MANAGEMENT CONCEPTS &

ORGANISATIONAL BEHAVIOUR

UNIT-1
 What is management ?
 The process of using various resources (inputs) to produce some results

(outputs) is known as management, and the degree of success varies

according to the efficiency with which the resources are managed.

 Management is a Set of activities

planning and decision making, organizing, leading and
controlling
directed at an organizational resources- human,
financial, physical and information
with the aim of achieving organizational goal
in an efficient and effective manner.
 Definitions of Management

Management Definition by H. Koontz

“Management is an art of getting things
done through and with the people in
formally organized group”

According to Harold Koontz and Heinz Weihrich
“Management is the process of designing
and maintaining an environment in which
individuals, working together in groups,
efficiently accomplish selected aims”.

According to F.W. Taylor, ‘ Management is an
art of knowing what to do when to do and see
that it is done in the best and cheapest way ‘.
Management by objectives (MBO), also known
as management by planning (MBP), was first
popularized by Peter Drucker in his 1954
book The Practice of Management. ... This
process allows managers to take work
that needs to be done one step at a time
to allow for a calm, yet productive work
environment.

According to Theo Heimann, management has three different
meanings, viz.,

Management as a Noun : refers to a Group of Managers.

Management as a Process : refers to the Functions of
Management i.e. Planning, Organising, Directing, Controlling,
etc.

Management as a Discipline : refers to the Subject of
Management.

Management is an individual or a group of individuals that
accept responsibilities to run an organisation. They Plan,
Organise, Direct and Control all the essential activities of the
organisation. Management does not do the work themselves.
They motivate others to do the work and co-ordinate (i.e. bring
together) all the work for achieving the objectives of the
organisation.

Management brings together all Six Ms i.e. Men and Women,
Money, Machines, Materials, Methods and Markets. They use
these resources for achieving the objectives of the organisation
such as high sales, maximum profits, business expansion, etc.
 Basic purpose of management

EFFICIENTLY
Using resources wisely and in cost effective way

EFFECTIVELY
Making the right decision and successfully
implementing them
 Efficiency:
operating in
a manner
where
resources are
not wasted

Successf
ul
managem
ent

Effectivenes
s: doing the
right thing in
a right way at
a right time
Characteristics of management

Multi-dimensional - Most management oversees
and supervises a company or organisation's service or
production cycle. Managers work closely with and
provide guidance to the members of their team. A
manager considers a staff member both as an
individual with diverse needs and as a component of
the larger group. To be effective, managers influence
their team members to apply their unique strengths
toward achieving the organisation's goals.


Dynamic - Management is a dynamic function and
evolves and adapts to changes in its environment,
whether they are economic, socio-political or
technological. For instance, a paper company could
see a decline in sales because of the rapid adoption of
screens and digital devices. Whether the company
Cont..

Intangible - Management is not a tangible product, but its
presence can change the way an organisation functions.
Management consists of ideologies, policies and human
interaction. Good management helps improve a company's
target achievement ratios, employee gratification levels
and overall ease in the company's operation.

Goal Oriented: Management is a purposeful activity. It
coordinates the efforts of workers to achieve the goals of
the organization. The success of management is measured
by the extent to which the organizational goals are
achieved. It is imperative that the organizational goals
must be well-defined and properly understood by the
management at various levels.

Distinct Process: Management is a distinct process
consisting of such functions as planning, organizing,
staffing, directing and controlling. These functions are so
interwoven that it is not possible to lay down exactly the
sequence of various functions or their relative significance.

Universal Application: Management is universal in
character. The principles and techniques of
management are equally applicable in the fields of
business, education, military, government and
hospital. Henri Fayol suggested that principles of
management would apply more or less in every
situation. The principles are working guidelines which
are flexible and capable of adaptation to every
organization where the efforts of human beings are to
be coordinated.
Nature of Management
• as a process
• as a discipline
• as a group of individuals
• as a profession,
• as a science as well as an art.
a) Management as a Process:
Management consists of a series of inter-related
activities of planning, organizing and controlling. All
activities are undertaken in a proper sequence with a
systematic approach so as to ensure that all actions are
directed towards achievement of common goals. Thus, it
is regarded as a process of organizing and employing
resources to accomplish the predetermined objectives
b) Management as a Discipline:
Management is a systematized body of knowledge that
has developed, grown and evolved over the years
through practice and research. The knowledge so
cumulated is disseminated to successive generations of
managers and used by them in performing their jobs.
Thus, it has become a separate field of study with its
own principles and practices and thus, evolved as an
independent discipline with its own techniques and
approaches.
c) Management as a Group:
Management normally refers to a group of managers working in an
organization. It includes the top executive as well as the first line
supervisors. These managers perform their functions jointly as a
group. The success of business does not depend on the efficiency of
one, but of all manages taken together. Managers work as a team so
that objectives of the business are fully achieved. However, in every
organization there are certain levels of management with varying
degree of the nature of authority and responsibilities. You will learn
about these later in this lesson.
d) Management as Profession: To be precise, any occupation that
satisfies the following requirements is called a profession. (i) It must
be an organized and systematized body of knowledge. Take for
example professions like engineering or chartered accountancy.
These require a specialized knowledge. (ii) There is always a formal
method of acquisition of such knowledge. In other words, individuals,
to pursue a specific profession, must acquire the specialized
knowledge through some formal institutions. (iii) There exists an
association to devise certain code of conduct for the professionals.
This code of conduct lays down norms to be observed by the
professionals while doing their job. (iv) A profession is no doubt an
occupation to earn one’s livelihood but the financial reward is not the
main measure of their success.
Though management may not meet all the
requirements of a profession in strict sense of
the term, but it meets most of the above
requirements and is, now a days, regarded a
fullfledged profession
 Management as Art or Science
Management as Science
1.Universal Acceptance - Scientific principles are
universally accepted principles and can be applied across
all situations, locations, and times. For example, Newton’s
law of motion applies to every object in motion irrespective
of their location and state. Similarly, management as well
comprises specific fundamental principles that are
accepted worldwide. For instance, the principle of unity of
command applies to all organisations, large and small.

2. Cause and Effect Relationship - In science, every cause

results in an effect. This phenomenon is known as
causality. To put simply, every event occurs due to reason.
For instance every action has consequences, like if
employees aren’t treated well, then the productivity will
degrade. Conversely, an organisation can attain increased
productivity if the workers are given a bonus and
satisfactory remuneration.
3. Experimentation and Observation - Science is all about
facts and logic and deduces results through
experimentation and observation. The principles of
management have been formed along the same lines. For
instance, equal work opportunities and fair remuneration
for the work are known to improve one’s productivity at
work. This idea was derived through scientific observation.

4. Test of Validity and Predictability - Every scientific

principle and law is tested for validity and can be verified
at any given point in time, and it shall provide similar
result each time. Likewise, one can test the principles of
management and expect the same results every time.
Consider two companies A and B. Let’s say, company A
has one boss who administers that company’s operations,
whereas, company B has two bosses and they both try to
manage the organisation as per their judgement. An
experiment will show that company A performs better
with one superior to direct all.
Management as Art

1. Skilful application - Art is personalised, and the style of every artist is

different. Each artist has a different perspective, style, and a different
approach to a job. Likewise, one can successfully manage their organisation
only with their individual skills. Here, one’s approach to the tasks at hand will
be different from another, and hence management can be considered an art.

2. Creativity - Every artist is creative, and similarly, managers need to show

creativity and innovation in the decisions they make for their business to
stand out and gain a competitive edge. Hence, creativity and innovation in
management help managers take unique yet effective decisions.

3. Practical & Theoretical Knowledge - Art supports and believes the

importance of theoretical knowledge and hence most of the art classes,
whether it is music, painting, or dance also carry theoretical papers for
students to study. And evidently, the practical knowledge forms the basis of
art. In management, the significance of theoretical and practical knowledge
is not new. With a theoretical understanding of management principles and
their subsequent practice, managers can perform better in managing their
organisational goals.
4. Practise - An artist becomes seasoned with
years of practice and dedication towards their
work. Management as art speaks the same
terms. Managers have to go through this trial
and error method before they can become
seasoned managers who can make appropriate
decisions.
5. Target-oriented - An artist never works on
their piece of art without any goals in mind;
goals make them more focused and act
accordingly for its fulfilment. The same holds
for management. A manager must set
objectives and work towards achieving it to
become proficient in their endeavour.
 Importance of Management
1.It helps in Achieving Group Goals - It arranges the
factors of production, assembles and organizes the
resources, integrates the resources in effective manner to
achieve goals. It directs group efforts towards achievement
of pre-determined goals. By defining objective of
organization clearly there would be no wastage of time,
money and effort. Management converts disorganized
resources of men, machines, money etc. into useful
enterprise. These resources are coordinated, directed and
controlled in such a manner that enterprise work towards
attainment of goals.
2. Optimum Utilization of Resources - Management
utilizes all the physical & human resources productively. This
leads to efficacy in management. Management provides
maximum utilization of scarce resources by selecting its
best possible alternate use in industry from out of various
uses. It makes use of experts, professional and these
services leads to use of their skills, knowledge, and proper
utilization and avoids wastage. If employees and machines
3. Reduces Costs - It gets maximum results through minimum
input by proper planning and by using minimum input & getting
maximum output. Management uses physical, human and
financial resources in such a manner which results in best
combination. This helps in cost reduction.
4. Establishes Sound Organization - No overlapping of efforts
(smooth and coordinated functions). To establish sound
organizational structure is one of the objective of management
which is in tune with objective of organization and for fulfilment
of this, it establishes effective authority & responsibility
relationship i.e. who is accountable to whom, who can give
instructions to whom, who are superiors & who are subordinates.
Management fills up various positions with right persons, having
right skills, training and qualification. All jobs should be cleared to
everyone.
5. Establishes Equilibrium - It enables the organization to
survive in changing environment. It keeps in touch with the
changing environment. With the change is external environment,
the initial co-ordination of organization must be changed. So it
adapts organization to changing demand of market / changing
needs of societies. It is responsible for growth and survival of
organization.
6. Essentials for Prosperity of Society - Efficient
management leads to better economical production
which helps in turn to increase the welfare of people.
Good management makes a difficult task easier by
avoiding wastage of scarce resource. It improves
standard of living. It increases the profit which is
beneficial to business and society will get maximum
output at minimum cost by creating employment
opportunities which generate income in hands.
Organization comes with new products and researches
beneficial for society.
The main functions of top management are as
follows:

1. Determining the objectives of the enterprise as a

whole.
2. Setting up an organisational framework.
3. Framing policies and making plans to achieve the
objectives laid.
4. Work as a link between internal organisational
environment and external environment by
representing organisation.
5. Assembling the resources of men, machine, material &
money.
6. Providing overall leadership to organisation.
7. Exercising effective overall control.
The important functions of Middle management are as
follows:

1. Interpreting the policies framed by top management.

2. Selecting suitable operative and supervisory personnel.
3. Assigning duties and responsibilities for timely execution of
the plans.
4. Motivating personnel to achieve higher productivity.
5. Preparing the organisational set up in their respective
departments.
6. Compiling and issuing instructions to the supervisors under
their control.
7. Coordinating with other departments so as to ensure a
smooth running of the entire organisation.
8. Reporting & feedback to top management.
9. Collecting information & reports on performance.
10. Making recommendations to top management for the
better implementation of plans & policies.
The various functions of lower management are as
follows:

1. To issue orders & instructions to the workers and

supervise & control their functioning.
2. To plan the activities of his section, classifying and
assigning jobs to the workers.
3. To direct and guide the workers about work procedures.
4. To provide on the job training.
5. To solve the problem of the subordinates.
6. To communicate the problems upward in the hierarchy
which cannot be solved at this level.
7. To maintain discipline among the subordinates and
develop in them the right approach for work.
8. To build up a high group morale among the subordinates.
9. To maintain good human relations.
10. To act as a liaison officer between the middle
management and rank and file employees.
 What is a Manager?

A manager is an expert in his or her field and

is a support system for employees. Managers
work within a business and work together as a
team to achieve company goals.
According to Ricky W. Griffin: A manager
is someone whose primary responsibility
is to carry out the management process
within an organization. ... The basic
activities that comprise the management
process are planning and decision, organizing,
leading, and controlling.
 Roles of manager by Mintzberg

Interpersonal Informational Decisional

• Figurehead • Monitor • Entrepreneur(an
• Leader • Disseminator(so individual who
• Liaison(commun meone that has an idea
btw 2 or more gives out actas on that
people or grp something, idea related to
that work news, info or new product or
together) ideas) service)
• Spokesperson • Disturbance
handler
• Resource
allocator
• Negotiator
 Skills of a Manager

Technical Skill.
Conceptual Skill.
Interpersonal and Communication Skills.
Decision-Making Skill.
Diagnostic and Analytical Skills.
Technical skills

Technical skill is knowledge of and proficiency in

activities involving methods, processes, and procedures.
Thus it involves working with tools and specific
techniques. Technical skill is the ability to use the
specialized knowledge, procedures, and techniques of a
field of activities.
Accountants, engineers, surgeons all have their
technical skills necessary for their respective
professions. Most managers, especially at the lower and
middle levels, need technical skills for effective task
performance.
For example, mechanics work with tools, and their
supervisors should have the ability to teach them how
to use these tools.
Conceptual Skill
 Conceptual skill is the ability to see the “big picture,” to
recognize significant elements in a situation and to
understand the relationships among the elements.
 Conceptual skill is the ability to coordinate and integrates all
of an organization’s interests and activities.
 It requires having the ability to visualize the enterprise as a
whole, to envision all the functions involved in a given
situation or circumstance, to understand how its parts
depend on one another and anticipate how a change in any
of its parts will affect the whole.
 A manager’s ability to think in the abstract and to view the
organization holistically is important.
 Suggesting a new product line for a company, introducing
computer technology to the organization’s operations, or
entering the international market; for deciding this
magnitude, a manager requires conceptual skill is his
personality.
Interpersonal and Communication Skills

Communication skill for a manager is a must. The

manager must be able to convey ideas and
information to others and receive information and
ideas from others effectively.
A manager’s job is to control the subordinates and
gives high-level managers or administrators
information about what’s going on.
Communication skill enables a manager to perform
them properly. Most of his time, a manager’s job is
to interact with people inside and outside of the
organization.
Manager’s ability to communication with individuals
and groups, controlling and motivation they are
what Interpersonal and Communication skill are.
Decision-Making Skill

Decision making skill is the skill that makes a

manager able to recognize opportunities and threat
and then select an appropriate course of action to
tackle them efficiently so that the organization can
benefit them.
Managers are not always going to make the best
decision.
But a good manager most often makes a good
decision and learns from the bad ones. Decision
making is a skill that improves as managers gain
more experience.
Training or educating is also a good method to
develop the Decision making the skill of a manager.
Diagnostic and Analytical Skills
A good manager has Diagnostic and Analytical
skills in his bags. Diagnostic skill refers to the
ability to visualize the best response to a
situation.
Analytical skill means, the ability to identify the
key variables in a situation. Manager diagnostic
skill and Analytical skill helps him to identify
possible approaches to a situation.
After that is also helps a manager to visualize
the result or outcomes of these approaches. This
skill sounds similar to the decision making skill,
but it is the skill required to make the decision.
 Planning
 According to KOONTZ, “Planning is deciding in advance - what to
do, when to do & how to do. It bridges the gap from where we
are & where we want to be”. A plan is a future course of actions.
It is an exercise in problem solving & decision making.

 Planning is determination of courses of action to achieve desired

goals. Thus, planning is a systematic thinking about ways &
means for accomplishment of pre-determined goals.

 Planning is necessary to ensure proper utilization of human &

non-human resources. It is all pervasive, it is an intellectual
activity and it also helps in avoiding confusion, uncertainties,
risks, wastages etc.

 Planning increases efficiency, reduces business related risks,

provides directions, encourages creativity and innovation, helps
in motivation. Planning also smoothens decision making , helps
to achieve objectives and basis of control.
Steps in Planning Process

Establishing verifiable goals

Establishing Planning Premises
Deciding the Planning Period
Finding alternative course of action
Evaluating and selecting a course of action
Implementing the Plan
Measuring and Controlling the Programme
Types of planning
 Types of Plans
 Objectives - Objectives may be defined as the goals which an
organization tries to achieve. Objectives are the ends towards
which the activities of the enterprise are aimed. Objectives
provide direction to various activities and serve as benchmark
of measuring the efficiency and effectiveness of the
organization.
 Strategies - A strategy is a special kind of plan formulated to
meet the challenge of the policies of the competitors. Strategy
can be shaped by the general forces operating in an industry
and the economy. The strategy must be consistent with
external environment
 Policies - Policies may be described as plans which are meant
to serve as broad guidelines to decision making in a firm.
Policies exist at various levels of the enterprise. A policy should
be definite, positive and clear. A policy is a standing plan which
assist decision making and should be referred as a general
statement of the established rule. For example –A firm has a
policy of promotion from within the organization. If a vacancy
arises; the first preference is given to existing employees.
 Procedure – Procedure lays down the manner or method
by which work is to be performed in a standard and
uniform way. Procedure is a standing plan acting as a
means of implementing a policy. For Example –Sales
department lays down a policy to execute all orders within
48 hours. So a procedure has to be followed in a
chronological and systematic order to fulfill the orders.
 Programs – Programs are precise plans which need to be
made to discharge a non –repetitive task. The essential
ingredient of every program are time phasing and
budgeting. Specific dates should be laid down for the
completion of each successive stage of a program. For
Example –An enterprise has a program of opening 5
branches in different parts of a country so they have to
allocate funds and time period for - a) Securing the
necessary accommodation b) Recruiting personnel to
manage business c) Arrange the supply of goods that are
to be sold through the branches Often a single step in a
program is set up as a project.
Rules – Rules are an explicit statement that
tells the members of the organization what
they can or cannot do. Rules do not allow any
room for interpretation because it clearly
specifies the action needed to be done in a
particular situation. Rules enforce discipline. For
e.g. - Use of Mobile Phone at workplace during
office hours is restricted.
Budgets: Budgets are plans for future period
of time containing statements of expected
results in numerical terms. Budgets are very
useful for an enterprise. Being expressed in
numerical terms, they facilitate comparison of
actual results with planned ones and serve as a
control devise. The important budgets are sales
budget, production budget, cash budget,
 Organizing
According to Chester Barnard, “Organizing is a
function by which the concern is able to define the role
positions, the jobs related and the co-ordination
between authority and responsibility. Hence, a manager
always has to organize in order to get results.

Organizing is important becoz:

It facilitates efficient management
It facilitates coordination and communication
It facilitates growth and diversification-
It ensures optimum use of resources
It provides for optimum use of technological innovations
It facilitates specialization
 Steps in organizing:

1.Determination of objectives - The purpose of the organization must be

identified. Objectives determine resources and various activities which should
be done to achieve the organizational goals.

2. Identification and grouping of activities- If group members are to pool

their efforts successfully, there must be proper division of the major activities.
Each job should be accurately classified and grouped. This will avoid duplication
of work.

3. Assignment of duties- After grouping the activities into various jobs, as per
the nature of work, Similar activities should be placed under one department .
Each individual should be given a particular task according to his ability and
skills.

4. Establishing relationship among individuals and group- The activities

which are performed by person holding different positions must be related.
Every person in the organization should know about his responsibility, authority
and accountability so that there is coordination, among individuals and
departments.

The organizing process results in organization structure with precisely defined

authority and responsibilities.
Staffing
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”.

Importance of Staffing
Helps in finding efficient worker
Helps in increased Productivity
Maintains Harmony
Helps in morale boosting
Helps in Optimum utilization of human
resources
Staffing involves:
Manpower Planning (estimating man power in
terms of searching, choose the person and
giving the right place).
 Recruitment, Selection & Placement.
 Induction and orientation
 Training & Development.
 Remuneration or compensation.
 Performance Appraisal.
 Promotions & Transfer
 Directing
According to Koontz and O'Donnell “Direction
is the interpersonal aspect of managing by
which subordinates are led to understand and
contribute effectively and efficiently to the
attainment of enterprise objectives.”
The manager must stimulate action by giving
direction to his subordinates through orders
and also supervise their work to ensure that
the plans and policies achieve the desired
actions and results
Importance of Directing
 Initiates action
 Creates a Sound work environment
 Develops managers
 Behavioral satisfaction
 Increase in productivity
 Achieves coordination
 Facilitates control
 Facilitates change
 Facilitates growth
Elements of directing
Directing deals with inter-personal relations. It is the doing or
implementing phase of management. Hence it is also called
management-in-action.

a) Supervision – It implies overseeing the work of

subordinates in order to guide and regulate their efforts.
Supervision is very important at the operating level of
management. The Supervision is in direct contact with the
workers and acts as the link between workers and
management. The purpose of supervision is to ensure that
subordinates perform their tasks according to prescribed
procedures and as efficiently as possible.
b) Communication- It is the process of passing information
view point, facts, ideas , opinion and understanding from
one person to another. It is a two way process and is
complete when there is some response from the receiver of
information. Communication may take several forms like
order, instructions, report, suggestion etc.
 Leadership- Leadership may be defined as the process
by which a manager guides and influences the work of his
subordinates. The success of every enterprise is
dependent upon the quality of its leadership. For example
Reliance would not have attained their present success
but for the able leadership of Dhiru Bhai Ambani. A leader
exercises his influence over the followers through the use
of informal authority or power.

 Motivation- Motivation means inspiring the subordinates

with a zeal to do work for accomplishment of
organizational objectives. A manager should make
appropriate use of motivational tools to actuate the
subordinates to work harmoniously towards achievement
of organizational goals. Different people are motivated by
different type of rewards, which can be financial
incentives or non-financial incentives.
 Controlling
It implies measurement of accomplishment
against the standards and correction of
deviation if any to ensure achievement of
organizational goals.
According to Theo Haimann "Controlling is the
process of checking whether or not proper
progress is being made towards the objectives
and goals and acting if necessary, to correct any
deviation.” Controlling ensures that there is
effective and efficient utilization of
organizational resources so as to achieve the
organizational goals. Controlling has two basic
purposes a) If facilitates coordination b) It helps
in planning
 Significance of good control system are as follows

1) Basis of future action- Control provides the basis for future

actions. It will reduce the chances of mistakes being repeated in
future by suggesting preventive steps.
2) Facilitates decision making- The process of control is complete
only when corrective measures have been taken. This requires
taking a right decision as to what type of follow up action is to be
taken.
3) Facilitates discipline and order – The existence of control
system has a positive impact on the behavior of the employees.
They are cautious while performing their duties as they know they
are being observed by their superiors.
4) Facilitates Coordination- Control helps in Coordination of the
activities of various departments of the enterprise. It provides
them unity of direction.
5) Facilitates motivation – A control system is most effective
when it motivates people to high performance. Since most people
respond to a challenge, successfully meeting a tough standard
may provide a greater sense of accomplishment. 6) Effective plan
Implementation-
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
 Relation between Planning and Controlling
 Control is always based on Planning-Every manager uses
certain Standards for measuring the performance which are
laid down by planning. So planning is a pre-requisite for
controlling
 Planning without Controlling is meaningless and control without
Planning is blind- A good plan will not bring any concrete result
if the management is lacking in controlling Planning identifies
the goals and determines the ways to achieve them whereas
control ensures attainment of goals by evaluating
performance and taking corrective action.
 Planning and controlling are both forward looking and backward
looking -Planning is looking ahead because plans are prepared
for future Controlling is looking forward because it aims to
improve future performance and helps in better planning in
future. Planning is looking backwards because new planning is
guided by past experiences. Controlling is looking backwards
as it compare actual performance with standards fixed in the
past
 The management process
Planning and
decision making:
setting the
organizational
goals & deciding
how best to
achieve them

INPUTS from
Environments
GOAL
•Human Controlling & attained
Organizing
Monitoring and
resource correcting ongoing
determining how
•Financial best to group
activities to
activities &
resources facilitate goal •Effectively
resources
•Physical attainment.
•Efficiently
resources
•Information
resources

Leading
motivating
members to work
in best interest of
the organization
MANAGEMENT BY
OBJECTIVE
 Management by objectives
Management by objectives (MBO) is a strategic
management model that aims to improve
organizational performance by clearly
defining objectives that are agreed to by
both management and employees.
 Management by Objectives Principles

 Cascading of organizational vision, goals

and objectives
 Specific objectives for each member

 Participative decision making

 Explicit time period

 Performance evaluation and feedback

 Steps in Management by Objectives Process

1. Define organization goals

Setting objectives is not only critical to the success of any company, but it also
serves a variety of purposes. It needs to include several different types of
managers in setting goals. The objectives set by the supervisors are
provisional, based on an interpretation and evaluation of what the company
can and should achieve within a specified time.

2. Define employee objectives

Once the employees are briefed about the general objectives, plan, and the
strategies to follow, the managers can start working with their subordinates on
establishing their personal objectives. This will be a one-on-one discussion
where the subordinates will let the managers know about their targets and
which goals they can accomplish within a specific time and with what
resources. They can then share some tentative thoughts about which goals the
organization or department can find feasible.
3.Continuous monitoring performance and progress
Though the management by objectives approach is necessary for increasing the
effectiveness of managers, it is equally essential for monitoring the performance and
progress of each employee in the organization.

4. Performance evaluation
Within the MBO framework, the performance review is achieved by the participation
of the managers concerned.

5. Providing feedback
In the management by objectives approach, the most essential step is the
continuous feedback on the results and objectives, as it enables the employees to track
and make corrections to their actions. The ongoing feedback is complemented by
frequent formal evaluation meetings in which superiors and subordinates may discuss
progress towards objectives, leading to more feedback.

6. Performance appraisal
Performance reviews are a routine review of the success of employees within
MBO organizations.
 Benefits of Management by Objectives
 Management by objectives helps employees appreciate
their on-the-job roles and responsibilities.
 The Key Result Areas (KRAs) planned are specific to each
employee, depending on their interest, educational
qualification, and specialization.
 The MBO approach usually results in better teamwork and
communication.
 It provides the employees with a clear understanding of
what is expected of them. The supervisors set goals for
every member of the team, and every employee is provided
with a list of unique tasks.
 Every employee is assigned unique goals. Hence, each
employee feels indispensable to the organization and
eventually develops a sense of loyalty to the organization.
 Managers help ensure that subordinates’ goals are related
to the objectives of the organization.
 The SMART Method
 Clarity of goals – With MBO, came the concept of SMART goals i.e. goals
that are:
Decision making
 Decision making
Herbert Simons has said the process of managing as a process
of decision-making. As per his opinion a post of position
cannot be said to be managerial until and unless the right of
Decision-Making is attached to it.
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
So, the quality of managers’ decisions is the Yardstick of their
effectiveness and value to the organization. This indicates that
managers must necessarily develop decision making skills.
According to Haynes and Massie, “a decision
is a course of action which is consciously
chosen for achieving a desired result”.
According to R. A. Killian, “A decision in its
simplest form is a selection of alternatives”.
According to D. E. McFarland, “A decision is
an act of choice – wherein an executive forms a
conclusion about what must not be done in a
given situation. A decision represents a course
of behavior chosen from a number of possible
alternatives”.
Thus, from above definitions it can be concluded that decision-
making is a typical form of planning. It involves choosing the best
alternative among various alternatives in order to realize certain
objectives. This process consists of four interrelated phases

explorative (searching for

decision occasions)
speculative (identifying the
factors affecting the decision
problem),
evaluative (analysis and
weighing alternative courses of
action
selective (choice of the best
course of action).
Condition of decision making process
 Types of Decision-Making:
Personal and Organizational Decisions:
Decisions to watch television, to study, or retire
early are examples of personal decisions. Such
decisions, pertain to managers as individuals.
They affect the organisation, in an indirect way.
For example, a personal decision to purchase a
MG rather than a JEEP, 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
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.
 Operational and Strategic Decisions:
 Operational or tactical decisions relate to the present
issues or problems. The main purpose is to achieve high
degree of efficiency. Better working conditions, effective
supervision, prudent use of existing resources, better
maintenance of the equipment, etc. fall in this category.
 While, expanding the scale of operations, entering new
markets, changing the product mix, shifting the
manufacturing facility, striking alliances with other
companies, etc. are strategic in nature.
 Usually, routine decisions are taken by managers at the
lower levels, while strategic decisions are taken by top
level managers. The focus in the operational decisions is
on the short-run or immediate present, while it is on the
long- rum in the case of strategic decisions.
Programmed and Non-Programmed
Decisions:
Programmed decisions are repetitive in nature.
Such decisions deal with simple, common,
frequently occurring problems that have
established procedures. These decisions are
taken based on the existing policy, rule or
procedure of the organization. For example:
making purchase orders, sanctioning of
different types of leave, increments in salary,
etc.
Non-programmed decisions are not routine in
nature. They are related to exceptional
situations for which there are no established
procedure. For example- Issues relating to
declining market share, increasing competition,
1. Recognizing and Some stimulus indicates that a decision A plant manager sees that employee
defining the situation must be made. The stimulus may be turnover has increased by 5 percent.
positive or negative.

2. Identifying alternatives Both obvious and creative alternatives are The plant manager can increase wages,
desired. In general, the more significant increase benefits, or change hiring
the decision, the more alternatives should standards.
be generated.

3. Evaluating Each alternative is evaluated to determine Increasing benefits may not be feasible.
alternatives its feasibility, its satisfactoriness, and its Increasing wages and changing hiring
consequences. standards may satisfy all conditions.

4. Selecting the best Consider all situational factors, and Changing hiring standards will take an
alternative choose the alternative that best fits the extended period of time to cut turnover,
manager's situation. so increase wages.

5. Implementing the The chosen alternative is implemented The plant manager may need permission
chosen alternative into the organizational system. of corporate headquarters. The human
resource department establishes a new
wage structure.

6. Follow-up and At some time in the future, the manager The plant manager notes that, six months
evaluation should ascertain the extent to which the later, turnover has dropped to its previous
alternative chosen in step 4 and level.
implemented in step 5 has worked.
 Techniques of decision making
 5 techniques that can assist managers in their efforts towards
arranging a meeting for the purpose of group decision-making.

1. Brainstorming: It is a combination of group problem-solving

and discussions. It works on the belief that the more the number
of ideas, greater the possibility of arriving at a solution to the
problem that is acceptable to all. It starts with the group
generating ideas which are then analyzed, with action points
based on the discussions.
 For instance, if you have received a new e-learning project and are thinking
of a strategy to implement in the course, you can follow this technique.
Gather a group of instructional designers in a conference and let them first
analyze the inputs. After that, you can collect ideas from each of them and
take the final decision.
 Nominal group technique:In a nominal group technique, the
team divides itself into smaller groups and generates ideas.
Possible options are noted down in writing and the team
members further discuss these to narrow down the possible
choices they would like to accept. Team members then discuss
and vote on the best possible choice. The choice that receives the
maximum votes is accepted as the group decision.

 Continuing the above example, this group of instructional

designers can be further divided into smaller teams. Every
member of the team gives their idea and at the end, each member
votes for the best one. At the end, the idea that gains the highest
votes would be finalized.
 . Multi-voting:It starts with a round of voting where an
individual casts his vote for the shortlisted options. Each
individual can cast one vote at a time. The options with the
maximum number of votes are carried to the next round. This
process is repeated until a clear winning option is obtained.

 For instance, from the above discussed example, each team

would propose their strategy in front of the other teams. And the
other teams would vote for the one they prefer best. The strategy
that receives the maximum number of votes is considered final.
 Delphi method:

The Delphi method is a structured communication technique,

originally developed as a systematic, interactive forecasting
method which relies on a panel of experts. The experts answer
questionnaires in two or more rounds. After each round, a
facilitator provides an anonymous summary of the experts’
forecasts from the previous round as well as the reasons they
provided for their judgments. Thus, experts are encouraged to
revise their earlier answers in light of the replies of other
members of their panel. It is believed that during this process the
range of the answers will decrease and the group will converge
towards the "correct" answer.
 5. Electronic meeting:
Here, the decision-making process takes place virtually with the
help of technology. For instance, we can have a Skype call with
the client. Create two or three strategies and discuss them with
the client clearly in the Skype call; let the client choose the
strategy close to his expectations.