Module - 2

Management and
Organisation
 Functions/ Task/ process of
Management
There are 6 functions of management used to describe the job of
management.
Decision making
Planning Motivation
Organizing
Communication
Staffing
Directing Supervision
Coordination
Leadership

Controlling
 Decision making
It is the process by which course of action is consciously
chosen from available alternatives for the purpose of achieving
a desired result.
 Planning
 Planning is a mental process requiring the use of intellectual foresights and
sound judgment.
 It simply means forecasting or predicting the future.
 Planning is thinking before doing.
 Bridges a gap between where we are today and where we want to reach.
 Planning is a continuous process.
 It is the determination of a course of action to achieving the goal, which
involves deciding in advance:
What to do
When to do
Where to do
How to do
Who is going to do it.
 The success of a plan lies in the managers ability to forecast the future
situations.
 Thus planning is a systematic thinking about the ways & means for the
 Organizing
 Organizing is an important managerial activity by which the structure &
allocation of jobs are to be determined.
 It is the process of bringing together physical, financial and human
resources and developing productive relationship amongst them for
achievement of organizational goals.
 According to Henry Fayol, “To organize a business is to provide it with
everything useful or its functioning i.e. raw material, tools, capital and
personnel’s”.
 To organize a business involves determining & providing human and non-
human resources to the organizational structure.
 Establishing the framework of working:
How many units or sub units or departments are needed.
How many posts or designations are needed in each department.
How to distribute authority & responsibility among employees.
 Once these decisions are taken, organizational structure gets set up.
 Staffing
It is the function of managing the organization structure and keeping it managed.
Staffing has assumed greater importance in the recent years due to advancement
of technology, increase in size of business, complexity of human behavior etc.
 The main purpose of staffing is to put right man on right job i.e. square pegs in
square holes and round pegs in round holes.
 According to Kootz & O’Donell, “Managerial function of staffing involves
managing the organization structure through proper and effective selection,
appraisal & development of personnel to fill the roles designed un the structure”.
Staffing involves:

Manpower planning (estimating man power in terms of searching, choose the

person and giving the right place).
Recruitment, Selection & Placement.
Training & development.
Remuneration.
Performance Appraisal.
Promotions & Transfer.
 Directing
Directing involves determining the courses of action by giving orders
and instructions and providing dynamic, leadership.
It is that part of managerial function which actuates the organizational
methods to work efficiently for achievement of organizational purposes.
It is considered life-spark of the enterprise which sets it in motion the
action of people because planning, organizing and staffing are the mere
preparations for doing the work.
 Direction is that inert-personnel aspect of management which deals
directly with influencing, guiding, supervising, motivating sub-ordinate
for the achievement of organizational goals.
Direction has following elements:
Supervision
Motivation
Leadership
Communication
Motivation:
Motivation means inspiring the subordinates to do the work for the
accomplishment of organizational objectives.
A manager can get the desired result from the people working in
the organizations by providing them with proper stimulation or
motivation
For making the organizational behavior desirable to the
organization, a manager should have to motivate their employees.
 A manager can motivate his employees by:
Financial : Incentives, bonus, gifts, etc.
Non Financial :Appreciation, promotion, etc.

Motivation differs from one to another depending on needs.

Management cant satisfy all of these needs but management must
have to satisfy some of the needs such as salary, good working
conditions etc.
 Importance of Motivation

Helps in realizing organization goals.

Increasing productivity.
Reducing employees turnover and absenteeism.
Helps in maintaining good industrial relations.
Reducing employee grievances.
communication:
It is the process of passing information and understanding one
person to another.
It is a two way process. i.e exchange of information between 2
or more person.
Sender & receiver are terminals
Encoder : translates the human thought into a language.
Medium : Through which a sender send message to receiver.
Decoder : Translates the message into an interpretable form.
A manager to be successful must develop an effective system of
communication. So that he may issue instructions receive the
reaction of subordinates and to guide and motivate them.
Importance of communication

 Encourage decision making

 It creates interpersonal relations.
 It is a means of achieving coordination.
 It boost the morale of employees.
 It helps to create a better human relations.
 It improves public relations.
 Types of communication
 Formal communication
Formal communication is used for official purpose. It is used for passing
information or getting work done. It can be written or oral. It may be
either vertical or horizontal communication.
• Vertical communication:
It involves downward & upward communication .
Downward communication means the flow of communication from the
top level to lower level of employees – Warning
Upward communication means the flow of communication from workers
to higher management level giving work accomplishment report or other
feed back information – suggestions, opinions, complaints.
• Horizontal communication
Communication between positions of the same level. i.e. interdepartmental
communication, permits exchange of jobs, related experience and
knowledge.
 Informal communication:
Any communication other than formal communication – unofficial.
Supervision

 It means overseeing the function of subordinates.

 Every executive has to supervise his subordinates.
 It is necessary to ensure that the subordinates are following the
instructions given to them and using the raw materials, machines etc
properly.
Leadership
 A manager must perform the function of leadership if he is to guide
the people effectively for the achievement of organizational
objectives.
 It may be defined as “ the process by which a manager guides and
influences the behavior of his subordinates”.
Types of leadership
 Autocratic leadership:
The leader has the supreme authority in decision making.
Subordinates are forced to obey.
 Democratic leadership:
The subordinates will also have participation in the decision
making process.
 Free rein leadership:
Complete freedom is given to the subordinates.Superior frames
the policy and gives full freedom to subordinates to implement it.
 Controlling
 It implies measurement of accomplishment against the standards and
correction of deviation if any to ensure achievement of organizational
goals.
 The purpose of controlling is to ensure that everything occurs in
conformities with the standards. An efficient system of control helps to
predict deviations before they actually occur.
 According to Koontz & O’Donell “Controlling is the measurement &
correction of performance activities of subordinates in order to make sure
that the enterprise objectives and plans desired to obtain them as being
accomplished”.
 Therefore controlling has following steps:
 Establishment of standard performance.
 Measurement of actual performance.
 Comparison of actual performance with the standards and finding out
deviation if any.
 Corrective action.
 Planning
A plan is a determined course of action for achieving a specific objective.
Managerial planning means determining the organizations goals and defining the
means for achieving them.
All planning involves anticipation of the future course of events and therefore
bears an element of uncertainty in respect of its success.
Planning determines both long term and short term objectives and also of the
individual departments as well as the entire organizations.
Planning offers direction to the whole organization and runs through the entire
organization.
It is a key to the success of other managerial functions, such as organizing ,
directing and controlling.
It enable the organizational members to know precisely what is expected of them.
 Planning is essentially a complex, dynamic and continuous process of an
organization.
 Characteristics of Planning
Planning is goal oriented
Sequence of planning
Continuous and cyclical activity
Choice based decision making activity
Occurrence of planning
Coordination
Limiting factors
Flexibility
 Importance of Planning
Planning facilitates management by objectives
Planning gives a sense of direction
Improved performance
Dealing uncertainty
Economy in operation
Better coordination
Basis for controlling
Planning improves employees moral
 Advantages of Planning
Unproductive work and waste of resources can be
minimized.
Planning enables a company to remain competitive with
other rivals in the industry.
Through careful planning crisis can be anticipated and
delays can be avoided.
Planning can point out the need for future change.
Planning enables the systematic and thorough
investigation of alternative methods or solutions to a
problem. Thus we can select the best alternative.
 Disadvantages of Planning
Planning is based on forecasts which may prove to be
inexact due to uncertainty of future.
Planning cannot give perfect insurance against
uncertainty.
Planning is costly as it involves data collection, forecast,
analysis etc.
Planning needs accurate data from internal and external
sources.
Planning is a lengthy process and hence planning can
delay actions.
 Levels of Planning
There are three levels of planning:-
 Top Level planning
 Middle Level Planning
 Lower level Planning
 Top level planning focuses on organizations long term goals and strategies in
general terms. Strategic plans clarify the company's vision and goals for the
future. It is carried out by the top management. These plans are generally
made for more than 5 years.

 Middle level planning is carried out by middle level managers. These plans are
charted to support the implementation of strategic plan. Middle level plans
are tactical plans which are concerned with how the resources of the
organization will be utilized to achieve the organizational strategic goal. These
plans are generally made for 1- 5 years.

 Lower Level planning is carried out by departmental managers and

supervisors. These plans are operational plans which are prepared for
achieving operational goals. Is usually for a short term that is up to 1 year.
Quality statements/ Planning at different levels
Vision:-
Vision means view of future or focus on distant future. This is an open declaration made
by the organization stating what it want to be and look like after a specific period of time.

Mission:-
It means identifying the basic function or task of an enterprise, what we are and what do
we aim to achieve.

Goal:-
A measurable objective. When an objective is expressed in quantitatively. It becomes a
goal. Goals are long term in nature.

Objective:-
Objective is what an organization trying to achieve.
Objectives are specific and short term nature that lead to the accomplishment of more
general and long term goals
Steps in Planning/Planning Process
 Being aware of opportunities
 Establishing objectives
 Developing planning premises:
Internal Premises:-
These are the factors that influence the plan which are inside the firm such as
organizational policies, resources of government etc.
External premises:-
These are the factors that influence the plan which are outside the firm such as
economic conditions. Policies etc.
 Identifying alternated course of actions
 Evaluating the alternative courses
 Selecting the best course of action
 Establishing the sequence of activities
 Reviewing the planning process
 Types of plan

Business plans can be classified on different basis as follows:

1. Goals and objectives
2. Classification of business plan based on scope
a. Strategic plan
b. Tactical plan
c. Operational plan
3. Classification based on frequency of use.
a. Single use plan
i. Programmes
ii. Budget
b. Standing plans
i. Policy
ii. Procedure
iii. Rules and Regulations
4. Classifications based on time horizon
a. Long term plan
b. Medium term plans
c. Short term plans
5. Classifications based on specificity
a. Specific plans
b. Directional plans
6. Contingency plan
 1. Goals and objectives
Objectives:

Objectives are specific and short term nature that lead to the accomplishment of more general and long
term goals.
Objective is what an organization trying to achieve.

Different types of objectives:

Organizational objectives- Profit, Growth & expansion, Reputation etc.
Personal objectives - Remuneration, Working condition, Training etc.
Social objectives - Goods & Service, Tax payment, dealings with customers etc
Goals:

Goals are the broad and long term targets of an organization.

A measurable objective.
When an objectives is expressed in quantitatively . It become a goal.
The goals of an organization are derived from the mission of an organization.
Mission means identify the basic function or task of the enterprise, what we are and what do we aim to
achieve.

E.g The goal of an organization may is to increase the sales.

Then the specific objective would be to increase the slae by 5% per year.
 2. Classification of business plan based on scope

Business plan can be classified as Strategic plan, tactical

plan, operational plan.
a) Strategic plan:
A strategic plan outline the broad goals for the whole
organization and also state its vision (purpose of existence).
Tope level management develops the strategic plan for the
entire organization.
These plans can be prepared for the next two or even more
years to move the organization. (Long term)
For e.g a firms strategic plan may involve penetrating a new
market.
b) Tactical plan:

 Tactical plan can defined as how an organized sequence of steps

designed to execute strategic plans. i.e. ,it is derived from strategic plans.
 Normally it is middle managers responsibility to take the broad strategic
plan and identify specific tactical actions.
 These plans can be prepared for one year or less than that because they
are considered short to medium term goals.
 For e.g a firms tactical plan may include designing and testing
equipment for a new product.
C) Operational plan:

Operational plan is one that a manager uses to accomplish

his or her job responsibilities.
These plans are formulated by department managers,
supervisors, team leaders and other low level managers for
carrying out the strategic and tactical plans.
These plans can be prepared for a week, month or a year.
(short term)
E.g Purchase plan, finanacial plan, recruitment plan,
facilities plan etc.
 3. Classification of business plan based on frequency of use.
a) Single use plans:
Single use plans apply to activities that do not recur or repeat. A one time occurrence,
such as a special sales program is a single use plan because it deals with the who, what,
where, how and how much of an activity. The aim of these plans is to meet the needs of
a particular situation.

The important forms of single use plans are:-

i) Programs
ii) Budget

Programs:- Programs are single use plans that are prepared to handle specific
situation. Each program is normally a special and one time activity for meeting a non
routine nature of goals.

Budgets: Budgets are another from of single use plans. A budget refers to the funds
allocated to operate a unit for a fixed period of time. Budget normally cover a specific
length of time , say one year and serve a specific purpose.
b) Continuing plan:- Continuing plan or ongoing plans or standing plans are usually
made once and retain their value over a period of years while undergoing periodic
revisions. These plans are used repeatedly because they focus on situations that
recur regularly over a period of time.
Policies, procedures and rules and regulations are important forms of standing
plans.

i) Policy:- A policy is a standing plan that furnishes broad guidelines for taking
action consistent with reaching organisational objectives.
E.g hiring policies, compensation policies and performance evaluation policies
etc.
ii) Procedure: A procedure is a standing plan that outlines a series of related actions
that must be taken to accomplish a particular task. procedures outline more
specific actions than policies do. Procedures state exactly what course of action
is to be adopted by an employee in a particular circumstances.
iii) Rule and regulations: A rule is a standing plan that designs specific required
action. A rule indicates what an organisation member should or should not do.
e.g No smoking.
Regulations in turn regulate the behavior of the organizational members in a
programmed manner.
 4. Classification of business plan based on time horizon:-

Plans are normally classified into short term plans, intermediate

plans and long term plans.
Long term plans:
 Long term plans are prepared when the organizations require
long periods of time to reach their goals.
Strategic plans are usually the long term plans of the
organization.
Top management is normally involved in the formulation of
long term plans.
These plans may cover a time period of two to five years or
more.
Intermediate plans:
Intermediate plans define the organizational activities that
are essential for the execution of long term plans.
Tactical planning is one form of intermediate planning.
These plans are useful for middle level managers as they
offer directions to them.
These plans normally cover a time horizon of 1 to 2 years.
Short term plan:
 These plans are formulated when the organization want to
accomplish their goals within a short span of time.
 These plans normally become tools for management of
day-to-day activities in departments, divisions, units etc.
 The short term plan period may not usually exceed a year.
 5. Classification based on specificity
Based on the scope for different interpretations , plans can
be classified into specific plans and directional plans.
Specific Plan:
 Specific plans are well defined plans that do not allow
different interpretations by different managers.
 These types of plans are apt for organizations that enjoy
stable external and internal environments.
 Clarity of organizational goals and objectives is an
important prerequisite for formulating effective specific
plans.
Directional plan:
 Directional plans are general plans that offer a great deal
of flexibility to the managers in goal formulation and
execution.
 They provide a general direction in which the organization
propose to move forward but there are no specific plans or
deadlines.
 Directional plans are best suited for uncertain and volatile
organizational environments.
 However, these plans do not have the clarity of specific
plans.
 6. Contingency plan

Contingency plans are plans formulated to address

specific possible future events that might have a
significant impact on the organization.
Contingency planning involves identifying alternative
courses of action that can be implemented if and when the
original plan proves inadequate because of changing
circumstances.
Contingency plans are taken by an organization in the
case of crisis, setbacks or unforeseen circumstances
Organizing for decision making
Organizing is a process of grouping the various activities to be done
and assigning duties and responsibilities to people in groups or
departments.
Organizing process involves determining what work is needed to
accomplish the goal assigning those tasks to individuals and
arranging those individuals in a decision making framework
( Organizational Structure).
The end result of the organizing process is an organization.
 If organizational goals and plans define what to do, organizing
defines how to do it.
 Organizing also helps managers to build, develop and maintain
working relationships.
 Nature of organizing
Goal directed activity
Differentiating activity
Grouping activity
Assigning or delegating activity
Integrating activity
Dynamic and constantly evolving activity.
 Steps in the process of organizing
Identifying the work to be performed
Classify the work or group the work
Assigning activities to the groups or
individuals( allocation of work)
Deciding the hierarchy of authority.
 Principle of organizing
Principle of unity of objectives
Principle of organizational efficiency
Principle of span of control
Principle of scalar chain
Principle of parity of authority and responsibility
Principle of unity of command
Principle of functional definition
Principle of balance
Principle of specialization
 Principle of flexibility
 Formal Organization and informal
organization
Formal organization:
 Formal organization refers to the structure of jobs and
positions with clearly defined functions and relationships
as prescribed by the top management.
 This type of organization is built by the management to
realize the objectives of an enterprise and is bound by
rules, syste4ms and procedures.
 Everybody is assigned a certain responsibility for the
performance of the given task and given the required
amount of authority for carrying it out.
Informal Organization:
An informal organization is an organization which is not
established by any formal authority, but arises from the
personal and social relations of the people.
Informal organization refers to the relationship between
people in the organization based on personal attitudes,
emotions, prejudices, likes and dislikes etc.
These relations are not developed according to the procedures
and regulations laid down in the formal organization structure.
Informal organization may not have any well defined tasks.
Many things which cannot be achieved through formal
organization can be achieved through informal organization.
Span of control, is a very important concept of organizing
function of management. It refers to the number of
subordinates that can be handled effectively by a superior
in an organization.
Span of control or span of management is a dimension of
organizational design measured by the number of
subordinates that report directly to a given manager.
The term span of management is also known as span of
control, span of supervision & span of authority. It
represents a numerical limit of subordinates to be
supervised & controlled by a manager.
 Organizational design
The first major task of managers engaged in organizing is
the development of an organizational design.
Organizational design involves the creation of a new
organizational structure or modifications of an existing
organizational structure to enable the organization to
achieve its goals.
 Principles of Organisation
There are 14 principles of organization.

Division of work
Authority and responsibility
Discipline
Unity of command
Unity of direction
Remuneration
Centralization
Scalar chain
Equity
Order
Stability of tenure
Initiative
Subordination of individual to general interest
Espirit de corps.
 Features of a good organizational
structure
Unity of objectives
Clear line of authority and responsibility
Division of work and specialization
Span of control
Unity of command
Simple and flexible.
 Organization chart
One aid to visualizing the organization structure is the
organizations chart.
The organization chart is a line diagram that depicts the
broad outlines of a organizations structure.
Organizational chart is a line drawing that shows how the
parts of an organizations are linked.

The organizational chart establishes the following

Authority :Right to give orders, and command
Responsibility :The duty or assignment
Delegation :Assigning duties or responsibility
Accountability : The moral responsibility
 Forms of organizational structure
Line or military or scalar organization
Functional organization
Line and staff organization
Matrix organization
Project organization
 Line Organisation
Line organization is the most oldest and simplest method
of administrative organization. According to this type
of organization, the authority flows from top to bottom in
a concern. The line of command is carried out from top to
bottom.
 Functional Organization
This is an organization in which we can define as a system in which
functional department are created to deal with the problems of business at
various levels.
Functional authority remains confined to functional guidance to different
departments.
This helps in maintaining quality and uniformity of performance of
different functions throughout the enterprise.
The concept of Functional organization was suggested by F.W. Taylor who
recommended the appointment of specialists at important positions.
For example, the functional head and Marketing Director directs the
subordinates throughout the organization in his particular area. This means
that subordinates receives orders from several specialists, managers
working above them.
 Line & Staff Organisation
A "line function" is one that directly advances an
organization in its core work. This always includes
production and sales, and sometimes also marketing. A
"staff function" supports the organization with specialized
advisory and support functions.
 Matrix organization
Definition. A  matrix organizational  structure is a
company structure in which the reporting relationships are
set up as a grid, or matrix, rather than in the traditional
hierarchy. In other words, employees have dual reporting
relationships - generally to both a functional manager and
a product manager.
 Project organization
A project organization is a structure that facilitates the
coordination &implementation of project activities.
 Its main reason is to create an environment that fosters
interactions among the team members with a minimum
amount of disruptions, overlaps and conflict.
All personnel on the project are under the direct authority
of the project manager for the duration of the project.
The selection of team occurs early in the life cycle of a
project.