structure often encourage group

participation and the sharing of work responsibilities.
Communication channels are open to employees, managers and
business owners and contact between all levels of employees
usually occurs on a regular basis. The type of communication most
often used in organic structures is verbal.
 Contingency Factors affecting Structural Choice
(i) Strategy
organizational structures are built to achieve objectives by implementing the strategies. When strategy
changes, structures must change. At the corporate level, strategies are formulated based on the company’s
mission and strategic goals or objectives.
(ii) Environment
Environment has an impact on decision making – specifically the difficulty of making decisions in an
uncertain or unpredictable environment. the stability and predictability of the environment have a direct
bearing on the ability of the organization to function effectively. An unstable environment that changes
rapidly and is less predictable
(iii) Technology

▪ technology is used to convert the resources into outputs in every organization. Technology includes the
knowledge, machinery, work procedures, and materials that convert the inputs into outputs. The
technology used to manufacture the products decides the kind of the organization for the production
system.
(iv) Size of the organization

The number of employers working in an organization indicates its size. It is observed that large
organizations differ structurally from small ones in terms of division of labour, rules and regulations,
performance appraisal and budgeting procedures

(v) Age of the organization

organizations evolve through stage of life cycle – birth, youth, midlife and maturity. In the birth stage, the
organization created by the entrepreneur is informal, with no rules and regulations. Decision making is
centralized with the owner and tasks are not specialized.

In the youth stage, the organization is growing – it expands and hires more employees. It incorporates
division of labour and formal rules and policies. Decision making is still with the owner although it is shared
by few persons close to the owner.

In the midlife stage, the company has become quite large. It now has extensive sets of rules, regulations,
policies and systems to guide the employees. Control systems are used, professionals are hired, tasks are
decentralized and authority is delegated to functional departments. In the maturity stage, rules, regulations,
specialized staffs, budgets, a refined division of labour and control systems are in place.
 An Overview of Contemporary Organizational designs
▪ Organizational designs fall into two categories, traditional and contemporary. Traditional designs include
simple structure, functional structure, and divisional structure. Contemporary designs would include team
structure, matrix structure, project structure, boundaryless organization, and the learning organization.
1. I. Traditional Designs
➢ Simple Structure
A simple structure is defined as a design with low departmentalization, wide spans of control, centralized
authority, and little formalization. This type of design is very common in small start up businesses.
➢ Functional Structure
A functional structure is defined as a design that groups similar or related occupational specialties together.
It is the functional approach to departmentalization applied to the entire organization.
➢ Divisional Structure
A divisional structure is made up of separate, semi-autonomous units or divisions. Within one corporation
there may be many different divisions and each division has its own goals to accomplish. A manager
oversees their division and is completely responsible for the success or failure of the division. This gets
managers to focus more on results knowing that they will be held accountable for them.
II. Contemporary Designs

➢ Team Structure
A team structure is a design in which an organization is made up of teams, and each team works towards
a common goal. Since the organization is made up of groups to perform the functions of the company,
teams must perform well because they are held accountable for their performance. In a team structured
organization there is no hierarchy or chain of command. Therefore, teams can work the way they want to,
and figure out the most effective and efficient way to perform their tasks. Teams are given the power to
be as innovative as they want. Some teams may have a group leader who is in charge of the group.

➢ Matrix Structure
A matrix structure is one that assigns specialists from different functional departments to work on one or
more projects. In an organization there may be different projects going on at once. Each specific project
is assigned a project manager and he has the duty of allocating all the resources needed to accomplish the
project. In a matrix structure those resources include the different functions of the company such as
operations, accounting, sales, marketing, engineering, and human resources. Basically the project
manager has to gather specialists from each function in order to work on a project, and complete it
successfully. In this structure there are two managers, the project manager and the department or
functional manager.
➢ Project Structure
A project structure is an organizational structure in which employees continuously work on projects.
This is like the matrix structure; however when the project ends the employees don’t go back their
departments. They continuously work on projects in a team like structure. Each team has the necessary
employees to successfully complete the project. Each employee brings his or her specialized skill to the
team. Once the project is finished then the team moves on to the next project.

➢ Learning Organization
A learning organization is defined as an organization that has developed the capacity to continuously
learn, adapt, and change. In order to have a learning organization a company must have very
knowledgeable employees who are able to share their knowledge with others and be able to apply it in
a work environment. The learning organization must also have a strong organizational culture where all
employees have a common goal and are willing to work together through sharing knowledge and
information. A learning organization must have a team design and great leadership. Learning
organizations that are innovative and knowledgeable create leverage over competitors.
Contemporary Organizational Structure Advantages and Disadvantages

▪ The main advantage of a contemporary organizational design is that employees have the freedom to
implement their own decisions, make changes and take ownership of their work without interference
from middle management and senior management. This freedom can lead to increased productivity,
greater work quality and a significant uptick in employee satisfaction. Under this structure, employees
form stronger bonds, because they must rely on each other's expertise and talent to accomplish their
goals. There is often also a greater level of communication among workers, because every employee is
dependent on the success of another employee.
▪ The primary disadvantage of a contemporary organizational structure is that the absence of supervisory
authority can lead to disorganization and inefficiency if employees fail to hold each other accountable
for mistakes. Another disadvantage is that because the structure is no longer top-down or bottom-up, the
opportunities for advancement or upward mobility are limited, since the organization now works as a
“flatter” structure in which workers are on an equal footing.
HUMAN RESOURCE MANAGEMENT
 ORGANIZATIONAL BEHAVIOR/HUMAN RESOURCE
MANAGEMENT (OB/HR)

The field of Organizational Behavior/Human Resource Management (OB/HR) deals with

the behavior of individuals and groups within organizations, and investigates the
enhancement of the effectiveness of an organization’s human capital in order to gain
competitive advantage and achieve organizational goals. OB is the study of the way
people interact within groups. Normally this study is applied in an attempt to create more
efficient business organizations.
HRM is the term used to describe formal systems devised for the management of people
within an organization. The responsibilities of a human resource manager fall into three
major areas: staffing, employee compensation and benefits, and defining/designing work.
Essentially, the purpose of HRM is to maximize the productivity of an organization by
optimizing the effectiveness of its employees.
LEADERSHIP
 LEADERSHIP
▪ Leadership can be defined as the ability of the management to make sound decisions
and inspire others to perform well. It is the process of directing the behavior of others
towards achieving a common goal. In short, leadership is getting things done through
others.
Leadership styles in business can be organized into five categories:
• Autocratic.
• Democratic.
• Laissez-Faire.
• Transactional.
• Autocratic Leadership Style
Autocratic leadership, also known as authoritarian leadership, is a leadership style where the boss has absolute
control over decisions in the workplace. Team members are not asked for input they are expected to comply
with all decisions and orders made by their leader. Autocratic leadership, like all the other leadership styles in
management, has its benefits as well as its drawbacks. Benefits of autocratic leadership include saving time on
the decision-making process, every member of the team knowing exactly what is expected of them and how
they are to perform, and fewer strategy implementation errors because there are fewer people involved in the
strategic planning process. Drawbacks include employees feeling like they are not personally valued, reduced
motivation among team members and an increased risk of employee rebellion.

• Democratic Leadership Style

Democratic leadership is the opposite of autocratic leadership. Democratic leadership, also sometimes known as
participative leadership, is a leadership style characterized by the leader’s choice to involve team members in
the decision-making process. In all decisions, the leader has the final say, but they make decisions according to
the input they receive from his team. Employees feel motivated to participate in decision-making. They feel like
their input is valued. Democratic leadership is not the perfect leadership style, though. Drawbacks include a
time-consuming decision-making process, as well as the potential for poor choices if the employees do not have
the experience necessary to provide well-informed input. A democratic leadership style can be a great choice for
a smaller team or a team composed of similarly skilled members.
• Laissez-Faire Leadership Style
Laissez-faire leadership is, essentially, the lack of a clear leader role. While one individual may be the
leader in title, the reality in this type of workplace dynamic is that everybody is an equal decision-maker
and every piece of input from the team is considered equally.
Rather than gathering team members’ input and then considering it when making a decision, a laissez-faire
leader leaves the decision-making up to their team members. This can lead to feelings of importance among
every member of the team, but it can also lead to confusion and bottlenecks in strategic processes.

• Transactional Leadership Style

Under a transactional leader, self-motivated employees tend to be most successful because the leader has
created a structured, rigid environment where they use clear rewards and punishments to drive employee
performance.
For example, a transactional leader might require each member of the sales team to speak with five
prospective customers each day, offering catered lunch on Friday for every team member who met this goal
Monday through Thursday.
CONTINGENCY THEORIES OF
LEADERSHIP
 FIEDLER’S CONTINGENCY THEORY
▪ Fiedler’s Contingency Model states that effective leadership is determined by two main factors, your
leadership style and your ability to control a given situation. The model is important because it can be
used to design management and leadership structures in the workplace. This leadership model is based on
a theory developed after many years of research by Professor Fred Fiedler, an Austrian psychologist.
Fiedler spent time with large groups of people, studying their personality traits and interactions with one
another. Here’s an in-depth look at the components of the Fiedler model.
▪ It is important to realize that in Fiedler’s Contingency Theory your leadership style is fixed. You cannot
change your style to suit the situation. Instead, you must put leaders into situations that match their style.
▪ There are two important factors in Fiedler’s Contingency Theory: leadership style and situational
favorableness.
1. Leadership Style
2. Situational Favorableness
1. Leadership Style

The first step in using the model is to determine your natural leadership style. To do this, Fiedler developed
a scale called the Least Preferred Coworker (LPC).
To score yourself on this scale you have to describe the coworker (evaluate the coworkers) with whom you
least prefer to work. According to the model, the more favorably you rated the person you least prefer to
work with the more relationship oriented. The less favorably you rated the person you least like working
with the more task-oriented.

So, in a nutshell:
•High LPC = Relationship-oriented leader.
•Low LPC = Task-oriented leader.

Task-oriented leaders tend to be good at organizing teams and projects and getting things done.
Relationship-oriented leaders tend to be good at building good relationships and managing conflict to get
things done.
2. Situational Favorableness

The next step is to understand the favorableness of the situation you face. This is determined by how
much control over the situation you have as a leader (situational control).
Determining situational favorableness is done by examining the following three factors:

a. Leader-Member Relations
This factor measures how much your team trusts you. Greater trust increases the favorableness of the
situation and less trust reduces it.

b. Task Structure
This factor measures the tasks that need to be performed. Are they clear and precise or vague.
Vague tasks decrease the favorableness of the situation and concrete and clear tasks increase it.

c. Position Power
This is determined by your authority, meaning the power you have to reward or punish your
subordinates. As you might expect, having more power increases the situational favorableness.
 PATH GOAL LEADERSHIP MODEL

▪ This theory was developed by Robert House. The leaders help the group members in
attaining the rewards by clarifying the paths of goals and remove obstacles to
performance. They do so by providing the information, support, and other resources
which can be required by the employees to complete the task.
▪ The goal is to increase your employees' motivation, empowerment, and satisfaction so
they become productive members of the organization. The Path-Goal model is a
theory based on specifying a leader's style or behavior that best fits the employee and
work environment in order to achieve a goal
 SITUATIONAL LEADERSHIP
▪ Paul Hersey – Ken Blanchard, The situational theory of leadership suggests that no
single leadership style is best. Instead, it depends on which type of leadership and
strategies are best-suited to the task. According to this theory, the most effective
leaders are those that are able to adapt their style to the situation and look at cues such as
the type of task, the nature of the group, and other factors that might contribute to getting
the job done.
▪ The theory was first introduced in 1969 as "life cycle theory of leadership". During the
mid-1970s, life cycle theory of leadership was renamed "Situational Leadership Theory.
▪ The Situational Leadership Model has two fundamental concepts: leadership style and
the individual or group's performance readiness level, also referred to as maturity level or
development level.
Leadership styles

Telling Selling Participating Delegating

Individuals are
experienced at the
Individuals lack the Individuals are task, and
Individuals are more
specific skills experienced and able comfortable with
able to do the task;
required for the job to do the task but their own ability to
however, they are
in hand and they are lack the confidence do it well. They are
demotivated for this
willing to work at the or the willingness to able and willing to
job or task. Unwilling
task. They are novice take on not only do the task,
to do the task.
but enthusiastic. responsibility. but to take
responsibility for the
task.
Maturity levels

High Medium Low

M4 M3 M2 M1
Very capable Capable but unwilling Unable but confident Unable and insecure

Individuals are
experienced at the Individuals lack the
Individuals are Individuals are more
task, and comfortable specific skills required
experienced and able able to do the task;
with their own ability for the job in hand
to do the task but lack however, they are
to do it well. They are and they are willing to
the confidence or the demotivated for this
able and willing to not work at the task. They
willingness to take on job or task. Unwilling
only do the task, but are novice but
responsibility. to do the task.
to take responsibility enthusiastic.
for the task.
 Development levels

•D1 – Enthusiastic Beginner: Low competence with high commitment

•D2 – Disillusioned Learner: Low/middling competence with low commitment

•D3 – Capable but Cautious Performer: High competence with low/variable commitment

•D4 – Self-reliant Achiever: High competence with high commitment

 MANAGERIAL GRID MODEL
▪ The managerial grid model (1964) is a style leadership model developed
by Robert R. Blake and Jane Mouton.
▪ This model originally identified five different leadership styles based on
the concern for people and the concern for production. The model is
represented as a grid with concern for production as the x-
axis and concern for people as the y- axis
▪ The model identified five leadership styles by their relative positions on
the grid.
• Country Club Style Leadership (High People and Low Production)
Country Club Style Leadership style of leader is most concerned about the needs and the feelings of
members of his or her team.
In this environment, the relationship-oriented manager has a high concern for people but a low concern
for production. He pays much attention to the security and comfort of the employees. He hopes that this
will increase performance.

• Produce or Perish Leadership- (High Production and Low People)

Produce or Perish Leadership management style is characterized by a concern for production as the only
goal.
Employees are viewed as obstacles to performance results unless obedience to the manager’s wishes is
explicitly granted. In this style, the manager is authoritarian or compliance. A task-oriented manager, he
has a high concern for production and a low concern for people. This type of leader is very autocratic, has
strict work rules, policies and procedures, and views punishment as the most effective means to motivate
employees.
impoverished Leadership-(Low Production and Low People)
Impoverished Leadership is a delegate-and-disappear management style and a lazy approach. The
manager shows a low concern for both people and production.
He or she avoids getting into trouble. His main concern is not to be held responsible for any mistakes.
Managers use this style to preserve job and job seniority, protecting themselves by avoiding getting into
trouble.
• Middle-Of-The-Road Leadership-(Medium Production and Medium People)
Middle-Of-The-Road Leadership is a kind of realistic medium without ambition. It is a balanced and
compromised style.
The manager tries to balance the competing goals of the company and the needs of the workers.
The manager gives some concern to both people and production, hoping to achieve acceptable performance.
He believes this is the most anyone can do.
Consequently, compromises occur where neither the production nor the people’s needs are fully met.
The supervisor views it as the most practical management technique. It is also an outcome when production
and people issues are seen as in conflict.

• Team Leadership-(High Production and High People)

Team Leadership, the manager pays high concern to both people and production. Motivation is high. This soft
style is based on the propositions of Theory Y of Douglas McGregor.
The manager encourages teamwork and commitment among employees.
This style emphasizes making employees feel part of the company-family and involving them in
understanding the organizational purpose and determining production needs. This method relies heavily on
making employees feel they are constructive parts of the company.
And this will result in a team environment organization based on trust and respect, which leads to high
satisfaction and motivation and, as a result, high production.
CONTROLLING
 CONTROLLING
▪ Controlling is one of the important functions of a manager. The meaning of
controlling function can be defined as ensuring that activities in an organization are
performed as per the plans. Controlling also ensures that an organization’s resources
are being used effectively & efficiently for the achievement of predetermined goals.
▪ It is a function that brings back the management cycle back to the planning function.
Thus, the controlling function act as a tool that helps in finding out that how actual
performance deviates from standards and also finds the cause of deviations & attempts
which are necessary to take corrective actions based upon the same.
▪ Control is an indispensable function of management without which the controlling
function in an organization cannot be accomplished and the best of plans which can be
executed can go away.
CONTROL PROCESS
 Tools For Measuring Organizational Performance

▪ Organizational performance means the actual output or results of an

organization as measured against its intended outputs (or goals and
objectives).
▪ Effective performance management is essential to businesses. Through
both formal and informal processes, it helps them align their employees,
resources, and systems to meet their strategic objectives
TOOLS FOR MEASURING ORGANIZATIONAL PERFORMANCE

▪ Financial Control : Every business wants to earn a profit. To achieve the final
objective/goal, managers need financial control.
▪ Balanced scorecard : it is a measurement tool that uses goal set by the managers in
four areas to measure a company’s performance (Finance, Customers, internal
processes, people/ innovation) . It emphases that all of these areas are important to
an organization’s success and that there should be a balance between them.
▪ Information control : Deals with internal environment and external strategic
context.
▪ Benchmarking : It compares performance, processes and practices against other
parts of the business. In other words, Benchmarking is defined as the process of
measuring products, services, and processes against those of organizations known to
be leaders in one or more aspects of their operations
▪ Key performance indicators (KPIs) : A Key Performance Indicator is a measurable
value that demonstrates how effectively a company is achieving key business
objectives. Organizations use KPIs at multiple levels to evaluate their success at
reaching targets. High-level KPIs may focus on the overall performance of the
business, while low-level KPIs may focus on processes in departments such as sales,
marketing, HR, support and others.

▪ Performance appraisals : systems provide a means of systematically evaluating

employees across various performance dimensions to ensure that organizations are
getting what they pay for. They provide valuable feedback to employees and
managers, and they assist in identifying promotable people as well as problems.

▪ Management by objectives (MBO)

 CONTEMPORARY ISSUES IN CONTROL

▪ Cross culture issues (Technology, legal constrains, difficulties in data

collections)
▪ Work place concerns (employee theft, work place violence, work
place privacy)
▪ Customer interaction (service and satisfaction)
▪ Corporate governance ( change in BOD, increase scrutiny of financial
reporting)