Unit II

Human Resource Management

Introduction:
Human beings are social beings and hardly ever live and work in isolation. We always plan,
develop and manage our relations both consciously and unconsciously. The relations are the
outcome of our actions and depend to a great extent upon our ability to manage our actions.
From childhood each and every individual acquire knowledge and experience on
understanding others and how to behave in each and every situations in life. Later we carry
forward this learning and understanding in carrying and managing relations at our workplace.
The whole context of Human Resource Management revolves around this core matter of
managing relations at work place.

Since mid 1980’s Human Resource Management (HRM) has gained acceptance in both
academic and commercial circle. HRM is a multidisciplinary organizational function that
draws theories and ideas from various fields such as management, psychology, sociology and
economics.

Behind the production of every product or service there is an human mind, effort and man
hours (working hours). No product or service can be produced without help of human being.
Human being is the fundamental resource for making or constructing anything. Today many
experts claim that machines and technology are replacing human resource and minimising
their role or effort. However, indeed, machines and technology are built by the humans; they
need to be operated or at least monitored by humans. Maybe because of this reason,
companies have continuously been searching for talented, skilled and qualified professionals
to further develop latest machines and technology, which again have to be controlled or
Monitored by humans to bring out products.
It is undisputed fact that humans are being replaced by artificial intelligence which means
robots. But all jobs cannot be handed over to Robots, to say in other words robots have its
own limitations and all roles cannot be handled by robots.Though British theoretical physicist
Stephen Hawking,Cambridge professor expressed about destruction of middle-class jobs due
to raise of artificial intelligence,he still felt that natural intelligence or need for application of
human mind is inevitable in certain roles.
Meaning:
Human Resource Management: Human resource management is the process of managing
the human resources of an organization in tune with the vision of the top management.
Human Resource Management is the process of recruitment and selecting employee,
providing orientation and induction, training and development , assessment of employee
(performance of appraisal), providing compensation and benefits, motivating, maintaining
proper relations with employees and with trade unions, maintaining employees safety,
welfare and healthy measures in compliance with labor laws of the land.
Why name 'Human Resource Management'?
Human: refers to the skilled workforce in the organisation.
Resource: refers to limited availability or scarceness.
Management: refers how to optimize and make best use of such limited and a scarce
resource so as to meet the ordination goals and objectives.
Altogether, human resource management is the process of proper and maximise utilisation of
available limited skilled workforce. The core purpose of the human resource management is
to make efficient use of existing human resource in the organisation. The Best example at
present situation is, construction industry has been facing serious shortage of skilled
workforce. It is expected to triple in the next decade from the present 30 per cent, will
negatively impact the overall productivity of the sector, warn industry experts. Every
organisations' desire is to have skilled and competent people to make their organisation more
effective than their competitors. humans are very important assets for the organisation rather
than land and buildings, without employees ( humans ) no activity in the organisation can be
done. Machines are meant to to produce more goods with good quality but they should get
operated by the human only.

Definitions: Many great scholars had defined human resource management in different ways
and with different words, but the core meaning of the human resource management deals
with how to manage people or employees in the organisation. Edwin Flippo defines- HRM
as ―planning, organizing, directing, controlling of procurement, development,
compensation, integration , maintenance and separation of human resources to the end that
individual, organizational and social objectives are achieved.‖ The National Institute of
Personal Management (NIPM) of India has defined human resources – personal
management as ―that part of management which is concerned with people at work and with
their relationship within an enterprise. Its aim is to bring together and develop into an
effective organization of the men and women who make up enterprise and having regard for
the well – being of the individuals and of working groups, to enable them to make their best
contribution to its success‖.

Human Resource Management

For any organisation to function effectively, it must have resource of men (Human Resource),
money, materials and machinery. The resources by themselves cannot fulfill the objectives of
an organisation, they need to be collected, co-ordinated and utilised through human
resources. And, the effective management of human resources is also vital. Hence, Human
Resource Management (HRM) has emerged as a major function in organisations.Human
Resource Management is the organizational function that deals with issues related to people
such as compensation, hiring, performance management, organization development, safety,
wellness, benefits, employee motivation, communication, administration, and training. The
administrative discipline of hiring and developing employees so that they become more
valuable to the organization. Human Resource management includes:
1. conducting job analyses,
2. planning personnel needs, and recruitment,
3. selecting the right people for the job,
4. orienting and training,
5. determining and managing wages and salaries,
6. providing benefits and incentives,
7. appraising performance,
8. resolving disputes,
9. communicating with all employees at all levels. Formerly called personnel management.
10. Maintaining awareness of and compliance with local, state and federal labor laws.
11. These are also called as functions of human resource management for the purpose of
effect you utilization of human resource.
Functions of HRM
Functions
The functions performed by managers are common to all organization.
Generally the functions performed by Human Resource Management may be
classified into two categories. They are
Managerial Function
Operative Function

Managerial Function
Planning
This involves predetermined course of action. In this process organizational
goals and formulation of policies and programmes for achieving them are
chalked out. A well thought out plan makes execution perfect and easy.
Organising
This is a process by which the structure and allocation of jobs are determined. Organising
involves allocating each subordinate a specific task, establishing departments, delegating
authority to subordinates, establishing channels of authority and communication, and
coordinating the work of subordinates.
Staffing
This is a process by which managers select, train, promote and retire the
subordinates. This involves deciding the type of people to be hired, recruiting
prospective employees, selecting employees, setting performance standard,
compensating employees, evaluating performance, counseling employees,
training and developing employees.
Directing
Directing is the process of activating group efforts to achieve the desired goals.
Controlling
This is the process of setting standards for performance, checking to see how the actual
performance compares with these set standards and taking the needed corrective action.
The operating functions already outlined forms the entire gamut of day to day functions of
HRM.

Operative Functions:
Procurement of personnel: It deal with determination of man power requirement, their
recruitment, selection, placement and orientation Development of personnel: After personnel
have been obtained, they must to some degree be developed before going to work.
Development has to do with the increase of skill, through training that is necessary for proper
job performance. Compensation of personnel: Compensation means, determination of
adequate and equitable remuneration of personnel for their contribution to organization
objectives. Record keeping: In this system personnel manager collets and maintain
information which is concerned with the staff of the organization Personnel planning and
evaluation: Under this system different types of activities are evaluated such as evaluation of
performances personnel policy of an organization and its practices, personnel audit, moral
survey and performance appraisal etc. Personnel research and audit: This function is
concerned with the research in motivational techniques and auditing.

Job Analysis: Job analysis can be defined as the process of identifying the tasks comprising a
particular job to assess whether they could be organized in a productive manner. This will
identify the main features of the job, the major tasks undertaken, the results to be achieved,
and how one job is related to the other jobs in the organizational hierarchy. The product of
job analysis is job description
Job Description: Job description is an accurate and concise description of (a) the overall
purposes of the job (b) the principal duties of the person doing this job. The job description
emphasizes the job requirements. Clear job description constitutes the basis for advertising
the vacancy positions and for drawing up job specifications. Once individuals are selected to
the posts, job description allows them to know exactly what their roles are and what is
expected of them.
Job Specification
Job specification identifies the requirements on the part of the person to perform the given
job. It provides the interviewer an understanding of the job and helps him to assess the
qualities necessary for its performance to an acceptable standard, at the time of interview.
This helps him to compare the performance of candidates objectively and to eliminate
unsuitable candidates.
Manpower Planning: It is the scientific process of evolving the right quantity of right men
to be required in future at right time on the right job. Definition: Manpower planning may be
defined as a rational method of assessing the requirements of human resources at different
levels in the organization. It ends with proposals for recruitment, retention, or even dismissal,
where necessary.
Objectives of Manpower Planning:
1. Making correct estimate of manpower requirement
2. Managing the manpower according to the need of enterprises
3. Helps in recruitment and selection
4. Maintaining production level
5. Making employees development programme effecting
6. Establishing industrial peace
7. Reduction in labour costs
8. Minimization of labour costs.
Recruitment: Applications are invited at this stage for further scrutiny and short listing.
Before advertising for the position, it common to check up of the position could be filled in
internally.
Selection: The process of identifying the most suitable persons for the organization is called
selection. Selection is also called a negative function because at a stage the applications are
screened and shortlisted based on the selection criteria. The main purpose of selection is to
choose the right person for the right job. The job analysis, job description, and job
specifications are carried out before the position is advertised. These provide adequate insight
about nature of the job, its description, and its specifications and further focus on what type
of person is to be selected for a given position. These simplify the process of selection.
Selection process involves the following stages:
1. Initial screening/Short listing
2. Comprehensive application/bio data screening
3. Aptitude or written rests
4. Group discussion
5. Personal interviews
6. Group discussion
7. Personal interviews
8. Medical examination
9. Employment offer letter
Training and development
Training: Training is short-term process of utilizing systematic and organized procedure by
which the staff acquires specific technical knowledge and functional skills for a definite
purpose. The focus of training is the job or task.
Training Needs:
- High turnover among the new recruits
- Increase in wastage of materials
- Increase in the number of rejected units of production
- Increase in the number of customer complaints
- Increase in the accident rate
- Reduced productivity levels
- Increase in machine breakdowns
Methods of Training: There are two methods of training
A. On-the job training
B. Off-the job training
A) On-the job training: It is designed to make the employees immediately productive. It is
learning by physically doing the work. The focus here is to provide specific skills in a real
situation. These methods include:
1)Job instruction training: This is a method used for such jobs which can be performed with
relatively low skill. Here, the trainees systematically acquire skills by following routine
instructions in key processes from a qualified instructor.
2) Experiential learning: This is a modern approach to the learning process. This method is
more . used for training the senior executives. It is a technique, which empowers the
manager-trainee with the freedom of choice to act upon and the capacity to initiate, rather
than simply respond, to circumstances.
3) Demonstration: Here, the work procedures are demonstrated to the trainees. Each of the
trainees is asked to carry out the work, on a sample basis, based on his/her observation and
understanding of the demonstration.
4) Apprentice training: Those who are selected to work in the shop floor are trained as
apprentices in the factory for a brief period ranging from three months to one year, depending
upon the complexity of the training. Those who show good progress in this training are likely
to be absorbed in the same organization. Those who complete apprentice training are likely to
get good jobs outside also.
B) Off-the-job training methods: provide a relatively broad idea relating to a given job or
task. These are meant for developing an understanding of general principles, providing
background knowledge, or generating an awareness of comparative ideas and practice. These
methods include:
1) Lectures/talks and class room instructions: These techniques are designed to communicate
specific interpersonal, technical, or problem-solving skills. Here, the trainer can maintain a
tight control over learning. However, this method restricts the trainee's freedom to develop
his/her own approaches to learning.
2) Conferences: Conferences refer to get-together of the experts from different areas of a
given topic. These experts present their views based on their work experience and research
results. When employees participate in such events they get a feel of the real world. They
may also get motivated to perform better.
3) Seminars: Seminars are held periodically by the professional organisations for the benefit
of all the practicing managers by taking into consideration the recent advances in a
specialized area. Participation in such seminars enables the executives to get exposed to the
recent developments in the area of their interest.
4) Team discussions: This technique develops team spirit among the executives from
different departments. It also enables them to understand and appreciate each other's
problems. It reinforces a feeling of unity among those who work towards common goals.
5) Case study: This is a predominant technique followed even in premier management
institutes. This technique helps to provide an understanding of what has gone wrong in a
particular case, such as Delhi Cloth Mills (DCM). Similarly, what are the factors responsible
for the success of organizations such as Reliance or Hindustan Lever. Case study technique is
a very good method of learning the principles and concepts. However, this method has one
weakness. The circumstances you are likely to face in your life may be very different from
the cases you have analyzed earlier! Case studies help to enhance the analytical & decision
making skills.
6) Role-playing: The participants are assigned roles and are asked to react to one another, as
they would do in their managerial jobs. These roles are eventually exchanged. In other words,
each participant will get a turn to play all the roles. For instance, the role-playing in a
grievance-handling situation involves two players: In the first step, the worker presents his
grievance to the personnel manager. In the second step, the worker plays the role of the
personnel manager while the personnel manager plays the role of the worker. Role-playing
allows participants to understand problems of each other. It enhances the interpersonal-
handling skills.
7) Programmed instruction: It is a system of instruction within which pre-established subject
matter is broken into small, discrete steps and carefully organized into logical sequence in
which, it can be learned by the trainee. Each step is built upon the previous one. The
programmed instruction techniques can be in the form of programmed tests and manuals, or
video displays. For instance, withdrawal of money through automatic teller machines
(ATMs) involves responding to programmed instructions; working on a personal computer or
internet involves responding to a series of programmed instructions.
8) Simulation exercises: These include interactive exercises in which trainees practice their
skills on working models or in mock situations based on real-life situations.
9) Group decision-making: Group decision-making refers to the process of making decisions
based on the opinions expressed by all the concerned — may be subordinates, peers, or
outside consultants. The manager thus ensures that more people are involved in taking
decisions. Each member of the group will accept the responsibility for the decisions made as
he is a party to it. This method facilitates to generate more alternative solutions to a given
problem because more people are involved in the thinking exercise. This facilitates
coordination among the groups also.
Development: Development is an activity aimed at career growth rather than immediate
performance. Employee development is the process, which helps him or her to understand
and interpret knowledge rather than teaching a specific set of functional skills. Development,
therefore, focuses more on employee's personal growth in the near future.
Placement: After training, the employee is placed in his/her position under the charge of a
manager. The new recruit is allowed to exercise full authority and is held responsible for the
results.
a) Promotion: Promotion refers to the advancement of an employee to a job with a higher
authority and responsibility. It may also carry a better compensation package. Promotion can
also be viewed as a means of filling up vacancies in the organization occurring from time to
time.
b) Demotion: Where an employee is not in a position to perform a given job, he may be
demoted or transferred to a position with a lower authority and salary. In other words,
demotion is a punishment.
c) Transfer: It is a lateral shift that moves an individual employee from one position to
another. It may be in the same department, or to a different department or location. This does
not involve any changes in the duties, responsibilities, or skills needed. The salary benefits
also may remain the same.
d) Separation: Separation refers to termination of employment. In other words, the employee
is separated from his job. In case of misconduct or misbehavior, where the employee is not in
a position to improve his performance despite notice, his/her employment is terminated. This
is also called dismissal.
e) Absenteeism: Absenteeism refers to the practice of an employee who does not report to
work for any particular reason. Absenteeism affects the productivity adversely. It becomes
difficult for the departments to cope up with the work pressures, if any particular employee is
absent. As a measure of control, the employees are not allowed to be absent without prior
permission from the management.

Wages and Salary Administration: Wages and salary administration is the process of fixing
wages/salary for different jobs in the organization through job evaluation, negotiations with
the unions, and so on.
Grievance Handling: A complaint from employees, when ignored, takes the form of a
grievance. Grievance is a complaint genuine or otherwise, about any issue relating to the job
such as about supervisor, wages, working conditions and so on. It is necessary to create an
inbuild mechanism to redress the grievances, at the earliest, at the departmental level. If the
individual grievances are ignored, they may take the form of industrial disputes.
Performance Appraisal: Performance appraisal is the process of measuring and evaluating
the performance or accomplishments, including behaviour, of an employee on the job front
for a given period. The purpose is to assess the worth and value of a person to the
organization. It is also meant for assessing his/her potential for future development in an
objective manner. Why appraise the performance:
1. To assess the employee's present level of performance
2. To identify the strengths or weaknesses of individual employee
3. To provide feedback to the employee so that he can improve his/her performance
4. To provide an objective basis for rewarding the employees for their performance
5. To motivate those employees who perform
6. To check and punish those employees who fail to perform
7. To identify the gaps in performance, and thus, assess training and development needs
8. To identify the employee's potential to perform
9. To provide a database for evolving succession strategies
10. To provide a basis for many other decisions such as fixation of incentives or increment,
regularization or confirmation of the services of the employee, promotion, transfer or
demotion. Steps in performance Appraisal:
1. Create set up performance standards
2. Mutually set identifiable and measurable
3. Measure present level of performance
4. Compare and appraise present level of performance with standard
5. Discuss the appraisal with employee
6. Identify and initiate the corrective action

Job Evaluation: An attempt to determine and compare the demands which the normal
performance of particular job makes on normal workers without taking account of the
individual abilities or performance of workers concerned. It rates the job not the rank.
Objectives:
1. To establish correct wage correct wage differentials for all jobs with in the factory
2. To bring new jobs into their proper relatively with jobs previously established
3. To help clarify lines of authority, responsibility and promotion
4. To accomplish the foregoing by means of the facts and principles, which can be readily
explained to and accepted by all concerned
5. To establish a general wage level for a given factory which will have parity with those of
neighboring factories
Advantages:
1. It is simple, inexpensive and expeditions
2. It is easily understood and easily administered
3. It helps setting better rates than the arbitrary rates based purely an judgment and
experience
4. Same unions prefer it, because it leases more room for bargaining.
Disadvantages:
1. Job may be ranked on the basis of incomplete inform action and without the benefits of
well defined standards
2. The rank position of different jobs is likely to be influenced by the prevailing wage ranks
3. No one committee number is likely to be familiar with all the jobs
Method of Job Evaluation: It is broadly be classified as
1) Qualitative Method
2) Quantitative Method
1) Qualitative Method: It can broadly be classified as ranking or classifying the job from
lowest to highest.
A)Ranking technique: In this method, the jobs in the organization are arranged in either in the
ascending or descending order and numbered serially. The basis of such arrangement could
be the job description in terms of duties, responsibilities, qualifications needed, relative
difficulty involved in don the job, or value to the company. Points considered:
1. Amount of work involved
2. Supervision needed
3. Extent of responsibility required
4. Difficulties involved in the work
5. Work conditions required
b) Classification Method: This is also called job-grading method. Here, the number of grades
and the salary particulars for each grade are worked out first. The grades are clearly described
in terms of knowledge, skill and so on. Major steps for job evaluation:
1. Deciding the number of grades
2. Writing grade descriptions
3. Identifying/listing of the jobs to be evaluated
4. Preparing job descriptions
2) Quantitative Method: Where point values are assigned to the various demands of a job
and relative value is obtained by summing all such point values.
a) Factor comparison method: Every job requires certain capabilities on the part of the person
who does the job. These capabilities are considered as critical factors, which can be grouped
as follows:
Mean effort Skill
Physical
Responsibility
Working conditions

Step involved in the factor comparison method:

Identify the key jobs
Rank the key job, factor by factor
Apportion the salary among each factor and rank the key jobs
Compare factor ranking of each job with its monetary ranking
Develop a monetary comparison scale
Evaluate non-key jobs based on the monetary comparison scale
b) Point-rating method: There are four widely accepted factors used in the point-rating
method, skill, effort, responsibility and job conditions each of these factors is divided into
sub-factors
Skills –
1. Education and training
2. Experience
3. Judgment and initiative
Efforts –
1. Physical
2. Mental
Responsibility towards –
1. Materials or product
2. Equipment or process
3. Safety of others
4. Work of others

Merit Rating: Merit rating is the process of evaluating the relative merit of the person on a
given job. It is an essential task of the personnel manager to distinguish the meritorious
employees from the other. The data collected from this task is used for strategic decisions
such as releasing an increment in pay, promotion, transfer, and transfer on promotion to a
critical assignment or even discharge.
Objectives of Merit Rating:
To determine salary increments
To decide who has to be transferred, promoted, or demoted
To discover the workers needs for retaining and advanced training
To unfold the exceptional skills among the employees based on their innate potentials
To guide and monitor the performance of those who are lagging behind.

Method of Merit Rating:

Ranking method: In this method, all the staff of a particular cadre or a department are
arranged either in the ascending or the descending order in order of merit or value to the firm.
Though this is a simple method, it cannot be followed where the employees in the department
are many in number. Paired comparison method: Here, every employee is compared with all
others in a particular cadre in the department. By comparing each pair of employees, the rater
can decide which of the employees is more valuable to the organization.
Rating scale: Here, the factors dealing with the quantity and quality of work are listed and
rated. A numeric value may be assigned to each factor and the factors could be weighed in
the order of their relative importance. All the variables are measured against a three or five
point scale. Forced distribution method: Here, employees are given a set of alternatives and
they have to choose one, which reflects their understanding of the true nature of the job. Their
thinking is conditioned by the given set of answers. Narrative or essay method: Here, the
candidate is required to narrate in an essay format his/her strengths, weaknesses, and
potential to perform. Here, the candidate is not restricted by any given set of alternatives.
The candidate is free to decide what to furnish or what not to furnish. Management by
objectives (MPO): The short-term objectives standards. This method considers the actual
performance as the basis mutually agreed upon by the management and the employees are
used as performance for evaluation. It is a systematic method of goal setting. In addition, it
provides for reviewing performance based on results rather than personality traits or
characteristics. However, this is not practical at all levels and for all kinds of work in the
organizations.
Maturity levels consist of a predefined set of process areas. The maturity levels are measured
by the achievement of the specific and generic goals that apply to each predefined set of
process areas. The following sections describe the characteristics of each maturity level in
detail.

Performance Management:
Performance Management is covered with communication. This is done by creating a climate
in which a continuing dialogue between managers and the members of their teams takes place
to define expectations and share information on the organizations mission, values and
objectives. This establishes mutual understanding of what is to be achieved and a framework
for managing and developing people to ensure that it will be achieved --- By Armstrong &
Murlis (1994).
Performance Management is about managing the organization. It is a natural process of
management, not a system or technique. --- By Fowler (1990).

the focus of most of the organizations is turning to performance management and specifically
to individual performance.
1. The focus of the performance appraisals practice in todays environment is changing by
concentrating more on career development relying on the dialogues and discussions with the
superiors.
2. Performance measuring, rating and review systems have become more thorough, structured
and individual employee specific than before.
3. Appraisal through a 360-degree feedback system takes place
4. In India, the performance appraisal processes are faced with a lot of poblems, the most
important
is the need of quantifiable indicators of the performance. The emergence of following trends
related to Performance appraisal practices can be seen in the global scenario: 360 degree
feedback, Team performance appraisal, Rank and yank strategy.
1) 360 Degree Feedback: It is also known as ‘multi-rater feedback’, where the feedback
about the employees’ performance comes from all the sources that come in contact with the
employee on his job.
2) Team Performance Appraisal: In this method each employee performance is measured
as a team member as well as individually.
3) Rank and Yank Strategy: It is also known as up or out policy where the performance
appraisal model is prepared in which best-to-worst ranking methods are used to identify and
separate the poor performers from the good performers. Then certain plans are chalked out
for improvement. Some of the organizations following this strategy are Ford, Microsoft and
Sun Microsystems.

Effective Performance Appraisal

The performance appraisal system is always questioned in terms of its effectiveness and the
problems of reliability and validity. It is always difficult to know whether what is appraised is
what was supposed to be appraised. As long as subjective judgment is there this question
cannot be answered perhaps, the following steps can help improve the system.
a) The supervisors should be told that they themselves will be evaluated on the basis of how
seriously they are performing their duties.
b) To perform assigned task of evaluation in a better way superior should be provided with
better training of writing report.
c) To carry out job evaluation studies and prepares job descriptions/roles and prepares
separate forms for various positions in the organization.
d) The system should be designed in such a way that it is neither difficult to understand nor
impossible to practice.
e) The supervisor should monitor whether the improvement in performance in the areas found
weak is taking place or not and, if not, help the employee to achieve the required
improvement.
f) Finally, reviewing, the appraisal systems every now and then help updating it, and making
appropriate changes in it. This is the most important factor in making performance appraisal
effective, with the passage of time necessary changes in tasks, abilities and skills to perform
has to be made. If changes in the format are not considered the reports may not generate the
kind of result needed to satisfy appraisal objectives.
The following measures could also be adopted for improving the effectiveness of an
appraisal:
a) Behaviorally Based Measures: The research strongly favours behaviourally based
measures over those developed around traits.
b) Ongoing Feedback: Employees like to know how they are performing the duties assigned
to them.
c) Multiple Raters: If a person is evaluated by a large no of superior then chance of getting
more frequent information increases
d) Peer Evaluations: Peer evaluations are conducted by employees’ co-workers, people
explicitly familiar with the jobs involved mainly because they too are doing the same thing,
they are the person who know the co-workers’ day to-day work behaviour and should get a
chance to provide the management with some feedback.
Unit II
Part B
STRATEGIC MANAGEMENT

Strategic management is what managers do to develop the organization’s strategies.

Strategic management involves all four of the basic management functions—planning,
organizing, leading, and controlling. Strategic management has a is important for
organizations as it has a significant impact on how well an organization performs. In today’s
business world, organizations of all types and sizes must manage constantly changing
situations. Today’s companies are composed of diverse divisions, units, functions, and work
activities that must be coordinated. Strategic management is involved in many of the
decisions that managers make.

Managers must carefully consider their organization’s internal and external environments as
they develop strategic plans. They should have a systematic means of analyzing the
environment, assessing their organization’s strengths and weaknesses, identifying
opportunities that would give the organization a competitive advantage, and incorporating
these findings into their planning. The value of thinking strategically has an important impact
on organization performance.
Corporate Planning: Corporate planning refers to the process of planning undertaken by top
management to achieve their organization goals.
Mission is the guiding force for all the activities here. The first step in the process of
achievement of the mission is to break the mission in to objectives, strategies and programme
have to be formulated and implemented to achieve the given objectives which would
eventually lead to the fulfilment of mission.
Mission: This is also called overall objective or overall goal.
Mission or purpose: The mission or purpose identifies the basic function or task of an
enterprises or agency or of any part of its. Every kind of organized operation has, or at least
should have if it is to be meaningful, purpose or mission.
Some writes distinguish between purpose and mission. While a business for example may
have a social purpose of producing and distributing goods and services. It can accomplish this
by fulfilling a mission of producing certain line of products.
Objectives: Objective are the ends towards which activities is aimed-they are results to be
achieved. They represent not only the end point of planning but the end toward which point
of planning but the end toward which organizing, staffing, leading and controlling are aimed.
While enterprises objectives are basic plan of firm a department may also have its own
objectives.
Goal: It goals naturally contribute to the attainment of enterprises objectives but the two sets
of goals may entirely different.
For example: The objective of a business might be to make a certain profit by producing a
given line of home entertainment equipment, while the goal of the manufacture department
might be to produce the required number of television sets of given design and quality at a
given cost.
Strategies: “Plan of Action”
a) General programs of action and development of resources to attain comprehensive
bjectives
b) The program of objectives of an organization and their changes, resources used to attain
these objectives.
c) The determination of basic long-term objectives of an enterprise and adoption of courses of
action and allocation of resources necessary to achieve the goals.

Policy: Policy a broad guideline set by the top management for the purpose of making
decisions at different levels in the organization, once the corporate objectives are established
policies can be formulated organization policy reflects the owner’s attitude to different
segments such a creditors the employees, customers and society at large.
Programmes: Programmes refer to the logical sequence of operations to be performed in a
given project based on a set of goals, policies, procedures, rules and task assignments. They
are used carry out a given course of action.
Purpose: A strategy is an operational tool to achieve the goals, and thus, the corporate
mission. Strategies do no attempt to outline exactly how the enterprise is to accomplish its
objective. A company may view downsizing in a competitive market to render cost effective
services. Thus, strategy provides a frame work to guide thinking and action.
The strategic management process is a six-step process that encompasses strategic
planning, implementation, and evaluation.
Identifying the Organization’s Current Mission, Objectives, and Strategies: Every
organization needs a mission, which is a statement of the purpose of an organization. The
mission statement addresses the question: What is the organization’s reason for being in
business? The organization must identify its current objectives and strategies, as well.
External Analysis: Managers in every organization need to conduct an external analysis.
Influential factors such as competition, pending legislation, and labor supply are included in
the external environment. After analyzing the external environment, managers must assess
what they have learned in terms of opportunities and threats. Opportunities are positive
trends in external environmental factors; threats are negative trends in environmental factors.
Because of different resources and capabilities, the same external environment can present
opportunities to one organization and pose threats to another
Internal Analysis: Internal analysis should lead to a clear assessment of the organization’s
resources and capabilities. Any activities the organization does well or any unique resources
that it has are called strengths. Weaknesses are activities the organization does not do well
or resources it needs but does not possess. The organization’s major value-creating skills and
capabilities that determine its competitive weapons are the organization’s core
competencies. Organizational culture is important in internal analysis; the company’s culture
can promote or hinder its strategic actions. SWOT analysis is an analysis of the
organization’s strengths, weaknesses, opportunities, and threats.
Formulating Strategies: After the SWOT, managers develop and evaluate strategic
alternatives and select strategies that are appropriate. Strategies need to be established for
corporate, business, and functional levels.
Implementing Strategies Evaluating Results to know how effective the strategies have
been and if any adjustments are necessary. Strategic Management Process: Strategic
management is a process or series of steps. The basic steps of the strategic management
process are
Identifying Corporate Mission: Identify what the organization wants to achieve to start with
for the purpose of it is necessary that all concerned parties understand the overall purpose of
the organization and the methods of attaining them. It is also desirable that they agree on the
corporate policies of the organization.
Formulate strategic objectives: By preparing statements of mission, policy, strategy, and
goals, the top management established the frame work within which its divisions or
departments prepare their plans. It is essential that the members of the organization agree on
these given strategic objectives. The strategic objectives thus formulated reinforce the
commitment of the members of the organization to achieve the corporate goals.
Appraise internal and external environment: To evolve alternative strategies to achieve
these evolve alternative strategies to achieve these goals, a detailed appraisal of both the
internal and external environment is carried out. The appraisal of internal environment
reveals the strengths and weakness of the firm. The appraisal of external environment reveals
the opportunities and threats for the firm. It is popularly called as SWOT analysis capitalizes
on internal strengths, make use of best opportunities and beware of the threats in the external
environment.
Develop and evaluate alternative strategies: There could be some alternative strategies to
pursue a given goals. If the goal is to expand the business, the following could be the three
alternatives.
Sold new products to the existing product line
Finding new markets, a part from the present market territories.
Manufacturing within the organization, the components, which were earlier
procured from outside.
Similarly, if the goal is to attain stability, the alternative strategies could be to maintain the
following. The existing range of products the existing markets The functions presently being
carried out.
Select the best strategy: For the firm to be more successful, it is necessary to focus its
strategies around its strengths and opportunities. It is a prerequisite that the numbers of the
organization agree on the strategic plan. Such a plan, which has been generally agreed upon,
is normally considered as the best strategy.
Establish strategic business units (SBUs): It is more strategic to define a business unit in
terms of customer groups, needs and/or technology and set up the business unit accordingly.
Most of companies define their businesses in term of products.
Fix target allot resources to each SBU: The development of SBUs based on appropriate
finding the top level management knows that its portfolio has certain old, established
relatively new, and brand new products.
Resources should be allocated based on market growth rate and relative market share of
SBUs. Here resources mean executive talent money and time. Developing operating plans:
The operating plan explain how the long-term goals of the organization can be met, the
corporate plans reveal how much the projected sales and revenue are where the top
management finds a significance gap between the targeted sales and actual sales, it can either
develop the existing business or acquire a new one to fill the gap.
Monitor performance: The results of the operating plans should be will monitored from
time to time. In the case of poor performance, check up with the members of the team to find
out their practical problems and sort these out. Also, it is essential to verify whether there are
any gaps in formulating the operating/tactical plans.
Revise the operating plans, where necessary: It is necessary to rise the operational plans
particularly when the firm does not perform as well as expected. The planes can be revised in
terms of focus, resource or time frame.

Generic Corporate strategy

It is an organizational strategy that determines what businesses a company is in, should be in,
or wants to be in, and what it wants to do with those businesses. There are three main types of
corporate strategies:
a. A growth strategy is a corporate strategy that is used when an organization wants to grow
and does so by expanding the number of products offered or markets served, either through
its current business) or through new businesses.
b. A stability strategy is a corporate strategy characterized by an absence of significant
change in what the organization is currently doing.
c. A renewal strategy is a corporate strategy designed to address organizational weaknesses
that are leading to performance declines. Two such strategies are retrenchment strategy and
turnaround strategy.

CONTEMPORARY MANAGEMENT PRACTICES

Management Information Systems: MIS refer to the process of covering the application of
people technology and procedures to solve business problems. MIS distinct from regular
information systems in that they are used to analyze other information systems applied in
operational activities in the organization. It is also commonly used to refer to the group
information management methods tied to the automation or support of human decision
making.
Ex: Decision support systems, expert systems earlier, when computers were newly launched,
business computers were use for the practical business of computing the Payroll and keeping
track of account payable and receivable. As applications were developed that provided
managers with information about sales, inventories and other data that would help in
managing the enterprise, the term “MIS” arose to describe there kind of applications.
Definition: It can be defined as “Research in the information systems field examines more
than that the technological system, or just the social system, or even the two side by side, in
addition, it investigates the phenomena that emerge when the two interact”.
End – use Computing: This term broadly meaning that there are no intermediary services for
making use of computer, the end-user acquires the hardware and software and run their
applications without the services of the specialist IS department
Factors for its growth:
Growth of Micro Computers
Dissatisfaction (delays, poor quality of centralized application systems built by the IT
specialist.
Increase in computer literacy among end-users
Materials Requirement Planning (MRP): MRP is a software base production planning and
inventory control system used to manage manufacturing processes.

Objectives:
To ensure the availability of materials and products for production, delivery to customers. To
maintain the lowest possible level of inventory To plan manufacturing activities, delivery
schedules and purchasing activities.
Just – In – Time (JIT): When components arrive as and when required in a manufacturing
operating by workers. It is called just-in-time. Some we would at a stroke eliminate any
inventory of parts, they would simply arrive just-in-time. Similarly we could produce finished
goods just-in-time to be handed to a customer who wants them. So at conceptual extremes.
JIT has no need for inventory or stock, either of raw materials or work in progress or finished
goods.
Total Quality Management: It is term first coined by the U.S Naval air systems command
to describer, its Japanese-style management approach to quality improvement. It is a
management approach to long-term success through customer satisfaction. In a TQM effort,
all members of an organization participate in improving processes, products, services and the
culture in which they work.

Six Sigma: Six sigma is a set of practices developed by Motorola to systematically improve
processes by eliminating defects. A defect is defined as non-conformity of a product or
service to its specifications. Six Sigma refers to the ability of highly capable processes to
produce output within specification. In particular processes that operate with Six Sigma
quality produce at defect level below 3.4 defects per million opportunities.

The statistical representation of six sigma quantitatively how a process is performing. To

achieve six sigma, a process must not produce more than 3.4 defects per million
opportunities. A six sigma defect is defined as anything outside of customer specification. A
six sigma opportunity is then the total quantity of chances for a defect. Definition: Six Sigma
at any organizations simply means a measure of quality that strives for near perfection. Six
sigma is a disciplined, data-driven approach and methodology for eliminating defects in any
process from manufacturing to transactional and from product to service.

Capability Maturing Model: Capability maturity Model (CMM) is a collection of

instructions an organization can follow with the purpose to gain better control over its
software development process. The CMM ranks software development organizations in a
hierarchy of five levels each with a progressively greater capability of producing quality
software. Each level is described as a level of maturity. Those 5 levels are equipped with
different number of instruction to follow.
Level – 1 - Initial : At maturity level-1 processes are usually ad hoc and the organization
usually does not provide a stable environment
Level – 2 - Repeatable: At this maturity level-2, software development successes are
repeatable. The organization may use some basic project management to track cost and
schedule.
Level – 3 - Defined: A maturity level-3, processes are well characterized and understood, and
are described in standards procedure, tools, and methods.
Level – 4 - Managed: Using precise measurement, management can effectively control the
software development effort. In particular, management can identify ways to adjust and adopt
the process to particular projects without measurable losses of quality or deviations from
specifications.
Level – 5 - Optimizing: This maturity level focuses on continually improving process
performance through both incremental and innovative technological improvement.

Supply Chain Management: It is the process of planning, implementing and controlling the
operations of the supply chain as efficiently as possible supply chain management spans all
movement and storage of raw materials, work-in-process inventory, and finished goods from
point-of-origin to point-of consumption.

Enterprise Resource Planning (ERP): It integrate all data can processes of an organization
into a unified system. A typical ERP system will use multiple components of computer
software and hardware to achieve the integration 4 key ingredient of most ERP systems is the
use of a unified database to store date. ERP systems cover all basic functions of an
organization, regardless of the organizations business, non-profit organization, non-
governmental organization or government.

Performance Management:
Performance Management is covered with communication. This is done by creating a climate
in which a continuing dialogue between managers and the members of their teams takes place
to define expectations and share information on the organization’s mission, values and
objectives. This establishes mutual understanding of what is to be achieved and a framework
for managing and developing people to ensure that it will be achieved

By Armstrong & Murlis (1994).

Performance Management is about managing the organization. It is a natural process of
management, not a system or technique.
By Fowler (1990).
Business Process Outsourcing (BPO): BPO refers to a decision to sub-contract some or all
non-core processes. The main motive for business process outsourcing is allow the company
to invest more time, money and human resources into core activities and building strategies,
which fuel company growth. The global market to day is highly competitive and ever-
changing. A company must focus on improving productivity and yet, cut down costs. There, a
lot of tasks that use up precious time, resources and energy, are being outsourced. BPOs or
the units to which work is being outsourced, are flexible, quicker, cheaper and very efficient.
BPO is the contracting of specific business task, such as payroll to a tird-party service
provider. BPO is often divided into two categories.
a) Back Office Outsourcing: This includes internal business functions such as billing or
purchasing.
b) Front Office Outsourcing: This includes customer-related services such as marketing or
technical support.

Business Process Re-engineering (BPR):

Definition: The fundamental rethinking and radical redesign of business processes to achieve
dramatic improvements in critical contemporary measures of performance, such as cost,
quality service and speed.

By Hammer and Champy

BPR is a management approach aiming at improvements by means of elevating efficiency
and effectiveness of the processes that exist within and across organizations. They key to
BPR is for organizations to look at their business processes form a “clean slate” perspective
and determine how they can best construct these processes to improve how they conduct
business.

Bench Marking: A process of searching for, identifying, and using ides, techniques and
improvement of other companies/situations in its own activities.
Definition: A systematic and ongoing process of improving performance by measuring a
product, service or process against a partner that has mastered it.
In short – comparing methods against the best to identify changes.

A quality management tool that includes a set of practices aimed at improving product and
service quality Bench marking involves measuring the performance of the organization, team
or individuals against the best practice for the industry, function or particular activity.

Balance scorecard: It is a management system that enables organizations to clarify their

vision and strategy and translate them into action. It provides feedback around both the
internal business processes and external outcomes in order to continuously improve strategic
performance and result. When full deployed, the balance scorecard transforms strategic
planning from an academic exercise into the nerve center of an enterprise The balance
scorecard suggests that we view the organization from four perspectives’
and to develop metrics.
The learning and growth perspective
The business process perspective
The customer perspective
The financial perspective.