CHAPTER 1What is management?The word Manage is from Italian word “maneggiare” means to handle especially to handle/or train horses. This traces back to Latin word “manus” means “hand”.In 16th century “manage” was quickly extended to operations of war and in sense of taking control, taking charge, or directing. Later it became confused with French words “menager” means “to use carefully”.In 17th & 18th centuries the word “manage” and “ménage” overlapped in usage and today’s meaning of “Manager” is coloured by these variations.Management originally used to indicate the process for managing, training or directing.It was first applied to sports, then to house-keeping and later to government and business. (McFarland (1979) Management Foundations & Practice)MANAGEMENT AS A PROCESSDefinitions:

1. Management is therefore defined as the process by which managers create, direct, maintain and operate purposive organizations through coordinated, cooperative human effort. (McFarland 1979)

2. Management has been called “the art of getting things done through people.”This definition by Mary Parker Follet, calls attention to the fact that managers achieve organization goals by arranging for others to perform whatever tasks may be necessary – not by performing the tasks themselves. (James A.F.Stoner, 1982, Management)

3. Management is the process of planning, organizing, leading and controlling the efforts of organization members and resources to achieve the stated goals”.

M O D E LM A N A G E M E

N T PLANING

ORGANIZING

LEADING

CONTROLLING

(Smith, Carroll, Kefales and Watson (1980 in their

book – Management – Making Organization

Perform)

4. “Management is the process of optimizing human, material and financial contribution for the achievement of the organizational goals”. (John Pearce II & Richard Robinson, Jr. 1989 in their book titled as Management)

5. “Management is concerned with accomplishment of objectives through the efforts of other people”. (Mondy, Holmes and Edwin B.Plippo 1983 in their book titled as Management: Concept and Practices)For example: Pass courses to get MBA and then seek job. For this purpose, you need to do the following:Planning: Determine what

is to be achievedAllocate resources and establish means to achieve the plans / goals.

Influencing/Directing:Motivate and lead

personnel.Controlling :Compare results achieved

with the planned goals.

Classic Definition by Henri Foyal (1916)

6. “To Manage is to forecast and plan, to organize, to command, to coordinate and to control”.

Definition by E.F.L. Brech (1957)“Management is a social process… the process consists of …… planning, control, coordination and motivation.”Koontz and O’Donnell (1976)Managing is an operational process initially best dissected by analyzing the managerial functions.The five essential managerial functions are: Planning, Organizing, Staffing, directing and leading and controlling.Terry (1977)“Management is a distinct process consisting of planning, organizing, actuating and controlling performed to determine and accomplish stated objectives by the use of human beings and other resources.”

Management is a process of responsibility for deploying

resources to accomplish given objectives.

For given objectives, the resources are manpower physical resources

i.e., material and financial.

Terry (1977) Management as a science:Management science is body of systematized knowledge accumulated and accepted with reference to understanding of general truths concerning management.Management as Art:“Arts mean personal creative power plus skill in performance.”Fullet defines Management as an Art.Henry Boettinger (1975) argues that Management is an Art. “As imposition of order on chaos” i.e., Painting, Poetry requires three components (i) artists vision, (ii) knowledge of craft and (iii) successful communication.Schein (1968) argues Management as a Profession.Key Characteristics

1. Professionals based their decision on general principles e.g., praise in public and criticize in private.

2. Professionals achieve professional status through performance. (difficult than lawyer or surgeon)

3. Code of Ethics for professional that protect client whereas no code of Ethics for Management.

4. Borje Saxberge – suggest – fourth characteristic i.e., dedication and commitment. According to this criterion, countless managers are professionals.

Characteristics for understanding Management

1. Management is purposeful.

2. Management makes things happen.

3. Management is an activity, not a person or group of persons.

4. Management is accomplished by, with and through efforts of others.

5. Management is intangible.

6. Management is aided not replaced by the computer.

7. Management has an outstanding impact on human life.

Characteristics of the New Manager (Fulmer 1989)

1. An orientation towards people

2. A concern with implementation

3. Competitive spirit4. An external

perspective5. An orientation towards

systems. (Information based system)

6. Pragmatism, flexibility and ability to deal with an ambiguity.

7. An orientation towards the future.

What Managers Do? (Stoner 1982)

1. Managers work with and through other people.

2. Managers act as channels of communication.

3. Managers are responsible and accountable.

4. Managers balance competing goals and set priorities.

5. Managers must think analytically and conceptually.

6. Managers are mediators.

7. Managers are politicians.

8. Managers should develop other political skills.

9. Managers are diplomats.

10. Managers make difficult decisions.

1

A Manager is what manager does.

CHAPTER NO. 2The emergence of

American Business and Management thought American Manager is

well known to achieve the goals

Skilled Manager can manage every business activity

Skill is called Management

American Managers are admired by international friends as well as enemies

Both men and women who valued “the better way” to make American industry more efficient and effective, and lead to American into world production leadership

Links in the Management ChainAmerican production efficiency has worldwide reputation.

Scientific ManagementCharles Babbage lived in 1800’s and was to first to make scientific enquiry in production area i.e., assignment of job’s various parts to workers on the basis of their skills. Division of labor was useful for four reasons:

1. Learning time is reduced because one worker must learn only one skill.

2. Less time is lost in changing from one skill to another.

3. Workers become specialist due to repetition.

4. Because the job is broken down into various component parts, special tools and equipment are to be developed.

The Father of Scientific ManagementFederick W. Taylor is usually known as Father of Scientific ManagementMajor areas: Labour and ManagementGantt and Gilbreths

Elton Mayo – Father of Human RelationsFamous Hawthorne ExperimentIn management history employees began to have rights.Mayo – Industrial Psychologist from Harvard University agreed to participate Hawthorne Plant of Western Electric Co. near Chicago.Worker’s productivity under different environmental conditions – light, heat room, colour etc. Six women were put in regular production and were observed.

Mayo’s assistants began gradual changes of all variables – less light more rest time different pay scales.

Surprisingly every change resulted in increase in productivity. Even when lights were like moonlight, the production increased.

Special treatment called as Hawthorne effect can bring positive results because of human factor.

Productivity in function of workers’ attitude.

The Hawthorne experiment demonstrated that:

1. Human, social and psychological needs are every bit as effective as motivators as money.

2. The social interaction of the work group is as influential as the organization of the actual work.

3. The human factor can not be ignored in any accurate management planning.

Henri Fayol (1841-1925)The Principles as given by Fayol are enumerated as under:

1. Division of work2. Authority and

Responsibility3. Discipline

4. Unity of Command

5. Unity of Direction

6. Subordination of individual interest to general interest

7. Remuneration8. Centralization9. Scalar Chain,

that is, Line of Authority.

10. Order11. Equity12. Stability of the

tenure of personnel

13. Initiative14. Espirit de

Corps, that is, Tean Spirit

CHAPTER 3Paths through the Management Maze1. Manager is a

HistorianEmpirical theory is based on the premise that we must study the past or to repeat it, e.g., successes or failures / mistakes made by the managers in the past and then we can take guidance for future. But there are also pre-condition e.g. a technique found right in the past may be proved worst in the present√ Management is not

based on precedent like law. (Courts etc.)

√ When employees walkout, would you,

a. Call in an expert labor consultant who knows nothing about your industry.

b. Negotiate and attempt to settle strike yourself.

c. Or both? and then see what are advantages in each alternative.

√ Past generalizations are only guidelines not dictators of guaranteed procedure to study methods of successful managers.

2. The Manager is a Psychologist

Managers deals with people of different nature – Manager is scientific and Psychologist. They must have developed theories, methods and techniques of behavioral sciences with a common sense understanding of people.

Scientific Management

Human Relations

Administration

2

Their approach is called “Human Relations”, “Leadership” and “Behavioral Sciences Approach”.An effective manager is always interested in current theories, developments in Psychology, group dynamics and inter personnel relations.So efficient manager is psychologist but a psychologist is not necessarily a manager. e.g., a study of job satisfaction.3. A good Manager is

a social ScientistSociologist – people in groups and collective psychology.Manager realizes that group attitude / relationship can affect outcome.i.e., Hawthorne experiment can be useful at right times rather than recitation of the experiment.Barnard, head of New Jersey Bell Telephone emphasized on cooperation. Barnard defined an organization as any cooperative system in which people are able to communicate with each other and are willing to contribute towards common purpose. Simon and others of social science school of Management stressed on importance of the cooperation and purposeful inter relationship.4. The Manager is a

social system specialist

Managers want to automate their skills but the systems can never replace feelings, innovations or human response.PERT Chart = Program Evaluation and Review Technique e.g., Social, Technical Systems.Best Managers throughout history have been “Systems People”

5. The Manager is a Logician

Economic decisions / decision theory helps Management thought – Analysis of the case.6. Manager is Part

Mathematician or Management Scientist

Maths is a tool rather than a school – a part rather than whole Manager.7. The

Communication – Centre Manager

Skills of Communication.

Computer is a tool of communication. Effective Manager is to receive, store, analyze, reshuffle and re-distribute information.8. The Whole Manager (Totality of situation)

CHAPTER NO. 4

EFFECTIVE DECISION MAKING

CONCEPTS / TERMSDecisionThe choice made from among available alternatives that in expected to lead to a favorable solution to a problem.

Decision MakingThe Process of organizing a problem generating and weighing alternatives, coming to a decision, taking action and assessing results.

ProblemA situation in which existing circumstances differ significantly from preferred situation.

Crises ProblemA situation that urgently requires an immediate decision.

Non Crises ProblemA problem that requires a decision in ordinarily business of life.

DEFINITIONS:1. Decision Making is a

process by which we evaluate alternatives and make a choice among them. (Mondy et al)

2. I have many decisions to make, and some of them are wrong. But have learned that there is something worse than a few wrong decisions, and that is indecision. (Ray Lyman Wilbur)

3. Not to decide is to decide. (Anonymous)

4. Decision making is applied every day every moment in the life.

Theoretical Model

Define Problem/Issue

Measure ResultsCollect Relevant

Data

Implement Solution

Develop Alternative Solutions

Select Optimum SolutionAssess

Consequences

Decision Model

ELEMENTS OF DECISION MAKING

1. Rational Decision Making

a. Decision on economic concept

b. Difference between pain and pleasure

c. Cost-benefit analysis

2. Psychological Dimensions of Decision Making

a. Deciding: Past, Present and Future

3. Preventive Problem Solving

a. Charlie says “it is a mistake to try to avoid the unpleasant things in life.

b. What is right – (to understand problem)

c. What can go wrong – Murphy’s Law of Management “If anything can go wrong it will”?

4. Problem Solvinga. Problem

solving is process to take decisions--------define the problem etc. etc.

TYPES OF DECSIONS

Personal Decisions (Career Selection)

For example: o Decisions to

study, watch a T.V, to go bed early, to play, to read or write etc. are personal decisions which are made by a college student every day.

Professional Decisions

o Every employed person has to take decision.

For example College

Professor makes decision about what information will be given to the students.

Physicians diagnose and

3

prescribe treatment.

Scientists formulate hypotheses and do experiment for testing them.

Thus Managers take decisions as part of their professional lives.Managers are professionals because they always make decisions

Routine V/S Non Routine Decisions

1. Routine Decisions

2. Non Routine Decisions: deals with unique problems and situation.

DECISION MAKING APPROACHES

1. The centralized V/S Decentralized Approach

2. The Group V/S Individual Approach

3. The Participatory V/S Non-Participatory Approach

4. The Democratic V/S The Consensus Approach

SUMMARY Centralized – As many

decisions as possible by Top Management.

Decentralized – The delegation of authority is encouraged.

Group – Two or more people work together to make decision.

Individual – One manager takes the decisions.

Participatory – Managers solicit information from others.

Non-Participatory – Managers do not solicit information from others.

Democratic – Decisions made on majority rule.

Consensus – Many participants, but general agreement is sought.

TECHNIQUES USED IN DECISION MAKING

Decision Tree Break-even

Analysis

Total Revenue

VC

B.E.P

Profit

Total Cost

Revenue Loss

F.O.

Cost

Steps in problem Analysis1. State the problem2. Define present level3. State your objective

difference between present and things should be

4. List the possible causes5. Select the most likely

cause6. List alternative solutions7. Analysis your alternative

actions8. Make your decision9. Make an action plan10. Accept the credit

graciously.

Japanese Decision – MakingPeter Drucker (1974) argues that in America we emphasize the answer while in Japan the emphasis in on the question and all its implications.

CHAPTER NO. 05THE PLANNING PROCESS

Definitions:1. As Billy E. Goetz said

years ago Planning is “fundamentally choosing” and “a planning problem arises only when an alternative course of action is discovered”. (Koontz & O’Donnell 1976)

2. Planning is deciding in advance what to do, how to do it, when to do it, and who is to do it. Planning bridges the gap from where we are to where we want to go. It makes it possible for things to occur which would not otherwise happen. (Harold Koontz & Cyril O’Donnell 1976)

3. Planning involves defining the organization’s goals, establishing an overall strategy for achieving those goals, and developing a comprehensive set of plans to integrate and coordinate organizational work. It’s concerned with both ends (what’s to be done) and means (how it’s to be done). (by Stephen P. Robbins and Mary Coulter, 2002)

4. Planning is the process of determining exactly what the organization will do to accomplish its objectives. In more formal terms, planning is “the systematic development of action programs aimed at reaching agreed business objectives by the process of analyzing, evaluating, and selecting among the opportunities which are foreseen”. (Samuel C. Certo, 1997)

5. Planning is the selecting and relating of facts and the making and using of assumptions regarding the future in the visualization and formulation of proposed activities believed necessary to achieve desired results. (Terry)

It is to determine in advance what is to be done and how it is to be done.

Five Key Dimensions of Business Planning

4

SUBJECTProduct

ResearchNew Product Development

FinancialMarketingAcquisition

FacilityManpower

ELEMENTSCharterCreed

PurposeObjectivesStrategyPolicy

ProgramBudget

ProcedureRule

TIMEShort Range

Medium RangeLong Range

Perpetual

CHARACTERISTICSSimple/Complex

Comprehensive/ Narrow CoverageMajor / Minor importanceQuantitative / Qualitative

Strategic / TacticalConfidential / PublicWritten / Unwritten

Prepared Formally / InformallyEase of Implementation

Rational / IrrationalFlexibility / Inflexibility

Economical / excessively costly

ORGANIZATIONCorporate

SubsidiariesFunctional Groups

DivisionsDepartments

Project/ProductConcept

What kind of Organization

Structure

What kind of people we need and when

How most effectively to lead and direct

people

By furnishing standards of control

PLANSObjectives and how to achieve

them

PLANNING PROCEEDS ALL THE FUNCTIONS OF MANAGEMENT

helps us to know

Necessary for

In order to assume success of Plans

direction

Plans as the foundation management

PLANNING PROCESS1. Choose Objectives

Peter Drucker (1974) argues for choosing objectives:

1. Market Standing2. Innovation3. Productivity4. Physical Resources5. Financial Resources6. Profitability7. Human Organization8. Social ResponsibilityObjectives are needed in every area where performance and results directly and vitally affect the survival and prosperity of the business.

2. Communicate ObjectivesTo all concerned in organization, e.g.,

a. Top Management with stress on overall picture of profit, public, stockholder satisfaction.

b. Production people with their targets cheaper and faster.

c. Marketing personnel for quotas, businesses and commission.

d. Finance folk for dividends, interest.

e. Supervisory personnel – for satisfying management and keep workers working

f. The workers3. Identify Premises

(Premises/assumptions)Management should consider controllable factors/premises i.e., salary level, program

responsibilities and uncontrollable factors such as economic conditions and political climate.

4. Survey ResourcesAll resources with

limitations.5. Establish Policies

Policies are defined as substitute of common sense i.e., company policy market policy, recruitment policy etc.

6. Choose alternative and take action.

7. Create Procedures and Rules

8. Establish Budgets9. Establish Time-tables

(ASAP= as soon as possible in meaningless)

10. Decide on Standards (Standards – Performance Results, Quantity-Quality, Time-Cost)

Ten reasons for failure1. Corporate planning is not

integrated into the total management system.

2. Planning is not systematic, lack of understanding of different dimensions of planning.

3. Management at all levels is not involved in planning.

4. Responsibility for planning is vested only in planning department.

5. Management assumes that as it is planned, it will come true.

6. Too much is attempted at one time.

7. Management plans its work but fails to work its plan.

8. Extradition and financial planning are confused with planning.

9. In-adequate information inputs are used.

10. Too much emphasis is placed on any single aspect of planning.

ORGANZING FOR ACTION

Definition and Concept

1. Organizing is an activity of Management in arranging people, tasks and resources.

2. Organizing is a process of people working together towards their common goals.

3. Organization is defined as two or more people working together in a coordinated manner to achieve groups results.

4. Organizing is the establishing of effective behavioral relationships among persons so that they may work together effectively and gain personal satisfaction in doing selected tasks under given environmental conditions for the purpose of achieving some goals or objectives.

The process of Organizing

1. Establish what is to be accomplished

2. Determine the type of work that needs to be accomplished

3. Assessing human resources

4. Assessing physical resources requirements

5. Grouping the functions, physical resources into an organizational structure

6. Assigning the obligation to perform a certain job (responsibility) and right to make decisions or take action to accomplish job

7. Assigning specific work activities

8. Determining if the job was accomplished (accountability of personnel)

Organizing includes the following activities

1. Determining, grouping and structuring activities

2. Devising and allocating roles arising from grouping and structuring activities

3. Assigning accountability for results to both groups and individuals

4. Determining detailed rules and systems of working including those for communication decision making and conflict resolution.

5. Organization / efficient organization

P. Drucker says that an Institute/organization is like a tune, it is not constituted by individual sounds but by relation between them. So organization is an orchestra working all team members together.

6. The Team V/S The function

Organizations have both functional and team characteristics having Marketing, Production, Engineering, Finance, Personnel and other functions and all functions are assigned to groups of people known as Team work.

7. The Basic elements of Organization.

William Scott has identified four factors termed as basis of classical organization theory:

i. Division of Labor or specialized effort.

The Negative side of specialization job

5

more routine, meaningless, monotony, boring etc, source of dissatisfaction.Measures to reduce frustration Job enlargement – opposite of division of labor which adds more parts of job to be performed.Job RotationThe participation approach, workers to participate in decision making

ii. Scalar and functional Process or the chain of command

Based

upon assumption that there is chain of command throughout the organization, e.g. top to bottom management decisions.Delegation in scalar process.O’Donnel, state factors for effective delegation

a.ceptiveness (give chance of others’ ide

as)

b. Willingness to let go (to give power of decision to sub-ordinates)

c. Willingness to let others to make mista

6

ke

d.llingness to trust subordinates

e.llingness to use broad controls

iii. Span of Control or Span of Management

The phenomenon that there is a limit to the number of persons a manager can supervise, even tho

ugh this limit varies depending on situation and the competence of a manager; the various situations, or underlying variables, include time available for supervision; training possessed by, and required of, subordinates; clarity of authority delegations; clarity of plans; rate of change in an enterprise; effectiveness of managerial con

trols; effectiveness of communications techniques; and the extent to which a situation requires personal face-to-face contact. Often referred to as “span of control’.

iv. Structure + Size and Complexity which makes up Business Organization

DPARTMENTATION BY FUNCTION

OR ORGANIZATIONAL

STRUCTURE BY FUNCTION

DEPARTMENTATION BY PRODUCT

ORORGANIZATIONAL STRUCTURE

BY PRODUCT

PRESIDENT

Finance Marketing Production

7

DEPARTMENTATION BY CUSTOMER

ORORGANZATIONAL STRUCTURE

BY CUSTOMER

DEPARTMENTATION BY GEOGRAPHIC TERRITORY

ORORGANIZATIONAL STRUCTURE BY GEOGRAPHIC TERRITORY

CHAPTER 07CONCEPTS OF CONTROLING

1. CONCEPT1. Effective Controlling

assists in the effort to regulate the planned performance to assure that performance takes place as planned.

2. According to Koontz and O’Donnell, the managerial function of controlling is the measurement and correction of the performance of activities of subordinates in order to make sure that enterprise objectives and the plans devised to attain them are being accomplished. It is thus the function of every manager, from president to foreman.

3. According to Robert Mockler, controlling is a systematic effort by business management to compare performance to predetermined standards, plans, or objectives to determine whether performance is in the line

with these standards and presumably to take any remedial action required to see that human and other corporate resources are being used in the most effective and efficient way possible in achieving corporate objectives.

Control Process1. Establishing the

standard performance

2. Measuring the performance

3. Comparing the performance with standard

4. Correcting unfavorable deviation by means of remedial action.

Measuring1. Total Achievements2. Output per Direct

Labor2. PHASES OF CONTROL

Control activity can take picture of three points: before, during and after.Thus you can prevent the problem, deal with the problem or see that problem doesn’t happen again.1. Pre-Control

(Preventive Maintenance)

2. Concurrent controls take place while activity continues

3. Post-Control (poor approach but common)

4. Correction of deviations (to make corrections in incorrect procedure, the sooner original goal can be achieved).

3. TYPES OF CONTROLa. PRODUCTION CONTROLb. INVENTORY CONTROLc. QUALITY CONTROLd. FINANCIAL CONTROLa. Production ControlConsists of Six Functions:1. Routing – Sequence –

Path of Flow of material through series of operations

2. Loading – assigning work to machine or department in advance

3. Scheduling – determines time at which each operation takes place

4. Estimating – in advance cost of production

5. Dispatching – process of ordering work to be done

6. Expediting – follow-up and checks whether plans are executed

b. Inventory ControlDeals with:1. Raw Materials2. Work in process3. Finished goodsFollowing questions are to be answered by Inventory Controller:

1. What is optimum amount of inventory to carry?

2. What is economic lot size for an order?

3. What is record system for showing inventory in hand?

c. Quality ControlTo keep/maintain quality standard of the product.By conducting tests.d. Financial Control

Budges, Profit Loss and Return on Investment.

5. BUDGETS:a. Budgeting is tool to

achieve goals:i. Revenue and

expenses budgetsii. Time, space, material

and product budgetsiii. Capital expenditure

budgetsiv. Cash budgets andv. Balance sheet

budgets

b. Break-even analysis

Total Revenue

VC

B.E.P

Profit

Total Cost

Revenue Loss

F.O.

Cost

c. Ratio Analysis (In comparing growth rates, ratio analysis is helpful.i. Check list of Financial

Ratio Analysis

1. Liquidity Ratio (measuring ability of firm to meet its maturing obligations)

Current Ratio

Acid Test Ratio

Cash Velocity

Inventory to net working capital

2. Leverage Ratios (Measuring contribution of financing by owners compared with financing provided by creditors)

Debt to Equity

Coverage of fixed charge

Current liability to net worth

Fixed assets to net worth

3. Activity Ratios (measuring the effectiveness of the employment of resources)

Inventory Turnover

Net working capital turnover

Fixed assets turnover

Average Collection period

Equity capital turnover

Total Capital turnover

VICE PRESIDENTMARKETING

Radio Products Division Television Products DivisionStereo System

Product Division

Vice President Marketing

Industrial Product Division Govt. Product Division Consumer Products Division

VICE PRESIDENT MARKETING

Southern Region Western Region Eastern Region

8

Inventories100,000

Accounts Receivable

50,000

Cash50,000

Product Cost500,000

Selling Expense150,000

Delivery Expense50,000

Administration expense100,000

Working capital200,000

Permanent Investment

300,000

Sales1,000,000

Cost of Sales800,000

Sales1,000,000

Total investment500,000

Earnings200,000

Sales1,000,000

Turnover 2.0

Earnings as percent of sales

20%

4.

Profitability Ratio (indicating degree of success in achieving desired profit levels)

Gross Margin

Net operating margin

Sales margin

Productivity of assets

Return on capital

Net profit on working capital

c. Return on Investment. Figure: The concept of

return on investment.

Plus

Divided by

PlusPlus

Multiplied by=

Plus Minus

Divided by

Plus

Plus

Essentially, ROI is determined by dividing total investment into earnings to determine a percentage rate of return (200,000 ÷ 500,000 =.40). This more complex method provides a fuller explanation of how this figure is determined. Incidentally, a ROI of 40% is fantastic. You might want to buy stock in this firm. What other conclusions can you draw about it?

9

5. DIRECT MANAGEMENT CONTROL (Control by Manager)

It is based on four assumptions:

1. Trained Managers make few errors

2. Managerial activities can be reduced

3. Principles of Management can serve clear standard for comparison with status quo.

4. Manager with expertise following good management rules.

6. DIRECT CONTROL (Through key Result Areas: Eight Areas)

1. Profitability2. Market Position3. Productivity 4. Product Leadership5. Personnel Development6. Employees Attitudes7. Public Responsibility and8. Balance between short

and long-range goals

7. CHARACTERISTICS OF A GOOD CONTROL SYSTEM (Koontz & O’Donnell)

1. Controls must reflect the nature of activity

2. Controls should report deviations promptly

3. Controls should focus on the future

4. Controls should point up exceptions at critical points

5. Controls should be objective

6. Controls should be flexible

7. Controls should reflect the organized pattern

8. Controls should be economical

9. Controls should be understandable

10. Controls should avoid obsolescence

11. Controls should seek employee commitment

12. Controls should seek rapid feedback

13. Controls should indicate corrective actionCHAPTER NINE

THE QUESTION OF AUTHORITY

1. Sources of Authority2. Competence Authority3. Authority Relationships4. Dangers in Using Staff5. The Future of Authority

What is Authority?

1. Sources of Authority Formal authority

theory (obedience or compliance is natural consequence of authority)

Pure acceptance theory (The soldier has to obey commands as alternative is firing squad)

2. Competence Authority Besides formal and

acceptance authority, the authors argue that competence authority is the type bestowed on individuals, who have obvious expertise in their field, e.g., engineers, economists, and doctors is called good example of acceptance theory.

Competence gains authority. e.g,

Professor holds both formal and acceptance authority on the basis of competence.

3. Authority Relationships (Can make departments and delegation)

Types of authority relationships (Line staff and functional)

1. Line Relationships: are those that deal with basic process of the business (i.e., production, sales and finance under this, He or She receives orders from above and gives orders to those below. Thus supervisor exercises direct supervision over subordinates in a direct line relationship.

2. Staff Authority: (service or support Staff) under this, Manager can not give orders to other departments – staff managers have a few subordinates and they give few orders. The task of Staff Manager is to assist, advise and do any thing to facilitate the work but not by direct command.

3. Functional Relationships: (Project Approach in business and government)e.g. line authority of the President

10

Authority after Delegation

4. Dangers in Using Staff: (Staff departments are necessary for success of organizations)Datton (1966) identified several limitations for use of staff functions:

1. Tending to undermine line authority

2. Allowing both line and staff to shift blame to the other

3. Making impractical recommendations

4. Causing management complications and disunity of command

5. Failing to understand the different authority relationships of line and staff

6. Giving advice that is ignored by line managers

7. Making recommendations which are unrealistic, obscure, erroneous and indecisive

8. Trying to take credit for the success of line managers who follow staff recommendations.

5. The Future of Authority (Should be different than the past due to increased challenges, and technological development)

CHAPTER 12

COMMUNICATION

The Idea Transplant

1. The Process2. The Pitfalls3. No Panaceas4. Media to carry

Messages5. Philosophies of

Communications6. Transactional Analysis7. the Ups and Downs of

Communication8. Communication

Systems9. The C’s of

Communication

1. THE PROCESS

The person with the ideai. Decides to

share. Next the idea is encoded

ii. Into some form of written, spoken or otherwise communicable language capable of being transmitted

iii. By symbols, sounds or expression to receiver

iv. Ready to receive the message which can be affected by environmental noises and other distractions

2. The Pitfall Common pitfall for communicator is assumption that because a message was sent, a message must have been received. The greatest enemy of communication is the illusion of it.Every time you communicate message, at least six different messages can come to life;1. the message you

intend to send2. the message you

actually send3. the message the other

person receives4. the other person’s

interpretation of what was received

5. the other person’s response

6. the difference between the response expected and the response received

3. NO PANACEAS It is well known that communication is problem communication may be effective, correct efficient or poor, vague and incorrect. Thus poor communication affects business performance. For example, here is a difference between right word and almost the right word – this can make a considerable difference.Of course each new method of communication proclaims itself to be the long awaited cure – all…………. The Panacea for our all pitfalls and misunderstanding.Questions helpful in communication process.

What is idea? Who is the one to

whom the idea is directed?

What channels will carry the message most clearly to that person?

What factors are to distort the message?

How can I avoid those directions?

How will I be able to feel if they have

received the correct idea?

4. MEDIA TO CARRY THE MESSAGES

Marshal Mchuhau’s statement that “the medium is the message”.

Human modes of processing information of a communication include many more than we usually consider:1. Thinking: is most

important process but often is over looked within the modes of communication – people immediately identify the sending modes.

2. Action: like Umpire. Actions speak louder than words.

3. Observation: Freud suggested that people all tend to practice selective reception, seeing only those incidents or parts of incidents that they want to see.

4. Speaking: the average rate of speaking is 125 words to 200 per minute. The objective should be accomplished with fewer words; Fewer words take less time and have a less opportunity to confuse the issue

5. Listening: See Table 12.1 P-260.

6. Writing: it is relatively small % out of total communication, but is the most important mode of communication.

7. Reading

5. PHILOSOPHIES OF COMMUNICATION

Four Philosophies of communication:

i. The Developmental Communicator – Two way communication is good for developmental communicator.

ii. The Controlling Communication – one way communication, no alternative. They assume that their ideas are best.

iii. The Relinquishing Communicator – They make few contributions and allow other to contribute

iv. The withdrawn communicator: is interested in maintaining Status – quo. The person believes that nothing can be done to improve the situation.

Style Approach1. Controlling I want to

have the most influence. (me)

2. Relinquishing

I want to give you the influence. (you)

Financial Procedures

Personnel Procedures

Purchasing Procedures

Public Relations

Procedures

Director Purchasing

Director Public

Relations

Director Finance

Director Personnel

Manager Western Division

Manager Central Division

Manager Eastern Division

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3. Development

I want to use my influence and yours to solve a problem. (us)

4. Withdrawn I want to stay uninvolved and neither exert nor respond to influence

6. TRANSACTIONAL ANALYSIS (TA)

Tom Harris has developed transactional analysis in his book “I am o.k. – You are o.k.”Transactional Analysis is a tool for helping us to understand what happens when any two persons interact. According to this theory, every one has three typical modes of behavior:i. the parent ego stateii. the adult ego stateiii. the child ego state

i. The Child: feelings of frustration, helplessness inadequacy exists in childhood.

Brain contains experience of job,

curiosity, imagination:Thus child is called “felt concept of life”Carefree himself insecure but other is ok.

ii. The Parent: Your parents your mother, father and other big people having experience of your early life.

iii. The Adult: is called ‘thought concept of life” in this age you suggest alternatives to a proposal rather than reacting emotionally, your adult has taken charge:The Three Faces of Me:a. I am not O.K. and

you are O.K.b. I am O.K. and you

are not O.K. (control over others & dominate others)

c. I am not O.K. you are not O.K.

d. I am O.K. and you are O.K. (rational life position – adult decision made by a self actualization person).

7. THE UPS AND DOWN OF COMMUNICATION

1. The chain of command is assumed.

2. A grievance procedure: to be heard and problem is solved.

3. a complaint system (suggestion Boxes / Question Boxes)

4. Counseling: to avoid costly cure

5. Questionnaires: about morale & other topics and contribution in future

6. The open door policy: always talked but less applied

7. An exit interview8. The grapevine:

provides accurate information and avoids irrelevant things.

9. Labor representatives10. An informer: has low

respect but may be necessary for co.

11. Special meetings: can be helpful for betterment.

12. An Ombudsman8. COMMUNICATION SYSTEM

1. Human System2. Mechanical System

9. THE C’s OF COMMUNICATION

Murphy’s Law of management if any thing can go wrong, (it will) is applicable in communication process:

1. Clarity2. Completeness3. Conciseness4. Concreteness –

concrete facts5. Correctness6. Cohesiveness7. consistency

CHAPTER 13

The Mystique of Motivation

As Berelson and Steiner have defined the term, a motive “is an inner state that energizes, activates, or moves (hence ‘motivation’), and that directs or channels behavior toward goals”.

In other words, “motivation” is a general term applying to the entire class of drives, desires, needs, wishes, and similar forces. Likewise, to say that managers motivate their subordinates is to say that they do those things which they hope will satisfy these drives and desires and induce the subordinates to act in a desired manner.

Motivation is defined as “feeling inside the body to do something or not to do something for achievement of goal – voluntarily”.

Theories of Motivation1. X-Y Theory (McGregor)2. Maslow’s Hierarchy of

Needs Theory3. Herzberg’s Two

Factors Theory4. Alderfer’s ERG Theory

1. X-Y Theory (McGregor)

McGregor – theory X and theory Y in his book

“The human side of the Enterprise”X - Theory

Employees are lazy

Require control and coercion

Avoiding responsibility

Seeking security

Y - Theory

Employees like work as rest or play

Not require control and coercion

Committed to the organization’s objectives

Under proper conditions, they not only accept but seek more and more responsibility.

2. Maslow’s Hierarchy of Needs

1. Physiological Needs: Need for food, sleep, shelter etc.

2. Safety Needs: Safety of job or safe working environment, free from threats.

3. love / Social needs – affection with colleagues and family

4. Esteem Need – Self respect, self-esteem and esteem of others

Self Actualization Needs

Esteem Needs

Love / Social needs

Safety Needs

Physiological Needs

1

2

3

4

5

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5. Self-actualization – self-confidence, self-fulfillment

3. Herzberg’s Motivation – Hygiene theory

200 engineers and accountants were studied and asked to recollect their experiences when they were satisfied and dissatisfied and concluded that certain factors tended to lead to job satisfaction and other factors led to dissatisfaction.The factors led to satisfaction called MotivatorsThe factors led to dissatisfaction called hygiene factorsMotivators:

Achievement Recognition Work itself Responsibility Advancement

(Positive effects) Led to satisfaction

Hygiene factors Company Policy &

Administration Supervision

Technical Aspects Salary Interpersonal

Relations – Supervision

Working Conditions

Prevented dissatisfaction:

Hygiene Factor

Motivation Factor

Company Policy &

Administration

Achievements

Supervision RecognitionSalary Work itself

Interpersonal relations

Responsibility

Working Conditions

Advancement

Hygiene Factor led to prevent dissatisfaction

Motivation factor led to satisfaction

4. Alderfer’s ERG Theory

Clayton Alderfer responded to some of the criticisms of Maslow’s work by conducting his own study of human needs. He defined three basic categories of needs:1. Existence needs – the

need for physical well-being.

2. Relatedness needs – the need for satisfying interpersonal relationships.

3. Growth needs – the need for continuing personal growth and development.

Alderfer’s ERG theory is similar to Maslow’s theory except in three major respects.

First, Alderfer identified only three orders of

human needs, compared to Maslow’s five orders.

Second, in contrast to Maslow, Alderfer found that people sometimes activate their higher-level needs before they have completely satisfied all of their lower-level needs.

Third, Alderfer concluded that movement in his hierarchy of human needs is not always upward.

For instance – and this is reflected in his frustration – regression principle – he found that a worker frustrated by his failure to satisfy an upper-level need might regress by trying to fulfill an already satisfied lower-level need.Alderfer’s work, in conjunction with Maslow’s, has implications for management. Employees frustrated by work that fails to provide opportunities for growth or development on the job might concentrate their energy on trying to make more money, thus regressing to a lower level of needs. To counteract such regression, management might use job enrichment strategies designed to help people meet their higher-order needs.

CHAPTER 15TRAINING &

DEVELOPMENT FOR TOMORROW

What is training? (The concept)

ADVANTAGES OF TRAINING1. Increased Executive

Management Skills2. Development in each

Executive of board background and appreciation of overall company’s operations and objectives.

3. Greater delegation of authority because lower executives can take the responsibilities.

4. Creation of a reverse of qualified personnel to replace the old ones.

5. Improved selection for promotion.

6. Minimum delay in staffing new positions.

7. Combination of youth and experience in top-management.

8. Improved executive morale.

9. Attraction to company of ambitious people who wish to move ahead rapidly.

10. Increased effectiveness and reduced costs resulting in greater assurance of continued profitability.

TYPES OF TRAINING1. On-the-Job Training2. Vestibule Schools – initial

training in a class room of semi-skilled and clerical workers (bank clerks / Machine Operators)

3. Apprenticeship Programs – higher level of skills, e.g., Engineering

4. Internship Training: students undertake this type of training.

5. Special Courses / Teaching Machines

6. Class room Instructions7. Retraining

STAGES IN DESIGNING TRAINING PROGRAM

1. Set overall training objectives

2. Select relevant training material

3. Decide training methods4. Assess training time

periods5. Construct the time table6. Brief the trainer7. Monitor and evaluate

training

WHAT CAUSES CHANGE?1. Environment (business,

economy, climate world conditions etc. govt. regulations, competition, changes in morals and values of the society – fashion)

2. Technological Developments

3. Organizational change, size, board level.

4. Managerial change is important type of change. Managers are source of many changes that managers face.

WHAT CAUSES RESISTENCE TO CHANGE?

Economic factors, workers resist automation because they fear loss of jobs.

Inconvenience Uncertainty Threats to social

relationships Resentment of control

REDUCING RESISTING TO CHANGE

1. Recognize the social and psychological factors in change.

2. Participation brings support.

3. Authority of Trust4. Force-Field Analysis (to

increase pressure to gain accept change force field situation can be inspiring for managers who are confronted with resistance.

5. Make only necessary changes.

STEPS OF CHANGE Unfreezing: willing to

learn and change. Changing: takes place

when there is identification or (internationalization) is

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the process of trying, adopting and using new attitudes or techniques.

Refreezing: is final acceptance and integration of the desired attitudes.

SPECIFIC TRAINING TECHNIQUES

1. Lecture2. cases (Case Study

Method)3. Incidents: shorter

description of a situation (two pages – short case / simple cases)

4. Role Playing – participants play different roles (10-30 minutes) under guidance of trainers.

5. Self-Development Programs

a. Programmed learning and reading assignments in management, development Seminars

b. Reading materials

6. Group Dynamics – Leadership Techniques, Techniques of communications, conflict is involved in training program – individual decisions and then asked to work in groups of 5 and reach consensus.

7. Simulation Exercises: to create a situation and handle it – like a real one e.g., computerized games

MANAGEMENT DEVELOPMENTCreativity and innovation are required in Management Development Programs.

1. Planned Progression: young manager receives an idea about path to the top (promotion)

2. Job Rotation: popular form of training in management (but more disadvantages than advantages)

3. “Assistants to” Positions4. Serving on Committees5. Junior Boards6. Outside Experiences:

conferences, formal University courses, leading speakers at conferences.

7. Psychological approaches: young managers in self-analysis and self training via role playing, group discussions.

ORGANIZATIONAL DEVELOPMENT (OD) Organizational structure and its flexibilityDifference between Management Development and Organizational Development

1. Time Frame: Management Training is short-term and Organizational Development is permanent and flexibility is encouraged to adopt changes of technology etc.

2. Need for specialists: professionals from universities or consultants to conduct management growth sessions.

3. Continuity: Organizational Development needs to be well planned, consistent and settled in for the duration.

4. Attitude towards change Management Development: approach expects to change the leader to solve problems while Organizational Development approaches problem from a systems point of view i.e., every fact of organization needs to be considered.

FUTURE OF TRAINING In year 2000, average

executive will spend one day per week i.e., full time study.

That – average executive will return to universities for formal studies, degrees, short courses and seminars.

Development of “Executive MBA Programs” i.e., IBM insists that every manager should receive 40 hours of Management Training annually.

LEARNING TO LEADLEADERSHIP

Concept of Leadership:

According to Samuel C. Certo the leadership is the process of directing the behavior of others towards the accomplishment of objectives. Directing, in this sense, means causing individuals to act in a certain way or to follow a particular course. Ideally, this course is perfectly consistent with such factors as established organizational policies, procedures and job descriptions. The central theme of leadership is getting things accomplished through people.

According to Coulter, the leadership is the process of influencing a group towards the achievement of goals.

According to Koontz and O’Donnell the leadership is generally defined simply as influence, the art or process of influencing people so that they will strive willingly towards the achievement of group goals. This concept can be enlarged to imply not only willingness

to work but also willingness to work with zeal and confidence.

FIG. The Key Leadership Variables

LeaderAccording to coulter the leader is someone who can influence others and who has managerial authority.Types of Leaders1. Charismatic leader

(whose influence springs mainly from personality e.g., Napoleon, Hitler, Churchill, Billy Graham and others)

2. Traditional leader (whose position is assured by birth e.g., kings, queens and tribal chieftains)

3. Situational leader (whose influence can only be effective by being in the right place at the right time.

4. Appointed leader (whose influence arises directly out of his position e.g., most managers and supervisors)

5. Functional leader (who secures their leadership position by what he or she does, rather than by what they are)

What is Power?Power is capacity to effect the decision.1. Legitimate PowerLegitimate power represents the power a leader has as a result of his or her position in the organization.2. Coercive PowerThe power a leader has because of his or her ability to punish or control.3. Reward PowerThe power a leader has because of his or her ability to give positive benefits or rewards.4. Expert PowerInfluence that’s based on expertise, special skills, or knowledge.5. Referent Power Power that arises because of a person’s desirable resources or personal traits.Leadership Theories1. Trait Theory2. Style Theory3. Behavioral Theory4. Contingency Theory

1. Trait Theory: The trait approach to

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LEADER Skills Knowledge Personality

TASKS/GOALS

SUBORDINATES Skills Motivation

ENVIRONMENT / SITUATION

leadership is based on early leadership research that seemed to assume that a good leader is born, not made. The mainstream of this research attempted to describe successful leaders as precisely as possible. The reasoning was that, if a complete profile of the traits of a successful leader could be drawn, it would be fairly easy to identify the individuals who should and should not be placed in leadership position.Many of the early studies that attempted to summarize the traits of successful leaders were documented. One of these summaries concludes that successful leaders tend to possess the following characteristics:

a. Intelligence, including judgment and verbal ability.

b. Past achievement in scholarship and athletics.

c. Emotional maturity and stability.

d. Dependability, persistence, and a drive for continuing achievement.

e. The skill to participate socially and adapt to various groups.

f. A desire for status and socioeconomic position.

Evaluations of these trait studies, however, have concluded that their findings are inconsistent. One researcher says that 50 years of study have failed to produce one personality trait or set of qualities that can be used consistently to discriminate leaders from nonleaders. It follows, then, that

no trait or combination of traits guarantees that someone will be a successful leader. Leadership is apparently a much more complex issue.Contemporary management writers and practitioners generally agree that leadership ability cannot be explained by an individual’s traits or inherited characteristics. They believe, rather, that individuals can be trained to be good leaders. In other words, leaders are made, not born. That is why thousands of employees each year are sent through leadership training programs.

2. Style Theory: (Authoritarian Style, Democratic Style) The interest in the human factor at work which was stimulated by the researchers of Human Relations, and taken up by the social psychologists who followed them, led logically to an interest in leadership as an aspect of behavior at work, rather than of personal characteristics since the 1950’s, in particular, several theories about leadership, or management, style have been put forward. These have tended to be expressed in terms of authoritarian versus democratic styles, or people orientation versus task orientation. In some cases, despite acknowledged inconsistencies in the theories themselves, style has led to quite useful devices for improving training for leadership.Authoritarian-Democratic: Three examples of this approach to management style are as follows:

a. D. McGregor’s

Theory X manager – tough, autocratic and supporting tight controls with punishment-reward systems – the authoritarian. The contrasting style is that of the Theory Y manager –benevolent, participative and believing in self-controls – the democrat. These styles flow from the assumptions about people that are the original basis of Theory X and Theory Y.

b. Rensis Likert’s four management systems:

System 1 the exploitive-authoritative system, which is the epitome of the authoritarian style.

System 2 the benevolent-authoritative system, which is basically a paternalistic style

System 3 the consultative system, which moves towards greater democracy and teamwork.

System 4 the participative-group system, which is the ultimate democratic style.

3. Behavioral Theories:

Leadership theories that identified behaviors that differentiated effective leaders from ineffective leaders.There are four main leader behavior studies. The major leader behavior dimensions and the conclusions are:

BEHAVIORAL DIMENSION

CONCLUSION

University Democratic Democratic

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of Iowa Style: involving subordinates, delegating authority, and encouraging participation

Autocratic Style: dictating work methods, centralizing decision making, and limiting participation.

Laissez-faire style: giving group freedom to make decisions and complete work

style of leadership was most effective, although later studies showed mixed results.

Ohio State Consideration: being considerate of followers’ ideas and feelings

Initiating structure: structuring work and work relationships to meet job goals

High-high leader (high in consideration and high in initiating structure) achieved high subordinate performance, and satisfaction, but not in all situations.

University of Michigan

Employee oriented: emphasized interpersonal relationships and taking care of employees’ needs

Production oriented: emphasized technical or task aspects of job

Employee-oriented leaders were associated with high group productivity and higher job satisfaction.

Managerial Grid

Concerns for people: measured leader’s concern for subordinates on a scale of 1 to 9 (low to high)

Concern for production: measured leader’s concern for getting job done on a scale of 1 to 9 (low to high)

Leaders performed best with a 9.9 style (high concern for production and high concern for people).

The Managerial Grid

One of the most widely known approaches to dramatizing leadership styles is the managerial grid, developed some years ago by Robert Blake and Jane Mouton. Building on previous research that showed the importance of a manager’s having concern both for production and for people, Blake and Mouton devised a clever device to dramatize this concern. This grid, shown below has been used widely throughout the world as a means of managerial training and of identifying various combinations of leadership styles.

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1.9 Management Thoughtful attention to needs of people leads to a friendly and comfortable organization atmosphere and work

tempo9.9 Management Work accomplished is from committed people with interdependence through a common stake in organization

purpose and with trust and respect5.5. Management Adequate performance through balance of work requirements and maintaining

satisfactory morale.1.1 Management Exertion of minimum effort is required to get work done and sustain organization morale9.1

Management Efficiency results from arranging work in such away that human elements have little effect

High

Low 1 2 34 5

6 7 8 9 High

Concerned for production

4. Contingency TheoryFunctional, or Action-centered Leadership. This concept of leadership was developed in the United Kingdom by Professor John Adair. It is based on the theory that leadership is more a question of appropriate behavior than of personality or of being in the right place at the right time. Adair’s model of leadership below incorporates the concern for task and concern for people that has featured in all the theories which we have just mentioned. The functional model, however, distinguishes the concern for individuals from the concern for groups, and stresses that effective leadership lies in what the leader does to meet the needs of task, group and individuals.The key features of the functional model can be summarized as follows:a. Task, Group and Individual

Needs are fulfilled in the context of a total leadership situation. The circumstances of each situation affect the priority which attaches to each area of needs. An effective leader is one who is aware of these priorities and who can act accordance with them. For example, in a situation of great urgency task needs must predominate over group and individual needs. In another situation, such as the re-building of a football team, it is group needs which must come first, then individual needs with task needs last. The model thus encourages a flexible style of leadership, which may be relatively task-oriented or group-oriented or individual-oriented,

depending on circumstances.

b. Task functions, directed towards task needs, include activities such as the setting of objectives, the planning of tasks, the allocation of responsibilities and the setting of appropriate standards of performance.

c. Group maintenance functions, directed towards group needs, include activities such as team-building and motivation, communication, discipline, and acting as group representative to others outside the boundaries of the unit.

d. Individual maintenance functions, directed towards the needs of individuals, include activities such as coaching, counseling, motivation and development.

Task Needs

Group Needs Individual Needs

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