MANAGEMENT CONCEPTS AND ORGANISATIONAL BEHAVIOUR

UNIT-1

Fundamentals of Management

Meaning of Management: - Management is how businesses organize and

direct workflow, operations, and employees to meet company goals. The
primary goal of management is to create an environment that empowers
employees to work efficiently and productively. A solid organizational structure
guides employees and establishes the tone and focus of their work.

Management is a technique of extracting work from others in an integrated

and co-ordinated manner for realizing the specific objectives through
productive use of material resources. Mobilising the physical, human and
financial resources and planning their utilization for business operations in such
a manner as to reach the defined goals can be benefited to as management.

Definition of Management: According to Henry Fayol “To manage is to

forecast and to plan, to organize, to command, to co-ordinate and to control.

J.N. Schulze – “Management is the force which leads, guides and directs an
organisation in the accomplishment of a pre-determined object.”

Nature or Characteristics of Management

• Management is a Factor of Production (Land, Labour, Capital &

Entrepreneurship).
• Management also implies skill and experience in getting things done
through people.
• Management is a process (Continuous Process-Planning, Staffing,
organising, Directing & Controlling.)
• Management is a universal activity
• Management is a Goal Oriented
• Management is a system of authority (Boss, Board of Directors,
Employees).
• Management involves decision-making

Management is both a Science (Rule of thumb) as well as an Art

Management is both a science as well as an art. The science of management
provides certain general principles which can guide the managers in their
professional effort. The art of management consists in tackling every situation
in an effective manner. As a matter of fact, neither science should be over
emphasized nor art should be discounted; the science and the art of
management go together and are both mutually interdependent and
complimentary. Management is thus a science as well as an art.
It can be said that- “The art of management is as old as human history, but the
science of management is an event of the recent past.”
Management is also – A measure of how efficiently and effectively managers
use available resources to satisfy customers and achieve organizational goals.

Efficiency

Efficiency refers to the act of performing activities with minimum wastages of

time and optimum use of resources, so that the work done is faster and, in an
error, free manner. (cost saving and time saving and quality of product)

Effectiveness

A measure of the appropriateness of the goals an organization is pursuing and

the degree to which they are achieved. (full utilization of resources)
 Management practices from past to present

Approaches to Management

Classical Approaches Neo Classical Approaches Modern Theory

Scientific management Hawthorne studies Quantitative approach
Administrative principles Maslow’s theory of human needs Contingency approach
Bureaucratic organization McGregor’s Theory X and Theory Y Systems approach
Argyris’s theory of adult personality

Classical Approaches

Scientific Management (Frederick Winslow Taylor)-FW Taylor believed that

there was only one best method to maximise efficiency & that can be
developed through study and analysis.
There always existed the possibility of a kind of class-conflict the managers
versus workers.
Taylor recognised that this conflict helped, none, the workers, the managers or
the factory owners-Loss of Time & Resources. (Good relationship between
employee & manager)

1. Develop rules of motion, standardized work implements, and proper

working conditions for every job.
2. Carefully select workers with the right abilities for the job.
3. Carefully train workers and provide proper incentives.
4. Support workers by carefully planning their work and removing
obstacles.
5. Motion study Science of reducing a job or task to its basic physical
motions.
6. Eliminating wasted motions improves performance.

Administrative Principles (Henri Fayol): Henri Fayol was a French mining

engineer who turned a leading industrialist and a successful manager.

1. Division of Work
2. Authority and Responsibility
 3. Discipline
4. Unity of Command
5. Unity of Direction
6. Subordination of Individual Interest
7. Remuneration
8. Centralization
9. Scalar Chain
10.Order
11.Equity
12.Stability
13.Initiative
14.Esprit de Corps

1. Division of Work: - Henri believed that segregating work in the workforce

amongst the workers will enhance the quality of the product. Similarly, he also
concluded that the division of work improves the productivity, efficiency,
accuracy and speed of the workers. This principle is appropriate for both the
managerial as well as a technical work level.

According to this principle, the work is divided into different kinds such as
technical, financial, commercial, accounting and managerial. (It is assigned to
employees as per their qualities and capabilities)

2. Authority and Responsibility: -These are the two key aspects of

management. Authority facilitates the management to work efficiently, and
responsibility makes them responsible for the work done under their guidance
or leadership.

Authority is the right to take decisions, it is necessary to get the things done
appropriately from subordinates.

3. Discipline: - Without discipline, nothing can be accomplished. It is the core

value for any project or any management. Good performance and sensible
interrelation make the management job easy and comprehensive. Employees’
good behaviour also helps them smoothly build and progress in their
professional careers.

Employee must obey and respect the rules that govern the organisation.
4. Unity of Command: -This means an employee should have only one boss
and follow his command. If an employee has to follow more than one boss,
there begins a conflict of interest and can create confusion.

Each member of organisation should receive orders from only one supervisor.

5. Unity of Direction: - Whoever is engaged in the same activity should have a

unified goal. This means all the people working in a company should have one
goal and motive which will make the work easier and achieve the set goal
easily.

This principle states that there should be one head and one plan in every
organisation.

6. Subordination of Individual Interest: -This indicates a company should work

unitedly towards the interest of a company rather than personal interest. Be
subordinate to the purposes of an organisation. This refers to the whole chain
of command in a company.

According to this principle the interest of an individual must be given less

importance than the interest of the organisation.

7. Remuneration: -This plays an important role in motivating the workers of a

company. Remuneration can be monetary or non-monetary. Ideally, it should
be according to an individual’s efforts they have put forth.

Employee must be given fair remuneration, wages or salary to keep them

satisfied financially as well as retain them for long span of time within the
organisation.

Skills, Experience, Knowledge, Tenure, cost of living, market trend, profitability

of the organisation.

8. Centralization & Decentralization: - In any company, the management or

any authority responsible for the decision-making process should be neutral.
However, this depends on the size of an organisation. Henri Fayol stressed on
the point that there should be a balance between the hierarchy and division of
power.
According to this principle there must be a proper balance between
centralization and decentralization in the organisation.

9. Scalar Chain: - Fayol, on this principle, highlights that the hierarchy steps
should be from the top to the lowest. This is necessary so that every employee
knows their immediate senior also they should be able to contact any, if
needed.

Scalar chain means the hierarchy of authority from the top level to the lower
level for the purpose of communication.

Employee A

Employee B Employee C

Employee D Employee E

10. Order: - A company should maintain a well-defined work order to have a

favourable work culture. The positive atmosphere in the workplace will boost
more positive productivity.

This principle is based on a place for everything and everything in its place.

11. Equity: - All employees should be treated equally and respectfully. It’s the
responsibility of a manager that no employees face discrimination.

Management should be fair as well as friendly to the subordinates.

12. Stability: - An employee delivers the best if they feel secure in their job. It is
the duty of the management to offer job security to their employees.

At the time of recruitment of employees, the management should assure them

about stability of tenure or job security
13. Initiative: - The management should support and encourage the employees
to take initiatives in an organisation. It will help them to increase their
motivation and morale.

Initiative refers to volunteering to do the work in an innovative way.

14. Esprit de Corps: - It is the responsibility of the management to motivate

their employees and be supportive of each other regularly. Developing trust
and mutual understanding will lead to a positive outcome and work
environment.

If all employee is working as a union and with mutual trust the difficulties can
be solved quickly.

Bureaucratic organization (Max Weber)

• Max Weber, a German scientist, defines bureaucracy as a highly

structured, formalized, and also an impersonal organization. He also
instituted the belief that an organization must have a defined
hierarchical structure and clear rules, regulations, and lines of authority
which govern it.
• An ideal, intentionally rational, and very efficient form of organization.
• Based on principles of logic, order, and legitimate authority.
• It was developed during industrial revolution to organise & direct
activities of a firm.
• Defined as a system of organisation in which roles, takes, responsibilities
& relationship between people are clearly define carefully prescribed &
controlled in accordance with formal authority & any deviations from
rules & regulations is seriously viewed.
• As per Max Weber, if organisation wants to achieve highest degree of
efficiency & wants to control humans working in organisation then that
organisation should adopt Bureaucratic theory of organisation.
 Characteristics of Bureaucratic Organizations

1. Division of labour-Word divided according to specialised skills possessed

by individuals every person in organisation knows his/her roles, duties,
responsibilities & the area in which he / she has to operate & in which he
must abstain from action so that he does not crosses his boundaries.

2. Clear Hierarchy of Authority- A system of working position from top to

bottom. Under this theory, every lower office is subject to control &
supervision by higher office.

3. Administrative Class-People paid are whole time employees, Salary &

promotions are based on their position. Tenure in organisation is
determined by rules & regulations. Selected for employment based on
their competence & merit do not carry any proprietary interest in
organisation.

4. Formal rules and procedures-Rules are laid down to ensure uniformity &
Coordination of efforts by individual member when there is no rule on
any matter, then that matter is referred upwards for decisions &
subsequently becomes applicable for future decision on same matters.

5. Impersonality- Under this theory, relationship is governed through

system of official authority & rules. Personal relation & traditional
pressures are no longer effective in such system. There is a clear
demarcation between personal & official affairs. Decision governed by
rational factors rather than personal factors.

6. Official Records- There should be proper record of all decisions &

activities of organisation. All rules, regulations, procedures etc. should be
clearly laid down.

Possible Disadvantages of Bureaucracy

1. Excessive paperwork or “red tape”

2. Slowness in handling problems
3. Rigidity in the face of shifting needs
4. Resistance to change
5. Employee apathy
 Human Resource Approaches/ Neo Classical Theory

Hawthorne studies

The Hawthorne studies were a series of experiments conducted at Western

Electric's Hawthorne plant in Chicago between 1924 and 1932. The studies
were designed to understand the impact of human relations on worker
productivity and satisfaction. The studies' findings led to the development of
the human relations approach to management and administrative theory.

Initial study examined how economic incentives and physical conditions

affected worker output.

Hawthorne studies were designed to explore avenues to increase worker

productivity. The Hawthorne theory of management suggests that worker
productivity is not only based on physical conditions, but the notion that
management cares about employee welfare and wages paid to them.

Hawthorne studies in management refer to the modification of employee

behaviour based on the perception that they are being observed by
management. Hawthorne studies are recognized for exploring the
sociopsychological factors of human behaviour as a strategy for managing
employees in the workplace.

The main conclusion of the Hawthorne studies was that worker productivity
changed based on the fact that workers were being observed. Although
productivity increased with other experimental variables, researchers
concluded that attention was the main factor influencing results.
 Four Phase of Hawthorne Studies

Relay
Illumination Assembly
Experiments Test Room
Experiments

Mass Bank Wiring

Interviewing Obeservation
Programme Room
Experiments Experiments

1.Illumination Experiments: -(Light) Illumination experiments were undertaken

to find out how varying levels of light affected the productivity.

To Prove: With higher illumination, productivity will increase

A group of workers was chosen and placed in two separate groups

Group A Group B
Group A, called as a control group Group B was exposed to
varying Continued to work under constant intensities of illumination.
Intensities of illumination.

Findings

1. As they increased the illumination in the experimental group, both

groups increased production.
2. When the intensity of illumination decreased, the production continued
to increase in both the groups.
3. The production in the experimental group decreased only when the
illumination was decreased to the level of moonlight.
4. The decrease was due to light falling much below the normal level.

Conclusion
 1. Illumination did not have any effect on productivity but something else
was interfering with the productivity.
2. Human Factor was important in determining productivity but which
aspect was affecting, it was not sure.

2.Relay Assembly Test Room Experiments: Relay assembly test room

experiments were designed to determine the effect of changes in various job
conditions on group productivity. The work was related to the assembly of
telephone relays.

Key Points

1. An observer was associated with girls to supervise their work.

2. Before each change was introduced, the girls were consulted.
3. They were given opportunity to express their viewpoints and concerns to
the supervisor.
4. In some cases, they were allowed to take decisions no matters
concerning them.
Conclusion

1. As each change was introduced, absenteeism decreased, moral

increased, and less supervision was required.
2. It was assumed that these positive factors were there because of the
various factors being adjusted and making them more positive.
3. At this time, the researchers decided to revert back to original position,
that is, no rest and other benefits. Surprisingly, productivity increased
further instead of going down.

3.Mass Interviewing Programme Experiments: To determine employee’s

attitudes towards company, supervision, insurance plans, promotion and
wages.

Findings

1. Objects, person or events are carriers of social meaning.

2. The personal situation of the workers is a configuration, composed of a
Many Factors.
3. The position or status of workers has a lot of impact on his behaviour.
 Maslow’s theory of human needs- it’s a motivation theory

• Proposed that motivation of people depends on their need.

• Those need can be arranged in hierarchy
• Basic need to higher needs
• Five categories of human needs dictate an individual’s behaviour.
• A need is a physiological or psychological deficiency a person feels
compelled to satisfy.
• Need levels
o Physiological- (Basic need-food, water)
o Safety- (Insurance, Pension)
o Social- (Family, Friend, Relationship)
o Esteem- (Achievement)
o Self-actualization- (Being growth needs)

Maslow’s hierarchy of human needs

McGregor’s Theory X and Theory Y

Theory X is based on the assumptions that employees don't really want to

work, lack ambition, only work to collect a pay check, and need constant
supervision. Theory Y is based on the assumptions that employees want to
work, want to take responsibility, and do not need much supervision.

Argyris’s theory of adult personality

According to this theory, a persons' development is processed along a

continuous break of an immaturity situation to a maturity situation. A mature
person is characterised for being active, independent, self-confident and self-
controlled.

Examples from Argyris: A teacher who believes that she has a class of “stupid”
students will communicate expectations such that the children behave stupidly.
 Modern Theory

Quantitative approach: The quantitative approach to management uses

statistics and mathematical techniques to solve complex problems. Depending
on the business area, managers may use techniques like computer simulations
or information models to assess performance. This analysis enables them to
understand what is working and what is not within the business, then develop
solutions to solve or improve the issues they find. Managers can also use these
techniques and data to determine the benefits or risks of different ideas. This
approach can help managers make objective decisions based on data and facts,
rather than personal opinions or feelings, that support the business.

Contingency approach: The contingency management approach states that

there is not just one management approach that fits every organization. It
believes that the optimal management style depends on the situation. Leaders
who utilize this theory do not adopt a single management style and instead
must identify and use different styles for different situations. As a result, these
leaders also develop additional traits and skills that ensure they can employ
various management approaches effectively.

Systems approach: The systems approach of management states that

organizations represent a complex collection of various components that work
together to reach a common goal. An organization is made up of numerous
subsystems, such as different departments. Managers using this theory
examine how these subsystems interact with and affect one another, rather
than analysing them separately. They must also consider their surrounding
environment and external factors that influence or affect these systems. The
systems approach further defines an organization by dividing it into different
components. These components demonstrate how different parts of the
organization work together toward a common goal.

Different levels of management

• The term “Levels of Management’ refers to a line of demarcation

between various managerial positions in an organization.
• The number of levels in management increases when the size of the
business and work force increases and vice versa.
• The level of management determines a chain of command, the amount
of authority & status enjoyed by any managerial position.
Top Level of Management:

It consists of board of directors, chief executive or managing director. The top

management is the ultimate source of authority and it manages goals and
policies for an enterprise. It devotes more time on planning and coordinating
functions.

Role of Top Management

• Top management lays down the objectives and broad policies of the
enterprise.
• It issues necessary instructions for preparation of department budgets,
procedures, schedules etc.
• It prepares strategic plans & policies for the enterprise.
• It appoints the executive for middle level i.e. departmental managers.
• It controls & coordinates the activities of all the departments.
• It is also responsible for maintaining a contact with the outside world.
• It provides guidance and direction.
• The top management is also responsible towards the shareholders for
the performance of the enterprise.

Middle Level of Management

The branch managers and departmental managers constitute middle level.

They are responsible to the top management for the functioning of them
department. They devote more time to organizational and directional
functions. In small organization, there is only one layer of middle level of
management but in big enterprises, there may be senior and junior middle
level management.

Role of Middle Level Management

• They execute the plans of the organization in accordance with the

policies and directives of the top management.
• They make plans for the sub-units of the organization.
• They participate in employment & training of lower-level management.
• They interpret and explain policies from top level management to lower
level.
• They are responsible for coordinating the activities within the division or
department.
• It also sends important reports and other important data to top level
management.
• They evaluate performance of junior managers.
• They are also responsible for inspiring lower-level managers towards
better performance.

Lower Level of Management

Lower level is also known as supervisory / operative level of management. It

consists of supervisors, foreman, section officers, superintendent etc.

According to R.C. Davis,

“Supervisory management refers to those executives whose work has to be
largely with personal oversight and direction of operative employees”. In other
words, they are concerned with direction and controlling function of
management.

Role of Lower-Level Management

• Assigning of jobs and tasks to various workers.

• They guide and instruct workers for day-to-day activities.
• They are responsible for the quality as well as quantity of production.
 • They are also entrusted with the responsibility of maintaining good
relation in the organization.
• They help to solve the grievances of the workers.
• They supervise & guide the sub-ordinates.
• They are responsible for providing training to the workers.
• They arrange necessary materials, machines, tools etc for getting the
things done.
• They prepare periodical reports about the performance of the workers.
• They ensure discipline in the enterprise.
• They motivate workers.
• They are the image builders of the enterprise because they are in direct
contact with the workers.

Managerial skills, Managerial Roles and Managerial Functions

Conceptual skills
• The ability to analyse and diagnose a situation and distinguish between
cause and effect.
• Conceptual skills are the ability to think abstractly, understand complex
ideas, and develop strategic plans.

Human skills
• The ability to understand, alter, lead, and control the behaviour of other
individuals and groups.
• Human skills are the skills we use to relate to one another. Someone
with strong human skills is likely very adept at social media for business
purposes. A person with strong human skills quickly engages the
audience, potential customer or current customer.

Technical skills
• Job-specific skills required to perform a particular type of work or
occupation at a high level.
• Technical skills are the specialized knowledge and expertise required to
perform specific tasks and use specific tools and programs in real-world
situations.
 Managerial Roles

Decisional Roles: - Decisional roles are managerial roles that involve making
strategic decisions that impact the organization.

• Entrepreneur—deciding which new projects or programs to initiate and

to invest resources in.
• Disturbance handler—managing an unexpected event or crisis.
• Resource allocator—assigning resources between functions and
divisions, setting the budgets of lower managers.
• Negotiator—reaching agreements between other managers, unions,
customers, or shareholders.

Interpersonal Roles: - Interpersonal roles are the relationships and

communication patterns between managers and others in an organization.

• Figurehead—symbolizing the organization’s mission and what it is

seeking to achieve.
 • Leader—training, counselling, and mentoring high employee
performance.
• Liaison—linking and coordinating the activities of people and groups
both inside and outside the organization.

Informational Roles: - Informational roles are a set of managerial roles that

involve collecting, sharing, and transmitting information.

• Monitor—analyzing information from both the internal and external

environment.
• Disseminator—transmitting information to influence the attitudes and
behavior of employees.
• Spokesperson—using information to positively influence the way people
in and out of the organization respond to it.

Functions of Management

Planning Organizing Staffing

Directing Controlling
Planning is the purpose of ascertaining in advance what is supposed to be
done and who has to do it. This signifies establishing goals in advance and
promoting a way of delivering them effectively and efficiently. In an
establishment, the aim is the obtainment and sale of conventional Indian
handloom and workmanship articles. They trade furnishings, ready-mades,
household items and fabrics made out of classical Indian textiles.

Organizing is the administrative operation of specifying grouping tasks, duties,

authorizing power and designating resources needed to carry out a particular
system. Once a definite plan has been set for the completion of an
organizational intent, the organizing party reviews the actions and resources
expected to execute the program. It ascertains what actions and resources are
needed. It determines who will do a distinct job, where and when it will be
done.

Staffing is obtaining the best resources for the right job. A significant
perspective of management is to make certain that the appropriate people
with the apt skills are obtainable in the proper places and times to achieve the
goals of the company. This is also called the human resource operations and it
includes activities such as selection, placement, recruitment and coaching of
employees.

Directing involves directing, leading and encouraging the employees to

complete the tasks allocated to them. This entails building an environment that
inspires employees to do their best. Motivation and leadership are 2 chief
elements of direction. Directing also includes communicating efficiently as well
as managing employees at the workplace. Motivating workers means simply
building an atmosphere that urges them to want to work. Leadership is
inspiring others to do what the manager wants them to do.

Controlling is the management operation of controlling organisational

achievement towards the accomplishment of organisational intentions. The job
of controlling comprises ascertaining criteria of performance, computing the
current performance, comparing this with organised rules and taking remedial
action where any divergence is observed. Here management should ascertain
what activities and outputs are important to progress, how and where they can
be regulated and who should have the power to take remedial response.
 Planning

Planning is deciding in advance what to do, how to do it, when to do it, and
who should do it. This bridges the gap from where the organization is to where
it wants to be. The planning function involves establishing goals and arranging
them in logical order.

Objective of planning

1. To bring Certainty in future events

2. To provide specific direction
3. To bring economy in managerial operations
4. Forecasting
5. To attain predetermined goals
6. To get victory over competitions

1. To bring Certainty in future events: Planning provides a proper

guidance to an organization how to bring certainty in future events for
the achievement of organization goals. As we know future is uncertain
and risk- oriented. To avoid these uncertainties and to bring certainty in
future events organization has to make a plan.

2. To provide specific direction: Planning provide a specific direction for

doing various activities in an appropriate manner.

3. To bring economy in managerial operations: It’s an important objective

of Planning provides a proper guidance to an organization how to bring
economy in all round operations. So that, organization can easily utilize
available resources in the best and cheapest way.

4. Forecasting: Forecasting is the essence of planning. The objective of

planning is to predict about the future course of events.

5. To attain predetermined goals: It is one of the most essential objectives

of planning. In fact, in the absence of planning any organization cannot
able to achieve its predetermined goals in a proper way.

6. To get victory over competitions: Planning provides a proper guidance

to an organization how to get victory over market competition.
 Planning Process

Setting Objectives

Developing Planning Premises

Identifying Alternative Courses of Action

Evaluating Alternative Course of Action

Selecting One Best Alternative

Implementing the Plan

Follow Up Action

Setting Objectives: This is the primary step in the process of planning which
specifies the objective of an organisation, i.e. what an organisation 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 organisation as a whole for all departments, and then departments set
their own objectives within the framework of organisational objectives.

Example: A mobile phone company sets the objective to sell 2,00,000 units
next year, which is double the current sales.

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.

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 favourable Government
policies towards digitisation of transactions.

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.

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.

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.

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 help convert the plans into action. This step involves allocating the
resources, organising for labour and purchase of machinery.

Example: Mobile phone company hires salesmen on a large scale, creates T.V
advertisement, starts online marketing activities and sets up service
workshops.

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.
 Types of Planning

Strategic Planning: A strategic plan is a high-level overview of the entire

business, its vision, objectives, and value. This plan is the foundational basis of
the organization and will dictate decisions in the long-term. The scope of the
plan can be two, three, five, or even ten years.

Tactical Planning: The tactical plan describes the tactics the organization plans
to use to achieve the ambitions outlined in the strategic plan. It is a short range
(i.e. with a scope of less than one year), low-level document that breaks down
the broader mission statements into smaller, actionable chunks. If the
strategic plan is a response to “What?”, the tactical plan responds to “How?”.

Operational Planning: The operational plan describes the day to day running of
the company. The operational plan charts out a roadmap to achieve the tactical
goals within a realistic timeframe. This plan is highly specific with an emphasis
on short-term objectives. “Increase sales to 150 units/day”, or “hire 50 new
employees” are both examples of operational plan 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.

Types of Plans
The main difference between a plan and planning is that a plan is a document
that captures a specific point in time during the planning process, while
planning is the process itself

1. Hierarchical Plans
2. Standing Plans
3. Single-Use Plans
4. Time-Frame Plans
5. Organizational Scope Plans

Hierarchical Plans: Strategic plans (institutional)—define the organization’s

long-term vision; articulate the organization’s mission and value statements;
define what business the organization is in or hopes to be in; articulate how the
organization will integrate itself into its general and task environments.

Administrative plans—specify the allocation of organizational resources to

internal units of the organization; address the integration of the institutional
level of the organization (for example, vision formulation) with the technical
core (vision implementation); address the integration of the diverse units of
the organization.

Operating plans (technical core)—cover the day-to-day operations of the

organization.

Standing Plans: Policies—general statements of understanding or intent; guide

decision-making, permitting the exercise of some discretion; guide behaviour
(for example, no employee shall accept Favors and/or entertainment from an
outside organization that are substantial enough in value to cause undue
influence over one’s decisions on behalf of the organization.
Rules—guides to action that do not permit discretion in interpretation; specify
what is permissible and what is
not permissible.

Procedures—like rules, they guide action; specify a series of steps that must be
taken in the performance of a
particular task.

Single-Use Plans: Programs—a complex set of policies, rules, and procedures

necessary to carry out a course of action.
Projects—specific action plans often created to complete various aspects of a
program.
Budgets—plans expressed in numerical terms.

Time-Frame Plans: Short-, medium-, and long-range plans—differ in the

distance into the future projected

• Short-range—several hours to a year

• Medium-range—one to five years
• Long-range—more than five years

Organizational Scope Plans: Business/divisional-level plans—focus on one of

the organization’s businesses (or divisions) and its competitive position.

Unit/functional-level plans—focus on the day-to-day operations of lower-level

organization units; marketing, human resources, accounting, and operations
plans (production).
Tactical plans—division-level or unit-level plans designed to help an
organization accomplish its strategic plans.

Decision Making

One of the most important functions of a manager is to take decisions in the

organization. Success or failure of an organization mainly depends upon the
quality of decision that the managers take at all levels. Each managerial
decision, whether it is concerned with planning, organizing, staffing or directing
is concerned with the process of decision-making.
A decision is a course of action which is consciously chosen from among a set
of alternatives to achieve a desired result. It means decision comes in picture
when various alternatives are present. Hence, in organization an execute forms
a conclusion by developing various course of actions in a given situation. It is a
made to achieve goals in the organization. To decide means to cut off on to
come to a conclusion.

According to D. E. McFarland, “A decision is an act of choice – wherein an

executive form a conclusion about what must not be done in a given situation.
A decision represents a course of behaviour chosen from a number of possible
alternatives”

Advantages and Disadvantages of Decision-Making

Advantages

1. Give More Information: A group has more information than an

individual. Members, drawn from diverse fields, can provide more
information and knowledge about the problem.

2. Provide More Alternatives: A group can generate a greater number of

alternatives. It can bring to bear a wider experience, a greater variety of
opinions and more thorough probing of facts than a single individual.

3. Increase People’s Participation: Participation in group decisions

increases acceptance and commitment on the part of people who now
see the solution as their own and acquire a psychological stake in its
success.

4. Improves the Quality of Decision: A good decision is one in which you

know what you do not know.

5. Helps in Strengthening the Organisation: Develop skills and knowledge

for current and future roles. Encourage: Provide direction, objectives and
measures. Support with resources and time. Then reinforce with
recognize and reward.
Disadvantages

1. Time- Consuming: Groups are notorious time-wasters. They may waste a

lot of time and energy, clowning around and getting organized.

2. Interpersonal Conflict: Interpersonal conflict is a disagreement or dispute

between two or more people. It can be emotional, physical, personal, or
professional, and it can happen in many different settings, including at
home, in the workplace, or between friends.
3. Dominance: Groups create pressures towards conformity; other
infirmities, like group think, force members to compromise on the least
common denominator.

4. Group Goals vs Organisational Goals: Presence of some group members,

who are powerful and influential may intimidate and prevent other
members from participating freely. Domination is counter-productive; it
puts a damper on the groups’ best problem solvers.

5. Costly: It may be very costly to secure participation from several

individuals in the decision-making process.

6. Focus Effect: The focusing effect is the tendency for the brain to rely too
much on the first piece of information it received in relation to decisions
made later on. A focusing effect is often seen with examples of was/now
pricing. A higher price might deter a shopper from making a purchase.

Types of decision Making

1. Personal and Organizational Decisions: Decisions to watch TV, to study or

retire early are examples of personal decisions. Such decisions, pertain to
managers as individuals. They affect the organization, in an indirect way. For
example, a personal decision to purchase Maruti rather than an ambassador,
indirectly helps one firm due to the sale and hurts another because of the lost
sale. Personal decisions cannot be delegated and have a limited impact.

Organisational decisions are made by managers, in their official or formal

capacity. These decisions are aimed at furthering the interests of the
organisation and can be delegated. While trying to deliver value to the
organisation, managers are expected to keep the interests of all stakeholders
also in mind—such as employees, customers, suppliers, the general public etc.
they need to take decisions carefully so that all stakeholders benefit by what
they do (Like price the products appropriately, do not resort to unethical
practices, do not sell low quality goods etc.)

2. Individual and Group Decisions: Individual decisions are taken by a single

individual. They are mostly routine decisions.

Group decisions, on the other hand are decisions taken by a group of

individuals constituted for this purpose (for example, Admission Committee of
a College, Board of Directors in a company). Group decisions, compared
to individual decisions, have far reaching consequences and impact a number
of persons and departments. They require serious discussion, deliberation and
debate.

3. Programmed and Non- Programmed Decisions: A programmed decision is

one that is routine and repetitive. Rules and policies are established well in
advance to solve recurring problems quickly. For example, a hospital
establishes a procedure for admitting new patients and this helps everyone to
put things in place quickly and easily even when many patients seek entry into
the hospital.
Programmed decisions leave no room for discretion. They have to be followed
in a certain way. They are generally made by lower-level personnel following
established rules and procedures.

4. Strategic, Basic and Routine Decisions: Strategic decision-making is a top

management responsibility. These are key, important and most vital decisions
affecting many parts of an organisation. They require sizeable allocation of
resources. They are future-oriented with long-term ramifications. They can
either take a company to commanding heights or make it a ‘bottomless pit’!

Basic Decisions: Decisions concerned with unique problems and situations an

organization is facing, that require large investments.

Decision-Making Techniques
1. Delphi technique
2. Nominal group technique
3. Brainstorming
4. Decision Tree
5. Cost-benefit analysis
6. Pareto analysis
7. SWOT analysis

1. Delphi technique: A group of experts are surveyed to come up with a

decision. This technique helps to improve problem formulation by
reducing bias and considering all opinions.

2. Nominal group technique: A technique used by teams to separate the

important items from the less important ones.

3. Brainstorming: A group decision-making technique that allows a team to

share ideas on how to approach a situation.

Brainstorming is a group problem-solving method that involves the

spontaneous contribution of creative ideas and solutions. This technique
requires intensive, freewheeling discussion in which every member of
the group is encouraged to think aloud and suggest as many ideas as
possible based on their diverse knowledge.

4. Decision Tree: A tool that evaluates and prioritizes a list of options by

establishing weighted criteria and evaluating each option against those
criteria.
In this technique, the decision-maker traces the optimum path through
the tree diagram. In the tree diagram the base, known as the ‘decision
point,’ is represented by a square. Two or more chance events follow
from the decision point. A chance event is represented by a circle and
constitutes a branch of the decision tree. Every chance event produces
two or more possible outcomes leading to subsequent decision points.
 5. Cost-benefit Analysis: A technique used to make financial decisions by
outlining the possible cost of a decision and the expected revenue.

6. Pareto Analysis: A statistical technique that uses the Pareto principle to

select a limited number of tasks that produce a significant overall effect.

7. SWOT Analysis: A common tool that helps analyse internal and external
factors that affect a decision, and identify the advantages and
disadvantages of each option.

STRENGTHS WEAKNESSES

• What is our competitive • Where can we improve?

advantage? • What products are
• What resources do we have? underperforming?
• What products are performing • Where are we lacking resources?
well?

OPPORTUNITIES THREATS

• What new technology can we use? • What regulations are changing?

• Can we expand our Business? • What are competitors doing?
• Increasing purchasing power of • How are consumer trends
people thereby increasing changing?
demand?
 Decision Making Process/ 7 Steps to Effective Decision Making

Awareness of the problem

Diagnose and state the Problem

Identify the alternatives

Weigh the evidence

Choose among alternatives

Take action

Review your decision & its consequences

1. Awareness of the problem at this stage the decision maker becomes

aware about a problem that is to be solve.

2. Diagnose and state the Problem The decision maker understands and
analyses the problem and attempts the problem and objectives that are
to be achieved through solution.

3. Identify the alternatives as you collect information, you will probably

identify several possible paths of action, or alternatives. You can also use
your imagination and additional information to construct new
alternatives. In this step, you will list all possible and desirable
alternatives.

4. Weigh the evidence Draw on your information and emotions to imagine

what it would be like if you carried out each of the alternatives to the
 end. Evaluate whether the need identified in Step 1 would be met or
resolved through the use of each alternative. As you go through this
difficult internal process, you’ll begin to Favor certain alternatives: those
that seem to have a higher potential for reaching your goal. Finally, place
the alternatives in a priority order, based upon your own value system.

5. Choose among alternatives Once you have weighed all the evidence,
you are ready to select the alternative that seems to be the best one for
you. You may even choose a combination of alternatives. very likely be
the same or similar to the alternative.

6. Take action You’re now ready to take some positive action by beginning
to implement the alternative.

7. Review your decision & its consequences in this final step, consider the
results of your decision and evaluate whether or not it has resolved the
need you identified.

Management by Objective

Management by objectives (MBO) is a management model that helps

organizations set and achieve goals by aligning the objectives of individual
employees with the overall goals of the company. MBO is based on the idea
that people are more motivated and productive when they understand their
roles and responsibilities.
Objective means something that you are trying to achieve (An Aim, Goal)
Management means to manage or to control or organise.
END