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Transcript of Management science
(13A52601) MANAGEMENT SCIENCE
UNIT I INTRODUCTION TO MANAGEMENT
Definition of Management- Function of Management- Management as a
Science and Art-Management as a Profession- Universality of
Management- Henri Faylo‘s Administrative Theory –Elton Mayo‘s
Human Relations Movement- Systems theory – Contingency theory-
Monetary andnon-monetary incentives to motivate work teams-
Leadership –Definition- Qualities of successfulleaders- Different
leadership styles.
UNIT II ORGANIZATION DESIGN AND STRUCTURE
Organization design and structure- Principles—Types of organization
structure-Mechanic andOrganic Structures- Line organization- Line &
Staff organization- Functional Organization – Matrixorganization
structures- merits and demerits- Departmentation and Decentralization-
Power andAuthority- Delegation of authority-Principles for effective
delegation of authority.
UNIT III HUMAN RESOURCE AND MATERIALS
MANAGEMENT
Concept of HRM-functions – Human Resource Planning-Job Analysis-
Recruitment and Selection-Training and Development- Performance
appraisal –methods- Wage and Salary Administration-Grievances
handling Procedure-Material Management- Need for Inventory control-
Economic orderquantity- ABC analysis- Management of purchase, stores
and stores records.-Marketing Management– Concept- Channels of
distribution- Marketing mix and product mix.
UNIT IV MANAGEMENT OF OPERATIONS & PROJECT
MANAGEMENT
Nature of organizational control- Marketing control- HR control-
effective control systems-Operations Management- Essentials of
operations management- Trends in operational management-Designing
operation system for effective management of an organization-Project
Management –Network Analysis-PERT and CPM-Project crashing
(Simple problems)
UNIT VCONTEMPORARY MANAGEMENT ISSUES
Strategic Management-Concept- Mission-Vision-Core values-Setting
objectives-Corporate planning – Environmental scanning-SWOT
analysis- Steps in strategy formulation & implementation- Management
Information System (MIS)- Enterprise Resource Planning (ERP)-Just-in-
Time (JIT)- Total Quality Management (TQM) – Supply Chain
Management-Six Sigma-Business Process
Outsourcing (BPO).
13A52601
JAYALAKASHMI. M All Engg Branches
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Unit-1
Introduction to management
Definition:
Henri.Fayoll (1916) "To manage is to forecast and plan, to organize, to command, to
coordinate and control·
(peter F Drucker': (i 955).. "Management is concerned with the systematic organization of
economic resources and its task is .to make these resources productive .
(E F L Brech3 (1957) "Management is a social process ... the process consists of ... planning,
control,cordination,and motivation.
W F Glueck4 (1977) "Management is effective utilisation.of human and material resources to
achieve the enterprise objectives.".
Koontz and O'Donneli (1984) "Management is an operational process that can be dissected
into five essential managerial functions. They are: planning, organizing, staffing, directing
and leading, and controlling."
Koontz and Weilzrich6(1988) "Management is the process of designing and maintaining an
environment in which individuals, working together in groups, accomplish efficiently
selected aims."
Peters. T7 (1988) He feels that management holds a solution to the day-to-day problems in
our chaotic.
Management and Administration
According to Theo Haimann, ―Administration means overall determination of policies,
setting of major objectives, the identification of general purposes and laying down of broad
programmes and projects‖. It refers to the activities of higher level. It lays down basic
principles of the enterprise. According to Newman, ―Administration means guidance,
leadership & control of the efforts of the groups towards some common goals‖.
Whereas, management involves conceiving, initiating and bringing together the various
elements; coordinating, actuating, integrating the diverse organizational components while
sustaining the viability of the organization towards some pre-determined goals. In other
words, it is an art of getting things done through & with the people in formally organized
groups.
The difference between Management and Administration can be summarized under 2
categories: -
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1. Functions
2. Usage / Applicability
On the Basis of Functions: -
Basis Management Administration
Meaning Management is an art of
getting things done through
others by directing their
efforts towards
achievement of pre-
determined goals.
It is concerned with
formulation of broad
objectives, plans &
policies.
Nature Management is an
executing function.
Administration is a
decision-making function.
Process Management decides who
should as it & how should
he dot it.
Administration decides
what is to be done & when
it is to be done.
Function Management is a doing
function because managers
get work done under their
supervision.
Administration is a
thinking function because
plans & policies are
determined under it.
Skills Technical and Human
skills
Conceptual and Human
skills
Level Middle & lower level
function
Top level function
On the Basis of Usage: -
Basis Management Administration
Applicability It is applicable to business
concerns i.e. profit-making
organization.
It is applicable to non-
business concerns i.e.
clubs, schools, hospitals
etc.
Influence The management decisions
are influenced by the
values, opinions, beliefs &
decisions of the managers.
The administration is
influenced by public
opinion, govt. policies,
religious organizations,
customs etc.
Status Management constitutes
the employees of the
organization who are paid
remuneration (in the form
of salaries & wages).
Administration represents
owners of the enterprise
who earn return on their
capital invested & profits
in the form of dividend.
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Practically, there is no difference between management & administration. Every manager is
concerned with both - administrative management function and operative management
function as shown in the figure. However, the managers who are higher up in the hierarchy
denote more time on administrative function & the lower level denote more time on directing
and controlling worker‘s performance i.e. management.
Management is an Art
Art implies application of knowledge & skill to trying about desired results. An art may be
defined as personalized application of general theoretical principles for achieving best
possible results. Art has the following characters -
1. Practical Knowledge: Every art requires practical knowledge therefore learning of
theory is not sufficient. It is very important to know practical application of
theoretical principles. E.g. to become a good painter, the person may not only be
knowing different colour and brushes but different designs, dimensions, situations etc
to use them appropriately. A manager can never be successful just by obtaining
degree or diploma in management; he must have also know how to apply various
principles in real situations by functioning in capacity of manager.
2. Personal Skill: Although theoretical base may be same for every artist, but each one
has his own style and approach towards his job. That is why the level of success and
quality of performance differs from one person to another. E.g. there are several
qualified painters but M.F. Hussain is recognized for his style. Similarly management
as an art is also personalized. Every manager has his own way of managing things
based on his knowledge, experience and personality, that is why some managers are
known as good managers (like Aditya Birla, Rahul Bajaj) whereas others as bad.
3. Creativity: Every artist has an element of creativity in line. That is why he aims at
producing something that has never existed before which requires combination of
intelligence & imagination. Management is also creative in nature like any other art. It
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combines human and non-human resources in useful way so as to achieve desired
results. It tries to produce sweet music by combining chords in an efficient manner.
4. Perfection through practice: Practice makes a man perfect. Every artist becomes
more and more proficient through constant practice. Similarly managers learn through
an art of trial and error initially but application of management principles over the
years makes them perfect in the job of managing.
5. Goal-Oriented: Every art is result oriented as it seeks to achieve concrete results. In
the same manner, management is also directed towards accomplishment of pre-
determined goals. Managers use various resources like men, money, material,
machinery & methods to promote growth of an organization.
Thus, we can say that management is an art therefore it requires application of certain
principles rather it is an art of highest order because it deals with moulding the attitude and
behavior of people at work towards desired goals.
Management as a Science
Science is a systematic body of knowledge pertaining to a specific field of study that contains
general facts which explains a phenomenon. It establishes cause and effect relationship
between two or more variables and underlines the principles governing their relationship.
These principles are developed through scientific method of observation and verification
through testing.
Science is characterized by following main features:
1. Universally acceptance principles - Scientific principles represents basic truth about
a particular field of enquiry. These principles may be applied in all situations, at all
time & at all places. E.g. - law of gravitation which can be applied in all countries
irrespective of the time.
Management also contains some fundamental principles which can be applied
universally like the Principle of Unity of Command i.e. one man, one boss. This
principle is applicable to all type of organization - business or non business.
2. Experimentation & Observation - Scientific principles are derived through
scientific investigation & researching i.e. they are based on logic. E.g. the principle
that earth goes round the sun has been scientifically proved.
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Management principles are also based on scientific enquiry & observation and not
only on the opinion of Henry Fayol. They have been developed through experiments
& practical experiences of large no. of managers. E.g. it is observed that fair
remuneration to personal helps in creating a satisfied work force.
3. Cause & Effect Relationship - Principles of science lay down cause and effect
relationship between various variables. E.g. when metals are heated, they are
expanded. The cause is heating & result is expansion.
The same is true for management, therefore it also establishes cause and effect
relationship. E.g. lack of parity (balance) between authority & responsibility will lead
to ineffectiveness. If you know the cause i.e. lack of balance, the effect can be
ascertained easily i.e. in effectiveness. Similarly if workers are given bonuses, fair
wages they will work hard but when not treated in fair and just manner, reduces
productivity of organization.
4. Test of Validity & Predictability - Validity of scientific principles can be tested at
any time or any number of times i.e. they stand the test of time. Each time these tests
will give same result. Moreover future events can be predicted with reasonable
accuracy by using scientific principles. E.g. H2 & O2 will always give H2O.
Principles of management can also be tested for validity. E.g. principle of unity of
command can be tested by comparing two persons - one having single boss and one
having 2 bosses. The performance of 1st person will be better than 2nd.
It cannot be denied that management has a systematic body of knowledge but it is not as
exact as that of other physical sciences like biology, physics, and chemistry etc. The main
reason for the inexactness of science of management is that it deals with human beings and it
is very difficult to predict their behavior accurately. Since it is a social process, therefore it
falls in the area of social sciences. It is a flexible science & that is why its theories and
principles may produce different results at different times and therefore it is a behavior
science. Ernest Dale has called it as a Soft Science.
Conclusion: ―Management is the art and the science of preparing, organizing and directing
human efforts to control the forces and utilize the material of nature for the benefit of men.‖
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Management has got two faces like a coin; on one side it is art and on the other side it is
science. ―Management is a mixture of an art and science – the present ratio is about 80% art
and 20% science.‖
Management is a Profession
Over a large few decades, factors such as growing size of business unit, separation of
ownership from management, growing competition etc have led to an increased demand for
professionally qualified managers. The task of manager has been quite specialized. As a
result of these developments the management has reached a stage where everything is to be
managed professionally.
A profession may be defined as an occupation that requires specialized knowledge and
intensive academic preparations to which entry is regulated by a representative body. The
essentials of a profession are:
1. Specialized Knowledge - A profession must have a systematic body of knowledge
that can be used for development of professionals. Every professional must make
deliberate efforts to acquire expertise in the principles and techniques. Similarly a
manager must have devotion and involvement to acquire expertise in the science of
management.
2. Formal Education & Training - There are no. of institutes and universities to impart
education & training for a profession. No one can practice a profession without going
through a prescribed course. Many institutes of management have been set up for
imparting education and training. For example, a CA cannot audit the A/C‘s unless he
has acquired a degree or diploma for the same but no minimum qualifications and a
course of study has been prescribed for managers by law. For example, MBA may be
preferred but not necessary.
3. Social Obligations - Profession is a source of livelihood but professionals are
primarily motivated by the desire to serve the society. Their actions are influenced by
social norms and values. Similarly a manager is responsible not only to its owners but
also to the society and therefore he is expected to provide quality goods at reasonable
prices to the society.
4. Code of Conduct - Members of a profession have to abide by a code of conduct
which contains certain rules and regulations, norms of honesty, integrity and special
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ethics. A code of conduct is enforced by a representative association to ensure self
discipline among its members. Any member violating the code of conduct can be
punished and his membership can be withdrawn. The AIMA has prescribed a code of
conduct for managers but it has no right to take legal action against any manager who
violates it.
5. Representative Association - For the regulation of profession, existance of a
representative body is a must. For example, an institute of Charted Accountants of
India establishes and administers standards of competence for the auditors but the
AIMA however does not have any statuary powers to regulate the activities of
managers.
Universality of Management
One more important controversy related to the nature of management is the universality of
management. The basic concept is: Is management universal? Universality of management
indicates that managerial knowledge and skills can be applied and/ or transferred equally
from one company to another, from one person to another, from one country to another.
In regards F.W Taylor writes: ―The fundamental principles of scientific management are
applicable to all kinds of human activities from our simplest individual act to work of great
cooperation‖. Similarly,Henry Feyol: all undertaking require planning, organization,
command, coordination and control, and, in order to function properly, all must observer the
same principle.
P.F.Drucker notes: ―the skill, the competence, and the experience of management can not, as
such, be transferred and applied to the organizations running of institutions. A carrier in
management is ,by itself, not a preparation for major political office…. Or for leadership in
the armed forces, the church or a university‖
Conclusion management is applicable for all types of human activities. If management is
considered a process or knowledge (concepts ,principles,theories,functions etc…),it is
universal as management fundamentals are universal.
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FUNCTIONS OF MANAGEMENT
To achieve the organizational objectives managers at all levels of organization should
perform different functions. A function is a group of similar activities.
The list of management functions varies from author to author with the number of functions
varying from three to eight.
Writers Management Functions
Henry Fayol
Luther Gullick
R. Davis
E.F.L. Breech
Koontz
Planning, Organizing, Commanding, Coordinating,
Controlling
POSDCORD- Planning, Organising, Staffing, Directing,
Coordinating, Reporting, Directing
Planning , Organising, Controlling
Planning, Organising, Motivating, Coordinating,
Controlling
Planning, Organising, Staffing, Leading, Controlling
Different authors presented different variations. By combining some of functions, these are
broadly grouped into Planning, Organising, Staffing, Directing, and Controlling.
PLANNING : “Choose Goals”
Deciding in advance :
planning
Organising
Staffing Directing
Controlling
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What to do
How to do
When to do
Who is going to do it
Bridges a gap between where we are today and where we want to reach.
Sets the goal of an organization.
It is the basic function of management. It deals with chalking out a future course of
action & deciding in advance the most appropriate course of actions for achievement
of pre-determined goals.
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.
ORGANISING: “Working together‖
It is the process of bringing together physical, financial and human resources and
developing productive relationship amongst them for achievement of organizational
goals.
According to Henry Fayol, ―To organize a business is to provide it with everything
useful or its functioning i.e. raw material, tools, capital and personnel‘s‖. To organize
a business involves determining & providing human and non-human resources to the
organizational structure.
Establishing the framework of working:
How many units or sub-units or departments are needed.
How many posts or designations are needed in each department.
How to distribute authority and responsibility among employees
Once these decisions are taken, organizational structure gets set up.
Organizing as a process involves:
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Identification of activities.
Classification of grouping of activities.
Assignment of duties.
Delegation of authority and creation of responsibility.
Coordinating authority and responsibility relationships.
STAFFING:
Recruiting, selecting, appointing the employees, assigning duties, maintaining cordial
relationship and taking care of grievances of employees.
Training and Development of employees, deciding their remuneration, promotion and
increments.
Evaluating their performance.
It is the function of manning the organization structure and keeping it manned.
Staffing has assumed greater importance in the recent years due to advancement of
technology, increase in size of business, complexity of human behavior etc. The main
purpose o staffing is to put right man on right job i.e. square pegs in square holes and
round pegs in round holes.
Staffing involves:
Manpower Planning (estimating man power in terms of searching, choose the
person and giving the right place).
Recruitment, selection & placement.
Training & development.
Remuneration.
Performance appraisal.
Promotions & transfer.
DIRECTING:
Giving direction or instruction to employees to get the job done.
Leadership qualities are required.
Motivating employees by providing monatory and non-monetory incentives.
Comunicating with them at regular intervals.
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It is that part of managerial function which actuates the organizational methods to
work efficiently for achievement of organizational purposes. It is considered life-
spark of the enterprise which sets it in motion the action of people because planning,
organizing and staffing are the mere preparations for doing the work. Direction is that
inert-personnel aspect of management which deals directly with influencing, guiding,
supervising, motivating sub-ordinate for the achievement of organizational goals.
Supervision- implies overseeing the work of subordinates by their superiors. It is the act of
watching & directing work & workers.
Motivation- means inspiring, stimulating or encouraging the sub-ordinates with zeal to work.
Positive, negative, monetary, non-monetary incentives may be used for this purpose.
Leadership- may be defined as a process by which manager guides and influences the work
of subordinates in desired direction.
Communications- is the process of passing information, experience, opinion etc from one
person to another. It is a bridge of understanding
CONTROLLING: ―Monitor & measure‖
Matching actual performance with the planned goal.
If problem, tries to find out the reasons of deviation.
Suggesting corrective measures come on the path of plan
It implies measurement of accomplishment against the standards and correction of
deviation if any to ensure achievement of organizational goals. The purpose of
controlling is to ensure that everything occurs in conformities with the standards. An
efficient system of control helps to predict deviations before they actually occur.
According to 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‖.
Therefore controlling has following steps:
Establishment of standard performance.
Measurement of actual performance.
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Comparison of actual performance with the standards and finding out
deviation if any.
Corrective action.
FAYOL’S ADMNISTRATIVE MANAGEMENT
Henry Fayol is a French Industrialist and the father of modern operational management
theory. Fayol recognized the following organizational activities.
Organizational Activities: Fayol divided the activities of organization into six groups---
Technical (related to production)
Commercial ( buying, selling and exchange)
Financial ( search for capital and its optimum use)
Security ( protection of property and person )
Accounting
Managerial ( planning, organizing, commanding, coordinating and controlling)
Among the above activities Fayol considered managerial activities are the most important for
the success of business and he concentrated more on that. His contributions are divided the
following categories.
Qualities of a manager
General principles of management
Elements of management
Managerial Qualities and Training: According to Fayol the following are the list of
qualities required in a manager.
Physical ( Health, Vigor and Health )
Mental ( Ability to understand and learn, judgment , mental vigor and capability)
Moral ( energy, firmness, initiative, loyalty, tact etc.,)
Educational
Technical ( peculiar to the function being performed )
Experience
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GENERAL PRINCIPLES OF MANAGEMENT:
Fayol has given 14 principles of management. He has made distinction between management
principles and management elements. While management principles is a fundamental truth
and establishes cause effect relationship, elements of management denotes the function
performed by a manager.
While giving the management principles, Fayol has emphasized two things.
1. The list of management principles is not exhaustive but suggestive and has discussed
only those principles which he followed on most occasions.
2. principles of management are not rigid but flexible
Principles:-
1. Division of work: It is helpful to take the advantage of specialization. Here, the work is
divided among the members of the group based on the employees skills and talents. It can
be applied at all levels of the organization.
2. Authority and Responsibility: Fayol finds authority as a continuation of official and
personal factors. Official authority is derived from the manager‘s position and personal
authority is derived from personal qualities such as intelligence, experience, moral worth,
past services, etc., Responsibility arises out of assignment of activity. In order to
discharge the responsibility properly, there should be parity between authority and
responsibility.
3. Discipline: All the personal serving in an organization should be disciplined. Discipline is
obedience, application, behavior and outward mark of respect shown by employees.
4. Unity of Command: Unity of command means that a person should get orders from only
one superior. Fayol‘s has considered unity of command as an important aspect in
managing an organization. He says that ―should it be violated, authority is undermined,
discipline is in jeopardy, order disturbed, and stability threatened.‖
5. Unity of Direction: According to this principle, each group of activities with the same
objective must have one head and one plan. It is concerned with functioning of the
organization I respect of grouping of activities or planning. Unity of direction provides
better coordination among various activities to be undertaken by an organization.
6. Subordination of individual interest to general interest: Individual interest must be
subordinate to general interest when there is conflict between the two. However factors
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like ambition, laziness, weakness, etc., tend to reduce the importance of general interest.
Therefore, superiors should set an example in fairness and goodness.
7. Remuneration to Personnel: Remuneration to employees should be fair and provide
maximum possible satisfaction to employees and employers. Fayol did not favor profit
sharing plan for workers but advocated it for managers. He was also in favor of non-
financial benefits.
8. Centralization: Everything which goes to increase the importance of subordinate‘s role
is decentralization; everything which goes to reduce it is centralization. The degree of
centralization or decentralization is determined by the needs of the company.
9. Scalar Chain: There should be a scalar chain of authority and of communication ranging
from the highest to the lowest. It suggests that each communication going up or coming
down must flow through each position in the line of authority. It can be short-circuited
only in special circumstances. For this purpose, Fayol has suggested ‗gang plank‘
Scalar chain and gang plank can be presented as follows.
10. Order: This is a principle relating to the arrangement of things and people. In material
order, there should be a place for everything and everything should be in its place.
Similarly, in social order, there should be the right man in the right place.
11. Equity: Equity is the combination of justice and kindness. Equity in treatment and
behavior is liked by everyone and it brings loyalty in the organization. The application of
equity requires good sense, experience and good nature.
12. Stability of tenure: No employee should be removed within short time. There should be
reasonable security of jobs. Stability of tenure is essential to get an employee accustomed
to new work and succeeding in doing it well.
13. Initiative: Within the limits of authority and discipline, managers should encourage their
employees for taking initiative. Initiative is concerned with thinking out and execution of
a plan. Initiative increases zeal and energy on the part of human beings.
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14. Esprit de corps: It is the principle of ‗union is strength‘ and extension of unity of
command for establishing team work. The manager should encourage esprit de corps
among his employees.
Hawthorne experiments and human relations:
The human relations approach was born out of a reaction to classical approach. A lot
of literature on human relations has been developed. For the first time, an intensive and
systematic analysis of human factor in organisations was made in the form of Hawthorne
experiments.
To investigate the relationship between productivity and physical working conditions,
a team of four members Elton mayo, White head, Roethlisberger and William Dickson was
introduced by the company in Hawthorne plant. They conducted various researches in four
phases with each phase attempting to answer the question raised at the previous phase. The
phases are ---
1. Experiments to determine the effects of changes in illuminations on productivity.
Illumination experiments (1924-27)
2. Experiments to determine the effects of changes in hours and other working
conditions on productivity. (Relay assembly test room experiments 1927-28)
3. mass interviewing programme (1928-1930)
4. determination and analysis of social organization at work (Bank wiring observation
room experiments 1931-32)
Conclusions:
Individual workers must be seen as members of a group
The sense of belongingness and effective management were the two secrets
unfolded by the Hawthorne experiments.
Informal or personal groups influenced the behaviour of workers on the job.
Need for status and belongingness to a group were viewed as more important
than monetary incentives or good physical working conditions
To seek workers cooperation, the management should be aware of their social
needs and cater to them. Otherwise, there is every danger that the workers
ignore and turn against the interests of the organisation.
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System Approach to management: Theory and Concept
System approach was developed inlate1960s. Herbert A. Simon is the father of system
theory.
System: A system is a set of interrelated but separate parts working towards a common
purpose.
The arrangement must be orderly and there must be proper communication facilitating
interaction between the elements and finally this interaction should lead to achieve a
common goal.
According to Cleland and King; ― A system is composed of related and dependent elements
which when in interaction from a unity whole‖.
Subsystems: Subsystem is a system created as part of the process of the overall management
system. A planning subsystem increases the effectiveness of the overall management system.
System Approach
• System approach to management views the organization as a unified, purposeful
system composed of interrelated parts.
• This approach also gives the manager to see the organization as a whole and as a part
of the larger external environment.
• System oriented manager would make decisions only after they have identified impact
of these decisions on all other departments and the entire organization.
• They must intertwine their department with the total organization and communicate
with all other departments, employees and with each other.
Example
Finance Department
Production Department
Humanresource
Department
Marketing Department
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Characteristics: Systems have structure, defined by parts and their composition;
• Systems have behavior, which involves inputs, processing and outputs of material,
energy or information;
• Systems have interconnectivity: the various parts of a system have functional as well
as structural relationships between each other.
• System(s) have by itself function(s) or group of functions.
Advantages: It aims at meaningful analysis of organizations and their management.
• It facilitates the interaction between organization and its environment.
• It guide manager to avoid analyzing problems in isolation and to develop an
integrated approach.
Disadvantages: The approach does not recognize the differences in systems.
• Over-conceptual
• Systems philosophy does not specify the nature of interactions and interdependencies.
• Unpractical: It cannot be easily and directly applied to practical problems.
• Lack of Universality
• Complex System
Contingency Theory
Contingency approach, also known as situational approach, is a concept in management
stating that there is no one universally applicable set of management principles (rules) by
which to manage organizations. Organizations are individually different, face different
situations (contingency variables), and require different ways of managing. Contingency
approaches remain less common than change management approaches.
The management has to use the measures/techniques as per the situation from time to time.
Management should match its approach as per the requirements of the situation. The policies
and practices used should be suitable to environmental changes. The success of management
depends on its ability to cope up with its environment
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If a problem is faced by the business, the management sector is required to adapt and change
business operations to counteract the possible effect a circumstance may have. They believe
that management must adopt a wide range of management approaches
Adapting to changing circumstances – No two situations are absolutely identical, therefore
each situation requires its own unique solution. - For example, you may have chosen to
construct a building a certain way with certain strategies, but that same approach may not
work for different buildings because they require a completely different approach. -
Advocates of the contingency approach believe that managers need to be adaptable and
flexible in their technique to solving problems. - No one wants a manager who is dogmatic
and inflexible.
Example: Real life business examples Steve Jobs ―there is no one right way of leading and
that a leader must adjust their style depending on the context―
Activity Question: You are the owner of medium sized marketing company with 50
employees, 10 of your employees spend their entire 8hr shift putting data into a computer and
only leave their desk to have a 30min lunch break, leaving a total of 7.5hrs on a computer per
day. The Government has introduced a new health & safety legislation, which states that data
entry employees can only spend a total of 5hrs on the computer per day, entering data. Being
a manager using contingency management, how would you work with this new legislation?
Characteristics:
The contingency approach is based on three characteristics they are...
An open system perspective
A research orientation
A multivariable approach
Merits: Contingency approach is pragmatic and open minded. It discounts preconceived
notions and universal validity of principles .It provides freedom/choice to manage to judge
the external environment and use the most suitable management techniques. Here,
importance is given to the judgment of the situation and not the use of specific principles.
The contingency approach has a wide-ranging applicability and practical utility in,
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organization and management. It advocates comparative analysis of organizations to bring
suitable adjustment between organization structure and situational peculiarities.
Limitations: It is argued that the contingency approach lacks a theoretical base. Under
contingency approach, a manager is supposed to think through all possible alternatives as he
has no dried principles to act upon. The responsibility of a manager increases as he has to
analyze the situation, examine the validity of different principles and techniques to the
situation at hand, make right choice by matching the technique to the situation and finally
execute his choice
Conclusion: The basic theme of contingency approach is that organizations have to deal with
different situations in different ways. There is no single best way of managing applicable to
all situations.
Monetary and Non-Monetary Incentive to Motivate Work Teams
Motivation:
Motivation is the word derived from the word ‘motive‘ which means needs, desires, wants or
drives within the individuals. It is the process of stimulating people to actions to accomplish
the goals. In the work goal context the psychological factors stimulating the people‘s
behavior can be -
desire for money
success
recognition
job-satisfaction
Team work, etc.
One of the most important functions of management is to create willingness amongst the
employees to perform in the best of their abilities. Therefore the role of a leader is to arouse
interest in performance of employees in their jobs. The process of motivation consists of
three stages:-
1. A felt need or drive
2. A stimulus in which needs have to be aroused
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3. When needs are satisfied, the satisfaction or accomplishment of goals.
Therefore, we can say that motivation is a psychological phenomenon which means needs
and wants of the individuals have to be tackled by framing an incentive plan.
Motivation Incentives - Incentives to motivate employees
Incentive is an act or promise for greater action. It is also called as a stimulus to greater
action. Incentives are something which are given in addition to wagers. It means additional
remuneration or benefit to an employee in recognition of achievement or better work.
Incentives provide a spur or zeal in the employees for better performance. It is a natural thing
that nobody acts without a purpose behind. Therefore, a hope for a reward is a powerful
incentive to motivate employees. Besides monetary incentive, there are some other stimuli
which can drive a person to better. This will include job satisfaction, job security, job
promotion, and pride for accomplishment. Therefore, incentives really can sometimes work
to accomplish the goals of a concern. The need of incentives can be many:-
1. To increase productivity,
2. To drive or arouse a stimulus work,
3. To enhance commitment in work performance,
4. To psychologically satisfy a person which leads to job satisfaction,
5. To shape the behavior or outlook of subordinate towards work,
6. To inculcate zeal and enthusiasm towards work,
7. To get the maximum of their capabilities so that they are exploited and utilized
maximally.
Therefore, management has to offer the following two categories of incentives to motivate
employees:
1. Monetary incentives- Those incentives which satisfy the subordinates by providing
them rewards in terms of rupees. Money has been recognized as a chief source of
satisfying the needs of people. Money is also helpful to satisfy the social needs by
possessing various material items. Therefore, money not only satisfies psychological
needs but also the security and social needs. Therefore, in many factories, various
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wage plans and bonus schemes are introduced to motivate and stimulate the people to
work.
2. Non-monetary incentives- Besides the monetary incentives, there are certain non-
financial incentives which can satisfy the ego and self- actualization needs of
employees. The incentives which cannot be measured in terms of money are under the
category of ―Non- monetary incentives‖. Whenever a manager has to satisfy the
psychological needs of the subordinates, he makes use of non-financial incentives.
Non- financial incentives can be of the following types:-
a. Security of service- Job security is an incentive which provides great
motivation to employees. If his job is secured, he will put maximum efforts to
achieve the objectives of the enterprise. This also helps since he is very far off
from mental tension and he can give his best to the enterprise.
b. Praise or recognition- The praise or recognition is another non- financial
incentive which satisfies the ego needs of the employees. Sometimes praise
becomes more effective than any other incentive. The employees will respond
more to praise and try to give the best of their abilities to a concern.
c. Suggestion scheme- The organization should look forward to taking
suggestions and inviting suggestion schemes from the subordinates. This
inculcates a spirit of participation in the employees. This also is helpful to
motivate the employees to feel important and they can also be in search for
innovative methods which can be applied for better work methods. This
ultimately helps in growing a concern and adapting new methods of
operations.
d. Job enrichment- Job enrichment is another non- monetary incentive in which
the job of a worker can be enriched. This can be done by increasing his
responsibilities, giving him an important designation, increasing the content
and nature of the work. This way efficient worker can get challenging jobs in
which they can prove their worth. This also helps in the greatest motivation of
the efficient employees.
e. Promotion opportunities- Promotion is an effective tool to increase the spirit
to work in a concern. If the employees are provided opportunities for the
advancement and growth, they feel satisfied and contented and they become
more committed to the organization.
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The above non-financial tools can be framed effectively by giving due concentration
to the role of employees. A combination of financial and non- financial incentives
help together in bringing motivation and zeal to work in a concern.
Positive Incentives: Positive incentives are those incentives which provide a positive
assurance for fulfilling the needs and wants. Positive incentives generally have an optimistic
attitude behind and they are generally given to satisfy the psychological requirements of
employees. For example-promotion, praise, recognition, perks and allowances, etc. It is
positive by nature.
Negative Incentives: Negative incentives are those whose purpose is to correct the mistakes
or defaults of employees. The purpose is to rectify mistakes in order to get effective results.
Negative incentive is generally resorted to when positive incentive does not works and a
psychological set back has to be given to employees. It is negative by nature. For example-
demotion, transfer, fines, penalties.
LEADERSHIP
DEFINITION: ―Leadership is interpersonal influence exercised in a situation and directed
through communication process, towards the attainment of a specified goal or goals‖.
– Tennenbaum.
―Leadership is the process of influencing and supporting others to work enthusiastically
toward achieving objectives‖. – Barnard Key.
Leadership- the process of influencing others
Leaders inspire thru personal trustworthiness & self-confidence
Leaders communicate a vision that turns self-interest into commitment to the job
Differences b/w leadership & management
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Leadership
based on influence
an informal designation
an achieved position
part of every nurse‘s role
independent of management
Management
based on authority
a formally designated position
an assigned position
improved by use of effective
leadership skills
LEADERSHIP STYLES:
Leadership styles are the patterns of behaviour which a leader adopts in influencing
the behaviour of his subordinates. Based on the degree of authority used by the supervisors,
there are three leadership styles.
LEADERSHIP STYLES: - Leadership styles refer to a leader‘s behaviour. Behavioral
pattern which the leader reflects in his role as a leader is often described as the style of
leadership. It is the result of the philosophy, personality and experience of the leader. The
important leadership styles are as follows:-
1. Autocratic (or) Authoritarian leaders
2. Participative (or) Democratic leaders
3. Free rein (or) Laiser faire leaders
Autocratic Leadership Style: - This is also known as authoritarian, directive style. In this
style manager centralizes decision-making power in him. He structures the complete work
situation for his employees. He does not entertain and suggestions or initiative from
subordinates. He gives orders and assigns tasks without taking subordinates opinion. There
are three categories of autocratic leaders.
Strict Autocrat: - He follows autocratic styles in a very strict sense. His method of
influencing subordinates behaviour is through negative motivation that is by criticizing
subordinates, imposing penalty etc…
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Benevolent Autocrat: - He also centralizes decision making power in him, but his
motivation style is positive. He can be effective in getting efficiency in man situations. Some
like to work under strong authority structure and they drive satisfaction by this leadership.
Incompetent autocrat: - Sometimes, superiors adopt autocratic leadership style just to hide
their in competency, because in other styles they may exposed before their subordinates.
However, this cannot be used for a long time.
Advantages:-
1. It provides strong motivation and reward to manager.
2. It permits very quick decisions.
3. Less competent subordinates also have scope to work in the organisation.
Disadvantages:-
1. People in the organization dislike it especially when it is strict and the motivational style is
negative.
2. Employees lack motivation frustration, low morale and conflict develops in the
organisation.
3. There is more dependence and less individuality in the organisation.
Participative Leadership Style:- It is also called as democratic, consultative or idiographic
leadership style. In this style the manager decentralizes his decision-making process. Instead
of taking unilateral decision he emphasizes consultation and participation of his subordinates.
He can win the cooperation of his group and can motivate them effectively and positively.
Advantages:-
A B C
M
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1. Employees are highly motivated.
2. The productivity of employees is very high.
3. Subordinates share the responsibility with the superior and try to safeguard them also.
Disadvantages:- 1. Complex nature of organisation requires as through understanding of its
Problems which lower-level employees may not be able to do.
2. Some people in the organisation want minimum interaction with their
superior.
3. Some leaders may use this style as a way of avoiding responsibility.
Free-rein Leadership:- A free-rein leader does not lead, but leaves the group entirely to
itself as shown in the following figure.
In this style, manager once determines policy,
programmes, and limitations for action and the entire process is left to subordinates group
A
M D
C
B
A B
D
A
C
A
M
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members perform everything and the manager usually maintains contacts with outside
persons to bring the information and materials which the group needs.
QUALITIES OF SUCCESSFUL LEADERS
―Great leaders are born, not made.‖ To some extent, the capacity for great leadership is
innate. However, learning how to be a more effective leader is within everyone‘s grasp –
whether you lead multiple teams, an entire company or just one staff member.
Many qualities have been identified that are important to great leaders… But there are ten
leadership qualities that seem to stand out as being more important than the others.
Here are the ten most identified attributes of leaders and executives.
• Integrity is the integration of outward actions and inner values. A person of integrity
is the same on the outside and on the inside. Such an individual can be trusted because
he or she never veers from inner values, even when it might be expeditious to do so.
A leader must have the trust of followers and therefore must display integrity.
• Dedication means spending whatever time or energy is necessary to accomplish the
task at hand. A leader inspires dedication by example, doing whatever it takes to
complete the next step toward the vision. By setting an excellent example, leaders can
show followers that there are no nine-to-five jobs on the team, only opportunities to
achieve something great.
• Honest dealings, predictable reactions, well-controlled emotions, and an absence of
tantrums and harsh outbursts are all signs of integrity. A leader who is centered in
integrity will be more approachable by followers.
• Magnanimity means giving credit where it is due. A magnanimous leader ensures
that credit for successes is spread as widely as possible throughout the company.
Conversely, a good leader takes personal responsibility for failures. This sort of
reverse magnanimity helps other people feel good about themselves and draws the
team closer together. To spread the fame and take the blame is a hallmark of effective
leadership.
• Leaders with humility recognize that they are no better or worse than other members
of the team. A humble leader is not self-effacing but rather tries to elevate everyone.
Leaders with humility also understand that their status does not make them a god.
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Mahatma Gandhi is a role model for Indian leaders, and he pursued a ―follower-
centric‖ leadership role.
• Openness means being able to listen to new ideas, even if they do not conform to the
usual way of thinking. Good leaders are able to suspend judgment while listening to
others‘ ideas, as well as accept new ways of doing things that someone else thought
of. Openness builds mutual respect and trust between leaders and followers, and it
also keeps the team well supplied with new ideas that can further its vision.
• Creativity is the ability to think differently, to get outside of the box that constrains
solutions. Creativity gives leaders the ability to see things that others have not seen
and thus lead followers in new directions. The most important question that a leader
can ask is, ―What if …?‖ Possibly the worst thing a leader can say is, ―I know this is a
dumb question
• Fairness means dealing with others consistently and justly. A leader must check all
the facts and hear everyone out before passing judgment. He or she must avoid
leaping to
Conclusions based on incomplete evidence. When people feel they that are being treated
fairly, they reward a leader with loyalty and dedication.
• Assertiveness is not the same as aggressiveness. Rather, it is the ability to clearly
state what one expects so that there will be no misunderstandings. A leader must be
assertive to get the desired results. Along with assertiveness comes the responsibility
to clearly understand what followers expect from their leader.
• A sense of humor is vital to relieve tension and boredom, as well as to defuse
positivity. Effective leaders know how to use humor to energize followers. Humor is a
form of power that provides some control over the work environment. And simply
put, humor fosters good camaraderie.
Conclusion: What makes a good leader depends on the organizational context. Developing
leadership potential involves matching individual talents with organizational need, and
building skills that both enhance performance and play to individual strengths.
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Unit-II
Organization Design and Structure
An organization is a social arrangement which pursues collective goals, controls its own
performance, and has a boundary separating it from its environment. In the social sciences,
organizations are studied by researchers from several disciplines, the most common of which
are sociology, economics, political science, psychology, management, and organizational
communication. The broad area is commonly referred to as organizational studies,
organizational behavior or organization analysis. Therefore, a number of different theories
and perspectives exist, some of which are compatible,
Organization – process-related: an entity is being (re-)organized (organization as task or
action).
Organization – functional: organization as a function of how entities like businesses or state
authorities are used (organization as a permanent structure).
Organization – institutional: an entity is an organization (organization as an actual
purposeful structure within a social context)
Organization is form of organizing which is a part of management process
Organization defied as collectivity of people for achieving common objectives
“Organization means the determination and assignment of duties to people, and also the
establishment and the maintenance of authority relationships among these grouped activities it is
the structural frame work with in which the various efforts are coordinated and related to each
other”.
Definitions: “Organization are collectivities of people that have been established for the pursuit of
relatively specific objectives on a more or less continuous basis”.
----William Scott
“Organization is the form of every human association for the attainment of a common purpose”.
----Mooney and Reilly
“Organization involves the grouping of activities necessary to accomplish goals and plans assignment
and these activities to appropriate departments and positions to appropriate departments and
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positions for authority delegation and coordination”.
------Koontz and O’Donnell
Organization is used in the following ways with or without prefix or suffix
1. as entity
2. as group of people
3. as structure
4. as process
PRINCIPLES OF ORGANIZATION
1. Principle of unity of objectives: Organizational goals, departmental goals, and individual goals
must be clearly defined. All goals and objectives must have uniformity. When there is contradiction
among different level of goals desired goals can’t be achieved. Therefore, unity of objectives is
necessary
2. Principle of specialization: Sound and effective organization believes on organization. The term
specialization is related to work and employees. When an employee takes special type of knowledge
and skill in any area, it is known as specialization. Modern business organization needs the
specialization, skill and knowledge by this desired sector of economy and thus, efficiency would be
established.
3. Principle of coordination: In an organization many equipment, tools are used. Coordination can
be obtained by group effort that emphasize on unity of action. Therefore, coordination facilitates in
several management concepts.
4. Principle of authority: Authority is the kind of right and power through which it guides and directs
the actions of others so that the organizational goals can be achieved. It is also related with decision
making. It is vested in particular position, not to the person because authority is given by an
institution and therefore it is legal. It generally flows from higher level to lowest level of
management. There should be unbroken line of authority.
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5. Principle of responsibility: Authentic body of an organization is top level management, top level
management direct the subordinates. Departmental managers and other personnel take the
direction from top level management to perform the task. Authority is necessary to perform the
work .only authority is not provided to the people but obligation is also provided. So the obligation
to perform the duties and task is known as responsibility. Responsibility can’t be delegated. It can’t
be avoided.
6. Principle of delegation: Process of transferring authority and creation of responsibility between
superior and subordinates to accomplish a certain task is called delegation of authority. Authority is
only delegated, not responsibilities in all levels of management. The authority delegated should be
equal to responsibility
7. Principle of efficiency: In enterprise different resources are used. Therese resources must be used
in effective manner. When the organization fulfill the objectives with minimum cost, it is effective.
Organization must always concentrate on efficiency.
8. Principle of unity of command: subordinates should receive orders from single superior at a time
and all subordinates should be accountable to that superior. More superior leads to confusion, delay
and so on.
9. Principle of span of control: unlimited subordinates cant be supervised by manager, this principle
thus helps to determine numerical limit if subordinates to be supervised by a manager. This
improves efficiency.
10. Principle of balance: the functional activities their establishment and other performances should
be balanced properly. Authority, centralization, decentralization must be balance equally. This is
very challenging job but efficient management must keep it.
11. Principle of communication: Communication is the process of transformation of information
from one person to another of different levels. It involves the systematic and continuous process of
telling, listening and understanding opinions ideas, feelings, information, views etc, in flow of
information. Effective communication is important
12. Principle of personal ability: for sound organization, human resources is important. Employees
must be capable. Able employees can perform higher. Mainly training and development programs
must be encouraged to develop the skill in the employees.
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13. Principle of flexibility: organizational structure must be flexible considering the environmental
dynamism. Sometimes, dramatically change may occur in the organization and in that condition,
organization should be ready to accept the change
14. Principle of simplicity: this principles emphasizes the simplicity of organizational structure, the
structure if organization should be simple with minimum number of levels do that its member an
understand duties and authorities.
DESIGN OF ORGANIZATION STRUCTURE
The main objective of an organization structure is to ensure that efforts of all the people working
in various sections are co-ordinate and integrated for achieving the task in the most efficient
effective way with minimum consumption of resources i.e. economical ways
1) Formal organization structure 2) Informal organization structure
Formal organization structure: According to classical theorists the formal organization is built four
pillars
1) Division of labour
2) Scalar functional processes
3) Structure
4) Span of control
Definition: An organization is formal when the activities of two or more persons are consciously
coordinated towards common objectives.
Informal organization: Informal organization arises spontaneously based on friendship or some
common interest and not based on rules, regulation and procedures. It is developed by the
employees themselves and not by the formal authority.
Definition: Informal organization brings cohesiveness to a formal organization, it brings to the
members of formal organization a feeling of belonging of status, of self-respect and of gregarious
satisfaction.
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Comparison between formal and informal organization
TYPE OF ORGANIZATION: An organization can be classified on the basis of authority relationship or
on the basis of its departments. The types of organization based on authority relationships are:
On the basis of authority relationships organization classified as follows
1. Line organization or Military organization or Scalar organization
2. Line and Staff organization
3. Functional organization
4. Matrix organization
LINE ORGANISATION STRUCTURE
Line organization is also called military or scalar organization.
It is traditional type and which is widely used even today
The managers in this line organization have direct responsibility for the results
Based on authority relationship, a line organization structure can be drawn
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1. PURE LINE ORGANISATION:
Under this form, similar activities are performed at a particular level. Each group of activities is self –
contained unit and is able to perform the assigned activities without the assistance of others
Production Manager
|
______________________________ |____________________________
| | |
Foreman-A Foreman-B Foreman-C
| | |
Worker Worker Worker
2. DEPARTMENTAL LINE ORGANISATION:
Under this form, entire activities are divided into different departments on the basis of similarity of
activities. The basic objective of this form is to have uniform control, authority and responsibility.
Engineer
Draughts man I
(Design and drawing)
Draughts man II
(plans)
Draughts man II
(specification)
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Production Manager
______________________________ |____________________________
| | |
Foreman-A Foreman-B Foreman-C
(Body Molding) (Seating) (Finishing)
| | |
Worker Worker Worker
Features:
It is the simplest form of organization.
Line of authority flows from top to bottom.
Specialized and supportive services do not take place in these organization.
Unified control by the line officers can be maintained since they can independently take
decisions in their areas and spheres.
This kind of organization always helps in bringing efficiency in communication and
bringing stability to a concern.
Merits Demerits
1) It is simple to understand
2) Easy supervision & control
3) Quick decisions
4) It sets clearly the direct lines of
authority and responsibility of a
line manager
1) Lack of specialization
2) Low – Morale
3) Autocratic approach
4) Overburden to manager
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Suitability:- It is suitable to small – scale organizations where the number of subordinates is quite
small.
Line and Staff Organization
Line and Staff organization is the in which the line heads are assisted by specialist staff. If
the firm is of large size, manager cannot give careful attention to every aspect of management. They
are busy with ordinary task of production and selling. Hence staff is deputed to do the work of
investigation, research, recording, and advising to managers. Thus the staff brings advising to
managers. Thus the staff brings specialization by assisting the line officers.
“Line” means - Operating
“Staff” means – Service
FEATURES:-
This origin structure clearly distinguishes between two aspects of administration viz.,
planning and execution.
Staff officers provide advice only to the line officers; they do not have any power of
command over them.
The staff supplements the line members.
Line and Staff Organization is a compromise of line organization. It is more complex than line
concern.
Division of work and specialization takes place in line and staff organization.
The whole organization is divided into different functional areas to which staff specialists are
attached.
Efficiency can be achieved through the features of specialization.
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MERITS DEMERITS
1. It enhances the quality of
decision
2. Greater scope for advancement
3. It relieves the line managers.
4. Reduction of burden.
1. It may create more friction or
Conflict between line and staff
2. It is expensive
3. It creates confusion
SUITABILITY: - It can be followed in large organizations where specialization of activities is required,
because it offers ample opportunities for specialization.
Functional organization
Functional organization as suggested by Taylor, is based on the concept of division of labor
Here the planning function is separated from the control function.
Taylor observed that one single foreman was overburdened with all the operations such as
task setting, time recording, quality inspection, disciplinary jobs and so on.
He divided this job into eight functional foremen-four dealing with planning task and four
dealing with implementation task. Planning and implementation task are divided into ensure
the division of labour. He suggested the functional type of organization structure as outlined
in figure:
Works manager
Planning function Control function
RC GB RB TCC
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The foremen involved in the planning task were:
Route clerk (identifies the route for the material pass on)
Instruction clerk(the workers about what to do and what not)
Time and cost clerk(time and cost for each job)
Shop disciplinarian(maintain discipline on the shop floor)
Those involved in implementation were:
Gang boss( assembles the machinery needed for the workers)
Speed boss( standardizes and sets the speed of the machines)
Repair boss( repairs the machinery case of break down)
Quality inspector( responsible for the matters relating to quality).
FEATURES:
1) The whole activities of an organisation are divided into various functions
2) Each functional area is put under the charge of one executive
3) For any decision, one has to consult the functional specialist
MERITS DEMERITS
1) Planned specialization
2) Facilitates large scale production
3) Disciplinary controls are well defined
4) Offers clear career paths
1) calls for more coordination
2) no clear line of authority
3) slow decision making
4) lack of responsibility
WORKERS
Insp. SB SD IC
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Matrix Organization
This is also called as project organization, it is a combination of all relationships in the
organization in vertical, horizontal and diagonal. It is mostly used in complex projects. It provides a
high degree of operational freedom, flexibility and adoptability for both the line and staff managers
in performing their respective roles. The main objective of matrix organization is to secure a higher
degree of coordination than what is possible from the conventional organizational structure as the
line and staff.
Merits:
1. It offers operational freedom and flexibility
2. It seeks to optimize the utilization of resources
3. It focuses on results
4. It maintains professional identity
5. It holds employees responsible for management of resources
Demerits:
1. It calls for greater degree of coordination
2. It violates unity of command principle
3. It may be difficult to define authority and responsibility precisely
General Manager
Production Personnel Finance Marketing
W W
Project B
Manager
W W
W W W
W W
W
W W Project B
Manager
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4. Employees may find it frustrating to work with two bosses
Suitability: It can be applicable where there is a pressure for dual focus, pressure for high in
formation processing, and pressure for shred resources.
Ex:- Aerospace, chemicals, Banking, Brokerage, Advertising etc..,
Mechanistic (or) modern trends in organizational structure designs
Organizations in the recent times have been gearing themselves to suit to the growing
demands from their stakeholders in terms of responsiveness, flexibility, agility, adaptability etc. In
this process, they are following organic structure, which are more agile, flexible and adaptable to the
changing circumstances. Virtual organizations, cellular organizations, team structure, boundary less
organization and inverted pyramid and different forms of organic structure that are widely seen
among most of the sun-rise sectors such as financial services, Information Technology (IT) and IT
enabled services. These structures have been contributing to the organic growth of the organization.
The focus of organic structures is to do away with those activities which do not directly
contribute to the growth of the organization and focus only on those activities which directly lead
the organization for the achievement of the given goals. These are discussed below:
Virtual Organization: Virtual organizations facilitate competitiveness particularly when these
organizations are part of the global economy. Here, there can be alliances and partnerships with
other organizations almost all over world. It is a flexible organization structure that removes the
traditional boundaries. It allows easy reassignment and reallocation of resources to take quick
advantage of shifting opportunities in global markets. To avoid disintegration and to attain the
effective needed focus, the lead virtual organizations must have a shared vision, strong brand and
high trust culture.
The virtual organization is a temporary network of companies that come together quickly to
exploit fast changing opportunities. Virtual organizations appear to be bigger than traditional
organizations. As virtual organizing required a strong information technology
(IT) platform, The boundaries that traditionally separate a firm form its suppliers, customers
and even competitors are largely eliminated, temporarily and in respect to a given transaction or
business purpose. Virtual organizations come into being ‘as needed’ when alliances are called into
action to meet specific operating needs and objectives. When the task is complete, the alliance rests
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until next called into action. Each partner in the alliance contributes to the virtual organization what
it is best as-its core competence.
Cellular Organization: Organizations structured around the units/cells that complete the entire
assembly process are called cellular organizations. In the modern organizations, cellular
organizations have been replacing the continuous line or linear production process system. In
cellular organizations, workers manufacture total product or sub-assemblies in teams (cells). Every
team (cell) of workers has the responsibility to improve or maintain the quality and quantity of its
products. Each team is free to recognize itself to improve performance and product quality. These
cells comprise self-managed teams. They monitor themselves and also correct where necessary on
their own. Cellular organizations are characterized by much smaller staff all over the organization
with middle management positions reduced and lean management members at the top. It is both a
lean and flat structure.
Team Structure: A structure in which the entire organization is made up of work groups or teams is
known as team structure. Team structures are both permanent and temporary in nature as situation
demands. Traditional organizations are characterized by vertical structures and modern
organizations are identified by the horizontal i.e., team structures. ‘We report to each other’ is the
main feature of team structure. It leads to boundary less organsiation in a borderless world. In team
structures, we find cross-functional teams meant for improving lateral relations, solving problem,
completing special projects and accomplishing routine tasks. A cross-functional team comprises
members from different functional departments such as marketing, finance, HR, production etc.
Project teams are convened for a particular task or project and these get dissolved once task is
completed. The intention here is to quickly bring together the people with the needed talents and
focus their efforts intensely to solve a problem or take advantage of a special opportunity. Here
employees are more involved and empowered because of reduced barriers among functional areas.
Sometimes, when there is pressure on teams to perform and there is no clear chain of command,
team structure fails to deliver results.
Boundary less Organization: At the name indicates, a boundary less organization eliminates internal
boundaries among subsystems and external boundaries with external environment. It is a
combination of team and network structures with the addition of temporariness. Such type of
organization structure is characterized by spontaneous teamwork and communication. This replaces
formal chain of command. It is a dynamic organization structure wherein organizational needs are
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met through a judicious mix of outsourcing contracts and alliances as and when needed. The key
features of boundary less organization include knowledge-sharing, absence of hierarchy and
bureaucracy, empowerment voluntary participation of expert members, technology utilization and
temporariness. The focus is on mustering necessary talent and competencies required for the
achievement of a task without any bureaucratic restrictions. Creativity, quality, timeliness, increase
in speed and flexibility are the benefits the boundary less organization yields. It also reduces
inefficiencies. The boundary less organization is highly flexible and responsive. These draw on talent
wherever it is found. Sometimes, they are ineffective due to problems in communication.
Inverted Pyramid: This is an alternative to the traditional chain of command. This is a structure,
which is narrow at the top and wide at the base. It includes a few levels of management. For
instance, sales people and sales support staff sit on the top as the key decision makers for all the
issues related to sales and dealing with the customers. Since the sales staffs are in touch with the
customer and aware of the requirements of the customers, they are given all the freedom to follow
their own best judgment at all levels.
DEPARTMETATION AND DECENTRALISATION
Departmentation
The process of classifying the organization on the basis of departments or similar activities in
it is called departmentaion.This facilities planning and control at the department level. It is possible
to fix the responsibility in the departmental head for targets. It offers scope to introduce division of
labor and ensure specialization. It created a necessity of large-scale industries to meet the increased
demand. In large scale, industries there are large number of employees. For the sake of efficient
supervision and control, the factory/enterprise is divided into different departments. Each
department is entrusted with a particular function for carrying out particular activity each
departmental head is expected to control and supervise the work in his department.
Definition: The process of dividing the work and then grouping them into units and submits or
departments for the purpose of administration.
Method of Departmentation:
1. By function: It is divided into primary function to be performed such as, finance, marketing,
production, personnel etc. each function separate departments
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2. By product: All activities related to a particular product line may be grouped together. This
basis of departmentation has become increasingly important, especially for complex
organizations producing different types of products.
3. By process: In this method, the manufacturing activity are sub divided on the basis of their
process of production, similar machines such as all laths, milling machines, grinding
machines, milling machine etc. are grouped into separate section, such as lathe department,
milling department, drilling department.
4. By geographical region: This method may be adopted when the enterprise produces and
sells in the wide market, often in international markets.
5. A manager alone cannot perform all the tasks assigned to him. In order to meet the targets,
the manager should delegate authority. Delegation of Authority means division of authority
and powers downwards to the subordinate. Delegation is about entrusting someone else to
do parts of your job. Delegation of authority can be defined as subdivision and sub-
allocation of powers to the subordinates in order to achieve effective results.
DECENTRALIZATION
Decentralization is a systematic delegation of authority at all levels of management and in all of the
organization. In a decentralization concern, authority in retained by the top management for taking
major decisions and framing policies concerning the whole concern. Rest of the authority may be
delegated to the middle level and lower level of management.
Decentralization is not the same as delegation. In fact, decentralization is all extension of
delegation. Decentralization pattern is wider is scope and the authorities are diffused to the
lowest most level of management. Delegation of authority is a complete process and takes
place from one person to another. While decentralization is complete only when fullest
possible delegation has taken place. For example, the general manager of a company is
responsible for receiving the leave application for the whole of the concern. The general
manager delegates this work to the personnel manager who is now responsible for receiving
the leave applicants. In this situation delegation of authority has taken place. On the other
hand, on the request of the personnel manager, if the general manager delegates this power to
all the departmental heads at all level, in this situation decentralization has taken place. There
is a saying that “Everything that increasing the role of subordinates is decentralization and
that decreases the role is centralization”. Decentralization is wider in scope and the
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subordinate‘s responsibility increase in this case. On the other hand, in delegation the
managers remain answerable even for the acts of subordinates to their superiors.
Example: Concepts of decentralization have been applied to group dynamics and
management science in private businesses and organizations, political science, law and public
administration, economics and technology.
Benefits of decentralization: Benefits of decentralization are, to some extent, similar to that
of delegation as decentralization is the result of systematic delegation on the lowest level in
the organizational hierarchy. Here, the some main benefits have been listed:
Reduced workloads for top executives
Technique of management development
Effective supervision and control
Facility for growth and diversification
Source of motivation
Employee satisfaction and high morale
Improved communication
Reduced complexity
Speedy decisions and actions
Disadvantages of decentralization: Decentralization is not always useful. In certain cases, it
may be source of problems, and hence, may lead to ineffectively.to management should be
aware of the possible disadvantage listed below.
Problem related to staff services(or loss of staff sevices)
Difficulties in coordination
Problem of overall control
Increased administrative costs
Problem during emergency
Lack of uniformity
Uncertain outcomes
Possibility of conflict
Power and Authority
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Power is a broader concept than authority. Power is the ability of a person or a group to influence
the beliefs and actions of other people. It is the ability to influence events. Power can be personal
power. A person gets his personal power from his personality or from his expert knowledge.
Doctors, Lawyers, Engineers, Programmers, etc. get their power from their expertise and
professional knowledge. Power can also be legitimate or official power. This power comes from a
higher authority.
Authority is the right given to a manager to achieve the objectives of the organisation. It is a
right to get the things done through others. It is a right to take decisions. It is a right to give
orders to the subordinates and to get obedience from them. A manager cannot do his work
without authority.
A manager gets his authority from his position or post. He gets his authority from the higher
authorities. The lower and middle-level managers get their authority from the top-level
managers. The top-level managers get their authority from the shareholders.
Authority always flows downwards. It is delegated from the top to the bottom.
According to Henri Fayol, :"Authority is the right to give orders and power to exact (get)
obedience."
Difference between power and authority
Power Authority
Power comes from knowledge and expertise.
Authority comes from position and office.
Power is the personal ability of a person to Authority is the formal right to take
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control or influence others. decisions or making commands.
Power does not come with rank or designation; a person is either powerful or not.
Authority comes with rank and designation.
The scope of power cannot be written down or explained because it is too broad a concept.
The scope of authority can be written down and explained in explicit terms.
Power is not dependant on levels as it is broader in context and has a more extensive approach.
Authority is dependent on levels or positions and can be used in a limited manner as awarded.
DELEGATION OF AUTHORITY
Delegation of authority is one vital organizational process. It is inevitable along with the
expansion and growth of a business enterprise. Delegation means assigning of certain
responsibilities along with the necessary authority by a superior to his subordinate
managers. Delegation does not mean surrender of authority by the higher level manager. It
only means transfer of certain responsibilities to subordinates and giving them the necessary
authority, which is necessary to discharge the responsibility properly. Delegation is quite
common in all aspects of life including business. Even in the college, the principal delegates
some of his authority to the vice-principal. All activities are not performed by one person.
Authority should be provided to the subordinates too. Process of transferring authority and
creation of responsibility between superior and subordinates to accomplish a certain task is
called delegation of authority.
Principles for effective delegation of authority
1. Principle of parity of authority and responsibility– parity of authority and
responsibility is one of the important principles of delegation of authority. There is
equality in assigned task and power to do the work. Authority to the subordinates is
given by the superior on the basis of assigned task. So Authority to the subordinates is
given nether more or less than the task otherwise their can be improper utilization of
authority and mismanagement of task.
2. Principle of absoluteness of responsibility– according to it, responsibility can‘t be
delegated. Only authority can be delegated. The person who delegates authority is
himself responsible for his seniors.
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3. Principle of unity of command– according to it, subordinates must be commanded
by one superior; they should take their task from one superior and should be
accountable from their responsibility toward the superior level of operation.
4. Principle of functional definition of authority and responsibility– as per this
principle. Duties and task assigned by the superior and the authority given to fulfill
the task should be clearly explained and decided. But this subordinates can know
about the limit of one‘s right, duties and responsibility.
5. The scalar chain– according to it, authority flows from top to bottom. So that scalar
chain is the basis of relationship between the superior and subordinates. It emphasizes
the relation between superior and subordinates by which delegation will be easier.
Relationship between Authority and Responsibility
Authority Responsibility
It is the legal right of a person or
a superior to command his
subordinates.
It is the obligation of subordinate to perform the
work assigned to him.
Authority is attached to the
position of a superior in concern.
Responsibility arises out of superior-subordinate
relationship in which subordinate agrees to carry
out duty given to him.
Authority can be delegated by a
superior to a subordinate
Responsibility cannot be shifted and is absolute
It flows from top to bottom. It flows from bottom to top.
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DIFFERENCE BETWEEN DELEGATION AND DECENTRALIZATION
BASIS DELEGATION DECENTRALIZATION
MEANING It is the entrustment of
responsibility and authority from
one individual to another.
It is a systematic delegation of
authority in the organization.
NATURE It is individualistic It is totalistic under an
organizational set up.
SCOPE Limited as it is individualistic. Wide as it is organizational.
RESPONSIBILITY Only duty and authority are
delegated but overall results
remains with superior.
Executive relived from his
responsibility and subordinates
become liable.
EFFECTIVENESS It is possible and effective in all
organizations.
It is possible and effective in big
organization.
RELATIONSHIP Delegation establish superior-
subordinates relationship.
Decentralization is a step towards
creation of semi autonomous units.